<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported)
February 21, 1996
MYLEX CORPORATION
(Exact name of registrant as specified in its charter)
Florida 0-13381 59-2291597
(State or other jurisdiction (Commission (IRS Employer
or incorporation) File Number) Identification No.)
34551 Ardenwood Boulevard
Fremont, California 94555
(Address of principal executive offices) (Zip code)
(510) 796-6100
(Registrant's telephone number, including area code)
<PAGE>
MYLEX CORPORATION
Index to Current Report on Form 8-K
Page No.
Item 2 Acquisition or Disposition of Assets 3
Item 7 Financial Statements and Exhibit 4
Signatures 5
2
<PAGE>
Item 2. ACQUISITION OR DISPOSITION OF ASSETS.
Effective February 21, 1996, upon the acceptance of the Agreement of Merger
by the California Secretary of State, Mylex Corporation (the "Registrant")
acquired BusLogic Inc., a California corporation ("BusLogic"), through the
merger of a wholly-owned subsidiary of the Registrant, BusLogic Acquisition
Corp. (the "Sub"), into BusLogic (the "Merger"). Upon the consummation of the
Merger, BusLogic became a wholly-owned subsidiary of the Registrant and
BusLogic's assets and liabilities immediately prior to the Merger were
unaffected by the Merger.
Pursuant to the terms and conditions of an Agreement and Plan of
Reorganization, dated December 14, 1995, among the Registrant, BusLogic, certain
principal shareholders of BusLogic, and the Sub (the "Acquisition Agreement"),
the shareholders of BusLogic received an aggregate of approximately 2,710,000
shares of the Registrant's common stock (the "Common Stock"), or .2682763 shares
of Common Stock for each share of BusLogic capital stock outstanding. In
addition, the Registrant assumed BusLogic's 1990 Equity Incentive Plan (the
"Plan"). As a result, the holders of outstanding options under such plan
will be entitled to purchase, upon the vesting of such options, up to an
aggregate of approximately 677,000 shares of Common Stock (based on the same
conversion ratio of .2682763 shares of Common Stock for each share of
BusLogic common stock subject to an option under the Plan).
The shares of Common Stock issued in the Merger are exempt from
registration under the Securities Act of 1933 (the "Act") pursuant to Section
3(a)(10) of the Act, as the issuance was approved by the California
Commissioner of Corporations after holding a "fairness hearing" with respect
to the issuance. The options and shares subject to the Plan have been
registered under the Act pursuant to a registration statement on Form S-8
filed with the Commission.
The consideration paid by the Registrant in the Merger was established by
arms-length negotiations between Registrant and BusLogic. The Registrant
retained Needham & Company to assist it in determining the amount of
consideration it would pay for BusLogic and in negotiating such consideration.
Needham & Company also provided a fairness opinion with respect to the Merger to
the Registrant.
BusLogic designs, develops and markets a product line of high performance,
small computer system interface (SCSI) host adaptor boards. It also designs the
core application specific integrated circuits (ASIC) used in such adapters.
BusLogic's principal executive offices are in Santa Clara, California.
The assets acquired indirectly through the Merger include, as noted, all of
the assets of BusLogic, including the property, plant and equipment used in its
business. The Registrant presently intends to have BusLogic continue to use
those assets in its business after the Merger.
3
<PAGE>
Item 7. FINANCIAL STATEMENTS, PRO-FORM FINANCIAL INFORMATION AND EXHIBITS.
(a) FINANCIAL STATEMENTS
It is impracticable for the Registrant to provide financial
statements of BusLogic Inc. at the time of filing this Report.
The Registrant presently anticipates that it will be able to
file the financial statments of BusLogic which are required to
to be filed pursuant to Item 7 of Form 8-K within 15 days of the
date of this Report on Form 8-K and, in any event, within the
60-day period provided in Item 7(a)(4) of Form 8-K.
(b) PRO-FORMA FINANCIAL INFORMATION
Pro forma combined condensed financial information respecting the
Registrant's acquisition of a business as described in Item 2 of
this Form 8-K.
(c) EXHIBITS
Agreement and Plan of Reorganization, dated December 14, 1995,
among Mylex Corporation, BusLogic Inc., BusLogic Acquisition
Corp. and certain principal shareholders of BusLogic Inc.
