<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999 OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________.
Commission file number 0-13244
GATEFIELD CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 41-1404495
(State of incorporation) (I.R.S. Employer Identification No.)
47436 FREMONT BOULEVARD, FREMONT, CALIFORNIA 94538
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (510) 623-4400
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days: Yes X No .
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
TITLE OF EACH CLASS OUTSTANDING AT OCTOBER 22, 1999
------------------- -------------------------------
Common stock, par value $0.10 per share 4,643,038
<PAGE>
GATEFIELD CORPORATION
INDEX
<TABLE>
<CAPTION>
Page
Number
PART I. FINANCIAL INFORMATION
<S> <C> <C>
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of September 30, 1999
and December 31, 1998 3
Condensed Consolidated Statements of Operations and
Comprehensive Loss for the Three and Nine Months Ended
September 30, 1999 and 1998 4
Condensed Consolidated Statements of Cash Flows for the Nine
Months Ended September 30, 1999 and 1998 5
Notes to Condensed Consolidated Financial Statements, September 30, 1999 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 7
Item 3. Quantitative and Qualitative Disclosures About Market Risk 16
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 17
Item 2. Changes in Securities and Use of Proceeds 17
Item 3. Defaults upon Senior Securities 17
Item 4. Submission of Matters to a Vote of Security Holders 17
Item 5. Other Information 17
Item 6. Exhibits and Reports on Form 8-K 17
SIGNATURES 17
</TABLE>
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GATEFIELD CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
September 30, December 31,
(IN THOUSANDS, EXCEPT SHARE AMOUNTS) 1999 1998
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 7,400 $ 3,832
Accounts receivable, less allowance for doubtful
accounts of $441 in 1999 and $244 in 1998 49 463
Inventories 475 117
Other current assets 1,084 556
-------- --------
Total current assets 9,008 4,968
Property and equipment, net 1,918 1,783
Other assets 52 102
-------- --------
Total assets $ 10,978 $ 6,853
======== ========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Current portion of long-term obligations $ 253 $ 393
Accounts payable 1,763 1,372
Accrued expenses 1,438 1,941
Deferred revenues 3,972 4,772
-------- --------
Total current liabilities 7,426 8,478
Long term obligations 8,141 330
-------- --------
Total liabilities 15,567 8,808
Redeemable Preferred Stock:
$0.10 par value; 2,000,000 shares authorized; shares issued
and outstanding: 318,000 in 1999 and 318,000 in 1998 3,085 3,083
Stockholders' deficit:
Common stock:
$0.10 par value; 65,000,000 shares authorized; shares issued
and outstanding: 4,221,000 in 1999 and 4,193,000 in 1998 469 419
Additional paid-in capital 86,307 81,900
Accumulated other comprehensive loss (864) (737)
Accumulated deficit (93,586) (86,620)
-------- --------
Total stockholders' deficit (7,674) (5,038)
-------- --------
Total liabilities and stockholders' deficit $ 10,978 $ 6,853
======== ========
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
3
<PAGE>
GATEFIELD CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
-------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues:
Product $ 377 $ 379 $ 1,001 $ 2,456
Service 33 629 523 3,869
-------- -------- -------- --------
Total revenues 410 1,008 1,524 6,325
-------- -------- -------- --------
Cost of revenues:
Product 395 1,040 964 1,717
Service 10 351 149 3,576
-------- -------- -------- --------
Total cost of revenues 405 1,391 1,113 5,293
-------- -------- -------- --------
Gross profit (loss) 5 (383) 411 1,032
-------- -------- -------- --------
Operating expenses:
Sales and marketing 183 1,603 568 3,877
Research and development 1,090 1,321 3,515 4,017
General and administrative 661 1,276 2,094 2,826
-------- -------- -------- --------
Total operating expenses 1,934 4,200 6,177 10,720
-------- -------- -------- --------
Operating loss (1,929) (4,583) (5,766) (9,688)
-------- -------- -------- --------
Other income (expense):
Interest expense, net (66) (36) (1,287) (146)
Other income, net 120 4,331 89 4,263
-------- -------- -------- --------
Total other income (expense) 54 4,295 (1,198) 4,117
-------- -------- -------- --------
Net loss (1,875) (288) (6,964) (5,571)
Other comprehensive gain (loss):
Currency translation adjustments 93 13 128 14
-------- -------- -------- --------
Comprehensive loss $ (1,782) $ (275) $ (6,836) $ (5,557)
======== ======== ======== ========
Loss attributable to common stockholders $ (1,876) $ (322) $ (6,967) $ (5,674)
======== ======== ======== ========
Basic and diluted net loss per share $ (0.44) $ (0.08) $ (1.65) $ (1.38)
======== ======== ======== ========
Basic and diluted weighted average shares outstanding 4,222 4,150 4,211 4,105
======== ======== ======== ========
</TABLE>
See Accompanying Notes To Condensed Consolidated Financial Statements.
4
<PAGE>
GATEFIELD CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
(IN THOUSANDS) 1999 1998
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operating activities:
Net loss $ (6,964) $ (5,571)
Reconciliation to net cash used in operating activities:
Depreciation and amortization 695 375
Non-cash subordinated convertible debt interest 1,231
Gain on sale of Design Service Business - (4,462)
Changes in assets and liabilities:
Accounts receivable 412 1,081
Inventories (358) 562
Other assets (479) 180
Accounts payable and accrued expenses (118) (2,200)
Deferred revenues (800) 3,763
-------- --------
Net cash used in operating activities (6,381) (6,272)
-------- --------
Investing activities:
Property and equipment purchases, net (830) -
Proceeds from sale of Design Service Business - 5,444
-------- --------
Net cash provided by (used in) in investing activities (830) 5,444
-------- --------
Financing activities:
Proceeds from issuance of convertible note 8,000 -
Proceeds from issuance of common stock 3,226 5,099
Proceeds from issuance of preferred stock - 3,000
Principal payments on long term debt & capital lease obligations (329) (158)
-------- --------
Net cash provided by financing activities 10,897 7,941
Effect of exchange rate changes on cash and cash equivalents (118) 40
-------- --------
Net change in cash and cash equivalents 3,568 7,153
Cash and cash equivalents, beginning of period 3,832 4,189
-------- --------
Cash and cash equivalents, end of period $ 7,400 $ 11,342
======== ========
Supplemental disclosure of cash flow information:
Noncash activities:
Equipment acquired under capital leases $ - $ 525
Cash activities:
Cash paid during the year for interest $ 159 $ 300
</TABLE>
See Accompanying Notes To Condensed Consolidated Financial Statements.
5
<PAGE>
GATEFIELD CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
SEPTEMBER 30, 1999
1. BASIS OF PRESENTATION
The accompanying financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. As shown in the
financial statements, during the quarters ended September 30, 1999 and 1998,
GateField Corporation, (the "company") incurred net losses of approximately
$1,875,000 and $288,000, respectively and had stockholders deficits of
approximately $7,674,000 at September 30, 1999 and $5,038,000 at December 31,
1998. The company must successfully introduce its 0.25-micron products into
the market and successfully manufacture sufficient quantities to support its
sales and marketing introduction to reach cash flow breakeven. If the company
fails to significantly increase revenues and improve gross margins within the
next six to nine months it will have to obtain additional financing in order
to fund planned operating levels or cease or significantly reduce operations.
The financial statements do not include any adjustments relating to
the recoverability and classification of recorded asset amounts or the
amounts and classification of liabilities that might be necessary should the
company be unable to continue as a going concern. The company's continuation
as a going concern is dependent upon its ability to complete its new product
development and begin commercial sales, and ultimately obtain sufficient
customer demand to attain profitable operations. Management intends to
closely manage its operating expenses, begin sales of new products currently
in development and obtain additional financing to cover its additional cash
flow requirements until it reaches a break-even level of operations. No
assurance can be given that the company will be successful in these efforts.
Interim results of operations are not necessarily indicative of the
results to be expected for the full year. The company's interim fiscal
quarter ended on September 30, 1999 and 1998, respectively. The condensed
consolidated financial statements should be read in conjunction with the
financial statements and the notes thereto for the year ended December 31,
1998, included in the company's annual report on Form 10-K.
2. INVENTORIES
Inventory consists principally of raw wafers.
3. CONVERTIBLE PROMISSORY NOTE
In May 1999, the company issued a convertible promissory note in the
aggregate principal amount of $8.0 million (the Note). The Note accrues
interest at 5.22% per annum, has a five-year term and is secured by a lien
against all the assets of the company. The Note is convertible into 420,000
shares of the company's Series C-1 Convertible Preferred Stock. The Series
C-1 Convertible Preferred Stock is in turn convertible into 1,230,769 shares
of the company's common stock, or the equivalent price of $6.50 per share of
common stock.
The Note is convertible at the option of the noteholder. On the date
of issuance, the Note was convertible into common stock at a price equal to
approximately a 13% discount (the Conversion Discount) to the closing market
price as reported on the OTCBB. The Conversion Discount of $1.2 million was
recognized during the second quarter of 1999 by the company as a non-cash
interest expense with a corresponding increase in the common stock additional
paid in capital.
4. REVERSE STOCK SPLIT
In March 1999, the company's Board of Directors approved a ten for
one reverse stock split of the company's common stock. In June 1999, the
company's shareholders approved the reverse stock split. The reverse split
became
6
<PAGE>
effective on June 30, 1999 (the "Effective Date"). No fractional shares were
issued. In lieu of any such fractional share interest, each holder will
receive cash in an amount equal to the product obtained by multiplying (i)
the closing sales price of the company's Common Stock on the Effective Date
as reported on the OTCBB by (ii) the number of shares of Common Stock held by
such holder that would otherwise have been exchanged for such fractional
share interest.
5. SALE OF COMMON STOCK
In September 1999, the company issued approximately 471,000 shares
of common stock to outside investors for an aggregate purchase price of
$3,062,000 pursuant to a Stock Purchase Agreement entered into on September
30, 1999.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
THE DISCUSSION IN THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS THAT
INVOLVE RISKS AND UNCERTAINTIES. THE STATEMENTS CONTAINED IN THIS REPORT THAT
ARE NOT PURELY HISTORICAL ARE FORWARD-LOOKING STATEMENTS WITHIN THE MEANING
OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21E OF
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, INCLUDING STATEMENTS
REGARDING THE COMPANY'S EXPECTATIONS, BELIEFS, INTENTIONS OR STRATEGIES
REGARDING THE FUTURE. ALL FORWARD-LOOKING STATEMENTS INCLUDED IN THIS
DOCUMENT ARE BASED ON INFORMATION AVAILABLE TO THE COMPANY ON THE DATE
HEREOF, AND THE COMPANY ASSUMES NO OBLIGATION TO UPDATE ANY SUCH
FORWARD-LOOKING STATEMENTS. THE COMPANY'S ACTUAL RESULTS COULD DIFFER
MATERIALLY FROM THOSE DISCUSSED HEREIN. FACTORS THAT COULD CAUSE OR
CONTRIBUTE TO SUCH DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, THOSE
DISCUSSED IN "FACTORS AFFECTING FUTURE RESULTS" AS WELL AS THOSE DISCUSSED IN
THIS SECTION AND ELSEWHERE IN THIS REPORT, AND THE RISKS DISCUSSED IN THE
COMPANY'S SECURITIES AND EXCHANGE COMMISSION FILINGS.
RESULTS OF OPERATIONS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
REVENUES
Total revenue for the quarter ended September 30, 1999 was $410,000
compared to $1,008,000 for the quarter ended September 30, 1998, a decrease
of 59%. Total product revenue in the quarter ended September 30, 1999 was
flat at $377,000, as compared to $379,000 for the same period last year.
ProASIC product revenue for the quarter ended September 30, 1999, was
$349,000, as compared to $375,000 for the same period in 1998. The current
quarter's ProASIC revenues include the recognition of $312,000 in license
fees from Rohm Co. Ltd. that were collected and deferred in fiscal 1998. The
decline in ProASIC revenues was due to the company's decision to halt active
sales efforts for the 0.72-micron product in the third quarter of 1998 and
ultimately terminate the sale of these products in the second quarter of
1999. The company believes it will have little, if any, revenue from its
0.72-micron products in the fourth quarter of 1999. The company expects
future revenues, if any, will come from the commercialization of its
0.25-micron products. The company began selling, on a limited basis, its
0.25-micron standard ProASIC product in the last month of the third quarter
of fiscal 1999. Total 0.25-micron standard ProASIC product revenue during the
quarter was insignificant and the company can not predict with any degree of
certainty what the revenue will be for the 0.25-micron product for the
balance of 1999 or that significant volumes of the product can be produced in
a timely manner. Indeed, no assurance can be given that design and production
problems will not arise that could interrupt or cease sales in future
quarters. Moreover, there can be no assurances that, even if such products
are introduced into the market in significant volumes on a timely basis, they
will achieve market acceptance. To the extent that the company's development
and commercialization efforts with respect to the 0.25-micron standard
ProASIC products are unsuccessful, or if these products do not achieve market
acceptance, the company's business, financial condition and results of
operations would be materially adversely affected.
Service revenues declined to $33,000 for the quarter ended September
30, 1999 from $629,000 for the same quarter last year. Service revenues are
comprised of two components: (i) maintenance contracts on the company's
verification systems and (ii) design services. Revenues from maintenance
contracts on the company's verification systems were $33,000 in the third
quarter of 1999, as compared to $363,000 in the third quarter of 1998. The
decline in verification maintenance revenues is the result of the sale of the
verification product assets in 1997. Revenues from maintenance contracts on
the company's verification systems earned in the third quarter of 1999 and
1998 represent the company's portion of a revenue sharing agreement with the
purchaser of the verification assets. The company expects revenues from
7
<PAGE>
this source to continue to decline at an increasing rate and to eventually
cease in the fourth quarter of 1999. The company did not generate any service
fees from its design services for the quarter ended September 30, 1999
because the company sold those assets in August 1998. Service fees related to
the company's design services were $266,000 in the quarter ended September
30, 1998.
Total revenue for the nine months ended September 30, 1999,
decreased to $1,524,000 from $6,325,000 for the same period last year.
Product revenue for the nine months ended September 30, 1999, was $1,001,000,
compared to $2,456,000 for the comparable period last year. Service revenue
was $523,000 for the nine months ended September 30, 1999, compared to
$3,869,000 for the same period last year. The decrease in product revenue and
service revenue represents the transition of the company's business from a
manufacturer of verification products to a designer, developer and marketer
of high-density, high-performance FPGA products. The company expects that
service revenue will decline to zero over the balance of the year.
GROSS PROFIT
Gross profit for the quarter ended September 30, 1999 was $5,000, as
compared to a gross loss of $383,000, for the same period last year. Gross
loss from product revenues was $18,000 in the quarter ended September 30,
1999, as compared to a gross loss of $661,000 in the same period last year.
Gross loss from ProASIC product revenues for the quarter ended September 30,
1999 was $46,000, as compared to a gross loss of $665,000 for the quarter
ended September 30, 1998. Poor manufacturing yields on the 0.72-micron
product wafers caused actual costs to exceed revenues on those products for
the quarter ended September 30, 1998. Gross profit related to 0.72-micron
products is expected to cease in the third quarter of 1999, as the company
does not expect to sell those products in future quarters. As the design and
manufacturing processes are different for the 0.72-micron and the 0.25-micron
products, the yields and, hence, the gross profits on the two products are
unrelated. Sale of the 0.25-micron standard ProASIC product was insignificant
in the third quarter of 1999. Furthermore, the 0.25-micron product has not
been manufactured in commercial quantities and the production process has not
been qualified. Therefore, the company cannot predict its standard ProASIC
product margins with any degree of certainty.
Gross profit from service revenues was $23,000 in the quarter ended
September 30, 1999, as compared to $278,000 in the same period last year.
Gross profit related to maintenance contracts on the verification systems was
$23,000 in the quarter ended September 30, 1999, as compared to $355,000 in
the same period last year. The company expects that revenues related to
maintenance contracts on the verification systems will decline to zero in the
fourth quarter of 1999 and, therefore, will not contribute to gross profit.
Gross loss related to design services was $77,000 for the quarter ended
September 30, 1998. Because revenue from design services ceased in August
1998, the company does not expect any gross profit contribution from this
source in 1999.
Gross profit for the nine-month period ended September 30, 1999, was
$411,000, compared to $1,032,000 for the same period last year. The gross
profit from product revenues was $37,000, or 4% of revenues, for the nine
month period ended September 30, 1999, as compared to a gross profit of
$739,000, or 30% of revenues, for the same period last year. Gross profit
from service revenues was $374,000, or 72% of revenues, for the nine months
ended September 30, 1999, compared to $293,000, or 8% of revenues, for the
same period last year.
SALES AND MARKETING
Sales and marketing expenses were $183,000 for the three months
ended September 30, 1999, as compared to $1,603,000 for the three months
ended September 30, 1998. Sales and marketing expenses for the nine months
ended September 30, 1999 and September 30, 1998 were $568,000 and $3,877,000,
respectively. The decrease represents the termination of the company's sales
and marketing personnel in connection with the sale of the company's
worldwide distribution rights to its 0.25-micron and below products to Actel
in August 1998. Expenses incurred in the third quarter of 1999 relate to the
company's efforts to prepare for the 0.25-micron product introduction and the
company's efforts to support strategic initiatives and new product designs.
The company expects quarterly sales and marketing expenses to remain
relatively flat for the next few quarters.
RESEARCH AND DEVELOPMENT
Research and development expenses for the three months ended
September 30, 1999, were $1,090,000 as
8
<PAGE>
compared to $1,321,000 for the three months ended September 30, 1998.
Research and development expenses for the nine months ended September 30,
1999 and September 30, 1998 were $3,515,000 and $4,017,000, respectively. The
decrease in the quarter ended September 30, 1999, represents a decrease in
mask expenses for the 0.25-micron product development and normal fluctuations
in operating expenses. The company expects quarterly research and development
expenses to be between $1.2 million and $1.5 million per quarter for the next
few quarters, however, development expenses could fluctuate significantly due
to unforeseen design, test and process issues.
GENERAL AND ADMINISTRATIVE
General and administrative expenses for the three months ended
September 30, 1999 and 1998 were $661,000 and $1,276,000, respectively. The
amount for the current quarter includes a non-cash bad debt expense of
$100,000 related to a reserve set up for receivables due from the purchaser
of the verification assets. The decrease represents reduced head count, legal
and accounting expenses. General and administrative expenses for the nine
months ended September 30, 1999 and 1998 were $2,094,000 and $2,826,000
respectively. The company expects these expenses to remain relatively flat
for the next few quarters. However, general and administrative expenses may
increase in future quarters due to legal and accounting expenses incurred in
connection with future financings.
OTHER INCOME AND EXPENSES
Other income for the quarter ended September 30, 1999, were $54,000
as compared to other income of $4,295,000 for the quarter ended September 30,
1998. Other expenses for the nine months ended September 30, 1999 were
$1,198,000, as compared to other income of $4,117,000 for the nine-month
period ended September 30, 1998. The increase in other expenses in 1999 is
due to a $1.2 million non-cash interest expense that the company recognized
on the date of issuance of a convertible promissory note in the aggregate
principal amount of $8.0 million to Actel (see note 3) in August of 1999
versus a $4.4 million gain on the sale of the design services business in
August of 1998.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1999, the company had cash and cash equivalents of
approximately $7,400,000 and working capital of $1,582,000. During the nine
month period ended September 30, 1999 and 1998, the company incurred net
losses of approximately $6,964,000 and $5,571,000, respectively. The company
expects to continue to generate such losses until 0.25-micron product sales
attain significant volumes and sustain positive gross margin. As a result,
the company estimates it will have used all of its currently available
capital resources on or about June 30, 2000. If the company cannot generate
significant revenues and positive gross margins by that date or obtain
additional funding, the company would be unable to continue as a going
concern. Many factors could increase or decrease the company's utilization of
its capital resources during this period. The company cannot predict the
timing or the magnitude of those factors with any degree of certainty.
Therefore, the company may need additional financing at an earlier date. The
company cannot assure you that additional financings will be available, or if
available, will be on reasonable terms, nor can we assure you that these
financings will not be dilutive to our shareholders.
The company will need to increase revenue significantly in a
relatively short period of time in order to attain breakeven cash flow from
operations with its existing capital. Several other circumstances could arise
which would also cause the company to exhausts its capital resources before
achievement of breakeven cash flow including: an increase in the company's
product development time and/or costs; an increase in the amount of time
and/or costs required to manufacture sufficient quantities of product; poor
manufacturing yields which erode margins on the 0.25-micron product sales;
and greater than anticipated company expenses. Therefore, there can be no
assurance that the cash and cash equivalents balance as of September 30,
1999, will be sufficient to meet the company's capital requirements through
June 30, 2000.
The company has historically used private offerings of convertible
debt and convertible preferred stock, public and private offerings of common
stock, sale and leaseback arrangements and bank financing and credit lines to
finance its business. The company has contacted a number of potential
providers of additional capital, including investment banking firms,
financial investors, customers, potential customers, strategic partners and
potential strategic partners and continues to seek additional funds. If the
company is unable to obtain additional financing on a timely basis when and
if needed, the company will be required to reduce or even terminate its
operations.
9
<PAGE>
Cash used in operations was $6,714,000 in the first nine months of
1999, compared to $6,272,000 for the first nine months of 1998. Net cash used
by investing activities during the nine-month period ended September 30, 1999
was $830,000, as compared to $5,444,000 of net cash provided by investing
activities for the same period of 1998. The company has already incurred
$654,000 in capital expenditures for mask cost for the 0.25-micron products
and could invest up to an additional $100,000 in mask sets for the
0.25-micron product in 1999 but does not presently anticipate any other
significant capital asset acquisitions during the remainder of the year. The
company could invest up to $400,000 for mask cost in the first half of the
fiscal year 2000 but does not presently anticipate any other significant
capital asset acquisitions during the first half of the fiscal year 2000.
Net cash provided by financing activities was $10,897,000 in the
nine months ended September 30, 1999 and includes a $3.1 million common stock
sale to various investors, a convertible promissory note in the aggregate
principal amount of $8.0 million issued to Actel and $164,000 in employee
purchases of stock under certain option plans. That amount compares to
$7,941,000 for the same nine month period in 1998 which included the sale of
$3.0 million of the company's preferred stock to Actel and the sale of $4.6
million of the company's common stock to Idanta Partners, Ltd.
YEAR 2000 ISSUES
The following constitutes "Year 2000 Disclosure" under the Year 2000
Information and Readiness Disclosure Act of 1998.
Background of Year 2000 issues. Many existing information technology
(IT) systems, such as computer systems and software products, as well as
non-IT systems that include embedded technology, were not designed to
correctly process date and time information after December 31, 1999.
Accordingly, computer programs and software may need to be modified prior to
the year 2000 in order to remain functional. Failure to complete necessary
modifications could cause a disruption or failure of such program and system.
The company has defined Year 2000 compliant as the ability to:
- Correctly handle date information needed for the December 31,
1999, to January 1, 200, date change;
- Function according to the product documentation provided for this
date change, without changes in operation resulting from the
advent of a new century, assuming correct configuration;
- Respond to two-digit date input in a way that resolves the
ambiguity as to century in a disclosed, defined and predetermined
manner;
- Store and provide output of date information in ways that are
unambiguous as to century if the date elements in interfaces and
data storage specify the century; and
- Recognize Year 2000 as a leap year
The company has formed a "Year 2000 Team" to identify, access and
resolve Year 2000 compliance issues. The team has completed an inventory of
all material Year 2000 issues.
