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STOCK PURCHASE AGREEMENT
Dated as of February 2, 1999
by and between
MAGNUM TECHNOLOGY LIMITED
(the "Purchaser")
and
DSP GROUP, INC.
(the "Company")
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TABLE OF CONTENTS
Page
ARTICLE I Purchase and Sale of Common Stock......................................................1
Section 1.1 Sale and Purchase...............................................1
Section 1.2 Purchase Price..................................................1
Section 1.3 The Closing.....................................................1
Section 1.3.2 Actions to be taken by the Company..............................1
Section 1.3.3 Actions to be taken by the Purchaser............................2
ARTICLE II Representations and Warranties.........................................................2
Section 2.1 Representation and Warranties of the Company....................2
(a) Organization, Good Standing and Power...........................2
(b) Authorization; Enforcement......................................2
(c) Capitalization..................................................3
(d) Issuance of Shares..............................................3
(e) No Conflicts....................................................3
(f) Commission Documents, Financial Statements......................4
(g) Subsidiaries....................................................4
(h) [Omitted].......................................................5
(i) No Undisclosed Liabilities......................................5
(j) No Undisclosed Events or Circumstances..........................5
(k) Indebtedness....................................................5
(l) Title to Assets.................................................6
(m) Actions Pending.................................................6
(n) Compliance with Law.............................................6
(o) Taxes...........................................................6
(p) Certain Fees....................................................7
(q) Disclosure......................................................7
(r) Intellectual Property; Operation of Business....................7
(s) Books and Records...............................................7
(t) Material Agreements.............................................7
(u) Transactions with Affiliates....................................7
(v) Securities Act of 1933..........................................7
(w) Governmental Approvals..........................................8
(x) Employees.......................................................8
(y) Absence of Certain Developments.................................8
(z) Use of Proceeds.................................................8
(aa) Public Utility Holding Company Act and Investment Company Act Status. ............8
(ab) Israeli Employment Benefits. .....................................................9
(ac) Acknowledgment Regarding Purchaser's Purchase of Shares. ........................9
(ad) Commitments.......................................................................9
(ae) "Material Adverse Effect" ........................................................9
Section 2.2 Representations and Warranties of the Purchaser.................9
(a) Organization and Standing of the Purchaser......................9
(b) Authorization and Power.........................................9
(c) No Conflicts....................................................9
(d) Acquisition....................................................10
(e) Accredited Purchaser...........................................10
ARTICLE III Covenants..............................................................................11
Section 3.1 Securities Compliance..........................................11
Section 3.2 Registration and Listing.......................................11
Section 3.3 Registration Statement.........................................11
Section 3.4 Compliance with Laws...........................................12
Section 3.5 Keeping of Records and Books of Account........................12
Section 3.6 Reporting Requirements.........................................12
Section 3.7 Covenants Regarding Board Representation.......................12
Section 3.8 Lockup Agreement...............................................13
Section 3.9 Amendments.....................................................14
Section 3.10 Other Agreements...............................................14
ARTICLE IV Indemnification.........................................................................14
Section 4.1 General Indemnity..............................................14
Section 4.2 Indemnification Procedure......................................15
ARTICLE V Miscellaneous...........................................................................16
Section 5.1 Fees and Expenses..............................................16
Section 5.2 Specific Enforcement, Consent to Jurisdiction..................16
Section 5.3 Entire Agreement; Amendment....................................16
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Section 5.4 Notices........................................................17
Section 5.5 Waivers........................................................18
Section 5.6 Headings.......................................................18
Section 5.7 Successors and Assigns.........................................18
Section 5.8 No Third Party Beneficiaries...................................18
Section 5.9 Governing Law..................................................18
Section 5.10 Survival.......................................................18
Section 5.11 Counterparts...................................................18
Section 5.12 Publicity......................................................19
Section 5.13 Severability...................................................19
Section 5.14 Further Assurances.............................................19
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TABLE OF SCHEDULES
Schedule Topic
-------- -----
2.1(c) Capitalization
2.1(g) Subsidiaries
2.1(i) Undisclosed Liabilities
2.1(j) Undisclosed Events or Circumstances
2.1(k) Indebtedness
2.1(l) Title to Assets
2.1(m) Actions Pending
2.1(o) Taxes
2.1(r) Intellectual Property
2.1(x) Employees
2.1(y) Absence of Certain Developments
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement") is dated as of
February 2, 1998 by and between DSP GROUP, INC., a Delaware corporation (the
"Company"), and MAGNUM TECHNOLOGY LIMITED, a British Virgin Islands corporation
(the "Purchaser").
For good and valid consideration, the sufficiency of which is
acknowledged by the parties, the parties hereto agree as follows:
ARTICLE I
Purchase and Sale of Common Stock
Section 1.1 Sale and Purchase. Subject to the terms and conditions of
this Agreement, the Company, on the Closing Date (as defined herein), is selling
and issuing to the Purchaser and the Purchaser is purchasing from the Company,
in reliance upon the representations, warranties and other terms and conditions
of this Agreement, 2,300,000 shares of Common Stock of the Company (the
"Shares").
Section 1.2 Purchase Price. The purchase price for the Shares is
thirty-four million five hundred thousand ($34,500,000) Dollars (the "Purchase
Price"), and shall be paid by wire transfer to an account designated by the
Company in writing.
Section 1.3 The Closing.
Section 1.3.1 Time and Place. The closing of the transactions
contemplated hereby (the "Closing") shall take place at the offices of Xxxxxx
Xxxxxx Flattau & Klimpl LLP at 10:00 a.m. New York City time on February 5, 1999
(the "Closing Date").