4
<PAGE>
Pro Forma Financial Information
Pro Forma Combined Condensed Financial Information
(Unaudited)
The following unaudited pro forma combined condensed financial statements assume
a business combination between Mylex Corporation and BusLogic Inc. accounted for
on a pooling of interests basis. The pro forma combined condensed financial
statements are based on the historical financial statements of Mylex and the
condensed consolidated balance sheet of BusLogic as of December 31, 1995 and the
condensed consolidated statements of operations of BusLogic for the twelve month
periods ended December 31, 1995, January 31, 1995 and January 31, 1994.
The BusLogic historical financial statement data as of and for the year ended
December 31, 1995 are unaudited but have been prepared on the same basis as the
audited financial statements and, in the opinion of management, contain all
adjustments, consisting only of normal recurring accruals, necessary for the
fair presentation of the results of operations for such periods.
The pro forma combined condensed consolidated balance sheet combines Mylex's
historical December 31, 1995 consolidated balance sheet with BusLogic's
December 31, 1995 condensed consolidated balance sheet, giving effect to the
business combination as if it had occurred on December 31, 1995. The pro forma
condensed consolidated statements of operations combine Mylex's historical
condensed consolidated statements of operations for the three fiscal years ended
December 31, 1993, 1994, and 1995, respectively, with the corresponding BusLogic
condensed consolidated statements of operations for each of the fiscal years
ended January 31, 1994 and 1995, and the year ended December 31, 1995,
respectively, giving effect to the business combination as if it had occurred on
January 1, 1993.
The pro forma information is presented for illustrative purposes only and is not
necessarily indicative of the operating results or financial position that would
have occurred if the business combination had been consummated at the beginning
of the periods presented, nor is it necessarily indicative of future operating
results or financial position.
Mylex and BusLogic estimate that they will incur direct transaction costs of
approximately $850,000 associated with the business combination, substantially
all of which will be charged to operations during the quarter ending March 31,
1996. There can be no assurance that Mylex will not incur additional charges
in subsequent quarters to reflect costs associated with the business combination
or that management will be successful in their efforts to integrate the
operations of the two companies.
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
Mylex Pro Forma
Corporation BusLogic Inc. Pro Forma Combined
Assets Dec. 31, 1995 Dec. 31, 1995 Adjustments Dec. 31, 1995
------ ------------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Cash and equivalents $6,446 $5,287 $ $11,733
Short term investments 25,708 - 25,708
Accounts receivable, net 19,807 3,274 23,081
Inventories 24,138 2,383 26,521
Prepaid expenses and other current assets 2,531 1,913 4,444
------- ------ --------
Total current assets 78,630 12,857 91,487
Property, plant and equipment, net 1,716 1,305 3,021
Other assets 112 - 112
------- ------ --------
Total assets $ 80,458 14,162 0 94,620
------- ------ --------
Liabilities and Stockholders' Equity
Accounts payable 11,230 1,013 12,243
Accrued liabilities 3,516 2,452 850 (3) 6,818
Current portion of long-term capital lease obligations 308 - 308
------- ------ --------
Total current liabilities 15,054 3,465 19,369
Long term obligations 203 - 203
------- ------ --------
Total liabilities 15,257 3,465 19,572
Mandatorily redeemable preferred stock 2,128 (2,128) (3) -
Stockholders' Equity:
Common stock 169 2,387 (2,360) (3) 196
Additional paid-in capital 47,822 - 4,488 (3) 52,310
Retained earnings 17,210 6,182 (850) (3) 22,542
------- ------ --------
Total stockholders' equity 65,201 8,569 75,048
------- ------ ----- --------
Total liabilities, mandatorily redeemable preferred stock
and stockholders' equity $80,458 $14,162 0 $94,620
------- ------ ----- --------
</TABLE>
See accompanying notes to pro forma combined condensed financial statements.