Products and IT systems. The company has tested all of its current
products for Year 2000 compliance. The company derived its testing method
from a review and analysis of the Year 2000 testing practices of software
vendors, relevant industry Year 2000 compliance standards and the specific
functionality and operation environments of its products. These tests were
run on all supported platforms for each current release of our product and
included testing for date calculations and internal storage of date
information with test numbers starting in 1999 and going beyond the year
2000. Based on these tests, the company believes its products are Year 2000
compliant with respect to date calculations and internal storage of date
information. However there can be no assurance that its tests detected every
possible contingency and no assurance the company will not receive claims
from its customers asserting liability, including liability for breach of
warranties related to the failure of its products and services to function
properly.
10
<PAGE>
To date, the company has not identified any significant areas of
noncompliance with respect to its internal IT systems. It expects that the
assessment and all remedial action for all of its IT systems will be
completed by the end of calendar year 1999. The company intends to take the
necessary steps to make its systems Year 2000 compliant. These steps may
require the company to modify, upgrade or replace some of its internal
financial and operational systems. The cost of bringing all internal systems,
equipment and operations into Year 2000 compliance has not yet been
determined. While these efforts may involve additional costs, the company
believes, based upon currently available information, that these costs will
not have a material adverse effect on the business, financial condition or
results of operations of the company--although no assurances can be given.
Customers, suppliers, and service providers. The company has
surveyed its significant customers, suppliers, service providers and the sole
manufacturer of its silicon wafers to determine their plans to address Year
2000 issues. The company has received assurances from most of its customers
and third party vendors and anticipates further cooperation in these efforts,
however there can be no assurance such third parties will indeed be Year 2000
compliant. If any customers have a business interruption due to Year 2000
compliance issues the company's revenue could be significantly impacted and
the resulting loss in sales for the quarter could have a material adverse
effect on the company's business, financial condition and results of
operation. If any suppliers, service providers or the sole manufacturer of
its silicon wafers fails to appropriately address their Year 2000 issues,
such failure could have a material adverse effect on the company's business,
financial condition and results of operation. The company may not find
alternative suppliers, service providers, or an alternative to its sole
manufacturer. In the event that any of our significant suppliers, service
providers or our sole manufacturer does not achieve Year 2000 compliance
successfully and in a timely manner, and we are unable to replace them with
alternate sources, our business would be harmed. The Year 2000 Team has
developed contingency plans in the event a third party fails to appropriately
address their Year 2000 issues for every supplier except the sole
manufacturer of our silicon wafers for which an alternative supplier is not
available. Even if the company's assessments, resolutions and contingency
plans are completed and put in place on time, there can be no assurance that
such actions will be sufficient to address any third-party failures. Nor can
the company be assured that unresolved or undetected internal and external
Year 2000 issues with third parties will not have a material adverse effect
on the company's business, financial condition and results of operations.
The most reasonably likely "worst case" scenario for the company
with respect to the Year 2000 problem is the failure of the company's major
distributor or the company's sole manufacturer of silicon wafers to be Year
2000 compliant such that the sale or distribution of GateField products or
the supply of components for such products is interrupted. This could result
in the company not being able to produce or distribute products for a period
of time, which in turn could result in lost sales and profits. If the
company's strategic partners were to incur a sustained interruption in their
ability to manufacture GateField wafers or sell GateField products, the
impact on the company's business, financial condition and results of
operations would be material.
Recent legislation. Legislation was recently passed by Congress that
purports to limit liability for failure to be Year 2000 compliant. We cannot
assure you that this legislation will limit our liability.
Although the company believes its Year 2000 Team will identify all
of the company's material Year 2000 issues, given the pervasiveness of Year
2000 issues and the complex interrelationships among Year 2000 issues both
internal and external to the company, there can be no assurance that the
company will be able to identify and accurately evaluate all such issues. As
the process of identifying, accessing and resolving Year 2000 compliance
issues proceeds, the company may identify situations that present material
Year 2000 risks and/or that will require substantial time and material
expense to address. Even if the company's assessments and resolutions are
completed on time and put in place, there can be no assurance that such plans
will be sufficient to address any failures or that unresolved or undetected
internal and external Year 2000 issues will not have a material adverse
effect on the company's business, financial condition and results of
operations. The discussion above regarding estimated completion dates, costs,
risks and other forward-looking statements regarding Year 2000 is based on
the company's best estimates given information that is currently available
and is subject to change as the company continues to progress with its Year
2000 initiatives, it may discover that actual results will differ materially
from these estimates.
11
<PAGE>
FACTORS AFFECTING FUTURE RESULTS
IMMEDIATE NEED FOR ADDITIONAL FUNDING
At September 30, 1999, the company had cash and cash equivalents of
approximately $7,067,000 and working capital of $1,582,000. During the nine
months ended September 30, 1999 and 1998, the company incurred net losses of
approximately $6,964,000 and $5,571,000, respectively. The company expects to
continue to generate losses for at least the next nine months. As a result,
the company expects that it will have utilized all of its currently available
cash on or about June 30, 2000. Many factors could increase or decrease the
company's utilization of its capital resources during this period and the
company may need additional financing at an earlier date. There can be no
assurance that such financing will be available on terms acceptable to the
company and its stockholders, if at all. If the company is unable to obtain
additional financing the company may be required to reduce or even terminate
its operations.
DEPENDENCE ON THE SUCCESSFUL DEVELOPMENT OF 0.25-MICRON PRODUCTS
The company's success is highly dependent upon the timely completion
and introduction of new products at competitive price and performance levels,
especially the timely roll-out of sufficient volumes of its next generation
of 0.25-micron products. GateField is currently completing initial testing of
its 0.25-micron product family and related software. The joint Actel /
GateField marketing team began limited shipments of its 0.25-micron products
to initial customers in the third quarter of 1999. However, no assurance can
be given that the company's design and introduction schedules for such
products will continue to be met. Indeed, several factors could interrupt or
severely limit production of its products; such interruptions or limited
production could drastically impact the company's financial performance for
one or more quarters. Moreover, there can be no assurances that, even if such
products are introduced into the market on a timely basis and in sufficient
volumes, they will achieve market acceptance or continue to be successfully
developed. To the extent that the company's development and commercialization
efforts with respect to the 0.25-micron products is unsuccessful or if these
products do not achieve market acceptance, the company's business, financial
condition and results of operations would be materially adversely affected.
The company's 0.25-micron products are highly complex and may
contain undetected or unresolved defects when first introduced or as new
versions are released. There can be no assurance that, despite testing by the
company, defects will not be found in new products, including the company's
0.25-micron products, or new versions of such products following commercial
release. This could result in loss of market share, delay in or loss of
market acceptance or product recall. Any such occurrence could have a
material adverse effect upon the company's business, financial condition and
results of operations.
DEPENDENCE ON INDEPENDENT WAFER MANUFACTURERS
The company currently uses a single independent manufacturer,
Infineon Corporation ("Infineon"), to provide wafers used in the production
of its products, including its 0.25-micron products. The company has invested
significant amounts of time and resources in working with Infineon to develop
and improve the manufacturing processes relating to GateField's 0.25-micron
product family. Although Infineon has also invested significant resources
into its relationship with GateField, if Infineon were unable or unwilling to
manufacture such products as anticipated by GateField, GateField would be
unable to introduce such products to market on a timely basis and/or produce
sufficient volumes, which would have a material adverse effect on the
company's business, financial condition and results on operations. If this
relationship were terminated, the company would be required to redesign its
wafers to make them compatible with the manufacturing process of a new
manufacturer. This process could take up to twelve (12) months. In addition,
the company could lose significant revenue opportunities while working to
achieve volume production with a new vendor. No assurance can be given that
any additional qualified wafer foundries would become available or be able to
satisfy GateField's requirements on a timely basis.
GateField's dependence on Infineon for the manufacture of its
products subjects the company to a number of risks associated with an
interruption of supply from a single source. In particular, with respect to
the manufacture of GateField's 0.25-micron products, Infineon will require
significant lead-time to reach volume production on new processes.
Accordingly, no assurance can be given that volume production or acceptable
yields with respect to GateField's new 0.25-micron product family will be
achieved on a timely basis or at all. GateField has in the past experienced
delays in obtaining wafers and unacceptable yields from its foundries, and
there can be no assurance that the company will not experience similar or
more severe delays or poor yields in the future. Although GateField has
supply agreements with Infineon, a
12
<PAGE>
shortage of raw materials or production capacity could lead Infineon to
allocate available capacity to customers other than GateField. In addition,
internal uses within Infineon could delay manufacture of GateField products
and interrupt GateField's capability to meet its product delivery
obligations. Any inability or unwillingness of Infineon to provide adequate
quantities of finished wafers to satisfy GateField's needs in a timely manner
would delay production and product shipments and could have a material
adverse effect on GateField's business, financial condition and results of
operations. Furthermore, Infineon is in the process of being spun off from
its parent, Siemens Aktiengesellschaft. There can be no assurance that the
wafer-manufacturing portion of such operations will be willing and capable of
continuing to support the manufacture of GateField's products.
RELIANCE ON ACTEL RELATIONSHIP
In August 1998, GateField entered into a strategic relationship with
Actel Corporation. In a product marketing agreement, Actel acquired the
exclusive right to distribute GateField's standard ProASIC products based on
0.25 micron and smaller geometries. As a result, GateField terminated its
entire sales force and does not anticipate creating a new sales force in the
foreseeable future. Consequently, GateField is highly dependent on Actel's
sales efforts and the success of its sales force in marketing GateField's
0.25-micron products.
Actel will continue to market its own products, including products
that are competitive with GateField's products. Accordingly, there is a risk
that Actel may give higher priority to its own Actel products, thus reducing
its efforts to sell GateField's products. In addition, GateField's agreement
with Actel is terminable by Actel under a variety of circumstances, including
GateField's material breach of the product marketing agreement. As GateField
would require significant amounts of time and resources to rebuild its sales
force, reduction in sales efforts by Actel or a termination of its agreement
with GateField would have a material adverse effect on GateField's business,
financial condition and results of operations.
COMPETITION
The semiconductor industry is intensely competitive and is
characterized by rapid technological change, product obsolescence, and price
erosion. The company expects competition to increase in the future. Increased
competition would likely reduce our prices. GateField's existing competitors
include suppliers of conventional gate arrays, complex programmable logic
devices (CPLDs) and FPGAs. The company's two principal competitors are
Xilinx, a supplier of FPGAs based on SRAM technology, and Altera, a supplier
principally of CPLDs. GateField also faces competition in the future from
major domestic and international semiconductor suppliers and suppliers of
logic products based on new or emerging technologies.
The company's competitors may respond more quickly to emerging
technologies. In addition, many of the company's competitors have longer
operating histories, more resources, broader customer relationships and
broader product lines. Important competitive factors in GateField's market
are: price, performance, number of usable gates, ease of use and
functionality of development system software, installed base of development
systems, adaptability of products to specific applications, length of
development cycle (including reductions to finer micron design rules), number
of I/Os, reliability, adequate wafer fabrication capacity and sources of raw
materials, protection of products by effective utilization of intellectual
property laws and technical service and support. Failure of GateField to
compete successfully in any of these or other areas could have a material
adverse effect on its business, financial condition and results of operations.
DEPENDENCE ON KEY PERSONNEL
GateField's success is dependent in large part on the continued
service of its key management, engineering, marketing and support employees.
Competition for qualified personnel, particularly skilled engineers, is
intense in the semiconductor industry. The loss of GateField's current key
employees, or the inability of the company to attract other qualified
personnel, could have a material adverse effect on GateField. The company
does not have employment agreements with any of its key employees.
PRICE EROSION
The semiconductor industry is characterized by intense competition.
Historically, average selling prices in the semiconductor industry in
general, and for GateField's products in particular, have declined
significantly over the life of
13
<PAGE>
each product. Moreover, GateField is highly dependent on Actel for the
marketing of the company's next generation of ProASIC products. While
GateField expects that the average selling prices of its products will be
reduced over time as the company achieves manufacturing cost reductions,
GateField may from time to time be required by competitive pressures to
reduce the prices of its products more quickly than such cost reductions can
be achieved. In addition, GateField occasionally approves price reductions on
specific sales to meet competition. If these reductions are not offset by
reductions in manufacturing costs or by a shift in the mix of products sold
toward higher-margin products, declines in the average selling prices of
GateField's products will reduce gross margins and could have a material
adverse effect on the company's business, financial condition and results of
operations.
MANUFACTURING YIELDS
The manufacture of high-performance ProASIC products is a complex
process that requires a high degree of technical skill, state-of-the-art
equipment and effective cooperation between the wafer supplier and the
circuit designer to produce acceptable yields. Minute impurities, errors in
any step of the fabrication process, defects in the masks used to print
circuits on a wafer and other factors can cause a substantial percentage of
wafers to be rejected or numerous die on each wafer to be nonfunctional.
GateField has from time to time experienced in the past, and expects that it
will experience in the future, production yield problems and delivery delays.
Any prolonged inability to obtain adequate yields or deliveries of the
0.25-micron products would adversely effect GateField's business, financial
condition and results of operations.
SEMICONDUCTOR INDUSTRY RISKS
The semiconductor industry has historically been cyclical and
periodically subject to significant economic downturns, which are
characterized by rapid technological change, product obsolescence, diminished
product demand, accelerated price erosion and overcapacity. Downturns often
occur in connection with, or in anticipation of, maturing product cycles (of
both the semiconductor companies and their "end customers") and declines in
general economic conditions. Some of these downturns have lasted for more
than a year. Also, during such periods, customers of semiconductor
manufacturers benefiting from shorter lead times may delay some purchases of
semiconductors into future periods.
DEPENDENCE ON DESIGN WINS
For GateField to sell its ProASIC products to a customer, the
customer must incorporate the company's ProASIC technology into the
customer's product in the design phase. GateField is highly dependent on
Actel's sales marketing and FAE team, in conjunction with the support of
GateField resources, to persuade potential customers to incorporate the
company's standard ProASIC product into new or updated products. These
efforts may precede by many months (and sometimes a year or more) the
generation of volume sales, if any, by the customer. The value of any design
win, moreover, will depend in large part upon the ultimate success of the
customer's product. No assurance can be given that GateField will win
sufficient designs or that any design win will result in significant revenues.
DEPENDENCE ON INDEPENDENT ASSEMBLY SUBCONTRACTORS
GateField relies primarily on foreign subcontractors for the
assembly and packaging of its products and, to a lesser extent, for the
testing of its finished products. The company generally relies on a few key
subcontractors to provide particular services and has from time to time
experienced difficulties with the timeliness and quality of product
deliveries. GateField has no long-term contracts with its subcontractors, and
certain of those subcontractors are currently operating at or near full
capacity. There can be no assurance that these subcontractors will continue
to be able and willing to meet GateField's requirements for components or
services. Any significant disruption in supplies from, or degradation in the
quality of components or services supplied by, these subcontractors could
delay shipments and result in the loss of customers or revenues or otherwise
have a material adverse effect on GateField's business, financial condition
and results of operations.
14
<PAGE>
PATENT INFRINGEMENT
Although GateField has obtained patents covering aspects of its
ProASIC and related technologies, no assurance can be given that GateField's
patents will be determined to be valid or that any assertions of infringement
or invalidity by other parties (or claims for indemnity from customers
resulting from any infringement claims) will not be successful. Although the
company is not currently a party to any material litigation, the
semiconductor industry is characterized by frequent claims regarding patent
and other intellectual property rights. As is typical in the semiconductor
industry, the company from time to time receives communications from third
parties asserting patents on certain of the company's technologies. In the
event any third party were to make a valid claim against the company, the
company could be required to discontinue the use of certain processes or
cease the use, import and sale of infringing products, to pay substantial
damages and to develop non-infringing technologies or to acquire licenses to
the alleged infringed technology. The company's business, financial condition
and results of operations could be materially and adversely affected by such
developments. Litigation, which could result in substantial cost to and
diversion of resources of the company, may also be necessary to enforce
patents or other intellectual property rights of the company or to defend the
company against claimed infringement of the rights of others. The failure to
obtain necessary licenses or the occurrence of litigation relating to patent
infringement or other intellectual property matters could have a material
adverse effect on the company's business, financial condition and results of
operations.
PROTECTION OF INTELLECTUAL PROPERTY
GateField has historically devoted significant resources to research
and development. It believes that the intellectual property derived from
research and development is a valuable asset that has been and will continue
to be important to the success of the company's business. GateField relies
primarily on a combination of nondisclosure agreements, other contractual
provisions, and patent and copyright laws to protect its proprietary rights.
No assurance can be given that the steps taken by GateField will be adequate
to protect its proprietary rights. In addition, the laws of certain
territories in which GateField's products are or may be developed,
manufactured or sold, including Asia and Europe, may not protect the
company's products and intellectual property rights to the same extent as the
laws of the United States. Failure of GateField to enforce its patents or
copyrights or to protect its trade secrets could have a material adverse
effect on the company's business, financial condition and results of
operations.
RELIANCE ON INTERNATIONAL SALES
In the past, GateField has operated sales offices in England,
Germany and Japan. Sales from these offices were in the local currency and,
therefore, exposed the company to currency exchange fluctuations. Sales to
customers located outside the United States accounted for approximately 30%
in 1998, 48% in 1997 and 31% in 1996. Of these sales, sales to customers
located in the Asia Pacific region and Japan accounted for approximately 25%,
28% and 18% of net revenues for 1998, 1997 and 1996, respectively. Revenue
from customers located in the Asia Pacific region and Japan in the third
quarter of 1999 and 1998 was $30,400 and $223,700 respectively. Revenue from
customers located in the Asia Pacific region and Japan for the nine-month
period ended September 30, 1999 and 1998 was $391,800 and $808,100
respectively.
GateField is in the process of closing down the operations of all of
its foreign offices and expects such closures to occur by the end of the
fourth quarter of 1999. GateField expects international revenues to continue
to decline each quarter from their current level.
Although GateField is closing its foreign sales offices, it expects
that revenues derived from international sales will continue to represent a
significant portion of the company's total revenues because of its marketing
relationship with Actel. Further, such direct foreign sales are denominated
in U.S. dollars. Therefore, GateField's products become less price
competitive in countries with currencies that are declining in value against
the dollar. International sales are subject to a variety of risks, including
longer payment cycles, greater difficulty in accounts receivable collection,
currency restrictions, tariffs, trade barriers, taxes, export license
requirements and the impact of recessionary environments in economies outside
the United States.
DEPENDENCE ON NEW PRODUCT DEVELOPMENT; RAPID TECHNOLOGICAL CHANGE
The market for GateField's products is characterized by rapidly
changing technology, frequent new product introductions, and declining
average selling prices over product life cycles. Thus GateField's future
success is highly dependent upon the timely completion and introduction of
new products at competitive price and performance levels,
15
<PAGE>
including the timely introduction of its next generation of 0.25-micron
ProASIC products.
In evaluating new product decisions, GateField must anticipate both
the future demand and the technology that will be available to supply such
demand. Failure to anticipate customer demand, delays in developing new
products and failure to coordinate the design and development of silicon and
associated software products each could have a material adverse effect on
GateField's business, financial condition and results of operation. No
assurance can be given that any other new products will gain market
acceptance or that GateField will respond effectively to new technological
changes or new product announcements by others. Any failure of GateField or
its strategic partners to successfully define, develop, market, manufacture,
assemble or test competitive new products could have a material adverse
effect on its business, financial condition and results of operations.
FORWARD-LOOKING STATEMENTS
All forward-looking statements contained in this Quarterly Report on
Form 10-Q, including all forward-looking statements contained in any document
incorporated herein by reference, are made pursuant to the safe harbor
provisions of the Public Securities Litigation Reform Act of 1995. Words such
as "anticipates," "believes," "estimates," "expects," intends," "plans,"
"seeks" and variations of such words and similar expressions are intended to
identify the forward-looking statements. The forward-looking statements
include projections relating to trends in markets, revenues, average selling
prices, gross margin, wafer yields, research and development expenditures,
selling, general and administrative expenditures and the Year 2000 compliance
issue.
All forward-looking statements are based on current expectations and
projections about the semiconductor industry and programmable logic market,
and assumptions made by GateField's management that reflect its best judgment
based on other factors currently known by management, but they are not
guarantees of future performance. Accordingly, actual events and results may
differ materially from those expressed or forecast in the forward-looking
statements due to the risk factors identified herein or for other reasons.
GateField undertakes no obligation to update any forward-looking statement
contained in this Quarterly Report on Form 10-Q or incorporated by reference
in the company's Annual Report on Form 10-K.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The GateField Corporation is exposed to market risk related to fluctuations
in interest rates and in foreign currency exchange rates:
INTEREST RATE EXPOSURE.
GateField maintains its funds in money market and Certificate of
Deposit accounts at banks. The company's exposure to market risk due to
fluctuations in interest rates relates primarily to its interest earnings on
its cash deposits. These securities are subject to interest rate risk
inasmuch as their fair value will fall if market interest rates increase. If
market interest rates were to increase immediately and uniformly by 10% from
the levels prevailing at December 31, 1998, the fair value of the portfolio
would not decline by a material amount. GateField does not use derivative
financial instruments to mitigate risks. However, it does have an investment
policy that would allow it to invest in short-term investments such as money
market instruments and corporate debt securities. The company's policy does
attempt to reduce such risks by typically limiting the maturity date of such
securities to no more than eighteen months with a maximum average maturity to
its whole portfolio of such investments at six months, placing its
investments with high credit quality issuers and limiting the amount of
credit exposure with any one issuer.
FOREIGN CURRENCY EXCHANGE RATE EXPOSURE.
GateField's exposure to market risk due to fluctuations in foreign
currency exchange rates relates primarily to the intercompany balances with
its U.K., German and Japanese subsidiaries. Although the company transacts
business in various foreign countries, settlement amounts are usually based
on U.S. currency. Transaction gains or losses have not been significant in
the past, and there is no hedging activity on sterling, mark, yen or other
currencies. GateField is in the process of closing these subsidiaries and
expects to receive approximately $500,000 in cash transfers during 1999 from
these closings. The company would not experience a material foreign exchange
loss based on a hypothetical 10% adverse change in the price of the sterling,
mark or yen against the U.S. dollar. Consequently, GateField does not expect
that a reduction in the value of such accounts denominated in foreign
currencies resulting from even a sudden or significant fluctuation in foreign
exchange rates would have a direct material impact on the company's financial
position, results of operations or cash flows.
Notwithstanding the foregoing analysis of the direct effects of
interest rate and foreign currency exchange rate fluctuations on the value of
certain of GateField's investments and accounts, the indirect effects of such
fluctuations could have a material adverse effect on the company's business,
financial condition and results of operations. For example, international
demand for GateField's products is affected by foreign currency exchange
rates. In addition, interest rate fluctuations may affect the buying patterns
of the company's customers. Furthermore, interest rate and currency exchange
rate fluctuations have broad influence on the general condition of the U.S.
foreign and global economics, which could materially adversely affect the
company.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
In September 1999, the company issued approximately 471,000 shares
of common stock to outside investors for an aggregate purchase price of
$3,062,000 pursuant to a Stock Purchase Agreement entered into on September
30, 1999 which were exempt from registration pursuant to Regulation D
promulgated under the Securities Act of 1933, as amended or Rule 4(2)
thereunder.