Section 1.3.2 Actions to be taken by the Company. Subject to the
representations and warranties of the Purchaser being true and correct in all
material respects and the satisfaction of all actions taken by the Purchaser, on
or before the Closing Date, the Company shall deliver to the Purchaser the
following:
(a) stock certificates representing the Shares;
(b) a duly executed registration rights agreement in the form
annexed hereto as Exhibit A (the "Registration Rights Agreement");
(c) the opinion of Xxxxxxxx & Xxxxxxxx LLP, attorneys for the
Company, dated as of the date hereof substantially in the form of Exhibit B
attached hereto; and
(d) the Certificate of Incorporation of the Company (the
"Certificate") and Bylaws of the Company (the "By-laws") as in effect on the
date hereof and the resolutions of the Board of Directors of the Company,
certified by the Secretary of the Company, authorizing the execution, delivery
and performance of this Agreement and each of the other documents and
instruments being executed and delivered by the Company herewith. Such
resolutions of the Board of Directors of the Company shall include the election
of two of the directors named in Section 3.7(a) herein.
(e) a certificate duly executed by an executive officer of the
Company certifying that the representations and warranties made as of the date
hereof are true and correct in all material respects as of the Closing Date.
Section 1.3.3 Actions to be taken by the Purchaser.
Subject to the representations and warranties of the Company
being true and correct in all material respects and the satisfaction of all
actions to be taken by the Company under Section 1.3.2, on the Closing Date, the
Purchaser shall pay to the Company the Purchase Price.
ARTICLE II
Representations and Warranties
Section 2.1 Representation and Warranties of the Company. The Company
hereby makes the following representations and warranties to the Purchaser:
(a) Organization, Good Standing and Power. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware and has the requisite corporate power to own,
lease and operate its properties and assets and to conduct its business as it is
now being conducted. The Company and each such subsidiary is duly qualified as a
foreign corporation to do business and is in good standing in every jurisdiction
in which the nature of the business conducted or property owned by it makes such
qualification necessary except for any jurisdiction in which the failure to be
so qualified will not have a material adverse effect on the Company's financial
condition.
(b) Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and perform this Agreement and to
issue and sell the Shares in accordance with the terms hereof. The execution,
delivery and performance of this Agreement by the Company and the consummation
by it of the transactions contemplated hereby and thereby have been duly and
validly authorized by all necessary corporate action, and no further consent or
authorization of the Company or its Board of Directors or stockholders is
required. This Agreement has been duly
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executed and delivered by the Company. This Agreement constitutes, or shall
constitute when executed and delivered, a valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation, conservatorship, receivership or
similar laws relating to, or affecting generally the enforcement of, creditor's
rights and remedies or by other equitable principles of general application.
(c) Capitalization. The authorized capital stock of the
Company is 20,000,000 shares of Common Stock and there are 9,432,520 shares
thereof currently issued and outstanding. All of the outstanding shares of the
Company's Common Stock have been duly and validly authorized. No shares of
Common Stock are entitled to preemptive rights or registration rights and except
as set forth on Schedule 2.1(c) there are no outstanding options, warrants,
scrip, rights to subscribe to, call or commitments of any character whatsoever
relating to, or securities or rights convertible into, any shares of capital
stock of the Company. Furthermore, except as set forth in this Agreement and as
set forth on Schedule 2.1(c), there are no contracts, commitments,
understandings, or arrangements by which the Company is bound to issue
additional shares of the capital stock of the Company or options, securities or
rights convertible into shares of capital stock of the Company (such Schedule
2.1 shall provide the exercise term, exercise price, vesting period, holders of
such options and number of options granted to each holder). Except for customary
transfer restrictions contained in agreements entered into by the Company in
order to sell restricted securities or Schedule 2.1(c) hereto, the Company is
not a party to any agreement granting registration rights to any person with
respect to any of its equity or debt securities. The Company is not a party to,
and it has no knowledge of, any agreement restricting the voting or transfer of
any shares of the capital stock of the Company. The offer and sale of all
capital stock, convertible securities, rights, warrants, or options of the
Company issued prior to the Closing complied with all applicable Federal and, to
the best of the Company's knowledge, all applicable state securities laws, and
no stockholder has a right of rescission or damages against the Company with
respect thereto. The Company has furnished or made available to the Purchaser
true and correct copies of the Certificate as in effect on the date hereof, and
the Bylaws as in effect on the date hereof.
(d) Issuance of Shares. The Shares to be issued under this
Agreement have been duly authorized by all necessary corporate action and, when
paid for or issued in accordance with the terms hereof, the Shares shall be
validly issued and outstanding, fully paid and nonassessable, and the Purchaser
shall be entitled to all rights accorded to a holder of Common Stock subject to
the restrictions contained herein.
(e) No Conflicts. The execution, delivery and performance of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated therein do not (i) violate any provision of the
Company's Certificate or Bylaws, (ii) conflict with, or constitute a default (or
an event which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any material agreement, mortgage, deed of trust, indenture,
note, bond, license, lease agreement, instrument or obligation to which the
Company is a party, (iii) create or impose a lien, charge or encumbrance on
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any material property of the Company under any agreement or any commitment to
which the Company is a party or by which the Company is bound or by which any of
its respective material properties or assets are bound, or (iv) result in a
violation of any federal, state, local or foreign statute, rule, regulation,
order, judgment or decree (including Federal and state securities laws and
regulations) applicable to the Company or any of its subsidiaries or by which
any property or asset of the Company or any of its subsidiaries are bound or
affected, the violation of which would have a Material Adverse Effect (as
defined below). The Company is not required under Federal, state or local law,
rule or regulation to obtain any consent, authorization or order of, or make any
filing or registration with, any court or governmental agency in order for it to
execute, deliver or perform any of its obligations under this Agreement, or
issue and sell the Shares in accordance with the terms hereof.