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
DECEMBER 31, 1995
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Mylex Pro Forma
Corporation BusLogic Inc. Combined
Year ended Year ended Pro Forma Year ended
Dec. 31, 1995 Dec. 31, 1995 Adjustments Dec. 31, 1995
------------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Net Sales $ 100,420 $ 27,035 $ 127,455
Cost of Sales 62,733 14,439 77,172
--------- --------- ---------
Gross Profit 37,687 12,596 50,283
Operating Expenses
Selling, Marketing, and Administrative 12,920 8,125 21,045
Research and Development 4,800 4,388 9,188
--------- --------- ---------
Operating Income 19,967 83 20,050
Other Income 220 203 423
--------- --------- ---------
Income Before Taxes 20,187 286 20,473
Income Tax Expense 7,065 100 7,165
--------- --------- ---------
Net Income $ 13,122 $ 186 $ 13,308
--------- --------- ---------
Primary earnings per share $ 0.80 $ 0.68
--------- ---------
Fully diluted earnings per share $ 0.79 $ 0.67
--------- ---------
Shares used in computing primary earnings per share 16,405 19,590
--------- ---------
Shares used in computing fully diluted earnings per share 16,631 19,863
--------- ---------
</TABLE>
See accompanying notes to pro forma combined condensed financial statements.
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
DECEMBER 31, 1994
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Mylex Pro Forma
Corporation BusLogic Inc. Combined
Year ended Year ended Pro Forma Year ended
Dec. 31, 1994 Jan. 31, 1995 Adjustments Dec. 31, 1994
------------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Net Sales $ 62,513 $ 30,076 $ 92,589
Cost of Sales 40,322 15,837 56,159
-------- -------- --------
Gross Profit 22,191 14,239 36,430
Operating Expenses
Selling, Marketing, and Administrative 8,235 8,135 16,370
Research and Development 3,332 4,334 7,666
-------- -------- --------
Operating Income 10,624 1,770 12,394
Other Income (Expense) (563) 147 (416)
-------- -------- --------
Income Before Taxes 10,061 1,917 11,978
Income Tax Expense 2,552 613 3,165
-------- -------- --------
Net Income $ 7,509 $ 1,304 $ 8,813
-------- -------- --------
Primary earnings per share $ 0.53 $ 0.51
-------- --------
Fully diluted earnings per share $ 0.51 $ 0.49
-------- --------
Shares used in computing primary earnings per share 14,208 17,261
-------- --------
Shares used in computing fully diluted earnings per share 15,247 18,390
-------- --------
</TABLE>
See accompanying notes to pro forma combined condensed financial statements.
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
DECEMBER 31, 1993
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Mylex Pro Forma
Corporation BusLogic Inc. Combined
Year ended Year ended Pro Forma Year ended
Dec. 31, 1993 Jan. 31, 1994 Adjustments Dec. 31, 1993
------------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Net Sales $ 45,234 $ 24,240 $ 69,474
Cost of Sales 36,456 12,053 48,509
-------- -------- --------
Gross Profit 8,778 12,187 20,965
Operating Expenses
Selling, Marketing, and Administrative 10,112 6,504 16,616
Research and Development 2,690 3,433 6,123
-------- -------- --------
Operating Income (Loss) (4,024) 2,250 (1,774)
Other Income (Expense) (466) 163 (303)
-------- -------- --------
Income Before Taxes (4,490) 2,413 (2,077)
Income Tax Expense (Benefit) (46) 893 847
-------- -------- --------
Net Income (Loss) ($4,444) $ 1,520 ($2,924)
-------- -------- --------
Primary earnings per share ($0.35) ($0.20)
-------- --------
Fully diluted earnings per share ($0.35) ($0.20)
-------- --------
Shares used in computing primary earnings per share 12,740 15,396
-------- --------
Shares used in computing fully diluted earnings per 12,740 15,396
-------- --------
</TABLE>
See accompanying notes to pro forma combined condensed financial statements.
<PAGE>
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
Note 1. PERIODS COMBINED
The Mylex statements of operations for each of the years in the three-year
period ended December 31, 1995 have been combined with the BusLogic statements
of operations for each of the years in the two-year period ended January 31,
1995 and the year ended December 31, 1995.
The Mylex balance sheet as of December 31, 1995 has been combined with the
BusLogic balance sheet as of December 31, 1995.
Note 2. PRO FORMA NET INCOME (LOSS) PER SHARE
The pro forma combined condensed statements of operations for Mylex and BusLogic
have been prepared as if the business combination was completed at the beginning
of the periods presented. The pro forma combined net income (loss) per share is
based on the combined weighted average number of common and common equivalent
shares of Mylex common stock and BusLogic common stock for each period, based on
the exchange ratio of .2682763 shares of Mylex common stock for each share of
BusLogic common stock.