On June 30, 1999 (the "Effective Time") the company effected a
reverse stock split of its outstanding common stock whereby each ten (10)
shares of the company's Common Stock, par value $0.10 per share, issued and
outstanding or held in treasury at the Effective Time were automatically and
without any action on the part of the respective holders thereof
16
<PAGE>
combined, converted and changed into one (1) share of Common Stock, par value
$0.10 per share, of the company (the "Reverse Stock-Split"). No fractional
shares were issued and, in lieu thereof, any holder of less than one share of
Common Stock received cash for such holder's fractional share based on the
closing price per share of the Common Stock on the Nasdaq Unaffiliated Over
the Counter Bulletin Board as of the Effective Time of the Reverse
Stock-Split.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
4.1 Common Stock Purchase Agreement, dated September 30, 1999, between the
company and Mitsui Create USA, Inc.
4.2 Common Stock Purchase Agreement, dated September 30, 1999, between the
company and MHT American Holding, Inc.
4.3 Common Stock Purchase Agreement, dated September 30, 1999, between the
company and Actel Corporation.
4.4 Common Stock Purchase Agreement, dated September 30, 1999, between the
company and Idanta Partners Limited.
4.5 Common Stock Purchase Agreement, dated September 30, 1999, between the
company and the Dunn Family Trust.
27.1 Financial Data Schedule.
(b) Reports on Form 8-K
None
17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: November 8, 1999 GATEFIELD CORPORATION
/s/ Timothy Saxe
-------------------------------------
Timothy Saxe
President and Chief Executive Officer
/s/ James B. Boyd
-------------------------------------
James B. Boyd
Chief Accounting Officer &
Corporate Controller
18
<PAGE>
EXHIBIT 4.1
COMMON STOCK PURCHASE AGREEMENT
This Common Stock Purchase Agreement (the "Agreement") dated as of
September 30, 1999, is entered into by and among GateField Corporation, a
Delaware corporation with offices at 47100 Bayside Parkway, Fremont, California
94538 (the "Company"), and Mitsui Create USA, Inc., a Delaware corporation with
offices at 1500 #B East Higgins Road, Elk Grove Village, IL 60007-1607, (the
"Purchaser"), in connection with the purchase of 153,848 shares of the Company's
Common Stock, par value $.10 (the "Stock"), to be sold to the Purchaser at the
Closing (as defined below). The solicitation of this Agreement and the offer
and sale of the Stock are being made in reliance upon the provisions of
Regulation D ("Regulation D") promulgated by the Securities and Exchange
Commission ("SEC") under the United States Securities Act of 1933, as amended
(the "Securities Act") or upon the provisions of Section 4(2) of the Securities
Act.
In consideration of the mutual promises, representations, warranties and
conditions set forth herein, and intending to be legally bound hereby, the
Company and the Purchaser agree as follows:
1. PURCHASE AND SALE OF STOCK; CLOSING CONDITIONS
1.1 PURCHASE AND SALE OF STOCK.
(a) PURCHASE OF STOCK. The Purchaser hereby agrees to purchase
and the Company agrees to sell to the Purchaser 153,848 shares of Stock at a
price of $6.499922 per share for the aggregate purchase price of $1,000,000 (the
"Purchase Price"). The closing of the purchase of such Stock shall take place
at the "Closing," subject to the satisfaction (or waiver) of the conditions
thereto set forth in Sections 1.2 and 1.3 below:
(b) PAYMENT AND DELIVERY OF STOCK CERTIFICATES. On the Closing
Date (as defined below), (i) the Purchaser shall pay the Purchase Price by wire
transfer of immediately available funds to the Company, in accordance with the
Company's written instructions, against delivery of duly executed stock
certificates which the Purchaser is then purchasing and (ii) the Company shall
deliver to the Purchaser such stock certificates against delivery of the
Purchase Price.
(c) CLOSING DATES. Subject to the satisfaction (or waiver) of
the conditions thereto set forth in Sections 1.2 and 1.3 below, the date and
time of the issuance and sale of the Stock pursuant to this Agreement (the
"Closing Date") shall be 9:00 am. Pacific Daylight Time on September 30, 1999 or
at such time as the parties may mutually agree upon.
1.2 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY TO ISSUE
AND SELL THE STOCK. The obligation hereunder of the Company to issue and sell
the Stock to the Purchaser at the Closing is subject to the satisfaction, at or
before the Closing, of each of the conditions set forth below. These conditions
are for the Company's sole benefit and may be waived by the Company at any time
in its sole discretion.
<PAGE>
(a) ACCURACY OF THE PURCHASER'S REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Purchaser contained in this Agreement
shall be true and correct as of the date when made and as of the Closing Date as
though made at such time.
(b) PERFORMANCE BY THE PURCHASER. The Purchaser shall have
performed, satisfied and complied in all respects with all covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by the Purchaser at or prior to the Closing.
(c) NO INJUNCTION. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction which prohibits or adversely affects any of the transactions
contemplated by this Agreement, and no proceeding shall have been commenced
which may have the effect of prohibiting or adversely affecting any of the
transactions contemplated by this Agreement.
1.3 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE PURCHASER TO
ACQUIRE THE STOCK. The obligation of the Purchaser hereunder to acquire and pay
for the Stock at the Closing is subject to the satisfaction, at or before the
Closing Date, of each of the following conditions. Each of these conditions is
for the Purchaser's sole benefit and may be waived by the Purchaser at any time
in its sole discretion.
(a) ACCURACY OF THE COMPANYS REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Company contained in this Agreement
shall be true and correct as of the date when made and as of the Closing Date as
though made at such time.
(b) PERFORMANCE BY THE COMPANY. The Company shall have
performed, satisfied and complied in all respects with all covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by the Company at or prior to the Closing.
(c) NO INJUNCTION. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction which prohibits or adversely effects any of the transactions
contemplated by this Agreement, and no proceeding shall have been commenced
which may have the effect of prohibiting or adversely affecting any of the
transactions contemplated by this Agreement.
(d) OFFICER'S CERTIFICATE. The Company shall have delivered to
the Purchaser a certificate in such form and substance as shall be reasonably
satisfactory to the Purchaser, executed by an executive officer of the Company
as of the Closing Date, to the effect that all of the conditions to the Closing
shall have been satisfied.
(e) CERTIFICATE AND DOCUMENTS. The Company shall have delivered
to the Purchaser:
2.
<PAGE>
(i) the Certificate of Incorporation of the Company, as
amended and in effect as of the date of the Closing certified by the Secretary
of State of the State of Delaware;
(ii) certificates, as of the most recent practicable dates,
as to the corporate good standing of the Company issued by the Secretary of
State of the State of Delaware and the Secretary of State of the State of
California;
(iii) the By-laws of the Company, as amended and in effect
as of the date of the Closing, certified by the Secretary of the Company; and
(iv) resolutions of the Board of Directors of the Company
authorizing and approving all matters in connection with this Agreement and the
transactions contemplated hereby, certified by the Secretary of the Company as
of the Closing Date.
(f) OTHER MATTERS. All corporate and other proceedings in
connection with the transactions contemplated by this Agreement and all
documents and instruments incident to such transactions shall be reasonably
satisfactory in substance and form to the Purchaser and its counsel, and the
Purchaser and its counsel shall have received all such counterpart originals or
certified or other copies of such documents as they may reasonably request.
2. REPRESENTATIONS AND WARRANTIES OF PURCHASER
The Purchaser represents and warrants to the Company that:
2.1 NO GOVERNMENT RECOMMENDATION OR APPROVAL. The Purchaser
understands that no United States federal or state agency, or similar agency of
any other country has passed upon or made any recommendation or endorsement of
the Company or the offering of the Stock.
2.2 INTENT. The Purchaser is purchasing the Stock for its own
account and not with a view towards distribution and the Purchaser has no
present arrangement (whether or not legally binding) at any time to sell the
Stock to or through any person or entity; provided, however, that by making the
representations herein, the Purchaser does not agree to hold the Stock for any
minimum or other specific term and reserves the right to dispose of the Stock at
any time in accordance with Federal and state securities laws applicable to such
disposition. The Purchaser understands that the Stock must be held indefinitely
unless such Stock is subsequently registered under the Securities Act or an
exemption from registration is available. The Purchaser has been advised or is
aware of the provisions of Rule 144 promulgated under the Securities Act.
2.3 SOPHISTICATED INVESTOR. The Purchaser is a sophisticated
investor (as described in Rule 506(b)(2)(ii) of Regulation D) and an accredited
investor (as defined in Rule 501 of Regulation D), and the Purchaser has such
experience in business and financial matters that it is capable of evaluating
the merits and risks of an investment in the Stock. The Purchaser acknowledges
that the investment in the Stock is speculative and involves a high degree of
risk.
3.
<PAGE>
2.4 INDEPENDENT INVESTIGATION. The Purchaser, in making its decision
to purchase the Stock subscribed for hereunder, has relied upon an independent
investigation made by it and/or its representatives and has not relied on any
oral or written representations or assurances from the Company or any
representative or agent of the Company, other than as set forth in this
Agreement and in the public filings of the Company. Prior to the date hereof,
the Purchaser has been furnished with and has reviewed the Company's latest
proxy statement and Annual Report on Form 10-K sent to the Company's
stockholders and all documents filed by the Company since the year ended
December 31, 1998 pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), (such
documents are collectively referred to in this Agreement as the "Exchange Act
Reports"). The Purchaser has had a reasonable opportunity to ask questions of
and receive answers from the Company concerning the Company and the offering of
securities and has received satisfactory answers to all inquiries it has made
with respect to the Company and the Stock. The Purchaser acknowledges the price
and terms of the Stock offered hereby has been determined by negotiation and
does not necessarily bear any relationship to the assets, book value or
potential performance of the Company or any other recognized criteria of value.
2.5 AUTHORITY. This Agreement has been duly authorized and validly
executed, and delivered by the Purchaser and is a valid and binding agreement
enforceable in accordance with its terms, subject to general principles of
equity and to bankruptcy or other laws affecting the enforcement of creditors'
rights generally.
2.6 NO LEGAL ADVICE FROM COMPANY. The Purchaser acknowledges that it
has had the opportunity to review this Agreement and the transactions
contemplated by this Agreement with his or its own legal counsel and tax
advisors. Except for any statements or representations of the Company made in
this Agreement and in the Exchange Act Reports, the Purchaser is relying solely
on such counsel and advisors and not on any statements or representations of the
Company or any of its representative or agents for legal, tax or investment
advice with respect to this investment, the transactions contemplated by this
Agreement or the securities laws of any jurisdiction.
2.7 NO BROKERS. The Purchaser has taken no action which would give
rise to any claim by any person for brokerage commission, finders fees or
similar payments by the Company relating to this Agreement or the transactions
contemplated hereby.
2.8 NOT AN AFFILIATE. Prior to the Closing, the Purchaser has not
been an officer, director or "affiliate" (as that term is defined in Rule 405 of
the Securities Act) of the Company.
2.9 RELIANCE ON REPRESENTATIONS AND WARRANTIES. The Purchaser
understands that the Stock is being offered and sold to it in reliance on
specific provisions of United States federal and state securities laws and that
the Company is relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgments and understandings of the Purchaser set
forth in this Agreement in order to determine the applicability of such
provisions.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
4.
<PAGE>
Subject to and except as disclosed by the Company in APPENDIX A annexed
hereto (the "Disclosure Schedule"), the Company represents and warrants to the
Purchaser that:
3.1 COMPANY STATUS. The Company has registered the Common Stock
pursuant to Section 12(b) or 12(g) of the Exchange Act and is in full compliance
with all reporting requirements of the Exchange Act.
3.2 CURRENT PUBLIC INFORMATION. The Exchange Act Reports include all
the filings made by the Company since the year ended December 31, 1998 pursuant
to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act.
3.3 NO DIRECTED SELLING EFFORTS OR GENERAL SOLICITATION IN REGARD TO
THIS TRANSACTION. Neither the Company nor any of its affiliates nor any
distributor or any person acting on its or their behalf has conducted any
"directed selling efforts" with respect to the Stock, nor have they made any
offers or sales of any security or solicited any offers to buy any security,
under circumstances that would require registration of the offer, issuance and
sale of the Stock under the Securities Act.
3.4 CAPITALIZATION; ISSUANCE OF SHARES.
(a) As of the date of this Agreement, the authorized capital
stock of the Company consists of 65,000,000 shares of Common Stock, of which
4,171,072 shares are issued and outstanding, and 2,000,000 shares of preferred
stock, of which 1,000,000 shares have been designated Series B Preferred Stock,
18,003 shares of which shares are issued and outstanding, 300,000 shares of
which have been designated Series C Preferred Stock all of which are issued or
outstanding and 420,000 shares of which have been designated Series C-1
Preferred Stock, none of which are issued and outstanding but up to all of which
is issuable upon conversion of that certain Convertible Promissory Note dated
May 25, 1999 issued to Actel Corporation. All of the issued and outstanding
shares of Preferred Stock and Common Stock have been duly and validly issued and
are fully paid and non-assessable. Except as set forth in Section 3.4 of the
Disclosure Schedule (i) no subscription, warrant, option, convertible security
or other right (contingent or otherwise) to purchase or acquire any shares of
capital stock of the Company is authorized or outstanding, (ii) the Company has
no obligation (contingent or otherwise) to issue any subscription, warrant,
option, convertible security or other such right or to issue or distribute to
holders of any shares of its capital stock any evidences of indebtedness or
assets of the Company, and (iii) the Company has no obligation (contingent or
otherwise) to purchase, redeem or otherwise acquire any shares of its capital
stock or any interest therein or to pay any dividend or make any other
distribution in respect thereof.
(b) The issuance, sale and delivery of the Stock in accordance
with this Agreement have been duly authorized by all necessary corporate and
stockholder action on the part of the Company and all such shares shall be duly
reserved for issuance.
3.5 ORGANIZAT10N AND QUALIFICATION. The Company is a corporation
duly incorporated and existing in good standing under the laws of the State of
Delaware and has the requisite corporate power to own its properties and to
carry on its business as now being conducted. The Company does not have any
subsidiaries, except for those listed in
5.
<PAGE>
its Annual Report on Form 10-K (or the exhibits attached thereto) filed with
the SEC for the year ended December 31, 1998. The Company and each such
subsidiary is duly qualified as a foreign corporation to do business and is
in good standing in every jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary other
than those in which the failure so to qualify would not have a Material
Adverse Change (as defined below). References to the "Company" in this
Agreement shall also include each subsidiary of the Company, except where the
context otherwise requires.
3.6 AUTHORIZATION; ENFORCEMENT. (i) The Company has the requisite
corporate power and authority to enter into and perform this Agreement and to
issue the Stock in accordance with the terms hereof and thereof, (ii) the
execution, issuance and delivery of this Agreement and the Common Stock by the
Company, and the consummation by the Company of the transactions contemplated
hereby, have been duly authorized by all necessary corporate action, and no
further consent or authorization of the Company or its Board of Directors or
stockholders is required, (iii) this Agreement has been duly executed and
delivered by the Company, and upon execution, issuance and delivery thereof
shall be a valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and remedies or by
other equitable principles of general application.
3.7 CORPORATE DOCUMEENTS. The Company has furnished or made
available to the Purchaser true and correct copies of the Company's Certificate
of Incorporation, as in effect on the date hereof (the "Certificate"), and the
Company's By-Laws, as in effect on the date hereof (the "By-Laws").
3.8 NO CONFLICTS. The execution, delivery and performance of this
Agreement and the sale and issuance of the Stock by the Company, do not and will
not result in a violation of or conflict with the Certificate or By-Laws, or
result in a violation of any Federal, state, local or foreign law, rule,
regulation, order, judgment or decree (including federal and state securities
laws and regulations) applicable to the Company or any of its subsidiaries or by
which any property or asset of the Company or any of its -subsidiaries is bound
or affected, except for such conflicts and violations as would not, individually
or in the aggregate, have a Material Adverse Change. The business of the
Company is not being conducted in violation of any law, ordinance or regulations
of any governmental entity, except for possible violations which either singly
or in the aggregate do not and will not have a Material Adverse Change. The
Company is not required under Federal, state or local law, rule or regulation in
the United States to obtain any consent, authorization or order of, or make any
filing or registration with, any court or governmental agency in order for it to
execute, deliver or perform any of its obligations under this Agreement or issue
and sell the Stock in accordance with the terms hereof and thereof (other than
any SEC, NASD, Exchange or state securities filings which may be required to be
made by the Company subsequent to the Closing, and any registration statement
which may be filed pursuant hereto); provided that, for purposes of the
representation made in this sentence, the Company is assuming and relying upon
the accuracy of the relevant representations and agreements of the Purchaser
herein.
6.
<PAGE>
3.9 EXCHANGE ACT REPORTS; FINANCIAL STATEMENTS. The Company has
delivered or made available to the Purchaser true and complete copies of the
Exchange Act Reports (including, without limitation, proxy information and
solicitation materials). As of their respective dates, the Exchange Act Reports
complied in all material respects with the requirements of the Exchange Act and
rules and regulations of the SEC promulgated thereunder and other Federal, state
and local laws, rules and regulations applicable to such Exchange Act Reports,
and none of the Exchange Act Reports contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the Exchange Act Reports comply as to form
in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC or other applicable rules and
regulations with respect thereto. Such financial statements have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto or (ii) in the case
of unaudited interim statements, to the extent they may not include footnotes or
may be condensed or summary statements) and fairly present the financial
condition of the Company as of the dates thereof and the results of operations
and cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments which in the aggregate will not
be material).
3.10 NO MATERIAL ADVERSE CHANGE. Since June 30, 1999, there has been
no material adverse change in the business, operations, properties, prospects,
condition, financial or otherwise, net worth, or results of operations of the
Company or its subsidiaries, except as described in the Exchange Act Reports and
the Disclosure Schedule ("Material Adverse Change").
3.11 NO UNDISCLOSED LIABILITIES. The Company and its subsidiaries
have no liabilities or obligations of any type, which in the aggregate exceed
$100,000, that are not fully reflected or disclosed in the Exchange Act Reports,
other than contractual liabilities and those incurred in the ordinary course of
the Company's or its subsidiaries' respective businesses since June 30, 1999.
3.12 NO UNDISCLOSED EVENTS OR CIRCUMSTANCES. No event or circumstance
has occurred or exists with respect to the Company or its subsidiaries or their
respective businesses, properties, prospects, operations or condition, financial
or otherwise, which, under applicable law, rule or regulation, requires
disclosure in the Exchange Act Reports or public disclosure prior to the date
hereof by the Company and which has not been so disclosed.
3.13 NO BROKERS. The Company has taken no action which would give
rise to any claim by any person for brokerage commissions, finder's fees or
similar payments by the Purchaser relating to this Agreement or the
transactions contemplated hereby.
3.14 LITIGATION. There is no action, suit or proceeding, or
governmental inquiry or investigation, pending, or, to the best of the Company's
knowledge, any basis therefor or threat thereof, against the Company, which
questions the validity of this Agreement or the
7.
<PAGE>
right of the Company to etnter into it, or which might result, either
individually or in the aggregate, in a Material Adverse Change.
3.15 INTELLECTUAL PROPERTY. To the best of its knowledge, the Company
owns or possesses sufficient legal rights to all patents, trademarks, service
marks, trade names, copyrights, trade secrets, licenses, information and other
proprietary rights and processes necessary for its business as now conducted and
as presently proposed to be conducted, without any known infringement of the
rights of others The business conducted or proposed by the Company does not and
will not cause the Company to infringe or violate any of the patents,
trademarks, service marks, trade names, copyrights, licenses, trade secrets or
other intellectual property rights of any other person or entity. The Company
is not aware that any employee is obligated under any contract (including any
license, covenant or commitment of any nature), or subject to any judgment,
decree or order of any court or administrative agency, that would conflict or
interfere with (i) the performance of employee's duties as an officer, employee
or director of the Company, (ii) the use of such employee's best efforts to
promote the interests of the Company or (iii) the Company's business as
conducted or proposed to be conducted. No other person or entity (including
without limitation any prior employer of any employee of the Company) has any
right to or interest in any inventions, improvements, discoveries or other
confidential information utilized by the Company in its business.
3.16 MATERIAL CONTRACTS AND OBLIGATIONS. Section 3.16 of the
Disclosure Schedule lists each material agreement to which the Company is a
party or subject, including without limitation all material employment and
consulting agreements, employee benefit, bonus, pension, profit-sharing, stock
option, stock purchase and similar plans and arrangements, and distributor and
sales representative agreements. The Disclosure Schedule lists each agreement
with any stockholder, officer or director of the Company, or any "affiliate" or
"associate" of such persons (as such terms are defined in the rules and
regulations promulgated under the Securities Act), including without limitation
any agreement or other arrangement providing for the furnishing of services by,
rental of real or personal property from, or otherwise requiring payments to,
any such person or entity and any agreement relating to the Intellectual
Property Rights. The Company has delivered to counsel to the Purchaser copies
of all of the foregoing agreements. All of such agreements and contracts are
valid, binding and in full force and effect.
3.17 EMPLOYEES. All employees of the Company whose employment
responsibility requires access to confidential or proprietary information of the
Company have executed and delivered nondisclosure and assignment of invention
agreements and all of such agreements are in full force and effect.
3.18 ERISA. The Company does not have or otherwise contribute to or
participate in any employee benefit plan subject to the Employee Retirement
Income Security Act of 1974.
3.19 BOOKS AND RECORDS. The minute books of the Company contain
complete and accurate records of all meetings and other corporate actions of its
stockholders and its Board of Directors and committees thereof. The Company has
delivered to counsel to the Purchaser copies of all of the minutes of all
meetings and other corporate actions of its
8.
<PAGE>
stockholders and its Board of Directors and committees thereof held or taken
since January 1, 1996.
4. COVENANTS
4.1 LISTING OF SHARES. The Company agrees, if the Company applies to
have its Common Stock traded on any principal stock exchange or market, it will
include the Stock in such application and will take such other action as is
necessary or desirable to cause the Stock to be listed on such other exchange or
market as promptly as possible.
4.2 EXCHANGE ACT REGISTRATION. The Company will cause its Common
Stock to continue to be registered under Section 12(g) or 12(b) of the Exchange
Act, will comply in all respects with its reporting and filing obligations under
the Exchange Act, and will not take any action or file any document (whether or
not permitted by the Exchange Act or the rules thereunder) to terminate or
suspend such registration or to terminate or suspend its reporting and filing
obligations under the Exchange Act. The Company will take all action under its
control to continue the listing and trading of its Common Stock on the Exchange.
4.3 CORPORATE EXISTENCE. The Company will take all steps necessary
to preserve and continue the corporate existence of the Company.
4.4 SALE OF SHARES UNDER RULE 144. From and after the Closing, at
the request of any holder of Shares (or other Registrable Securities (as defined
in the Registration Rights Agreement)) who proposes to sell the same in
compliance with Rule 144 under the Securities Act, the Company shall (a)
promptly furnish to such holder a written statement as to its compliance with
the filing requirements of the SEC as set forth in Rule 144, as the same may be
amended from time to time, and (b) make such additional filings of reports with
the SEC as will enable the holders of Registrable Securities to make sales
thereof pursuant to such Rule. The Company shall provide its transfer agent
with appropriate instructions and/or opinions of counsel in order for any
restrictive legend contained on the certificates for the Shares (or other
Registrable Securities) to be removed when appropriate and for such holders to
sell, transfer and/or dispose of the Registrable Securities in accordance with
Rule 144.
5. LEGENDS
5.1 LEGENDS. The certificates evidencing the Stock will bear the
following legend (the "Legend"):
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR OFFERED FOR SALE EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID
ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION FROM
SUCH REGISTRATION REQUIREMENTS.
