AGREEMENT TO CLOSE AND
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AMENDMENT TO AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
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This Agreement to Close and Amendment to Agreement and Plan of Merger and
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Reorganization (the "AGREEMENT") is made as of August 1, 1997 by and among
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Silicon Graphics, Inc., a Delaware corporation ("PARENT"), ParaGraph Acquisition
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Corporation, a Delaware corporation and a wholly owned subsidiary of Parent
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("MERGER SUB"), ParaGraph International, Inc., a California corporation (the
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"COMPANY"), and the holders of capital stock of the Company listed on Exhibit A
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hereto.
RECITALS
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WHEREAS, Parent, Merger Sub and the Company entered into that certain
Agreement and Plan of Merger, dated as of May 14, 1997, as amended by that
certain First Amendment to Agreement and Plan of Merger and Reorganization,
dated as of July 15, 1997 (as amended, the "MERGER AGREEMENT"), pursuant to
which the parties agreed that Merger Sub shall be merged with and into the
Company and that the Company shall continue as the surviving corporation, all on
the terms and conditions more particularly set forth therein;
WHEREAS, the parties wish to set forth the terms and conditions upon which
they shall cause the Merger to be consummated and all other transactions set
forth in, or contemplated by, the Merger Agreement to be completed.
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
I. Capitalized Terms. Capitalized terms used herein without definition
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shall have the meanings ascribed to such terms in the Merger Agreement.
I. Definitions. The following terms, when used in this Agreement, shall
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have the respective meanings specified below.
A. "Export Control License Issuance" shall mean the issuance by the
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Bureau of Export Administration of the United States Department of Commerce of
export control licenses to Parent for those individuals listed on Exhibit B
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attached hereto.
A. "Moscow Subsidiary Establishment" shall mean the incorporation in
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Russia by Parent or a subsidiary of Parent of a wholly owned subsidiary that is
legally capable of employing and paying compensation for such employment to the
current employees of "JV ParaGraph" Ltd. X.X.Xx., a wholly owned subsidiary of
the Company located at Russian Federation, 117571 Xxxxxx, Xxxxxxxx Xxxxxxxxxxx,
00 (the "PARAGRAPH MOSCOW SUBSIDIARY").
I. Effective Time. Upon the satisfaction of the conditions to
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obligations of (a) Parent and Merger Sub under Section 6 hereof and (b) the
Company under Section 7 hereof and upon the earlier of (a) September 30, 1997 or
(b) the occurrence of both of the Export Control License Issuance and the Moscow
Subsidiary Establishment, the parties shall cause the Merger to be consummated
pursuant to the procedures set forth in Section 2.02 of the Merger Agreement.
The parties agree that the date set forth in Section 8.01(c) of the Merger
Agreement is hereby deleted and replaced with September 30, 1997. The parties
further agree that the conditions to the obligations of the parties set forth in
Sections 6 and 7 hereof shall be the only conditions to the consummation of the
transactions contemplated by the Merger Agreement.
I. Exchange Ratio. The parties agree that the Exchange Ratio shall be
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equal to the quotient of the Per Share Purchase Price divided by $15.9313.
I. Shelf Registration and New York Stock Exchange Listing.
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A. Filing of Registration Statement. As promptly as practicable after
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the date hereof, and in any event no later than August 11, 1997, Parent shall
file with the SEC a shelf registration statement for the purpose of permitting
the resale of the shares of Parent Common Stock received pursuant hereto by the
holders of Company Securities, and shall use best efforts to have such
registration statement declared effective by the SEC as promptly as practicable
after the Effective Time.
A. No Other Modification. Except as modified by Section 5(a) above,
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Section 5.10 of the Merger Agreement, setting forth provisions relating to
Parent's obligations with regard to the shelf registration, shall remain in full
force and effect.
A. New York Stock Exchange Listing. As promptly as practicable after the
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date hereof, and in any event no later than August 11, 1997, Parent shall file
with the NYSE an application for listing the shares of Parent Common Stock
issuable to the holders of Company Securities pursuant to the Merger Agreement,
and shall use best efforts to have such shares authorized for listing on the
NYSE, upon official notice of issuance.