Note 3. BASIS OF PRESENTATION
PRO FORMA BASIS OF PRESENTATION
The pro forma combined condensed financial statements reflect the issuance of
2,710,738 shares of Mylex common stock in exchange for an aggregate of
10,104,277 shares of BusLogic common stock, including the assumed conversion of
800,000 shares of mandatorily redeemable preferred stock (outstanding as of
December 31, 1995) in connection with the business combination based on the
exchange ratio of .2682763 shares of Mylex common stock for every share of
BusLogic common stock.
<TABLE>
<CAPTION>
<S> <C>
BusLogic common stock outstanding at December 31, 1995 10,104,277
Exchange ratio .2682763:1
----------
Number of shares of Mylex common stock exchanged 2,710,738
Number of shares of Mylex common stock outstanding
at December 31, 1995 16,880,000
----------
Number of shares of Mylex common stock outstanding after
completion of the business combination 19,590,738
----------
</TABLE>
The actual number of shares of Mylex common stock issued upon effectiveness of
the business combination, on February 21, 1996, was 2,710,738, based on the
number of shares of BusLogic common stock outstanding at such time.
BUSINESS COMBINATION TRANSACTION COSTS
Mylex and BusLogic estimate that they will incur direct transaction costs of
approximately $850,000 associated with the business combination, consisting of
transaction fees for investment bankers, attorneys, accountants, and other
related charges. These nonrecurring costs have been charged to retained
earnings in the unaudited pro forma combined condensed balance sheet, and are
accordingly, not reflected in the Unaudited Pro Forma Combined Condensed
Statement of Operations.
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
MYLEX CORPORATION
(A FLORIDA CORPORATION),
BUSLOGIC ACQUISITION CORP.
(A CALIFORNIA CORPORATION),
BUSLOGIC INC.
(A CALIFORNIA CORPORATION),
AND
PRINCIPAL SHAREHOLDERS
OF BUSLOGIC INC.
DECEMBER 14, 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
ARTICLE I. THE MERGER; CLOSING; EFFECTIVE TIME 1
Section 1.1 THE MERGER 1
Section 1.2 CLOSING 1
Section 1.3 EFFECTIVE TIME 1
ARTICLE II. ARTICLES OF INCORPORATION, BYLAWS AND
OFFICERS AND DIRECTORS OF THE SURVIVING CORPORATION 2
Section 2.1 ARTICLES OF INCORPORATION AND BYLAWS 2
Section 2.2 OFFICERS AND DIRECTORS 2
ARTICLE III. CONVERSION OR CANCELLATION
OF SECURITIES IN THE MERGER 2
Section 3.1 CONVERSION AND CANCELLATION OF SECURITIES 2
Section 3.2 ASSUMPTION OF OPTIONS 2
Section 3.3 ADJUSTMENTS FOR CAPITAL CHANGES 3
Section 3.4 NO FURTHER OWNERSHIP RIGHTS 3
Section 3.5 SURRENDER AND DELIVERY OF SECURITIES 3
Section 3.6 DISSENTING SHAREHOLDERS 3
Section 3.7 TAX FREE REORGANIZATION 3
ARTICLE IV. ESCROW OF MERGER CONSIDERATION 4
Section 4.1 ESCROW OF MERGER CONSIDERATION. 4