(f) Commission Documents, Financial Statements. The Common
Stock of the Company is registered pursuant to Section 12(b) or 12(g) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, the
Company has timely filed all reports, schedules, forms, statements and other
documents required to be filed by it with the Securities and Exchange Commission
(the "Commission") pursuant to the reporting requirements of the Exchange Act,
including material filed pursuant to Section 13(a) or 15(d) of the Exchange Act
(all of the foregoing including filings incorporated by reference therein being
referred to herein as the "Commission Documents"). As a result the Company is
eligible to file a registration statement on Form S-3 with the Commission. The
Company has delivered or made available to the Purchaser true and complete
copies of the Commission Documents filed with the Commission since December 31,
1997. As of their respective dates, the Form 10-K for the year ended December
31, 1997 and the Forms 10-Q for the fiscal quarters ended March 31, 1998, June
30, 1998 and September 30, 1998 complied in all material respects with the
requirements of the Exchange Act and the rules and regulations of the Commission
promulgated thereunder and other Federal, state and local laws, rules and
regulations applicable to such documents, and, as of their respective dates,
none of the Form 10-K and the Forms 10-Q referred to above contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The financial
statements of the Company included in the Commission Documents comply as to form
in all material respects with applicable accounting requirements and the
published rules and regulations of the Commission or other applicable rules and
regulations with respect thereto. Such financial statements have been prepared
in accordance with generally accepted accounting principles ("GAAP") applied on
a consistent basis during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto or (ii) in the case
of unaudited interim statements, to the extent they may not include footnotes or
may be condensed) and fairly present in all material respects the financial
position of the Company and its subsidiaries as of the dates thereof and the
results of operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments).
(g) Subsidiaries. Schedule 2.1(g) hereto sets forth each
subsidiary of the Company, showing the jurisdiction of its incorporation or
organization and showing the percentage
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of each person's ownership of the outstanding stock or other interests of such
subsidiary. For the purposes of this Agreement, "subsidiary" shall mean any
corporation or other entity of which at least a majority of the securities or
other ownership interest having ordinary voting power (absolutely or
contingently) for the election of directors or other persons performing similar
functions are at the time owned directly or indirectly by the Company and/or any
of its other subsidiaries. All of the outstanding shares of capital stock of
each subsidiary have been duly authorized and validly issued, and are fully paid
and nonassessable. There are no outstanding preemptive, conversion or other
rights, options, warrants or agreements granted or issued by or binding upon any
subsidiary for the purchase or acquisition of any shares of capital stock of any
subsidiary or any other securities convertible into, exchangeable for or
evidencing the rights to subscribe for any shares of such capital stock. Neither
the Company nor any subsidiary is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of the
capital stock of any subsidiary or any convertible securities, rights, warrants
or options of the type described in the preceding sentence. Neither the Company
nor any subsidiary is party to, nor has any knowledge of, any agreement
restricting the voting or transfer of any shares of the capital stock of any
subsidiary.
(h) [Omitted]
(i) No Undisclosed Liabilities. Except as disclosed in the
Commission Documents or on Schedule 2.1(i) hereto, to the knowledge of the
Company neither the Company nor any of its subsidiaries has incurred since
December 31, 1997 any liabilities, obligations, claims or losses (whether
liquidated or unliquidated, secured or unsecured, absolute, accrued, contingent
or otherwise) that would have a Material Adverse Effect.
(j) No Undisclosed Events or Circumstances. Except as
disclosed in the Commission Documents or on Schedule 2.1(j) hereto, to the
knowledge of the Company since December 31, 1997, no event or circumstance has
occurred or exists with respect to the Company or its subsidiaries or their
respective businesses, properties, prospects, operations or financial condition,
which, is reasonably likely to have a Material Adverse Effect.
(k) Indebtedness. Schedule 2.1(k) hereto sets forth as of the
date hereof all outstanding secured and unsecured Indebtedness of the Company or
any subsidiary, or for which the Company or any subsidiary has commitments. For
the purposes of this Agreement, "Indebtedness" shall mean (a) any liabilities
for borrowed money or amounts owed in excess of $100,000 (other than trade
accounts payable incurred in the ordinary course of business), (b) all
guaranties, endorsements and other contingent obligations in respect of
Indebtedness of others, whether or not the same are or should be reflected in
the Company's balance sheet (or the notes thereto), except guaranties by
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business; and (c) the present value of
any lease payments in excess of $100,000 due under leases required to be
capitalized in accordance with GAAP. Neither the Company nor any subsidiary is
in default with respect to any Indebtedness.
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(l) Title to Assets. Each of the Company and the subsidiaries
has good and marketable title to all of its real and personal property having a
value in excess of $100,000 and reflected in the Commission Documents free of
any mortgages, pledges, charges, liens, security interests or other
encumbrances, except for those indicated on Schedule 2.1(l) hereto or such that
do not result in a Material Adverse Effect. All leases which require payments of
at least $100,000 per year of the Company and each of its subsidiaries are valid
and subsisting and in full force and effect.
(m) Actions Pending. There is no action, suit, claim,
investigation or proceeding pending or, to the knowledge of the Company,
threatened against the Company or any subsidiary which questions the validity of
this Agreement or the transactions contemplated hereby or any action taken or to
be taken pursuant hereto or thereto. Except as set forth on Schedule 2.1(m)
hereto, there is no action, suit, claim, investigation or proceeding pending or,
to the knowledge of the Company, threatened, against or involving the Company,
any subsidiary of the Company or any of their respective properties or assets.
There are no outstanding orders, judgments, injunctions, awards or decrees of
any court, arbitrator or governmental or regulatory body against the Company or
any subsidiary.
(n) Compliance with Law. The business of the Company and the
subsidiaries has been and is presently being conducted in accordance with all
applicable Federal, state and local governmental laws, rules, regulations and
ordinances, domestic and foreign, except where the conduct of the business of
the Company in violation of any of such laws, rules, regulations and ordinances
could not reasonably result in a Material Adverse Effect. The Company and each
of its subsidiaries have all franchises, permits, licenses, consents and other
governmental or regulatory authorizations and approvals necessary for the
conduct of its business as now being conducted by it unless the failure to
possess such franchises, permits, licenses, consents and other governmental or
regulatory authorizations and approvals, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect.
(o) Taxes. The Company and each of the subsidiaries has
accurately prepared and filed all Federal, state and other tax returns required
by law, domestic and foreign, to be filed by it, has paid or made provisions for
the payment of all taxes shown to be due and all additional assessments, and
adequate provisions have been and are reflected in the financial statements of
the Company and the subsidiaries of the Company for all current taxes and other
charges to which the Company or any subsidiary of the Company is subject and
which are not currently due and payable except where the failure to prepare and
file such tax returns or the failure to pay or make provision for the payment of
all such taxes could not reasonably result in a Material Adverse Effect. Except
as disclosed on Schedule 2.1(o) hereto, none of the Federal income tax returns
of the Company or any subsidiary of the Company for the years subsequent to
December 31, 1994 have been audited by the Internal Revenue Service or other
foreign governmental tax agency. The Company has no knowledge of any additional
assessments, adjustments or contingent tax liability (whether federal or state)
pending or threatened against the Company or any subsidiary of the Company for
any period that would have a Material Adverse Effect, nor of any basis for any
such assessment, adjustment or contingency.