I. Conditions to Obligations of Parent and Merger Sub. The obligations
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of Parent and Merger Sub to consummate the transactions contemplated by the
Merger Agreement shall be subject to the fulfillment, at or prior to the
Effective Time, of the following conditions:
A. Representations, Warranties and Covenants. (i) The representations
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and warranties of the Company and the Principal Shareholders contained in the
Merger Agreement shall have been true, complete and correct when made and as of
the date hereof, other than such representations and warranties as are made as
of another date and except in such case where the failure to be so true,
complete and correct would
not have, or could not reasonably be expected to have, a Material Adverse Effect
on the Business, the Company or any Subsidiary.
(ii) The representations and warranties of the Company and the
Principal Shareholders contained in the Merger Agreement shall be true, complete
and correct in all material respects as of the Effective Time, with the same
force and effect as if made as of the Effective Time, other than such
representations and warranties as are made as of another date and except in such
case where the failure to be so true, complete and correct:
(A) would not have, or could not reasonably be expected to
have, a Material Adverse Effect on the Business, the Company or
any Subsidiary;
(B) was proximately caused by any action taken by or at the
direction of, or expressly consented to, either orally or in
writing, by Parent or Merger Sub;
(C) has occurred as a result of (1) any Action brought by any
third party after the date hereof (other than any such Action
described in Section 6.2(b) hereof) or (2) any breach by any
third party after the date hereof; or
(D) with respect to representations and warranties qualified by
the knowledge of the Company, any Subsidiary or the Principal
Shareholders, has occurred solely as a result of knowledge
acquired by the Company, any Subsidiary or any Principal
Shareholder, as applicable, after the date hereof.
(iii) The covenants and agreements contained in the Merger Agreement
to be complied with by the Company at or prior to the Effective Time shall have
been complied with in all material respects, except where the failure to so
comply occurs after the date hereof and:
(A) was not a willful breach by the Company and would not have,
or could not reasonably be expected to have, a Material Adverse
Effect on the Business, the Company or any Subsidiary; or
(B) was proximately caused by any action taken by or at the
direction of, or expressly consented to, either orally or in
writing, by Parent or Merger Sub; or
(C) has occurred as a result of (1) any Action brought by any
third party after the date hereof (other than any such Action
described in
Section 6.2(b) hereof) or (2) any breach by any
third party after the date hereof.
A. No Proceeding or Litigation. No legal action, suit, arbitration or
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administrative proceeding shall have been commenced or threatened in writing by
any national, federal, state or other government (excluding municipal and local
authorities), governmental, regulatory or administrative authority, agency or
commission or any court, tribunal, or judicial or arbitral body against the
Company, Parent or Merger Sub, seeking to restrain or materially and adversely
alter the transactions contemplated by the Merger Agreement which, in the
reasonable, good faith determination of the Parent or Merger Sub, could
reasonably be expected to render it impossible or unlawful to consummate such
transactions or which could reasonably be expected to have a Material Adverse
Effect; provided, however, that the provisions of this Section 6(b) shall not
apply (i) if Parent or Merger Sub shall have solicited or encouraged, directly
or indirectly, any such legal action, suit, arbitration or administrative
proceeding or (ii) such legal action, suit, arbitration or administrative
proceeding is related to the Export Control Licenses or the Moscow Subsidiary
Establishment.
A. Legal Opinion. Parent and Merger Sub shall have received from Xxxxxx
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& Xxxxxxx, counsel to the Company, a legal opinion letter, addressed to Parent
and Merger Sub and dated the date of the Effective Time, in form and substance
reasonably satisfactory to Parent and the Company.
A. Officers' Certificate. Parent and Merger Sub shall have received from
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the chief executive officer and chief financial officer of the Company a
certificate dated the date of the Effective Time, in the form of the officers'
certificate attached hereto as Exhibit C;
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A. Secretary's Certificate. Parent and Merger Sub shall have received
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from the secretary of the Company a certificate dated the date of the Effective
Time, in the form of the secretary's certificate attached hereto as Exhibit D .
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A. Company Actions. The Company shall have taken all such actions
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required of the Company by the organizational documents of the Company or by Law
to effect the Merger.