ARTICLE V. REPRESENTATIONS AND WARRANTIES 4
Section 5.1 REPRESENTATIONS AND WARRANTIES OF BUSLOGIC AND PRINCIPAL
SHAREHOLDERS 4
a. ORGANIZATION, CORPORATE POWER AND GOOD STANDING OF BUSLOGIC 4
b. CAPITAL STRUCTURE AND TITLE TO SHARES 4
c. AUTHORITY 6
d. COMPLIANCE WITH APPLICABLE LAWS 7
e. LITIGATION 7
f. FINANCIAL STATEMENTS 7
g. TAXES 7
h. CERTAIN AGREEMENTS 7
i. SUBSIDIARIES 8
j. ABSENCE OF CERTAIN CHANGES OR EVENTS 8
k. SHAREHOLDER APPROVAL REQUIRED 8
l. BROKER'S AND FINDER'S FEES 8
m. CORPORATE RECORDS; OTHER INFORMATION 8
n. BOOKS AND RECORDS. 8
o. LABOR AND EMPLOYMENT MATTERS 9
p. EMPLOYEE BENEFIT PLANS 10
q. INSURANCE 11
r. CONTRACTS 11
s. PATENTS, TRADEMARKS AND OTHER INTELLECTUAL PROPERTY RIGHTS 12
t. ENVIRONMENTAL CONDITION AND GOVERNMENTAL AUTHORIZATIONS. 14
u. REAL ESTATE 14
v. TANGIBLE PROPERTY. 15
w. INVENTORIES 15
x. ACCOUNTS RECEIVABLE 15
y. SUPPLIERS AND CUSTOMERS. 15
z. PRODUCTS; WARRANTY POLICIES. 16
aa. CERTAIN TRANSACTIONS AND AGREEMENTS. 16
ab. COMPLETE DISCLOSURE. 17
Section 5.2 REPRESENTATIONS AND WARRANTIES OF MYLEX 17
a. ORGANIZATION, CORPORATE POWER AND GOOD STANDING 17
i
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b. CAPITAL STRUCTURE 17
c. AUTHORITY 17
d. COMPLIANCE WITH APPLICABLE LAWS 18
e. LITIGATION 18
f. FINANCIAL STATEMENTS 18
g. TAXES 19
h. BROKER'S AND FINDER'S FEES 19
i. ABSENCE OF CERTAIN CHANGES OR EVENTS 19
j. NO SHAREHOLDER VOTE 19
k. SECURITIES LAW FILINGS 19
l. COMPLETE DISCLOSURE 19
Section 5.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. 20
ARTICLE VI. COVENANTS OF THE PARTIES 20
Section 6.1 CONDUCT OF BUSINESS PENDING THE MERGER 20
Section 6.2 COMPENSATION PLANS 22
Section 6.3 LEGAL CONDITIONS TO MERGER 22
Section 6.4 SHAREHOLDERS' MEETING. 22
Section 6.5 NOTIFICATION OF CERTAIN MATTERS 22
Section 6.6 PUBLIC ANNOUNCEMENTS 23
Section 6.7 TAX TREATMENT 23
Section 6.8 FURTHER ASSURANCES 23
Section 6.9 SECURITIES LAWS. 23
Section 6.10 NO OTHER NEGOTIATIONS. 23
Section 6.11 ACCESS TO INFORMATION. 24
Section 6.12 AFFILIATES AGREEMENTS. 24
Section 6.13 PRINCIPAL SHAREHOLDER LETTERS. 24
ARTICLE VII. CONDITIONS TO THE CLOSING 24
Section 7.1 CONDITIONS TO BUSLOGIC'S AND MYLEX'S OBLIGATIONS 24
a. SHAREHOLDER APPROVAL 24
b. OTHER APPROVALS 24
c. NO INJUNCTIONS, RESTRAINTS OR ILLEGALITY 25
d. TAX OPINION 25
e. ESCROW AGREEMENT 25
f. COVENANT NOT TO COMPETE 25
g. CALIFORNIA SECURITIES PERMIT 25
Section 7.2 CONDITIONS TO OBLIGATIONS OF MYLEX 25
a. REPRESENTATIONS AND WARRANTIES 25
b. PERFORMANCE OF OBLIGATIONS OF BUSLOGIC 25
c. CONSENTS 25
d. NO BURDENSOME CONDITION 26
e. NO ADVERSE DEVELOPMENTS 26
f. ACCOUNTING TREATMENT FOR MYLEX 26
g. ACCOUNTING TREATMENT FOR BUSLOGIC 26
h. FINANCIAL STATEMENTS 26
i. OPINION OF COUNSEL 26
j. REQUISITE VOTE AND DISSENTING SHARES 26
k. AFFILIATE AGREEMENTS 27
l. PRINCIPAL SHAREHOLDER LETTER 27
