<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 13D
Under the Securities Exchange Act of 1934
SIPEX Corporation
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock
- --------------------------------------------------------------------------------
(Title of Class of Securities)
829909100
- --------------------------------------------------------------------------------
(CUSIP Number)
Manuel Del Arroz
237 Whitney Place
Fremont, CA 94539
(510) 656-2900
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
October 21, 1999
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(b)(3) or (4), check the following box [_].
Check the following box if a fee is being paid with the statement [_]. (A
fee is not required only if the reporting person: (1) has a previous statement
on file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
(Continued on following pages)
(Page 1)
1
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- ----------------------------------- -----------------------------------
CUSIP NO. 829909100 13D Page 2
- ----------------------------------- -----------------------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSONS
1 S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Manuel Del Arroz
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
2 (a) [_]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS (See Instructions)
4 PF
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED
5 PURSUANT TO ITEMS 2(d) OR 2(e) -
[_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION - U.S.
6
- ------------------------------------------------------------------------------
SOLE VOTING POWER - 3,156,521
7
NUMBER OF
SHARES -----------------------------------------------------------
SHARED VOTING POWER - 0
BENEFICIALLY 8
OWNED BY
-----------------------------------------------------------
SOLE DISPOSITIVE POWER - 3,156,521
9
REPORTING
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER - 0
WITH 10
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON - 3,156,521
11
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES
12
[_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11 - 14.4%
13
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON - IN
14
- ------------------------------------------------------------------------------
2
<PAGE>
Item 1: Security and Issuer.
- ------ -------------------
Class of Securities: Common Stock
Issuer: SIPEX Corporation ("Issuer")
Principal Address: 22 Linnell Circle
Billerica, MA 01821
Telephone: (978) 671-1900
Item 2: Identity and Background.
- ------ -----------------------
(a) - (c) The undersigned, Manuel Del Arroz, hereby files this Schedule 13D
Statement as an individual. The principal business and office address for the
undersigned is 237 Whitney Place, Fremont, CA 94539. The undersigned is employed
as the Senior Vice President of Business Development of the Issuer.
(d) - (e) Not applicable.
(f) The undersigned is a citizen of the United States.
Item 3: Source and Amount of Funds or Other Consideration.
- ------ -------------------------------------------------
The undersigned received the Common Stock of the Issuer upon
conversion of shares of Common Stock of Calogic through a reorganization. See
Item 4.
Item 4: Source and Amount of Funds or Other Consideration.
- ------ -------------------------------------------------
On October 21, 1999, SIPEX Corporation (the "Issuer") acquired Calogic
through a reorganization. In connection with the reorganization, the Issuer
issued 9.565 shares of its Common Stock for each outstanding share of Common
Stock of Calogic. The acquisition of the securities of the Issuer was made in
connection with the reorganization.
Item 5: Purpose of Transaction.
- ------ ----------------------
(a) The undersigned is the beneficial owner of 3,156,521 shares of Common
Stock or approximately 14.4% of the Common Stock outstanding.
(b) The undersigned has sole power to direct the vote and/or disposition
of the shares held by the undersigned.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
3
<PAGE>
Item 6: Contracts, Arrangements, Understandings or Relationships with Respect
- ------ ---------------------------------------------------------------------
to Securities of the Issuer.
- ---------------------------
Except as set forth below, to the best knowledge of the undersigned,
there are no contracts, understandings, arrangements, or relationships (legal or
otherwise) giving the persons named in Item 2 and between such persons and any
other person with respect to the securities of Issuer, including, but not
limited to, transfer or voting of any of the Issuer's securities, finder's fees,
joint ventures, loan or option agreement, puts or calls, guarantees of profits,
divisions of profits or loss, or the giving or withholding of proxies.
The undersigned is a party to an Escrow Agreement by and among SIPEX
Corporation, a Massachusetts corporation, Calogic, a California corporation,
certain security holders of Calogic and State Street Bank and Trust Company,
dated as of November 23, 1999 pursuant to which 10% of the undersigned's shares
were held in escrow to secure certain obligations under the reorganization
agreement.
The undersigned is a party to an Employment Agreement by and between
SIPEX Corporation, a Massachusetts corporation, and the undersigned, dated as of
November 23, 1999 pursuant to which the undersigned was granted a non-qualified
option to purchase 500,000 shares of Common Stock of SIPEX Corporation.
The undersigned intends to sell some portion of shares in an orderly
manner through regular sales on the market or hedging transactions over the
foreseeable future through securities brokers, such as Merrill Lynch.
Item 7: Material to be Filed as Exhibits.
- ------ --------------------------------
7.1 Agreement and Plan of Reorganization by and among SIPEX Corporation, a
Massachusetts corporation, CAT Acquisition Corporation I, a Delaware
corporation and a wholly owned subsidiary of SIPEX Corporation,
Calogic, a California corporation and certain shareholders of Calogic,
dated October 21, 1999.
7.2 Amendment No. 1 to Agreement and Plan of Reorganization by and among
SIPEX Corporation, a Massachusetts corporation, CAT Acquisition
Corporation I, a Delaware corporation and a wholly owned subsidiary of
SIPEX Corporation, Calogic, a California corporation and certain
shareholders of Calogic, dated November 23, 1999.
7.3 Agreement of Merger by and between CAT Acquisition Corporation I, a
Delaware corporation, and Calogic, a California corporation, dated as
of November 23, 1999.
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: March 14, 2000
By: /s/ Manuel Del Arroz
----------------------------
Manuel Del Arroz
4
<PAGE>
EXHIBIT 7.1
SIPEX CORPORATION
CAT ACQUISITION CORPORATION I
CALOGIC
AGREEMENT AND PLAN OF REORGANIZATION
Dated as of October 21, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I. THE MERGER.......................................... 1
1.1 The Merger................................................ 1
1.2 Effects of the Merger..................................... 1
1.3 Closing................................................... 2
1.4 Approval by the Stockholders of Calogic................... 2
1.5 Approval by Merger Sub and Parent......................... 2
ARTICLE II. CONVERSION AND EXCHANGE OF SHARES; DISSENTING SHARES 2
2.1 Conversion of Shares of Calogic Common Stock.............. 2
2.2 Escrow Shares............................................. 3
2.3 Dissenting Shares......................................... 4
2.4 Delivery of Evidence of Ownership......................... 4
2.5 No Further Ownership Rights in Calogic Common Stock....... 4
2.6 No Fractional Shares...................................... 4
2.7 Assumption of Stock Options............................... 5
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF CALOGIC AND THE
STOCKHOLDERS........................................ 5
3.1 Organization, Standing and Power; Subsidiaries............ 5
3.2 Capital Structure......................................... 6
3.3 Authority................................................. 7
3.4 Compliance with Laws and Other Instruments;
Non-Contravention......................................... 7
3.5 Technology and Intellectual Property Rights............... 8
3.6 Financial Statements; Business Information................ 10
3.7 Taxes..................................................... 11
3.8 Absence of Certain Changes and Events..................... 13
3.9 Leases in Effect.......................................... 14
3.10 Personal Property; Real Estate............................ 15
3.11 Certain Transactions...................................... 15
3.12 Litigation and Other Proceedings.......................... 15
3.13 No Defaults............................................... 16
3.14 Major Contracts........................................... 16
3.15 Material Reductions....................................... 17
3.16 Insurance and Banking Facilities.......................... 17
3.17 Employees................................................. 17
3.18 Employee Benefit Plans.................................... 18
3.19 Certain Agreements........................................ 19
3.20 Power of Attorney......................................... 19
3.21 Brokers and Finders....................................... 19
3.22 Certain Payments.......................................... 19
3.23 Environmental Matters..................................... 19
3.24 Enforceability of Contracts, etc.......................... 20
3.25 Accounting Matters........................................ 20
3.26 Year 2000................................................. 20
3.27 Disclosure................................................ 21
3.29 Reliance.................................................. 21
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS.. 21
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER
SUB................................................. 22
</TABLE>
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<TABLE>
<S> <C>
5.1 Organization and Qualification............................ 22
5.2 Capitalization............................................ 22
5.3 Authority Relative to this Agreement...................... 22
5.4 Non-Contravention......................................... 23
5.5 Reports and Financial Statements.......................... 23
5.6 Validity of Parent Merger Shares.......................... 24
5.7 Consents and Approvals of Governmental Authorities........ 24
5.8 Absence of Certain Changes or Events...................... 24
5.9 Investment Matters........................................ 24
5.10 Disclosure................................................ 24
5.11 Reliance.................................................. 24
5.12 Accounting Matters........................................ 25
5.13 WARN Act.................................................. 25
5.14 Certain Tax Matters....................................... 25
- -------------------------
ARTICLE VI. COVENANTS OF CALOGIC................................ 25
6.1 Conduct of Business in Ordinary Course.................... 25
6.2 Dividends, Issuance of, or Changes in Securities.......... 26
6.3 Governing Documents....................................... 26
6.4 No Acquisitions........................................... 27
6.5 No Dispositions........................................... 27
6.6 Indebtedness.............................................. 27
6.7 Compensation.............................................. 27
6.8 Claims.................................................... 27
6.9 Access to Properties and Records.......................... 27
6.10 Breach of Representations and Warranties.................. 27
6.11 Consents.................................................. 28
6.12 Tax Returns............................................... 28
6.13 Stockholder Approval...................................... 28
6.14 Preparation of Disclosure and Solicitation Materials...... 28
6.15 Exclusivity; Acquisition Proposals........................ 28
6.16 Notice of Events.......................................... 29
6.17 Reasonable Best Efforts................................... 29
6.18 Insurance................................................. 29
ARTICLE VII. COVENANTS OF PARENT................................ 29
7.1 Breach of Representations and Warranties.................. 29
7.2 Additional Information; Access............................ 29
7.3 Consents.................................................. 30
7.4 Reasonable Best Efforts................................... 30
7.5 Officers and Directors.................................... 30
7.6 Nasdaq National Market Listing............................ 30
7.7 Notice of Events.......................................... 30
7.8 Third Party Beneficiaries................................. 30
7.9 Exclusivity; Acquisition Proposals........................ 30
----------------------------------
ARTICLE VIII. ADDITIONAL AGREEMENTS............................. 31
8.1 Investment Agreements..................................... 31
8.2 Legal Conditions to the Merger............................ 31
8.3 Employee Benefits......................................... 31
8.4 Expenses.................................................. 32
8.5 Additional Agreements..................................... 32
8.6 Public Announcements...................................... 32
8.7 Confidentiality........................................... 32
</TABLE>
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<TABLE>
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8.8 Pooling....................................................... 32
8.9 Hart-Scott-Rodino Filing...................................... 33
8.10 Environmental Matters......................................... 33
- ---- ---------------------
ARTICLE IX. CONDITIONS PRECEDENT.................................... 34
9.1 Conditions to Each Party's Obligation to Effect the Merger.... 34
9.2 Conditions of Obligations of Parent and Merger Sub............ 34
9.3 Conditions of Obligation of Calogic and Stockholders.......... 36
ARTICLE X. INDEMNIFICATION.......................................... 37
10.1 Indemnification Relating to Agreement......................... 37
10.2 Third Party Claims............................................ 38
10.3 Tax Contests.................................................. 38
10.4 Limitations................................................... 38
10.5 Binding Effect................................................ 39
10.6 Time Limit.................................................... 39
10.7 Sole Remedy................................................... 39
ARTICLE XA. INDEMNIFICATION BY PARENT............................... 40
10.1A Indemnification Relating to Agreement......................... 40
10.2A Limitations................................................... 40
10.3A Time Limit.................................................... 40
10.4A Sole Remedy................................................... 41
ARTICLE XI. TERMINATION............................................. 41
11.1 Mutual Agreement.............................................. 41
11.2 Termination by Parent......................................... 41
11.3 Termination by Calogic........................................ 41
11.4 Outside Date.................................................. 41
11.5 Effect of Termination......................................... 41
ARTICLE XII. MISCELLANEOUS.......................................... 42
12.1 Entire Agreement.............................................. 42
12.2 Governing Law; Consent to Jurisdiction........................ 42
12.3 Notices....................................................... 42
12.4 Severability.................................................. 43
12.5 Survival of Representations and Warranties.................... 43
12.6 Assignment.................................................... 44
12.7 Counterparts.................................................. 44
12.8 Amendment..................................................... 44
12.9 Extension, Waiver............................................. 44
12.10 Interpretation................................................ 44
12.11 Knowledge..................................................... 44
12.12 Transfer, Sales, Documentary, Stamp and Other Similar
Taxes......................................................... 44
12.13 Remedies Not Exclusive........................................ 45
----------------------
12.14 Limitation on Recovery........................................ 45
----------------------
</TABLE>
EXHIBITS
Exhibit 1.1 -- Merger Documents
Exhibit 2.2 -- Escrow Agreement
Exhibit 8.1 -- Investment Agreement
Exhibit 8.2 -- Registration Rights Agreement
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<PAGE>
Exhibit 8.8 -- Calogic Affiliate Agreement
Exhibit 9.2 -- Opinion of Cooley Godward, LLP
Exhibit 9.3 -- Opinion of Testa, Hurwitz & Thibeault, LLP
-iv-
<PAGE>
INDEX OF DEFINED TERMS [to be updated]
<TABLE>
<S> <C>
A
Acquisition Transaction............................................. 28
Affiliate Agreement................................................. 32
Agreement........................................................... 1
Audited Balance Sheet Date.......................................... 10
Audited Balance Sheets.............................................. 10
B
Business Condition.................................................. 5
C
Calogic............................................................. 1, 40
Calogic Affiliate................................................... 32
Calogic Common Stock................................................ 2
Calogic Disclosure Schedule......................................... 5
Calogic Intellectual Property....................................... 8
Calogic Option...................................................... 6
Calogic Voting Debt................................................. 6
Charter Documents................................................... 6
Closing............................................................. 2
Closing Date........................................................ 2
Code................................................................ 1
Commission.......................................................... 23
Consent............................................................. 8
Conversion Ratio.................................................... 3
D
Dissenting Shares................................................... 4
E
Effective Time...................................................... 1
Environmental Assessment Report.....................................
Environmental Consultant............................................
Environmental Laws.................................................. 19
Environmental Liabilities........................................... 20
ERISA............................................................... 18
Escrow Agreement.................................................... 3
Escrow Shares....................................................... 3
Excluded Shares..................................................... 2
F
Financial Statements................................................ 10
G
Governmental Entity................................................. 8
H
Hazardous Materials................................................. 19
Holder Agreement.................................................... 38
H-S-R Act........................................................... 32
I
Indemnifiable Amounts............................................... 37, 40
Indemnified Stockholders............................................ 40
Investment Agreements............................................... 30
K
Knowledge........................................................... 44
L
Lease............................................................... 14
Leases.............................................................. 14
Liens............................................................... 6
M
Merger.............................................................. 1
Merger Documents.................................................... 1
Merger Sub.......................................................... 1
N
New Parent Stockholders............................................. 30
O
Option Holder....................................................... 5
Outstanding Calogic Options......................................... 3
Outstanding Calogic Shares.......................................... 3
P
Parent.............................................................. 1
Parent Average Closing Price........................................ 4
Parent Common Stock................................................. 2
Parent Disclosure Schedule.......................................... 22
Parent Merger Shares................................................ 3
Person.............................................................. 6
Plan................................................................ 18
R
Recent 10-Q......................................................... 23
Registration Rights Agreement....................................... 30
Reports............................................................. 23
S
Securities Act...................................................... 14
Stockholder Indemnifiable Amounts................................... 40
Stockholder Threshold Amount........................................ 40
Stockholders........................................................ 1
Subsidiary.......................................................... 5
Surviving Corporation............................................... 1
T
Tax................................................................. 11
Tax Return.......................................................... 11
</TABLE>
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<TABLE>
<S> <C>
Tax Returns......................................................... 11
Taxes............................................................... 11
Threshold Amount.................................................... 39
Trading Day......................................................... 4
U
Unaudited Balance Sheet............................................. 10
Unaudited Balance Sheet Date........................................ 10
</TABLE>
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<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION, dated as of October 21, 1999 (this
"Agreement"), by and among SIPEX Corporation, a Massachusetts corporation
---------
("Parent"); CAT Acquisition Corporation I, a Delaware corporation and a wholly-
-------
owned subsidiary of Parent ("Merger Sub"); Calogic, a California corporation
----------
("Calogic"); and the undersigned stockholders of Calogic (the "Stockholders")
-------- ------------
Intending to be legally bound, and in consideration of the mutual
representations, warranties, covenants and agreements contained herein, Parent,
Merger Sub, Calogic and the Stockholders agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Subject to the terms and conditions hereof, and in
----------
accordance with the California General Corporation Law (the "CGCL") and the
Delaware General Corporation Law ("DGCL"), Merger Sub will be merged with and
into Calogic (the "Merger"). A Certificate of Merger and any other required
------
documents (collectively, the "Merger Documents"), substantially in the form
----------------
attached as Exhibit 1.1, will be duly prepared, executed and acknowledged by
-----------
Calogic and Merger Sub and thereafter delivered to the Secretary of State of
California for filing in accordance with the CGCL and to the Secretary of State
of Delaware for filing in accordance with the DGCL for filing in accordance with
the DGCL contemporaneously with the Closing (as defined in Section 1.3). The
Merger will become effective at such time as the Merger Documents have been
filed with the Secretary of State of California and Delaware (whichever is
later) (the "Effective Time"). Following the Merger, Calogic will continue as
--------------
the surviving corporation of the Merger (the "Surviving Corporation") under the
---------------------
laws of the State of California, and the separate corporate existence of Merger
Sub will cease.
1.2 Effects of the Merger. At and after the Effective Time, (i) the
---------------------
Merger will have all of the effects provided by the Articles of Merger and
applicable law, (ii) the Certificate of Incorporation of Calogic will be amended
in the form attached as Appendix A to Exhibit 1.1 until duly further amended,
---------- -----------
(iii) the bylaws of Merger Sub will be the bylaws of the Surviving Corporation
until duly amended, (iv) the directors of Merger Sub will be the directors of
the Surviving Corporation, to hold office in accordance with the bylaws of the
Surviving Corporation, (v) the officers of Calogic will be the officers of the
Surviving Corporation, to hold office in accordance with the bylaws of the
Surviving Corporation and (vi) the issued and outstanding certificates for the
capital stock of Merger Sub will be the issued and outstanding certificates
initially representing all of the issued capital stock of the Surviving
Corporation. The Merger is intended to be a reorganization within the meaning of
Section 368(a)(2)(E) of the Internal Revenue Code of 1986, as amended (the
"Code"), and this Agreement is intended to constitute a "plan of reorganization"
----
within the meaning of the regulations promulgated under Section 368 of the Code.
<PAGE>
1.3 Closing. The closing of the transactions contemplated by this
-------
Agreement "Closing") will take place as soon as practicable (but no more than
-------
five (5) business days) after satisfaction or waiver of the last to be fulfilled
of the conditions set forth in Article IX that by their terms are not to occur
at the Closing (the "Closing Date"), but in no event later than November 30,
------------
1999 at the offices of Testa, Hurwitz & Thibeault LLP in Boston, Massachusetts,
unless another date or place is agreed to in writing by Parent and Calogic. If
all of conditions set forth in Article IX hereof are determined to be satisfied
(or duly waived) at the Closing, concurrently with the Closing the parties
hereto will cause the Merger to be consummated by the filing of the Merger
Documents with the Secretary of State of California and Delaware. The Closing
will be deemed to have concluded at the Effective Time.
1.4 Approval by the Stockholders of Calogic. Calogic will take all action
---------------------------------------
necessary in accordance with applicable law, its Charter Documents (as defined
below) and any agreements to which it is a party to solicit the approval of this
Agreement, the Merger and all of the transactions contemplated hereby by all
stockholders of Calogic by means of a unanimous written consent of stockholders
in accordance with the CGCL, or if it is unable to obtain such written consent,
by a duly convened meeting of stockholders. Calogic will use its reasonable best
efforts to obtain such stockholder approval. Calogic represents and warrants
that its Board of Directors has duly (i) approved the Merger in accordance with
the CGCL and (ii) resolved to recommend to the stockholders of Calogic that they
approve this Agreement, the Merger and all of the transactions contemplated
hereby.
1.5 Approval by Merger Sub and Parent. Merger Sub represents and warrants
---------------------------------
that its Board of Directors has duly (i) approved the Merger in accordance with
the DGCL and (ii) resolved to recommend to the stockholders of Merger Sub that
they approve this Agreement, the Merger and all of the transactions contemplated
hereby. Parent represents and warrants that (i) its Board of Directors has duly
approved the Merger in accordance with the Massachusetts General Corporation Law
(the "MGCL") and (ii) it is not necessary under the MGCL that the shareholders
of Parent approve this Agreement, the Merger or the transactions contemplated
hereby.
ARTICLE II
CONVERSION AND EXCHANGE OF SHARES; DISSENTING SHARES
2.1 Conversion of Shares of Calogic Common Stock.
--------------------------------------------
(a) Subject, without limitation, to the provisions of Section 2.3
hereof, at the Effective Time, all of the shares of common stock, no par value,
of Calogic ("Calogic Common Stock") issued and outstanding immediately prior to
--------------------
the Effective Time (excluding any Calogic Common Stock held by Parent or Merger
Sub or any other subsidiary of Parent, or by Calogic or any subsidiary of
Calogic, which shares ("Excluded Shares") will be automatically canceled in the
---------------
Merger without payment of any consideration therefor, and excluding Dissenting
Shares (as defined in Section 2.3 hereof)), will automatically, by virtue of the
Merger and without any action on the part of the holder thereof, be converted
into shares of common stock, $.01 par value per share, of Parent ("Parent Common
-------------
Stock") in accordance with Section 2.1(c), and cash (rounded down to the nearest
- -----
whole cent) in lieu of fractional shares, if any, pursuant to Section 2.6 below.
Shares of Calogic Common Stock that are
-2-
<PAGE>
actually issued and outstanding immediately prior to the Effective Time,
excluding the Excluded Shares, are sometimes referred to herein as the
"Outstanding Calogic Shares." All rights, warrants or options to acquire Calogic
--------------------------
Common Stock and securities convertible into Calogic Common Stock that are
outstanding immediately prior to the Effective Time and do not expire pursuant
to their terms on or before the Closing (each of which is specifically
identified in Section 3.2 of the Calogic Disclosure Schedule (as defined below))
are sometimes referred to herein as the "Outstanding Calogic Options."
---------------------------
(b) The maximum number of shares of Parent Common Stock to be issued
in exchange for the acquisition of all Outstanding Calogic Shares and the
assumption of all Outstanding Calogic Options will be 3,400,000, provided such
maximum number shall be adjusted, as appropriate, for any stock split, stock
dividend, reclassification, recapitalization or similar event. Such shares are
herein referred to as the "Parent Merger Shares".
--------------------
(c) The ratio at which one Outstanding Calogic Share will be
converted into shares of Parent Common Stock at the Effective Time is herein
called the "Conversion Ratio" and will be calculated as set forth in this
-----------------
Section 2.1(c). Subject to Section 2.3, at the Effective Time, each Outstanding
Calogic Share will be converted into the right to receive that number (which may
be a fraction) of shares of Parent Common Stock that equals the quotient
obtained by dividing the number of Parent Merger Shares by the sum of the number
--------
of Outstanding Calogic Shares plus the number of shares of Calogic Common Stock
----
issuable upon the exercise or conversion of all Outstanding Calogic Options.
Each holder of Outstanding Calogic Shares will be entitled to receive that
aggregate number of shares of Parent Common Stock equal to the Conversion Ratio
multiplied by the number of Outstanding Calogic Shares held by such holder
immediately prior to the Effective Time, subject to Section 2.3 herein.
(d) At the Effective Time, each share of common stock, $.01 par
value, of Merger Sub issued and outstanding immediately prior to the Effective
Time will, by virtue of the Merger and without any action on the part of the
holder hereof, be converted into one share of common stock, no par value, of the
Surviving Corporation.
2.2 Escrow Shares. Ten percent of the Parent Merger Shares (the "Escrow
------------- ------
Shares") will be deposited and held in escrow in accordance with an escrow
- ------
agreement substantially in the form attached as Exhibit 2.2 (the "Escrow
----------- ------
Agreement") as the first source, but not the sole source, of indemnification
- ---------
payments that may become due to Parent pursuant to Article X. The Escrow Shares
will be withheld on a pro rata basis among the holders of the Outstanding
Calogic Shares. The exact number of Escrow Shares held for the account of each
Calogic stockholder will be determined at the Closing by the agreement in
writing of Parent and Calogic. The delivery of the Escrow Shares will be made on
behalf of the holders of the Outstanding Calogic Shares in accordance with the
provisions hereof, with the same force and effect as if such shares had been
delivered by Parent directly to such holders and subsequently delivered by such
holders to the Escrow Agent. The adoption of this Agreement by stockholders of
Calogic will also constitute their approval of the terms and provisions of the
Escrow Agreement, which is an integral term of the Merger.
2.3 Dissenting Shares. Any holder of shares of Calogic Common Stock
-----------------
that are outstanding on the record date for the determination of which holders
will be entitled to vote for or against the Merger who did not vote such shares
in favor of the Merger or sign and deliver a written consent thereto with
respect to such shares (the shares of Calogic Common Stock then outstanding that
are not
-3-
<PAGE>
thus voted or as to which such consents are not signed and delivered are
referred to as "Dissenting Shares") will be entitled to exercise dissenters'
-----------------
rights pursuant to Chapter 13 of the CGCL with respect to such Dissenting Shares
provided that such holder meets all of the requirements of the CGCL with respect
to such Dissenting Shares, and will not be entitled to receive Parent Merger
Shares, unless otherwise provided by the CGCL or agreed in writing by Parent.
Calogic will, after consultation with Parent, give such notices with respect to
dissenters' rights as may be required by the CGCL as soon as practicable.
2.4 Delivery of Evidence of Ownership. At the Closing, each holder of a
---------------------------------
certificate or other documentation representing Outstanding Calogic Shares,
other than Dissenting Shares, will surrender such certificates or other
documentation to Parent, and, if not previously delivered, duly executed
counterparts of this Agreement, the Escrow Agreement, the Investment Agreement
(as defined below) and the Registration Rights Agreement (as defined below) and
such other duly executed documentation as may be reasonably required by Parent
to effect a transfer of such shares, and upon such surrender and at the
Effective Time each such holder will be entitled to receive promptly after the
Effective Time from Parent or its transfer agent certificates registered in the
name of such holder representing the applicable number of Parent Merger Shares,
and the cash (calculated pursuant to Section 2.6, which will be paid by check),
to which such holder is entitled pursuant to the provisions of this Agreement,
with a portion of such shares to be deposited in escrow pursuant to the Escrow
Agreement, as provided in Section 2.2.
2.5 No Further Ownership Rights in Calogic Common Stock. The Merger and
---------------------------------------------------
its approval by the stockholders of Calogic and the execution of this Agreement
will be deemed, at the Effective Time, to constitute full satisfaction and
termination of all rights and agreements pertaining to Calogic Common Stock
pursuant to the CGCL, by contract or otherwise. After the Effective Time, there
will be no transfers on the stock transfer books of Calogic of Calogic Common
Stock. Until surrendered to Parent, each certificate for Calogic Common Stock
will, after the Effective Time, represent only the right to receive shares of
Parent Common Stock and the right to receive cash into which the shares of
Calogic Common Stock formerly represented thereby will have been converted
pursuant to this Agreement. Any dividends or other distribution declared after
the Effective Time with respect to Parent Common Stock will be paid to the
holder of any certificate for shares of Calogic Common Stock when the holder
thereof is entitled to receive a certificate for such holder's Parent Merger
Shares in accordance with this Agreement.
2.6 No Fractional Shares. No certificates or scrip for fractional
--------------------
shares of Parent Common Stock will be issued, no Parent stock split or dividend
will be paid in respect of any fractional share interest, and no such fractional
share interest will entitle the owner thereof to vote or to any rights of or as
a stockholder of Parent. In lieu of such fractional shares, any holder of
Outstanding Calogic Shares who would otherwise be entitled to a fraction of a
share of Parent Common Stock (after aggregating all fractional shares of Parent
Common Stock to be received by such holder) will be paid the cash value of such
fraction, which will be equal to such fraction multiplied by the Parent Average
-------------
Closing Price. For purposes of this Agreement "Parent Average Closing Price"
----------------------------
will be the average closing price of the Parent Common Stock as publicly
reported by the Nasdaq National Market over the ten Trading Days ending two
Trading Days prior to the Closing Date. "Trading Day" will mean days on which
-----------
closing prices for purchases and sales of Parent Common Stock are reported by
the Nasdaq National Market.
-4-
<PAGE>
2.7 Assumption of Stock Options. At the Effective Time, Parent shall
---------------------------
assume each outstanding Calogic Option (an "Outstanding Calogic Option") and
each holder thereof (each an "Option Holder") shall thereby be entitled to
-------------
acquire, by virtue of the Merger and without any action on the part of the
Option Holder, on substantially the same terms (including the dates and extent
of exercisability) and subject to the same conditions, including vesting, as
such Outstanding Calogic Option, the number of shares of Parent Common Stock
determined by multiplying the number of shares of Calogic Common Stock for which
-----------
such Outstanding Calogic Option is then exercisable in accordance with its terms
immediately prior to the Effective Time by the Conversion Ratio (rounded down to
the nearest whole share), at an exercise or conversion price per share of Parent
Common Stock (rounded up to the nearest whole cent) determined by dividing the
exercise price per share of Calogic Common Stock of such Outstanding Calogic
Option immediately prior to the Effective Time by the Conversion Ratio.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CALOGIC
AND THE STOCKHOLDERS
Except as set forth in the disclosure schedule of Calogic dated as of the
date hereof and delivered herewith to Parent (the "Calogic Disclosure Schedule")
---------------------------
which identifies the section and subsection to which each disclosure therein
relates, and whether or not the Calogic Disclosure Schedule is referred to in a
specific section or subsection, Calogic and each of the Stockholders jointly and
severally represent and warrant to Parent and Merger Sub as follows:
3.1 Organization, Standing and Power; Subsidiaries.
----------------------------------------------
(a) Calogic is a corporation duly organized, validly existing and in
good standing under the laws of the State of California, has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its businesses as now being conducted, and is duly qualified and in
good standing to do business in each jurisdiction in which a failure to so
qualify would have a material adverse effect on the Business Condition (as
hereinafter defined) of Calogic.
As used in this Agreement, "Business Condition" with respect to any
------------------
Person (as defined below) means the business, financial condition, results of
operations or assets (without giving effect to the consequences of the
transactions contemplated by this Agreement, and other than changes in general
economic conditions) of such Person or Persons including its Subsidiaries taken
as a whole. For purposes of this Article III and Article VI, "Calogic" shall
refer to Calogic and its Subsidiaries. In this Agreement, a "Subsidiary" of any
----------
Person means a corporation, partnership, limited liability company, joint
venture or other entity of which such Person directly or indirectly owns or
controls a majority of the equity interests or voting securities or other
interests that are sufficient to elect a majority of the Board of Directors or
other managers of such corporation, partnership, limited liability company,
joint venture or other entity. References to Calogic in this Agreement shall be
deemed to include all Subsidiaries of Calogic, if any, unless the context
specifically requires otherwise. In this Agreement, "Person" means any natural
------
person, corporation, partnership, limited liability company, joint venture or
other entity.
-5-
<PAGE>
All Subsidiaries of Calogic and their jurisdiction of incorporation
are completely and correctly listed in Section 3.1 of the Calogic Disclosure
Schedule. Calogic has delivered to Parent complete and correct copies of the
articles or certificate of incorporation, bylaws and/or other primary charter
and organizational documents ("Charter Documents") of Calogic, in each case, as
-----------------
amended to the date hereof. Complete and correct copies of the minute books and
stock records of Calogic have been delivered to Parent. Section 3.1 of the
Calogic Disclosure Schedule contains a complete and correct list of the officers
and directors of Calogic.
(b) Section 3.1 of the Calogic Disclosure Schedule contains a
complete and correct list of the Subsidiaries of Calogic and correctly sets
forth the number of outstanding shares of capital stock of each Subsidiary of
Calogic and each shareholder of such Subsidiary and the number of shares of
capital stock of such Subsidiary owned by such shareholder. Except as set forth
in Section 3.1 of the Calogic Disclosure Schedule, all of the outstanding shares
of capital stock of each Subsidiary of Calogic are owned beneficially and of
record by Calogic, free and clear of any security interests, liens, charges,
restrictions, claims, encumbrances or assessments of any nature whatsoever
("Liens"); and there are no outstanding subscriptions, warrants, options,
-----
convertible securities, or other rights (contingent or other) pursuant to which
any of the Subsidiaries is or may become obligated to issue any shares of its
capital stock to any Person other than Calogic or one of the other Subsidiaries.