A. Exercise of Dissenters' Rights. The holders of not more than five
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percent of the Fully Diluted Shares shall have demanded pursuant to Section 1301
of the General Corporation Law of the State of California that the Company
purchase the shares of Company Capital Stock held thereby at fair market value
A. Delivery of Documents. Parent shall have received the completed and
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executed originals of all shareholder representation letters and Ancillary
Documents, telefacsimile copies of the signature pages of which were delivered
to the Company to Parent on the date hereof.
A. Shareholder Approvals. The shareholder consents received by the
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Company as of the date hereof (copies of which were delivered by the Company to
Parent on the date hereof) shall remain in full force and effect, no shareholder
of the Company providing any such consent shall have revoked the same, and all
such shareholders shall have retained all voting powers with respect to such
shares.
A. Trustee Representation Letter. Parent shall have received a letter of
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representations from the Trustee substantially in the form attached hereto as
Exhibit E.
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I. Conditions to Obligations of the Company. The obligations of the
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Company to consummate the transactions contemplated by the Merger Agreement
shall be subject to the fulfillment, at or prior to the Effective Time, of each
of the following conditions, any and all of which the Company may waive at its
sole discretion:
A. Representations, Warranties and Covenants. The representations and
-----------------------------------------
warranties of Parent and Merger Sub contained in the Merger Agreement shall have
been true, complete and correct when made and shall be true, compete and correct
in all material respects as of the Effective Time, other than such
representations and warranties as are made as of another date and except in such
cases where the failure to be so true, complete and correct would not have, or
could not reasonably be expected to have, a Material Adverse Effect on Parent or
Merger Sub. The covenants and agreements contained in this Agreement to be
complied with by Parent and Merger Sub at or prior to the Effective Time shall
have been complied with in all material respects.
A. No Proceeding or Litigation. No Action shall have been commenced by
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or before any Governmental Authority against the Company, Parent or Merger Sub,
seeking to restrain or materially and adversely alter the transactions
contemplated by the Merger Agreement which, in the reasonable, good faith
determination of the Company, could reasonably be expected to render it
impossible or unlawful to consummate such transactions; provided, however, that
the provisions of this Section 7(b) shall not apply if the Company shall have
solicited or encouraged, directly or indirectly, any such Action;
A. Legal Opinion. The Company shall have received from Shearman &
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Sterling, counsel to Parent, a legal opinion letter, addressed to the Company
and dated the date of the Effective Time, in form and substance reasonably
satisfactory to Parent and the Company.
A. Officers' Certificate. The Company shall have received from
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an authorized officer of each of Parent and Merger Sub a certificate dated the
date of the Effective Time, in the form of the officers' certificates delivered
on the date hereof and attached hereto as Exhibit F
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A. Secretary's Certificate. The Company shall have received from the
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secretary or the assistant secretary of each of Parent and Merger Sub a
certificate dated the closing date, in the form of the secretary's certificates
delivered on the date hereof and attached hereto as Exhibit G.
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A. New York Stock Exchange Listing. The shares of Parent Common Stock
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issuable to the holders of Company Securities pursuant to the Merger Agreement
shall have been authorized for listing on the NYSE, upon official notice of
issuance.
I. Amendments to the Merger Agreement. (a) The parties agree that the
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stock register referred to in Section 3.02(b) of the Merger Agreement shall be
deemed to be the stock register attached hereto as Exhibit H.
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(b) The Company Disclosure Schedule is hereby amended by (i)
deleting the Schedule "Section 3.02(c) -- Vesting Schedules" and replacing the
same with a new Schedule "Section 3.02(c) -- Vesting Schedules," which is
attached to this Agreement as Exhibit I, and (ii) adding the following after
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Section 3.17(a)(ii):
"Section 3.17(a)(iii). None."
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(c) The indemnification obligations of the Company and the Principal
Shareholders set forth in Article VII of the Merger Agreement shall not apply to
Losses resulting from, arising out of or relating to:
(i) any action or event occurring after the date hereof and
prior to the Effective Time which causes or results in the failure of
a representation or warranty made by the Company or any Principal
Shareholder contained in the Acquisition Documents to be true,
complete and correct; provided, however, that the provisions of this
subsection (i) shall not apply if such action or event was
proximately caused by the willful action (other than any action taken
by or at the direction of, or expressly consented to, either orally
or in writing, by Parent or Merger Sub) or intentional
misrepresentation of the Company or Principal Shareholders.