m. RESIGNATION OF DIRECTORS 27
n. FAIRNESS OPINION 27
o. OTHER DOCUMENTS 27
Section 7.3 CONDITIONS TO OBLIGATIONS OF BUSLOGIC 27
a. REPRESENTATIONS AND WARRANTIES 27
b. PERFORMANCE OF OBLIGATIONS OF MYLEX AND MERGER SUBSIDIARY 27
c. NO ADVERSE DEVELOPMENTS 27
d. OPINION OF COUNSEL 27
e. OTHER DOCUMENTS 27
ii
<PAGE>
ARTICLE VIII. INDEMNIFICATION 28
Section 8.1 BUSLOGIC INDEMNIFICATION 28
Section 8.2 REIMBURSEMENT 28
Section 8.3 MYLEX INDEMNIFICATION. 29
Section 8.4 REIMBURSEMENT 29
Section 8.5 NOTICE 29
ARTICLE IX. TERMINATION, AMENDMENT OR WAIVER 30
Section 9.1 TERMINATION. 30
Section 9.2 EFFECT OF TERMINATION 30
Section 9.3 AMENDMENT. 31
Section 9.4 WAIVER 31
ARTICLE X. POST-CLOSING COVENANT 31
Section 10.1 INSURANCE AND INDEMNIFICATION 31
ARTICLE XI. MISCELLANEOUS AND GENERAL 31
Section 11.1 DEFINITIONS 31
Section 11.2 FEES AND EXPENSES 32
Section 11.3 NOTICES 32
Section 11.4 CONFIDENTIALITY 32
Section 11.5 NO THIRD-PARTY BENEFICIARIES. 32
Section 11.6 GOVERNING LAW 32
Section 11.7 ENTIRE AGREEMENT 32
Section 11.8 ATTORNEYS' FEES 32
Section 11.9 SEVERABILITY 32
Section 11.10 COUNTERPARTS 33
Section 11.11 HEADINGS 33
Section 11.12 CONSTRUCTION 33
Section 11.13 SUCCESSORS AND ASSIGNS 33
Section 11.14 REFERENCES 33
Section 11.15 ADDITIONAL CONDITIONS 33
Section 11.16 SHAREHOLDER VOTE 33
SCHEDULE A DEFINITIONS 35
SCHEDULE B BUSLOGIC DISCLOSURE SCHEDULE 41
SCHEDULE C MYLEX DISCLOSURE SCHEDULE 42
SCHEDULE D KEY EMPLOYEES 43
SCHEDULE E OFFICERS AND DIRECTORS OF SURVIVING CORPORATION 44
EXHIBIT A AGREEMENT OF MERGER 45
EXHIBIT B-1 OFFICER'S CERTIFICATE OF BUSLOGIC 46
EXHIBIT B-2 OFFICER'S CERTIFICATE OF MYLEX 47
EXHIBIT C ESCROW AGREEMENT 48
EXHIBIT D NON-COMPETITION AGREEMENTS 49
EXHIBIT E AFFILIATE AGREEMENT 50
EXHIBIT F PRINCIPAL SHAREHOLDER LETTER 51
iii
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made and
entered into as of this 14th day of December, 1995, by Mylex Corporation, a
Florida corporation ("Mylex"), BusLogic Acquisition Corp., a California
corporation and a newly formed, wholly-owned subsidiary of Mylex ("Merger
Subsidiary"), BusLogic Inc., a California corporation ("BusLogic"), and the
Principal Shareholders of Mylex.
RECITALS:
WHEREAS, Mylex desires to acquire BusLogic, and BusLogic is willing to be
acquired by Mylex, pursuant to a merger in which Merger Subsidiary will merge
with and into BusLogic (the "Merger") and the shareholders of BusLogic will
receive shares of the Common Stock of Mylex in exchange for their shares of
Common Stock of BusLogic, all in accordance with the terms and conditions set
forth in this Agreement; and
WHEREAS, to effect the Merger, Mylex desires to adopt a plan of
reorganization in accordance with Section 368(a) of the Internal Revenue Code of
1986, as amended, and the regulations thereunder.