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(p) Certain Fees. No brokers, finders or financial advisory
fees or commissions will be payable by the Company or any subsidiary of the
Company with respect to the transactions contemplated by this Agreement.
(q) Disclosure. To the best of the Company's knowledge,
neither this Agreement nor the Schedules hereto nor any of the Commission
Documents furnished to the Purchaser by or on behalf of the Company or any
subsidiary of the Company in connection with the transactions contemplated by
this Agreement contain any untrue statement of a material fact or omits to state
a material fact necessary in order to make the statements made herein or
therein, in the light of the circumstances under and at the time at which they
were made herein or therein, not misleading.
(r) Intellectual Property; Operation of Business. In the
conduct of its business as now conducted, the Company or a subsidiary of the
Company owns or possesses all patents, know how, licenses and authorizations
from third parties, ("Intellectual Property") free and clear of all liens,
charges or encumbrances that are necessary. Neither the Company, nor its
subsidiaries has received a notice of a claim of infringement relating to the
Intellectual Property, except as set forth on Schedule 2.1(r) or knows of any
reasonable basis for a claim that such an infringement or violation exists.
(s) Books and Records. The records and documents of the
Company and its subsidiaries accurately reflect in all material respects the
information relating to the business of the Company and its subsidiaries, the
location of their assets, and the nature of all transactions giving rise to the
obligations or accounts receivable of the Company or any subsidiary of the
Company.
(t) Material Agreements. There is no agreement that has not
been filed with the Commission as an exhibit to a registration statement or
other applicable form the breach of which could cause a Material Adverse Effect.
(u) Transactions with Affiliates. Except for employment
agreements and consulting agreements, there are no loans, leases, agreements,
contracts, royalty agreements, management contracts or arrangements or other
continuing transactions exceeding $60,000 between (a) the Company, any
subsidiary of the Company or any of their respective customers or suppliers on
the one hand, and (b) on the other hand, any officer or director of the Company,
or any of its subsidiaries, or any person owning any capital stock of the
Company or any subsidiary of the Company or any member of the immediate family
of such officer, director or stockholder or any corporation or other entity
controlled by such officer, director or stockholder, or a member of the
immediate family of such officer, director or stockholder.
(v) Securities Act of 1933. The Company has complied and will
comply with all applicable Federal and state securities laws in connection with
the offer, issuance and sale of the Shares hereunder in order that the issuance
and sale of the Shares will not be subject to the registration provisions of the
Securities Act of 1933, as amended (the "Securities Act"), and applicable state
securities laws. Neither the Company nor any of its affiliates, nor any person
acting
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on its or their behalf, has engaged in any form of general solicitation or
general advertising (within the meaning of Regulation D under the Securities
Act) in connection with the offer or sale of the Shares.
(w) Governmental Approvals. Except for the filing of any
notice prior or subsequent to the Closing that may be required under applicable
state and/or Federal securities laws and/or other applicable laws of territories
in which the Company conducts business (which if required, shall be filed on a
timely basis), including the filing of a registration statement or statements
pursuant to this Agreement, no authorization, consent, approval, license,
exemption of, filing or registration with any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, is or
will be necessary for, or in connection with, the delivery of the Shares, or for
the performance by the Company of its obligations under this Agreement.
(x) Employees. Neither the Company nor any subsidiary of the
Company has any collective bargaining arrangements or agreements covering any of
its employees, except as set forth on Schedule 2.1(x) hereto. Since December 31,
1997, no officer, consultant or key employee of the Company or any subsidiary of
the Company whose termination, either individually or in the aggregate, could
have a Material Adverse Effect, has terminated or, to the knowledge of the
Company, has any present intention of terminating his or her employment or
engagement with the Company or any subsidiary of the Company.
(y) Absence of Certain Developments. Except as set forth in
the Commission Documents or on Schedule 2.1(y) hereto, since December 31, 1997,
neither the Company nor any subsidiary has:
(i) sold, assigned or transferred any tangible
assets, or canceled any debts or claims, except in the ordinary course of
business;
(ii) suffered any substantial losses or waived any
rights of material value, whether or not in the ordinary course of business; or
(iii) experienced any material problems with labor or
management in connection with the terms and conditions of their employment.
(z) Use of Proceeds. The proceeds from the sale of the Shares
will be used by the Company and its subsidiaries for acquisitions and general
corporate purposes.
(aa) Public Utility Holding Company Act and Investment Company
Act Status. The Company is not a "holding company" or a "public utility company"
as such terms are defined in the Public Utility Holding Company Act of 1935, as
amended. The Company is not, and as a result of and immediately upon Closing
will not be, an "investment company" or a company "controlled"
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by an "investment company," within the meaning of the Investment Company Act of
1940, as amended.
(ab) Israeli Employment Benefits. The Company has accrued on
its financial statements or paid on behalf of every Israeli employee all
necessary monies in excess of $100,000 required under applicable Israeli law.
(ac) Acknowledgment Regarding Purchaser's Purchase of Shares.
The Company acknowledges and agrees that the Purchaser is acting solely in the
capacity of arm's length purchaser with respect to this Agreement and the
transactions contemplated hereunder. The Company further acknowledges that the
Purchaser is not acting as a financial advisor or fiduciary of the Company (or
in any similar capacity) with respect to this Agreement and the transactions
contemplated hereunder and any advice given by the Purchaser or any of its
representatives or agents in connection with this Agreement and the transactions
contemplated hereunder is merely incidental to the Purchaser's purchase of the
Shares. The Company further represents to the Purchaser that the Company's
decision to enter into this Agreement has been based solely on the independent
evaluation by the Company and its representatives.