At the Closing, the Company will issue to the transfer agent for its common
stock (and to any substitute or replacement transfer agent for its common stock
coterminous with the Company's appointment of any such substitute or replacement
transfer agent) irrevocable
9.
<PAGE>
instructions in form and substance reasonably satisfactory to the Purchaser.
It is the intent and purpose of such instructions to require the transfer
agent for the common stock from time to time to issue certificates evidencing
the Shares free of the Legend during the following period and under the
following circumstances and without consultation by the transfer agent with
Company or its counsel and without the need for any further advice or
instruction to the transfer agent by or from the Company or its counsel:
(a) At any time from and after the Closing Date, upon any
surrender of one or more certificates evidencing Stock and which bear the
Legend, to the extent accompanied by a notice requesting the issuance of new
certificates free of the Legend to replace those surrendered and containing or
also accompanied by representations that (i) the holder thereof is permitted to
dispose thereof pursuant to Rule 144 promulgated under the Securities Act or
(ii) the holder intends to effect the sale or other disposition of such
securities to a purchaser or purchasers who will not be subject to the
registration requirements of the Securities Act, or (iii) such holder is not
then subject to such requirements.
5.2 NO OTHER LEGEND OR STOCK TRANSFER RESTRICTIONS. No legend has
been or shall be placed on the share certificates representing the Stock and no
instructions or "stop transfers," so called, "stock transfer restrictions," so
called, or other restrictions have been or shall be given to the Company's
transfer agent with respect thereto, other than as set forth in this Section 5.
5.3 PURCHASER'S COMPLIANCE. Nothing in this section shall affect in
any way the Purchaser's obligations under and agreement to comply with all
applicable securities laws upon resale of the Stock.
6. CHOICE OF LAW AND VENUE
THIS AGREEMENT SHALL BE CONSTRUED UNDER THE LAWS OF THE STATE OF
CALIFORNIA, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW OR CHOICE OF LAW,
EXCEPT TO THE EXTENT THAT THE LAW OF THE STATE OF DELAWARE REGULATES THE
COMPANY'S ISSUANCE OF SECURITTES.
7. ASSIGNNIENT; ENTIRE AGREEMENT; AMENDMENT
7.1 ASSIGNMENT. This Agreement may not be assigned by the Purchaser
or the Company to any other person or entity. Notwithstanding the foregoing,
the provisions of this Agreement shall inure to the benefit of, and be
enforceable by, any entity which shall succeed to all or substantially all of
the assets and liabilities of Purchaser by merger or purchase.
7.2 ENTIRE AGREEMENT; AMENDMENT. This Agreement, and the other
agreements and documents delivered pursuant hereto constitute the full and
entire understanding and agreement between the parties with regard to the
subject hereof and thereof and supersede all prior agreements and understandings
relating to such subject matter, and no party shall be liable or bound to any
other party in any manner by any warranties, representations or covenants except
as specifically set forth in this Agreement or therein. Except as expressly
provided in this Agreement, neither this Agreement nor any term hereof may be
amended, waived, discharged or
10.
<PAGE>
terminated other than by a written instrument signed by the party against
whom enforcement of any such amendment, waiver, discharge or termination is
sought.
8. NOTICES, ETC.; EXPENSES; INDEMNITY
8.1 NOTICES. Any notice, demand, request or other communication
required or permitted to be given by either the Company or the Purchaser
pursuant to the terms of this Agreement shall be in writing and shall be deemed
to have been duly given when delivered personally or by facsimile, with a hard
copy to follow by overnight delivery by a reputable courier.
If to the Company, at: GateField Corporation, 47436 Fremont Boulevard,
Fremont, CA 94538-6503, Attention: President, Facsimile No: (510) 623-4484, or
at such other address or addresses as may have been finished in writing by the
Company to the Purchaser, with a copy to Eric C. Jensen, Esq., Cooley Godward
LLP, 5 Palo Alto Square, 4th Floor, 3000 El Camino Real, Palo Alto, California
94306-2155, Facsimile No: (650) 857-0663; or
If to the Purchaser, at: Mitsui Create USA, Inc., 1500 #B East Higgins
Road, Elk Grove Village, IL 60007-1607, Attention: President, or at such other
address or addresses as may have been furnished to the Company in writing by
such Purchaser, with a copy to: Noboru Yoshikawa, Mitsui Create Inc., 1-2-1
Chiyo, Yahatanishi-ku, Kitakyushu 807-1112 Japan.
8.2 INDEMNIFICATION. Each party ("Indemnifying Party") shall
indemnify the other party against any loss, liabilities, expenses, cost or
damages (including reasonable attorney's fees) incurred as a result of the
Indemnifying Party's breach of any representation, warranty, covenant or
agreement in this Agreement.
9. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of which
shall be enforceable against the parties actually executing such counterparts,
and all of which together shall constitute one instrument.
10. SURVIVAL; SEVERABILITY
The representations, warranties, covenants and agreements of the parties
hereto shall survive the Closing. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and
effect without said provision; provided that the absence of such provision does
not materially change the economic benefit of this Agreement to any party.
11. TITLE AND SUBTITLES
The titles and subtitles used in this Agreement are used for convenience
only and are not to be considered in construing or interpreting this Agreement.
11.
<PAGE>
IN WITNESS WHEREOF, the parties have signed this Agreement the day and year
first written above.
GATEFIELD CORPORATION
By: Timothy Saxe
----------------------------------
(Print Name)
By: /s/ Timothy Saxe
-----------------------------------
(Signed Name)
Title: President & CEO
-----------------------------------
(Position, if applicable)
PURCHASER:
MITSUI CREATE USA, INC.
By: Yasunari Mitsui
----------------------------------
(Print Name)
By: /s/ Yasunari Mitsui
----------------------------------
(Signed Name)
Title: President
----------------------------------
(Position, if applicable)
12.
<PAGE>
EXHIBIT 4.2
COMMON STOCK PURCHASE AGREEMENT
This Common Stock Purchase Agreement (the "Agreement") dated as of
September 30, 1999, is entered into by and among GateField Corporation, a
Delaware corporation with offices at 47100 Bayside Parkway, Fremont,
California 94538 (the "Company"), and MHT American Holding, Inc., a Delaware
corporation with offices at 2001 Gateway Place, Suite 201, San Jose, CA
95110, (the "Purchaser"), in connection with the purchase of 153,848 shares
of the Company's Common Stock, par value $.10 (the "Stock"), to be sold to
the Purchaser at the Closing (as defined below). The solicitation of this
Agreement and the offer and sale of the Stock are being made in reliance upon
the provisions of Regulation D ("Regulation D") promulgated by the Securities
and Exchange Commission ("SEC") under the United States Securities Act of
1933, as amended (the "Securities Act") or upon the provisions of Section
4(2) of the Securities Act.
In consideration of the mutual promises, representations, warranties and
conditions set forth herein, and intending to be legally bound hereby, the
Company and the Purchaser agree as follows:
1. PURCHASE AND SALE OF STOCK; CLOSING CONDITIONS
1.1 PURCHASE AND SALE OF STOCK.
(a) PURCHASE OF STOCK. The Purchaser hereby agrees to
purchase and the Company agrees to sell to the Purchaser 153,848 shares of
Stock at a price of $6.499922 per share for the aggregate purchase price of
$1,000,000 (the "Purchase Price"). The closing of the purchase of such Stock
shall take place at the "Closing," subject to the satisfaction (or waiver) of
the conditions thereto set forth in Sections 1.2 and 1.3 below:
(b) PAYMENT AND DELIVERY OF STOCK CERTIFICATES. On the
Closing Date (as defined below), (i) the Purchaser shall pay the Purchase
Price by wire transfer of immediately available funds to the Company, in
accordance with the Company's written instructions, against delivery of duly
executed stock certificates which the Purchaser is then purchasing and (ii)
the Company shall deliver to the Purchaser such stock certificates against
delivery of the Purchase Price.
(c) CLOSING DATES. Subject to the satisfaction (or waiver)
of the conditions thereto set forth in Sections 1.2 and 1.3 below, the date
and time of the issuance and sale of the Stock pursuant to this Agreement
(the "Closing Date") shall be 9:00 am. Pacific Daylight Time on September 30,
1999 or at such time as the parties may mutually agree upon.
1.2 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY TO ISSUE
AND SELL THE STOCK. The obligation hereunder of the Company to issue and
sell the Stock to the Purchaser at the Closing is subject to the
satisfaction, at or before the Closing, of each of the conditions set forth
below. These conditions are for the Company's sole benefit and may be waived
by the Company at any time in its sole discretion.
1.
<PAGE>
(a) ACCURACY OF THE PURCHASER'S REPRESENTATIONS AND
WARRANTIES. The representations and warranties of the Purchaser contained in
this Agreement shall be true and correct as of the date when made and as of
the Closing Date as though made at such time.
(b) PERFORMANCE BY THE PURCHASER. The Purchaser shall have
performed, satisfied and complied in all respects with all covenants,
agreements and conditions required by this Agreement to be performed,
satisfied or complied with by the Purchaser at or prior to the Closing.
(c) NO INJUNCTION. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction which prohibits or adversely affects any of the transactions
contemplated by this Agreement, and no proceeding shall have been commenced
which may have the effect of prohibiting or adversely affecting any of the
transactions contemplated by this Agreement.
1.3 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE PURCHASER TO
ACQUIRE THE STOCK. The obligation of the Purchaser hereunder to acquire and
pay for the Stock at the Closing is subject to the satisfaction, at or before
the Closing Date, of each of the following conditions. Each of these
conditions is for the Purchaser's sole benefit and may be waived by the
Purchaser at any time in its sole discretion.
(a) ACCURACY OF THE COMPANYS REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Company contained in this Agreement
shall be true and correct as of the date when made and as of the Closing Date
as though made at such time.
(b) PERFORMANCE BY THE COMPANY. The Company shall have
performed, satisfied and complied in all respects with all covenants,
agreements and conditions required by this Agreement to be performed,
satisfied or complied with by the Company at or prior to the Closing.
(c) NO INJUNCTION. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction which prohibits or adversely effects any of the transactions
contemplated by this Agreement, and no proceeding shall have been commenced
which may have the effect of prohibiting or adversely affecting any of the
transactions contemplated by this Agreement.
(d) OFFICER'S CERTIFICATE. The Company shall have delivered
to the Purchaser a certificate in such form and substance as shall be
reasonably satisfactory to the Purchaser, executed by an executive officer of
the Company as of the Closing Date, to the effect that all of the conditions
to the Closing shall have been satisfied.
(e) CERTIFICATE AND DOCUMENTS. The Company shall have
delivered to the Purchaser:
2.
<PAGE>
(i) the Certificate of Incorporation of the Company, as
amended and in effect as of the date of the Closing certified by the
Secretary of State of the State of Delaware;
(ii) certificates, as of the most recent practicable
dates, as to the corporate good standing of the Company issued by the
Secretary of State of the State of Delaware and the Secretary of State of the
State of California;
(iii) the By-laws of the Company, as amended and in
effect as of the date of the Closing, certified by the Secretary of the
Company; and
(iv) resolutions of the Board of Directors of the
Company authorizing and approving all matters in connection with this
Agreement and the transactions contemplated hereby, certified by the
Secretary of the Company as of the Closing Date.
(f) OTHER MATTERS. All corporate and other proceedings in
connection with the transactions contemplated by this Agreement and all
documents and instruments incident to such transactions shall be reasonably
satisfactory in substance and form to the Purchaser and its counsel, and the
Purchaser and its counsel shall have received all such counterpart originals
or certified or other copies of such documents as they may reasonably request.
2. REPRESENTATIONS AND WARRANTIES OF PURCHASER
The Purchaser represents and warrants to the Company that:
2.1 NO GOVERNMENT RECOMMENDATION OR APPROVAL. The Purchaser
understands that no United States federal or state agency, or similar agency
of any other country has passed upon or made any recommendation or
endorsement of the Company or the offering of the Stock.
2.2 INTENT. The Purchaser is purchasing the Stock for its own
account and not with a view towards distribution and the Purchaser has no
present arrangement (whether or not legally binding) at any time to sell the
Stock to or through any person or entity; provided, however, that by making
the representations herein, the Purchaser does not agree to hold the Stock
for any minimum or other specific term and reserves the right to dispose of
the Stock at any time in accordance with Federal and state securities laws
applicable to such disposition. The Purchaser understands that the Stock
must be held indefinitely unless such Stock is subsequently registered under
the Securities Act or an exemption from registration is available. The
Purchaser has been advised or is aware of the provisions of Rule 144
promulgated under the Securities Act.
2.3 SOPHISTICATED INVESTOR. The Purchaser is a sophisticated
investor (as described in Rule 506(b)(2)(ii) of Regulation D) and an
accredited investor (as defined in Rule 501 of Regulation D), and the
Purchaser has such experience in business and financial matters that it is
capable of evaluating the merits and risks of an investment in the Stock.
The Purchaser acknowledges that the investment in the Stock is speculative
and involves a high degree of risk.
3.
<PAGE>
2.4 INDEPENDENT INVESTIGATION. The Purchaser, in making its
decision to purchase the Stock subscribed for hereunder, has relied upon an
independent investigation made by it and/or its representatives and has not
relied on any oral or written representations or assurances from the Company
or any representative or agent of the Company, other than as set forth in
this Agreement and in the public filings of the Company. Prior to the date
hereof, the Purchaser has been furnished with and has reviewed the Company's
latest proxy statement and Annual Report on Form 10-K sent to the Company's
stockholders and all documents filed by the Company since the year ended
December 31, 1998 pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), (such
documents are collectively referred to in this Agreement as the "Exchange Act
Reports"). The Purchaser has had a reasonable opportunity to ask questions
of and receive answers from the Company concerning the Company and the
offering of securities and has received satisfactory answers to all inquiries
it has made with respect to the Company and the Stock. The Purchaser
acknowledges the price and terms of the Stock offered hereby has been
determined by negotiation and does not necessarily bear any relationship to
the assets, book value or potential performance of the Company or any other
recognized criteria of value.
2.5 AUTHORITY. This Agreement has been duly authorized and
validly executed, and delivered by the Purchaser and is a valid and binding
agreement enforceable in accordance with its terms, subject to general
principles of equity and to bankruptcy or other laws affecting the
enforcement of creditors' rights generally.
2.6 NO LEGAL ADVICE FROM COMPANY. The Purchaser acknowledges that
it has had the opportunity to review this Agreement and the transactions
contemplated by this Agreement with his or its own legal counsel and tax
advisors. Except for any statements or representations of the Company made
in this Agreement and in the Exchange Act Reports, the Purchaser is relying
solely on such counsel and advisors and not on any statements or
representations of the Company or any of its representative or agents for
legal, tax or investment advice with respect to this investment, the
transactions contemplated by this Agreement or the securities laws of any
jurisdiction.
2.7 NO BROKERS. The Purchaser has taken no action which would
give rise to any claim by any person for brokerage commission, finders fees
or similar payments by the Company relating to this Agreement or the
transactions contemplated hereby.
2.8 NOT AN AFFILIATE. Prior to the Closing, the Purchaser has not
been an officer, director or "affiliate" (as that term is defined in Rule 405
of the Securities Act) of the Company.
2.9 RELIANCE ON REPRESENTATIONS AND WARRANTIES. The Purchaser
understands that the Stock is being offered and sold to it in reliance on
specific provisions of United States federal and state securities laws and
that the Company is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and understandings
of the Purchaser set forth in this Agreement in order to determine the
applicability of such provisions.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
4.
<PAGE>
Subject to and except as disclosed by the Company in APPENDIX A annexed
hereto (the "Disclosure Schedule"), the Company represents and warrants to
the Purchaser that:
3.1 COMPANY STATUS. The Company has registered the Common Stock
pursuant to Section 12(b) or 12(g) of the Exchange Act and is in full
compliance with all reporting requirements of the Exchange Act.
3.2 CURRENT PUBLIC INFORMATION. The Exchange Act Reports include
all the filings made by the Company since the year ended December 31, 1998
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act.
3.3 NO DIRECTED SELLING EFFORTS OR GENERAL SOLICITATION IN REGARD
TO THIS TRANSACTION. Neither the Company nor any of its affiliates nor any
distributor or any person acting on its or their behalf has conducted any
"directed selling efforts" with respect to the Stock, nor have they made any
offers or sales of any security or solicited any offers to buy any security,
under circumstances that would require registration of the offer, issuance
and sale of the Stock under the Securities Act.
3.4 CAPITALIZATION; ISSUANCE OF SHARES.
(a) As of the date of this Agreement, the authorized capital
stock of the Company consists of 65,000,000 shares of Common Stock, of which
4,171,072 shares are issued and outstanding, and 2,000,000 shares of
preferred stock, of which 1,000,000 shares have been designated Series B
Preferred Stock, 18,003 shares of which shares are issued and outstanding,
300,000 shares of which have been designated Series C Preferred Stock all of
which are issued or outstanding and 420,000 shares of which have been
designated Series C-1 Preferred Stock, none of which are issued and
outstanding but up to all of which is issuable upon conversion of that
certain Convertible Promissory Note dated May 25, 1999 issued to Actel
Corporation. All of the issued and outstanding shares of Preferred Stock and
Common Stock have been duly and validly issued and are fully paid and
non-assessable. Except as set forth in Section 3.4 of the Disclosure
Schedule (i) no subscription, warrant, option, convertible security or other
right (contingent or otherwise) to purchase or acquire any shares of capital
stock of the Company is authorized or outstanding, (ii) the Company has no
obligation (contingent or otherwise) to issue any subscription, warrant,
option, convertible security or other such right or to issue or distribute to
holders of any shares of its capital stock any evidences of indebtedness or
assets of the Company, and (iii) the Company has no obligation (contingent or
otherwise) to purchase, redeem or otherwise acquire any shares of its capital
stock or any interest therein or to pay any dividend or make any other
distribution in respect thereof.
(b) The issuance, sale and delivery of the Stock in
accordance with this Agreement have been duly authorized by all necessary
corporate and stockholder action on the part of the Company and all such
shares shall be duly reserved for issuance.
3.5 ORGANIZAT10N AND QUALIFICATION. The Company is a corporation
duly incorporated and existing in good standing under the laws of the State
of Delaware and has the requisite corporate power to own its properties and
to carry on its business as now being conducted. The Company does not have
any subsidiaries, except for those listed in
5.
<PAGE>
its Annual Report on Form 10-K (or the exhibits attached thereto) filed with
the SEC for the year ended December 31, 1998. The Company and each such
subsidiary is duly qualified as a foreign corporation to do business and is
in good standing in every jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary other
than those in which the failure so to qualify would not have a Material
Adverse Change (as defined below). References to the "Company" in this
Agreement shall also include each subsidiary of the Company, except where the
context otherwise requires.
3.6 AUTHORIZATION; ENFORCEMENT. (i) The Company has the requisite
corporate power and authority to enter into and perform this Agreement and to
issue the Stock in accordance with the terms hereof and thereof, (ii) the
execution, issuance and delivery of this Agreement and the Common Stock by
the Company, and the consummation by the Company of the transactions
contemplated hereby, have been duly authorized by all necessary corporate
action, and no further consent or authorization of the Company or its Board
of Directors or stockholders is required, (iii) this Agreement has been duly
executed and delivered by the Company, and upon execution, issuance and
delivery thereof shall be a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, or
similar laws relating to, or affecting generally the enforcement of,
creditors' rights and remedies or by other equitable principles of general
application.
3.7 CORPORATE DOCUMEENTS. The Company has furnished or made
available to the Purchaser true and correct copies of the Company's
Certificate of Incorporation, as in effect on the date hereof (the
"Certificate"), and the Company's By-Laws, as in effect on the date hereof
(the "By-Laws").
3.8 NO CONFLICTS. The execution, delivery and performance of this
Agreement and the sale and issuance of the Stock by the Company, do not and
will not result in a violation of or conflict with the Certificate or
By-Laws, or result in a violation of any Federal, state, local or foreign
law, rule, regulation, order, judgment or decree (including federal and state
securities laws and regulations) applicable to the Company or any of its
subsidiaries or by which any property or asset of the Company or any of its
- -subsidiaries is bound or affected, except for such conflicts and violations
as would not, individually or in the aggregate, have a Material Adverse
Change. The business of the Company is not being conducted in violation of
any law, ordinance or regulations of any governmental entity, except for
possible violations which either singly or in the aggregate do not and will
not have a Material Adverse Change. The Company is not required under
Federal, state or local law, rule or regulation in the United States to
obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency in order for it to
execute, deliver or perform any of its obligations under this Agreement or
issue and sell the Stock in accordance with the terms hereof and thereof
(other than any SEC, NASD, Exchange or state securities filings which may be
required to be made by the Company subsequent to the Closing, and any
registration statement which may be filed pursuant hereto); provided that,
for purposes of the representation made in this sentence, the Company is
assuming and relying upon the accuracy of the relevant representations and
agreements of the Purchaser herein.
6.
<PAGE>
3.9 EXCHANGE ACT REPORTS; FINANCIAL STATEMENTS. The Company has
delivered or made available to the Purchaser true and complete copies of the
Exchange Act Reports (including, without limitation, proxy information and
solicitation materials). As of their respective dates, the Exchange Act
Reports complied in all material respects with the requirements of the
Exchange Act and rules and regulations of the SEC promulgated thereunder and
other Federal, state and local laws, rules and regulations applicable to such
Exchange Act Reports, and none of the Exchange Act Reports contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the Exchange
Act Reports comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC or
other applicable rules and regulations with respect thereto. Such financial
statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods
involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto or (ii) in the case of unaudited interim
statements, to the extent they may not include footnotes or may be condensed
or summary statements) and fairly present the financial condition of the
Company as of the dates thereof and the results of operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal year-end audit adjustments which in the aggregate will not be
material).
3.10 NO MATERIAL ADVERSE CHANGE. Since June 30, 1999, there has
been no material adverse change in the business, operations, properties,
prospects, condition, financial or otherwise, net worth, or results of
operations of the Company or its subsidiaries, except as described in the
Exchange Act Reports and the Disclosure Schedule ("Material Adverse Change").
3.11 NO UNDISCLOSED LIABILITIES. The Company and its subsidiaries
have no liabilities or obligations of any type, which in the aggregate exceed
$100,000, that are not fully reflected or disclosed in the Exchange Act
Reports, other than contractual liabilities and those incurred in the
ordinary course of the Company's or its subsidiaries' respective businesses
since June 30, 1999.
3.12 NO UNDISCLOSED EVENTS OR CIRCUMSTANCES. No event or
circumstance has occurred or exists with respect to the Company or its
subsidiaries or their respective businesses, properties, prospects,
operations or condition, financial or otherwise, which, under applicable law,
rule or regulation, requires disclosure in the Exchange Act Reports or public
disclosure prior to the date hereof by the Company and which has not been so
disclosed.
3.13 NO BROKERS. The Company has taken no action which would give
rise to any claim by any person for brokerage commissions, finder's fees or
similar payments by the Purchaser relating to this Agreement or the
transactions contemplated hereby.
3.14 LITIGATION. There is no action, suit or proceeding, or
governmental inquiry or investigation, pending, or, to the best of the
Company's knowledge, any basis therefor or threat thereof, against the
Company, which questions the validity of this Agreement or the
7.
<PAGE>
right of the Company to enter into it, or which might result, either
individually or in the aggregate, in a Material Adverse Change.