AGREEMENT:
NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants, agreements, and conditions contained in this Agreement, the parties
agree as follows:
ARTICLE I. THE MERGER; CLOSING; EFFECTIVE TIME
Section 1.1 THE MERGER. Subject to the terms and conditions of this
Agreement and the Agreement of Merger attached hereto as Exhibit "A" (the
"Agreement of Merger"), at the Effective Time (as defined in Section 1.3),
Merger Subsidiary shall merge with and into BusLogic and the separate corporate
existence of Merger Subsidiary shall cease. BusLogic (which this Agreement
sometimes refers to as the "Surviving Corporation") shall survive the Merger and
shall continue to be governed by the laws of the State of California. From and
after the Effective Time, BusLogic shall retain and possess all rights,
privileges, immunities, and franchises, and be subject to all the restrictions,
disabilities, debts, liabilities and duties, of each of BusLogic and Merger
Subsidiary. The Merger shall have the effects specified in Section 1107 of the
California General Corporation Law ("California GCL") with respect to BusLogic
and Merger Subsidiary.
Section 1.2 CLOSING. The closing of the Merger (the "Closing") shall take
place at the offices of Brown & Bain, P.C., 600 Hansen Way, Suite 100, Palo
Alto, California 94306, commencing at 10:00 a.m. California time on the second
business day following the satisfaction or waiver of all conditions to the
obligations of the parties to consummate the Merger set forth in Article VII
(other than conditions with respect to actions the respective parties will take
at the Closing itself) or such other date as Mylex and BusLogic shall mutually
determine ("Closing Date").
Section 1.3 EFFECTIVE TIME. As soon as practicable following fulfillment
or waiver of the conditions specified in Article VII, and provided that this
Agreement has not been terminated or abandoned pursuant to Article IX, each of
BusLogic, Mylex and Merger Subsidiary will cause a Merger Agreement and other
documents required under the California GCL ("Merger Filing Documents") to be
filed with the Secretary of State of the State of California (the "Secretary of
State"), as provided in Section 1103 of the California GCL. The Merger shall
become effective upon the filing of Merger Filing Documents with the Secretary
of State, and this Agreement refers to the time of filing as the "Effective
Time."
<PAGE>
ARTICLE II. ARTICLES OF INCORPORATION, BYLAWS AND
OFFICERS AND DIRECTORS OF THE SURVIVING CORPORATION
Section 2.1 ARTICLES OF INCORPORATION AND BYLAWS. The Articles of
Incorporation and Bylaws of BusLogic in effect at the Effective Time shall be
the Articles of Incorporation and Bylaws of the Surviving Corporation, until
duly amended in accordance with their terms and the California GCL.
Section 2.2 OFFICERS AND DIRECTORS. The directors and officers specified
on the attached Schedule E shall be the directors and officers, respectively, of
the Surviving Corporation from and after the Effective Time until their
successors have been duly elected or appointed and qualified or until their
earlier death, resignation, or removal in accordance with the Surviving
Corporation's Articles of Incorporation and Bylaws.
ARTICLE III. CONVERSION OR CANCELLATION
OF SECURITIES IN THE MERGER
Section 3.1 CONVERSION AND CANCELLATION OF SECURITIES. Subject to Article
IV and Section 3.6, at the Effective Time, without any action on the part of the
holder of each security described in this Section 3.1, the Merger shall:
a. Convert each share of Common Stock of BusLogic ("BusLogic Common
Stock") issued and outstanding immediately before the Effective Time into the
right to receive .2682763 fully paid and non-assessable shares of Common Stock,
par value $0.01 per share, of Mylex ("Mylex Common Stock");
b. Convert each share of Preferred Stock of BusLogic ("BusLogic Preferred
Stock") issued and outstanding immediately before the Effective Time into the
right to receive .2682763 fully paid and non-assessable shares of Mylex Common
Stock; and
c. Convert each share of the Common Stock of Merger Subsidiary issued and
outstanding immediately before the Effective Time ("Subsidiary Stock") into the
right to receive 1010.4275 shares of the Common Stock of the Surviving
Corporation ("Surviving Corporation Stock").
Section 3.2 ASSUMPTION OF OPTIONS. At the Effective Time, each holder of
an outstanding option (collectively, the "BusLogic Options") to purchase
BusLogic Common Stock granted under the BusLogic Stock Option Plan shall be
entitled, in accordance with the terms of such option, to purchase after the
Effective Time that number of shares of Mylex Common Stock, determined by
multiplying the number of shares of BusLogic Common Stock subject to such
BusLogic Option at the Effective Time by .2682763, and the exercise price per
share for each such option will equal the exercise price of the BusLogic Option
immediately prior to the Effective Time divided by .2682763 (the "New Options").
