ARCADA HOLDINGS INC.
January 17, 1996
EXHIBIT B
Irell & Xxxxxxx
1800 Avenue of the Stars
Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Dear Sirs:
In connection with the opinion to be delivered by you pursuant to Section
7.3(b) of the Agreement and Plan of Reorganization dated December 21, 1995 (the
"Agreement"), by and among Seagate Technology, Inc., a Delaware corporation
("Seagate"), Arcada Holdings, Inc., a Delaware corporation ("Arcada"), and Xxxxx
X. Xxxxxx, an individual relating to the proposed merger (the "Merger") of
Merger Sub with and into Arcada, and recognizing that you will rely on this
letter in rendering said opinion, the undersigned, a duly authorized officer of
Arcada and acting as such, hereby certifies that to the best knowledge of the
undersigned after reasonable inquiry, the facts relating to the Merger as
described in the Agreement and the Proxy Statement/Prospectus, expected to be
dated January 19, 1996, including attachments thereto, are true, correct and
complete in all material respects and hereby certifies, to the best knowledge of
the undersigned after reasonable inquiry, to the following as of the date
hereof. Insofar as such certification pertains to any person (including Seagate,
Xxxxxx Peripherals, Inc., a Delaware corporation ("Xxxxxx") and Merger Sub)
other than Arcada and any of its subsidiaries, the voting stock of which Arcada
owns at least eighty percent (80%) (an "Affiliate"), such certification is only
as to the knowledge of the undersigned without specific inquiry. We understand
that you will reaffirm your opinion at the time of the Merger and that, in
connection with such reaffirmation, you will require that we reaffirm this
certification at that time.
Capitalized terms in this letter shall have the same meanings ascribed to
them in the Agreement unless otherwise specified herein.
A. REPRESENTATIONS OF ARCADA
1. The Merger will be consummated in accordance with the terms of the
Agreement and none of the material terms or conditions therein have been waived
or modified and Arcada has no plan or intention to waive or modify any such
material terms or conditions.
2. The ratio for the exchange of shares of common stock of Arcada (the
"Arcada Common Stock") for voting common stock of Seagate ("Seagate Common
Stock") in the Merger was negotiated through arm's length bargaining.
3. It is the belief of management of Arcada that the fair market value of
the Seagate Common Stock to be received by Arcada stockholders is, in the
aggregate, approximately equal to the aggregate fair market value of the Arcada
Common Stock surrendered in exchange therefor.
4. There is no present plan or intention on the part of the stockholders of
Arcada other than Xxxxxx who own one percent (1%) or more of Arcada Common Stock
(on an as-converted basis), or, to the knowledge of Arcada any plan or intention
on the part of Arcada's stockholders other than Xxxxxx (a "Plan"), to engage in
a sale, exchange, transfer, reduction of risk of ownership or any other direct
or indirect disposition (a "Sale") of (i) shares of Seagate Common Stock to be
issued to them in the Merger, which shares have an aggregate fair market value,
as of the period ending at the effective time of the Merger (the "Effective
Time"), in excess of fifty percent (50%) of the aggregate fair market
Irell & Xxxxxxx
January 17, 1996
Page 2
value, immediately prior to the Merger, of the outstanding shares of Arcada
Common Stock (assuming conversion of all outstanding convertible preferred stock
of Arcada) held by shareholders other than Xxxxxx immediately prior to the
Merger ("Outstanding Arcada Common Stock") (including shares of Arcada Common
Stock issued after the date hereof and prior to the Effective Time pursuant to
exercise of options to acquire Arcada Common Stock issued to present or former
employees or directors of Arcada in the ordinary course of business (the "Arcada
Options")), or (ii) more than fifty percent (50%) of the shares of Seagate
Common Stock received by such stockholders in the Merger. For purposes of the
foregoing, a Sale of Seagate Common Stock shall be considered to have occurred
pursuant to a Plan if such Sale occurs in a transaction that is in contemplation
of or related to the Merger (a "Related Transaction"). In addition, shares of
Arcada Common Stock (or the portion thereof) (i) exchanged for cash in lieu of
fractional shares of Seagate Common Stock or (ii) with respect to which a Sale
occurred in a Related Transaction prior to the Merger shall be considered to
have been Outstanding Arcada Common Stock that was exchanged for Seagate Common
Stock in the Merger and then disposed of pursuant to a Plan.
5. Arcada has no present plan or intention to issue additional shares of
its stock that would result in Xxxxxx losing control of Arcada within the
meaning of Section 368(c)(1) of the Internal Revenue Code, as amended (the
"Code"), other than pursuant to options issued to employees of Arcada with an
exercise price at or near the fair market value of the underlying stock of
Arcada at the time the options are issued.
6. To the knowledge of Arcada, neither Xxxxxx nor Seagate has a present
plan or intention: to liquidate Arcada; to merge Arcada into another corporation
(other than the possible merger of Arcada into a direct, wholly owned subsidiary
of Seagate following a merger of Xxxxxx into Seagate); to cause Arcada to sell
or otherwise dispose of any of its assets, except for dispositions made in the
ordinary course of business; or to sell or otherwise dispose of any of the
Arcada Common Stock acquired in the Merger or otherwise, except for transfers
described in Code Section 368(a)(2)(C) and the possible transfer of Arcada
Common Stock to Seagate pursuant to a merger of Xxxxxx into Seagate which would
qualify under Code Section 332.
7. Arcada has no plan or intention to acquire after the Merger any of the
Seagate Common Stock to be issued in the Merger.