3.15 INTELLECTUAL PROPERTY. To the best of its knowledge, the
Company owns or possesses sufficient legal rights to all patents, trademarks,
service marks, trade names, copyrights, trade secrets, licenses, information
and other proprietary rights and processes necessary for its business as now
conducted and as presently proposed to be conducted, without any known
infringement of the rights of others The business conducted or proposed by
the Company does not and will not cause the Company to infringe or violate
any of the patents, trademarks, service marks, trade names, copyrights,
licenses, trade secrets or other intellectual property rights of any other
person or entity. The Company is not aware that any employee is obligated
under any contract (including any license, covenant or commitment of any
nature), or subject to any judgment, decree or order of any court or
administrative agency, that would conflict or interfere with (i) the
performance of employee's duties as an officer, employee or director of the
Company, (ii) the use of such employee's best efforts to promote the
interests of the Company or (iii) the Company's business as conducted or
proposed to be conducted. No other person or entity (including without
limitation any prior employer of any employee of the Company) has any right
to or interest in any inventions, improvements, discoveries or other
confidential information utilized by the Company in its business.
3.16 MATERIAL CONTRACTS AND OBLIGATIONS. Section 3.16 of the
Disclosure Schedule lists each material agreement to which the Company is a
party or subject, including without limitation all material employment and
consulting agreements, employee benefit, bonus, pension, profit-sharing,
stock option, stock purchase and similar plans and arrangements, and
distributor and sales representative agreements. The Disclosure Schedule
lists each agreement with any stockholder, officer or director of the
Company, or any "affiliate" or "associate" of such persons (as such terms are
defined in the rules and regulations promulgated under the Securities Act),
including without limitation any agreement or other arrangement providing for
the furnishing of services by, rental of real or personal property from, or
otherwise requiring payments to, any such person or entity and any agreement
relating to the Intellectual Property Rights. The Company has delivered to
counsel to the Purchaser copies of all of the foregoing agreements. All of
such agreements and contracts are valid, binding and in full force and effect.
3.17 EMPLOYEES. All employees of the Company whose employment
responsibility requires access to confidential or proprietary information of
the Company have executed and delivered nondisclosure and assignment of
invention agreements and all of such agreements are in full force and effect.
3.18 ERISA. The Company does not have or otherwise contribute to
or participate in any employee benefit plan subject to the Employee
Retirement Income Security Act of 1974.
3.19 BOOKS AND RECORDS. The minute books of the Company contain
complete and accurate records of all meetings and other corporate actions of
its stockholders and its Board of Directors and committees thereof. The
Company has delivered to counsel to the Purchaser copies of all of the
minutes of all meetings and other corporate actions of its
8.
<PAGE>
stockholders and its Board of Directors and committees thereof held or taken
since January 1, 1996.
4. COVENANTS
4.1 LISTING OF SHARES. The Company agrees, if the Company applies
to have its Common Stock traded on any principal stock exchange or market, it
will include the Stock in such application and will take such other action as
is necessary or desirable to cause the Stock to be listed on such other
exchange or market as promptly as possible.
4.2 EXCHANGE ACT REGISTRATION. The Company will cause its Common
Stock to continue to be registered under Section 12(g) or 12(b) of the
Exchange Act, will comply in all respects with its reporting and filing
obligations under the Exchange Act, and will not take any action or file any
document (whether or not permitted by the Exchange Act or the rules
thereunder) to terminate or suspend such registration or to terminate or
suspend its reporting and filing obligations under the Exchange Act. The
Company will take all action under its control to continue the listing and
trading of its Common Stock on the Exchange.
4.3 CORPORATE EXISTENCE. The Company will take all steps
necessary to preserve and continue the corporate existence of the Company.
4.4 SALE OF SHARES UNDER RULE 144. From and after the Closing, at
the request of any holder of Shares (or other Registrable Securities (as
defined in the Registration Rights Agreement)) who proposes to sell the same
in compliance with Rule 144 under the Securities Act, the Company shall (a)
promptly furnish to such holder a written statement as to its compliance with
the filing requirements of the SEC as set forth in Rule 144, as the same may
be amended from time to time, and (b) make such additional filings of reports
with the SEC as will enable the holders of Registrable Securities to make
sales thereof pursuant to such Rule. The Company shall provide its transfer
agent with appropriate instructions and/or opinions of counsel in order for
any restrictive legend contained on the certificates for the Shares (or other
Registrable Securities) to be removed when appropriate and for such holders
to sell, transfer and/or dispose of the Registrable Securities in accordance
with Rule 144.
5. LEGENDS
5.1 LEGENDS. The certificates evidencing the Stock will bear the
following legend (the "Legend"):
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR OFFERED FOR SALE
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES
UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE
EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS.
At the Closing, the Company will issue to the transfer agent for its
common stock (and to any substitute or replacement transfer agent for its
common stock coterminous with the Company's appointment of any such
substitute or replacement transfer agent) irrevocable
9.
<PAGE>
instructions in form and substance reasonably satisfactory to the Purchaser.
It is the intent and purpose of such instructions to require the transfer
agent for the common stock from time to time to issue certificates evidencing
the Shares free of the Legend during the following period and under the
following circumstances and without consultation by the transfer agent with
Company or its counsel and without the need for any further advice or
instruction to the transfer agent by or from the Company or its counsel:
(a) At any time from and after the Closing Date, upon any
surrender of one or more certificates evidencing Stock and which bear the
Legend, to the extent accompanied by a notice requesting the issuance of new
certificates free of the Legend to replace those surrendered and containing
or also accompanied by representations that (i) the holder thereof is
permitted to dispose thereof pursuant to Rule 144 promulgated under the
Securities Act or (ii) the holder intends to effect the sale or other
disposition of such securities to a purchaser or purchasers who will not be
subject to the registration requirements of the Securities Act, or (iii) such
holder is not then subject to such requirements.
5.2 NO OTHER LEGEND OR STOCK TRANSFER RESTRICTIONS. No legend has
been or shall be placed on the share certificates representing the Stock and
no instructions or "stop transfers," so called, "stock transfer
restrictions," so called, or other restrictions have been or shall be given
to the Company's transfer agent with respect thereto, other than as set forth
in this Section 5.
5.3 PURCHASER'S COMPLIANCE. Nothing in this section shall affect
in any way the Purchaser's obligations under and agreement to comply with all
applicable securities laws upon resale of the Stock.
6. CHOICE OF LAW AND VENUE
THIS AGREEMENT SHALL BE CONSTRUED UNDER THE LAWS OF THE STATE OF
CALIFORNIA, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW OR CHOICE OF
LAW, EXCEPT TO THE EXTENT THAT THE LAW OF THE STATE OF DELAWARE REGULATES THE
COMPANY'S ISSUANCE OF SECURITTES.
7. ASSIGNNIENT; ENTIRE AGREEMENT; AMENDMENT
7.1 ASSIGNMENT. This Agreement may not be assigned by the
Purchaser or the Company to any other person or entity. Notwithstanding the
foregoing, the provisions of this Agreement shall inure to the benefit of,
and be enforceable by, any entity which shall succeed to all or substantially
all of the assets and liabilities of Purchaser by merger or purchase.
7.2 ENTIRE AGREEMENT; AMENDMENT. This Agreement, and the other
agreements and documents delivered pursuant hereto constitute the full and
entire understanding and agreement between the parties with regard to the
subject hereof and thereof and supersede all prior agreements and
understandings relating to such subject matter, and no party shall be liable
or bound to any other party in any manner by any warranties, representations
or covenants except as specifically set forth in this Agreement or therein.
Except as expressly provided in this Agreement, neither this Agreement nor
any term hereof may be amended, waived, discharged or
10.
<PAGE>
terminated other than by a written instrument signed by the party against
whom enforcement of any such amendment, waiver, discharge or termination is
sought.
8. NOTICES, ETC.; EXPENSES; INDEMNITY
8.1 NOTICES. Any notice, demand, request or other communication
required or permitted to be given by either the Company or the Purchaser
pursuant to the terms of this Agreement shall be in writing and shall be
deemed to have been duly given when delivered personally or by facsimile,
with a hard copy to follow by overnight delivery by a reputable courier.
If to the Company, at: GateField Corporation, 47436 Fremont Boulevard,
Fremont, CA 94538-6503, Attention: President, Facsimile No: (510) 623-4484,
or at such other address or addresses as may have been finished in writing by
the Company to the Purchaser, with a copy to Eric C. Jensen, Esq., Cooley
Godward LLP, 5 Palo Alto Square, 4th Floor, 3000 El Camino Real, Palo Alto,
California 94306-2155, Facsimile No: (650) 857-0663; or
If to the Purchaser, at: MHT American Holding, Inc., 10-1 Komine, 2
chome, Yahatanishi-ku, Kitakyushu 806-5888 Japan, Attention: President, or at
such other address or addresses as may have been furnished to the Company in
writing by such Purchaser, with copies to: David Fowler, Mitsui High-tec
Inc., 10-1 Komine, 2 chome, Yahatanishi-ku, Kitakyushu 806-5888 Japan;
Yasunari Mitsui, MHT America Holdings, Inc., 1500 #B East higgins Road, Elk
Grove Village, Illinois 60007-1607.
8.2 INDEMNIFICATION. Each party ("Indemnifying Party") shall
indemnify the other party against any loss, liabilities, expenses, cost or
damages (including reasonable attorney's fees) incurred as a result of the
Indemnifying Party's breach of any representation, warranty, covenant or
agreement in this Agreement.
9. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which shall be enforceable against the parties actually executing such
counterparts, and all of which together shall constitute one instrument.
10. SURVIVAL; SEVERABILITY
The representations, warranties, covenants and agreements of the parties
hereto shall survive the Closing. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force
and effect without said provision; provided that the absence of such
provision does not materially change the economic benefit of this Agreement
to any party.
11. TITLE AND SUBTITLES
The titles and subtitles used in this Agreement are used for convenience
only and are not to be considered in construing or interpreting this
Agreement.
11.
<PAGE>
IN WITNESS WHEREOF, the parties have signed this Agreement the day and year
first written above.
GATEFIELD CORPORATION
By: Timothy Saxe
----------------------------
(Print Name)
By: /s/ Timothy Saxe
----------------------------
(Signed Name)
Title: President & CEO
-------------------------
(Position, if applicable)
PURCHASER:
MHT AMERICAN HOLDINGS, INC.
By: Satoshi Nagata
----------------------------
(Print Name)
By: /s/ Satoshi Nagata
----------------------------
(Signed Name)
Title: President
-------------------------
(Position, if applicable)
12.
<PAGE>
EXHIBIT 4.3
COMMON STOCK PURCHASE AGREEMENT
This Common Stock Purchase Agreement (the "Agreement") dated as of
September 30, 1999, is entered into by and among GateField Corporation, a
Delaware corporation with offices at 47436 Fremont Blvd., Fremont, California
94538-6503 (the "Company"), and Actel Corporation, a California corporation
with offices at 955 East Arques Avenue, Sunnyvale, California 94086-4533,
(the "Purchaser"), in connection with the purchase of 112,129 shares of the
Company's Common Stock, par value $.10 (the "Stock"), to be sold to the
Purchaser at the Closing (as defined below). The solicitation of this
Agreement and the offer and sale of the Stock are being made in reliance upon
the provisions of Regulation D ("Regulation D") promulgated by the Securities
and Exchange Commission ("SEC") under the United States Securities Act of
1933, as amended (the "Securities Act") or upon the provisions of Section
4(2) of the Securities Act.
In consideration of the mutual promises, representations, warranties and
conditions set forth herein, and intending to be legally bound hereby, the
Company and the Purchaser agree as follows:
1. PURCHASE AND SALE OF STOCK; CLOSING CONDITIONS
1.1 PURCHASE AND SALE OF STOCK.
(A) PURCHASE OF STOCK. The Purchaser hereby agrees to
purchase and the Company agrees to sell to the Purchaser 112,129 shares of
Stock at a price of $6.499922 per share for the aggregate purchase price of
$728,829.75 (the "Purchase Price"). The closing of the purchase of such
Stock shall take place at the "Closing," subject to the satisfaction (or
waiver) of the conditions thereto set forth in Sections 1.2 and 1.3 below:
(B) PAYMENT AND DELIVERY OF STOCK CERTIFICATES. On the
Closing Date (as defined below), (i) the Purchaser shall pay the Purchase
Price by wire transfer of immediately available funds to the Company, in
accordance with the Company's written instructions, against delivery of duly
executed stock certificates which the Purchaser is then purchasing and (ii)
the Company shall deliver to the Purchaser such stock certificates against
delivery of the Purchase Price.
(C) CLOSING DATES. Subject to the satisfaction (or waiver)
of the conditions thereto set forth in Sections 1.2 and 1.3 below, the date
and time of the issuance and sale of the Stock pursuant to this Agreement
(the "Closing Date") shall be 9:00 am. Pacific Daylight Time on September 30,
1999 or at such time as the parties may mutually agree upon.
1.2 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY TO ISSUE
AND SELL THE STOCK. The obligation hereunder of the Company to issue and
sell the Stock to the Purchaser at the Closing is subject to the
satisfaction, at or before the Closing, of each of the conditions set forth
below. These conditions are for the Company's sole benefit and may be waived
by the Company at any time in its sole discretion.
1.
<PAGE>
(A) ACCURACY OF THE PURCHASER'S REPRESENTATIONS AND
WARRANTIES. The representations and warranties of the Purchaser contained in
this Agreement shall be true and correct as of the date when made and as of
the Closing Date as though made at such time.
(B) PERFORMANCE BY THE PURCHASER. The Purchaser shall have
performed, satisfied and complied in all respects with all covenants,
agreements and conditions required by this Agreement to be performed,
satisfied or complied with by the Purchaser at or prior to the Closing.
(C) NO INJUNCTION. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction which prohibits or adversely affects any of the transactions
contemplated by this Agreement, and no proceeding shall have been commenced
which may have the effect of prohibiting or adversely affecting any of the
transactions contemplated by this Agreement.
1.3 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE PURCHASER TO
ACQUIRE THE STOCK. The obligation of the Purchaser hereunder to acquire and
pay for the Stock at the Closing is subject to the satisfaction, at or before
the Closing Date, of each of the following conditions. Each of these
conditions is for the Purchaser's sole benefit and may be waived by the
Purchaser at any time in its sole discretion.
(A) ACCURACY OF THE COMPANYS REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Company contained in this Agreement
shall be true and correct as of the date when made and as of the Closing Date
as though made at such time.
(B) PERFORMANCE BY THE COMPANY. The Company shall have
performed, satisfied and complied in all respects with all covenants,
agreements and conditions required by this Agreement to be performed,
satisfied or complied with by the Company at or prior to the Closing.
(C) NO INJUNCTION. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction which prohibits or adversely effects any of the transactions
contemplated by this Agreement, and no proceeding shall have been commenced
which may have the effect of prohibiting or adversely affecting any of the
transactions contemplated by this Agreement.
(D) OFFICER'S CERTIFICATE. The Company shall have delivered
to the Purchaser a certificate in such form and substance as shall be
reasonably satisfactory to the Purchaser, executed by an executive officer of
the Company as of the Closing Date, to the effect that all of the conditions
to the Closing shall have been satisfied.
(E) CERTIFICATE AND DOCUMENTS. The Company shall have
delivered to the Purchaser:
2.
<PAGE>
(I) the Certificate of Incorporation of the Company, as
amended and in effect as of the date of the Closing certified by the
Secretary of State of the State of Delaware;
(II) certificates, as of the most recent practicable
dates, as to the corporate good standing of the Company issued by the
Secretary of State of the State of Delaware and the Secretary of State of the
State of California;
(III) the By-laws of the Company, as amended and in
effect as of the date of the Closing, certified by the Secretary of the
Company; and
(IV) resolutions of the Board of Directors of the
Company authorizing and approving all matters in connection with this
Agreement and the transactions contemplated hereby, certified by the
Secretary of the Company as of the Closing Date.
(F) OTHER MATTERS. All corporate and other proceedings in
connection with the transactions contemplated by this Agreement and all
documents and instruments incident to such transactions shall be reasonably
satisfactory in substance and form to the Purchaser and its counsel, and the
Purchaser and its counsel shall have received all such counterpart originals
or certified or other copies of such documents as they may reasonably request.
2. REPRESENTATIONS AND WARRANTIES OF PURCHASER
The Purchaser represents and warrants to the Company that:
2.1 NO GOVERNMENT RECOMMENDATION OR APPROVAL. The Purchaser
understands that no United States federal or state agency, or similar agency
of any other country has passed upon or made any recommendation or
endorsement of the Company or the offering of the Stock.
2.2 INTENT. The Purchaser is purchasing the Stock for its own
account and not with a view towards distribution and the Purchaser has no
present arrangement (whether or not legally binding) at any time to sell the
Stock to or through any person or entity; provided, however, that by making
the representations herein, the Purchaser does not agree to hold the Stock
for any minimum or other specific term and reserves the right to dispose of
the Stock at any time in accordance with Federal and state securities laws
applicable to such disposition. The Purchaser understands that the Stock
must be held indefinitely unless such Stock is subsequently registered under
the Securities Act or an exemption from registration is available. The
Purchaser has been advised or is aware of the provisions of Rule 144
promulgated under the Securities Act.
2.3 SOPHISTICATED INVESTOR. The Purchaser is a sophisticated
investor (as described in Rule 506(b)(2)(ii) of Regulation D) and an
accredited investor (as defined in Rule 501 of Regulation D), and the
Purchaser has such experience in business and financial matters that it is
capable of evaluating the merits and risks of an investment in the Stock.
The Purchaser acknowledges that the investment in the Stock is speculative
and involves a high degree of risk.
3.
<PAGE>
2.4 INDEPENDENT INVESTIGATION. The Purchaser, in making its
decision to purchase the Stock subscribed for hereunder, has relied upon an
independent investigation made by it and/or its representatives and has not
relied on any oral or written representations or assurances from the Company
or any representative or agent of the Company, other than as set forth in
this Agreement and in the public filings of the Company. Prior to the date
hereof, the Purchaser has been furnished with and has reviewed the Company's
latest proxy statement and Annual Report on Form 10-K sent to the Company's
stockholders and all documents filed by the Company since the year ended
December 31, 1998 pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), (such
documents are collectively referred to in this Agreement as the "Exchange Act
Reports"). The Purchaser has had a reasonable opportunity to ask questions
of and receive answers from the Company concerning the Company and the
offering of securities and has received satisfactory answers to all inquiries
it has made with respect to the Company and the Stock. The Purchaser
acknowledges the price and terms of the Stock offered hereby has been
determined by negotiation and does not necessarily bear any relationship to
the assets, book value or potential performance of the Company or any other
recognized criteria of value.
2.5 AUTHORITY. This Agreement has been duly authorized and
validly executed, and delivered by the Purchaser and is a valid and binding
agreement enforceable in accordance with its terms, subject to general
principles of equity and to bankruptcy or other laws affecting the
enforcement of creditors' rights generally.
2.6 NO LEGAL ADVICE FROM COMPANY. The Purchaser acknowledges that
it has had the opportunity to review this Agreement and the transactions
contemplated by this Agreement with his or its own legal counsel and tax
advisors. Except for any statements or representations of the Company made
in this Agreement or in the Exchange Act Reports, the Purchaser is relying
solely on such counsel and advisors and not on any statements or
representations of the Company or any of its representative or agents for
legal, tax or investment advice with respect to this investment, the
transactions contemplated by this Agreement or the securities laws of any
jurisdiction.
2.7 NO BROKERS. The Purchaser has taken no action which would
give rise to any claim by any person for brokerage commission, finders fees
or similar payments by the Company relating to this Agreement or the
transactions contemplated hereby.
2.8 (This space left intentionally blank)
2.9 RELIANCE ON REPRESENTATIONS AND WARRANTIES. The Purchaser
understands that the Stock is being offered and sold to it in reliance on
specific provisions of United States federal and state securities laws and
that the Company is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and understandings
of the Purchaser set forth in this Agreement in order to determine the
applicability of such provisions.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
4.
<PAGE>
Subject to and except as disclosed by the Company in APPENDIX A annexed
hereto (the "Disclosure Schedule"), the Company represents and warrants to
the Purchaser that:
3.1 COMPANY STATUS. The Company has registered the Common Stock
pursuant to Section 12(b) or 12(g) of the Exchange Act and is in full
compliance with all reporting requirements of the Exchange Act.
3.2 CURRENT PUBLIC INFORMATION. The Exchange Act Reports include
all the filings made by the Company since the year ended December 31, 1998
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act.
3.3 NO DIRECTED SELLING EFFORTS OR GENERAL SOLICITATION IN REGARD
TO THIS TRANSACTION. Neither the Company nor any of its affiliates nor any
distributor or any person acting on its or their behalf has conducted any
"directed selling efforts" with respect to the Stock, nor have they made any
offers or sales of any security or solicited any offers to buy any security,
under circumstances that would require registration of the offer, issuance
and sale of the Stock under the Securities Act.
3.4 CAPITALIZATION; ISSUANCE OF SHARES.
(A) As of the date of this Agreement, the authorized capital
stock of the Company consists of 65,000,000 shares of Common Stock, of which
4,171,072 shares are issued and outstanding, and 2,000,000 shares of
preferred stock, of which 1,000,000 shares have been designated Series B
Preferred Stock, 18,003 shares of which shares are issued and outstanding,
300,000 shares of which have been designated Series C Preferred Stock all of
which are issued or outstanding and 420,000 shares of which have been
designated Series C-1 Preferred Stock, none of which are issued and
outstanding but up to all of which is issuable upon conversion of that
certain Convertible Promissory Note dated May 25, 1999 issued to Actel
Corporation. All of the issued and outstanding shares of Preferred Stock and
Common Stock have been duly and validly issued and are fully paid and
non-assessable. Except as set forth in Section 3.4 of the Disclosure
Schedule (i) no subscription, warrant, option, convertible security or other
right (contingent or otherwise) to purchase or acquire any shares of capital
stock of the Company is authorized or outstanding, (ii) the Company has no
obligation (contingent or otherwise) to issue any subscription, warrant,
option, convertible security or other such right or to issue or distribute to
holders of any shares of its capital stock any evidences of indebtedness or
assets of the Company, and (iii) the Company has no obligation (contingent or
otherwise) to purchase, redeem or otherwise acquire any shares of its capital
stock or any interest therein or to pay any dividend or make any other
distribution in respect thereof.
(B) The issuance, sale and delivery of the Stock in
accordance with this Agreement have been duly authorized by all necessary
corporate and stockholder action on the part of the Company and all such
shares shall be duly reserved for issuance.
3.5 ORGANIZAT10N AND QUALIFICATION. The Company is a corporation
duly incorporated and existing in good standing under the laws of the State
of Delaware and has the requisite corporate power to own its properties and
to carry on its business as now being conducted. The Company does not have
any subsidiaries, except for those listed in
5.
<PAGE>
its Annual Report on Form 10-K (or the exhibits attached thereto) filed with
the SEC for the year ended December 31, 1998. The Company and each such
subsidiary is duly qualified as a foreign corporation to do business and is
in good standing in every jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary other
than those in which the failure so to qualify would not have a Material
Adverse Change (as defined below). References to the "Company" in this
Agreement shall also include each subsidiary of the Company, except where the
context otherwise requires.