3.2 Capital Structure.
-----------------
(a) The authorized capital stock of Calogic consists of 2,500,000
shares of Calogic Common Stock, of which 345,000 shares are issued and
outstanding as of the date of this Agreement and no shares are issued and held
as treasury shares by Calogic. The Calogic Disclosure Schedule sets forth all
holders of Calogic Common Stock and the number of shares owned. The Calogic
Disclosure Schedule also sets forth any options, warrants, calls, conversion
rights, commitments, agreements, contracts, understandings, restrictions,
arrangements or rights of any character (each, an "Calogic Option") to which
--------------
Calogic is a party or by which Calogic may be bound obligating Calogic to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares of
the capital stock of Calogic, or obligating Calogic to grant, extend, or enter
into any such option, warrant, call, conversion right, conversion payment,
commitment, agreement, contract, understanding, restriction, arrangement or
right.
(b) All outstanding shares of Calogic Common Stock are, and any
shares of Calogic Common Stock issued upon exercise of any Outstanding Calogic
Options will be, validly issued, fully paid, nonassessable and not subject to
any preemptive rights (other than those which have been duly waived), or to any
agreement to which Calogic is a party or by which Calogic may be bound. Calogic
does not have outstanding any bonds, debentures, notes or other indebtedness the
holders of which (i) have the right to vote (or convertible or exercisable into
securities having the right to vote) with holders of shares of Calogic Common
Stock on any matter ("Calogic Voting Debt") or (ii) are or will become entitled
-------------------
to receive any payment as a result of the execution of this Agreement or the
completion of the transactions contemplated hereby.
3.3 Authority. The execution, delivery and performance of this Agreement
---------
and all other agreements contemplated hereby by Calogic have been duly
authorized by all necessary action of the Board of Directors of Calogic, and if
the Closing shall occur, shall have been duly authorized by all
-6-
<PAGE>
necessary action of the stockholders of Calogic. Certified copies of the
resolutions adopted by the Board of Directors of Calogic and its stockholders
approving this Agreement, all other agreements contemplated hereby and the
Merger have been or will be provided to Parent prior to the Closing. Calogic has
duly and validly executed and delivered this Agreement and has, or prior to
Closing, will have duly and validly executed and delivered all other agreements
contemplated hereby, and each of this Agreement and such other agreements
constitutes a valid, binding and enforceable obligation of Calogic in accordance
with its terms except insofar as enforceability may be affected by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally, and general principles of equity.
3.4 Compliance with Laws and Other Instruments; Non-Contravention. Calogic
-------------------------------------------------------------
holds, and at all times has held, all licenses, permits and authorizations from
all Governmental Entities (as defined below) necessary for the lawful conduct of
its business pursuant to all applicable statutes, laws, ordinances, rules and
regulations of all such Governmental Entities having jurisdiction over it or any
part of its operations, excepting, however, when such failure to hold would not
have a material adverse effect on Calogic's Business Condition. There are no
material violations or claimed violations known by Calogic of any such license,
permit or authorization or any such statute, law, ordinance, rule or regulation.
Assuming the receipt of all Consents (as defined below) and assuming the
accuracy of the representations and warranties of Parent and Merger Sub
contained in this Agreement and the other agreements contemplated hereby,
neither the execution, delivery or performance of this Agreement and all other
agreements contemplated hereby by Calogic and the Stockholders, nor the
consummation of the Merger or any other transaction described herein, does or
will, after the giving of notice, or the lapse of time, or otherwise, conflict
with, result in a breach of, or constitute a default under, the Charter
Documents of Calogic or any federal, foreign, state or local court or
administrative order or process, statute, law, ordinance, rule or regulation, or
any contract, agreement or commitment to which Calogic is a party, or under
which Calogic is obligated, or by which Calogic or any of the rights, properties
or assets of Calogic are subject or bound; result in the creation of any Lien
upon, or otherwise adversely affect, any of the rights, properties or assets of
Calogic; terminate, amend or modify, or give any party the right to terminate,
amend, modify, abandon or refuse to perform or comply with, any contract,
agreement or commitment to which Calogic is a party, or under which Calogic is
obligated, or by which Calogic or any of the rights, properties or assets of
Calogic are subject or bound; or accelerate, postpone or modify, or give any
party the right to accelerate, postpone or modify, the time within which, or the
terms and conditions under which, any liabilities, duties or obligations are to
be satisfied or performed, or any rights or benefits are to be received, under
any contract, agreement or commitment to which Calogic is a party, or under
which Calogic may be obligated, or by which Calogic or any of the rights,
properties or assets of Calogic are subject or bound. Section 3.4 of the Calogic
Disclosure Schedule sets forth each agreement, contract or other instrument
binding upon Calogic requiring a notice or consent (by its terms or as a result
of any conflict or other contravention required to be disclosed in the Calogic
Disclosure Schedule pursuant to the preceding provisions of this Section 3.4) as
a result of the execution, delivery or performance of this Agreement and all
other agreements contemplated hereby by Calogic and the Stockholders or the
consummation of the Merger or any other transaction described herein (each such
notice or consent, a "Consent"). Assuming the accuracy of the representations
-------
and warranties of Parent and Merger Sub contained in this Agreement and the
other agreements contemplated hereby, no consent, approval, order, or
authorization of or registration, declaration, or filing with or exemption (also
a "Consent") by, any court, administrative agency or commission or other
-------
governmental authority or instrumentality, whether domestic or foreign (each a
"Governmental Entity") is required to be made or obtained by Calogic or any of
-------------------
its Subsidiaries
-7-
<PAGE>
in connection with the execution, delivery or performance of this Agreement and
all other agreements contemplated hereby by Calogic and the Stockholders or the
consummation of the Merger or any other transaction described herein, except for
(i) the filing by Calogic and Merger Sub of the appropriate Merger Documents
with the Secretary of State of California and Delaware and (ii) any filings
required by the H-S-R Act (as defined in Section 8.9), and (iii) the filings
described in Section 5.7.
3.5 Technology and Intellectual Property Rights.
-------------------------------------------
(a) For the purposes of this Agreement, "Calogic Intellectual
--------------------
Property" consists of the following intellectual property:
- --------
(i) all patents, trademarks, trade names, service marks, trade
dress, copyrights and any renewal rights therefor, mask works, schematics,
software, firmware, technology, manufacturing processes, supplier lists,
customer lists, trade secrets, know-how, moral rights and applications and
registrations for any of the foregoing;
(ii) all documents, records and files relating to design, end user
documentation, manufacturing, quality control, sales, marketing or customer
support for all intellectual property described herein;
(iii) all other tangible or intangible proprietary information and
materials; and
(iv) all license and other rights in any third party product or any
third party intellectual property described in (i) through (iii) above;
that are owned or held by or on behalf of Calogic or that are being, and/or have
been, used, or are currently under development for use, in the business of
Calogic as it (i) has been conducted during the past two years (ii) is currently
conducted or (iii) is currently planned in written documentation to be
conducted; provided, however, that Calogic Intellectual Property will not
include any commercially available third party software or related intellectual
property.
(b) Section 3.5 of the Calogic Disclosure Schedule lists: (i) all
patents, copyright registrations, mask works, registered trademarks, registered
service marks, trade dress, any renewal rights for any of the foregoing, and any
applications and registrations for any of the foregoing, that are included in
Calogic Intellectual Property and owned by or on behalf of Calogic; (ii) all
hardware products and tools, software products and tools and services that are
currently published, offered, or under development by Calogic; and (iii) all
licenses, sublicenses and other agreements to which Calogic is a party and
pursuant to which Calogic or any other person is authorized to use any Calogic
Intellectual Property or exercise any other right with regard thereto. The
disclosures described in (iii) hereof include the identities of the parties to
the relevant agreements, a description of the nature and subject matter thereof,
the term thereof and the applicable royalty or summary of any formula or
procedure for determining such royalty.
(c) To the knowledge of Calogic, based solely upon the fact that
Calogic has not received written notice to the contrary and without further
investigation, Calogic Intellectual Property consists solely of items and rights
that are either: (i) owned solely by Calogic; (ii) in the public domain; or
(iii) rightfully used and authorized for use by Calogic and its successors
pursuant to a valid
-8-
<PAGE>
license. All Calogic Intellectual Property that consists of license or other
rights to third party property is separately set forth in Section 3.5 of the
Calogic Disclosure Schedule. To the knowledge of Calogic, Calogic has all rights
in Calogic Intellectual Property necessary to carry out Calogic's activities,
including without limitation rights to make, use, exclude others from using,
reproduce, modify, adapt, create derivative works based on, translate,
distribute (directly and indirectly), transmit, display and perform publicly,
license, rent, lease, assign or otherwise transfer Calogic Intellectual Property
in all geographic locations and fields of use, and to sublicense any or all such
rights to third parties, including the right to grant further sublicenses.
(d) Calogic is not, nor as a result of the execution or delivery of
this Agreement and all other agreements contemplated hereby, or performance of
Calogic's obligations hereunder or the consummation of the Merger, will Calogic
be, in violation of any license, sublicense or other agreement relating to any
Calogic Intellectual Property to which Calogic is a party or otherwise bound.
Calogic is not obligated to provide any consideration (whether financial or
otherwise) to any third party, nor is any third party otherwise entitled to any
consideration, with respect to any exercise of rights by Calogic or Parent, as
successor to Calogic, in Calogic Intellectual Property pursuant to any license,
sublicense or other agreement.
(e) To the knowledge of Calogic, based solely upon the fact that
Calogic has not received written notice to the contrary and without further
investigation, the use, reproduction, modification, distribution, licensing,
sublicensing, sale, or any other exercise of rights in any product, work,
technology, service or process as used, provided, or offered at any time, or as
proposed for use, reproduction, modification, distribution, licensing,
sublicensing, sale, or any other exercise of rights, by Calogic does not
infringe any copyright, patent, trade secret, trademark, service mark, trade
name, firm name, logo, trade dress, mask work, moral right, other intellectual
property right, right of privacy, or right in personal data of any Person. No
claims (i) challenging the validity, effectiveness, or ownership by Calogic of
any Calogic Intellectual Property, or (ii) to the effect that the use,
reproduction, modification, manufacturing, distribution, licensing,
sublicensing, sale, or any other exercise of rights in any product, work,
technology, service, or process as used, provided or offered at any time, or as
proposed for use, reproduction, modification, distribution, licensing,
sublicensing, sale, or any other exercise of rights, by Calogic infringes or
will infringe on any intellectual property or other proprietary or personal
right of any Person have been asserted to Calogic or, to the knowledge of
Calogic (as defined below), are threatened by any Person. There are no legal or
governmental proceedings, including interference, re-examination, reissue,
opposition, nullity, or cancellation proceedings pending that relate to any
Calogic Intellectual Property, other than review of pending applications for
patent, and to the knowledge of Calogic no such proceedings are threatened by
any Governmental Entity or any other Person. All granted or issued patents and
mask works and all registered trademarks and copyright registrations owned by
Calogic are valid, enforceable and subsisting. To the knowledge of Calogic and
without investigation, there is no unauthorized use, infringement, or
misappropriation of any Calogic Intellectual Property by any third party,
employee or former employee.
(f) Section 3.5(f) of the Calogic Disclosure Schedule separately
lists all parties, including, without limitation, employees) and consultants,
who have created any portion of, or otherwise have any rights in or to, such
Calogic Intellectual Property, other than Calogic Intellectual Property that is
licensed to Calogic. Calogic has not secured from any party identified in
Section 3.5(f) of the Calogic Disclosure Schedule a valid and enforceable
written assignment of any such work or
-9-
<PAGE>
other rights to Calogic. To the knowledge of Calogic, no party has asserted any
rights in or to, or made any claims for payments or royalties in respect of,
Calogic Intellectual Property, other than Calogic Intellectual Property that is
licensed to Calogic.
3.6 Financial Statements; Business Information.
------------------------------------------
(a) Calogic has delivered to Parent an unaudited balance sheet (the
"Unaudited Balance Sheet") as of September 30, 1999 (the "Unaudited Balance
- ------------------------ -----------------
Sheet Date") and audited balance sheets (the "Audited Balance Sheets") as of
- ---------- ----------------------
June 30, 1999 (the "Audited Balance Sheet Date") and June 30, 1997 and 1998,
--------------------------
unaudited statements of income and cash flows for the three-month period ended
September 30, 1999 and audited statements of income and cash flows for its 1996,
1997 and 1998 fiscal years (all of such balance sheets and statements of income
and cash flows are collectively referred to as the "Financial Statements"). The
--------------------
Financial Statements: (i) are in accordance with the books and records of
Calogic; (ii) present fairly, in all material respects, the financial position
of Calogic as of the date indicated and the results of its operations and cash
flows for such periods; and (iii) have been prepared in accordance with
generally accepted accounting principles consistently applied (subject, in the
case of unaudited statements, to the absence of footnote disclosure and in the
case of interim statements to year-end adjustments, which will not be material
either individually or in the aggregate and except as described in the Section
3.6 of the Calogic Disclosure Schedule). As of the Unaudited Balance Sheet Date,
there were no liabilities, claims or obligations of any nature in excess of
$250,000 in the aggregate, whether accrued, absolute, contingent, anticipated or
otherwise, whether due or to become due, that are intentionally not shown or are
intentionally improperly recorded in the Unaudited Balance Sheet. Since the
Unaudited Balance Sheet Date, Calogic has incurred no material liabilities,
claims or obligations of any nature, whether accrued, absolute, contingent,
anticipated or otherwise other than in the ordinary course of business and
except for liabilities incurred by Calogic in connection with the preparation
and execution of this Agreement and the consummation of the transactions
contemplated herein.
(b) All of the accounts, notes and other receivables which are
reflected in the Audited Balance Sheet were acquired in the ordinary course of
business; and, except to the extent reserved against in the Audited Balance
Sheet, all of the accounts, notes and other receivables which are reflected
therein have been collected in full, or, to the knowledge of Calogic, are valid,
binding and enforceable in accordance with their terms in the ordinary course of
business, and arise from bona fide transactions, and Calogic has not received
notice that the same are subject to counterclaims, refusals to pay or other
rights of setoff. All of the accounts, notes and other receivables which have
been acquired by Calogic since the Audited Balance Sheet Date were acquired in
the ordinary course of business and have been collected in full, or to the
knowledge of Calogic, are valid, binding and enforceable in accordance with
their terms in the ordinary course of business, and arise from bona fide
transactions, and Calogic has not received notice that the same are subject to
counterclaims, refusals to pay or other rights of setoff, subject to an
appropriate reserve. No accounts, notes or other receivables are contingent upon
the performance by Calogic of any obligation or contract. No Person has any Lien
on any of such receivables and no agreement for deduction or discount has been
made with respect thereto.
(c) The business information prepared by Calogic in connection with
this Agreement and the transactions contemplated herein and delivered to Parent
was prepared in good faith.
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<PAGE>
3.7 Taxes.
-----
(a) The term "Taxes" as used herein means all federal, state, local
-----
and foreign income tax, alternative or add-on minimum tax, estimated, gross
income, gross receipts, sales, use, ad valorem, value added, transfer,
franchise, capital profits, lease, service, license, withholding, payroll,
employment, excise, severance, stamp, occupation, premium, property,
environmental or windfall profit taxes, customs, duties and other taxes,
governmental fees and other like assessments and charges of any kind whatsoever,
together with all interest, penalties, additions to tax and additional amounts
with respect thereto, and the term "Tax" means any one of the foregoing Taxes.
---
The term "Tax Returns" as used herein means all returns, declarations, reports,
-----------
claims for refund, information statements and other documents relating to Taxes,
including all schedules and attachments thereto, and including all amendments
thereof, and the term "Tax Return" means any one of the foregoing Tax Returns.
----------
(b) Calogic has timely filed all Tax Returns required to be filed and
has paid all Taxes owed (whether or not shown as due on such Tax Returns),
including, without limitation, all Taxes which Calogic is obligated to withhold
for amounts owing to employees, creditors and third parties. All Tax Returns
filed by Calogic were complete and correct in all material respects, and such
Tax Returns correctly reflected the facts regarding the income, business,
assets, operations, activities, status and other matters of Calogic and any
other information required to be shown thereon. None of the Tax Returns filed by
Calogic or Taxes payable by Calogic have been the subject of an audit, action,
suit, proceeding, claim, examination, deficiency or assessment by any
Governmental Entity, and no such audit, action, suit, proceeding, claim,
examination, deficiency or assessment is currently pending or, to the knowledge
of Calogic, threatened. Calogic is not currently the beneficiary of any
extension of time within which to file any Tax Return, and Calogic has not
waived any statute of limitation with respect to any Tax or agreed to any
extension of time with respect to a Tax assessment or deficiency. All material
elections with respect to Taxes affecting Calogic, as of the date hereof, are
set forth in the Financial Statements or in Section 3.7 of the Calogic
Disclosure Schedule. None of the Tax Returns filed by Calogic contain a
disclosure statement under former Section 6661 of the Code or Section 6662 of
the Code (or any similar provision of state, local or foreign Tax law). Calogic
is not a party to any Tax sharing agreement or similar arrangement. Calogic has
never been a member of a group filing a consolidated federal income Tax Return
(other than a group the common parent of which was Calogic), and Calogic does
not have any liability for the Taxes of any Person (other than Calogic) under
Treasury Regulation Section 1.1502-6 (or any corresponding provision of state,
local or foreign Tax law), as a transferee or successor, by contract, or
otherwise.
(c) Calogic is not a party to any agreement, contract, arrangement or
plan that has resulted or would result, separately or in the aggregate, in the
payment of (i) any "excess parachute payments" within the meaning of Section
280G of the Code (without regard to the exceptions set forth in Sections
280G(b)(4) and 280G(b)(5) of the Code) or (ii) any amount for which a deduction
would be disallowed or deferred under Section 162 or Section 404 of the Code.
Calogic has not agreed to make any adjustment under Section 481(a) of the Code
(or any corresponding provision of state, local or foreign law) by reason of a
change in accounting method or otherwise, and Calogic will not be required to
make any such adjustment as a result of the transactions set forth in this
Agreement. Calogic does not have and has not had a permanent establishment in
any foreign country, as defined in any applicable Tax treaty or convention
between the United States and such foreign country. No portion of
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<PAGE>
the Parent Merger Shares is subject to the Tax withholding provisions of Section
3406 of the Code, or of Subchapter A of Chapter 3 of the Code or of any other
provision of law. None of the assets of Calogic is property which is required to
be treated as being owned by any other Person pursuant to the so-called "safe
harbor lease" provisions of former Section 168(f)(8) of the Code. None of the
assets of Calogic directly or indirectly secures any debt, the interest on which
is tax exempt under Section 103(a) of the Code. None of the assets of Calogic is
"tax-exempt use property" within the meaning of Section 168(h) of the Code. No
claim has ever been made by any Governmental Entity in a jurisdiction where
Calogic does not file Tax Returns that it is or may be subject to Tax in that
jurisdiction. Calogic has not participated in an international boycott as
defined in Section 999 of the Code. None of the shares of outstanding capital
stock of Calogic are subject to a "substantial risk of forfeiture" within the
meaning of Section 83 of the Code.
(d) There are no liens for Taxes (other than for ad valorem Taxes not
yet due and payable) upon the assets of Calogic. The unpaid Taxes of Calogic did
not, as of the Unaudited Balance Sheet Date, exceed the reserve for actual Taxes
(as opposed to any reserve for deferred Taxes established to reflect timing
differences between book and Tax income) as shown on the Unaudited Balance
Sheet, and will not exceed such reserve as adjusted for the passage of time
through the Closing Date in accordance with the past custom and practice of
Calogic in filing its Tax Returns (taking into account any Taxes incurred as a
result of the transactions contemplated by this Agreement). Section 3.7 of the
Calogic Disclosure Schedule sets forth Calogic's Tax basis in each of its
assets. Calogic is not a party to any joint venture, partnership, limited
liability company or other arrangement or contract which could be treated as a
partnership for federal income tax purposes.
(e) Calogic has no net operating losses or other tax attributes
presently subject to limitation under sections 382, 383 or 384 of the Code or
the federal consolidated return regulations promulgated thereunder (other than
limitations imposed as a result of the transactions contemplated by this
Agreement). Calogic is not, and has not been a U.S. Real Property Holding
Company (as defined in Section 897(c)(2) of the Code) during the applicable
period specified in Section 897(c)(1)(A)(ii) of the Code. Calogic has never
filed a consent pursuant to Section 341(f) of the Code, relating to collapsible
corporations. To the knowledge of Calogic, neither Calogic nor any of its
shareholders has taken or agreed to take any action that would reasonably be
expected to cause the Merger to fail to qualify as a reorganization within the
meaning of Section 368(a) of the Code.
3.8 Absence of Certain Changes and Events. From the Audited Balance Sheet
-------------------------------------
Date, there has not been, except as consented to in writing by Parent (such
consent not to be unreasonably withheld):
(a) Any transaction involving more than $50,000 entered into by
Calogic other than in the ordinary course of business ("ordinary course of
------------------
business"); any change (or any development or combination of developments of
- --------
which Calogic has knowledge which is reasonably likely to result in such a
change) in Calogic's Business Condition, other than changes in the ordinary
course of business which in the aggregate have not been and are not expected to
be materially adverse to Calogic's Business Condition; or, without limiting the
foregoing, any loss of or damage to any of the properties of Calogic due to fire
or other casualty or other loss, whether or not insured, amounting to more than
$50,000 in the aggregate;
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<PAGE>
(b) Any declaration, setting aside or payment of any dividend or
other distribution with respect to any shares of capital stock of Calogic, or
any repurchase, redemption, retirement or other acquisition by Calogic of any
outstanding shares of capital stock, any Calogic Option, or other securities of,
or other equity or ownership interests in, Calogic;
(c) Any discharge or satisfaction of any Lien or payment or
satisfaction of any obligation or liability (whether absolute, accrued,
contingent or otherwise and whether due or to become due) other than current
liabilities shown on the Audited Balance Sheet and current liabilities incurred
since the Audited Balance Sheet Date in the ordinary course of business;
(d) Any change in the Charter Documents of Calogic or any amendment
of any term of any outstanding security of Calogic;
(e) Any incurrence, assumption or guarantee by Calogic of any
indebtedness for borrowed money other than in the ordinary course of business
and in an aggregate amount exceeding $50,000;
(f) Any creation or assumption by Calogic of any Lien on any asset in
excess of $50,000;
(g) Any making of any loan, advance or capital contributions to, or
investment in, any Person in an aggregate amount exceeding $50,000;
(h) Any sale, lease, pledge, transfer or other disposition of any
material capital asset in an aggregate amount exceeding $50,000;
(i) Any material transaction or commitment made, or any material
contract or agreement entered into, by Calogic relating to its assets or
business (including the acquisition or disposition of any assets) or any
relinquishment by Calogic of any contract or other right in an aggregate amount
exceeding $50,000;
(j) Any (A) grant of any severance or termination pay to any
director, officer or employee of Calogic, (B) entering into of any employment,
severance, management, consulting, deferred compensation or other similar
agreement (or any amendment to any such existing agreement) with any director,
officer or employee of Calogic, (C) change in benefits payable under existing
severance or termination pay policies or employment, severance, management,
consulting or other similar agreements, (D) change in compensation, bonus or
other benefits payable to directors, officers or employees of Calogic or (E)
change in the payment or accrual policy with respect to any of the foregoing;
(k) Any labor dispute or any activity or proceeding by a labor union
or representative thereof to organize any employees of Calogic, or any lockouts,
strikes, slowdowns, work stoppages or threats thereof by or with respect to any
employees of Calogic;
(l) Any notes or accounts receivable or portions thereof written off
by Calogic as uncollectible in an aggregate amount exceeding $50,000;
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<PAGE>
(m) Any issuance or sale of any stock, bonds, phantom stock interest
or other securities of which Calogic is the issuer, or the grant, issuance or
change of any stock options, warrants, or other rights to purchase securities of
Calogic or phantom stock interest in Calogic;
(o) Any cancellation of any debts or claims or waiver of any rights
of substantial value in an aggregate amount exceeding $50,000;
(p) Any sale, assignment or transfer of any Calogic Intellectual
Property or other similar assets, including licenses therefor;
(q) Any capital expenditures, or commitment to make any capital
expenditures, for additions to property, plant or equipment in an aggregate
amount exceeding $100,000;
(r) Payment of any amounts to, or liability incurred to or in respect
of, or sale of any properties or assets (real, personal or mixed, tangible or
intangible) to, or any transaction or any agreement or arrangement with, any
corporation or business in which Calogic or any of its stockholders, officers or
directors, or any "affiliate" or "associate" (as such terms are defined in the
rules and regulations promulgated under the Securities Act of 1933, as amended
(the "Securities Act") of any such Person, has any direct or indirect ownership
--------------
interests; or
(s) Any agreement undertaking or commitment to do any of the
foregoing.
3.9 Real Property. All real property leases, subleases and occupancy
-------------
agreements as to which Calogic is a party and any amendments or modifications
thereof (i) are listed in Section 3.9 of the Calogic Disclosure Schedule (each a
"Lease" and collectively, the "Leases"); (ii) to the knowledge of Calogic, are
----- ------
valid, in full force and effect and enforceable, and (iii) there are no existing
defaults thereunder on the part of Calogic. Calogic has not received or given
notice of default or claimed default with respect to any Lease, nor is there any
event that with notice or lapse of time, or both, would constitute a default on
the part of Calogic or to the knowledge of Calogic any landlord thereunder. In
addition, copies of any non-disturbance agreements which relate to any of the
Leases are listed in Section 3.9 of the Calogic Disclosure Schedule. All rent
and other sums and charges payable by Calogic under each Lease have been paid
through the date hereof and shall be paid by Calogic through the Closing. The
premises demised under each of the Leases and the improvements, equipment and
fixtures therein are in good operating condition and repair reasonable wear and
tear excepted. To the knowledge of Calogic, the premises demised under each of
the Leases (i) is in compliance with all applicable laws, (ii) is not subject to
any official complaint or notice of violation of any applicable zoning ordinance
or building code, (iii) is not subject to any use or occupancy restriction, and
(iv) is not subject to any pending or threatened condemnation proceeding.
Calogic does not own, or have options to purchase, any real property.
3.10 Personal Property. Calogic has good and marketable title, free and
-----------------
clear of all title defects and Liens, except for any liens that do not exceed
$50,000 in the aggregate and any lien for current taxes not yet due and payable,
to all inventory, receivables, furniture, machinery, equipment and other
personal property, tangible or otherwise, reflected on the Unaudited Balance
Sheet or used in Calogic's business, except for acquisitions and dispositions
since the Unaudited Balance Sheet Date in the ordinary course of business. The
Calogic Disclosure Schedule lists (i) all computer equipment and (ii) all other
personal property, in each case having a depreciated book value of $25,000 or
more, which
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are used by Calogic in the conduct of its business, and all such equipment and
property, in the aggregate, is in good operating condition and repair,
reasonable wear and tear excepted. There is no tangible asset used or required
by Calogic in the conduct of its business as presently operated which is not
either owned by it or licensed or leased to it.
3.11 Certain Transactions. Except for (a) relationships with Calogic as
--------------------
an officer, director, or employee thereof (and compensation by Calogic in
consideration of such services) and (b) relationships with Calogic as
stockholders or option holders therein, none of the directors, officers, or
stockholders of Calogic, or any member of any of their families, is presently a
party to, or was a party to during the year preceding the date of this
Agreement, any transaction, or series of similar transactions, with Calogic, in
which the amount involved exceeds $60,000, including, without limitation, any
material contract, agreement, or other arrangement (i) providing for the
furnishing of services to or by, (ii) providing for rental of real or personal
property to or from, or (iii) otherwise requiring payments to or from, any such
Person or any other Person in which any such Person has or had a 5%-or-more
interest (as a stockholder, partner, beneficiary, or otherwise) or is or was a
director, officer, employee, or trustee. None of Calogic's officers or
directors has any interest in any property, real or personal, tangible or
intangible, including inventions, copyrights, trademarks, or trade names, used
in or pertaining to the business of Calogic, or any supplier, distributor, or
customer of Calogic, except for the normal rights of a stockholder, and except
for rights under existing employee benefit plans.
3.12 Litigation and Other Proceedings. There is no action, suit, claim,
--------------------------------
investigation or proceeding pending against or, to the knowledge of Calogic,
threatened against Calogic or its properties and assets before any court or
arbitrator or any Governmental Entity. Calogic is not subject to any order,
writ, judgment, decree, or injunction that has a material adverse effect on
Calogic's Business Condition.
3.13 No Defaults. Calogic is not, nor has Calogic received notice that it
-----------
would be with the passage of time, in default or violation of any term,
condition, or provision of (i) the Charter Documents; (ii) any judgment, decree,
or order applicable to Calogic; or (iii) any loan or credit agreement, note,
bond, mortgage, indenture, contract, agreement, lease, license, or other
instrument to which Calogic is now a party or by which it or any of its
properties or assets may be bound, except for defaults and violations which,
individually or in the aggregate, would not have a material adverse effect on
the Business Condition of Calogic.
3.14 Major Contracts. Calogic is not a party to or subject to:
---------------
(a) Any union contract, or any employment contract or arrangement
(other than "at-will" employment arrangements) providing for future
compensation, written or oral, with any officer, consultant, director, or
employee;
(b) Any plan or contract or arrangement, written or oral, providing
for bonuses, pensions, deferred compensation, retirement payments, profit-
sharing or the like;
(c) Any joint venture contract or arrangement or any other agreement
which has involved or is expected to involve a sharing of profits;
-15-
<PAGE>
(d) Any OEM agreement, reseller or distribution agreement, volume
purchase agreement, corporate end user sales or service agreement, reproduction
or replication agreement or manufacturing agreement in which the amount involved
exceeds annually, or is expected to exceed in the aggregate over the life of the
contract, $50,000 or pursuant to which Calogic has granted or received
manufacturing rights, most favored nation pricing provisions, or exclusive
marketing, production, publishing or distribution rights related to any product,
group of products or territory;
(e) Any lease for real or personal property in which the amount of
payments which Calogic is required to make on an annual basis exceeds $50,000;
(f) Any agreement, license, franchise, permit, indenture, or
authorization which has not been terminated or performed in its entirety and not
renewed which may be, by its terms, terminated, impaired, or materially
adversely affected by reason of the execution of this Agreement and all other
agreements contemplated hereby, the consummation of the Merger, or the
consummation of the transactions contemplated hereby or thereby;
(g) Except for trade indebtedness incurred in the ordinary course of
business, any instrument evidencing or related in any way to indebtedness
incurred in the acquisition of companies or other entities or indebtedness for
borrowed money by way of direct loan, sale of debt securities, purchase money
obligation, conditional sale, guarantee, or otherwise which individually is in
the amount of $50,000 or more;
(h) Any license agreement, either as licensor or licensee (excluding
nonexclusive hardware and software licenses granted to distributors or end-users
and commercially available in-licensed software applications);
(i) Any contract or agreement containing covenants purporting to
limit Calogic's freedom to compete in any line of business in any geographic
area; or
(j) Any contract or agreement, not elsewhere specifically disclosed
pursuant to this Agreement, other than in the ordinary course of business and
involving the payment or receipt by Calogic of more than $50,000 in the
aggregate.
To the knowledge of Calogic, based upon the fact that Calogic has not
received written notice to the contrary, all contracts, arrangements, plans,
agreements, leases, licenses, franchises, permits, indentures, authorizations,
instruments and other commitments which are listed in the Calogic Disclosure
Schedule pursuant to this Section 3.14 are valid and in full force and effect
and Calogic has not, nor, has any other party thereto, materially breached any
material provisions of, or entered into material default in any material respect
under the terms thereof. Since the Audited Balance Sheet Date, Calogic has not
amended, modified or terminated the terms of the contracts or agreements
referred to in this Section 3.14 unless such amendment, modification or
termination was in the ordinary course of business and Calogic has provided
Parent with written notification of such.
3.15 Material Reductions. To Calogic's knowledge, none of the parties to
-------------------
any of the contracts identified in the Calogic Disclosure Schedule pursuant to
Section 3.14 have terminated, or, expressed to Calogic an intent to reduce or
terminate the amount of its business with Calogic by an amount in excess of
$50,000 in the aggregate.
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<PAGE>
3.16 Insurance and Banking Facilities. Section 3.16 of the Calogic
--------------------------------
Disclosure Schedule contains a complete and correct list of (i) all contracts of
insurance or indemnity of Calogic in force at the date of this Agreement
(including name of insurer or indemnitor, agent, annual premium, coverage,
deductible amounts and expiration date) and (ii) the names and locations of all
banks in which Calogic has accounts or safe deposit boxes, the designation of
each such account and safe deposit box, and the names of all persons authorized
to draw on or have access to each such account and safe deposit box. All
premiums and other payments due from Calogic with respect to any such contracts
of insurance or indemnity have been paid, and Calogic has not received any
notice that any such contract is to be canceled or terminated. All known claims
for insurance or indemnity have been presented subject to any deductible.