(ii) any breach (other than willful breaches by the Company or
the Principal Shareholders) arising after the date hereof of any
covenant or agreement by the Company contained in the Acquisition
Documents; or
(iii) Liabilities of the Company or any Subsidiary not
reflected on the Audited Balance Sheet, whether arising before or
after the Effective Time,
arising from or relating to (A) the ownership after the date hereof
or actions or inactions of the Company or any Subsidiary after the
date hereof or (B) the conduct of the respective businesses of the
Company or any Subsidiary from the date hereof until the Effective
Time, except to the extent that the manner of such ownership, such
actions or inactions or such conduct of business is a willful breach
by the Company or the Principal Shareholders of the covenants and
agreements of the Company contained in the Acquisition Documents.
I. Letter of Transmittal and Dissenters' Rights Notice. Not later than
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10 business days after the date of this Agreement, Parent shall cause to be
delivered or mailed (a) the letter of transmittal and instructions referenced in
Section 2.08(c) of the Merger Agreement to the recipients referenced in such
section and (b) the documents referenced in Section 1301(a) of the California
Corporations Code.
10. Assignment of Intellectual Property. Prior to the Effective Time, the
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Company and Principal Shareholders shall (a) cause all Intellectual Property
owned by or registered in the name of Soviet-American Joint Venture ParaGraph,
Soviet-American JV ParaGraph, Joint Venture ParaGraph, JV ParaGraph and/or such
similar entities to be assigned to, and registered with the applicable
Governmental Authorities in Russia in the name of, "JV ParaGraph Ltd. X.X.Xx.",
which assignment shall be in form and substance reasonably acceptable to Parent,
and (b) deliver to Parent copies of all documents and instruments effecting the
same.
11. No Further Modifications. Except as expressly set forth herein, the
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terms and provisions of the Merger Agreement remain unmodified and in full force
and effect.
12. Miscellaneous.
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A. Severability. If any term or other provision of this Agreement shall
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be determined by any court of competent jurisdiction to be invalid, illegal or
unenforceable in whole or in part by reason of any applicable Law or public
policy and such determination shall become final and nonappealable, all other
terms and provisions of this Agreement shall nevertheless remain in full force
and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner in order that the
transactions contemplated hereby are consummated as originally contemplated too
the greatest extent possible.
A. Governing Law. In all respects, including all matters of validity,
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construction, effect, performance and remedies, this Agreement and the
obligations of each party arising hereunder shall be governed by, and construed
and enforced in accordance with, the laws of the State of California applicable
to contracts executed in and to be performed entirely within such State, without
regard to the principles thereof regarding conflict of laws, and any applicable
laws of the United States of America.
B. Counterparts. This Agreement may be executed in one or more
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counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
In witness whereof, the parties hereto have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
SILICON GRAPHICS, INC.
Signature:
Name:
Title:
PARAGRAPH ACQUISITION CORPORATION
Signature:
Name:
Title:
PARAGRAPH INTERNATIONAL, INC.
Signature:
Name:
Title:
Xxxxxxx Xxxxxx
Xxxx Xxxx
Xxxxxx Xxxxxxxx
Xxxxxxx Xxxxxxx
EXHIBIT A
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COMPANY SHAREHOLDERS
Xxxxxxx Xxxxxx
Xxxx Xxxx
Xxxxxx Xxxxxxxx
Xxxxxxx Xxxxxxx
EXHIBIT B
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EXPORT CONTROL LICENSE INDIVIDUALS
EXHIBIT C
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FORM OF OFFICERS' CERTIFICATES
[COMPANY]
EXHIBIT D
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FORM OF SECRETARY'S CERTIFICATE
[COMPANY]
EXHIBIT E
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FORM OF TRUSTEE REPRESENTATION LETTER
EXHIBIT F
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FORM OF OFFICERS' CERTIFICATE
[PARENT/MERGER SUB]
EXHIBIT G
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FORM OF SECRETARY'S CERTIFICATE
[PARENT/MERGER SUB]
EXHIBIT H
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STOCK REGISTER
EXHIBIT I
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SCHEDULE 3.02(C) TO THE COMPANY DISCLOSURE SCHEDULE