3.6 AUTHORIZATION; ENFORCEMENT. (i) The Company has the requisite
corporate power and authority to enter into and perform this Agreement and to
issue the Stock in accordance with the terms hereof and thereof, (ii) the
execution, issuance and delivery of this Agreement and the Common Stock by
the Company, and the consummation by the Company of the transactions
contemplated hereby, have been duly authorized by all necessary corporate
action, and no further consent or authorization of the Company or its Board
of Directors or stockholders is required, (iii) this Agreement has been duly
executed and delivered by the Company, and upon execution, issuance and
delivery thereof shall be a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, or
similar laws relating to, or affecting generally the enforcement of,
creditors' rights and remedies or by other equitable principles of general
application.
3.7 CORPORATE DOCUMEENTS. The Company has furnished or made
available to the Purchaser true and correct copies of the Company's
Certificate of Incorporation, as in effect on the date hereof (the
"Certificate"), and the Company's By-Laws, as in effect on the date hereof
(the "By-Laws").
3.8 NO CONFLICTS. The execution, delivery and performance of this
Agreement and the sale and issuance of the Stock by the Company, do not and
will not result in a violation of or conflict with the Certificate or
By-Laws, or result in a violation of any Federal, state, local or foreign
law, rule, regulation, order, judgment or decree (including federal and state
securities laws and regulations) applicable to the Company or any of its
subsidiaries or by which any property or asset of the Company or any of its
- -subsidiaries is bound or affected, except for such conflicts and violations
as would not, individually or in the aggregate, have a Material Adverse
Change. The business of the Company is not being conducted in violation of
any law, ordinance or regulations of any governmental entity, except for
possible violations which either singly or in the aggregate do not and will
not have a Material Adverse Change. The Company is not required under
Federal, state or local law, rule or regulation in the United States to
obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency in order for it to
execute, deliver or perform any of its obligations under this Agreement or
issue and sell the Stock in accordance with the terms hereof and thereof
(other than any SEC, NASD, Exchange or state securities filings which may be
required to be made by the Company subsequent to the Closing, and any
registration statement which may be filed pursuant hereto); provided that,
for purposes of the representation made in this sentence, the Company is
assuming and relying upon the accuracy of the relevant representations and
agreements of the Purchaser herein.
6.
<PAGE>
3.9 EXCHANGE ACT REPORTS; FINANCIAL STATEMENTS. The Company has
delivered or made available to the Purchaser true and complete copies of the
Exchange Act Reports (including, without limitation, proxy information and
solicitation materials). As of their respective dates, the Exchange Act
Reports complied in all material respects with the requirements of the
Exchange Act and rules and regulations of the SEC promulgated thereunder and
other Federal, state and local laws, rules and regulations applicable to such
Exchange Act Reports, and none of the Exchange Act Reports contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the Exchange
Act Reports comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC or
other applicable rules and regulations with respect thereto. Such financial
statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods
involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto or (ii) in the case of unaudited interim
statements, to the extent they may not include footnotes or may be condensed
or summary statements) and fairly present the financial condition of the
Company as of the dates thereof and the results of operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal year-end audit adjustments which in the aggregate will not be
material).
3.10 NO MATERIAL ADVERSE CHANGE. Since June 30, 1999, there has
been no material adverse change in the business, operations, properties,
prospects, condition, financial or otherwise, net worth, or results of
operations of the Company or its subsidiaries, except as described in the
Exchange Act Reports and the Disclosure Schedule ("Material Adverse Change").
3.11 NO UNDISCLOSED LIABILITIES. The Company and its subsidiaries
have no liabilities or obligations of any type, which in the aggregate exceed
$100,000, that are not fully reflected or disclosed in the Exchange Act
Reports, other than contractual liabilities and those incurred in the
ordinary course of the Company's or its subsidiaries' respective businesses
since June 30, 1999.
3.12 NO UNDISCLOSED EVENTS OR CIRCUMSTANCES. No event or
circumstance has occurred or exists with respect to the Company or its
subsidiaries or their respective businesses, properties, prospects,
operations or condition, financial or otherwise, which, under applicable law,
rule or regulation, requires disclosure in the Exchange Act Reports or public
disclosure prior to the date hereof by the Company and which has not been so
disclosed.
3.13 NO BROKERS. The Company has taken no action which would give
rise to any claim by any person for brokerage commissions, finder's fees or
similar payments by the Purchaser relating to this Agreement or the
transactions contemplated hereby.
3.14 LITIGATION. There is no action, suit or proceeding, or
governmental inquiry or investigation, pending, or, to the best of the
Company's knowledge, any basis therefor or threat thereof, against the
Company, which questions the validity of this Agreement or the
7.
<PAGE>
right of the Company to enter into it, or which might result, either
individually or in the aggregate, in a Material Adverse Change.
3.15 INTELLECTUAL PROPERTY. To the best of its knowledge, the
Company owns or possesses sufficient legal rights to all patents, trademarks,
service marks, trade names, copyrights, trade secrets, licenses, information
and other proprietary rights and processes necessary for its business as now
conducted and as presently proposed to be conducted, without any known
infringement of the rights of others The business conducted or proposed by
the Company does not and will not cause the Company to infringe or violate
any of the patents, trademarks, service marks, trade names, copyrights,
licenses, trade secrets or other intellectual property rights of any other
person or entity. The Company is not aware that any employee is obligated
under any contract (including any license, covenant or commitment of any
nature), or subject to any judgment, decree or order of any court or
administrative agency, that would conflict or interfere with (i) the
performance of employee's duties as an officer, employee or director of the
Company, (ii) the use of such employee's best efforts to promote the
interests of the Company or (iii) the Company's business as conducted or
proposed to be conducted. No other person or entity (including without
limitation any prior employer of any employee of the Company) has any right
to or interest in any inventions, improvements, discoveries or other
confidential information utilized by the Company in its business.
3.16 MATERIAL CONTRACTS AND OBLIGATIONS. Section 3.16 of the
Disclosure Schedule lists each material agreement to which the Company is a
party or subject, including without limitation all material employment and
consulting agreements, employee benefit, bonus, pension, profit-sharing,
stock option, stock purchase and similar plans and arrangements, and
distributor and sales representative agreements. The Disclosure Schedule
lists each agreement with any stockholder, officer or director of the
Company, or any "affiliate" or "associate" of such persons (as such terms are
defined in the rules and regulations promulgated under the Securities Act),
including without limitation any agreement or other arrangement providing for
the furnishing of services by, rental of real or personal property from, or
otherwise requiring payments to, any such person or entity and any agreement
relating to the Intellectual Property Rights. The Company has delivered to
counsel to the Purchaser copies of all of the foregoing agreements. All of
such agreements and contracts are valid, binding and in full force and effect.
3.17 EMPLOYEES. All employees of the Company whose employment
responsibility requires access to confidential or proprietary information of
the Company have executed and delivered nondisclosure and assignment of
invention agreements and all of such agreements are in full force and effect.
3.18 ERISA. The Company does not have or otherwise contribute to
or participate in any employee benefit plan subject to the Employee
Retirement Income Security Act of 1974.
3.19 BOOKS AND RECORDS. The minute books of the Company contain
complete and accurate records of all meetings and other corporate actions of
its
8.
<PAGE>
stockholders and its Board of Directors and committees thereof. The Company
has delivered to counsel to the Purchaser copies of all of the minutes of all
meetings and other corporate actions of its stockholders and its Board of
Directors and committees thereof held or taken since January 1, 1996.
4. COVENANTS
4.1 LISTING OF SHARES. The Company agrees, if the Company applies
to have its Common Stock traded on any principal stock exchange or market, it
will include the Stock in such application and will take such other action as
is necessary or desirable to cause the Stock to be listed on such other
exchange or market as promptly as possible.
4.2 EXCHANGE ACT REGISTRATION. The Company will cause its Common
Stock to continue to be registered under Section 12(g) or 12(b) of the
Exchange Act, will comply in all respects with its reporting and filing
obligations under the Exchange Act, and will not take any action or file any
document (whether or not permitted by the Exchange Act or the rules
thereunder) to terminate or suspend such registration or to terminate or
suspend its reporting and filing obligations under the Exchange Act. The
Company will take all action under its control to continue the listing and
trading of its Common Stock on the Exchange.
4.3 CORPORATE EXISTENCE. The Company will take all steps
necessary to preserve and continue the corporate existence of the Company.
4.4 SALE OF SHARES UNDER RULE 144. From and after the Closing, at
the request of any holder of Stock who proposes to sell the same in
compliance with Rule 144 under the Securities Act, the Company shall (a)
promptly furnish to such holder a written statement as to its compliance with
the filing requirements of the SEC as set forth in Rule 144, as the same may
be amended from time to time, and (b) make such additional filings of reports
with the SEC as will enable the holder of such Stock to make sales thereof
pursuant to such Rule. The Company shall provide its transfer agent with
appropriate instructions and/or opinions of counsel in order for any
restrictive legend contained on the certificates for the Stock to be removed
when appropriate and for such holder to sell, transfer and/or dispose of such
Stock in accordance with Rule 144.
5. LEGENDS
5.1 LEGENDS. The certificates evidencing the Stock will bear the
following legend (the "Legend"):
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR OFFERED FOR SALE
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES
UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE
EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS.
At the Closing, the Company will issue to the transfer agent for its
common stock (and to any substitute or replacement transfer agent for its
common stock coterminous with the Company's appointment of any such
substitute or replacement transfer agent) irrevocable
9.
<PAGE>
instructions in form and substance reasonably satisfactory to the Purchaser.
It is the intent and purpose of such instructions to require the transfer
agent for the common stock from time to time to issue certificates evidencing
the Shares free of the Legend during the following period and under the
following circumstances and without consultation by the transfer agent with
Company or its counsel and without the need for any further advice or
instruction to the transfer agent by or from the Company or its counsel:
(A) At any time from and after the Closing Date, upon any
surrender of one or more certificates evidencing Stock and which bear the
Legend, to the extent accompanied by a notice requesting the issuance of new
certificates free of the Legend to replace those surrendered and containing
or also accompanied by representations that (i) the holder thereof is
permitted to dispose thereof pursuant to Rule 144 promulgated under the
Securities Act or (ii) the holder intends to effect the sale or other
disposition of such securities to a purchaser or purchasers who will not be
subject to the registration requirements of the Securities Act, or (iii) such
holder is not then subject to such requirements.
5.2 NO OTHER LEGEND OR STOCK TRANSFER RESTRICTIONS. No legend has
been or shall be placed on the share certificates representing the Stock and
no instructions or "stop transfers," so called, "stock transfer
restrictions," so called, or other restrictions have been or shall be given
to the Company's transfer agent with respect thereto, other than as set forth
in this Section 5.
5.3 PURCHASER'S COMPLIANCE. Nothing in this section shall affect
in any way the Purchaser's obligations under and agreement to comply with all
applicable securities laws upon resale of the Stock.
6. CHOICE OF LAW AND VENUE
THIS AGREEMENT SHALL BE CONSTRUED UNDER THE LAWS OF THE STATE OF
CALIFORNIA, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW OR CHOICE OF
LAW, EXCEPT TO THE EXTENT THAT THE LAW OF THE STATE OF DELAWARE REGULATES THE
COMPANY'S ISSUANCE OF SECURITTES.
7. ASSIGNNIENT; ENTIRE AGREEMENT; AMENDMENT
7.1 ASSIGNMENT. This Agreement may not be assigned by the
Purchaser or the Company to any other person or entity. Notwithstanding the
foregoing, the provisions of this Agreement shall inure to the benefit of,
and be enforceable by, any entity which shall succeed to all or substantially
all of the assets and liabilities of Purchaser by merger or purchase.
7.2 ENTIRE AGREEMENT; AMENDMENT. This Agreement, and the other
agreements and documents delivered pursuant hereto constitute the full and
entire understanding and agreement between the parties with regard to the
subject hereof and thereof and supersede all prior agreements and
understandings relating to such subject matter, and no party shall be liable
or bound to any other party in any manner by any warranties, representations
or covenants except as specifically set forth in this Agreement or therein.
Except as expressly provided in this Agreement, neither this Agreement nor
any term hereof may be amended, waived, discharged or
10.
<PAGE>
terminated other than by a written instrument signed by the party against
whom enforcement of any such amendment, waiver, discharge or termination is
sought.
8. NOTICES, ETC.; EXPENSES; INDEMNITY
8.1 NOTICES. Any notice, demand, request or other communication
required or permitted to be given by either the Company or the Purchaser
pursuant to the terms of this Agreement shall be in writing and shall be
deemed to have been duly given when delivered personally or by facsimile,
with a hard copy to follow by overnight delivery by a reputable courier.
If to the Company, at: GateField Corporation, 47436 Fremont Boulevard,
Fremont, CA 94538-6503, Attention: President, Facsimile No: (510) 623-4484,
or at such other address or addresses as may have been finished in writing by
the Company to the Purchaser, with a copy to Eric C. Jensen, Esq., Cooley
Godward LLP, 5 Palo Alto Square, 4th Floor, 3000 El Camino Real, Palo Alto,
California 94306-2155, Facsimile No: (650) 857-0663; or
If to the Purchaser, at: Actel Corporation, 955 East Arques Avenue,
Sunnnyvale, California 94086, Attention: President, or at such other address
or addresses as may have been furnished to the Company in writing by such
Purchaser, with a copy to: Henry P. Massey, Jr., Esq., Wilson Sonsini
Goodrich & Rosati, 650 Page Mill Road, Palo Alto, California 94304, Facsimile
No: (650) 493-6811.
8.2 INDEMNIFICATION. Each party ("Indemnifying Party") shall
indemnify the other party against any loss, liabilities, expenses, cost or
damages (including reasonable attorney's fees) incurred as a result of the
Indemnifying Party's breach of any representation, warranty, covenant or
agreement in this Agreement.
9. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which shall be enforceable against the parties actually executing such
counterparts, and all of which together shall constitute one instrument.
10. SURVIVAL; SEVERABILITY
The representations, warranties, covenants and agreements of the parties
hereto shall survive the Closing. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force
and effect without said provision; provided that the absence of such
provision does not materially change the economic benefit of this Agreement
to any party.
11. TITLE AND SUBTITLES
The titles and subtitles used in this Agreement are used for convenience
only and are not to be considered in construing or interpreting this
Agreement.
11.
<PAGE>
IN WITNESS WHEREOF, the parties have signed this Agreement the day and
year first written above.
GATEFIELD CORPORATION
By: Timothy Saxe
---------------------------
(Print Name)
By: /s/ Timothy Saxe
---------------------------
(Signed Name)
Title: President & CEO
------------------------
(Position, if applicable)
PURCHASER:
ACTEL CORPORATION
By: John East
---------------------------
(Print Name)
By: /s/ John East
---------------------------
(Signed Name)
Title: President & CEO
------------------------
(Position, if applicable)
12.
<PAGE>
EXHIBIT 4.4
COMMON STOCK PURCHASE AGREEMENT
This Common Stock Purchase Agreement (the "Agreement") dated as of
September 30, 1999, is entered into by and among GateField Corporation, a
Delaware corporation with offices at 47436 Fremont Blvd., Fremont, California
94538-6503 (the "Company"), and Idanta Partners Limited, a Texas Limited
Partnership with offices at 4660 La Jolla Village Drive, Suite 850, San
Diego, California 92122, (the "Purchaser"), in connection with the purchase
of 40,818 shares of the Company's Common Stock, par value $.10 (the "Stock"),
to be sold to the Purchaser at the Closing (as defined below). The
solicitation of this Agreement and the offer and sale of the Stock are being
made in reliance upon the provisions of Regulation D ("Regulation D")
promulgated by the Securities and Exchange Commission ("SEC") under the
United States Securities Act of 1933, as amended (the "Securities Act") or
upon the provisions of Section 4(2) of the Securities Act.
In consideration of the mutual promises, representations, warranties and
conditions set forth herein, and intending to be legally bound hereby, the
Company and the Purchaser agree as follows:
1. PURCHASE AND SALE OF STOCK; CLOSING CONDITIONS
1.1 PURCHASE AND SALE OF STOCK.
(a) PURCHASE OF STOCK. The Purchaser hereby agrees to purchase
and the Company agrees to sell to the Purchaser 40,818 shares of Stock at a
price of $6.499922 per share for the aggregate purchase price of $265,313.82
(the "Purchase Price"). The closing of the purchase of such Stock shall take
place at the "Closing," subject to the satisfaction (or waiver) of the
conditions thereto set forth in Sections 1.2 and 1.3 below:
(b) PAYMENT AND DELIVERY OF STOCK CERTIFICATES. On the Closing
Date (as defined below), (i) the Purchaser shall pay the Purchase Price by
wire transfer of immediately available funds to the Company, in accordance
with the Company's written instructions, against delivery of duly executed
stock certificates which the Purchaser is then purchasing and (ii) the
Company shall deliver to the Purchaser such stock certificates against
delivery of the Purchase Price.
(c) CLOSING DATES. Subject to the satisfaction (or waiver) of
the conditions thereto set forth in Sections 1.2 and 1.3 below, the date and
time of the issuance and sale of the Stock pursuant to this Agreement (the
"Closing Date") shall be 9:00 am. Pacific Daylight Time on September 30, 1999
or at such time as the parties may mutually agree upon.
1.2 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY TO ISSUE
AND SELL THE STOCK. The obligation hereunder of the Company to issue and
sell the Stock to the Purchaser at the Closing is subject to the
satisfaction, at or before the Closing, of each of the conditions set forth
below. These conditions are for the Company's sole benefit and may be waived
by the Company at any time in its sole discretion.
1.
<PAGE>
(a) ACCURACY OF THE PURCHASER'S REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Purchaser contained in this
Agreement shall be true and correct as of the date when made and as of the
Closing Date as though made at such time.
(b) PERFORMANCE BY THE PURCHASER. The Purchaser shall have
performed, satisfied and complied in all respects with all covenants,
agreements and conditions required by this Agreement to be performed,
satisfied or complied with by the Purchaser at or prior to the Closing.
(c) NO INJUNCTION. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction which prohibits or adversely affects any of the transactions
contemplated by this Agreement, and no proceeding shall have been commenced
which may have the effect of prohibiting or adversely affecting any of the
transactions contemplated by this Agreement.
1.3 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE PURCHASER TO
ACQUIRE THE STOCK. The obligation of the Purchaser hereunder to acquire and
pay for the Stock at the Closing is subject to the satisfaction, at or before
the Closing Date, of each of the following conditions. Each of these
conditions is for the Purchaser's sole benefit and may be waived by the
Purchaser at any time in its sole discretion.
(a) ACCURACY OF THE COMPANYS REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Company contained in this Agreement
shall be true and correct as of the date when made and as of the Closing Date
as though made at such time.
(b) PERFORMANCE BY THE COMPANY. The Company shall have
performed, satisfied and complied in all respects with all covenants,
agreements and conditions required by this Agreement to be performed,
satisfied or complied with by the Company at or prior to the Closing.
(c) NO INJUNCTION. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction which prohibits or adversely effects any of the transactions
contemplated by this Agreement, and no proceeding shall have been commenced
which may have the effect of prohibiting or adversely affecting any of the
transactions contemplated by this Agreement.
(d) OFFICER'S CERTIFICATE. The Company shall have delivered to
the Purchaser a certificate in such form and substance as shall be reasonably
satisfactory to the Purchaser, executed by an executive officer of the
Company as of the Closing Date, to the effect that all of the conditions to
the Closing shall have been satisfied.
(e) CERTIFICATE AND DOCUMENTS. The Company shall have
delivered to the Purchaser:
2.
<PAGE>
(i) the Certificate of Incorporation of the Company, as
amended and in effect as of the date of the Closing certified by the
Secretary of State of the State of Delaware;
(ii) certificates, as of the most recent practicable
dates, as to the corporate good standing of the Company issued by the
Secretary of State of the State of Delaware and the Secretary of State of the
State of California;
(iii) the By-laws of the Company, as amended and in effect
as of the date of the Closing, certified by the Secretary of the Company; and
(iv) resolutions of the Board of Directors of the Company
authorizing and approving all matters in connection with this Agreement and
the transactions contemplated hereby, certified by the Secretary of the
Company as of the Closing Date.
(f) OTHER MATTERS. All corporate and other proceedings in
connection with the transactions contemplated by this Agreement and all
documents and instruments incident to such transactions shall be reasonably
satisfactory in substance and form to the Purchaser and its counsel, and the
Purchaser and its counsel shall have received all such counterpart originals
or certified or other copies of such documents as they may reasonably request.
2. REPRESENTATIONS AND WARRANTIES OF PURCHASER
The Purchaser represents and warrants to the Company that:
2.1 NO GOVERNMENT RECOMMENDATION OR APPROVAL. The Purchaser
understands that no United States federal or state agency, or similar agency
of any other country has passed upon or made any recommendation or
endorsement of the Company or the offering of the Stock.
2.2 INTENT. The Purchaser is purchasing the Stock for its own
account and not with a view towards distribution and the Purchaser has no
present arrangement (whether or not legally binding) at any time to sell the
Stock to or through any person or entity; provided, however, that by making
the representations herein, the Purchaser does not agree to hold the Stock
for any minimum or other specific term and reserves the right to dispose of
the Stock at any time in accordance with Federal and state securities laws
applicable to such disposition. The Purchaser understands that the Stock
must be held indefinitely unless such Stock is subsequently registered under
the Securities Act or an exemption from registration is available. The
Purchaser has been advised or is aware of the provisions of Rule 144
promulgated under the Securities Act.
2.3 SOPHISTICATED INVESTOR. The Purchaser is a sophisticated
investor (as described in Rule 506(b)(2)(ii) of Regulation D) and an
accredited investor (as defined in Rule 501 of Regulation D), and the
Purchaser has such experience in business and financial matters that it is
capable of evaluating the merits and risks of an investment in the Stock.
The Purchaser acknowledges that the investment in the Stock is speculative
and involves a high degree of risk.
3.
<PAGE>
2.4 INDEPENDENT INVESTIGATION. The Purchaser, in making its
decision to purchase the Stock subscribed for hereunder, has relied upon an
independent investigation made by it and/or its representatives and has not
relied on any oral or written representations or assurances from the Company
or any representative or agent of the Company, other than as set forth in
this Agreement and in the public filings of the Company. Prior to the date
hereof, the Purchaser has been furnished with and has reviewed the Company's
latest proxy statement and Annual Report on Form 10-K sent to the Company's
stockholders and all documents filed by the Company since the year ended
December 31, 1998 pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), (such
documents are collectively referred to in this Agreement as the "Exchange Act
Reports"). The Purchaser has had a reasonable opportunity to ask questions
of and receive answers from the Company concerning the Company and the
offering of securities and has received satisfactory answers to all inquiries
it has made with respect to the Company and the Stock. The Purchaser
acknowledges the price and terms of the Stock offered hereby has been
determined by negotiation and does not necessarily bear any relationship to
the assets, book value or potential performance of the Company or any other
recognized criteria of value.
2.5 AUTHORITY. This Agreement has been duly authorized and
validly executed, and delivered by the Purchaser and is a valid and binding
agreement enforceable in accordance with its terms, subject to general
principles of equity and to bankruptcy or other laws affecting the
enforcement of creditors' rights generally.
2.6 NO LEGAL ADVICE FROM COMPANY. The Purchaser acknowledges
that it has had the opportunity to review this Agreement and the transactions
contemplated by this Agreement with his or its own legal counsel and tax
advisors. Except for any statements or representations of the Company made
in this Agreement or in the Exchange Act Reports, the Purchaser is relying
solely on such counsel and advisors and not on any statements or
representations of the Company or any of its representative or agents for
legal, tax or investment advice with respect to this investment, the
transactions contemplated by this Agreement or the securities laws of any
jurisdiction.