3.17 Employees. Section 3.17 of the Calogic Disclosure Schedule sets
---------
forth a list of (a) the names, titles, salaries and all other compensation of
all salaried Calogic employees (such term meaning permanent and temporary, full-
time and part-time employees) and (b) the wage rates for non-salaried Calogic
employees (by classification). To the knowledge of Calogic, any persons engaged
by Calogic as independent contractors, rather than employees, have been properly
classified as such and have been so engaged in accordance with all applicable
federal, foreign, state or local laws. No employee has stated to Calogic that
such employee intends to resign or retire as a result of the transactions
contemplated by this Agreement or otherwise within six months after the Closing
Date. Hours worked by and payments made to employees of Calogic have not been in
violation of the Fair Labor Standards Act or any other applicable federal,
foreign, state or local laws dealing with such matters. Calogic is not and
during the past 2 years has not been engaged in any dispute or litigation with
an employee or former employee regarding matters pertaining to intellectual
property or assignment of inventions. To the knowledge of Calogic, it is not
now, nor has it been during the past 2 years, subject to a union organizing
effort. Calogic does not have any written contract of employment or other
employment, severance or similar agreement with any of its employees or any
established policy or practice relating thereto, and all of its employees are
employees-at-will. Calogic is not a party to any pending, or to Calogic's
knowledge, threatened, labor dispute. Calogic has complied in all material
respects with all applicable federal, state and local laws, ordinances, rules
and regulations and requirements relating to the employment of labor, including
but not limited to the provisions thereof relating to wages, hours, collective
bargaining and ensuring equality of opportunity for employment and advancement
of minorities and women. There are no claims pending, or, to the knowledge of
Calogic, threatened to be brought, in any court or administrative agency by any
former or current Calogic employees for compensation, pending severance
benefits, vacation time, vacation pay or pension benefits, or, to the knowledge
of Calogic any other claim threatened or pending in any court or administrative
agency from any current or former employee or any other Person arising out of
Calogic's status as employer, whether in the form of claims for employment
discrimination, harassment, unfair labor practices, grievances, wrongful
discharge, or otherwise.
3.18 Employee Benefit Plans. Each Plan (as defined below) covering
----------------------
active, former, or retired employees of Calogic is listed in Section 3.18 of the
Calogic Disclosure Schedule. "Plan" means any employee benefit plan as defined
----
in Section 3(3) of ERISA (as defined below) and will also include any Code
Section 125 flexible benefit plan, dependent care reimbursement plan,
employment, severance or similar contract, arrangement or policy and each plan
or arrangement providing for medical care benefits, insurance coverage
(including any self-insured arrangements), workers' compensation, disability
benefits, supplemental unemployment benefits, vacation benefits, pension or
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retirement benefits or for deferred compensation, profit-sharing, bonuses,
phantom stock, stock options, stock appreciation rights or other forms of
incentive compensation or post-retirement insurance, compensation or benefits.
Calogic has provided to Parent a copy of each Plan, and where applicable, any
related trust agreement, annuity, or insurance contract, test results for Code
Section 401(k) and 401(m) nondiscrimination requirements and Code Section 416
top-heavy requirements for the past three years; any material correspondence
with the Internal Revenue Service or Department of Labor; and ; a copy of the
most recent IRS determination or opinion letter. All annual reports (Form 5500)
required to be filed with the Internal Revenue Service have been properly filed
on a timely basis, and Calogic has provided copies of the three most recently
filed Forms 5500 for each Plan for which such Forms 5500 were required to be
filed. Each Plan intended to be qualified under Section 401(a) of the Code has
been determined by the Internal Revenue Service to be so qualified and, to the
knowledge of Calogic, no event has occurred and no condition exists with respect
to the form or operation of such Plans that would cause the loss of such
qualification or the imposition of any material liability, penalty or tax under
ERISA or the Code. To the knowledge of Calogic, each trust maintained in
connection with a Plan is exempt from federal income tax under Section 501(a) of
the Code.. No operational error has occurred which would adversely affect the
qualified status of the Plan. No Plan is covered by Title IV of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or Section 412 of
-----
the Code. No "prohibited transaction," as defined in ERISA Section 406 or Code
Section 4975 has occurred with respect to any Plan, unless such a transaction
was exempt from such rules. Each Plan has been maintained and administered in
material compliance with its terms and with the requirements prescribed by any
and all statutes, orders, rules and regulations, including but not limited to
ERISA and the Code, which are applicable to such Plans. To the knowledge of
Calogic, there are no pending or threatened claims against or otherwise
involving any of the Plans and no suit, action, or other litigation (excluding
claims for benefits incurred in the ordinary course of Plan activities) has been
brought against or with respect to any Plan. All contributions, reserves, or
premium payments to the Plan, accrued to the date hereof have been made or
provided for. Neither Calogic nor any entity which is considered one employer
with Calogic under Section 414 of the Code or Section 4001 of ERISA has ever
maintained or contributed to or incurred or, to the knowledge of Calogic,
expects to incur liability with respect to any Plan subject to Title IV of ERISA
or any "multi-employer plan" within the meaning of Section 4001(a)(3) of ERISA.
There are no restrictions on the rights of Calogic to amend or terminate any
Plan without incurring any liability thereunder. Calogic has not engaged in or
is a successor or parent corporation to an entity that has engaged in a
transaction described in ERISA Section 4069. There have been no amendments to,
written interpretation of, or announcement (whether or not written) by Calogic
relating to, or change in employee participation or coverage under, any Plan.
Neither Calogic nor any of its ERISA affiliates have any current or projected
liability in respect of post-employment or post-retirement welfare benefits for
retired or former employees of Calogic other than health care continuation
benefits required to be provided under applicable law. No tax under Section
4980B or 4980D of the Code has been incurred in respect of any Plan that is a
group health plan, as defined in Section 5000(b)(1) of the Code. Neither
Calogic nor any Plan has received a distribution of stock from any converted
mutual insurance company.
3.19 Certain Agreements. Except as contemplated by this Agreement,
------------------
neither the execution and delivery of this Agreement and all other agreements
contemplated hereby, nor the consummation of the transactions contemplated
hereby will: (i) result in any payment by Calogic (including, without
limitation, severance, unemployment compensation, parachute payment, bonus or
otherwise) becoming due to any director, employee, or independent contractor of
Calogic under any Plan, agreement, or
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<PAGE>
otherwise, (ii) increase any benefits otherwise payable under any Plan or
agreement or (iii) result in the acceleration of the time of payment or vesting
of any such benefits.
3.20 Power of Attorney. Calogic has no powers of attorney outstanding
-----------------
(other than those issued in the ordinary course of business).
3.21 Brokers and Finders. Neither Calogic nor any of its stockholders has
-------------------
retained any broker, finder, or investment banker in connection with this
Agreement or any of the transactions contemplated by this Agreement, nor does or
will Calogic owe any fee or other amount to any broker, finder, or investment
banker in connection with this Agreement or the transactions contemplated by
this Agreement.
3.22 Certain Payments. To the knowledge of Calogic, neither Calogic nor
----------------
any Person acting on behalf of Calogic has, directly or indirectly, on behalf of
or with respect to Calogic: (i) made an unreported political contribution, (ii)
made or received any payment which was not legal to make or receive, (iii)
engaged in any material transaction or made or received any material payment
which was not properly recorded on the books of Calogic, (iv) created or used
any "off-book" bank or cash account or "slush fund," or (v) engaged in any
conduct constituting a violation of the Foreign Corrupt Practices Act of 1977.
3.23 Environmental Matters. Except as set forth in the Environmental
---------------------
Assessment Report (as defined in section 8.10) (i) to the knowledge of Calogic,
Calogic has complied in all material respects with all federal, state and local
laws (including, without limitation, case law, rules, regulations, orders,
judgments, decrees, permits, licenses and governmental approvals) which are
intended to protect the environment and/or human health or safety (collectively,
"Environmental Laws"); (ii) Calogic has not handled, generated, used, stored,
------------------
transported or disposed of any material, substance or waste which is regulated
by Environmental Laws ("Hazardous Materials"), except in material compliance
-------------------
with Environmental Laws; (iii) to the knowledge of Calogic there is not now, nor
has there ever been, any underground storage tank or asbestos on any real
property owned, operated or leased by Calogic; (iv) Calogic has not conducted,
nor has it received notice of, any environmental investigations, studies,
audits, tests, reviews or analyses, the purpose of which was to discover,
identify, or otherwise characterize the condition of the soil, groundwater, air
or the presence of Hazardous Materials at any real property owned, operated or
leased by Calogic; and (v) Calogic has received no notice of any "Environmental
Liabilities". For purposes of this Agreement, "Environmental Liabilities" are
-------------------------
any claims, demands, or liabilities under Environmental Laws which (i) arise out
of or in any way relate to Calogic's operations or activities, or any real
property at any time owned, operated or leased by Calogic, whether vested or
unvested, contingent or fixed, actual or potential, and (ii) arise from or
relate to actions occurring (including any failure to act) or conditions
existing on or before the Closing Date.
3.24 Enforceability of Contracts, etc.
---------------------------------
(a) To the knowledge of Calogic, based upon the fact that Calogic
has not received written notice to the contrary, no Person that is a party to
any contract, agreement, commitment or plan to which Calogic is a party has a
valid defense, on account of non-performance or malfeasance by Calogic, which
would make any such contracts, agreement, commitment or plan not valid and
binding upon or enforceable against such parties in accordance with their terms,
except to the extent such
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<PAGE>
enforceability may be subject to or limited by bankruptcy, insolvency,
reorganization, arrangement or similar laws affecting the rights of creditors
generally and usual equity principles.
(b) To the knowledge of Calogic, based upon the fact that Calogic has
not received written notice to the contrary, neither Calogic nor any other
Person, is in material breach or violation of, or default under, any material
contract, agreement, arrangement, commitment or plan to which Calogic is a
party, and no event or action has occurred, is pending, or, to the knowledge of
Calogic, is threatened, which, after the giving of notice, or the lapse of time,
or otherwise, would constitute a material breach or a default by Calogic or, to
the knowledge of Calogic, any other Person, under any material contract,
agreement, arrangement, commitment or plan to which Calogic is a party.
3.25 Accounting Matters. To the knowledge of Calogic, neither Calogic nor
------------------
any of its affiliates has taken or agreed to, or plans to, take any action that
would prevent Parent from accounting for the Merger as a "pooling of interests"
in accordance with generally accepted accounting principles. Accounting
Principles Board Opinion No. 16 and all published rules, regulations and
policies of the Commission.
3.26 Year 2000. To the knowledge of Calogic, any reprogramming required
---------
to permit the proper functioning, in and following the year 2000, of Calogic's
computer systems and equipment containing embedded microchips used in Calogic's
business, and the testing of all such systems and equipment, as so reprogrammed,
will be completed by December 31, 1999. To the knowledge of Calogic, the cost
to the Company of such reprogramming and testing and the reasonably foreseeable
consequences of year 2000 to the Company (including, without limitation,
reprogramming errors, products or services provided by Calogic and the failure
of others' systems or equipment) will not have a material adverse effect on
Calogic's Business Condition.
3.27 Disclosure. Neither the representations or warranties made by
----------
Calogic or the Stockholders in this Agreement, nor the Calogic Disclosure
Schedule or any other certificate executed and delivered by Calogic or the
Stockholders pursuant to this Agreement, when taken together, contains any
untrue statement of a material fact, or omits to state a material fact necessary
to make the statements or facts contained herein or therein not misleading in
light of the circumstances under which they were furnished.
3.29 Reliance. The foregoing representations and warranties are made by
--------
Calogic and the Stockholders with the knowledge and expectation that Parent and
Merger Sub are placing reliance thereon.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDERS
Except as set forth in the disclosure schedule of the Stockholders dated as
of the date hereof and delivered herewith to Parent (the "Stockholder Disclosure
Schedule") which identifies the section and subsection to which each disclosure
therein relates, and whether or not the Stockholder Disclosure
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<PAGE>
Schedule is referred to in a specific section or subsection, each Stockholder
severally represents and warrants to Parent and Merger Sub as follows:
(a) Subject to applicable community property laws, such Calogic
Stockholder is the lawful owner of the shares of Calogic Common Stock to be
exchanged for the Parent Merger Shares pursuant to this Agreement and has, and
on the Closing Date will have, good and clear title to such shares of Calogic
Common Stock, free of all Liens.
(b) Such Stockholder has, and on the Closing Date will have, full
legal right, power and authority to enter into this Agreement and to sell and
deliver the shares of Calogic Common Stock owned by him, her or it in the manner
provided herein. Such Stockholder has duly and validly executed this Agreement
and has, or prior to the Closing, will have duly and validly executed and
delivered all other agreements contemplated hereby to be executed by such
stockholder, and each of this Agreement and such other agreements constitutes a
valid, binding and enforceable obligation of such Stockholder in accordance with
its terms except insofar as enforceability may be affected by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally, and general principles of equity.
(c) The execution, delivery and performance of this Agreement and the
other agreements contemplated hereby by such Stockholder, and the consummation
of the transactions contemplated hereby or thereby, will not require, on the
part of such Stockholder, any consent, approval, authorization or other order
of, or any filing with, any Governmental Entity, or under any contract,
agreement or commitment to which such Stockholder is a party or by which such
Stockholder or property of such Stockholder is bound, assuming the accuracy of
the representations and warranties of Parent and Merger Sub contained in this
Agreement and the other agreements contemplated hereby, except for (i) the
filing by Calogic and Merger Sub of the appropriate Merger Documents with the
Secretary of State of California and Delaware, (ii) any filings required by the
H-S-R Act, and (iii) the filings described in Section 5.7, and will not
constitute a violation on the part of such Stockholder of any law,
administrative regulation or ruling or court decree, or any contract, agreement
or commitment, applicable to such Stockholder or property of such Stockholder.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as set forth in the disclosure schedule of Parent dated as of the
date hereof and delivered herewith to Calogic (the "Parent Disclosure Schedule")
--------------------------
which identifies the section and subsection to which each disclosure therein
relates, and whether or not the Parent Disclosure Schedule is referred to in a
specific section or subsection, Parent and Merger Sub jointly and severally
represent and warrant to Calogic as follows:
5.1 Organization and Qualification. Parent is a corporation duly
------------------------------
organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts, has all requisite corporate power and authority
to own, lease and operate its properties and to carry on its businesses as now
being conducted, and is duly qualified and in good standing to do business in
each jurisdiction in
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<PAGE>
which a failure to so qualify would have a material adverse effect on the
Business Condition of Parent. Merger Sub is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, is recently organized and has conducted no business activities,
other than as contemplated by this Agreement.
5.2 Capitalization. The authorized capital stock of Parent consists of
--------------
1,000,000 shares of preferred stock, $.01 par value per share, of which no
shares are issued or outstanding or held in Parent's treasury, and 40,000,000
shares of Parent Common Stock, of which, as of September 30, 1999: (a)
18,093,000 shares were validly issued and outstanding, fully paid and
nonassessable and (b) 3,499,692 shares were reserved for issuance pursuant to
Parent's stock option and stock purchase plans for its employees and directors.
Except for options and rights relating to shares described in clause (b) of the
preceding sentence, and except as set forth in Section 5.2 of the Parent
Disclosure Schedule or the Reports (as defined in Section 5.5), there are no
options, warrants or other rights, agreements or commitments (contingent or
otherwise) obligating Parent to issue shares of its capital stock or any other
securities convertible into or evidencing the right to subscribe to shares of
its capital stock.
5.3 Authority Relative to this Agreement. The execution, delivery and
------------------------------------
performance of this Agreement and all other agreements contemplated hereby by
Parent and Merger Sub have been duly authorized by all necessary action of the
Boards of Directors and stockholders of Parent and Merger Sub. Certified copies
of the resolutions adopted by the Boards of Directors of Parent and Merger Sub
and Parent as sole stockholder of Merger Sub approving this Agreement, all other
agreements contemplated hereby and the Merger have been or will be provided to
Calogic prior to Closing. Each of Parent and Merger Sub has duly and validly
executed and delivered this Agreement and has, or prior to Closing, will have
duly and validly executed and delivered all other agreements contemplated hereby
to be executed by it, and each of this Agreement and such other agreements
constitutes a valid, binding and enforceable obligation of each of Parent and
Merger Sub in accordance with its terms except insofar as enforceability may be
affected by bankruptcy, insolvency, reorganization, moratorium of similar laws
affecting creditors' rights generally, and general principles of equity.
5.4 Non-Contravention. Assuming the accuracy of the representations and
-----------------
warranties of Calogic and its stockholders contained in the Agreement and the
other agreements contemplated hereby, neither the execution, delivery or
performance of this Agreement and all other agreements contemplated hereby by
Parent and Merger Sub, nor the consummation of the Merger or any other
transaction described herein, does or will, after the giving of notice, or the
lapse of time, or otherwise, conflict with, result in a breach of, or constitute
a default under, the Charter Documents of Parent or Merger Sub or any federal,
foreign, state or local court or administrative order or process, statute, law,
ordinance, rule or regulation, or any contract, agreement or commitment to which
Parent is a party, or under which Parent is obligated, or by which Parent or any
of the rights, properties or assets of Parent are subject or bound; result in
the creation of any Lien upon, or otherwise adversely affect, any of the rights,
properties or assets of Parent; terminate, amend or modify, or give any party
the right to terminate, amend, modify, abandon or refuse to perform or comply
with, any contract, agreement or commitment to which Parent is a party, or under
which Parent is obligated, or by which Parent or any of the rights, properties
or assets of Parent are subject or bound; or accelerate, postpone or modify, or
give any party the right to accelerate, postpone or modify, the time within
which, or the terms and conditions under which, any liabilities, duties or
obligations are to be satisfied or performed, or any rights or benefits are to
be received, under any contract, agreement or commitment to which Parent is a
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party, or under which Parent may be obligated, or by which Parent or any of the
rights, properties or assets of Parent are subject or bound, other than any of
the foregoing which would not have, individually or in the aggregate, a material
adverse effect on Business Condition of Parent.
5.5 Reports and Financial Statements. Parent has previously furnished or
--------------------------------
made available to Calogic true and correct copies of its (i) Form 10-K for the
period ended December 31, 1998, (ii) its Quarterly Report on Form 10-Q for the
period ended June 30, 1999 (the "Recent 10-Q-"), (iii) all other reports filed
-----------
by it with the Securities and Exchange Commission (the "Commission") under the
----------
Securities Exchange Act of 1934, as amended (the "Exchange Act") since January
1, 1999 and (iv) Parent hereby agrees to furnish to Calogic true and correct
copies of all reports filed by it with the Commission after the date hereof and
prior to the Closing all in the form (including exhibits) so filed
(collectively, the "Reports"). As of their respective dates, the Reports
-------
complied or will comply in all material respects with the then applicable
published rules and regulations of the Commission with respect thereto at the
date of their issuance and did not or will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. As of the date hereof, no additional
filings or amendments to previously filed Reports are required pursuant to such
rules and regulations. Each of the audited consolidated financial statements and
unaudited interim financial statements included in Parent's Reports complied as
to form in all material respects with the published rules and regulations of the
Commission applicable thereto and has been prepared in accordance with generally
accepted accounting principles applied on a consistent basis (except as may be
indicated therein or in the notes thereto) and fairly presents the financial
position of the entity or entities to which it relates as at its date or the
results of operations, stockholders' equity or cash flows of such entity or
entities (subject, in the case of unaudited statements, to the absence of
footnote disclosure and in the case of unaudited interim statements to year-end
adjustments, which will not be material either individually or in the aggregate,
and except as described in Section 5.5 of the Parent Disclosure Schedule).
5.6 Validity of Parent Merger Shares. The Parent Merger Shares to be
--------------------------------
issued in the Merger will, when issued, be, validly issued, fully paid and
nonassessable and not subject to any preemptive rights (other than those which
have been duly waived) or to any agreement to which Parent is a party or by
which Parent may be bound.
5.7 Consents and Approvals of Governmental Authorities. Assuming the
--------------------------------------------------
accuracy of the representations and warranties of Calogic and its stockholders
contained in the Agreement and the other agreements contemplated hereby, except
for (a) the requirements of state securities (or "Blue Sky") laws, (b) the
filing and recording of the Merger Documents as provided by the CGCL and the
DGCL, (c) the filing of appropriate documents with the Nasdaq Stock Market and
(d) the filing of a Form D and a Form 8-K with the Commission, if applicable,
and (e) any filings required by the H-S-R Act, no consent, approval order, or
authorization of, or registration, declaration, or filing with or exemption by,
any Governmental Entity is required to be made or obtained by Parent or Merger
Sub in connection with the execution, delivery and performance of this Agreement
and all other agreements contemplated hereby by Parent and Merger Sub or the
consummation of the Merger or any other transaction described herein.
5.8 Absence of Certain Changes or Events. Since September 30, 1999, there
------------------------------------
has not been any material adverse change in the Business Condition of Parent.
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5.9 Investment Matters. Parent is acquiring the Calogic Common Stock for
------------------
its own account for investment purposes only and not with a view to, or for sale
in connection with, any resale or distribution thereof.
5.10 Disclosure. Neither the representations or warranties made by Parent
----------
in this Agreement, nor the Parent Disclosure Schedule or any other certificate
executed and delivered by Parent pursuant to this Agreement, when taken together
and with knowledge of the contents of the Reports, contains any untrue statement
of a material fact, or omits to state a material fact necessary to make the
statements or facts contained herein or therein not misleading in light of the
circumstances under which they were furnished.
5.11 Reliance. The foregoing representations and warranties are made by
--------
Parent with the knowledge and expectation that Calogic and the Stockholders are
placing reliance thereon.
5.12 Accounting Matters. To the knowledge of Parent, neither Parent nor
------------------
any of its affiliates has taken or agreed to, or plans to, take any action that
would prevent Parent from accounting for the Merger as a "pooling of interests"
in accordance with generally accepted accounting principles. Accounting
Principles Board Opinion No. 16 and all published rules, regulations and
policies of the Commission.
5.13 WARN Act. Parent has no intention of initiating a "plant closing" or
--------
"mass layoff" within the meaning of the Worker Adjustment and Retraining
Notification Act with respect to Calogic employees.
5.14 Certain Tax Matters. To Parent's knowledge, neither Parent nor any
-------------------
of its subsidiaries has taken or agreed to take any action that would reasonably
be expected to cause the Merger to fail to qualify as a reorganization within
the meaning of Section 368(a) of the Code.
ARTICLE VI
COVENANTS OF CALOGIC
During the period from the date of this Agreement (except as
otherwise indicated) and continuing until the earlier of the termination of this
Agreement or the Effective Time, each of Calogic and the Stockholders agree
(except as expressly contemplated by this Agreement or otherwise permitted with
Parent's prior written consent which consent shall not be unreasonably
withheld):
6.1 Conduct of Business in Ordinary Course. Calogic will carry on its
--------------------------------------
business in the ordinary course in substantially the same manner as heretofore
conducted and, to the extent consistent with such business, use all reasonable
best efforts to preserve intact its present business organization, keep
available the services of its present officers, consultants and employees and
preserve its relationships with customers, suppliers and distributors and others
having business dealings with it. Calogic will confer on a regular and frequent
basis with representatives of Parent to report operational matters of a material
nature and to report the general status of the ongoing operations of the
business of
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<PAGE>
Calogic. The foregoing notwithstanding, Calogic will not except as consented to
in writing by Parent (such consent not to be unreasonably withheld):
(a) other than in the ordinary course of business, enter into any
material commitment or transaction, including but not limited to any purchase of
assets (other than raw materials, supplies or cash equivalents) for a purchase
price in excess of $50,000;
(b) grant any bonus, severance or termination pay to any officer,
director, independent contractor or employee of Calogic except as set forth in
Section 3.8 of the Calogic Disclosure Schedule;
(c) enter into or amend any agreements pursuant to which any other
party is granted support, service, marketing or publishing rights, or is granted
distribution rights of any type or scope with respect to any products of
Calogic, other than in the ordinary course of business;
(d) other than in the ordinary course of business, enter into or
terminate any contracts, arrangements, plans, agreements, leases, licenses,
franchises, permits, indentures, authorizations, instruments, or commitments, or
amend or otherwise change in any material respect the terms thereof in a manner
adverse to Calogic;
(e) commence a lawsuit other than: (i) for the routine collection of
bills, (ii) in such cases where Calogic in good faith determines that failure to
commence suit would result in a material impairment of a valuable aspect of
Calogic's business; provided, that Calogic consults with Parent prior to filing
such suit, or (iii) for a breach of this Agreement or any agreement related
hereto;
(f) modify in any material respect existing discounts or other terms
and conditions with dealers, distributors and other resellers of Calogic's
products or services in a manner adverse to Calogic;
(g) accelerate the vesting or otherwise modify any Calogic Option,
restricted stock or other outstanding rights or other securities;
(h) take any action which would make any representation or warranty
in this Agreement untrue or incorrect, as if made as of such time;
(i) make or change any material election in respect of Taxes, adopt
or change any accounting method in respect of Taxes, enter into any closing
agreement, settle any claim or assessment in respect of Taxes, or consent to any
extension or waiver of the limitation period applicable to any claim or
assessment in respect of Taxes; or
(j) agree in writing or otherwise to take any of the foregoing
actions.
6.2 Dividends, Issuance of, or Changes in Securities. Calogic will not:
------------------------------------------------
(i) declare or pay any dividends on or make other distributions to its
stockholders (whether in cash, shares or property), (ii) issue, deliver, sell,
or authorize, propose, or agree to, or commit to the issuance, delivery, or sale
of any shares of its capital stock of any class, any Company Voting Debt or any
securities convertible into its capital stock, any options, warrants, calls,
conversion rights, commitments, agreements, contracts,
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<PAGE>
understandings, restrictions, arrangements or rights of any character obligating
Calogic to issue any such shares, Company Voting Debt or other convertible
securities except as any of the foregoing is required by Calogic Options; (iii)
split, combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of capital stock of Calogic, (iv) repurchase or otherwise acquire,
directly or indirectly, any shares of its capital stock or options or warrants
related thereto, or (v) propose any of the foregoing except as contemplated
herein in connection with the transactions described in this Agreement.
6.3 Governing Documents. Calogic will not amend its Charter Documents.
-------------------
6.4 No Acquisitions. Calogic will not authorize, recommend, propose or
---------------
announce an intention to authorize, recommend or propose, or enter into a letter
of intent (whether or not binding), an agreement in principle or an agreement
with respect to any merger, consolidation or business combination (other than
the Merger), or any acquisition of assets or securities, other than acquisitions
in the ordinary course of business.
6.5 No Dispositions. Calogic will not sell, lease, license, transfer,
---------------
mortgage, encumber or otherwise dispose of any of its material assets or cancel,
release, or assign any material indebtedness or claim, except in the ordinary
course of business.
6.6 Indebtedness. Calogic will not incur indebtedness in excess of an
------------
aggregate amount of $500,000 for borrowed money by way of direct loan, sale of
debt securities, purchase money obligation, conditional sale, guarantee or
otherwise.
6.7 Compensation. Calogic will not adopt or amend, or modify in any
------------
material respect, any Plan or pay any pension or retirement allowance not
required by any existing Plan. Calogic will not enter into or modify any
employment or severance contracts, increase the salaries, wage rates or fringe
benefits of its officers, directors or employees or pay bonuses or other
remuneration except for current salaries, severance and other remuneration for
which Calogic is obligated under arrangements existing prior to the Unaudited
Balance Sheet Date to which Calogic is a party and which have been disclosed in
the Calogic Disclosure Schedule.
6.8 Claims. Calogic will not settle any claim, action or proceeding,
------
except in the ordinary course of business.
6.9 Access to Properties and Records. Subject to contractual and other
--------------------------------
obligations, Calogic will give Parent and its representatives full access, at a
place reasonably acceptable to Calogic, during reasonable business hours and
following reasonable notice but in such a manner as not unduly to disrupt the
business of Calogic, to its senior management, senior technical personnel,
premises, properties, contracts, commitments, books, records and affairs, and
will provide Parent with such financial, technical and operating data and other
information pertaining to its business as Parent may reasonably request. With
Calogic's prior consent, which will not be unreasonably withheld, Parent will be
entitled in conjunction with Calogic personnel to make appropriate inquiries of
third parties in the course of its investigation.
6.10 Breach of Representations and Warranties. Calogic will not take any
----------------------------------------
action that would cause or constitute a breach of any of the representations and
warranties set forth in Article III or that
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would cause any of such representations and warranties to be inaccurate in any
material respect or that would constitute a breach of any of its other
obligations under this Agreement. In the event of, and promptly after obtaining
knowledge of, the occurrence of or the pending or threatened occurrence of any
event that would cause or constitute such a breach or inaccuracy, Calogic will
give detailed notice thereof to Parent and will use its reasonable best efforts
to prevent or remedy promptly such breach or inaccuracy.
6.11 Consents. Calogic will promptly apply for or otherwise seek and use
--------
its reasonable best efforts to obtain, all Consents, and make all filings
required with respect to the consummation of the Merger.
6.12 Tax Returns. Calogic will promptly provide or make available to
-----------
Parent copies of all of its tax returns, reports and information statements that
have been filed or are filed prior to the Closing Date.
6.13 Stockholder Approval. Each of the Stockholders agrees to vote all of
--------------------
such Stockholder's shares of Calogic Common Stock for the approval of this
Agreement and the appropriate Merger Documents as required by the CGCL.
6.14 Preparation of Disclosure and Solicitation Materials. As promptly as
----------------------------------------------------
practicable after the execution of this Agreement, Calogic will promptly submit
to its stockholders, information and documents relating to Calogic, its business
or operations, Parent, its business or operations, the terms of the Merger and
this Agreement as reasonably agreed by counsel to Parent and Calogic and
intended to comply in all material respects with Regulation D under the
Securities Act and the material facts concerning all payments which in the
absence of stockholder approval would be "Parachute Payments" as defined in Code
Section 280G(b)(2), in form and substance satisfactory to Parent and its
counsel, to satisfy all requirements applicable to Calogic of applicable state
and federal securities laws, the CGCL and Code Section 280G(b)(5)(B) and the
regulations thereunder. Calogic will promptly set a record date, give notice of
a special meeting, solicit consents and/or give notices to holders of Dissenting
Shares so as to facilitate the Closing of the Merger as of the earliest
practicable date.
6.15 Exclusivity; Acquisition Proposals. Unless and until this Agreement
----------------------------------
will have been terminated by either party pursuant to Article XI hereof and
thereafter subject to Section 11.5, neither Calogic nor any of the Stockholders
will (and each will use its reasonable best efforts to ensure that none of its
officers, directors, agents, representatives or affiliates) take or cause or
permit any Person to take, directly or indirectly, any of the following actions
with any party other than Parent and its designees: (i) solicit, encourage,
initiate or participate in any negotiations, inquiries, or discussions with
respect to any offer or proposal to acquire all or any significant part of
Calogic's business, assets or capital stock, whether by merger, consolidation,
other business combination, purchase of assets, tender or exchange offer or
otherwise (each of the foregoing, an "Acquisition Transaction"), (ii) disclose,
-----------------------
in connection with an Acquisition Transaction, any information not customarily
disclosed to any Person other than Parent or its representatives concerning
Calogic's business or properties or afford to any Person other than Parent or
its representatives access to its properties, books, or records, except in the
ordinary course of business and as required by law or pursuant to a governmental
request for information, (iii) enter into or execute any agreement relating to
an Acquisition Transaction, or (iv) make or authorize any public statement,
recommendation or solicitation in support of any Acquisition Transaction or any
offer or proposal relating to an Acquisition Transaction other than with respect
to
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<PAGE>
the Merger. In the event that Calogic is contacted by any third party expressing
an interest in discussing an Acquisition Transaction, Calogic will promptly
notify Parent of such contact and the identity of the party so contacting
Calogic.
6.16 Notice of Events. Throughout the period between the date of this
----------------
Agreement and the Closing, Calogic will promptly advise and consult with Parent
regarding (i) any and all material events and developments concerning its
financial position, results of operations, assets, liabilities or business and
(ii) any and all material adverse changes to the representations, warranties and
covenants of Calogic and the Stockholders contained in this Agreement.
6.17 Reasonable Best Efforts. Calogic and each of the Stockholders will
-----------------------
use their reasonable best efforts to effectuate the transactions contemplated
hereby and to fulfill and cause to be fulfilled the conditions to Closing under
this Agreement.
6.18 Insurance. Calogic will use its reasonable best efforts to maintain
---------
in force at the Effective Time policies of insurance of the same character and
coverage as those described in the Calogic Disclosure Schedule, and Calogic will
promptly notify Parent in writing of any material changes in such insurance
coverage occurring prior to the Effective Time.