(ad) Commitments. The Company does not have any existing
commitments for future capital expenditures in excess of $1,000,000.
(ae) "Material Adverse Effect" shall mean any effect on the
business, operations, properties or financial condition of the Company that is
material and adverse to the Company and its subsidiaries and affiliates, taken
as a whole and/or any condition, circumstance, or situation that would prohibit
or otherwise interfere with the ability of the Company to enter into and perform
any of its obligations under this Agreement or the Registration Rights Agreement
in any material respect.
Section 2.2 Representations and Warranties of the Purchaser. The
Purchaser hereby makes the following representations and warranties to the
Company:
(a) Organization and Standing of the Purchaser. The Purchaser
is a corporation duly incorporated, validly existing and in good standing under
the laws of the jurisdiction of its incorporation. The Purchaser, formerly known
as Magnum Technology Fund, has multiple investments.
(b) Authorization and Power. The Purchaser has the requisite
power and authority to enter into and perform this Agreement and to purchase the
Shares being sold to it hereunder. The execution, delivery and performance of
this Agreement by the Purchaser and the consummation by it of the transactions
contemplated hereby have been duly authorized by all necessary corporate action.
(c) No Conflicts. The execution, delivery and performance of
this Agreement and the consummation by the Purchaser of the transactions
contemplated hereby or relating hereto do not
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and will not (i) result in a violation of the Purchaser's charter documents or
bylaws or (ii) conflict with, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of any
agreement, indenture or instrument to which the Purchaser is a party, or result
in a violation of any law, rule, or regulation, or any order, judgment or decree
of any court or governmental agency applicable to the Purchaser or its
properties (except for such conflicts, defaults and violations as would not,
individually or in the aggregate, have a Material Adverse Effect. The Purchaser
is not required to obtain any consent, authorization or order of, or make any
filing or registration with, any court or governmental agency in order for it to
execute, deliver or perform any of its obligations under this Agreement or to
purchase the Shares in accordance with the terms hereof, provided that for
purposes of the representation made in this sentence, the Purchaser is assuming
and relying upon the accuracy of the relevant representations and agreements of
the Company herein.
(d) Acquisition for Investment. Such Purchaser is purchasing
the Shares solely for its own account for the purpose of investment and not with
a view to or for sale in connection with distribution. The Purchaser does not
have a present intention to sell the Shares, nor a present arrangement (whether
or not legally binding) or intention to effect any distribution of the Shares to
or through any person or entity; provided, however, that by making the
representations herein, the Purchaser reserves the right, subject to the
provisions of Section 3.8 herein, to dispose of the Shares at any time in
accordance with Federal securities laws applicable to such disposition (except
that from the date hereof until the day immediately prior to the first
anniversary of the date hereof, the Purchaser may not dispose of the Shares and
from the first anniversary of the date hereof until the day six months from the
first anniversary of the date hereof the Purchaser may dispose of the Shares
only up to the limits set forth in Rule 144(e)(i) under the Securities Act)
provided, however, that the Purchaser agrees that it will not dispose of any
Shares during any period in which directors of the Company are subject to a
"blackout period" or other prohibitions against the sale or disposition of
Common Stock. The Purchaser acknowledges that it is able to bear the financial
risks associated with an investment in the Shares and that it has been given
full access to such records of the Company and the subsidiaries of the Company
and to the officers of the Company and the subsidiaries of the Company as it has
deemed necessary or appropriate to conduct its due diligence investigation. The
Purchaser is capable of evaluating the risks and merits of an investment in the
Shares by virtue of its experience as an investor and its knowledge, experience,
and sophistication in financial and business matters and the Purchaser is
capable of bearing the entire loss of its investment in the Shares.
(e) Accredited Purchaser. The Purchaser is an "accredited
investor" as defined in Regulation D promulgated under the Securities Act.
ARTICLE III
Covenants
The Company covenants with the Purchaser as follows, which covenants
are for the benefit of the Purchaser and its permitted assignees (as defined
herein).
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Section 3.1 Securities Compliance.
(a) The Company shall notify the Commission and NASD, if
applicable, in accordance with their rules and regulations, of the transactions
contemplated by this Agreement, and shall take all other necessary action and
proceedings as may be required and permitted by applicable law, rule and
regulation, for the legal and valid issuance of the Shares to the Purchaser or
subsequent holders.
(b) The Company is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and understandings of
the Purchaser set forth herein in order to determine the applicability of
Federal and state securities laws exemptions and the suitability of the
Purchaser to acquire the Shares.
Section 3.2 Registration and Listing. The Company will cause its Common
Stock to continue to be registered under Sections 12(b) or 12(g) of the Exchange
Act, will comply in all respects with its reporting and filing obligations under
the Exchange Act, will comply with all requirements related to any registration
statement filed pursuant to this Agreement, and will not take any action or file
any document (whether or not permitted by the Securities Act or the rules
promulgated thereunder) to terminate or suspend such registration or to
terminate or suspend its reporting and filing obligations under the Exchange Act
or Securities Act, except as permitted herein. The Company will take all action
necessary to continue the listing or trading of its Common Stock on the NASDAQ
system, if applicable, and will comply in all respects with the Company's
reporting, filing and other obligations under the bylaws or rules of the NASD
and NASDAQ system.
Section 3.3 Registration Statement. The Company shall cause to be filed
a registration statement under the Securities Act ("Registration Statement"),
which Registration Statement shall provide for the resale of the Shares
purchased by and issued to the Purchaser in accordance of this Agreement. The
Company shall use its best efforts to cause such Registration Statement to be
declared effective by the Commission prior to six months from the date hereof.
In the event the Purchaser is not permitted to resell the Shares pursuant to the
Registration Statement, (due to the Company's non-compliance with its
obligations under the Exchange Act or for any other similar reason), the Company
shall use its best efforts to cause a Registration Statement on such other
appropriate form to be effective within such six month period which will permit
the Purchaser to resell the Shares pursuant to such Registration Statement. All
costs and expenses associated with the Registration Statement shall be borne by
the Company.
Section 3.4 Compliance with Laws. The Company shall comply, and cause
each subsidiary of the Company to comply, with all applicable laws, rules,
regulations and orders, noncompliance with which could have a Material Adverse
Effect.