8. Seagate, Xxxxxx, Merger Sub, Arcada and the stockholders of Arcada will
each pay separately its or their own expenses incurred in connection with the
Merger.
9. Xxxxxx will acquire Arcada Common Stock solely in exchange for Seagate
Common Stock and immediately after the acquisition, Xxxxxx will have control of
Arcada, as defined in Section 368(c) of the Code. Furthermore, no liabilities of
Arcada or Arcada shareholder's will be assumed by Xxxxxx, nor will any of the
Arcada Common Stock be subject to any liabilities.
10. At the Effective Time, Arcada will not have outstanding any warrants,
options, convertible securities, or any other type of right pursuant to which
any person could acquire stock in Arcada that, if exercised or converted, would
affect Xxxxxx'x acquisition or retention of control of Arcada as defined in Code
Section 368(c)(1).
11. Arcada is not an "investment company" as defined in Section
368(a)(2)(F)(iii) and (iv) of the Code, nor will Arcada be an investment company
at the Effective Time.
12. Arcada will pay its dissenting shareholders the value of their stock out
of its own funds. No funds will be supplied for that purpose, directly or
indirectly, by Xxxxxx, Seagate or Merger Sub nor xxxx Xxxxxx, Seagate or Merger
Sub directly or indirectly reimburse Arcada for any payments to dissenters.
13. The fair market value of the assets of Arcada does and at the Effective
Time will exceed the aggregate liabilities of Arcada plus the amount of any
other liabilities to which such assets are subject that are not included in the
aggregate.
Irell & Xxxxxxx
January 17, 1996
Page 3
14. No fractional shares of Seagate Common Stock will be issued in the
Merger. In lieu thereof, cash will be paid to Arcada stockholders otherwise
entitled to a fractional share of Seagate Common Stock. The payment of cash in
lieu of fractional shares of Seagate Common Stock is made solely for the purpose
of avoiding the expense and inconvenience of issuing and transferring fractional
shares and is not separately bargained for consideration. The total amount of
cash that any holder of Seagate Common Stock will receive in lieu of a
fractional share interest will not equal or exceed the fair market value (as
determined in accordance with the Agreement) of one full share of Seagate Common
Stock on the last trading day prior to the Effective Time, and the total cash
consideration that will be paid in the transaction to Arcada stockholders in
lieu of issuing fractional shares of Seagate Common Stock will not exceed one
percent (1%) of the total consideration that will be issued in the transaction
to the Arcada stockholders in exchange for their shares of Arcada Common Stock.
15. Any compensation paid to stockholders of Arcada who enter (or who have
entered) into an employment, consulting or non-competition contract, if any,
with Xxxxxx, Seagate, Merger Sub (or any member of a Controlled Group in which
Xxxxxx, Seagate or Merger Sub is also a member) at any time or with Arcada after
the Effective Time will be for services actually rendered or to be rendered (or
compliance with restrictions on competition) and will be commensurate with
amounts paid to third parties bargaining at arm's length for similar services
(or compliance). None of such compensation represents consideration for the
exchange of shares of Arcada Common Stock for Seagate Common Stock. None of the
shares of Seagate Common Stock received by Arcada stockholders in the Merger is
separate consideration for or otherwise allocable to anything other than Arcada
Common Stock, such as for services or any covenant not to compete.
16. Other than in the ordinary course of its business, Arcada has made and
will make no transfer of any of its assets in contemplation of the Merger or
during the period ending at the Effective Time and beginning with the
commencement of negotiations (whether informal or formal) with Xxxxxx, Seagate
or Merger Sub regarding the Merger (or any other form of disposition of the
assets or stock of Arcada other than in the ordinary course of business). For
purposes of this paragraph, a transfer of assets includes any distribution of
assets with respect to stock or in redemption of stock other than the
distribution of regular dividends or the repurchase of unvested shares of stock
held by employees.
17. All shares of Arcada Common Stock owned directly or indirectly by Arcada
will be canceled at the Effective Time, and no consideration will be delivered
in exchange therefor. Such cancellation is solely for the purpose of avoiding
the expense and inconvenience of causing Seagate to issue shares to Arcada.
18. Neither Seagate, nor any Affiliate of Seagate, excluding Xxxxxx and any
of its subsidiaries, owns, nor has owned within the preceding five years,
directly or indirectly, any Arcada Common Stock.
19. None of the shares of Seagate Common Stock received by any party
pursuant to the Merger is separate consideration for or allocable to the Arcada
Options or the Arcada Xxxxxx Options which remain outstanding after the
Effective Time.
20. Arcada is authorized to make all the representations made by it and set
forth herein.
B. LIMITATIONS ON OPINION: RELIANCE
1. Arcada has read and understands all the limitations and qualifications
to which your opinion is subject and the items upon which you have relied.
2. Arcada recognizes that your opinion will be based, in part, on the
representations herein and that such opinion will not be effective if any of
such representations is not accurate and complete in all material respects at
all relevant times.
Irell & Xxxxxxx
January 17, 1996
Page 4
This letter is being furnished to you solely for your benefit and for use in
rendering your opinion and is not to be used, circulated, quoted or otherwise
referred to for any purpose (other than inclusion in your opinion) without the
express written consent of Arcada. All of the foregoing certifications are true
to the best knowledge of the management of Arcada.
Very truly yours,
ARCADA HOLDINGS, INC.
By:___________________________________
Xxxxx X. Xxxxxx
Authorized Signatory