ARTICLE VII
COVENANTS OF PARENT
During the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement or the Effective Time (or later
where so indicated), Parent and Merger Sub agree (except as expressly
contemplated by this Agreement or with Calogic's prior written consent which
consent will not be unreasonably withheld):
7.1 Breach of Representations and Warranties. Neither Parent nor Merger
----------------------------------------
Sub will take any action which would cause or constitute a breach of any of the
representations and warranties set forth in Article V or which would cause any
of such representations and warranties to be inaccurate in any material respect
or that would constitute a breach of any of its other obligations under this
Agreement. In the event of, and promptly after becoming aware of, the
occurrence of or the pending or threatened occurrence of any event which would
cause or constitute such a breach or inaccuracy, Parent will give detailed
notice thereof to Calogic and will use its reasonable best efforts to prevent or
remedy promptly such breach or inaccuracy.
7.2 Additional Information; Access. Parent will provide Calogic and its
------------------------------
stockholders with the information relating to Parent referred to in Section 5.5.
In addition, Parent will afford to Calogic and to its counsel and to the persons
expected to become stockholders of Parent pursuant to the Merger access
throughout the period prior to the Effective Time to its senior management and
all other information concerning Parent as Calogic or such stockholder may
reasonably request. Such stockholders will also be afforded the opportunity to
ask questions and to receive accurate and complete answers from Parent
concerning the terms and conditions of the Merger and the issuance of the Parent
Merger Shares pursuant thereto.
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<PAGE>
7.3 Consents. Parent will promptly apply for or otherwise seek, and use
--------
its reasonable best efforts to obtain, all consents and approvals, and make
filings, required with respect to the consummation of the Merger.
7.4 Reasonable Best Efforts. Each of Parent and Merger Sub will use its
-----------------------
reasonable best efforts to effectuate the transactions contemplated hereby and
to fulfill and cause to be fulfilled the conditions to Closing under this
Agreement.
7.5 Officers and Directors. Parent agrees that all rights to
----------------------
indemnification existing on the date hereof in favor of the present or former
officers and directors of Calogic with respect to actions taken in their
capacities as directors or officers of Calogic prior to the Effective Time as
provided in the Charter Documents of Calogic and any applicable indemnification
agreements (copies of which have been provided to Parent) will survive the
Merger and continue in full force and effect following the Effective Time and
the obligations related thereto will be assumed by Parent. Notwithstanding the
foregoing the provisions of such Charter Documents or agreements will have no
effect on the obligations of any stockholders of Calogic pursuant to Article X
of this Agreement or the Escrow Agreement.
7.6 Nasdaq National Market Listing. Parent will use its reasonable best
------------------------------
efforts to cause the Parent Merger Shares to be authorized for trading on the
Nasdaq National Market as soon as practicable. Parent will use its best efforts
to issue its fourth quarter 1999 and year-end earnings press release prior to
February 29, 2000.
7.7 Notice of Events. Throughout the period between the date of this
----------------
Agreement and the Closing, Parent will promptly advise and consult with Calogic
regarding any and all material adverse change to the representations, warranties
and covenants of Parent and Merger Sub contained in this Agreement.
7.8 Third Party Beneficiaries. Sections 7.5 and 7.6 will survive the
-------------------------
consummation of the Merger, are intended to benefit the stockholders of Calogic
that receive Parent Merger Shares (the "New Parent Stockholders"), will be
-----------------------
binding on Parent and its successors and assigns, and will be enforceable by the
officers and directors of Calogic and the New Parent Stockholders.
7.9 Exclusivity; Acquisition Proposals. Unless and until this Agreement
----------------------------------
will have been terminated by either party pursuant to Article XI hereof and
thereafter subject to Section 11.5, Parent will not (and will use its reasonable
best efforts to ensure that none of its officers, directors, agents,
representatives or affiliates) take or cause or permit any Person to take,
directly or indirectly any of the following actions with any party other than
Calogic or its Stockholders unless the Board of Directors of Parent believes,
after consultation with outside legal counsel, that the failure to take such
actions would be inconsistent with the fiduciary duties of the Board of
Directors: (i) solicit, encourage, initiate or participate in any negotiations,
inquiries, or discussions with respect to any offer or proposal to acquire all
or any significant part of Parent's business, assets or capital stock, whether
by merger, consolidation, other business combination, purchase of assets, tender
or exchange offer or otherwise (each of the foregoing, an "Acquisition
-----------
Transaction"), (ii) disclose, in connection with an Acquisition Transaction, any
- -----------
information not customarily disclosed to any Person other than to Calogic and
the Stockholders concerning Parent's business or properties or afford to any
Person other than to Calogic
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<PAGE>
and the Stockholders access to its properties, books, or records, except in the
ordinary course of business and as required by law or pursuant to a governmental
request for information, (iii) enter into or execute any agreement relating to
an Acquisition Transaction, or (iv) make or authorize any public statement,
recommendation or solicitation in support of any Acquisition Transaction or any
offer or proposal relating to an Acquisition Transaction other than with respect
to the Merger. In the event that Parent is contacted by any third party
expressing an interest in discussing an Acquisition Transaction, Parent will
promptly notify Calogic of such contact and the identity of the party so
contacting Parent.
ARTICLE VIII
ADDITIONAL AGREEMENTS
In addition to the foregoing, Parent, Merger Sub, Calogic and the
Stockholders each agree to take the following actions after the execution of
this Agreement.
8.1 Investment Agreements. All resales of Parent Merger Shares by the New
---------------------
Parent Stockholders will be subject to the restrictions imposed by the
investment agreements (the "Investment Agreements") in the form attached as
---------------------
Exhibit 8.1 and the registration rights agreement (the "Registration Rights
- ----------- -------------------
Agreement") in the form attached as Exhibit 8.2, each of which will be entered
- --------- -----------
into by each New Parent Stockholder and Parent. Parent will be entitled to
place the legends as referred to in the form of Investment Agreement on each
certificate evidencing any Parent Common Shares to be received by New Parent
Stockholders pursuant to the terms of this Agreement and to issue appropriate
stop transfer instructions to the transfer agent for Parent Common Shares
consistent with the terms of the Investment Agreements.
8.2 Legal Conditions to the Merger. Each of Parent, Merger Sub, Calogic
------------------------------
and the Stockholders will use all reasonable best efforts to take actions
necessary to comply promptly with all legal requirements which may be imposed on
it with respect to the Merger. Each of Parent, Merger Sub, Calogic and the
Stockholders will use all reasonable best efforts to take all actions to obtain
(and to cooperate with the other parties in obtaining) any consent required to
be obtained or made by Calogic, Merger Sub, or Parent in connection with the
Merger, or the taking of any action contemplated thereby or by this Agreement.
8.3 Employee Benefits. Nothing contained herein will be considered as
-----------------
requiring Calogic or Parent to continue any specific plan or benefit, or to
confer upon any employee, beneficiary, dependent, legal representative or
collective bargaining agent of such employee any right or remedy of any nature
or kind whatsoever under or by reason of this Agreement, including without
limitation any right to employment or to continued employment for any specified
period, at any specified location or under any specified job category, except as
specifically provided for in an offer letter or other agreement of employment.
It is specifically understood that continued employment with Calogic or
employment with Parent is not offered or implied for any other employees of
Calogic and any continuation of employment with Calogic after the Closing will
be at will except as specifically provided otherwise in an offer letter or other
agreement of employment.
8.4 Expenses. Except as provided below, whether or not the Merger is
--------
consummated, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated
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<PAGE>
hereby and thereby, including investment banking, legal and accounting expenses,
will be paid by the party incurring such expense; provided, however, that any
expenses incurred by Calogic on its behalf or on behalf of a stockholder in
excess of an aggregate of $450,000 shall be borne or reimbursed by the
Stockholders (without regard to Section 10.4); provided, further, that Calogic
will estimate and itemize any such investment banking, legal and accounting
expenses of Calogic prior to Closing and provide Parent with a copy of such
estimate at least 2 business days prior to the Closing; and provided, further,
that the provisions of this Section 8.4 shall not be construed to relieve a
party from liability resulting from such party's breach of this Agreement.
8.5 Additional Agreements. In case at any time after the Effective Time
---------------------
any further action is reasonably necessary or desirable to carry out the
purposes of this Agreement or to vest the Surviving Corporation with full title
to all properties, assets, rights, approvals, immunities and franchises of
Calogic, the proper officers and directors of each corporation which is a party
to this Agreement will take all such necessary action. Without limiting the
foregoing, on or prior to the Closing Date, Calogic will deliver to Parent a
properly executed statement satisfying the requirements of Treasury Regulation
Sections 1.897-2(h) and 1.1445-2(c)(3) in a form reasonably acceptable to
Parent.
8.6 Public Announcements. Neither Parent, Calogic nor any of the
--------------------
Stockholders will disseminate any press release or other announcement concerning
this Agreement or the transactions contemplated herein to any third party
(except to the directors, officers and employees of the parties to this
Agreement whose direct involvement is necessary for the consummation of the
transactions contemplated under this Agreement, to the attorneys, advisors and
accountants of the parties hereto, or except as Parent or Calogic determines in
good faith to be required by applicable law) without the prior written agreement
of Parent and Calogic. In the event of any disclosure required by law, Parent
and Calogic will consult each other as to the contents thereof prior to making
such disclosure to the extent permitted by law.
8.7 Confidentiality. Calogic and Parent have entered into a Mutual Non-
---------------
Disclosure and Confidentiality Agreement dated June 17, 1999 as amended (the
"Non-Disclosure Agreement") concerning each party's obligations to protect the
confidential information of the other party. Calogic and Parent each hereby
affirm each of their obligations under such agreement. If this Agreement is
terminated in accordance with Article XI hereof, Parent will, and will cause its
accountants, counsel and other representatives to deliver to Calogic all
documents and other material, and all copies thereof, obtained by Parent or on
its behalf from Calogic in connection with this Agreement, whether so obtained
before or after the execution hereof, and will not disclose any such information
or documents to any third parties or make any use of such. If this Agreement is
terminated in accordance with Article XI hereof, Calogic will, and will cause
its accountants, counsel and other representatives to, deliver to Parent all
documents and other material, and all copies thereof, obtained by Calogic or on
its behalf or by a Stockholder from Parent in connection with this Agreement,
whether so obtained before or after the execution hereof, and will not disclose
any such information or documents to any third parties or make any use of such.
8.8 Pooling.
-------
(a) Parent, the Merger Sub, Calogic and each of Stockholders will use
all reasonable best efforts, will cooperate fully and will take all actions as
are reasonably necessary to allow the
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Merger and other transactions contemplated by this Agreement to be accounted for
as a "pooling of interests" in accordance with United States generally accepted
accounting principles which will be acceptable to the Commission.
(b) Calogic has delivered to Parent prior to the date of this
Agreement a letter that identifies all persons who it believes (based on the
advice of counsel) may be "affiliates" of Calogic, as such term is used in Rule
145 under the Securities Act and applicable accounting pronouncements of the
Commission (each such Person, an "Calogic Affiliate"). Each such Calogic
-----------------
Affiliate has executed and delivered to Parent a written agreement (an
"Affiliate Agreement") in the form of Exhibit 8.8 hereto to the effect that such
------------------- -----------
Calogic Affiliate (i) has not made and will not make any disposition of any
shares of Calogic Common Stock or other securities of Calogic in the 30-day
period prior to the Effective Time, and (ii) will not make any disposition of
any of the Parent Merger Shares to be received by such Person after the
Effective Time until Parent shall have publicly released a report including the
combined financial results of Parent and Calogic for a period of at least 30
days of combined operations of Parent and Calogic.
8.9 Hart-Scott-Rodino Filing. If and to the extent applicable, Parent,
------------------------
Calogic and each Stockholder agree to file, and to cause any other Person
obligated to do so as a result of such person's stock holdings in Parent or
Calogic, a Notification and Report Form in accordance with the notification
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the
rules and regulations thereunder (collectively, the "H-S-R Act") with the
---------
Antitrust Division of the United States Department of Justice and the Federal
Trade Commission within 10 business days of the date hereof and to use its and
their reasonable best efforts to achieve the prompt termination or expiration of
the waiting period or any extension thereof provided for under the HSR Act as a
prerequisite to the consummation of the transactions provided for herein.
8.10 Environmental Matters. Parent has, engaged Levine-Fricke, Inc. (the
---------------------
"Environmental Consultant") to do an "environmental site assessment" (the
"Environmental Assessment Report") on Calogic's premises in Freemont and
Pleasanton, California. Calogic agrees to provide reasonable access to Parent
and Environmental Consultant to such premises to permit the preparation of the
Environmental Assessment Report after Calogic has approved the engagement letter
with Environmental Consultant (which approval shall not be unreasonably
withheld) in respect of such Environmental Assessment Report.
Parent agrees to cause such report to be completed as soon as possible, and
in no event later than November 15, 1999. In the event such report indicates
that environmental contamination exists at such premises, then prior to the
Closing Date the parties hereto shall negotiate in good faith as to whether
Calogic will be liable for the costs of remediating any such contamination and
to reduce the number of Parent Merger Shares (valued at the Parent Average
Closing Price) to reflect a reasonable estimate of the liability to Calogic for
the cost of remediating such contamination; provided, however, that in the event
it is not reasonably likely that Calogic would actually be held liable for any
of the costs of remediating such contamination, then no such reduction shall be
made; provided, further, that such reduction shall reflect Calogic's share of
the cost of any such remediation reduced by the liability of any other parties
which may reasonably be determined to share in liability for such remediation
costs or by any anticipated recovery on any available insurance.
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ARTICLE IX
CONDITIONS PRECEDENT
9.1 Conditions to Each Party's Obligation to Effect the Merger. The
----------------------------------------------------------
respective obligations of each party to effect the Merger will be subject to the
satisfaction prior to the Closing Date of the following conditions:
(a) Governmental Approvals. Other than the filing of the Merger
----------------------
Documents with the Secretary of State of California and Delaware, all statutory
requirements and all Consents of Governmental Entities legally required for the
consummation of the Merger and the transactions contemplated by this Agreement
will have been filed, occurred, or been obtained, other than such Consents for
which the failure to obtain would not have a material adverse effect on the
consummation of the Merger or the other transactions contemplated hereby or on
the Business Condition of Parent or Calogic. If and to the extent applicable,
the filing and waiting period requirements under the H-S-R Act will have been
complied with and will have expired or terminated.
(b) No Restraints. No statute, rule or regulation, and no final and
-------------
nonappealable order, decree or injunction will have been enacted, entered,
promulgated or enforced by any court or Governmental Entity of competent
jurisdiction which enjoins or prohibits the consummation of the Merger.
9.2 Conditions of Obligations of Parent and Merger Sub. The obligations
--------------------------------------------------
of Parent and Merger Sub to effect the Merger are subject to the satisfaction of
the following conditions unless waived by Parent and Merger Sub:
(a) Representations and Warranties of Calogic and the Stockholders.
--------------------------------------------------------------
The representations and warranties of Calogic and the Stockholders set forth in
this Agreement will be true and correct in all material respects as of the date
of this Agreement and as of the Closing Date as though made on and as of the
Closing Date, except (i) as otherwise contemplated by this Agreement, (ii) as a
result of actions taken or not taken at the direction of or after consultation
with and written concurrence of Parent and (iii) for representations and
warranties specifically limited to an earlier date(s). Parent will have received
a certificate signed by or on behalf of each of the Stockholders and by the
chief executive officer and the chief financial officer of Calogic to such
effect on the Closing Date.
(b) Performance of Obligations of Calogic and the Stockholders.
----------------------------------------------------------
Calogic and the Stockholders will have performed in all material respects all
agreements and covenants required to be performed by them under this Agreement
prior to the Closing Date except (i) as otherwise contemplated or permitted by
this Agreement and (ii) as a result of actions taken or not taken at the
direction of or after consultation with and written concurrence of Parent, and
Parent will have received a certificate signed by each of the Stockholders and
by the chief executive officer and the chief financial officer of Calogic to
such effect on the Closing Date.
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(c) Investment and Escrow Agreements. Parent will have received from
--------------------------------
stockholders of Calogic constituting at least 95% of the Outstanding Calogic
Shares duly executed Investment Agreements and the Escrow Agreement.
(d) Employment and Noncompetition Agreements. Manuel Del Arroz will
----------------------------------------
have executed an employment agreement (the "Employment Agreement") and a non-
solicitation agreement (the "Non-Solicitation Agreement") in the form previously
provided by Parent to Calogic.
(e) Legal Action. There will not be overtly threatened or pending any
------------
action, proceeding or other application before any court or Governmental Entity
brought by any Person or Governmental Entity: (i) challenging or seeking to
restrain or prohibit the consummation of the transactions contemplated by this
Agreement, or seeking to obtain any material damages from Parent, Merger Sub or
Calogic as a result of such transactions; or (ii) seeking to prohibit or impose
any limitations on Parent's ownership or operation of all or any portion of
Calogic's business or assets, or to compel Parent to dispose of or hold separate
all or any portion of its or Calogic's business or assets as a result of the
transactions contemplated by the Agreement which if successful would have a
material adverse effect on Parent's ability to receive the anticipated benefits
of the Merger and the employment of the individuals referenced in Section
9.2(d).
(f) Opinion of Counsel. Parent will have received an opinion dated as
------------------
of the Closing Date of Cohen & Ostler, counsel to Calogic, and Cooley Godward
LLP, special counsel to Calogic, substantially in the form attached as Exhibit
-------
9.2.
- ---
(g) Consents. Parent will have received duly executed copies of all
--------
Consents relating to the leases for the 235/237/239 Whitney, Fremont, California
and Serpentine, Pleasanton, California locations.
(h) Termination of Rights and Certain Securities. Any registration
--------------------------------------------
rights, rights of refusal, voting rights, rights to any liquidation preference
or redemption rights relating to any security of Calogic will have been
terminated or waived or satisfied as of the Closing.
(i) Stockholder Approvals. This Agreement and the Merger will have
---------------------
been approved by stockholders of Calogic holding at least ninety-five percent
(95%) of the voting power of the Outstanding Calogic Shares. Any Parachute
Payments will have been approved by the percentage of holders of the Outstanding
Calogic Shares as required by law (as reasonably interpreted by counsel for
Parent).
(j) Parent Pooling Letter. Parent will have received an unqualified
---------------------
written opinion from KPMG LLP, Parent's independent accountants, to the effect
that such firm concurs with Parent's management that no conditions exist that
would preclude Parent from accounting for the Merger as a "pooling of interests"
under applicable rules and regulations of the Commission (unless the failure to
receive such opinion results from a breach by Parent or Merger Sub of any
covenant contained in this Agreement).
(k) Corporate Proceedings Satisfactory. All corporate and other
----------------------------------
proceedings to be taken by Calogic in connection with the transactions
contemplated hereby and all documents incident thereto will be satisfactory in
form and substance to Parent and its counsel,
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and Parent and its counsel will have received all such counterpart originals or
certified or other copies of such documents as they reasonably may request.
(l) Securities Law Compliance. Parent will be satisfied, in its sole
-------------------------
discretion, that the approval of the Merger, this Agreement and all associated
transactions by the stockholders of Calogic and the issuance of Parent Merger
Shares hereunder will have been conducted in compliance with Regulation D under
the Securities Act;
(m) Termination of Certain Agreement and Arrangements. The agreements
-------------------------------------------------
and arrangements described in Section 3.17(8) of the Calogic Disclosure Schedule
will have been terminated with no liability to Calogic and evidence of such
termination will have been delivered to Parent.
9.3 Conditions of Obligations of Calogic and Stockholders. The obligation
-----------------------------------------------------
of Calogic and the Stockholders to effect the Merger is subject to the
satisfaction of the following conditions unless waived by Calogic and the
Stockholders:
(a) Representations and Warranties of Parent and Merger Sub. The
-------------------------------------------------------
representations and warranties of Parent and Merger Sub set forth in this
Agreement will be true and correct in all material respects as of the date of
this Agreement and as of the Closing Date as though made on and as of the
Closing Date, except as otherwise contemplated by this Agreement, and Calogic
will have received a certificate signed on behalf of Parent and Merger Sub by a
duly authorized officer of Parent and Merger Sub to such effect on the Closing
Date.
(b) Performance of Obligations of Parent and Merger Sub. Parent and
---------------------------------------------------
Merger Sub will have performed in all material respects all agreements and
covenants required to be performed by them under this Agreement prior to the
Closing Date, and Calogic will have received a certificate signed on behalf of
Parent and Merger Sub by duly authorized officers of Parent and Merger Sub to
such effect on the Closing Date.
(c) Opinion of Parent's Counsel. Calogic and the Stockholders have
---------------------------
received an opinion dated the Closing Date of Testa, Hurwitz & Thibeault, LLP,
substantially in the form attached as Exhibit 9.3.
-----------
(d) Stockholder Approval. This Agreement and the Merger will have
--------------------
been approved and adopted by the requisite vote of the stockholders of Calogic,
as required by the CGCL and Calogic's Charter Documents; provided, however, that
the inclusion of this condition will not be construed in any way as excusing any
of the Stockholders from fulfilling their covenant in Section 6.13.
(e) Escrow and Registration Rights Agreements. Parent shall have duly
-----------------------------------------
executed and delivered the Escrow Agreement and the Registration Rights
Agreement.
(f) Legal Action. There will not be overtly threatened or pending any
------------
action, proceeding or other application before any court or Governmental Entity
brought by any Person or Governmental Entity: (i) challenging or seeking to
restrain or prohibit the consummation of the transactions contemplated by this
Agreement, or seeking to obtain any material damages from Calogic
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<PAGE>
or the Stockholders as a result of the transactions contemplated by this
Agreement or (ii) restricting in any way the receipt, ownership, or ability to
dispose of the consideration to be received by any stockholder of Calogic in the
transactions contemplated by this Agreement.
(g) Parent Average Closing Price. The Parent Average Closing Price
----------------------------
shall be greater than or equal to $ 6.00, subject to adjustment, as appropriate,
for any stock split, stock dividend, reclassification, recapitalization or
similar event.
(h) Corporate Proceedings Satisfactory. All corporate and other
----------------------------------
proceedings to be taken by Parent in connection with the transactions
contemplated hereby and all documents incident thereto will be satisfactory in
form and substance to Calogic and its counsel, and Calogic and its counsel will
have received all such counterpart originals or certified or other copies of
such documents as they reasonably may request.
ARTICLE X
INDEMNIFICATION
10.1 Indemnification Relating to Agreement. Subject to Sections 10.4 and
-------------------------------------
10.6, the Stockholders and, as an integral term of the Merger, all other
stockholders of Calogic who accept the Parent Merger Shares and execute the
Escrow Agreement (which is a condition to receiving such consideration), jointly
and severally, hereby agree to defend, indemnify and hold Parent harmless from
and against, and to reimburse Parent with respect to, any and all losses,
damages, liabilities, claims, judgments, settlements, fines, costs and expenses
(including reasonable attorneys' fees), determined as provided in Section 10.4
("Indemnifiable Amounts"), of every nature whatsoever incurred by Parent (which
---------------------
will be deemed to include any of the foregoing incurred by the Surviving
Corporation) by reason of or arising out of or in connection with (i) any
breach, or any claim (including claims by parties other than Parent) that
constitutes a breach, by Calogic or any of the Stockholders of any
representation or warranty of Calogic or the Stockholders contained in this
Agreement or in any certificate or other document delivered to Parent pursuant
to this Agreement, other than any breach or related claim taken or not taken at
the written direction of or after consultation with and written concurrence of
Parent, (ii) the failure, partial or total, of Calogic or any of the
Stockholders to perform any agreement or covenant required by this Agreement to
be performed by it or them other than any breach or related claim taken or not
taken at the written direction of or after consultation with and written
concurrence of Parent and (iii) any federal or state Tax liability, or asserted
liability, of Calogic attributable to periods (or any portion thereof) ending on
or prior to the Closing but only to the extent such liabilities were not accrued
for on the Balance Sheet. The foregoing obligations to indemnify Parent will be
determined without regard to any right to indemnification to which any Person
may have in his or her capacity as an officer, director, employee, agent or any
other capacity of Calogic, and no stockholder of Calogic will be entitled to any
indemnification from Calogic or the Surviving Corporation for amounts paid
hereunder. There will be no right of contribution or subrogation from Parent or
the Surviving Corporation for indemnification payments made by or for the
account of the Stockholders.
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<PAGE>
10.2 Third Party Claims. With respect to any claims or demands by third
------------------
parties as to which Parent may seek indemnification hereunder, other than claims
or demands covered by Section 10.3, whenever Parent will have received a written
notice that such a claim or demand has been asserted or threatened, Parent will
promptly notify the "Indemnification Representative" (as designated in the
Escrow Agreement) of such claim or demand and of the facts within Parent's
knowledge that relate thereto within a reasonable time after receiving such
written notice. The Indemnification Representative will then have the right to
defend, contest, negotiate or settle any such claim or demand through counsel of
his own selection, reasonably satisfactory to Parent, and solely at the
Stockholders' own cost and expense, which costs and expenses will be payable out
of the property being held pursuant to the Escrow Agreement. Notwithstanding
the preceding sentence, the Indemnification Representative will not settle,
compromise, or offer to settle or compromise any such claim or demand without
the prior written consent of Parent, which consent will not be unreasonably
withheld. Without limiting Parent's rights to object for other reasons, Parent
may object to a settlement or compromise which includes any provision which in
its reasonable judgment may have an adverse impact on or establish an adverse
precedent for the Business Condition of Parent or any of its Subsidiaries. If
the Indemnification Representative gives notice to Parent within twenty (20)
calendar days after Parent has notified the Indemnification Representative that
any such claim or demand has been made in writing, that the Indemnification
Representative elects to have Parent defend, contest, negotiate, or settle any
such claim or demand, then Parent will have the right to contest and/or settle
any such claim or demand and seek indemnification pursuant to this Article X as
to any Indemnifiable Amounts; provided, however, that Parent will not settle,
compromise, or offer to settle or compromise any such claim or demand without
the prior written consent (which may include a general or limited consent) of
the Indemnification Representative, which consent will not be unreasonably
withheld. If the Indemnification Representative fails to give written notice to
Parent of his intention to contest or settle any such claim or demand within
twenty (20) calendar days after Parent has notified the Indemnification
Representative that any such claim or demand has been made in writing, or if any
such notice is given but any such claim or demand is not contested by the
Indemnification Representative within a reasonable time thereafter, Parent will
have the right to contest and/or settle any such claim or demand in its sole
discretion and seek indemnification pursuant to this Article X as to any
Indemnifiable Amounts.
10.3 Tax Contests. Notwithstanding any of the foregoing, Parent will have
------------
the right to conduct any Tax audit or other Tax contest relating to the
Surviving Corporation. Parent will conduct any such Tax audit or other Tax
contest in good faith. With respect to any matters relating to such Tax audits
or other Tax contests as to which Parent may seek indemnification hereunder,
Parent shall consult with the Indemnification Representative and allow him to
comment before taking any position or making any written submission with any
Governmental Entity with regard to any Indemnifiable matter.
10.4 Limitations. Notwithstanding any other provision in this Article X,
-----------
Parent will be entitled to indemnification only to the extent that the aggregate
Indemnifiable Amounts (which shall be determined for all purposes of this
Article X disregarding any qualification in any representation or warranty as to
"materially" or "material") exceed Five Hundred Thousand Dollars ($500,000) (the
"Threshold Amount"). The aggregate amount to which Parent will be entitled to
----------------
be indemnified will not exceed a dollar amount equal to ten percent (10%) of
Parent Merger Shares valued at the Parent Average Closing Price, and the
liability of any single Stockholder for indemnification obligations shall be
limited to such Stockholder's pro rata share of any Indemnifiable Amounts based
on the number of
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<PAGE>
Parent Merger Shares received by such Stockholder relative to the aggregate
number of Parent Merger Shares; provided, however, that the limitation on the
obligations of any Person for Indemnifiable Amounts arising out of criminal
activity or fraud or willful misstatements or omissions by Calogic or such
Person will be a Dollar amount equal to the aggregate number of Parent Merger
Shares received by such Person valued at the Parent Average Closing Price.
Parent will first seek reimbursement of any Indemnifiable Amounts pursuant to
the provisions of the Escrow Agreement, but may seek indemnification hereunder
with respect to any Indemnifiable Amounts after the termination of the Escrow
Agreement, subject to Section 10.6. During the term of the Escrow Agreement,
Parent's sole remedy will be a claim pursuant to the Escrow Agreement. To the
extent Parent is paid an amount on account of an Indemnifiable matter in excess
of the limitation set forth above, Parent will promptly remit such excess amount
to the party entitled thereto.
10.5 Binding Effect. The indemnification obligations contained in this
--------------
Article X are an integral part of this Agreement and the Merger in the absence
of which Parent would not have entered into this Agreement.
10.6 Time Limit. The representations, warranties, covenants and agreements
----------
of Calogic and the Stockholders set forth in this Agreement will survive the
Closing and the consummation of the transactions contemplated by this Agreement,
but, absent fraud, any claims with respect thereto may be made only on or before
the first yearly anniversary of the date of this Agreement; provided, however,
that claims relating to the representations and warranties in Section 3.6 may be
made only on or before the date Parent publishes financial results covering at
least 30 days combined operations of Parent and Calogic.
10.7 Sole Remedy. Notwithstanding any other provision in this Agreement
-----------
to the contrary, except as provided for in the Holder Agreement of even date
herewith, among Parent, Calogic and Manuel Del Arroz (the "Holder Agreement")
the provisions of this Article X and the provisions of the Escrow Agreement will
be the sole and exclusive remedy of (and corresponding liability of any
stockholder of Calogic, in such stockholder's capacity as such, to) Parent,
Merger Sub and the Surviving Corporation for any damage, claim, cause of action
or right of any nature arising out of or relating to this Agreement, the
certificates or other documents executed or delivered herewith, or the
transactions contemplated hereby; provided, however, that nothing in this
Agreement or the Escrow Agreement will be deemed to limit any right or remedy
for criminal activity or fraud, or willful misstatements or omissions, or
breaches of covenants or inaccuracies in any representations or warranties set
forth in any other agreement contemplated by this Agreement, including any
Investment Agreement, Affiliate Agreement, the Employment Agreement, the Non
solicitation Agreement, the Registration Rights Agreement or the Holder
Agreement.
ARTICLE XA
INDEMNIFICATION BY PARENT
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10.1A Indemnification Relating to Agreement. Subject to Sections 10.2A
-------------------------------------
and 10.3A, Parent hereby agrees to defend, indemnify and hold the Stockholders
and all other stockholders of Calogic who accept the Parent Merger Shares (the
"Indemnified Stockholders") harmless from and against, and to reimburse the
------------------------
Indemnified Stockholders with respect to, any and all losses, damages,
liabilities, claims, judgments, settlements, fines, costs and expenses
(including reasonable attorneys' fees), determined as provided in Section 10.2A
("Stockholder Indemnifiable Amounts"), of every nature whatsoever incurred by
---------------------------------
the Indemnified Stockholders by reason of or arising out of or in connection
with (i) any breach, or any claim that constitutes a breach, by Parent or Merger
Sub of any representation or warranty of Parent or Merger Sub contained in this
Agreement or in any certificate or other document delivered by Parent or Merger
Sub to the Indemnified Stockholders or Calogic pursuant to this Agreement, other
than any breach or related claim taken or not taken at the written direction of
or after consultation with and written concurrence of Calogic or the Indemnified
Stockholders, and (ii) the failure, partial or total, of Parent or Merger Sub to
perform any agreement or covenant required by this Agreement to be performed by
it other than any breach or related claim taken or not taken at the written
direction of or after consultation with and written concurrence of Calogic or
the Indemnified Stockholders.
10.2A Limitations. Notwithstanding any other provision in this Article
-----------
XA, the Indemnified Stockholders will be entitled to indemnification only to the
extent that the aggregate Stockholder Indemnifiable Amounts (which shall be
determined for all purposes of this Article XA disregarding any qualification in
any representation or warranty as to "materially" or "material") exceed Five
Hundred Thousand Dollars ($500,000) (the "Stockholder Threshold Amount"). The
----------------------------
aggregate amount to which the Indemnified Stockholders will be entitled to be
indemnified will not exceed a dollar amount equal to ten percent (10%) of Parent
Merger Shares valued at the Parent Average Closing Price, provided, however,
that the limitation on the obligations of Parent for Stockholder Indemnifiable
Amounts arising out of criminal activity or fraud or willful misstatements or
omissions by Parent or Merger Sub will be a dollar amount equal to the aggregate
number of Parent Merger Shares valued at the Parent Average Closing Price. To
the extent an Indemnified Stockholder is paid an amount on account of an
Indemnifiable matter in excess of the limitation set forth above, such
Indemnified Stockholder will promptly remit such excess amount to Parent.
10.3A Time Limit. The representations, warranties, covenants and
----------
agreements of Parent and Merger Sub set forth in this Agreement will survive the
Closing and the consummation of the transactions contemplated by this Agreement,
but any claims with respect thereto may be made only on or before the first
yearly anniversary of the date of this Agreement; provided, however, that claims
alleging fraud or willful misstatements or omissions of Parent or Merger Sub may
be made only on or before the third yearly anniversary of the Closing Date.