Section 3.5 Keeping of Records and Books of Account. The Company shall
keep and cause each subsidiary of the Company to keep adequate records and books
of account, in which complete entries will be made in accordance with GAAP
consistently applied, reflecting all financial
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transactions of the Company and its subsidiaries, and in which, for each fiscal
year, all proper reserves for depreciation, depletion, obsolescence,
amortization, taxes, bad debts and other purposes in connection with its
business shall be made.
Section 3.6 Reporting Requirements. The Company shall furnish the
following to the Purchaser so long as such Purchaser shall beneficially own any
Shares:
(a) Quarterly Reports filed with the Commission on Form 10-Q
as soon as available, and in any event within 45 days after the end of each of
the first three fiscal quarters of the Company; and
(b) Annual Reports filed with the Commission on Form 10-K as
soon as available, and in any event within 90 days after the end of each fiscal
year of the Company.
(c) Any other filings made with the Commission, any press
releases issued or any communications sent to stockholders.
Section 3.7 Covenants Regarding Board Representation.
(a) The Company will cause Xxx Xxxxx and Xxxxx Xxxxx to be
elected to the Company's Board of Directors as of the Closing Date one of which
shall be elected to the Company's Audit Committee and one of which shall be
elected to the Company's Compensation Committee. Subject to Section 3.7(e), the
Company shall cause any two of Xxx Xxxxx, Xxxxx Xxxxx, Xxx Xxxxxxxxx and Xxx
Tocatly (the "Purchaser Representatives") or instead of one or more Purchaser
Representatives, such other person designated by Purchaser who is approved by a
majority of the members of the Board of Directors who are not Affiliates or
Associates (within the meaning of Rule 405 under the Securities Act) of
Purchaser or a Purchaser Representative to be included in the slate of nominees
recommended by such Board to the Company's stockholders for election as
directors at each annual meeting of the stockholders of the Company or to serve
as a member of the Company's Audit Committee or Compensation Committee. In the
event that any designee of the Purchaser for election to the Company's Board of
Directors pursuant to the foregoing provisions shall cease to serve as a
director or member of the Company's Audit Committee or Compensation Committee,
the vacancy resulting therefrom shall be filled according to the procedures
described in the preceding sentence (subject to Section 3.7 (e)).
(b) The Company will furnish to such designee on the Company's
Board of Directors all information that is provided to the other directors of
the Company.
(c) It is the Company's policy to discuss with the Board of
Directors any proposed merger, consolidation, reorganization or acquisition or
disposition of material assets other than in the ordinary course of business and
other transactions out of the ordinary course of business that would have a
material impact on the Company's financial position or results of operations.
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(d) The parties acknowledge and agree that any director
nominated or designated by Purchaser will be under an obligation to the
Purchaser not to disclose to any person other than the Purchaser, or use other
than in the Purchaser's business, any confidential information or material
relating to the business of the Purchaser or its subsidiaries. The parties
acknowledge that there shall be no obligation on the part of such director to
disclose any such information or material to the Company, even if such
disclosure would be of interest or value to the Company.
(e) The Purchaser shall be entitled to designate, for each
annual meeting of stockholders, two directors to the Company's Board of
Directors in accordance with Section 3.7(a) ; provided, however, in the event
the Purchaser shall own less than 821,276 shares of the Company's Common Stock
(subject to appropriate adjustment in the event of a recapitalization, spin-off,
stock split, reverse stock split or other similar transaction (each, a
"Capitalization Event") and 7% of the Company's outstanding shares of Common
Stock (without giving effect to shares of Common Stock issued upon the exercise
of stock options after the date hereof) then one director designated by the
Purchaser shall resign and Purchaser shall thereafter be entitled to designate
only one director in accordance with the provisions of Section 3.7(a) hereof.
(f) Except as may be otherwise provided herein, the Company
shall not increase the number of directors to serve on the Board of Directors
without the approval of the Purchaser.
(g) As long as the Purchaser owns at least 15% of the
outstanding shares of Common Stock of the Company (without giving effect to
shares of Common Stock issued upon the exercise of stock options after the date
hereof ), or a designee of Purchaser, pursuant to subparagraph (e) above, is a
director of the Company, the Purchaser shall vote for the slate of nominees
recommended by the Board for election as directors at each annual meeting of
stockholders of the Company.
Section 3.8 Lockup Agreement. Without the prior written consent of the
Company, (i) for a period commencing on the date hereof and ending on the day
immediately prior to the first anniversary of the date hereof, the Purchaser
will not sell, transfer or otherwise dispose of any of the Shares or any other
shares of Common Stock of the Company owned by the Purchaser or any shares of
Common Stock of the Company owned by Purchaser and (ii) from the period
commencing on the first anniversary of the date hereof and ending on the day six
months from the first anniversary of the date hereof the Purchaser may dispose
of the Shares or any shares of Common Stock of the Company owned by Purchaser
only up to the limits set forth in Rule 144(e)(i) under the Securities Act;
provided, however, that the Purchaser agrees that it will not dispose of any
Shares or any other shares of Common Stock of the Company owned by the Purchaser
during any period in which directors of the Company are subject to a "blackout
period" or other prohibitions against the sale or disposition of Common Stock.
Section 3.9 Amendments. The Company shall not amend or waive any
provision of the Certificate or Bylaws in any way that would adversely affect
the dividend rights or voting rights of
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the holders of the Shares. However, the Company shall amend a certain Rights
Agreement dated as of June 5, 1997 between the Company and Norwest Bank
Minnesota, N.A as provided in Exhibit C attached hereto.
Section 3.10 Other Agreements. The Company shall not enter into any
agreement which would restrict or impair the right of the Company or any
subsidiary of the Company to perform its obligations under this Agreement or the
Certificate.
Section 3.11 Purchaser's Filing of Schedule 13D. The Purchaser shall
file a statement on Schedule 13D with the Commission in accordance with Section
13(d)(i) of the Exchange Act which shall report the Purchaser's beneficial
ownership of Common Stock of the Company as well as its intention to purchase
35% of the outstanding shares of Common Stock of the Company.