2.7 NO BROKERS. The Purchaser has taken no action which would
give rise to any claim by any person for brokerage commission, finders fees
or similar payments by the Company relating to this Agreement or the
transactions contemplated hereby.
2.8 (This space left intentionally blank)
2.9 RELIANCE ON REPRESENTATIONS AND WARRANTIES. The Purchaser
understands that the Stock is being offered and sold to it in reliance on
specific provisions of United States federal and state securities laws and
that the Company is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and understandings
of the Purchaser set forth in this Agreement in order to determine the
applicability of such provisions.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
4.
<PAGE>
Subject to and except as disclosed by the Company in APPENDIX A annexed
hereto (the "Disclosure Schedule"), the Company represents and warrants to
the Purchaser that:
3.1 COMPANY STATUS. The Company has registered the Common Stock
pursuant to Section 12(b) or 12(g) of the Exchange Act and is in full
compliance with all reporting requirements of the Exchange Act.
3.2 CURRENT PUBLIC INFORMATION. The Exchange Act Reports include
all the filings made by the Company since the year ended December 31, 1998
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act.
3.3 NO DIRECTED SELLING EFFORTS OR GENERAL SOLICITATION IN REGARD
TO THIS TRANSACTION. Neither the Company nor any of its affiliates nor any
distributor or any person acting on its or their behalf has conducted any
"directed selling efforts" with respect to the Stock, nor have they made any
offers or sales of any security or solicited any offers to buy any security,
under circumstances that would require registration of the offer, issuance
and sale of the Stock under the Securities Act.
3.4 CAPITALIZATION; ISSUANCE OF SHARES.
(a) As of the date of this Agreement, the authorized capital
stock of the Company consists of 65,000,000 shares of Common Stock, of which
4,171,072 shares are issued and outstanding, and 2,000,000 shares of
preferred stock, of which 1,000,000 shares have been designated Series B
Preferred Stock, 18,003 shares of which shares are issued and outstanding,
300,000 shares of which have been designated Series C Preferred Stock all of
which are issued or outstanding and 420,000 shares of which have been
designated Series C-1 Preferred Stock, none of which are issued and
outstanding but up to all of which is issuable upon conversion of that
certain Convertible Promissory Note dated May 25, 1999 issued to Actel
Corporation. All of the issued and outstanding shares of Preferred Stock and
Common Stock have been duly and validly issued and are fully paid and
non-assessable. Except as set forth in Section 3.4 of the Disclosure
Schedule (i) no subscription, warrant, option, convertible security or other
right (contingent or otherwise) to purchase or acquire any shares of capital
stock of the Company is authorized or outstanding, (ii) the Company has no
obligation (contingent or otherwise) to issue any subscription, warrant,
option, convertible security or other such right or to issue or distribute to
holders of any shares of its capital stock any evidences of indebtedness or
assets of the Company, and (iii) the Company has no obligation (contingent or
otherwise) to purchase, redeem or otherwise acquire any shares of its capital
stock or any interest therein or to pay any dividend or make any other
distribution in respect thereof.
(b) The issuance, sale and delivery of the Stock in accordance
with this Agreement have been duly authorized by all necessary corporate and
stockholder action on the part of the Company and all such shares shall be
duly reserved for issuance.
3.5 ORGANIZAT10N AND QUALIFICATION. The Company is a corporation
duly incorporated and existing in good standing under the laws of the State
of Delaware and has the requisite corporate power to own its properties and
to carry on its business as now being conducted. The Company does not have
any subsidiaries, except for those listed in
5.
<PAGE>
its Annual Report on Form 10-K (or the exhibits attached thereto) filed with
the SEC for the year ended December 31, 1998. The Company and each such
subsidiary is duly qualified as a foreign corporation to do business and is
in good standing in every jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary other
than those in which the failure so to qualify would not have a Material
Adverse Change (as defined below). References to the "Company" in this
Agreement shall also include each subsidiary of the Company, except where the
context otherwise requires.
3.6 AUTHORIZATION; ENFORCEMENT. (i) The Company has the
requisite corporate power and authority to enter into and perform this
Agreement and to issue the Stock in accordance with the terms hereof and
thereof, (ii) the execution, issuance and delivery of this Agreement and the
Common Stock by the Company, and the consummation by the Company of the
transactions contemplated hereby, have been duly authorized by all necessary
corporate action, and no further consent or authorization of the Company or
its Board of Directors or stockholders is required, (iii) this Agreement has
been duly executed and delivered by the Company, and upon execution, issuance
and delivery thereof shall be a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, or
similar laws relating to, or affecting generally the enforcement of,
creditors' rights and remedies or by other equitable principles of general
application.
3.7 CORPORATE DOCUMEENTS. The Company has furnished or made
available to the Purchaser true and correct copies of the Company's
Certificate of Incorporation, as in effect on the date hereof (the
"Certificate"), and the Company's By-Laws, as in effect on the date hereof
(the "By-Laws").
3.8 NO CONFLICTS. The execution, delivery and performance of
this Agreement and the sale and issuance of the Stock by the Company, do not
and will not result in a violation of or conflict with the Certificate or
By-Laws, or result in a violation of any Federal, state, local or foreign
law, rule, regulation, order, judgment or decree (including federal and state
securities laws and regulations) applicable to the Company or any of its
subsidiaries or by which any property or asset of the Company or any of its
- -subsidiaries is bound or affected, except for such conflicts and violations
as would not, individually or in the aggregate, have a Material Adverse
Change. The business of the Company is not being conducted in violation of
any law, ordinance or regulations of any governmental entity, except for
possible violations which either singly or in the aggregate do not and will
not have a Material Adverse Change. The Company is not required under
Federal, state or local law, rule or regulation in the United States to
obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency in order for it to
execute, deliver or perform any of its obligations under this Agreement or
issue and sell the Stock in accordance with the terms hereof and thereof
(other than any SEC, NASD, Exchange or state securities filings which may be
required to be made by the Company subsequent to the Closing, and any
registration statement which may be filed pursuant hereto); provided that,
for purposes of the representation made in this sentence, the Company is
assuming and relying upon the accuracy of the relevant representations and
agreements of the Purchaser herein.
6.
<PAGE>
3.9 EXCHANGE ACT REPORTS; FINANCIAL STATEMENTS. The Company has
delivered or made available to the Purchaser true and complete copies of the
Exchange Act Reports (including, without limitation, proxy information and
solicitation materials). As of their respective dates, the Exchange Act
Reports complied in all material respects with the requirements of the
Exchange Act and rules and regulations of the SEC promulgated thereunder and
other Federal, state and local laws, rules and regulations applicable to such
Exchange Act Reports, and none of the Exchange Act Reports contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the Exchange
Act Reports comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC or
other applicable rules and regulations with respect thereto. Such financial
statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods
involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto or (ii) in the case of unaudited interim
statements, to the extent they may not include footnotes or may be condensed
or summary statements) and fairly present the financial condition of the
Company as of the dates thereof and the results of operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal year-end audit adjustments which in the aggregate will not be
material).
3.10 NO MATERIAL ADVERSE CHANGE. Since June 30, 1999, there has
been no material adverse change in the business, operations, properties,
prospects, condition, financial or otherwise, net worth, or results of
operations of the Company or its subsidiaries, except as described in the
Exchange Act Reports and the Disclosure Schedule ("Material Adverse Change").
3.11 NO UNDISCLOSED LIABILITIES. The Company and its subsidiaries
have no liabilities or obligations of any type, which in the aggregate exceed
$100,000, that are not fully reflected or disclosed in the Exchange Act
Reports, other than contractual liabilities and those incurred in the
ordinary course of the Company's or its subsidiaries' respective businesses
since June 30, 1999.
3.12 NO UNDISCLOSED EVENTS OR CIRCUMSTANCES. No event or
circumstance has occurred or exists with respect to the Company or its
subsidiaries or their respective businesses, properties, prospects,
operations or condition, financial or otherwise, which, under applicable law,
rule or regulation, requires disclosure in the Exchange Act Reports or public
disclosure prior to the date hereof by the Company and which has not been so
disclosed.
3.13 NO BROKERS. The Company has taken no action which would give
rise to any claim by any person for brokerage commissions, finder's fees or
similar payments by the Purchaser relating to this Agreement or the
transactions contemplated hereby.
3.14 LITIGATION. There is no action, suit or proceeding, or
governmental inquiry or investigation, pending, or, to the best of the
Company's knowledge, any basis therefor or threat thereof, against the
Company, which questions the validity of this Agreement or the
7.
<PAGE>
right of the Company to enter into it, or which might result, either
individually or in the aggregate, in a Material Adverse Change.
3.15 INTELLECTUAL PROPERTY. To the best of its knowledge, the
Company owns or possesses sufficient legal rights to all patents, trademarks,
service marks, trade names, copyrights, trade secrets, licenses, information
and other proprietary rights and processes necessary for its business as now
conducted and as presently proposed to be conducted, without any known
infringement of the rights of others The business conducted or proposed by
the Company does not and will not cause the Company to infringe or violate
any of the patents, trademarks, service marks, trade names, copyrights,
licenses, trade secrets or other intellectual property rights of any other
person or entity. The Company is not aware that any employee is obligated
under any contract (including any license, covenant or commitment of any
nature), or subject to any judgment, decree or order of any court or
administrative agency, that would conflict or interfere with (i) the
performance of employee's duties as an officer, employee or director of the
Company, (ii) the use of such employee's best efforts to promote the
interests of the Company or (iii) the Company's business as conducted or
proposed to be conducted. No other person or entity (including without
limitation any prior employer of any employee of the Company) has any right
to or interest in any inventions, improvements, discoveries or other
confidential information utilized by the Company in its business.
3.16 MATERIAL CONTRACTS AND OBLIGATIONS. Section 3.16 of the
Disclosure Schedule lists each material agreement to which the Company is a
party or subject, including without limitation all material employment and
consulting agreements, employee benefit, bonus, pension, profit-sharing,
stock option, stock purchase and similar plans and arrangements, and
distributor and sales representative agreements. The Disclosure Schedule
lists each agreement with any stockholder, officer or director of the
Company, or any "affiliate" or "associate" of such persons (as such terms are
defined in the rules and regulations promulgated under the Securities Act),
including without limitation any agreement or other arrangement providing for
the furnishing of services by, rental of real or personal property from, or
otherwise requiring payments to, any such person or entity and any agreement
relating to the Intellectual Property Rights. The Company has delivered to
counsel to the Purchaser copies of all of the foregoing agreements. All of
such agreements and contracts are valid, binding and in full force and effect.
3.17 EMPLOYEES. All employees of the Company whose employment
responsibility requires access to confidential or proprietary information of
the Company have executed and delivered nondisclosure and assignment of
invention agreements and all of such agreements are in full force and effect.
3.18 ERISA. The Company does not have or otherwise contribute to
or participate in any employee benefit plan subject to the Employee
Retirement Income Security Act of 1974.
3.19 BOOKS AND RECORDS. The minute books of the Company contain
complete and accurate records of all meetings and other corporate actions of
its stockholders and its Board of Directors and committees thereof. The
Company has delivered to counsel to the Purchaser copies of all of the
minutes of all meetings and other corporate actions of its
8.
<PAGE>
stockholders and its Board of Directors and committees thereof held or taken
since January 1, 1996.
4. COVENANTS
4.1 LISTING OF SHARES. The Company agrees, if the Company applies
to have its Common Stock traded on any principal stock exchange or market, it
will include the Stock in such application and will take such other action as
is necessary or desirable to cause the Stock to be listed on such other
exchange or market as promptly as possible.
4.2 EXCHANGE ACT REGISTRATION. The Company will cause its Common
Stock to continue to be registered under Section 12(g) or 12(b) of the
Exchange Act, will comply in all respects with its reporting and filing
obligations under the Exchange Act, and will not take any action or file any
document (whether or not permitted by the Exchange Act or the rules
thereunder) to terminate or suspend such registration or to terminate or
suspend its reporting and filing obligations under the Exchange Act. The
Company will take all action under its control to continue the listing and
trading of its Common Stock on the Exchange.
4.3 CORPORATE EXISTENCE. The Company will take all steps
necessary to preserve and continue the corporate existence of the Company.
4.4 SALE OF SHARES UNDER RULE 144. From and after the Closing,
at the request of any holder of Stock who proposes to sell the same in
compliance with Rule 144 under the Securities Act, the Company shall (a)
promptly furnish to such holder a written statement as to its compliance with
the filing requirements of the SEC as set forth in Rule 144, as the same may
be amended from time to time, and (b) make such additional filings of reports
with the SEC as will enable the holder of such Stock to make sales thereof
pursuant to such Rule. The Company shall provide its transfer agent with
appropriate instructions and/or opinions of counsel in order for any
restrictive legend contained on the certificates for the Stock to be removed
when appropriate and for such holder to sell, transfer and/or dispose of such
Stock in accordance with Rule 144.
5. LEGENDS
5.1 LEGENDS. The certificates evidencing the Stock will bear the
following legend (the "Legend"):
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR OFFERED FOR SALE
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES
UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE
EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS.
At the Closing, the Company will issue to the transfer agent for its
common stock (and to any substitute or replacement transfer agent for its
common stock coterminous with the Company's appointment of any such
substitute or replacement transfer agent) irrevocable instructions in form
and substance reasonably satisfactory to the Purchaser. It is the intent and
9.
<PAGE>
purpose of such instructions to require the transfer agent for the common
stock from time to time to issue certificates evidencing the Shares free of
the Legend during the following period and under the following circumstances
and without consultation by the transfer agent with Company or its counsel
and without the need for any further advice or instruction to the transfer
agent by or from the Company or its counsel:
(a) At any time from and after the Closing Date, upon any
surrender of one or more certificates evidencing Stock and which bear the
Legend, to the extent accompanied by a notice requesting the issuance of new
certificates free of the Legend to replace those surrendered and containing
or also accompanied by representations that (i) the holder thereof is
permitted to dispose thereof pursuant to Rule 144 promulgated under the
Securities Act or (ii) the holder intends to effect the sale or other
disposition of such securities to a purchaser or purchasers who will not be
subject to the registration requirements of the Securities Act, or (iii) such
holder is not then subject to such requirements.
5.2 NO OTHER LEGEND OR STOCK TRANSFER RESTRICTIONS. No legend
has been or shall be placed on the share certificates representing the Stock
and no instructions or "stop transfers," so called, "stock transfer
restrictions," so called, or other restrictions have been or shall be given
to the Company's transfer agent with respect thereto, other than as set forth
in this Section 5.
5.3 PURCHASER'S COMPLIANCE. Nothing in this section shall affect
in any way the Purchaser's obligations under and agreement to comply with all
applicable securities laws upon resale of the Stock.
6. CHOICE OF LAW AND VENUE
THIS AGREEMENT SHALL BE CONSTRUED UNDER THE LAWS OF THE STATE OF
CALIFORNIA, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW OR CHOICE OF
LAW, EXCEPT TO THE EXTENT THAT THE LAW OF THE STATE OF DELAWARE REGULATES THE
COMPANY'S ISSUANCE OF SECURITTES.
7. ASSIGNNIENT; ENTIRE AGREEMENT; AMENDMENT
7.1 ASSIGNMENT. This Agreement may not be assigned by the
Purchaser or the Company to any other person or entity. Notwithstanding the
foregoing, the provisions of this Agreement shall inure to the benefit of,
and be enforceable by, any entity which shall succeed to all or substantially
all of the assets and liabilities of Purchaser by merger or purchase.
7.2 ENTIRE AGREEMENT; AMENDMENT. This Agreement, and the other
agreements and documents delivered pursuant hereto constitute the full and
entire understanding and agreement between the parties with regard to the
subject hereof and thereof and supersede all prior agreements and
understandings relating to such subject matter, and no party shall be liable
or bound to any other party in any manner by any warranties, representations
or covenants except as specifically set forth in this Agreement or therein.
Except as expressly provided in this Agreement, neither this Agreement nor
any term hereof may be amended, waived, discharged or terminated other than
by a written instrument signed by the party against whom enforcement of any
such amendment, waiver, discharge or termination is sought.
10.
<PAGE>
8. NOTICES, ETC.; EXPENSES; INDEMNITY
8.1 NOTICES. Any notice, demand, request or other communication
required or permitted to be given by either the Company or the Purchaser
pursuant to the terms of this Agreement shall be in writing and shall be
deemed to have been duly given when delivered personally or by facsimile,
with a hard copy to follow by overnight delivery by a reputable courier.
If to the Company, at: GateField Corporation, 47436 Fremont Boulevard,
Fremont, CA 94538-6503, Attention: President, Facsimile No: (510) 623-4484,
or at such other address or addresses as may have been finished in writing by
the Company to the Purchaser, with a copy to Eric C. Jensen, Esq., Cooley
Godward LLP, 5 Palo Alto Square, 4th Floor, 3000 El Camino Real, Palo Alto,
California 94306-2155, Facsimile No: (650) 857-0663; or
If to the Purchaser, at: Idanta Partners Ltd., 4660 La Jolla Village
Drive, Suite 850, San Diego, California 92122, Attention: General Partner,
Facsimile No: (858) 452-2013 or at such other address or addresses as may
have been furnished to the Company in writing by such Purchaser.
INDEMNIFICATION. Each party ("Indemnifying Party") shall indemnify the
other party against any loss, liabilities, expenses, cost or damages
(including reasonable attorney's fees) incurred as a result of the
Indemnifying Party's breach of any representation, warranty, covenant or
agreement in this Agreement.
9. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which shall be enforceable against the parties actually executing such
counterparts, and all of which together shall constitute one instrument.
10. SURVIVAL; SEVERABILITY
The representations, warranties, covenants and agreements of the parties
hereto shall survive the Closing. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force
and effect without said provision; provided that the absence of such
provision does not materially change the economic benefit of this Agreement
to any party.
11. TITLE AND SUBTITLES
The titles and subtitles used in this Agreement are used for convenience
only and are not to be considered in construing or interpreting this
Agreement.
(This space left intentionally blank).
11.
<PAGE>
IN WITNESS WHEREOF, the parties have signed this Agreement the day and year
first written above.
GATEFIELD CORPORATION
By: TIMOTHY SAXE
----------------------------
(Print Name)
By: /s/ Timothy Saxe
----------------------------
(Signed Name)
Title: PRESIDENT & CEO
-------------------------
(Position, if applicable)
PURCHASER:
IDANTA PARTNERS LTD.
By: JONATHAN S. HUBERMAN
----------------------------
(Print Name)
By: /s/ Jonathan S. Huberman
----------------------------
(Signed Name)
Title: GENERAL PARTNER
-------------------------
(Position, if applicable)
12.
<PAGE>
EXHIBIT 4.5
COMMON STOCK PURCHASE AGREEMENT
This Common Stock Purchase Agreement (the "Agreement") dated as of
September 30, 1999, is entered into by and among GateField Corporation, a
Delaware corporation with offices at 47436 Fremont Blvd., Fremont, California
94538-6503 (the "Company"), and the Dunn Family Trust, a California Trust with
offices at 4660 La Jolla Village Drive, Suite 850, San Diego, California 92122,
(the "Purchaser"), in connection with the purchase of 10,407 shares of the
Company's Common Stock, par value $.10 (the "Stock"), to be sold to the
Purchaser at the Closing (as defined below). The solicitation of this Agreement
and the offer and sale of the Stock are being made in reliance upon the
provisions of Regulation D ("Regulation D") promulgated by the Securities and
Exchange Commission ("SEC") under the United States Securities Act of 1933, as
amended (the "Securities Act") or upon the provisions of Section 4(2) of the
Securities Act.
In consideration of the mutual promises, representations, warranties and
conditions set forth herein, and intending to be legally bound hereby, the
Company and the Purchaser agree as follows:
1. PURCHASE AND SALE OF STOCK; CLOSING CONDITIONS
1.1 PURCHASE AND SALE OF STOCK.
(a) PURCHASE OF STOCK. The Purchaser hereby agrees to purchase
and the Company agrees to sell to the Purchaser 10,407 shares of Stock at a
price of $6.499922 per share for the aggregate purchase price of $67,644.69 (the
"Purchase Price"). The closing of the purchase of such Stock shall take place
at the "Closing," subject to the satisfaction (or waiver) of the conditions
thereto set forth in Sections 1.2 and 1.3 below:
(b) PAYMENT AND DELIVERY OF STOCK CERTIFICATES. On the Closing
Date (as defined below), (i) the Purchaser shall pay the Purchase Price by wire
transfer of immediately available funds to the Company, in accordance with the
Company's written instructions, against delivery of duly executed stock
certificates which the Purchaser is then purchasing and (ii) the Company shall
deliver to the Purchaser such stock certificates against delivery of the
Purchase Price.
(c) CLOSING DATES. Subject to the satisfaction (or waiver) of
the conditions thereto set forth in Sections 1.2 and 1.3 below, the date and
time of the issuance and sale of the Stock pursuant to this Agreement (the
"Closing Date") shall be 9:00 am. Pacific Daylight Time on September 30, 1999 or
at such time as the parties may mutually agree upon.
1.2 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY TO ISSUE
AND SELL THE STOCK. The obligation hereunder of the Company to issue and sell
the Stock to the Purchaser at the Closing is subject to the satisfaction, at or
before the Closing, of each of the conditions set forth below. These conditions
are for the Company's sole benefit and may be waived by the Company at any time
in its sole discretion.
1.
<PAGE>
(a) ACCURACY OF THE PURCHASER'S REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Purchaser contained in this Agreement
shall be true and correct as of the date when made and as of the Closing Date as
though made at such time.
(b) PERFORMANCE BY THE PURCHASER. The Purchaser shall have
performed, satisfied and complied in all respects with all covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by the Purchaser at or prior to the Closing.
(c) NO INJUNCTION. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction which prohibits or adversely affects any of the transactions
contemplated by this Agreement, and no proceeding shall have been commenced
which may have the effect of prohibiting or adversely affecting any of the
transactions contemplated by this Agreement.
1.3 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE PURCHASER TO
ACQUIRE THE STOCK. The obligation of the Purchaser hereunder to acquire and pay
for the Stock at the Closing is subject to the satisfaction, at or before the
Closing Date, of each of the following conditions. Each of these conditions is
for the Purchaser's sole benefit and may be waived by the Purchaser at any time
in its sole discretion.
(a) ACCURACY OF THE COMPANYS REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Company contained in this Agreement
shall be true and correct as of the date when made and as of the Closing Date as
though made at such time.
(b) PERFORMANCE BY THE COMPANY. The Company shall have
performed, satisfied and complied in all respects with all covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by the Company at or prior to the Closing.
(c) NO INJUNCTION. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction which prohibits or adversely effects any of the transactions
contemplated by this Agreement, and no proceeding shall have been commenced
which may have the effect of prohibiting or adversely affecting any of the
transactions contemplated by this Agreement.
(d) OFFICER'S CERTIFICATE. The Company shall have delivered to
the Purchaser a certificate in such form and substance as shall be reasonably
satisfactory to the Purchaser, executed by an executive officer of the Company
as of the Closing Date, to the effect that all of the conditions to the Closing
shall have been satisfied.
(e) CERTIFICATE AND DOCUMENTS. The Company shall have delivered
to the Purchaser:
2.