10.4A Sole Remedy. Notwithstanding any other provision in this Agreement
-----------
to the contrary, the provisions of this Article XA will be the sole and
exclusive remedy of (and corresponding liability of Parent and Merger Sub) the
Indemnified Stockholders for any damage, claim, cause of action or right of any
nature arising out of or relating to this Agreement, the certificates or other
documents executed or delivered herewith, or the transactions contemplated
hereby; provided, however, that nothing in this Agreement will be deemed to
limit any right or remedy for criminal activity or fraud, or willful
misstatements or omissions, or breaches of covenants or inaccuracies in any
representations or warranties set forth in any other agreement contemplated by
this Agreement, including any employment agreements or the Registration Rights
Agreement.
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ARTICLE XI
TERMINATION
11.1 Mutual Agreement. This Agreement may be terminated at any time prior
----------------
to the Effective Time by the written consent of Parent and Calogic.
11.2 Termination by Parent. This Agreement may be terminated by Parent
---------------------
(provided that it is not then in material breach of any representation,
warranty, covenant or agreement contained in this Agreement) alone, by means of
written notice to Calogic, if there has been a material breach by Calogic or a
Stockholder of any representation, warranty, covenant or agreement set forth in
this Agreement or other ancillary agreements, which breach would result in a
failure to satisfy the closing conditions contained in Section 9.2 and has not
been cured within five (5) business days following receipt by Calogic of notice
of such breach.
11.3 Termination by Calogic. This Agreement may be terminated by Calogic
----------------------
(provided that it is not then in material breach of any representation,
warranty, covenant or agreement contained in this Agreement) alone, by means of
written notice to Parent, if there has been a material breach by Parent of any
representation, warranty, covenant or agreement set forth in this Agreement or
other ancillary agreements, which breach would result in a failure to satisfy
the closing conditions contained in Section 9.3 and has not been cured within
five (5) business days following receipt by Parent of notice of such breach.
11.4 Outside Date. This Agreement may be terminated by Parent alone or by
------------
Calogic alone by means of written notice if the Effective Time does not occur on
or prior to November 30, 1999; provided, however, that the right to terminate
this Agreement pursuant to the preceding clause will not be available to any
party whose failure to fulfill any obligation under this Agreement has been a
significant cause of, or resulted in, the failure of the Effective Time to occur
on or before such date.
11.5 Effect of Termination. In the event of termination of this Agreement
---------------------
by either Calogic or Parent as provided in this Article, this Agreement will
forthwith become void and have no effect, and there will be no liability or
obligation on the part of Parent, Calogic, Merger Sub, the Stockholders or their
respective officers or directors, except that (i) the provisions of Sections
8.4, 8.6, 8.7 (including the provisions of the Non-Disclosure Agreement) and
12.2 will survive any such termination and abandonment, and (ii) no party will
be released or relieved from any liability arising from the willful breach by
such party prior to termination of any of its representations, warranties,
covenants or agreements as set forth in this Agreement.
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ARTICLE XII
MISCELLANEOUS
12.1 Entire Agreement. This Agreement, including the exhibits, schedules
----------------
and other agreements delivered pursuant to this Agreement, contains all of the
terms and conditions agreed upon by the parties relating to the subject matter
of this Agreement and supersedes all prior agreements, negotiations,
correspondence, undertakings and communications of the parties, whether oral or
written, respecting that subject matter other than the Non-Disclosure Agreement
and the Holder Agreement.
12.2 Governing Law; Consent to Jurisdiction. The Merger will be governed
--------------------------------------
by the CGCL and the DGCL to the extent applicable, and all other aspects of this
Agreement will be governed by the internal laws of the Commonwealth of
Massachusetts. Legal proceedings relating to this Agreement, the agreements
executed in connection with this Agreement or the transactions contemplated
hereby or thereby may be commenced only in the state or federal courts in
Boston, Massachusetts. Each of the parties hereby consents to the exclusive
jurisdiction of such courts (and of the appropriate appellate courts) in any
such action or proceeding and waives any objection to venue laid therein. The
foregoing provisions will not be construed to preclude any party from bringing a
counter-claim in any action or proceeding properly commenced in accordance with
the foregoing provisions. Process in any such action or proceeding may be
served on any party anywhere in the world. Notwithstanding the foregoing, any
dispute relating to a claim under the Escrow Agreement will be resolved in
accordance with the arbitration provisions of the Escrow Agreement.
12.3 Notices. All notices, requests, demands or other communications
-------
which are required or may be given pursuant to the terms of this Agreement will
be in writing and will be deemed to have been duly given: (i) on the date of
delivery if personally delivered by hand, (ii) upon the third day after such
notice is deposited in the United States mail, if mailed by registered or
certified mail, postage prepaid, return receipt requested, (iii) upon the date
scheduled for delivery after such notice is sent by a nationally recognized
overnight express courier or (iv) by fax upon written confirmation (including
the automatic confirmation that is received from the recipient's fax machine) of
receipt by the recipient of such notice:
If to Parent or Merger Sub Sipex Corporation
--------------------------
22 Linnell Circle
Billerica, MA 01821
Attention: Frank DiPietro
Telephone No.: (978) 671-1909
Fax No.: (978) 670-9088
With a copy to:
---------------
Testa, Hurwitz & Thibeault, LLP
125 High Street
Boston, Massachusetts 02110
Attention: Timothy C. Maguire, Esq.
Telephone No.: (617) 248-7000
Fax No.: (617) 248-7100
-41-
<PAGE>
If to Calogic: Calogic
--------------
237 Whitney Place
Fremont, CA 94539
Attention: Chief Executive Officer
Telephone No.: (510) 656-2900
Fax No.: (510) 651-1076
With a copy to:
---------------
Cooley Godward LLP
One Maritime Plaza
20/th/ Floor
San Francisco, CA 94111-3580
Attention: Joseph Scherer, Esq.
Telephone No.: (415) 693-2017
Fax No.: (415) 951-3699
Such addresses may be changed, from time to time, by means of a notice
given in the manner provided in this Section 12.3.
12.4 Severability. If any provision of this Agreement is held to be
------------
unenforceable for any reason, it will be modified rather than voided, if
possible, in order to achieve the intent of the parties to this Agreement to the
extent possible. In any event, all other provisions of this Agreement will be
deemed valid and enforceable to the full extent.
12.5 Survival of Representations and Warranties. All representations and
------------------------------------------
warranties contained in this Agreement, including the exhibits and schedules
delivered pursuant to this Agreement, will survive the Effective Time, but any
claims for breach thereof may only be made within any applicable time limits
specified herein or in the Escrow Agreement.
12.6 Assignment. No party to this Agreement may assign, by operation of
----------
law or otherwise, all or any portion of its rights, obligations, or liabilities
under this Agreement without the prior written consent of Calogic, Merger Sub
and Parent, which consent may be withheld in the absolute discretion of the
party asked to grant such consent; provided however, that no such assignment
which materially adversely reflects the rights of a Stockholder will be made
without the written consent of such Stockholder. Any attempted assignment by
Merger Sub or Parent, on the one hand, or by Calogic, on the other hand, in
violation of this Section 12.6 will be voidable and will entitle Calogic or
Parent, respectively, to terminate this Agreement at its option.
12.7 Counterparts. This Agreement may be executed in two or more
------------
partially or fully executed counterparts each of which will be deemed an
original and will bind the signatory, but all of which together will constitute
but one and the same instrument. The execution and delivery of a Signature Page
to Agreement and Plan of Reorganization in the form annexed to this Agreement,
including a facsimile copy of the actual signature, by any party hereto who will
have been furnished the final form of this Agreement will constitute the
execution and delivery of this Agreement by such party.
-42-
<PAGE>
12.8 Amendment. This Agreement may not be amended except by an instrument
---------
in writing executed by Calogic, Merger Sub and Parent; provided however, that no
such amendment which materially adversely affects the rights or obligations of
any Stockholder will be made without the written consent of such Stockholder.
12.9 Extension, Waiver. At any time prior to the Effective Time, any
-----------------
party hereto may, to the extent legally allowed: (i) extend the time for the
performance of any of the obligations or other acts of any other party hereto to
the party extending such time, (ii) waive any inaccuracies in the
representations and warranties made to such party contained herein or in any
document delivered pursuant hereto, and (iii) waive compliance with any of the
agreements, covenants or conditions for the benefit of such party contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver will be valid only if set forth in an instrument in writing signed on
behalf of such party.
12.10 Interpretation. When a reference is made in this Agreement to
--------------
Sections, Exhibits or Schedules, such reference will be to a Section, Exhibit or
Schedule to this Agreement unless otherwise indicated. The words "include,"
"includes," and "including" when used therein will be deemed in each case to be
followed by the words "without limitation." The table of contents, index to
defined terms, and headings contained in this Agreement are for reference
purposes only and will not affect in any way the meaning or interpretation of
this Agreement.
12.11 Knowledge. For purposes of this Agreement, the term "knowledge"
--------- ---------
(including any derivation thereof such as "know" or "knowing" and regardless of
whether such word starts with an initial capital) in reference to Calogic will
mean the knowledge of the directors and executive officers of Calogic and the
Stockholders (the "Specified Individuals"). For purposes of this Agreement, a
Specified Individual shall not be deemed to have any knowledge of the inaccuracy
of any representation, warranty or other statement unless such Specified
Individual actually knows that such representation, warranty or other statement
is materially inaccurate. No knowledge shall be imputed to any Specified
Individual.
12.12 Transfer, Sales, Documentary, Stamp and Other Similar Taxes. Any
-----------------------------------------------------------
and all transfer, sales, documentary, stamp and other similar Taxes imposed in
connection with the transactions contemplated by this Agreement will be paid by
the stockholder of Calogic with respect to which such Tax relates. At Parent's
discretion, the amount paid to any Person pursuant to this Agreement will be
reduced by the amount of Taxes payable by such Person pursuant to this Section
12.12. Any amounts so withheld will be promptly remitted to the appropriate
taxing authority.
12.13 Remedies Not Exclusive. The rights and remedies of the parties
-----------------------
hereto shall be cumulative (and not alternative). The parties to this Agreement
agree that, in the event of any breach or threatened breach by any party to this
Agreement of any covenant, obligation or other provision set forth in this
Agreement for the benefit of any other party to this Agreement, such other party
shall be entitled (in addition to any other remedy that may be available to it)
to a) a decree or order of specific performance or mandamus to enforce the
observance and performance of such covenant, obligation or other provision, and
(b) an injunction restraining such breach or threatened breach. Neither Parent
nor any other Stockholder or Indemnitee shall be required to provide any bond or
other security in connection with any such decree, order or injunction or in
connection with any related action or legal proceeding.
-43-
<PAGE>
12.14 Limitation on Recovery. For purposes of Article III and Article IV,
----------------------
neither Calogic nor any Stockholder shall be deemed to have breached any
representation or warranty if Parent or Merger Sub had, on the date hereof,
knowledge of the breach of such representation or warranty and for purposes of
this Section 12.4 Parent and Merger Sub will be deemed to have knowledge of the
contents of any documents delivered to, or reviewed by, them by Calogic or its
representatives. For purposes of Article V, neither Parent nor Merger Sub shall
be deemed to have breached any representation or warranty if Calogic or any
Stockholder had, on the date hereof, knowledge of the breach of such
representation or warranty.
(The remainder of this page has been left blank intentionally.)
-44-
<PAGE>
Signature Page to
Agreement and Plan of Reorganization
IN WITNESS WHEREOF, Parent, Merger Sub, Calogic and the Stockholders have
executed this Agreement as of the date first written above.
SIPEX CORPORATION CALOGIC
By: /s/ James E. Donegan By: /s/ Manuel Del Arroz
Title: Title:
CAT Acquisition Corporation I
By: /s/ James E. Donegan
Title:
STOCKHOLDERS:
Name of Stockholder: /s/ Manuel Del Arroz
By: ______________________________
Title, if any:
Name of Stockholder: /s/ Daniel Del Arroz
By: ______________________________
Title, if any:
Name of Stockholder: /s/ Edward Morris
By: ______________________________
Title, if any:
-45-
<PAGE>
CERTIFICATES OF APPROVAL BY STOCKHOLDERS
The undersigned Secretary of Calogic hereby certifies that holders of
shares of Common Stock of Calogic, out of ____ shares of such Common Stock
outstanding and entitled to vote approved the foregoing Agreement and Plan of
Reorganization on _______________.
CALOGIC
By: ___________________________
Secretary
The undersigned Secretary of CAT Acquisition Corporation I hereby certifies
that the sole stockholder of CAT Acquisition Corporation I approved the
foregoing Agreement and Plan of Reorganization on _____________.
CAT ACQUISITION CORPORATION I
By: ___________________________
Secretary
-46-
<PAGE>
Exhibit 1.1
ARTICLES OF MERGER
OF
CAT ACQUISITION CORPORATION I
INTO
CALOGIC
Pursuant to Section 252 of the General Corporation Law of the State of
Delaware, the undersigned corporation, which is organized and existing under and
by virtue of the General Corporation Law of the State of California, DOES HEREBY
CERTIFY THAT:
FIRST: The constituent corporations are Calogic, a California corporation
-----
("Calogic"), and CAT Acquisition Corporation I, a Delaware corporation ("CAT").
SECOND: An Agreement and Plan of Reorganization (the "Merger Agreement")
------
dated as of October __, 1999, by and among SIPEX Corporation, a Massachusetts
corporation, Calogic and CAT has been approved, adopted, certified, executed and
acknowledged by each of the constituent corporations in accordance with the
requirements of Section 252(c) of the General Corporation Law of the State of
Delaware.
THIRD: The surviving corporation is Calogic.
-----
FOURTH: The articles of incorporation of Calogic, with such amendments as
------
are effected shall be as set forth in full in Exhibit A attached hereto and is
---------
incorporated herein by reference.
FIFTH: The executed Merger Agreement is on file at the principal place of
-----
business of Calogic at 237 Whitney Place, Faremont, CA 94539.
SIXTH: A copy of the Merger Agreement will be furnished by Calogic
-----
Corporation, on request and without cost, to any stockholder of either
constituent corporation.
SEVENTH: Calogic agrees that it may be served with process in Delaware in
-------
any proceeding for enforcement of any obligation of any constituent corporation
of this state, as well as for enforcement of any obligation of the surviving
corporation arising from the merger, including any suit or other proceeding to
enforce the right of any stockholders as determined in appraisal proceedings
pursuant to the provisions of (S)262 of the General Corporation Law of the State
of Delaware and irrevocably appoints the Secretary of State as its agent to
accept service of process in any such suit or other proceeding and a copy of
such process shall be mailed by the Secretary of State to:
<PAGE>
Calogic
237 Whitney Place
Fremont, CA 94539
IN WITNESS WHEREOF, the undersigned has caused this Instrument to be duly
executed by its authorized officers.
Dated:
CAT ACQUISITION CORPORATION I CALOGIC
a Delaware corporation a California corporation
By: ______________________________ By: ______________________________
James Donegan Manny DelArroz
President President
By: ______________________________ By: ______________________________
Frank DiPietro [ ]
Secretary Secretary
-2-
<PAGE>
AGREEMENT OF MERGER
This Agreement of Merger, dated as of October ___, 1999 (the "Merger
Agreement"), is made and entered into by CAT Acquisition Corporation I, a
Delaware Corporation ("Merger Sub"), and Calogic, a California corporation (the
"Company" or "Surviving Corporation") (the Company and Merger Sub being
hereinafter collectively referred to as the "Constituent Corporations").
RECITALS
A. SIPEX Corporation, a Massachusetts corporation ("Parent"), the
Company, Merger Sub and the other parties named therein have entered into an
Agreement and Plan of Reorganization dated as of October ___, 1999 (the
"Reorganization Agreement"), providing, among other things, for the execution
and filing of this Merger Agreement and the merger of Merger Sub with and into
the Company upon the terms set forth in the Reorganization Agreement and this
Merger Agreement (the "Merger").
B. The respective Boards of Directors of each of the Constituent
Corporations deem it advisable and in the best interests of each of such
corporations and their respective shareholders that Merger Sub be merged with
and into the Company.
AGREEMENT
NOW, THEREFORE, in consideration of the promises and mutual agreements
contained in this Merger Agreement, the Constituent Corporations hereby agree
that Merger Sub shall be merged with and into the Company in accordance with the
provisions of the laws of the State of California, upon the terms and subject to
the conditions set forth as follows:
ARTICLE 1
The Merger
1.1 Filing. This Merger Agreement, together with the officers'
certificates of each of the Constituent Corporations required by the General
Corporation Law of the State of California (the "California Law"), shall be
filed with the Secretary of State of the State of California at the time
specified in the Reorganization Agreement.
1.2 Effectiveness. The Merger shall become effective upon the later of
the filing of this Merger Agreement with the Secretary of State of the State of
California or the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware (the "Effective Time").
1.3 Merger. On the Effective Time, Merger Sub shall be merged into the
Company and the separate corporate existence of Merger Sub shall thereupon
cease. The Company shall be the Surviving Corporation in the merger and the
separate corporate existence of the Company, with all of its purposes, objects,
rights, privileges, powers, immunities and franchises, shall continue unaffected
and unimpaired by the Merger.
1.4 Effect of the Merger. The Merger shall have the effects set forth in
California Law.
<PAGE>
Without limiting the generality of the foregoing, the Surviving Corporation
shall possess all the rights, privileges, powers and franchises, of a public as
well as a private nature, and be subject to all the restrictions, disabilities
and duties, of each of the Constituent Corporations. The Surviving Corporation
shall be vested with the rights, privileges, powers and franchises, all property
(real, personal, and mixed) and all debts due on whatever account and all other
things in action or belonging to, and all and every other interest of, each of
the Constituent Corporations. All debts, liabilities and duties of each of the
Constituent Corporation shall attach to the Surviving Corporation and may be
enforced against it to the same extent as if such debts, liabilities and duties
had been incurred or contracted by it.
1.5 Further Action. If at any time after the Effective Time any further
action is necessary or desirable to carry out the purposes of this Merger
Agreement or to vest the Surviving Corporation with the full right, title and
possession to all assets, property, rights, privileges, immunities, powers and
franchises of either or both of the Constituent Corporations, the officers and
directors of the Surviving Corporation are fully authorized in the name of
either or both of the Constituent Corporations or otherwise to take all such
action.
ARTICLE 2
Corporate Governance Matters
2.1 Articles. The Articles of Surviving Corporation with such amendments
as are effected shall be as set forth in Exhibit A attached hereto and shall
---------
remain in effect unless and until amended as provided by law.
2.2 Bylaws. The Bylaws of Surviving Corporation with such amendments as
are effected shall be as set forth in Exhibit B attached hereto and shall remain
---------
in effect unless and until amended as provided by law.
2.3 Directors. From and after the Effective Time, the directors of Merger
Sub shall be the directors of the Surviving Corporation and they shall hold
office as provided in the Bylaws of the Surviving Corporation.
2.4 Officers. The officers of the Surviving Corporation shall be the
officers of the Company on the Effective Time and they shall continue to hold
office from and after the Effective Time as provided in the Bylaws of the
Surviving Corporation.
-2-
<PAGE>
ARTICLE 3
Manner of Converting Shares of the Constituent Corporations
3.1 Definitions.
(a) For purposes of this Agreement, "Average Price" shall mean
[$_______.]
(b) At the Effective Time, all of the shares of common stock, no par
value per share of the Company issued and outstanding immediately prior to the
Effective Time (the "Company Shares") (excluding any Company Shares held by
Parent or Merger Sub or any other subsidiary of Parent or by the Company, which
shares shall be canceled in the Merger, and Dissenting Company Shares (as
defined in Section 3.5 hereof)) shall automatically, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into shares
of common stock, $.01 par value per share, of Parent (the "Parent Common Stock")
in accordance with Section 3.1(d) (rounded down to the nearest whole share), and
cash (rounded to the nearest whole cent) in lieu of fractional shares, if any,
pursuant to Section 3.2 below (such Parent Common Stock and cash being referred
to herein as the "Merger Consideration"). The Company Shares that are actually
issued and outstanding immediately prior to the Effective Time are sometimes
referred to herein as the "Outstanding Company Shares."
(c) The maximum number of shares of Parent Common Stock to be issued
(which maximum number includes Parent Common Stock to be issued upon exercise of
the Outstanding Company Options) in exchange for the acquisition of all
Outstanding Company Shares shall be [3,400,000] provided that such maximum
number shall be adjusted to the extent required by Section 3.2(b) below.
(d) The ratio at which one outstanding Company Share will be
converted into shares of Parent Common Stock at the Effective Time is herein
called the "Conversion Ratio" and shall be calculated as set forth in this
Section 3.1(d). Subject to Section 3.2(a), at the Effective Time, each
outstanding Company Share shall be converted into the right to receive that
number (which may be a fraction) of shares of parent Common Stock that equals
the quotient obtained by dividing [3,400,000] (as may be adjusted pursuant to
Section 3.2(b)) by the number of Outstanding Company Shares plus the number of
Company Shares issued upon the exercise or conversion of all Outstanding Company
Options. Each holder of Company Shares shall have received that aggregate number
of shares of Parent Common Stock (rounded down to the nearest whole share) equal
to the Conversion Ratio multiplied by the number of Company Shares held by such
holder immediately prior to the Effective Time, subject to Section 3.5 herein.
(e) At the Effective Time, each Company Share held by the Company
shall automatically, by virtue of the Merger, be canceled without payment of any
consideration therefor and without any conversion thereof.
(f) At the Effective Time, each Company Share held by Parent or
Merger Sub or any other subsidiary of Parent shall automatically, by virtue of
the Merger, be canceled without payment of any consideration therefor and
without any conversion thereof.
(g) At the Effective Time, each share of common stock, $.01 par value
per share, of
-3-
<PAGE>
Merger Sub issued and outstanding immediately prior to the Effective Time shall,
by virtue of the Merger and without any action on the part of the holder
thereof, be converted into one share of common stock, no par value, of the
Surviving Corporation.
3.2 (a) No Fractional Shares. No certificates or scrip for fractional
shares of Parent Common Stock will be issued, no Parent stock split or dividend
shall be paid in respect of any fractional share interest, and no such
fractional shares interest shall entitle the owner thereof to vote or to any
rights of or as a stockholder of Parent. In lieu of such fractional shares, any
holder of Company Shares who would otherwise be entitled to a fraction of a
share of Parent Common Stock (after aggregating all fractional shares of Parent
Common Stock to be received by such holder) will be paid the cash value of such
fraction, which shall be equal to the fraction multiplied by the Average Price.
(b) Adjustment. If, between the date hereof and the Effective Time,
the outstanding shares of Parent Common Stock shall be changed into a different
number of shares, or a different class by reason of any reclassification,
recapitalization, split-up, exchange of shares or readjustment, or if a stock
dividend thereon shall be declared with a record date within such period, the
number of shares of Parent Common Stock to be issued and delivered in the Merger
for each outstanding Company Share as provided in this Agreement shall be
correspondingly adjusted.
3.3 Closing of Company Transfer Books. On and after the Effective Time,
holders of certificates representing the Company Shares shall cease to have any
rights as shareholders of the Company and the stock transfer books of the
Company shall be closed with respect to the Company Shares and no further
transfer of such shares shall thereafter be made on such stock transfer books.
If, after the Effective Time, valid certificates previously representing such
shares are presented to the Surviving Corporation or Parent, they shall be
exchanged as provided in Section 3.4.
3.4 Exchange of Certificates. Promptly following the Effective Time, the
Company shall transmit to the former Company shareholders appropriate documents
to be used by them to surrender their certificates representing the Company
Shares in exchange for the Merger Consideration payable hereunder. Until so
surrendered and exchanged, each certificate for the Company Shares shall
represent solely the right to receive the Merger consideration payable hereunder
in accordance with Section 3.1 hereof (or to perfect the holder thereof's right
to receive payment for such shares pursuant to Chapter 13 of the California Law
and Section 3.5 hereof); provided, however, that customary and appropriate
certifications and indemnities allowing exchange against lost or destroyed
certificates shall be provided. Notwithstanding anything in this Agreement to
the contrary, no party hereto shall be obliged to distribute any consideration
payable hereunder prior to receipt, by facsimile or otherwise, of a copy of this
Agreement evidencing the date stamp of the California Secretary of State.
3.5 Dissenting Company Shares. Notwithstanding anything in this Agreement
to the contrary, the Company Shares that are held by shareholders who have not
voted such shares in favor of the Merger (the "dissenting Company Shares") shall
not be canceled and converted into the right to receive cash unless and until
such holder shall have failed to perfect, or shall have effectively withdrawn or
lost, such holder's right to purchase and payment under the California Law. If
such holder shall have so failed to perfect, or shall have effectively withdrawn
or lost such right, such holder's Company Shares shall thereupon be deemed to
have been canceled and converted as described in Section 3.1 at the Effective
Time, and each such share shall represent solely the right to receive the amount
specified in Section 3.1. The Company shall give Parent prompt notice of any
-4-
<PAGE>
demand received by the Company for purchase of its shares, and, prior to the
Effective Time, Parent shall have the right to participate in all negotiations
and proceedings with respect to such demands. Prior to the Effective Time, the
Company shall not, except with the prior written consent of Parent, make any
payment with respect to, or settle or offer to settle, any such demands. From
and after the Effective Time, no shareholder who has exercised dissenters'
rights as provided in Chapter 13 of the California Law shall be entitled to vote
such holder's shares for any purpose or to receive payment of dividends or other
distributions with respect to such holder's shares (except dividends and other
distributions with respect to such holder's hares (except dividends and other
distributions payable to shareholders of record at a date which is prior to the
Effective Time).
ARTICLE 4
Termination and Amendment
4.1 Termination. Notwithstanding the approval of this Merger Agreement by
the shareholders of Merger Sub and the Company, this Merger Agreement shall
terminate forthwith in the event that the Reorganization Agreement shall be
terminated as therein provided.
4.2 Amendment. This Merger Agreement may be amended by the parties hereto
at any time before or after approval hereof by the shareholders of either Merger
Sub or the Company, but, after any such approval, no amendment shall be made
with without the further approval of such shareholders which would (i) have a
material adverse effect on the shareholders of either Merger Sub or the Company,
(ii) change any of the principal terms of the Merger Agreement, or (iii) change
any term of the Articles of incorporation of the Surviving Corporation. This
Merger Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
-5-
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first written above.
CAT ACQUISITION CORPORATION I CALOGIC
a Delaware Corporation a California corporation
By:__________________________ By:___________________________
James Donegan Manny DelArroz
President President
By:__________________________ By:___________________________
Frank R. DiPietro [_____________]
Secretary Secretary
-6-
<PAGE>
Exhibit 2.2
to Agreement and Plan
of Reorganization
ESCROW AGREEMENT
This Escrow Agreement (this "Escrow Agreement") is made and entered into as
----------------
of _____________________ (the "Effective Time") by and among SIPEX Corporation,
--------------
a Massachusetts corporation ("Parent"); Calogic, a California corporation
------
("Calogic"); the undersigned security holders of Calogic (collectively the
-------
"Holders"); __________________, as the representative of the Holders (the
-------
"Indemnification Representative"); and _____________, as custodian of the Escrow
------------------------------
Shares (as defined below) (the "Custodian").
---------
A. CAT Acquisition Corporation I, a Delaware corporation and wholly owned
subsidiary of Parent ("Merger Sub") Calogic, and certain stockholders of Calogic
----------
(the "Holders") have entered into an Agreement and Plan of Reorganization dated
-------
as of ______________ (the "Merger Agreement") setting forth certain terms and
----------------
conditions pursuant to which Merger Sub is being merged into Calogic (the
"Merger").
------
B. Pursuant to Section 2.2 of the Merger Agreement, Parent Merger Shares
(as defined therein) are to be issued to the Holders.
C. The Merger Agreement provides that ____________ (the "Escrow Amount")
-------------
of the Parent Merger Shares issued for Outstanding Calogic Shares pursuant to
the Merger will be placed in an escrow account to secure certain indemnification
obligations of the Holders to Parent under Article X of the Merger Agreement on
the terms and conditions set forth therein and herein.
D. Unless otherwise indicated herein, all terms used herein without
definition shall have the same meaning as set forth in the Merger Agreement.
NOW THEREFORE, for and in consideration of the foregoing and the mutual
covenants and agreements contained in the Merger Agreement and in this Escrow
Agreement, the parties agree as follows:
1. ESTABLISHMENT OF ESCROW ACCOUNT
-------------------------------
1.1 Deposit of Shares. Parent shall deposit as soon as practicable
-----------------
on the Holders' behalf with the Custodian stock certificates representing the
Escrow Shares issued pursuant to the Merger registered in the respective names
of the Holders and in the relative amounts set forth on Exhibit 1.1 hereto (the
-----------
"Initial Escrow Shares"). Any shares of Parent capital stock that result from
---------------------
any share dividend, reclassification, stock split, subdivision or combination of
shares, recapitalization, merger or other events made with respect to any Escrow
Shares held in escrow under this Escrow Agreement ("Additional Shares") shall be
-----------------
delivered to the Custodian and shall be held by the Custodian in accordance with
this Escrow Agreement. Unless otherwise indicated, as used in this Escrow
Agreement, the term "Escrow Shares" includes the Initial Escrow Shares and any
-------------
Additional Shares. The Custodian agrees to accept delivery of the Escrow Shares
and to hold such Escrow Shares in escrow in accordance with this Escrow
Agreement and to release the Escrow Shares out of escrow as
<PAGE>
provided in this Escrow Agreement.
1.2 Dividends; Voting and Rights of Ownership. Any cash dividends,
-----------------------------------------
dividends payable in property or other distributions of any kind (except for
Additional Shares) made in respect of the Escrow Shares shall be distributed
currently by Parent to the Holders on a pro rata basis. Each Holder shall have
the right to vote the Escrow Shares held in escrow for the account of such
Holder so long as such Escrow Shares are held in escrow, and Parent and the
Custodian shall take all steps necessary to allow the exercise of such rights.
While the Escrow Shares remain in the Custodian's possession pursuant to this
Escrow Agreement, the Holders shall retain and shall be able to exercise all
other incidents of ownership of the Escrow Shares that are not inconsistent with
the terms and conditions hereof.
1.3 No Encumbrance. None of the Escrow Shares or any beneficial
--------------
interest therein may be pledged, sold, assigned or transferred, including by
operation of law or by a Holder, or may be taken or reached by any legal or
equitable process in satisfaction of any debt or other liability of a Holder,
prior to the delivery of the Escrow Shares by the Custodian or Parent to such
Holder pursuant to this Escrow Agreement.
1.4 Power to Transfer Escrow Shares. The Custodian is hereby granted
-------------------------------
the power to effect any transfer of the Escrow Shares provided for in this
Escrow Agreement.
2. RESOLUTION OF CLAIMS
--------------------
2.1 Indemnification Obligations. The Escrow Shares shall serve as
---------------------------
the first source, but not the sole source, of payment for the indemnity
obligations of the Holders under Article X of the Merger Agreement. For the
purposes of this Escrow Agreement, those obligations shall continue in
accordance with Article X of the Merger Agreement, notwithstanding the merger of
Merger Sub into Calogic pursuant to the Merger Agreement. Payment for any amount
determined as provided below to be owing to Parent under such indemnity
obligations under the Merger Agreement ("Damages") and any award of attorneys'
-------
fees and charges owing to Parent pursuant to Section 2.3(c)(iv) or 11.2 of this
Agreement (a "Prevailing Party Award") shall be made by the release of Escrow
----------------------
Shares to Parent (each such payment, an "Escrow Adjustment"), subject to the
-----------------
limitations set forth in Section 10.4 of the Merger Agreement. By the execution
of this Escrow Agreement, each of the Holders agrees to be bound by the
indemnification provisions set forth in Article X of the Merger Agreement and
confirms that the issuance of the Escrow Amount of the Parent Merger Shares
pursuant to the Merger Agreement is subject to this Escrow Agreement.
Notwithstanding anything to the contrary herein, Parent shall not be entitled to
receive payment of any portion of a Prevailing Party Award which is already a
part of Damages (i.e., there shall be no double payment of legal fees). Any
Escrow Adjustments and corresponding release to Parent of Escrow Shares shall be
made in proportion to each of the Holders' interest in the Escrow Shares as of
the date or dates specified and the manner provided for in this Escrow
Agreement. Each Escrow Adjustment to the Escrow Shares shall be made by the
release to Parent of Escrow Shares having an aggregate value equal to the
Damages and any Prevailing Party Award, with the per share value of such shares
being based, for all purposes under this Escrow Agreement on the Parent Average
Closing Price (adjusted for any share dividend, reclassification, stock split,
subdivision or combination of shares, recapitalization, merger or other events)
notwithstanding any changes in market value of Parent Common Shares. In lieu of
releasing any fractional Escrow Shares, any fraction of a released Escrow Share
that would otherwise be released
-2-
<PAGE>
shall be rounded to the nearest whole Escrow Share.