Section 3.12 Additional Purchases. Without the consent of the Board of
Directors of the Company, the Purchaser nor any corporation or entity controlled
by, controlling or under common control with the Purchaser (collectively, the
"Purchaser's Affiliates") shall not, directly or indirectly, acquire any shares
of Common Stock of the Company to the extent that the effect of such purchase is
that the Purchaser and the Purchaser's Affiliates would beneficially own in the
aggregate, the greater of (i) 35% of the outstanding shares of Common Stock of
the Company or (ii) 4,106,381 shares of the Company's Common Stock (subject to
appropriate adjustment in the event of a Capitalization Event).
ARTICLE IV
Indemnification
Section 4.1 General Indemnity. The Company agrees to indemnify and hold
harmless the Purchaser (and its directors, officers, affiliates, agents,
successors and assigns) from and against any and all losses, liabilities,
deficiencies, costs, damages and expenses (including, without limitation,
reasonable attorney's fees, charges and disbursements) incurred by the Purchaser
as a result or arising out of the negotiation, execution or performance of this
Agreement (including but not limited to those arising from any claims or actions
challenging the transaction, no matter how meritless the claim may be) or any
steps taken by the Company in connection therewith or any material inaccuracy in
or material breach of the representations, warranties or covenants made by the
Company herein. The Purchaser agrees to indemnify and hold harmless the Company
and its directors, officers, affiliates, agents, successors and assigns from and
against any and all losses, liabilities, deficiencies, costs, damages and
expenses (including, without limitation, reasonable attorneys fees, charges and
disbursements) incurred by the Company as result of any material inaccuracy in
or material breach of the representations, warranties or covenants made by the
Purchaser herein.
Section 4.2 Indemnification Procedure. Any party entitled to
indemnification under this Article IV (an "indemnified party") will give written
notice to the indemnifying party of any matters giving rise to a claim for
indemnification; provided, that the failure of any party entitled to
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indemnification hereunder to give notice as provided herein shall not relieve
the indemnifying party of its obligations under this Article IV except to the
extent that the indemnifying party is actually prejudiced by such failure to
give notice. In case any action, proceeding or claim is asserted against an
indemnified party in respect of which indemnification is sought hereunder, the
indemnifying party shall be entitled to participate in and, unless in the
reasonable judgment of the indemnified party a conflict of interest between it
and the indemnifying party may exist with respect of such action, proceeding or
claim, to assume the defense thereof with counsel reasonably satisfactory to the
indemnified party. In the event that the indemnifying party advises an
indemnified party that it will contest such a claim for indemnification
hereunder, or fails, within thirty (30) days of receipt of any indemnification
notice to notify, in writing, such person of its election to defend, settle or
compromise, at its sole cost and expense, any action, proceeding or claim (or
discontinues its defense at any time after it commences such defense), then the
indemnified party may, at its option, defend, settle or otherwise compromise or
pay such action or claim. In any event, unless and until the indemnifying party
elects in writing to assume and does so assume the defense of any such claim,
proceeding or action, the indemnified party's costs and expenses arising out of
the defense, settlement or compromise of any such action, claim or proceeding
shall be losses subject to indemnification hereunder. The indemnified party
shall cooperate fully with the indemnifying party in connection with any
negotiation or defense of any such action or claim by the indemnifying party and
shall furnish to the indemnifying party all information reasonably available to
the indemnified party which relates to such action or claim. The indemnifying
party shall keep the indemnified party fully apprised at all times as to the
status of the defense or any settlement negotiations with respect thereto. If
the indemnifying party elects to defend any such action or claim, then the
indemnified party shall be entitled to participate in such defense with counsel
of its choice. The indemnifying party shall not be liable for any settlement of
any action, claim or proceeding effected without its prior written consent.
Notwithstanding anything in this Article IV to the contrary, the indemnifying
party shall not, without the indemnified party's prior written consent, settle
or compromise any claim or consent to entry of any judgment in respect thereof
which imposes any future obligation on the indemnified party or which does not
include, as an unconditional term thereof, the giving by the claimant or the
plaintiff to the indemnified party of a release from all liability in respect of
such claim. The indemnification required by this Article IV for an action or
claim brought against the Purchaser by a third party shall be made by periodic
payments of the amount thereof during the course of investigation or defense, as
and when bills are received for expenses related to the legal defense or
investigation, so long as the indemnified party irrevocably agrees to refund
such moneys if it is ultimately determined by a court of competent jurisdiction
that such party was not entitled to indemnification. The indemnity agreements
contained herein shall be in addition to (a) any cause of action or similar
rights of the indemnified party against the indemnifying party or others, and
(b) any liabilities the indemnifying party may be subject pursuant to the law.
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ARTICLE V
Miscellaneous
Section 5.1 Fees and Expenses. The Company and the Purchaser shall each
pay all fees and expenses which it incurs related to the transactions
contemplated by this Agreement; provided, that, the Company is paying at the
Closing, attorneys fees and expenses incurred by the Purchaser not to exceed
$25,000 in connection with the preparation, negotiation, execution and delivery
of this Agreement and the transactions contemplated hereunder. The Company shall
pay all stamp or other similar taxes and duties levied in connection with
issuance of the Shares pursuant hereto.
Section 5.2 Specific Enforcement, Consent to Jurisdiction.
(a) The Company and the Purchaser acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent or cure breaches of the provisions of
this Agreement and to enforce specifically the terms and provisions hereof or
thereof, this being in addition to any other remedy to which any of them may be
entitled by law or equity.
(b) Each of the Company and the Purchaser (i) hereby
irrevocably submits to the jurisdiction of the United States District Court and
other courts of the United States sitting in the Southern District of New York
for the purposes of any suit, action or proceeding arising out of or relating to
this Agreement and (ii) hereby waives, and agrees not to assert in any such
suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of such court, that the suit, action or proceeding is brought in an
inconvenient forum or that the venue of the suit, action or proceeding is
improper. Each of the Company and the Purchaser consents to process being served
in any such suit, action or proceeding by mailing a copy thereof to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing in this Section shall affect or limit any right to serve
process in any other manner permitted by law.