<PAGE>
(i) the Certificate of Incorporation of the Company, as
amended and in effect as of the date of the Closing certified by the Secretary
of State of the State of Delaware;
(ii) certificates, as of the most recent practicable dates,
as to the corporate good standing of the Company issued by the Secretary of
State of the State of Delaware and the Secretary of State of the State of
California;
(iii) the By-laws of the Company, as amended and in effect
as of the date of the Closing, certified by the Secretary of the Company; and
(iv) resolutions of the Board of Directors of the Company
authorizing and approving all matters in connection with this Agreement and the
transactions contemplated hereby, certified by the Secretary of the Company as
of the Closing Date.
(f) OTHER MATTERS. All corporate and other proceedings in
connection with the transactions contemplated by this Agreement and all
documents and instruments incident to such transactions shall be reasonably
satisfactory in substance and form to the Purchaser and its counsel, and the
Purchaser and its counsel shall have received all such counterpart originals or
certified or other copies of such documents as they may reasonably request.
2. REPRESENTATIONS AND WARRANTIES OF PURCHASER
The Purchaser represents and warrants to the Company that:
2.1 NO GOVERNMENT RECOMMENDATION OR APPROVAL. The Purchaser
understands that no United States federal or state agency, or similar agency of
any other country has passed upon or made any recommendation or endorsement of
the Company or the offering of the Stock.
2.2 INTENT. The Purchaser is purchasing the Stock for its own
account and not with a view towards distribution and the Purchaser has no
present arrangement (whether or not legally binding) at any time to sell the
Stock to or through any person or entity; provided, however, that by making the
representations herein, the Purchaser does not agree to hold the Stock for any
minimum or other specific term and reserves the right to dispose of the Stock at
any time in accordance with Federal and state securities laws applicable to such
disposition. The Purchaser understands that the Stock must be held indefinitely
unless such Stock is subsequently registered under the Securities Act or an
exemption from registration is available. The Purchaser has been advised or is
aware of the provisions of Rule 144 promulgated under the Securities Act.
2.3 SOPHISTICATED INVESTOR. The Purchaser is a sophisticated
investor (as described in Rule 506(b)(2)(ii) of Regulation D) and an accredited
investor (as defined in Rule 501 of Regulation D), and the Purchaser has such
experience in business and financial matters that it is capable of evaluating
the merits and risks of an investment in the Stock. The Purchaser acknowledges
that the investment in the Stock is speculative and involves a high degree of
risk.
3.
<PAGE>
2.4 INDEPENDENT INVESTIGATION. The Purchaser, in making its decision
to purchase the Stock subscribed for hereunder, has relied upon an independent
investigation made by it and/or its representatives and has not relied on any
oral or written representations or assurances from the Company or any
representative or agent of the Company, other than as set forth in this
Agreement and in the public filings of the Company. Prior to the date hereof,
the Purchaser has been furnished with and has reviewed the Company's latest
proxy statement and Annual Report on Form 10-K sent to the Company's
stockholders and all documents filed by the Company since the year ended
December 31, 1998 pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), (such
documents are collectively referred to in this Agreement as the "Exchange Act
Reports"). The Purchaser has had a reasonable opportunity to ask questions of
and receive answers from the Company concerning the Company and the offering of
securities and has received satisfactory answers to all inquiries it has made
with respect to the Company and the Stock. The Purchaser acknowledges the price
and terms of the Stock offered hereby has been determined by negotiation and
does not necessarily bear any relationship to the assets, book value or
potential performance of the Company or any other recognized criteria of value.
2.5 AUTHORITY. This Agreement has been duly authorized and validly
executed, and delivered by the Purchaser and is a valid and binding agreement
enforceable in accordance with its terms, subject to general principles of
equity and to bankruptcy or other laws affecting the enforcement of creditors'
rights generally.
2.6 NO LEGAL ADVICE FROM COMPANY. The Purchaser acknowledges that it
has had the opportunity to review this Agreement and the transactions
contemplated by this Agreement with his or its own legal counsel and tax
advisors. Except for any statements or representations of the Company made in
this Agreement or in the Exchange Act Reports, the Purchaser is relying solely
on such counsel and advisors and not on any statements or representations of the
Company or any of its representative or agents for legal, tax or investment
advice with respect to this investment, the transactions contemplated by this
Agreement or the securities laws of any jurisdiction.
2.7 NO BROKERS. The Purchaser has taken no action which would give
rise to any claim by any person for brokerage commission, finders fees or
similar payments by the Company relating to this Agreement or the transactions
contemplated hereby.
2.8 (This space left intentionally blank)
2.9 RELIANCE ON REPRESENTATIONS AND WARRANTIES. The Purchaser
understands that the Stock is being offered and sold to it in reliance on
specific provisions of United States federal and state securities laws and that
the Company is relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgments and understandings of the Purchaser set
forth in this Agreement in order to determine the applicability of such
provisions.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
4.
<PAGE>
Subject to and except as disclosed by the Company in APPENDIX A annexed
hereto (the "Disclosure Schedule"), the Company represents and warrants to the
Purchaser that:
3.1 COMPANY STATUS. The Company has registered the Common Stock
pursuant to Section 12(b) or 12(g) of the Exchange Act and is in full compliance
with all reporting requirements of the Exchange Act.
3.2 CURRENT PUBLIC INFORMATION. The Exchange Act Reports include all
the filings made by the Company since the year ended December 31, 1998 pursuant
to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act.
3.3 NO DIRECTED SELLING EFFORTS OR GENERAL SOLICITATION IN REGARD TO
THIS TRANSACTION. Neither the Company nor any of its affiliates nor any
distributor or any person acting on its or their behalf has conducted any
"directed selling efforts" with respect to the Stock, nor have they made any
offers or sales of any security or solicited any offers to buy any security,
under circumstances that would require registration of the offer, issuance and
sale of the Stock under the Securities Act.
3.4 CAPITALIZATION; ISSUANCE OF SHARES.
(a) As of the date of this Agreement, the authorized capital
stock of the Company consists of 65,000,000 shares of Common Stock, of which
4,171,072 shares are issued and outstanding, and 2,000,000 shares of preferred
stock, of which 1,000,000 shares have been designated Series B Preferred Stock,
18,003 shares of which shares are issued and outstanding, 300,000 shares of
which have been designated Series C Preferred Stock all of which are issued or
outstanding and 420,000 shares of which have been designated Series C-1
Preferred Stock, none of which are issued and outstanding but up to all of which
is issuable upon conversion of that certain Convertible Promissory Note dated
May 25, 1999 issued to Actel Corporation. All of the issued and outstanding
shares of Preferred Stock and Common Stock have been duly and validly issued and
are fully paid and non-assessable. Except as set forth in Section 3.4 of the
Disclosure Schedule (i) no subscription, warrant, option, convertible security
or other right (contingent or otherwise) to purchase or acquire any shares of
capital stock of the Company is authorized or outstanding, (ii) the Company has
no obligation (contingent or otherwise) to issue any subscription, warrant,
option, convertible security or other such right or to issue or distribute to
holders of any shares of its capital stock any evidences of indebtedness or
assets of the Company, and (iii) the Company has no obligation (contingent or
otherwise) to purchase, redeem or otherwise acquire any shares of its capital
stock or any interest therein or to pay any dividend or make any other
distribution in respect thereof.
(b) The issuance, sale and delivery of the Stock in accordance
with this Agreement have been duly authorized by all necessary corporate and
stockholder action on the part of the Company and all such shares shall be duly
reserved for issuance.
3.5 ORGANIZAT10N AND QUALIFICATION. The Company is a corporation
duly incorporated and existing in good standing under the laws of the State of
Delaware and has the requisite corporate power to own its properties and to
carry on its business as now being conducted. The Company does not have any
subsidiaries, except for those listed in
5.
<PAGE>
its Annual Report on Form 10-K (or the exhibits attached thereto) filed with
the SEC for the year ended December 31, 1998. The Company and each such
subsidiary is duly qualified as a foreign corporation to do business and is
in good standing in every jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary other
than those in which the failure so to qualify would not have a Material
Adverse Change (as defined below). References to the "Company" in this
Agreement shall also include each subsidiary of the Company, except where the
context otherwise requires.
3.6 AUTHORIZATION; ENFORCEMENT. (i) The Company has the requisite
corporate power and authority to enter into and perform this Agreement and to
issue the Stock in accordance with the terms hereof and thereof, (ii) the
execution, issuance and delivery of this Agreement and the Common Stock by the
Company, and the consummation by the Company of the transactions contemplated
hereby, have been duly authorized by all necessary corporate action, and no
further consent or authorization of the Company or its Board of Directors or
stockholders is required, (iii) this Agreement has been duly executed and
delivered by the Company, and upon execution, issuance and delivery thereof
shall be a valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and remedies or by
other equitable principles of general application.
3.7 CORPORATE DOCUMEENTS. The Company has furnished or made
available to the Purchaser true and correct copies of the Company's Certificate
of Incorporation, as in effect on the date hereof (the "Certificate"), and the
Company's By-Laws, as in effect on the date hereof (the "By-Laws").
3.8 NO CONFLICTS. The execution, delivery and performance of this
Agreement and the sale and issuance of the Stock by the Company, do not and will
not result in a violation of or conflict with the Certificate or By-Laws, or
result in a violation of any Federal, state, local or foreign law, rule,
regulation, order, judgment or decree (including federal and state securities
laws and regulations) applicable to the Company or any of its subsidiaries or by
which any property or asset of the Company or any of its -subsidiaries is bound
or affected, except for such conflicts and violations as would not, individually
or in the aggregate, have a Material Adverse Change. The business of the
Company is not being conducted in violation of any law, ordinance or regulations
of any governmental entity, except for possible violations which either singly
or in the aggregate do not and will not have a Material Adverse Change. The
Company is not required under Federal, state or local law, rule or regulation in
the United States to obtain any consent, authorization or order of, or make any
filing or registration with, any court or governmental agency in order for it to
execute, deliver or perform any of its obligations under this Agreement or issue
and sell the Stock in accordance with the terms hereof and thereof (other than
any SEC, NASD, Exchange or state securities filings which may be required to be
made by the Company subsequent to the Closing, and any registration statement
which may be filed pursuant hereto); provided that, for purposes of the
representation made in this sentence, the Company is assuming and relying upon
the accuracy of the relevant representations and agreements of the Purchaser
herein.
6.
<PAGE>
3.9 EXCHANGE ACT REPORTS; FINANCIAL STATEMENTS. The Company has
delivered or made available to the Purchaser true and complete copies of the
Exchange Act Reports (including, without limitation, proxy information and
solicitation materials). As of their respective dates, the Exchange Act Reports
complied in all material respects with the requirements of the Exchange Act and
rules and regulations of the SEC promulgated thereunder and other Federal, state
and local laws, rules and regulations applicable to such Exchange Act Reports,
and none of the Exchange Act Reports contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the Exchange Act Reports comply as to form
in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC or other applicable rules and
regulations with respect thereto. Such financial statements have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto or (ii) in the case
of unaudited interim statements, to the extent they may not include footnotes or
may be condensed or summary statements) and fairly present the financial
condition of the Company as of the dates thereof and the results of operations
and cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments which in the aggregate will not
be material).
3.10 NO MATERIAL ADVERSE CHANGE. Since June 30, 1999, there has been
no material adverse change in the business, operations, properties, prospects,
condition, financial or otherwise, net worth, or results of operations of the
Company or its subsidiaries, except as described in the Exchange Act Reports and
the Disclosure Schedule ("Material Adverse Change").
3.11 NO UNDISCLOSED LIABILITIES. The Company and its subsidiaries
have no liabilities or obligations of any type, which in the aggregate exceed
$100,000, that are not fully reflected or disclosed in the Exchange Act Reports,
other than contractual liabilities and those incurred in the ordinary course of
the Company's or its subsidiaries' respective businesses since June 30, 1999.
3.12 NO UNDISCLOSED EVENTS OR CIRCUMSTANCES. No event or circumstance
has occurred or exists with respect to the Company or its subsidiaries or their
respective businesses, properties, prospects, operations or condition, financial
or otherwise, which, under applicable law, rule or regulation, requires
disclosure in the Exchange Act Reports or public disclosure prior to the date
hereof by the Company and which has not been so disclosed.
3.13 NO BROKERS. The Company has taken no action which would give
rise to any claim by any person for brokerage commissions, finder's fees or
similar payments by the Purchaser relating to this Agreement or the transactions
contemplated hereby.
3.14 LITIGATION. There is no action, suit or proceeding, or
governmental inquiry or investigation, pending, or, to the best of the Company's
knowledge, any basis therefor or threat thereof, against the Company, which
questions the validity of this Agreement or the
7.
<PAGE>
right of the Company to enter into it, or which might result, either
individually or in the aggregate, in a Material Adverse Change.
3.15 INTELLECTUAL PROPERTY. To the best of its knowledge, the Company
owns or possesses sufficient legal rights to all patents, trademarks, service
marks, trade names, copyrights, trade secrets, licenses, information and other
proprietary rights and processes necessary for its business as now conducted and
as presently proposed to be conducted, without any known infringement of the
rights of others The business conducted or proposed by the Company does not and
will not cause the Company to infringe or violate any of the patents,
trademarks, service marks, trade names, copyrights, licenses, trade secrets or
other intellectual property rights of any other person or entity. The Company
is not aware that any employee is obligated under any contract (including any
license, covenant or commitment of any nature), or subject to any judgment,
decree or order of any court or administrative agency, that would conflict or
interfere with (i) the performance of employee's duties as an officer, employee
or director of the Company, (ii) the use of such employee's best efforts to
promote the interests of the Company or (iii) the Company's business as
conducted or proposed to be conducted. No other person or entity (including
without limitation any prior employer of any employee of the Company) has any
right to or interest in any inventions, improvements, discoveries or other
confidential information utilized by the Company in its business.
3.16 MATERIAL CONTRACTS AND OBLIGATIONS. Section 3.16 of the
Disclosure Schedule lists each material agreement to which the Company is a
party or subject, including without limitation all material employment and
consulting agreements, employee benefit, bonus, pension, profit-sharing, stock
option, stock purchase and similar plans and arrangements, and distributor and
sales representative agreements. The Disclosure Schedule lists each agreement
with any stockholder, officer or director of the Company, or any "affiliate" or
"associate" of such persons (as such terms are defined in the rules and
regulations promulgated under the Securities Act), including without limitation
any agreement or other arrangement providing for the furnishing of services by,
rental of real or personal property from, or otherwise requiring payments to,
any such person or entity and any agreement relating to the Intellectual
Property Rights. The Company has delivered to counsel to the Purchaser copies
of all of the foregoing agreements. All of such agreements and contracts are
valid, binding and in full force and effect.
3.17 EMPLOYEES. All employees of the Company whose employment
responsibility requires access to confidential or proprietary information of the
Company have executed and delivered nondisclosure and assignment of invention
agreements and all of such agreements are in full force and effect.
3.18 ERISA. The Company does not have or otherwise contribute to or
participate in any employee benefit plan subject to the Employee Retirement
Income Security Act of 1974.
3.19 BOOKS AND RECORDS. The minute books of the Company contain
complete and accurate records of all meetings and other corporate actions of its
stockholders and its Board of Directors and committees thereof. The Company has
delivered to counsel to the Purchaser copies of all of the minutes of all
meetings and other corporate actions of its
8.
<PAGE>
stockholders and its Board of Directors and committees thereof held or taken
since January 1, 1996.
4. COVENANTS
4.1 LISTING OF SHARES. The Company agrees, if the Company applies to
have its Common Stock traded on any principal stock exchange or market, it will
include the Stock in such application and will take such other action as is
necessary or desirable to cause the Stock to be listed on such other exchange or
market as promptly as possible.
4.2 EXCHANGE ACT REGISTRATION. The Company will cause its Common
Stock to continue to be registered under Section 12(g) or 12(b) of the Exchange
Act, will comply in all respects with its reporting and filing obligations under
the Exchange Act, and will not take any action or file any document (whether or
not permitted by the Exchange Act or the rules thereunder) to terminate or
suspend such registration or to terminate or suspend its reporting and filing
obligations under the Exchange Act. The Company will take all action under its
control to continue the listing and trading of its Common Stock on the Exchange.
4.3 CORPORATE EXISTENCE. The Company will take all steps necessary
to preserve and continue the corporate existence of the Company.
4.4 SALE OF SHARES UNDER RULE 144. From and after the Closing, at
the request of any holder of Stock who proposes to sell the same in compliance
with Rule 144 under the Securities Act, the Company shall (a) promptly furnish
to such holder a written statement as to its compliance with the filing
requirements of the SEC as set forth in Rule 144, as the same may be amended
from time to time, and (b) make such additional filings of reports with the SEC
as will enable the holder of such Stock to make sales thereof pursuant to such
Rule. The Company shall provide its transfer agent with appropriate
instructions and/or opinions of counsel in order for any restrictive legend
contained on the certificates for the Stock to be removed when appropriate and
for such holder to sell, transfer and/or dispose of such Stock in accordance
with Rule 144.
5. LEGENDS
5.1 LEGENDS. The certificates evidencing the Stock will bear the
following legend (the "Legend"):
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR OFFERED FOR SALE EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID
ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION FROM
SUCH REGISTRATION REQUIREMENTS.
At the Closing, the Company will issue to the transfer agent for its common
stock (and to any substitute or replacement transfer agent for its common stock
coterminous with the Company's appointment of any such substitute or replacement
transfer agent) irrevocable
9.
<PAGE>
instructions in form and substance reasonably satisfactory to the Purchaser.
It is the intent and purpose of such instructions to require the transfer
agent for the common stock from time to time to issue certificates evidencing
the Shares free of the Legend during the following period and under the
following circumstances and without consultation by the transfer agent with
Company or its counsel and without the need for any further advice or
instruction to the transfer agent by or from the Company or its counsel:
(a) At any time from and after the Closing Date, upon any
surrender of one or more certificates evidencing Stock and which bear the
Legend, to the extent accompanied by a notice requesting the issuance of new
certificates free of the Legend to replace those surrendered and containing or
also accompanied by representations that (i) the holder thereof is permitted to
dispose thereof pursuant to Rule 144 promulgated under the Securities Act or
(ii) the holder intends to effect the sale or other disposition of such
securities to a purchaser or purchasers who will not be subject to the
registration requirements of the Securities Act, or (iii) such holder is not
then subject to such requirements.
5.2 NO OTHER LEGEND OR STOCK TRANSFER RESTRICTIONS. No legend has
been or shall be placed on the share certificates representing the Stock and no
instructions or "stop transfers," so called, "stock transfer restrictions," so
called, or other restrictions have been or shall be given to the Company's
transfer agent with respect thereto, other than as set forth in this Section 5.
5.3 PURCHASER'S COMPLIANCE. Nothing in this section shall affect in
any way the Purchaser's obligations under and agreement to comply with all
applicable securities laws upon resale of the Stock.
6. CHOICE OF LAW AND VENUE
THIS AGREEMENT SHALL BE CONSTRUED UNDER THE LAWS OF THE STATE OF
CALIFORNIA, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW OR CHOICE OF LAW,
EXCEPT TO THE EXTENT THAT THE LAW OF THE STATE OF DELAWARE REGULATES THE
COMPANY'S ISSUANCE OF SECURITTES.
7. ASSIGNNIENT; ENTIRE AGREEMENT; AMENDMENT
7.1 ASSIGNMENT. This Agreement may not be assigned by the Purchaser
or the Company to any other person or entity. Notwithstanding the foregoing,
the provisions of this Agreement shall inure to the benefit of, and be
enforceable by, any entity which shall succeed to all or substantially all of
the assets and liabilities of Purchaser by merger or purchase.
7.2 ENTIRE AGREEMENT; AMENDMENT. This Agreement, and the other
agreements and documents delivered pursuant hereto constitute the full and
entire understanding and agreement between the parties with regard to the
subject hereof and thereof and supersede all prior agreements and understandings
relating to such subject matter, and no party shall be liable or bound to any
other party in any manner by any warranties, representations or covenants except
as specifically set forth in this Agreement or therein. Except as expressly
provided in this Agreement, neither this Agreement nor any term hereof may be
amended, waived, discharged or
10.
<PAGE>
terminated other than by a written instrument signed by the party against
whom enforcement of any such amendment, waiver, discharge or termination is
sought.
8. NOTICES, ETC.; EXPENSES; INDEMNITY
8.1 NOTICES. Any notice, demand, request or other communication
required or permitted to be given by either the Company or the Purchaser
pursuant to the terms of this Agreement shall be in writing and shall be deemed
to have been duly given when delivered personally or by facsimile, with a hard
copy to follow by overnight delivery by a reputable courier.
If to the Company, at: GateField Corporation, 47436 Fremont Boulevard,
Fremont, CA 94538-6503, Attention: President, Facsimile No: (510) 623-4484, or
at such other address or addresses as may have been finished in writing by the
Company to the Purchaser, with a copy to Eric C. Jensen, Esq., Cooley Godward
LLP, 5 Palo Alto Square, 4th Floor, 3000 El Camino Real, Palo Alto, California
94306-2155, Facsimile No: (650) 857-0663; or
If to the Purchaser, at: Dunn Family Trust, 4660 La Jolla Village Drive,
Suite 850, San Diego, California 92122, Attention: David J. Dunn, Trustee
Facsimile No: (858) 452-2013 or at such other address or addresses as may have
been furnished to the Company in writing by such Purchaser.
INDEMNIFICATION. Each party ("Indemnifying Party") shall indemnify the
other party against any loss, liabilities, expenses, cost or damages (including
reasonable attorney's fees) incurred as a result of the Indemnifying Party's
breach of any representation, warranty, covenant or agreement in this Agreement.
9. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of which
shall be enforceable against the parties actually executing such counterparts,
and all of which together shall constitute one instrument.
10. SURVIVAL; SEVERABILITY
The representations, warranties, covenants and agreements of the parties
hereto shall survive the Closing. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and
effect without said provision; provided that the absence of such provision does
not materially change the economic benefit of this Agreement to any party.
11. TITLE AND SUBTITLES
The titles and subtitles used in this Agreement are used for convenience
only and are not to be considered in construing or interpreting this Agreement.
(This space left intentionally blank).
11.
<PAGE>
IN WITNESS WHEREOF, the parties have signed this Agreement the day and
year first written above.
GATEFIELD CORPORATION
By: Timothy Saxe
------------------------------
(Print Name)
By: /s/ Timothy Saxe
------------------------------
(Signed Name)
Title: President & CEO
------------------------------
(Position, if applicable)
PURCHASER:
DUNN FAMILY TRUST
By: David J. Dunn
------------------------------
(Print Name)
By: /s/ David J. Dunn
------------------------------
(Signed Name)
Title: Trustee
------------------------------
(Position, if applicable)
12.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JUL-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 7,400
<SECURITIES> 0
<RECEIVABLES> 490
<ALLOWANCES> 0
<INVENTORY> 475
<CURRENT-ASSETS> 9,008
<PP&E> 1,918
<DEPRECIATION> 0
<TOTAL-ASSETS> 10,978
<CURRENT-LIABILITIES> 7,426
<BONDS> 0
0
3,085
<COMMON> 469
<OTHER-SE> 85,443
<TOTAL-LIABILITY-AND-EQUITY> 10,978
<SALES> 377
<TOTAL-REVENUES> 410
<CGS> 395
<TOTAL-COSTS> 405
<OTHER-EXPENSES> 1,934
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 66
<INCOME-PRETAX> (1,875)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,875)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,875)
<EPS-BASIC> (0.44)
<EPS-DILUTED> (0.44)
</TABLE>