2.2 Notice of Claims. Promptly after the receipt by Parent of notice
----------------
or discovery of any claim, damage, or legal action or proceeding giving rise to
indemnification rights under the Merger Agreement, after giving effect to the
Threshold Amount (as defined in the Merger Agreement) (a "Claim") Parent shall
-----
give the Indemnification Representative written notice of such Claim and shall
provide a copy of such notice to the Custodian. Each notice of a Claim by Parent
(a "Notice of Claim") shall be in writing and shall be delivered on or before
---------------
the Release Date (as defined in Section 3.1 below).
2.3 Resolution of Claims. Any Notice of Claim received by the
--------------------
Indemnification Representative and the Custodian pursuant to Section 2.2 above
shall be resolved as follows:
(a) Uncontested Claims. In the event that the Indemnification
------------------
Representative does not contest a Notice of Claim (an "Uncontested Claim") in
-----------------
writing within thirty (30) calendar days, as provided below in Section 2.3(b),
Parent may deliver to the Custodian, with a copy to the Indemnification
Representative, a written demand by Parent (a "Parent Demand") stating that a
-------------
Notice of Claim has been given as required in this Escrow Agreement and that no
notice of contest has been received from the Indemnification Representative
during the period specified in this Escrow Agreement and further setting forth
the proposed Escrow Adjustments to be made in accordance with this Section
2.3(a). It is provided, however, that within thirty (30) calendar days after
receipt of the Parent Demand, the Indemnification Representative may object in a
written notice delivered to Parent and the Custodian to the computations or
other administrative matters relating to the proposed Escrow Adjustments (but
may not object to the validity or amount of the Claim previously disclosed in
the Notice of Claim), whereupon neither the Custodian nor Parent shall make any
of the Escrow Adjustments until either: (i) Parent and the Indemnification
Representative shall have given the Custodian written notice setting forth
agreed Escrow Adjustments, or (ii) the matter is resolved as provided in
Sections 2.3(b) and 2.3(c). Upon satisfaction of the foregoing, the Custodian,
as directed in writing by Parent, and Parent shall promptly take all steps to
implement the final Escrow Adjustments.
(b) Contested Claims. In the event that the Indemnification
----------------
Representative gives written notice to Parent and the Custodian contesting all
or a portion of a Notice of Claim (a "Contested Claim") within the 30-day period
---------------
provided above, matters that are subject to third party claims against Parent or
Calogic in a litigation or arbitration shall await the final decision, award or
settlement of such litigation or arbitration, while matters that arise between
Parent on the one hand and Calogic and/or the Holders on the other hand,
including any disputes regarding performance or nonperformance of a party's
obligations under this Escrow Agreement ("Arbitrable Claims") shall be settled
-----------------
in accordance with Section 2.3(c) below. Any portion of a Notice of Claim that
is not contested or is subsequently settled by Parent and the Indemnification
Representative shall be resolved as set forth above in Section 2.3(a), provided
that in the case of a settlement the value of Escrow Shares shall equal the
Parent Average Closing Price notwithstanding any change in the market value of
Parent Common Shares. If written notice is received by the Custodian that a
Notice of Claim is contested by the Indemnification Representative, then the
Custodian shall hold hereunder after what would otherwise be the Release Date
(as defined in Section 3.1 below), the number of Escrow Shares specified in the
Release Notice or as otherwise provided in Section 3.1, until the earlier of:
(i) receipt of a settlement agreement executed by Parent and the Indemnification
Representative setting forth a
-3-
<PAGE>
resolution of the Notice of Claim and the Escrow Adjustments; (ii) receipt of a
written notice from Parent (a "Parent Distribution Notice") attaching a copy of
---------------------------
the final award or decision of the arbitrator and setting forth the Escrow
Adjustments (Parent shall at the same time provide a copy of the Parent
Distribution Notice to the Indemnification Representative); or (iii) receipt of
a written notice from the Indemnification Representative (a "Representative
--------------
Distribution Notice") attaching a copy of the final award or decision of the
- -------------------
arbitrator that no Escrow Adjustments are to be made as a result of such award
(the Indemnification Representative shall at the same time provide a copy of the
Representative Distribution Notice to Parent). If the earliest of the three
events described in the preceding sentence is (i) or (ii), the Custodian shall,
within twenty (20) calendar days of receipt of the settlement agreement or the
Parent Distribution Notice, as applicable, (a) release to Parent the number of
Escrow Shares specified in the Escrow Adjustments and (b) if the Release Date
has occurred, and there are no remaining unresolved Contested Claims, release to
the Holders the balance of the Escrow Shares. If the earliest of the three
events described above is (iii) and the Release Date has occurred, and there are
no remaining unresolved Contested Claims, the Custodian shall, within twenty
(20) calendar days of receipt of the Representative Distribution Notice, release
to the Holders the Retained Escrow (as defined in Section 3.1), in accordance
with the Holders' interests therein, provided that if the Release Date has not
occurred the Escrow Shares shall continue to be held pursuant to the terms of
this Agreement. If the award or decision of the arbitrator concludes that Escrow
Shares are to be released to Parent either in satisfaction of Damages or as
Prevailing Party Awards, the arbitrator shall specify the number of Escrow
Shares to be so released to Parent either in the arbitrator's final award or
decision or a supplementary report or finding. In the event that the Custodian
institutes an action for interpleader in accordance with Section 4.6 of this
Escrow Agreement as a result of a dispute between the parties, the parties
hereby agree to jointly seek to stay such interpleader action pending the
resolution of any arbitration commenced by the parties or any dispute pursuant
to this Section 2.3(b) and Section 2.3(c).
(c) Arbitration.
-----------
(i) Arbitration Rules. Any Arbitrable Claim, and any dispute
-----------------
between the Holders and Parent under this Escrow Agreement, shall be submitted
to final and binding arbitration before a single arbitrator in Boston,
Massachusetts in accordance with the commercial arbitration rules of the
American Arbitration Association.
(ii) Binding Effect. The final decision of the arbitrator shall be
--------------
furnished in writing to the Custodian, the Indemnification Representative, the
Holders and Parent and will constitute a conclusive determination of the issue
in question, binding upon the Holders, the Indemnification Representative and
Parent. The arbitrator shall have the authority to grant any equitable and
legal remedies that would be available in any judicial proceeding instituted to
resolve an Arbitrable Claim. Any judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction over the subject
matter thereof.
(iii) Compensation of Arbitrator. The arbitrator will be compensated
--------------------------
for his or her services, as provided below in Section 2.3(c)(iv), in accordance
with the commercial arbitration rules of the American Arbitration Association.
(iv) Payment of Costs. Subject to the limitations in Article X of
----------------
the Merger Agreement, the substantially prevailing party in any arbitration
shall be entitled to an award of
-4-
<PAGE>
attorneys' fees and costs, and all costs of arbitration, including those
provided for above, will be paid by the losing party, subject in each case to a
determination by the arbitrator as to which party is the substantially
prevailing party and the amount of such fees and costs to be allocated to such
party and subject to the terms of Section 2.3(c)(iii). Any amounts payable to
Parent by or on account of the Holders under this subsection will be reimbursed
as if the amount of such awarded fees and expenses were an Uncontested Claim.
(v) Terms of Arbitration. The arbitrator chosen in accordance with
--------------------
these provisions shall not have the power to alter, amend or otherwise affect
the terms of these arbitration provisions or the provisions of this Escrow
Agreement, the Merger Agreement or any other documents that are executed in
connection therewith.
(vi) Exclusive Remedy. Arbitration or mediation under this Section
----------------
2.3(c) shall be the sole and exclusive remedy of the parties for any Arbitrable
Claim arising out of this Escrow Agreement.
3. RELEASE FROM ESCROW
-------------------
3.1 Release of Escrow Shares. The Escrow Shares shall be released by
------------------------
the Custodian and Parent as soon as practicable, taking into account the notices
to be delivered under this Section 3.1, after the publication of Parent's
audited financial results for the year ended December 31, 1999 (the "Release
-------
Date") less: (a) any Escrow Shares delivered to or deliverable to Parent in
- ---- ----
satisfaction of Uncontested Claims or Contested Claims which have been settled
by the parties hereto, and (b) any of the Escrow Shares subject to delivery to
Parent in accordance with Section 2.3(b) with respect to any then pending
Contested Claims. Parent shall give written notice to the Indemnification
Representative and the Custodian of the publication of Parent's audited
financial results for the year ended December 31, 1999. Within ten (10) of the
Custodian's business days ("Business Days") after the Release Date, Parent and
-------------
the Indemnification Representative shall deliver to the Custodian a written
notice (a "Release Notice") setting forth the number of Escrow Shares to be
--------------
released by the Custodian and Parent (the "Released Escrow") including the
---------------
number of Escrow Shares to be released to each Holder and the number of Escrow
Shares to be retained as provided in this Section 3.1 (the "Retained Escrow")
---------------
Parent and the Indemnification Representative shall make a good faith effort to
agree on a reasonable portion of the Escrow Shares to retain for pending
Contested Claims and Prevailing Party Awards and related expenses. Until such
agreement is reached, or a determination is made in accordance with Section
2.3(c), the remaining Escrow Shares shall be the Retained Escrow. The Released
Escrow shall be released to the Holders in proportion to their respective
interests in the Initial Escrow Shares. In lieu of releasing any fractional
Escrow Shares, any fraction of a released Escrow Share that would otherwise be
released shall be rounded to the nearest whole Escrow Share. Within ten (10)
Business Days after receipt of the Release Notice, Parent shall instruct the
Custodian to deliver (by registered mail or overnight courier service) to each
Holder evidence of ownership of the number of Escrow Shares in the names of the
appropriate Holders. The Custodian shall not be required to take such action
until the Custodian has received the Release Notice executed by Parent and the
Indemnification Representative or, in the event Parent and the Indemnification
Representative fail to execute and deliver a jointly approved Release Notice, a
final award or decision which specifies the distribution of the Escrow Shares.
3.2 Release of Retained Escrow. Upon the resolution of Contested
--------------------------
Claims as
-5-
<PAGE>
provided for in Section 2.3(b), the Retained Escrow shall be subject to release
by the Custodian to Parent and/or to the Holders in accordance with Section
2.3(b), this Section and as otherwise provided for in this Escrow Agreement. The
Custodian and Parent shall cause the transfer agent to transfer to Parent the
number of Escrow Shares to be released to Parent pursuant to Section 2.3(b) and
reissue certificates for Escrow Shares that are to be either distributed to the
Holders pursuant to Section 3.1 or further retained by the Custodian pending the
resolution of Contested Claims and/or Prevailing Party Awards. Any Escrow Shares
released from escrow to Parent shall be subject to cancellation by Parent
without requiring Parent to pay any consideration whatsoever in receipt thereof
to Calogic or any of the Holders.
3.3 Expenses of Indemnification Representative. The Indemnification
------------------------------------------
Representative shall be entitled to be reimbursed his reasonable out-of-pocket
expenses and the reasonable fees and disbursements of counsel retained by him.
Such reimbursements shall be treated as an Uncontested Claim on a pro rata basis
among the contributors to the Escrow Shares, for all services performed pursuant
to the Merger Agreement and this Escrow Agreement; provided, however, that
payment of any Escrow Adjustment shall take priority over payments to the
Indemnification Representative, as provided herein. The Custodian shall follow
the joint written instructions of the Indemnification Representative and Parent
concerning the release or sale of Escrow Shares relating to the reimbursement of
the Indemnification Representative. If upon termination of this Agreement, the
Indemnification Representative shall not have received the reimbursements to
which he is entitled hereunder, then the Indemnification Representative shall be
entitled to reimbursement from the Holders on a joint and several basis.
4. CUSTODIAN
---------
4.1 Duties. The duties and responsibilities of the Custodian
------
hereunder shall be entirely administrative and not discretionary and shall be
determined solely by the express provisions of this Escrow Agreement and no
duties shall be implied. The Custodian shall be obligated to act only in
accordance with written instructions received by it as provided in this Escrow
Agreement and is authorized hereby to comply with any orders, judgments, or
decrees of any court with or without jurisdiction and shall not be liable as a
result of its compliance with the same.
4.2 Legal Opinions. As to any questions arising in connection with
--------------
the administration of this Escrow Agreement, the Custodian may rely absolutely
upon the joint instruction of Parent and the Indemnification Representative or
the opinions given to the Custodian by its outside counsel and shall be free of
liability for acting or refraining from acting in reliance on such opinions.
4.3 Signatures. The Custodian may rely absolutely upon the
----------
genuineness and authorization of the signature and purported signature of any
party upon any instruction, notice, release, receipt or other document delivered
to it pursuant to this Escrow Agreement.
4.4 Receipts and Releases. The Custodian may, as a condition to the
---------------------
disbursement of monies or disposition of securities as provided herein, require
from the payee or recipient a receipt therefor and, upon final payment or
disposition, a release of the Custodian from any liability arising out of its
execution or performance of this Escrow Agreement, such release to be in a form
reasonably satisfactory to the Custodian.
-6-
<PAGE>
4.5 Refrain from Action. The Custodian shall be entitled to refrain
-------------------
from taking any action contemplated by this Escrow Agreement in the event it
becomes aware of any dispute between Calogic, the Holders and Parent as to any
material facts or as to the happening of any event precedent to such action.
4.6 Interpleader. If any controversy arises between the parties
------------
hereto or with any third person, the Custodian shall not be required to
determine the same or to take any action, but the Custodian in its discretion
may institute such interpleader or other proceedings in connection therewith as
the Custodian may deem proper, and in following either course, the Custodian
shall not be liable.
4.7 Other Provisions. The Custodian may rely and shall be protected
----------------
in acting or refraining from acting upon any written notice, instruction or
request furnished to it hereunder and believed by it to be genuine and to have
been signed or presented by the proper party or parties. The Custodian shall be
under no duty to inquire into or investigate the validity, accuracy or content
of any such document. The Custodian shall be not be liable for any action taken
or omitted by it in good faith unless a court of competent jurisdiction
determines that the Custodian's willful misconduct was the primary cause of a
loss to the Parent, the Indemnification Representative, or the Holders. In the
administration of this Escrow Agreement, the Custodian may execute any of its
powers and perform its duties hereunder directly or through agents or attorneys
and may, consult with counsel, accountants and other skilled persons to be
selected and retained by it. The Custodian shall not be liable for anything
done, suffered or omitted in good faith by it in accordance with the advice or
opinion of any such counsel, accountants or other skilled persons.
5. INDEMNIFICATION
---------------
5.1 Waiver and Indemnification. Parent, Calogic, the Indemnification
--------------------------
Representative and the Holders agree to and hereby do waive any suit, claim,
demand or cause of action of any kind which they may have or may assert against
the Custodian arising out of or relating to the execution or performance by the
Custodian of this Escrow Agreement, unless such suit, claim, demand or cause of
action is based upon the willful neglect or gross negligence or bad faith of the
Custodian. Parent, Calogic and the Holders further agree, jointly and
severally, to indemnify and hold Custodian and its directors, officers, agents
and employees (collectively, the "Indemnitees") harmless from and against any
-----------
and all claims, liabilities, losses, damages, fines, penalties, and expenses,
including out-of-pocket, incidental expenses, reasonable legal fees and
expenses, and the allocated costs and expenses of in-house counsel and legal
staff ("Losses") that may be imposed on, incurred by, or asserted against, the
------
Indemnitees or any of them for following any instructions or other directions
upon which the Custodian is authorized to rely pursuant to the terms of this
Escrow Agreement, provided the Custodian has not acted with gross negligence,
willful neglect or bad faith. In addition, to and not in limitation of the
immediately preceding sentence, Parent, Calogic and the Holders also agree,
jointly and severally, to indemnify and hold the Indemnitees and each of them
harmless from and against any and all Losses that may be imposed on, incurred
by, or asserted against the Indemnitees or any of them in connection with or
arising out of the Custodian's performance under this Escrow Agreement, provided
the Custodian has not acted with gross negligence, willful neglect or bad faith.
The provisions of this Section 5.1 shall survive the termination of this Escrow
Agreement and the resignation or removal of the Custodian for any reason.
Anything in this Escrow Agreement to the contrary notwithstanding, in no event
shall the Custodian be liable for special, indirect or consequential loss or
damage of any kind whatsoever (including but not limited to lost profits), even
if the Custodian
-7-
<PAGE>
has been advised of such loss or damage and regardless of the form of action.
5.2 Conditions to Indemnification. In case any litigation is brought
-----------------------------
against the Custodian in respect of which indemnification may be sought
hereunder, the Custodian shall give prompt notice of that litigation to the
parties hereto, and the parties upon receipt of that notice shall have the
obligation and the right to assume the defense of such litigation with counsel
reasonably satisfactory to the Custodian; provided that failure of the Custodian
to give that notice shall not relieve the parties hereto from any of their
obligations under this Section 5 unless that failure prejudices the defense of
such litigation by said parties. At its own expense, the Custodian may employ
separate counsel and participate in the defense. The parties hereto shall not
be liable for any settlement without their respective consents.
6. ACKNOWLEDGMENT BY THE CUSTODIAN
-------------------------------
By execution and delivery of this Escrow Agreement, the Custodian
acknowledges that the terms and provisions of this Escrow Agreement are
acceptable and it agrees to carry out the provisions of this Escrow Agreement on
its part.
7. RESIGNATION OR REMOVAL OF CUSTODIAN; SUCCESSOR
----------------------------------------------
7.1 Resignation and Removal.
-----------------------
7.1.1 Notice. The Custodian may resign as such following the
------
giving of thirty (30) days' prior written notice to the other parties hereto.
Similarly, the Custodian may be removed and replaced following the giving of
thirty (30) days' prior written notice to be given to the Custodian jointly by
the Indemnification Representative and Parent. In either event, the duties of
the Custodian shall terminate thirty (30) days after the date of such notice (or
as of such earlier date as may be mutually agreeable), and the Custodian shall
then deliver the balance of the Escrow Shares then in its possession to a
successor Custodian as shall be appointed by the other parties hereto as
evidenced by a written notice filed with the Custodian.
7.1.2 Court Appointment. If the parties hereto are unable to
-----------------
agree upon a successor or shall have failed to appoint a successor prior to the
expiration of thirty (30) days following the date of the notice of resignation
or removal, then the acting Custodian, at the expense of the Holders and Parent,
may petition any court of competent jurisdiction for the appointment of a
successor Custodian or other appropriate relief, and any such resulting
appointment shall be binding upon all of the parties hereto.
7.2 Successors. Every successor appointed hereunder shall execute,
----------
acknowledge and deliver to its predecessor, and also to the Indemnification
Representative and Parent, an instrument in writing accepting such appointment
hereunder, and thereupon such successor, without any further act, shall become
fully vested with all the duties, responsibilities and obligations of its
predecessor; but such predecessor shall, nevertheless, on the written request of
its successor or any of the parties hereto, execute and deliver an instrument or
instruments transferring to such successor all the rights of such predecessor
hereunder, and shall duly assign, transfer and deliver all property, securities
and monies held by it pursuant to this Escrow Agreement to its successor.
Should any instrument be required by any successor for more fully vesting in
such successor the duties, responsibilities, and obligations
-8-
<PAGE>
hereby vested or intended to be vested in the predecessor, any and all such
instruments in writing shall, on the request of any of the other parties hereto,
be executed, acknowledged, and delivered by the predecessor.
7.3 New Custodian. In the event of an appointment of a successor,
-------------
the predecessor shall cease to be custodian of any funds, securities or other
assets and records it may hold pursuant to this Escrow Agreement, and the
successor shall become such custodian.
7.4 Release. Upon acknowledgment by any successor Custodian of the
-------
receipt of the then remaining balance of the Escrow Shares, the then acting
Custodian shall be fully released and relieved of all duties, responsibilities
and obligations under this Escrow Agreement that may arise and accrue
thereafter.
7.5 Successors. Any corporation or association into which the
----------
Custodian in its individual capacity may be merged or converted or with which it
may be consolidated, or any corporation or association resulting from any
merger, conversion or consolidation to which the Custodian in its individual
capacity shall be a party, or any corporation or association to which all or
substantially all the corporate trust business of the Custodian in its
individual capacity may be sold or otherwise transferred, shall be the Custodian
hereunder without further act.
8. FEE
---
The Custodian will be paid by the Parent as billed for services and
expenses hereunder in accordance with the fee schedule attached hereto as
Exhibit 8. In the event that the Custodian is made a party to litigation with
- ---------
respect to the property held hereunder, or brings an action in interpleader, or
in the event that the conditions to this Escrow Agreement are not promptly
fulfilled, or the Custodian is required to render any service not provided for
in this Escrow Agreement and fee schedule, or there is any assignment of the
interests of this Escrow Agreement or any modification hereof, the Custodian
shall be entitled to reasonable compensation from Parent for such extraordinary
services and reimbursement for all fees, costs, liability, and expenses,
including attorneys fees and expenses.
9. INDEMNIFICATION REPRESENTATIVE
------------------------------
9.1 Appointment and Authority. For purposes of this Escrow
-------------------------
Agreement, the Holders have, by the execution of this Escrow Agreement,
irrevocably consented to the appointment of the Indemnification Representative
as representative of the Holders and as the attorney-in-fact for and on behalf
of each Holder, and, subject to the express limitations set forth below, the
taking by the Indemnification Representative of any and all actions and the
making of any decisions required or permitted to be taken by him under this
Escrow Agreement, including but not limited to the exercise of the power to:
(i) authorize delivery to Parent of the Escrow Shares, or any portion thereof,
in satisfaction of Claims otherwise in connection with an Escrow Adjustment,
(ii) agree to, negotiate, enter into settlements and compromises of, and demand
arbitration and comply with orders of courts and awards of arbitrators with
respect to such Claims, (iii) resolve any Claims, and (iv) take all actions
necessary in the judgment of the Indemnification Representative for the
accomplishment of the foregoing and all of the other terms, conditions, and
limitations of this Escrow Agreement. Any notice given to the Indemnification
Representative will constitute notice to each and all of the Holders at the time
notice is given to the Indemnification Representative. Any action taken by, or
-9-
<PAGE>
notice or instruction received from, the Indemnification Representative will be
deemed to be an action by, or notice or instruction from, each and all of the
Holders. Parent and the Custodian will disregard any notice or instruction
received from any Holder other than the Indemnification Representative with
regard to this Escrow Agreement. The Indemnification Representative shall have
unlimited authority and power to act on behalf of each Holder with respect to
this Escrow Agreement and the disposition, settlement, or other handling of all
Claims, notices, rights, or obligations arising under this Escrow Agreement so
long as all Holders are treated in the same manner (in respect of their
proportional interests in the Escrow Shares).
9.2 Indemnification. The Indemnification Representative shall not
---------------
suffer any liability or loss for any act performed or omitted to be performed by
him under this Escrow Agreement in the absence of adjudicated gross negligence,
bad faith or willful misconduct. The Indemnification Representative may consult
with counsel and other experts as may be reasonably necessary to advise him with
respect to his rights and obligations hereunder and shall be fully protected by
any act taken, suffered, permitted, or omitted in good faith in accordance with
the advice of such counsel and experts. The Indemnification Representative
shall not be responsible for the sufficiency or accuracy of the form, execution,
validity, or genuineness of documents or securities now or hereafter deposited
hereunder, or of any endorsement thereof or for any lack of endorsement thereon,
or for any description therein, nor shall he be responsible or liable in any
respect on account of the identity, authority or rights of the persons executing
or delivering or purporting to execute or deliver any such document, security or
endorsement, and the Indemnification Representative shall be fully protected in
relying upon any written notice, demand, certificate or document which he in
good faith believes to be genuine.
9.3 Death or Disability; Successors. In the event of the death or
-------------------------------
permanent disability of the Indemnification Representative, or his resignation
as the Indemnification Representative, a successor Indemnification
Representative shall be elected by a majority vote of the Holders, with each
Holder to be given a vote equal to his proportionate share of the Escrow Shares.
The Holders shall cause to be delivered to Parent and the Custodian prompt
written notice of such election of a successor Indemnification Representative.
Each successor Indemnification Representative shall have all of the power,
authority, rights, and privileges conferred by this Agreement upon the original
Indemnification Representative, and the term, "Indemnification Representative"
------------------------------
as used herein shall be deemed to include any successor Indemnification
Representative.
10. TERMINATION; DEFICIENCY CLAIMS
------------------------------
This Escrow Agreement and the escrow created hereby shall terminate
following Custodian's delivery, and Parent's release of all remaining Escrow
Shares to the Holders and/or Parent pursuant to Section 2 or 3.
11. MISCELLANEOUS PROVISIONS
------------------------
11.1 Parties in Interest. This Escrow Agreement is not intended, nor
-------------------
shall it be construed, to confer any enforceable rights on any Person not a
party hereto. All of the terms and provisions of this Escrow Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto.
-10-
<PAGE>
11.2 Attorneys' Fees. In the event of any action to enforce any
---------------
provision of this Escrow Agreement, or on account of any default under or breach
of this Escrow Agreement, the substantially prevailing party in such action
shall be entitled to recover, in addition to all other relief, from the other
party all attorneys' fees incurred by the substantially prevailing party in
connection with such action (including, but not limited to, any appeal thereof).
11.3 Entire Agreement. This Escrow Agreement constitutes the final
----------------
and entire agreement among the parties with respect to the subject matter hereof
and supersedes all prior arrangements or understandings.
11.4 Notices. All notices, requests, demands or other communications
-------
which are required or may be given pursuant to the terms of this Agreement shall
be in writing and shall be deemed to have been duly given: (i) on the date of
delivery if personally delivered by hand, (ii) upon the third day after such
notice is deposited in the United States mail, if mailed by registered or
certified mail, postage prepaid, return receipt requested, (iii) upon the date
scheduled for delivery after such notice is sent by a nationally recognized
overnight express courier or (iv) by fax upon written confirmation (including
the automatic confirmation that is received from the recipient's fax machine) of
receipt by the recipient of such notice:
If to Parent: Sipex Corporation
------------- 22 Linnell Circle
Billerica, MA 01821
Attention: Frank DiPietro
Telephone No.: (978) 667-8700
Fax No.: (978) 670-9088
With copies to:
---------------
Testa, Hurwitz & Thibeault, LLP
125 High Street
Boston, MA 02110
Attention: Timothy Maguire, Esq.
Telephone No.: (617) 248-7000
Fax No.: (617) 248-7100
If to Parent's
--------------
Transfer Agent:
--------------
Attention:
Telephone No.:
Fax No.:
If to the Indemnification
-------------------------
Representative:
---------------
Telephone No.:
Fax No:
With copies to:
---------------
-11-
<PAGE>
Telephone No.:
Fax No:
If to the Custodian:
--------------------
Telephone No.:
Fax No.:
Such addresses may be changed, from time to time, by means of a notice
given in the manner provided in this Section 11.4.
11.5 Changes. The terms of this Escrow Agreement may not be modified
-------
or amended, or any provisions hereof waived, temporarily or permanently, except
pursuant to the written agreement of Parent, the Indemnification Representative
and the Custodian.
11.6 Severability. If any term or provision of this Escrow Agreement
------------
or the application thereof as to any Person or circumstance shall to any extent
be invalid or unenforceable, the remaining terms and provisions of this Escrow
Agreement or the application of such term or provision to persons or
circumstances other than those as to which it is held invalid or unenforceable
shall not be affected thereby and each term and provision of this Escrow
Agreement shall be valid and enforceable to the fullest extent permitted by law.
11.7 Counterparts. This Escrow Agreement may be executed in two or
------------
more partially or fully executed counterparts, each of which shall be deemed an
original and shall bind the signatory, but all of which together shall
constitute but one and the same instrument. The execution and delivery of a
Signature Page to Escrow Agreement in the form annexed to this Escrow Agreement
by any party hereto who shall have been furnished the final form of this Escrow
Agreement shall constitute the execution and delivery of this Escrow Agreement
by such party.
11.8 Headings. The headings of the various sections of this Escrow
--------
Agreement have been inserted for convenience of reference only and shall not be
deemed to be a part of this Escrow Agreement.
11.9 Governing Law. This Escrow Agreement shall be construed and
-------------
controlled by the laws of the Commonwealth of Massachusetts without regard to
the principles of conflicts of laws. Calogic, the Holders and the
Indemnification Representative consent to jurisdiction and venue in the state
and federal courts in Boston, Massachusetts.
11.10 Binding Effect. This Escrow Agreement shall inure to the
--------------
benefit of and be binding upon the parties hereto and their respective heirs,
affiliates, successors and assigns.
-12-
<PAGE>
Signature Page to Escrow Agreement
IN WITNESS WHEREOF, the parties have duly executed this Escrow Agreement as of
the day and year first above written.
SIPEX CORPORATION CALOGIC
By: _________________________________ By: _________________________________
Title: Title:
INDEMNIFICATION REPRESENTATIVE:
____________________________________
, as Custodian
By: _________________________________
Authorized Signatory
-13-
<PAGE>
Holders:
Exhibit 1.1
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</TABLE>
-61-
<PAGE>
Exhibit 8
Custodian Fee Schedule
----------------------
<PAGE>
Exhibit 8.1
INVESTMENT AGREEMENT
This Investment Agreement is between SIPEX Corporation, a Massachusetts
corporation ("Sipex"), and you as the undersigned stockholder (the
-----
"Stockholder") of Calogic, a California corporation ("Calogic").
----------- -------
A. Sipex, CAT Acquisition Corporation I, a Delaware corporation and a wholly
owned subsidiary of Sipex ("Merger Sub"), Calogic and certain stockholders of
----------
Calogic have entered into an Agreement and Plan of Reorganization dated as of
October __, 1999 (the "Reorganization Agreement").
------------------------
B. The Reorganization Agreement provides for the merger of Merger Sub into
Calogic (the "Merger"). Upon the consummation of the Merger, the undersigned
------
Stockholder will become the owner of shares of Common Stock of Sipex (the "Sipex
-----
Common Stock").
- ------------
C. All capitalized terms shall have the same meaning as defined in the
Reorganization Agreement unless otherwise indicated herein.
Intending to be legally bound, and in consideration of the premises and the
mutual representations, warranties, covenants and agreements contained herein,
Sipex and you, as the Stockholder, hereby agree as follows:
1. Securities Act Matters. You acknowledge and agree that the Sipex Common
----------------------
Stock to be issued to you has not been (and at the time of acquisition by you,
will not have been) registered under the Securities Act of 1933, as amended, or
any similar federal statute, and the rules and regulations of the Securities and
Exchange Commission thereunder (collectively, the "Securities Act") or under the
--------------
securities laws of any state, in reliance upon certain exemptive provisions of
such statutes, and have not been registered under or qualified under the
securities or other laws of any other jurisdiction. You recognize and
acknowledge that such claims of exemption are based, in part, upon your
representations contained in this Agreement. You further recognize and
acknowledge that, because the Sipex Common Stock is not registered under federal
and state laws, it is not presently eligible for public resale, and may only be
resold, assigned, transferred, pledged or otherwise disposed of pursuant to an
effective registration statement under the Securities Act and any applicable
state securities laws, or pursuant to a valid exemption from such registration
requirements. You recognize and acknowledge that Rule 144 promulgated under the
Securities Act (which facilitates routine sales of securities in accordance with
the terms and conditions of that Rule, including a holding period requirement)
is not now available to you for resale of the Sipex Common Stock, and you
recognize and acknowledge that, in the absence of the availability of Rule 144,
a sale pursuant to a claim of exemption from registration under the Securities
Act would require compliance with some other exemption under the Securities Act,
none of which may be available for resale or other disposition of the Sipex
Common Stock by you. You recognize and acknowledge that, except as set forth in
a Registration Rights Agreement being executed in connection with this
Agreement, Sipex is under no obligation to register the Sipex Common Stock,
either pursuant to the Securities Act or the securities laws of any state or to
supply the information which may be necessary to enable you to sell the Sipex
Common Stock. You agree that Sipex, at its discretion, may cause stop transfer
orders to be placed
-2-
<PAGE>
with its transfer agent with respect to the certificates representing your
shares of Sipex Common Stock, and may place legends on such certificates
reflecting any applicable restrictions on transfer.
2. Restrictive Legend. Each certificate representing Sipex Common Stock
------------------
shall, except as otherwise provided in this Section 2 or in Section 3, be
stamped or otherwise imprinted with a legend substantially in the following
form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS: (i) THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS
COVERING ANY SUCH TRANSACTION; (ii) THE CORPORATION RECEIVES AN OPINION
OF LEGAL COUNSEL SATISFACTORY TO THE CORPORATION THAT SUCH TRANSACTION IS
EXEMPT FROM SUCH REGISTRATION OR (iii) THE CORPORATION IS OTHERWISE
SATISFIED THAT SUCH TRANSACTION IS EXEMPT FROM SUCH REGISTRATION. THE
HOLDER OF THIS SECURITY IS ENTITLED TO CERTAIN REGISTRATION RIGHTS AND
SUBJECT TO CERTAIN RESTRICTIONS ON SALE, PLEDGE OR DISPOSITION OF THIS
SECURITY AS SET FORTH IN A REGISTRATION RIGHTS AGREEMENT AND AN
INVESTMENT AGREEMENT DATED AS OF OCTOBER __, 1999, COPIES OF WHICH MAY BE
OBTAINED FROM THE CLERK OF THE CORPORATION."