Section 5.3 Entire Agreement; Amendment. This Agreement contains the
entire understanding of the parties with respect to the matters covered hereby
and, except as specifically set forth herein, neither the Company nor the
Purchaser makes any representations, warranty, covenant or undertaking with
respect to such matters. No provision of this Agreement may be waived or amended
other than by a written instrument signed by the party against whom enforcement
of any such amendment or waiver is sought.
Section 5.4 Notices. Any notice, demand, request, waiver or other
communication required or permitted to be given hereunder shall be in writing
and shall be effective (a) upon hand delivery by telex (with correct answer back
received), telecopy or facsimile at the address or number designated below (if
delivered on a business day during normal business hours where such notice is
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to be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be:
If to the Company: DSP Group, Inc.
0000 Xxxxx Xxxxxxxxx
Xxxxx Xxxxx, XX 00000
Attention: Xxxx Xxxxxx
Fax: 000- 000-0000
with copies to: Xxxxxxxx & Xxxxxxxx LLP
000 Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000-0000
Attention: Xxxxx Xxxx Xxxx
Telephone: 000- 000-0000
Fax: 000-000-0000
Xxxxxxxx & Xxxxxxxx LLP
1290 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxx
Telephone: 000-000-0000
Fax: 000-000-0000
If to the Purchaser: Magnum Technology Limited
c/o Rothschild Corporate Fiduciary Services
Ltd. (Guernsey)
X.X. Xxx 000
Xx. Xxxxx'x Xxxxx
Xx Xxxxxxx
Xx. Xxxxx Port, Guernsey
Channel Islands GY1 6AX
Attention: Xx. Xxxxxxxx Xxxx
with copies to: Xxxxxx Xxxxxx Flattau & Klimpl, LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Telephone Number: (000) 000-0000
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Fax: (000) 000-0000
Any party hereto may from time to time change its address for notices
by giving at least ten (10) days written notice of such changed address to the
other party hereto.
Section 5.5 Waivers. No waiver by either party of any default with
respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any other
provisions, condition or requirement hereof, nor shall any delay or omission of
any party to exercise any right hereunder in any manner impair the exercise of
any such right accruing to it thereafter.
Section 5.6 Headings. The article, section and subsection headings in
this Agreement are for convenience only and shall not constitute a part of this
Agreement for any other purpose and shall not be deemed to limit or affect any
of the provisions hereof.
Section 5.7 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their successors and assigns;
provided, however, that the parties hereto may not amend this Agreement or
assign any rights or obligations hereunder without the prior written consent of
the Company and the Purchaser. After the Closing, the assignment by a party to
this Agreement of any rights hereunder shall not affect the obligations of such
party under this Agreement.
Section 5.8 No Third Party Beneficiaries. This Agreement is intended
for the benefit of the parties hereto and their respective permitted successors
and assigns and is not for the benefit of, nor may any provision hereof be
enforced by, any other person.
Section 5.9 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York, without
giving effect to the choice of law provisions.
Section 5.10 Survival. Except as otherwise provided herein, the
representations, warranties and the agreements of the Company and the Purchaser
contained in Articles I, II, IV and V shall survive the execution and delivery
hereof, and the agreements and covenants set forth in Articles III of this
Agreement shall survive the execution and delivery hereof until the Purchaser no
longer owns any Shares.
Section 5.11 Counterparts. This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and the same
instrument and shall become effective when counterparts have been signed by each
party and delivered to the other parties hereto, it being understood that all
parties need not sign the same counterpart. In the event any signature is
delivered by facsimile transmission, the party using such means of delivery
shall cause four additional executed signature pages to be physically delivered
to the other parties within five days of the execution and delivery hereof.
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Section 5.12 Publicity. The Company agrees that it will not disclose,
and will not include in any public announcement, the name of the Purchaser,
unless and until such disclosure is required by law or applicable regulation,
and then only to the extent of such requirement. Any press release regarding
this Agreement shall be agreed to by the parties hereto.
Section 5.13 Severability. The provisions of this Agreement are
severable and, in the event that any court of competent jurisdiction shall
determine that any one or more of the provisions or part
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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of the provisions contained in this Agreement shall, for any reason, be held to
be invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not affect any other provision or part of a provision
of this Agreement shall be reformed and construed as if such invalid or illegal
or unenforceable provision, or part of such provision, had never been contained
herein, so that such provisions would be valid, legal and enforceable to the
maximum extent possible.
Section 5.14 Further Assurances. From and after the date of this
Agreement, upon the request of the Purchaser or the Company, each of the Company
and the Purchaser shall execute and deliver such instrument, documents and other
writings as may be reasonably necessary or desirable to confirm and carry out
and to effectuate fully the intent and purposes of this Agreement and the
Shares.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officer as of the date first above
written.
MAGNUM TECHNOLOGY LIMITED
By:
Name:
Title
DSP GROUP, INC.
By:
Name:
Title::
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EXHIBIT A to the
COMMON STOCK PURCHASE AGREEMENT
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DISCLOSURE SCHEDULES
RELATING TO THE COMMON STOCK
PURCHASE AGREEMENT, DATED AS OF FEBRUARY 2, 1999
AMONG THE COMPANY AND
THE PURCHASER NAMED HEREIN
ALL SECTION AND SUBSECTION NUMBERS AND LETTERS RELATE AND
COINCIDE TO SUCH NUMBERS AND LETTERS AS SET FORTH IN THE COMMON STOCK PURCHASE
AGREEMENT (THE "AGREEMENT"). ANY TERMS REQUIRING DEFINITION HEREIN ARE DEFINED
IN THE AGREEMENT.
ALL REPRESENTATIONS AND WARRANTIES SET FORTH IN THE
AGREEMENT ARE MODIFIED IN THEIR ENTIRETY BY THESE DISCLOSURE SCHEDULES. THE
DISCLOSURES CONTAINED IN THESE DISCLOSURE SCHEDULES SHALL BE READ IN THEIR
ENTIRETY, AND ALL THE DISCLOSURES SHALL BE READ TOGETHER.
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