Such certificates shall not bear such legend if in the opinion of counsel
satisfactory to Sipex the securities being sold thereby may be publicly sold
without registration under the Securities Act and applicable state securities
laws or if such securities have been sold pursuant to Rule 144 or an effective
registration statement.
3. Notice of Proposed Transfer. Prior to any proposed transfer of any Sipex
---------------------------
Common Stock other than pursuant to an effective registration statement, the
holder thereof shall give written notice to Sipex of its intention to effect
such transfer. Each such notice shall describe the manner of the proposed
transfer and, if requested by Sipex, shall be accompanied by an opinion of
counsel satisfactory to Sipex to the effect that the proposed transfer may be
effected without registration under the Securities Act and applicable state
securities laws, whereupon, if such proposed transfer is otherwise in accordance
with the terms hereof and any "Affiliate Letter" executed by such holder, the
holder of such security shall be entitled to transfer such security in
accordance with the terms of its notice. If requested by Sipex, a transferee of
Sipex Common Stock (other than Sipex Common Stock sold pursuant to an effective
registration statement under the Securities Act or pursuant to Rule 144) will
execute, as a condition of such transfer, an agreement to be bound by this
Agreement in a form acceptable to Sipex and provide such other information and
representations as Sipex may reasonably request. Each certificate for Sipex
Common Stock transferred as above provided shall bear the legend set forth in
Section 2, except that such certificate shall not bear such legend if (i) such
transfer is in accordance with the provisions of Rule 144 or (ii) the opinion of
counsel referred to above is to the further effect that the transferee and any
subsequent transferee (other than an affiliate of Sipex) would be entitled to
transfer such securities in a public sale without registration under the
Securities Act and applicable state securities laws. The restrictions provided
for in this Section 3 shall not apply to
<PAGE>
securities which are not required to bear the legend prescribed by Section 2 in
accordance with the provisions of that Section.
4. Representations and Covenants. You hereby represent and warrant to
-----------------------------
Sipex as follows:
(a) YOU UNDERSTAND THAT YOUR INVESTMENT IN THE SIPEX COMMON STOCK
INVOLVES RISK.
(b) YOU HAVE CONSULTED YOUR OWN ATTORNEY, ACCOUNTANT OR INVESTMENT
ADVISOR WITH RESPECT TO THE INVESTMENT CONTEMPLATED HEREBY AND ITS SUITABILITY
FOR YOU. ANY SPECIFIC ACKNOWLEDGMENT SET FORTH BELOW WITH RESPECT TO ANY
STATEMENT OR INFORMATION FURNISHED TO YOU SHALL NOT BE DEEMED TO LIMIT THE
GENERALITY OF THIS REPRESENTATION AND WARRANTY.
(c) You are acquiring the Sipex Common Stock to be issued to you
solely in exchange for the Calogic Common Stock owned by you in connection with
the transactions contemplated by the Reorganization Agreement.
(d) You have paid no brokerage or similar commissions in connection
with the acquisition of such Sipex Common Stock.
(e) You are acquiring such Sipex Common Stock solely for your account
and not with a present view toward resale or other distribution thereof.
(f) Sipex has made available to you, during the course of this
transaction and prior to the acquisition of the Sipex Common Stock, the
opportunity to ask questions of and receive complete and correct answers from
representatives of Sipex concerning the terms and conditions of the Sipex Common
Stock and to obtain any additional information relating to the financial
condition and business of Sipex, all of your questions have been answered to
your satisfaction and you have obtained such information relating to Sipex as
you have deemed necessary to make an investment decision regarding the Sipex
Common Stock.
(g) You understand that you must bear the economic risk of your
investment in the Sipex Common Stock for an indefinite period of time.
(h) You have adequate means of providing for your current needs and
personal contingencies and have no need for liquidity in connection with this
investment in the Sipex Common Stock.
(i) Your overall commitment to investments which are not readily
marketable is not disproportionate to your net worth and your investment in the
Sipex Common Stock will not cause such overall commitment to become excessive.
The acquisition of the Sipex Common Stock by you is consistent with your general
investment objectives.
(j) Please check one of the boxes below:
-3-
<PAGE>
[_] You are an "accredited investor" within the meaning of Rule
501 under the Securities Act and one or more of the
categories set forth in EXHIBIT A attached hereto correctly
---------
and in all respects describes you.
[_] You, with your purchaser representative, whose Purchaser
Representative Certification Agreement is attached hereto as
EXHIBIT B, have such knowledge and experience in financial
---------
and business matters that you are capable of evaluating the
merits and risks of the investment in Sipex Common Stock.
(k) If you are not a natural person, you were not organized for the
specific purpose of acquiring the Sipex Common Stock.
(l) You received an offer concerning the Sipex Common Stock and first
learned of this investment in the state or other jurisdiction listed in the
residence address on the signature page hereto, and intend that the state
securities laws of that state or other jurisdiction alone govern this
transaction.
(m) You hereby acknowledge receipt of the documents described in
Section 5.5 of the Reorganization Agreement which you have reviewed.
You acknowledge and warrant that any exhibits to these documents which were
not directly furnished to you have been made available to you, at your request,
prior to consummation of the transactions contemplated by the Reorganization
Agreement. You further acknowledge and warrant that, prior to the execution of
this Agreement, you have had the opportunity to ask questions and receive
answers from Sipex and Calogic concerning the terms and conditions of the
transactions contemplated by the Reorganization Agreement and the issuance of
the Sipex Common Stock, and concerning any of the documents identified above,
and to obtain such additional further information from Sipex and Calogic as you
have deemed necessary to verify the accuracy of the information contained in the
documents identified above or any other information furnished to you.
(The remainder of this page has been left blank intentionally.)
-4-
<PAGE>
Signature Page of Investment Agreement
IN WITNESS WHEREOF, the parties have caused this Investment Agreement to be
executed as of the date first above written.
Sipex Corporation Name of Stockholder: ___________________
By: __________________________ By: __________________________
Name:_____________________ Title, if any:
Title:____________________
-5-
<PAGE>
Exhibit A
An "Accredited Investor" means any person or entity who comes within any of
the following categories:
1. A natural person whose net worth, either individually or jointly with
such person's spouse and inclusive of the value of the Calogic securities,
having net worth or joint net worth, at the time of his purchase, in excess of
$1,000,000.
2. A natural person who had individual income in excess of $200,000, or
joint income with that person's spouse in excess of $300,000, in 1997 and 1998
and reasonably expects to reach the same income level in 1999.
3. A corporation, partnership or other organization described in Section
501(c)(3) of the Internal Revenue Code, or Massachusetts or similar business
trust, not formed for the specific purpose of acquiring the securities offered,
with total assets in excess of $5,000,000.
4. An entity which falls within one of the following categories of
institutional accredited investors set forth in Rule 501(a) of Regulation D
under the Securities Act:
(a) A bank as defined in Section 3(a)(2) of the Securities Act, or
any savings and loan association or other institution as defined
in Section 3(a)(5)(A) of the Securities Act whether acting in its
individual or a fiduciary capacity.
(b) A broker or dealer registered pursuant to Section 15 of the
Securities Exchange Act of 1934 as amended.
(c) An insurance company as defined in Section 2(13) of the
Securities Act.
(d) An investment company registered under the Investment Company Act
of 1940 or as a business development company as defined in
Section 2(a)(48) of that Act.
(e) A Small Business Investment Company licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of the Small
Business Investment Act of 1958.
(f) Any plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or its
political subdivisions, for the benefit of its employees, if such
a plan has total assets in excess of $5,000,000.
(g) Any private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940.
(h) An employee benefit plan within the meaning of Title I of the
Employee Retirement Income Security Act of 1974, if the
investment decision is made by a
-6-
<PAGE>
plan fiduciary, as defined in Section 3(21) of such Act, which is
either a bank, savings and loan association, insurance company or
registered investment adviser or if the employee benefit plan has
total assets in excess of $5,000,000 or, if a self-directed plan,
with investment decisions made solely by persons that are
accredited investors.
(i) A trust, with total assets in excess of $5,000,000 not formed for
the specific purpose of acquiring the securities offered, whose
purpose is directed by a sophisticated person as described in
Rule 506(b)(2)(ii) of Regulation D.
5. An entity in which all of the equity owners are accredited investors and
described in one or more of the categories set forth in paragraph 1 and 4
above.
-7-
<PAGE>
Exhibit B
PURCHASER REPRESENTATIVE CERTIFICATION
The undersigned, as Purchaser Representative to certain stockholders (the
"Stockholders") of Calogic, a California corporation ("Calogic"), in a proposed
------------ -------
merger and acquisition by SIPEX Corporation, a Massachusetts corporation
("Sipex"), in which Sipex is proposing to issue shares of its Common Stock to
-----
the Stockholders in exchange for their Calogic Common Stock, hereby states and
certifies to Sipex as follows:
1. I am familiar with the definition and qualifications of a "Purchaser
Representative" as set forth in Rule 501(h) of the Regulation D promulgated
by the United States Securities and Exchange Commission under the
Securities Act of 1933, as amended.
2. I certify that I meet the conditions applicable to a Purchaser
Representative and am qualified to act in such capacity in connection with
this transaction and agree to act in such capacity.
3. I am not an affiliate, director, officer or other employee of Sipex.
4. I have such knowledge and experience in financial and business matters that
I am capable of evaluating the merits and risks of the transaction on
behalf of the Stockholders.
PURCHASER REPRESENTATIVE:
_________________________
Name: ___________________
Date: ___________________
-8-
<PAGE>
Exhibit 8.2
to Agreement and Plan
of Reorganization
REGISTRATION RIGHTS AGREEMENT
October __, 1999
To each of the several Holders named in
Schedule A attached hereto:
Dear Sir/Madam:
Pursuant to the Agreement and Plan of Reorganization dated as
of_______________ (the "Reorganization Agreement"), among SIPEX Corporation
------------------------
("Parent"); CAT Acquisition Corporation I, a Delaware corporation and a wholly
- --------
owned subsidiary of Parent ("Merger Sub"); Calogic, a California corporation
----------
("Calogic"); and the other parties named therein, Merger Sub is being merged
- ---------
with and into Calogic (the "Merger"). In connection therewith you, as the
------
holders ( together with your respective successors, assigns or transferees, the
"Holders") of Common Stock of Calogic, are acquiring shares of Common Stock of
-------
Parent. As the context requires, a Holder may be referred to as a "seller."
------
Capitalized terms used in this Registration Rights Agreement and not otherwise
defined herein shall have the meanings given to them in the Reorganization
Agreement. In connection with the Merger, Parent and you covenant and agree as
follows:
1. Certain Definitions. As used in this Agreement, the following terms
-------------------
shall have the following respective meanings:
"Agreement" shall mean this Registration Rights Agreement as amended
---------
from time to time and in effect between the parties hereto.
"Commission" shall mean the Securities and Exchange Commission, or any
----------
other federal agency at the time administering the Securities Act.
"Common Stock" shall mean the Common Stock, $.01 par value, of Parent,
------------
as constituted as of the date of this Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
------------
amended, or any similar federal statute, and the rules and regulations of
the Commission thereunder, all as the same shall be in effect at the time.
"Merger Shares" shall mean (i) the shares of Common Stock of Parent
-------------
issued to the Holders pursuant to the Reorganization Agreement and (ii) any
shares of Common Stock issued in respect thereof as a result of any stock
split, stock dividend, share exchange, merger, consolidation,
recapitalization, reclassification or other distribution with respect to or
in exchange for or replacement of any Merger Shares.
<PAGE>
"Registration Expenses" shall mean the expenses so described in
---------------------
Section 4.
"Restricted Stock" shall mean the Merger Shares, excluding Merger
----------------
Shares which (a) have been registered under the Securities Act pursuant to
an effective registration statement covering such Merger Shares filed in
compliance with the Securities Act and disposed of in accordance with the
registration statement covering them; or (b) have been sold pursuant to
Rule 144 under the Securities Act.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
--------------
any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Selling Expenses" shall mean the expenses so described in Section 4.
----------------
2. Registration. Parent shall use its reasonable best efforts to file a
------------
registration statement under the Securities Act on Form S-3 (or such successor
registration form under the Securities Act subsequently adopted by the
Commission which permits inclusion or incorporation of substantial information
by reference to other documents filed by Parent with the Commission), relating
to all of the shares of Restricted Stock on or before March15, 2000; provided,
however, that Parent shall not be required to register shares of Restricted
Stock of any Holder who does not comply with such Holder's obligations in the
last two paragraphs of Section 3 below.
3. Registration Procedures. In connection with the registration of any
-----------------------
shares of Restricted Stock under the Securities Act as described in Section 2,
Parent will do the following:
(a) prepare and file, as required by Section 2 above, with the
Commission a registration statement with respect to such securities and use its
reasonable best efforts to cause such registration statement (i) to become
effective as soon as practicable after the date of its filing with the
Commission and (ii) to remain effective until the earlier of the sale of all
Restricted Stock covered thereby or one year after the Closing Date; provided,
however, that Parent may suspend sales at any time under the registration
statement immediately upon notice to the Holders at the last known address of
the Holders, for a period or periods of time not to exceed in the aggregate 90
days during any 12-month period, if there then exists material, non-public
information relating to Parent which, in the reasonable opinion of Parent, would
not be appropriate for disclosure during that time; provided, that such
suspension shall not apply to any disposition of Restricted Stock pursuant to a
program sale which Parent reasonably determines permits no discretion on the
part of the Holder with respect to such sales;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
the period specified in paragraph (a) above;
(c) furnish to each seller of Restricted Stock such number of copies
of the registration statement and each such amendment and supplement thereto (in
each case including exhibits) and the prospectus included therein (including
each preliminary prospectus) as such persons reasonably may request in order to
facilitate the public sale or other disposition of the Restricted Stock
-2-
<PAGE>
covered by such registration statement;
(d) use its reasonable best efforts to register or qualify the
Restricted Stock covered by such registration statement under the securities or
"blue sky" laws of such jurisdictions as the sellers of Restricted Stock
reasonably shall request, provided, however, that Parent shall not for any such
purpose be required to qualify generally to transact business as a foreign
corporation in any jurisdiction where it is not so qualified or to consent to
general service of process in any such jurisdiction;
(e) prepare and file with Nasdaq an additional listing
application and use its reasonable best efforts to have the Restricted Stock
covered by such registration statement be accepted by Nasdaq for listing on the
Nasdaq National Market;
(f) notify each seller of Restricted Stock under such
registration statement (at any time when a prospectus relating thereto is
required to be delivered under the Securities Act), of the happening of any
event of which Parent has knowledge as a result of which the prospectus
contained in such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing, and promptly prepare and furnish to
such seller a reasonable number of copies of a prospectus supplemented or
amended so that, as thereafter delivered to the purchasers of such Restricted
Stock, such prospectus shall not include an untrue statement of material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances then
existing, provided that in no event shall Parent be obligated to file more than
three (3) amendments or supplements to reflect gifts or other non-public
transfers of Restricted Stock so that such shares may be sold under the
prospectus by such donees or transferees; and
(g) if the registration pursuant to Section 2 involves an
underwritten public offering (as determined in accordance with the last
paragraph of this Section 3), furnish, at the request of any Holder of
Restricted Stock included in the registration statement pursuant to Section 2 of
this Agreement, on the date that such Restricted Stock is delivered to the
underwriters for sale in such registration, (i) an opinion, dated such date, of
the counsel representing Parent for the purposes of such registration, in form
and substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to such Holder, and (ii) a
letter dated such date, from the independent certified public accountants of
Parent, in form and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public offering, addressed
to the underwriters, if any, and to such Holder (if permitted under applicable
professional standards);
(h) notify the Holders participating in such registration,
promptly after it shall receive notice thereof, of the time when such
registration statement has become effective or a supplement to any prospectus
forming a part of such registration statement has been filed; and
(i) in the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering.
In connection with the registration of Restricted Stock hereunder, the
sellers of Restricted Stock
-3-
<PAGE>
will furnish to Parent in writing such information requested by Parent with
respect to themselves and the proposed distribution by them as shall be
necessary in order to assure compliance with applicable federal and state
securities laws.
Parent and Holders of a majority of the shares then constituting Restricted
Stock may determine, either before or after the initial filing of the
registration statement pursuant to Section 2, that the shares of Restricted
Stock may only be sold pursuant to such registration in an underwritten public
offering. In that event, Parent will give prompt notice of such decision to each
seller, and afford each seller an opportunity to participate in such
underwritten offering. Parent may set time limits for the sellers to indicate
whether or not they desire to participate in such public offering, and may
require those sellers wishing to participate therein to execute custody
agreements and powers of attorney (which shall include authority to the
attorney-in-fact thereunder to execute an underwriting agreement with respect to
such offering) and other documentation in the form reasonably prescribed by
Parent and reasonably acceptable to the Holders. Upon the filing of a
registration statement for such underwritten offering (or an amendment to a
previously filed registration statement), sellers may only sell Restricted Stock
pursuant to such underwritten offering (or pursuant to an available exemption
from registration). If such underwritten offering is not completed within 75
days from the date of the determination referred to in the first sentence of
this paragraph, then such restriction shall no longer be applicable, and
Parent's obligations under Section 2 hereof shall be reinstated, with a new
registration statement (or amendment) to be filed by Parent as soon as
practicable and in any event within 15 days after the expiration of such 75-day
period.
4. Expenses. All expenses incurred by Parent in connection with
--------
registrations pursuant to Sections 2 and 3, including, without limitation, all
registration, qualification and filing fees, fees and disbursements of counsel
and independent public accountants for Parent, fees and expenses incurred in
connection with complying with state securities or "blue sky" laws, fees of the
National Association of Securities Dealers, Inc., transfer taxes, fees of
transfer agents and registrars, but excluding any Selling Expenses, are called
"Registration Expenses." All underwriting discounts (if any) and selling
- ----------------------
commissions applicable to the sale of Restricted Stock are called "Selling
-------
Expenses." Except as set forth in this paragraph, Parent will pay all
- --------
Registration Expenses in connection with the registration statement under
Section 2. All Selling Expenses in connection with the registration statement
under Section 2 and the sale of Restricted Stock thereunder shall be borne by
the participating sellers in proportion to the number of shares sold by each.
The Registration Expenses associated with any amendment or supplement to the
prospectus to reflect a gift or other non-public transfer of shares of
Restricted Stock so that such shares may be sold under the prospectus by the
donee or transferee shall be paid by the seller or sellers which made such gift
or transfer.
5. Indemnification and Contribution.
--------------------------------
(a) In connection with the registration, qualification or compliance of
the Restricted Stock under the Securities Act pursuant to Section 2 hereof,
Parent will indemnify and hold harmless (i) each seller of such Restricted Stock
thereunder, (ii) to the extent the registration involves an underwritten public
offering as determined in accordance with Section 3, any underwriter of such
Restricted Stock thereunder and (iii) each other person, if any, who controls
such seller or underwriter within the meaning of the Securities Act, against any
expenses, losses, claims, damages and liabilities, joint or several, to which
such seller, underwriter or controlling person may become subject under the
Securities Act, Exchange Act, state securities laws or otherwise, insofar as
such losses, claims,
-4-
<PAGE>
damages or liabilities (or actions, proceedings or settlements in respect
thereof) arising out of or are based upon (a) any untrue statement or alleged
untrue statement of material fact contained in the registration statement under
which such Restricted Stock was registered under the Securities Act pursuant to
Section 2 hereof at the time it became effective under the Securities Act, any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereto, offering circular, or other document (including any
related registration statement, notification, or the like) incident to any such
registration, qualification, or compliance), (b) the omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances under which
they were made or (c) any violation by Parent or its agents of any rule or
regulation promulgated under the Securities Act, Exchange Act or state
securities laws applicable to Parent or its agents and relating to action or
inaction required of Parent in connection with such registration, qualification
or compliance and Parent will reimburse each such seller, each such underwriter
and each such controlling person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action, provided, however, that Parent will not be
liable in any such case if any to the extent that (A) any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement, an omission or alleged omission or a violation or
alleged violation so made in conformity with information furnished in writing by
any such seller, any such underwriter or any such controlling person for
inclusion in the registration statement under which such Restricted Stock was
registered under the Securities Act pursuant to Section 2 hereof or any
prospectus contained therein, or any amendment or supplement to such
registration statement or prospectus, or (B) if such untrue statement or alleged
untrue statement, omission or alleged omission or violation or alleged violation
was corrected in an amended or supplemented prospectus delivered to such seller
and/or underwriter, as the case may be, and such seller or underwriter failed to
deliver a copy of the amended or supplemented prospectus at or prior to the
confirmation of the sale of the Restricted Stock to the person or entity
asserting any such loss, claim, damage or liability in any case where such
delivery is required by the Securities Act or any state securities laws.
(b) In connection with the registration of the Restricted Stock under
the Securities Act pursuant to Section 2 hereof, each seller of such Restricted
Stock thereunder, if Restricted Stock held by such Holder are included in the
securities as to which such registrations being effected, severally and not
jointly, will indemnify and hold harmless Parent, each person, if any, who
controls Parent within the meaning of the Securities Act, each officer of Parent
who signs the registration statement, each director of Parent, each underwriter
and each person who controls such underwriter within the meaning of the
Securities Act, against all losses, claims, damages or liabilities, joint or
several, to which Parent or such officer, director, underwriter or controlling
person may become subject under the Securities Act, or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon (i) the failure of such seller to comply with the
provisions of Section 8 herein, or (ii) any untrue statement or alleged untrue
statement of any material fact contained in the registration statement, any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereto, or arising out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will reimburse
Parent and each such officer, director, underwriter and controlling person for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action,
provided, however, that such seller will be liable hereunder in any such case if
and only to the extent that any such loss, claim, damage or liability arises out
of or is based upon an untrue statement or alleged untrue
-5-
<PAGE>
statement or omission or alleged omission made in reliance upon and in
conformity with information furnished by such seller to Parent in writing and
stated to be specifically for use in the registration statement under which such
Restricted Stock was registered under the Securities Act pursuant to Section 2
hereof or any prospectus contained therein, or any amendment or supplement to
such registration statement or prospectus; and provided, further, that in no
event shall any indemnity under this subsection 5(b) exceed the gross proceeds
from the offering received by such Holder from the sale of Restricted Stock.
(c) Promptly after receipt by an indemnified party hereunder of notice
of the commencement of any action, such indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party hereunder, notify
the indemnifying party in writing thereof, but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
such indemnified party other than under this Section 5 and shall only relieve it
from any liability which it may have to such indemnified party under this
Section 5 if and to the extent the indemnifying party is prejudiced by such
omission. In case any such claim or action shall be brought against any
indemnified party and it shall notify the indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to participate in and, to the
extent it shall wish, to assume and undertake the defense thereof with counsel
reasonably satisfactory to such indemnified party, and, after notice from the
indemnifying party to such indemnified party of its election so to assume and
undertake the defense, the indemnifying party shall not be liable to such
indemnified party under this Section 5 for any legal expenses subsequently
incurred by such indemnified party in connection with the defense thereof other
than reasonable costs of investigation and of liaison with counsel so selected,
provided, however, that, if the defendants in any such action include both the
indemnified party and the indemnifying party and if the interests of the
indemnified party reasonably may be deemed to conflict with the interests of the
indemnifying party, the indemnified party shall have the right to select a
separate counsel and to assume such legal defenses and otherwise to participate
in the defense of such action, with the expenses and fees of such separate
counsel and other expenses related to such participation to be reimbursed by the
indemnifying party as incurred.
No indemnifying party, in the defense of any such claim or litigation,
shall, except with the consent of each indemnified party, consent to entry of
any judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation. Each indemnified party shall furnish such information regarding
itself or the claim in question as an indemnifying party may reasonably request
in writing and as shall be reasonably required in connection with defense of
such claim and litigation resulting therefrom.
(d) In order to provide for just and equitable contribution to joint
liability in any case in which a claim for indemnification is made pursuant to
this Section 5 but it is judicially determined (by the entry of a final judgment
or decree by a court of competent jurisdiction and the expiration of time to
appeal or the denial of the last right of appeal) that such indemnification may
not be enforced in such case notwithstanding the fact that this Section 5
provides for indemnification in such case, Parent and each seller of Restricted
Stock will contribute to the aggregate losses, claims, damages or liabilities to
which they may be subject (after contribution from others) in proportion to the
relative fault of Parent, on the one hand, and each holder, severally, on the
other hand; provided, however, that, in any such case, no person or entity
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) will be entitled to contribution from any person or
-6-
<PAGE>
entity who was not guilty of such fraudulent misrepresentation and; provided,
further, that in no event shall any contribution under this subsection 5(d) on
the part of any Holder exceed the gross proceeds received by such Holder from
the sale of Restricted Stock.
(e) The indemnities provided in this Section 5 shall survive the
transfer of any Restricted Stock by such Holder.
6. Reports Under Securities Exchange Act of 1934. With a view to
---------------------------------------------
making available to the Holders the benefits of Rule 144 promulgated under the
Securities Act, Parent agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144 or any successor provision thereof, at all
times;
(b) maintain registration of its Common Stock under Section 12 of the
Exchange Act, as is necessary to enable Holders to utilize Form S-3 for the sale
of their Restricted Stock;
(c) file in a timely manner all reports and other documents required
of Parent under the Securities Act and the Exchange Act; and
(d) furnish to any Holder, so long as the Holder owns any Restricted
Stock, forthwith upon request: (i) a written statement by Parent regarding its
compliance with the reporting requirements of Rule 144, the Securities Act and
the Exchange Act (ii) a copy of the most recent annual or quarterly report of
Parent and such other reports and documents so filed by Parent under the
Exchange Act.
7. Changes in Common Stock. If, and as often as, there is any change in
-----------------------
the Common Stock by way of a stock split, stock dividend, combination or
reclassification or similar event, or through a reorganization or
recapitalization or similar event, appropriate adjustment shall be made in the
provisions hereof so that the rights and privileges granted hereby shall
continue with respect to the Common Stock as so changed.
8. Sellers' Conduct. With respect to any sale of Restricted Stock
----------------
pursuant to Section 2, you understand and agree as follows:
(a) You will carefully review the information concerning you contained
in the registration statement (if any) and will promptly notify Parent if such
information is not complete and accurate in all respects, including having
properly disclosed any position, office or other material relationship within
the past three years with Parent or its affiliates;
(b) You agree to sell your Restricted Stock only in the manner set
forth in the registration statement while such registration statement is
effective;
(c) You agree to comply with the anti-manipulation rules under the
Exchange Act in connection with purchases and sales of securities of Parent
during the time the registration statement remains effective;
(d) You agree to only sell shares in a jurisdiction after counsel for
Parent has
-7-
<PAGE>
advised that such sale is permissible under the applicable state securities or
"Blue Sky" laws;
(e) You agree to comply with the prospectus delivery requirements of
the Securities Act;
(f) You agree to promptly notify Parent of any and all planned sales
and immediately notify Parent of any completed sales of shares; and
(g) You agree to suspend sales during the periods when sales are to be
suspended pursuant to Section 3(a) herein.
9. Miscellaneous.
-------------
(a) All covenants and agreements contained in this Agreement by or on
behalf of any of the parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto (including, without
limitation, transferees of any Restricted Stock, provided that such transferee
executes a counterpart signature page to this Agreement in a form acceptable to
Parent), whether so expressed or not, and provided, further, that no holder or
transferee of Merger Shares which have ceased to be Restricted Stock shall have
the benefit of the covenants and agreements in this Agreement with respect to
such Merger Shares.
(b) All notices, requests, consents and other communications hereunder
shall be in writing and shall be mailed by certified or registered mail, return
receipt requested, postage prepaid, sent by nationally recognized delivery
service guaranteeing delivery in two business days or less, with the price of
delivery paid by the sender, or telecopied, addressed as follows:
if to Parent, SIPEX Corporation at 22 Linnell Circle, Billerica,
MA 01821, ATTN: Frank DiPietro (Fax Number 978-670-9088), with a copy to
Timothy Maguire, Esq., Testa, Hurwitz & Thibeault, LLP, 125 High Street,
Boston, Massachusetts 02110 (Fax Number 617-248-7100); and;
if to any other party hereto, at the address of such party set
forth on the signature page hereto;
or, in any case, at such other address or addresses as shall have been furnished
in writing to Parent (in the case of a holder of Restricted Stock) or to the
holders of Restricted Stock (in the case of Parent) in accordance with the
provisions of this paragraph.
(c) This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts.
(d) This Agreement may be amended or modified, and provisions hereof
may be waived, with the written consent of Parent and the holders of at least a
majority of the outstanding shares of Restricted Stock.
(e) This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
-8-
<PAGE>
(f) If any provision of this Agreement shall be held to be illegal,
invalid or unenforceable, such illegality, invalidity or unenforceability shall
attach only to such provision and shall not in any manner affect or render
illegal, invalid or unenforceable any other provision of this Agreement, and
this Agreement shall be carried out as if any such illegal, invalid or
unenforceable provision were not contained herein.
10. Assignment of Registration Rights. The rights to cause the
---------------------------------
Company to register shares of Restricted Stock pursuant to this Section 2 may be
assigned by a Holder to a transferee or assignee of shares of Restricted Stock
which (a) is a subsidiary, parent, general partner, limited partner, retired
partner, member or retired member of a Holder, (b) is a Holder's family member
or trust for the benefit of an individual Holder, or (c) acquires the lesser of
(i) ten percent (10%) of the shares of Restricted Stock issued to such Holder
pursuant to the Reorganization Agreement (as adjusted for stock splits and
combinations) and (ii) the total number of shares (as adjusted for stock splits
and combinations) of Restricted Stock issued to such Holder pursuant to the
Reorganization Agreement; provided, however, (i) the transferor shall, within
ten (10) days after such transfer, furnish to the Company written notice of the
name and address of such transferee or assignee and the securities with respect
to which such registration rights are being assigned and (ii) such transferee
shall agree to be subject to all restrictions and covenants set forth in this
Registration Rights Agreement.
(The remainder of this page has been left blank intentionally.)
-9-
<PAGE>
Signature Page to
Registration Rights Agreement
Please indicate your acceptance of the foregoing by signing and
returning the enclosed counterpart of this letter, whereupon this Agreement
shall be a binding agreement between the Company and you. You understand that
Parent is expressly relying on the accuracy of the information contained herein.
The foregoing information is complete and correct as of the date hereof. You
hereby undertake to promptly notify Parent of any change in the above
information prior to investment in Parent.
Very truly yours,
SIPEX CORPORATION
By:_______________________________
Name:
Title:
AGREED TO AND ACCEPTED as of
the date first above written.
HOLDERS:
______________________________
Name:
Address:
______________________________
Name:
Address:
______________________________
Name:
Address:
-10-
<PAGE>
SCHEDULE A
LIST OF HOLDERS
---------------
<TABLE>
<CAPTION>
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Holder Merger Shares (Excluding
- ------ ------------------------
Escrow Shares)
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<S> <C>
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</TABLE>
-11-
<PAGE>
Exhibit 8.8
AFFILIATE LETTER
(Calogic Corporation)
SIPEX Corporation
22 Linnell Circle
Billerica, Massachusetts 01821
Ladies and Gentlemen:
The undersigned officer, director or stockholder (the "Stockholder") of
-----------
Calogic, a California corporation ("Calogic"), has entered into an Agreement and
-------
Plan of Reorganization (the "Reorganization Agreement"), dated as of October __,
------------------------
1999 by and among SIPEX Corporation, a Massachusetts corporation ("Parent"), CAT
------
Acquisition Corporation I, a Delaware corporation and a wholly owned subsidiary
of Parent ("Merger Sub"), Calogic and other stockholders of Calogic providing
----------
for the merger of Merger Sub into Calogic (the "Merger"). The Reorganization
Agreement provides that at least 95% of all of the outstanding capital stock of
Calogic (the "Calogic Shares") will be exchanged for shares of Common Stock of
--------------
Parent (the "Parent Common Stock") in accordance with the Reorganization
-------------------
Agreement.
The Stockholder has been advised that, as of the date hereof, the
Stockholder may be deemed to be an "affiliate" of the Calogic, as the term
"affiliate" is used in and for purposes of Accounting Series Releases 130 and
135, as amended, of the U.S. Securities and Exchange Commission (the
"Commission").
----------
The Stockholder understands that the representations, warranties and
covenants set forth herein will be relied upon by Calogic, the other
stockholders of Calogic, Parent, Merger Sub, the stockholders of Parent and
their respective counsel and accounting firms.
The Stockholder hereby represents and warrants to Calogic, Parent and
Merger Sub that the Stockholder has not sold, exchanged, transferred, pledged,
disposed or otherwise reduced his or her risk relative to any Calogic Shares
owned by the Stockholder since August 31, 1999. The Stockholder agrees that,
during the period from the date hereof through the date on which financial
results covering at least 30 days of post-Merger combined operations of Parent
and Calogic have been published by Parent (within the meaning of the applicable
"pooling of interests" accounting requirements) (the "Restricted Period"), the
Stockholder shall not sell, transfer or dispose of, or reduce the Stockholder's
risk relating to any Parent Common Stock, except pursuant to and upon
consummation of the Merger or except by exercise of an option.
The Stockholder hereby agrees with Calogic, Parent and Merger Sub that,
without the prior
<PAGE>
written consent of Parent (it being understood that Parent will not unreasonably
withhold or delay such consent), the Stockholder will not sell, exchange,
transfer, dispose of or otherwise reduce his or her risk relative to any shares
of Parent Common Stock acquired by the Stockholder during the Restricted Period,
except by exercise of an option. Parent, at its discretion, may apply legends to
the Parent Common Stock concerning the foregoing and may cause stop transfer
orders to be placed with its transfer agent with respect to the certificates
representing the Stockholder's shares of Parent Common Stock.
Parent agrees, as promptly as practicable following the acquisition by
Parent of at least 95% of all of the outstanding capital stock of the Calogic
(and in no event later than February 29, 2000), to publish results covering at
least 30 days of combined operations of Parent and Calogic in the form of a
quarterly earnings report, as part of an effective registration statement filed
with the Commission, a report to the Commission on Form 10-K, 10-Q or 8-K, or
any other public filing or announcement that includes the combined results of
operations of Parent and Calogic; provided, however, that Parent shall be under
no obligation to publish any such financial information other than with respect
to a fiscal quarter of Parent.
Number of Calogic Shares beneficially owned by the
Stockholder:___________________
Very truly yours,
______________________________
(Print Stockholder's Name)
By:____________________________
Title:_________________________
(if applicable)
Accepted as of the _____ day
of October, 1999
SIPEX CORPORATION
By:__________________________
Name:________________________
Title:_______________________
-2-
<PAGE>
Exhibit 9.2
Form of Opinion of Counsels to the Company
Note: Defined terms have the same meaning as in the Merger Agreement.
1. The Company is a corporation validly existing and in good standing
under the laws of the State of California. The Company and each of its
Subsidiaries have all requisite corporate power and authority to carry on the
businesses in which they are engaged and to own and use the properties owned and
used by them.
2. The authorized capital stock of the Company consists of (a) 2,000,000
shares of Common Stock, of which (i) 345,000 shares are issued and outstanding
and (ii) no shares are held in the treasury of the Company. All of the issued
and outstanding shares of capital stock of the Company are duly authorized,
validly issued, fully paid, nonassessable and free of all statutory preemptive
rights and preemptive rights known to such counsel. Except as set forth in
Section 2.5 of the Calogic Disclosure Schedule, to the best of such counsel's
knowledge, there are no outstanding or authorized options, warrants, rights,
agreements or commitments to which the Company is a party or which are binding
upon the Company providing for the issuance or redemption of any of its capital
stock. All of the issued and outstanding shares of capital stock of the Company
were issued in compliance with the registration requirements (or valid
exemptions therefrom) under the Securities Act of 1933.
*3. The Company has all requisite corporate power and authority to execute
and deliver the Merger Agreement and the Escrow Agreement and to perform its
obligations thereunder. The execution and delivery by the Company of the Merger
Agreement and the Escrow Agreement and consummation by the Company of the
transactions contemplated thereby have been duly and validly authorized by all
necessary action on the part of the Company and its stockholders. The Merger
Agreement and the Escrow Agreement have been duly and validly executed and
delivered by the Company and constitute valid and binding obligations of the
Company and its stockholders, enforceable against the Company and its
stockholders in accordance with their terms, subject to bankruptcy, insolvency
and similar laws affecting the rights of creditors generally.
*4. Except as set forth in Section 3.4 of the Agreement or Section 3.4 of
the Calogic Disclosure Schedule, neither the execution, delivery and performance
by the Company of the Merger Agreement, nor the consummation by the Company of
the transactions contemplated thereby, (i) conflicts with or violates any
provision of the Certificate of Incorporation or By-laws of the Company or any
Subsidiary, (ii) requires on the part of the Company or any Subsidiary any
filing with, or permit, authorization, consent or approval of, any governmental
entity, (iii) violates any provision of applicable law or regulation or to such
counsel's knowledge any judgment, injunction, order, decree or award binding
upon the Company or any Subsidiary, or affecting any of its assets or
properties, or (iv) to such counsel's knowledge, conflicts with, contravenes or
constitutes a default under, or results in the creation or imposition of any
lien on any asset of the Company or any Subsidiary or gives rise to a right of
termination, cancellation, modification, or acceleration of any obligation of
the Company or any Subsidiary under any contract, agreement, indenture, lease,
sublease, license, sublicense, franchise or other instrument identified in the
Calogic Disclosure Schedule.
*5. Except as set forth in the Calogic Disclosure Schedule, to such
counsel's knowledge, there is no claim, complaint, action, suit, investigation,
hearing or proceeding pending or threatened
<PAGE>
against the Company or any Subsidiary.
*6. Upon consummation of the Merger, all Outstanding Calogic Options of
which such counsel is aware shall be converted into options for Buyer Common
Stock and no longer represent the right to acquire equity in the Company or the
Surviving Corporation.
*7. Upon the filing of the Certificate of Merger with the Secretary of
State of California and Delaware, the Merger will be effective under California
and Delaware law.
* Opinions to be given by Cooley Godward or both.
-2-
<PAGE>
Exhibit 9.3
[Date]
Calogic
237 Whitney Place
Fremont, CA 94539
and
The Common Stockholders
of Calogic
Ladies and Gentlemen:
We have acted as counsel to SIPEX Corporation, a Massachusetts
corporation ("SIPEX"), in connection with the Agreement and Plan of Merger dated
-----
as of October ___, 1999 by and among you, SIPEX and CAT Acquisition Corporation
I, a Delaware corporation wholly owned by SIPEX ("Merger Sub") (the
----------
"Reorganization Agreement"). This opinion is furnished to you pursuant to and
- -------------------------
in satisfaction of Section 9.3(c) of the Reorganization Agreement. Capitalized
terms used herein, unless otherwise defined herein, shall have meanings assigned
to such terms in the Reorganization Agreement.
In rendering our opinion, we have examined and relied upon originals or
certified copies of the following:
(1) the Reorganization Agreement and all schedules and exhibits thereto;
(2) the Articles of Merger effective as of the date hereof;
(3) the Registration Rights Agreement dated as of the date hereof;
(4) the Escrow Agreement dated as of the date hereof (the Reorganization
Agreement, including all schedules and exhibits thereto, the Articles
of Merger, the Registration Rights Agreement and the Escrow Agreement,
collectively, the "Transaction Documents");
---------------------
(5) a Certificate dated as of the date hereof of a Vice President of SIPEX
as to, among other things, the representations and warranties made by
SIPEX in the Reorganization Agreement;
(6) a Certificate dated as of the date hereof of the Clerk of SIPEX
certifying (a) the resolutions of SIPEX's Board of Directors approving
the Reorganization Agreement and the transactions contemplated
therein, (b) the By-laws of SIPEX, (c) the Restated Articles of
Organization of SIPEX, as amended to date, and (d) the incumbency of
SIPEX's officers signing any of the Transaction Documents or other
documents delivered on behalf of SIPEX at the Closing; and
(7) such other documents, instruments, certificates and corporate records
as we have deemed necessary as a basis for the opinions hereinafter
expressed.
In our examination of the foregoing documents, we have assumed the
genuineness of all signatures and the authenticity of all documents submitted to
us as originals, the conformity to original
<PAGE>
documents of all documents submitted to us as copies, whether certified or not,
and the completeness of the corporate minute books and other record books of
SIPEX. As to all matters of fact relevant to this opinion, we have assumed the
completeness and accuracy of, and are relying upon, the statements set forth in
certificates of public officials and officers of SIPEX and the representations
and warranties of all parties set forth in the Transaction Documents, and have
undertaken no independent verification of such facts. For purposes of this
opinion, we have assumed compliance by you with all laws and regulations
relating to your authority to enter into the Transaction Documents and to effect
the transactions contemplated thereby, we have assumed that you have all
requisite power and authority and have taken all action necessary for you to
enter into the Transaction Documents and to effect such transactions
contemplated thereby, and we have assumed that each of the Transaction Documents
has been duly authorized, executed and delivered by, and constitutes the valid,
binding and enforceable obligation of, each of the parties thereto other than
SIPEX.
This opinion is based upon our knowledge of the law and facts as of the
date hereof and assumes no event will take place in the future which would
affect the opinions set forth herein. We assume no duty to communicate with you
with respect to any change in law or facts which comes to our attention
hereafter. Any reference to "our knowledge" or to matters "known to us" or "of
which we have knowledge," or any variation thereof, shall mean the actual
knowledge, but not including any constructive or imputed notice of any
information, of attorneys in our firm who worked on the transactions
contemplated in the Transactions Documents, without any independent
investigation, except for inquiry of officers of SIPEX and Merger Sub.
Our opinion in paragraph 1 below as to incorporation and existence of SIPEX
is based solely on a certificate received from the Secretary of State of the
Commonwealth of Massachusetts, and such opinion is limited accordingly and is
rendered as of the date of such certificate.
We are members of the bar of the Commonwealth of Massachusetts and have not
made an independent review of the laws of any state or jurisdiction other than
those of the Commonwealth of Massachusetts, the Federal securities laws of the
United States of America, and the General Corporation Law of the State of
Delaware. Accordingly, we express no opinion herein with respect to the laws of
any state or jurisdiction other than those of the Commonwealth of Massachusetts,
the Federal securities laws of the United States of America, and the General
Corporation Law of the State of Delaware.
To the extent that any of the Transaction Documents or any of the matters
covered hereby are governed by the laws of the State of California, we have
assumed (with your permission) that the laws of the State of California are
identical to the laws of the Commonwealth of Massachusetts. Our opinion is
qualified to the extent that: (a) the availability of equitable remedies,
including, without limitation, specific enforcement and injunctive relief, is
subject to the discretion of the court before which any proceedings therefor may
be brought; and (b) the enforceability of certain terms provided in the
Transaction Documents may be limited by (i) applicable bankruptcy,
reorganization, arrangement, fraudulent conveyance or transfer, insolvency,
moratorium or similar laws affecting the enforcement of creditors' rights
generally as at the time in effect and (ii) general principles of equity and the
discretion of a court in granting equitable remedies (whether enforceability is
considered in a proceeding at law or in equity).
In addition, we express no opinion as to anti-trust laws or regulations, or
anti-fraud laws or regulations.
We did not attend the Closing of the Merger, and our opinion is given on
the assumption that
-2-
<PAGE>
all of the Transaction Documents and the other documents delivered at the
Closing were executed by all of the parties thereto in the form most recently
produced by us or supplied to us.
Based upon the foregoing and subject to the qualifications and limitations
set forth herein, we are of the following opinion:
1. SIPEX is a corporation duly organized, validly existing and in good
standing under the laws of the Commonwealth of Massachusetts. SIPEX has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its businesses as now being conducted and to execute and deliver
the Transaction Documents and to consummate the Merger and the other
transactions contemplated by the Transaction Documents.
2. Each of SIPEX and Merger Sub has taken all necessary corporate action
to authorize the execution, delivery and performance of the Transaction
Documents and, except for the filing of the appropriate Merger Documents with
the Secretary of State of California, has taken all necessary corporate action
to consummate the transactions contemplated thereby. The execution, delivery
and performance of the Transaction Documents by SIPEX and Merger Sub have been
duly authorized by all necessary action of the Board of Directors of SIPEX and
Merger Sub. Other than the indemnification and contribution provisions of the
Registration Rights Agreement (as to which we express no opinion concerning the
validity, binding effect or enforceability), the Transaction Documents
constitute valid, binding and enforceable obligations of SIPEX and Merger Sub in
accordance with their terms.
3. Neither the execution and delivery of the Transaction Documents by
SIPEX and Merger Sub nor the consummation of the Merger or any other transaction
described herein, does or will, after the giving of notice, or the lapse of
time, or otherwise, conflict with, result in a breach of, or constitute a
default under, the Charter Documents of SIPEX or Merger Sub or, to our
knowledge, any Federal, state or local court or administrative order or process,
or any United States Federal law or Commonwealth of Massachusetts statute, law,
ordinance, rule or regulation, or the General Corporation Law of the State of
Delaware, or, to our knowledge, any contract, agreement or commitment to which
SIPEX or Merger Sub is a party, or under which SIPEX or Merger Sub is obligated,
or by which SIPEX or Merger Sub or any of the rights, properties or assets of
SIPEX or Merger Sub are subject or bound which has been filed with the
Securities and Exchange Commission; to our knowledge, result in the creation of
any Lien upon, or otherwise adversely affect, any of the rights, properties or
assets of SIPEX or Merger Sub; to our knowledge, terminate, amend or modify, or
give any party the right to terminate, amend, modify, abandon or refuse to
perform or comply with, any contract, agreement or commitment to which SIPEX or
Merger Sub is a party, or under which SIPEX or Merger Sub is obligated, or by
which SIPEX or Merger Sub or any of the rights, properties or assets of SIPEX or
Merger Sub are subject or bound which has been filed with the Securities and
Exchange Commission; or, to our knowledge, accelerate, postpone, or modify the
time within which, or the terms and conditions under which, any liabilities,
duties or obligations are to be satisfied or performed, or any rights or
benefits are to be received, under any contract, agreement or commitment to
which SIPEX or Merger Sub is a party, or under which SIPEX or Merger Sub may be
obligated, or by which SIPEX or Merger Sub or any of the rights, properties or
assets of SIPEX or Merger Sub are subject or bound which has been filed with the
Securities and Exchange Commission, other than any of the foregoing which would
not have, individually or in the aggregate, a material adverse effect on the
Business Condition of SIPEX or Merger Sub.
-3-
<PAGE>
4. To our knowledge, except for (a) the filing of the appropriate Merger
Documents with the Secretary of State of California, (b) the filing of
appropriate documents with the Nasdaq Stock Market and (c) the filing of a Form
D and a Form 8-K with the Securities and Exchange Commission, if applicable, and
except for such other consents which if not obtained or made would not have a
material adverse effect on the Business Condition of SIPEX or the transactions
contemplated by the Reorganization Agreement, no consent, approval or
authorization of or registration, declaration or filing with any United States
Federal, Delaware or Massachusetts governmental authority is required on the
part of SIPEX or Merger Sub in connection with the execution, delivery and
performance of the Transaction Documents by SIPEX and Merger Sub.
5. The Parent Merger Shares to be issued in the Merger deliverable
pursuant to the Reorganization Agreement will be, when delivered pursuant
thereto, duly authorized, validly issued, fully paid and nonassessable, and not
subject to any preemptive rights or rights of first refusal either under the
Business Corporation Law of the Commonwealth of Massachusetts or arising
pursuant to any agreement or other instrument known to us to which SIPEX is a
party or which is otherwise binding upon SIPEX.
6. Based upon the representations of SIPEX and the Calogic shareholders,
the issuance and delivery of the Parent Merger Shares pursuant to the
Reorganization Agreement to the Calogic shareholders do not require registration
under the Securities Act or state securities laws.
The opinions herein expressed are solely for the benefit and information
of, and may be relied upon solely by you, and no other person shall be entitled
to rely upon the opinions herein expressed. Except with our prior written
consent, the opinions herein expressed are not to be used, circulated, quoted or
otherwise referred to nor are they to be filed with any governmental agency or
any other person. The opinion is rendered solely for purposes of the
transactions contemplated by the Reorganization Agreement and may not be relied
upon for any other purpose.
Very truly yours,
TESTA, HURWITZ & THIBEAULT, LLP
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<PAGE>
EXHIBIT 7.2
AMENDMENT NO. 1 DATED AS OF NOVEMBER 23, 1999 TO THE AGREEMENT AND
PLAN OF REORGANIZATION
AMENDMENT NO. 1 DATED AS OF NOVEMBER 23, 1999 TO THE AGREEMENT AND PLAN OF
REORGANIZATION, dated as of October 21, 1999 (the "Agreement"), by and among
---------
SIPEX Corporation, a Massachusetts corporation ("Parent"); CAT Acquisition
------
Corporation I, a Delaware corporation and a wholly-owned subsidiary of Parent
("Merger Sub"); Calogic, a California corporation ("Calogic"); and the
---------- -------
undersigned stockholders of Calogic (the "Stockholders"). Capitalized terms
------------
which are not otherwise defined herein shall have their respective meanings set
forth in the Agreement.
WHEREAS, pursuant to Section 12.8 of the Agreement, the parties hereto
desire to amend the Agreement to make certain changes to the Agreement.
Intending to be legally bound, and in consideration of the mutual
representations, warranties, convenants and agreements contained herein, Parent,
Merger Sub, Calogic and the Stockholders agree as follows:
1. Section 2.1(b) of the Agreement is hereby deleted in its entirety and
replaced with the following:
"(b) The maximum number of shares of Parent Common Stock to be issued in
exchange for the acquisition of all Outstanding Calogic Shares and the
assumption of all Outstanding Calogic Options will be 3,300,000, provided such
maximum number shall be adjusted, as appropriate, for any stock split, stock
dividend, reclassification, recapitalization or similar event. Such shares are
herein referred to as the "Parent Merger Shares"."
2. This Amendment No. 1 may be executed in several counterparts, each of
which shall be an original, but all of which taken together shall constitute one
agreement.
3. Except as amended hereby, the Agreement shall continue in full force
and effect.
<PAGE>
Signature Page to
Amendment No. 1
IN WITNESS WHEREOF, Parent, Merger Sub, Calogic and the Stockholders have
executed this Agreement as of the date first written above.
SIPEX CORPORATION CALOGIC
By: /s/ James E Donegan By: /s/ Manuel Del Arroz
---------------------- -----------------------
Title: CEO Title:
CAT Acquisition Corporation I
By: /s/ James E Donegan
----------------------
Title:CEO
STOCKHOLDERS:
Name of Stockholder: /s/ Manuel Del Arroz
--------------------------
By: /s/ Manuel Del Arroz
----------------------
Title: if any:
Name of Stockholder: /s/ Daniel Del Arroz
--------------------------
By:____________________
Title: if any:
Name of Stockholder: /s/ Edward Morris
--------------------------
By:____________________
Title: if any:
<PAGE>
EXHIBIT 7.3
AGREEMENT OF MERGER
This Agreement of Merger, dated as of November 23, 1999 (the "Merger
Agreement"), is made and entered into by CAT Acquisition Corporation I, a
Delaware Corporation ("Merger Sub"), and Calogic, a California corporation (the
"Company" or "Surviving Corporation") (the Company and Merger Sub being
hereinafter collectively referred to as the "Constituent Corporations").
RECITALS
A. SIPEX Corporation, a Massachusetts corporation and sole shareholder of
Merger Sub ("Parent"), the Company, Merger Sub and the other parties named
therein have entered into an Agreement and Plan of Reorganization dated as of
October 21, 1999, as amended, (the "Reorganization Agreement"), providing, among
other things, for the execution and filing of this Merger Agreement and the
merger of Merger Sub with and into the Company upon the terms set forth in the
Reorganization Agreement and this Merger Agreement (the "Merger").
B. The respective Boards of Directors of each of the Constituent
Corporations deem it advisable and in the best interests of each of such
corporations and their respective shareholders that Merger Sub be merged with
and into the Company.
AGREEMENT
NOW, THEREFORE, in consideration of the promises and mutual agreements
contained in this Merger Agreement, the Constituent Corporations hereby agree
that Merger Sub shall be merged with and into the Company in accordance with the
provisions of the General Corporation Law of the State of California (the
"California Law") upon the terms and subject to the conditions set forth as
follows:
ARTICLE 1
The Merger
1.1 Filing. This Merger Agreement, together with the officers'
certificates of each of the Constituent Corporations shall be filed with the
Secretary of State of the State of California at the time specified in the
Reorganization Agreement.
1.2 Effectiveness. The Merger shall become effective upon the filing of
this Merger Agreement with the Secretary of State of the State of California
(the "Effective Time").
1.3 Merger. On the Effective Time, Merger Sub shall be merged into the
Company and the separate corporate existence of Merger Sub shall thereupon
cease. The
<PAGE>
Company shall be the Surviving Corporation in the merger and the separate
corporate existence of the Company, with all of its purposes, objects, rights,
privileges, powers, immunities and franchises, shall continue unaffected and
unimpaired by the Merger.
1.4 Effect of the Merger. The Merger shall have the effects set forth in
California Law. Without limiting the generality of the foregoing, the Surviving
Corporation shall possess all the rights, privileges, powers and franchises, of
a public as well as a private nature, and be subject to all the restrictions,
disabilities and duties, of each of the Constituent Corporations. The Surviving
Corporation shall be vested with the rights, privileges, powers and franchises,
all property (real, personal, and mixed) and all debts due on whatever account
and all other things in action or belonging to, and all and every other interest
of, each of the Constituent Corporations. All debts, liabilities and duties of
each of the Constituent Corporation shall attach to the Surviving Corporation
and may be enforced against it to the same extent as if such debts, liabilities
and duties had been incurred or contracted by it.
1.5 Further Action. If at any time after the Effective Time any further
action is necessary or desirable to carry out the purposes of this Merger
Agreement or to vest the Surviving Corporation with the full right, title and
possession to all assets, property, rights, privileges, immunities, powers and
franchises of either or both of the Constituent Corporations, the officers and
directors of the Surviving Corporation are fully authorized in the name of
either or both of the Constituent Corporations or otherwise to take all such
action.
ARTICLE 2
Corporate Governance Matters
2.1 Articles. The Articles of Surviving Corporation shall remain the
Articles of Incorporation of Calogic.
2.2 Directors. At the Effective Time, the directors of Merger Sub shall
become the directors of the Surviving Corporation and they shall hold office as
provided in the Bylaws of the Surviving Corporation.
2.3 Officers. At the Effective Time, the officers of Merger Sub shall
become the officers of the Surviving Corporation and they shall hold office as
provided in the Bylaws of the Surviving Corporation.
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<PAGE>
ARTICLE 3
Manner of Converting Shares of the Constituent Corporations
3.1 Definitions.
(a) For purposes of this Agreement, "Average Price" shall mean
$11.906.
(b) At the Effective Time, all of the shares of common stock, no par
value per share of the Company issued and outstanding immediately prior to the
Effective Time (the "Company Shares") (excluding any Company Shares held by
Parent or Merger Sub or any other subsidiary of Parent or by the Company, which
shares shall be canceled in the Merger, and Dissenting Company Shares (as
defined in Section 3.5 hereof)) shall automatically, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into shares
of common stock, $.01 par value per share, of Parent (the "Parent Common Stock")
in accordance with Section 3.1(d) (rounded down to the nearest whole share), and
cash (rounded to the nearest whole cent) in lieu of fractional shares, if any,
pursuant to Section 3.2 below (such Parent Common Stock and cash being referred
to herein as the "Merger Consideration"). The Company Shares that are actually
issued and outstanding immediately prior to the Effective Time are sometimes
referred to herein as the "Outstanding Company Shares," and the outstanding
options to purchase common stock of the Company are sometimes referred to herein
as the "Outstanding Company Options".
(c) The maximum number of shares of Parent Common Stock to be issued
(which maximum number includes Parent Common Stock to be issued upon exercise of
the Outstanding Company Options) in exchange for the acquisition of all
Outstanding Company Shares shall be 3,300,000 provided that such maximum number
shall be adjusted to the extent required by Section 3.2(b) below.
(d) The ratio at which each Outstanding Company Share will be
converted into shares of Parent Common Stock at the Effective Time is herein
called the "Conversion Ratio" and shall be calculated as set forth in this
Section 3.1(d). Subject to Section 3.2(a), at the Effective Time, each
Outstanding Company Share shall be converted into the right to receive that
number (which may be a fraction) of shares of Parent Common Stock that equals
the quotient obtained by dividing 3,300,000 (as may be adjusted pursuant to
Section 3.2(b)) by the number of Outstanding Company Shares plus the number of
Company Shares issued upon the exercise or conversion of all Outstanding Company
Options. Each holder of Company Shares shall have received that aggregate number
of shares of Parent Common Stock (rounded down to the nearest whole share) equal
to the Conversion Ratio multiplied by the number of Company Shares held by such
holder immediately prior to the Effective Time, subject to Section 3.5 herein.
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<PAGE>
(e) At the Effective Time, Parent will assume each Outstanding
Company Option and each holder thereof (each an "Option Holder") shall thereby
-------------
be entitled to acquire, by virtue of the Merger and without any action on the
part of the Option Holder, on substantially the same terms (including the dates
and extent of exercisability) and subject to the same conditions, including
vesting, as such Outstanding Company Option, the number of shares of Parent
Common Stock determined by multiplying the number of shares of Company Common
-----------
Stock for which such Outstanding Company Option is then exercisable in
accordance with its terms immediately prior to the Effective Time by the
Conversion Ratio (rounded down to the nearest whole share), at an exercise or
conversion price per share of Parent Common Stock (rounded up to the nearest
whole cent) determined by dividing the exercise price per share of Calogic
Common Stock of such Outstanding Company Option immediately prior to the
Effective Time by the Conversion Ratio.
(f) At the Effective Time, each Company Share held by the Company
shall automatically, by virtue of the Merger, be canceled without payment of any
consideration therefor and without any conversion thereof.
(g) At the Effective Time, each Company Share held by Parent or
Merger Sub or any other subsidiary of Parent shall automatically, by virtue of
the Merger, be canceled without payment of any consideration therefor and
without any conversion thereof.
(h) At the Effective Time, each share of common stock, $.01 par value
per share, of Merger Sub issued and outstanding immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on the part
of the holder thereof, be converted into one share of common stock, no par
value, of the Surviving Corporation.
3.2 (a) No Fractional Shares. No certificates or scrip for fractional
shares of Parent Common Stock will be issued, no Parent stock split or dividend
shall be paid in respect of any fractional share interest, and no such
fractional shares interest shall entitle the owner thereof to vote or to any
rights of or as a stockholder of Parent. In lieu of such fractional shares, any
holder of Company Shares who would otherwise be entitled to a fraction of a
share of Parent Common Stock (after aggregating all fractional shares of Parent
Common Stock to be received by such holder) will be paid the cash value of such
fraction, which shall be equal to the fraction multiplied by the Average Price.
(b) Adjustment. If, between the date hereof and the Effective Time,
the outstanding shares of Parent Common Stock shall be changed into a different
number of shares, or a different class by reason of any reclassification,
recapitalization, split-up, exchange of shares or readjustment, or if a stock
dividend thereon shall be declared with a record date within such period, the
number of shares of Parent Common Stock to be issued and delivered in the Merger
for each outstanding Company Share as provided in this Agreement shall be
correspondingly adjusted.
-4-
<PAGE>
3.3 Closing of Company Transfer Books. On and after the Effective Time,
holders of certificates representing the Company Shares shall cease to have any
rights as shareholders of the Company and the stock transfer books of the
Company shall be closed with respect to the Company Shares and no further
transfer of such shares shall thereafter be made on such stock transfer books.
If, after the Effective Time, valid certificates previously representing such
shares are presented to the Surviving Corporation or Parent, they shall be
exchanged as provided in Section 3.4.
3.4 Exchange of Certificates. Promptly following the Effective Time, the
Company shall transmit to the former Company shareholders appropriate documents
to be used by them to surrender their certificates representing the Company
Shares in exchange for the Merger Consideration payable hereunder. Until so
surrendered and exchanged, each certificate for the Company Shares shall
represent solely the right to receive the Merger consideration payable hereunder
in accordance with Section 3.1 hereof (or to perfect the holder thereof's right
to receive payment for such shares pursuant to Chapter 13 of the California Law
and Section 3.5 hereof); provided, however, that customary and appropriate
certifications and indemnities allowing exchange against lost or destroyed
certificates shall be provided. Notwithstanding anything in this Agreement to
the contrary, no party hereto shall be obliged to distribute any consideration
payable hereunder prior to receipt, by facsimile or otherwise, of a copy of this
Agreement evidencing the date stamp of the California Secretary of State.
3.5 Dissenting Company Shares. Notwithstanding anything in this Agreement
to the contrary, the Company Shares that are held by shareholders who have not
voted such shares in favor of the Merger (the "dissenting Company Shares") shall
not be canceled and converted into the right to receive cash unless and until
such holder shall have failed to perfect, or shall have effectively withdrawn or
lost, such holder's right to purchase and payment under the California Law. If
such holder shall have so failed to perfect, or shall have effectively
withdrawn or lost such right, such holder's Company Shares shall thereupon be
deemed to have been canceled and converted as described in Section 3.1 at the
Effective Time, and each such share shall represent solely the right to receive
the amount specified in Section 3.1. The Company shall give Parent prompt
notice of any demand received by the Company for purchase of its shares, and,
prior to the Effective Time, Parent shall have the right to participate in all
negotiations and proceedings with respect to such demands. Prior to the
Effective Time, the Company shall not, except with the prior written consent of
Parent, make any payment with respect to, or settle or offer to settle, any such
demands. From and after the Effective Time, no shareholder who has exercised
dissenters' rights as provided in Chapter 13 of the California Law shall be
entitled to vote such holder's shares for any purpose or to receive payment of
dividends or other distributions with respect to such holder's shares (except
dividends and other distributions with respect to such holder's hares (except
dividends and other distributions payable to shareholders of record at a date
which is prior to the Effective Time).
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<PAGE>
ARTICLE 4
Termination and Amendment
4.1 Termination. Notwithstanding the approval of this Merger Agreement by
the shareholders of Merger Sub and the Company, this Merger Agreement shall
terminate forthwith in the event that the Reorganization Agreement shall be
terminated as therein provided.
4.2 Amendment. This Merger Agreement may be amended by the parties hereto
at any time before or after approval hereof by the shareholders of either Merger
Sub or the Company, but, after any such approval, no amendment shall be made
with without the further approval of such shareholders which would (i) have a
material adverse effect on the shareholders of either Merger Sub or the Company,
(ii) change any of the principal terms of the Merger Agreement, or (iii) change
any term of the Articles of incorporation of the Surviving Corporation. This
Merger Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
[REMAINDER OF PAGE IS INTENTIONALLY LEFT BLANK]
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<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first written above.
CAT ACQUISITION CORPORATION I CALOGIC
a Delaware Corporation a California corporation
By: /s/ Frank R. Dipietro By: /s/ Manuel Del Arroz
-------------------------- --------------------------
Frank R. DiPietro Manuel Del Arroz
Vice President President
By: /s/ Timothy C. Maguire By: /s/ Juanita Del Arroz
-------------------------- --------------------------
Timothy C. Maguire Juanita Del Arroz
Assistant Secretary Secretary
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<PAGE>
CAT ACQUISITION CORPORATION I
(Disappearing Corporation)
OFFICERS' CERTIFICATE
Frank DiPietro and Timothy Maguire hereby certify that:
1. They are Vice President and Assistant Secretary, respectively, of CAT
Acquisition Corporation I, a Delaware corporation (the "Corporation").
2. The Agreement of Merger to which this Certificate is attached (the
"Merger Agreement") has been duly approved by the Board of Directors of
the Corporation.
3. The Corporation has one class of stock outstanding, designated "Common
Stock," of which 100 shares were outstanding and entitled to vote on
the merger.
4. The principal terms of the Merger Agreement were approved by the
Corporation by a vote of a number of shares which equaled or exceeded
the vote required. The vote required was greater than 50% of the
outstanding shares of Common Stock.
5. No vote of the shareholders of SIPEX Corporation, the Corporation's
parent and sole shareholder, was required.
Each of the undersigned declares under penalty of perjury that the matters
set out in the foregoing Certificate are true of his own knowledge. Executed at
Billerica, MA on November __, 1999.
/s/ Frank Dipietro
---------------------------------------
Frank DiPietro, Vice President
/s/ Timothy Maguire
---------------------------------------
Timothy Maguire, Assistant Secretary
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<PAGE>
CALOGIC
(SURVIVING CORPORATION)
OFFICER'S CERTIFICATE
Manuel Del Arroz and Juanita Del Arroz hereby certify that:
1. They are the President and Secretary, respectively, of Calogic, a
California corporation (the "Corporation").
2. The Agreement of Merger to which this Certificate is attached (the
"Merger Agreement") has been duly approved by the board of Directors of
the Corporation.
3. The Corporation has one class of stock outstanding, designated "Common
Stock," of which 345,000 shares were outstanding and entitled to vote
on the merger.
4. The principal terms of the Merger Agreement were approved by the
Corporation by a vote of a number of shares of each class which equaled
or exceeded the vote required. The vote required was greater than 50%
of the outstanding shares of Common Stock.
Each of the undersigned declares under penalty of perjury that the matters
set out in the foregoing Certificate are true of his own knowledge. Executed at
Fremont, California on November __, 1999.
/s/ Manuel Del Arroz
---------------------------------------
Manuel Del Arroz, President
/s/ Juanita Del Arroz
---------------------------------------
Juanita Del Arroz, Secretary
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