If the foregoing calculation results in an assumed option being exercisable for
a fraction of a share, then the number of shares of Mylex Common Stock subject
to such option will be rounded down to the nearest whole number and the exercise
price per share shall be increased so that the aggregate exercise price for such
option prior to it being assumed is the same after it is assumed. The term,
exercisability, vesting schedule, status as an "incentive stock option" under
Section 422 of the Code, if applicable, and all other terms of the BusLogic
Options will otherwise be unchanged. Continuous employment with BusLogic will
be credited to an optionee for purposes of determining the number of shares
subject to exercise after the Effective Time. Mylex will cause the Mylex Common
Stock issued upon exercise of the assumed BusLogic Options to be registered on
Form S-8 of the Securities and Exchange Commission ("SEC") on or before the
later to occur of January 31, 1996 and ten business days after the Effective
Date, will exercise best efforts to maintain the effectiveness of such
registration statement for so long as such assumed BusLogic Options remain
outstanding and will reserve a sufficient number of shares of Mylex Common Stock
for issuance upon exercise thereof. Mylex will administer the BusLogic Stock
Option Plan assumed pursuant to this Section 3.2 in a manner that complies with
Rule 16b-3 promulgated by the SEC under the Exchange Act.
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Section 3.3 ADJUSTMENTS FOR CAPITAL CHANGES. If, prior to the Merger,
Mylex or BusLogic recapitalizes through a split-up of its outstanding shares
into a greater number, or a combination of its outstanding shares into a lesser
number, reorganizes, reclassifies or otherwise changes its outstanding shares
into the same or a different number of shares of other classes (other than
through a split-up or combination of shares provided for in the previous
clause), or declares a dividend on its outstanding shares payable in shares or
securities convertible into shares, the number of shares of Mylex Common Stock
into which the shares of BusLogic capital stock are to be converted and the
number of shares of Mylex Common Stock for which each BusLogic Option shall be
exercisable will adjust appropriately so as to maintain the proportionate
interests, as contemplated by Sections 3.1 and 3.2, of the holders of shares of
BusLogic capital stock and the holders of BusLogic Options and the holders of
shares of Mylex Common Stock after the Merger.
Section 3.4 NO FURTHER OWNERSHIP RIGHTS. This Agreement refers to the
shares of BusLogic Common Stock, BusLogic Preferred Stock and Subsidiary Stock
converted at the Effective Time as the "Cancelled Shares." The Merger will
cancel and retire all Cancelled Shares at the Effective Time. Subject to
Section 3.6, each holder of a certificate representing any Cancelled Shares
shall cease to have any rights with respect to such Cancelled Shares after the
Effective Time, except the right to receive the Merger Consideration for such
Cancelled Shares, upon the surrender of such certificate in accordance with
Section 3.5 and Article IV. Each holder of a BusLogic Stock Option will have
the right to receive a New Option, in lieu of a BusLogic Stock Option, in
accordance with Section 3.2. No fractional shares of Mylex Common Stock or
Surviving Corporation Stock shall be issued as Merger Consideration. Instead of
each fractional share, Mylex or the Surviving Corporation, as appropriate, shall
issue a whole share of its Common Stock.
Section 3.5 SURRENDER AND DELIVERY OF SECURITIES. Promptly after the
Effective Date, the Secretary of Mylex (the "Exchange Agent"), shall provide to
each holder of Cancelled Shares a letter of transmittal and instructions for use
in effecting the surrender of the certificates representing Cancelled Shares.
Subject to Article IV, upon any Person's surrender to the Exchange Agent of such
certificates, together with such letter of transmittal, duly executed and
completed in accordance with the instructions, Mylex shall cause the Exchange
Agent promptly to deliver to that Person a certificate in the name of that
Person representing the Merger Consideration to which such Person is entitled.
Section 3.6 DISSENTING SHAREHOLDERS. Each share of BusLogic capital stock
whose holder is entitled to an appraisal with respect to the Merger pursuant to
Section 1300 of the California GCL as a result of such holder not voting to
approve the Merger ("Dissenting Shares") shall be converted into the right to
receive such consideration as may be determined to be due to such holder
pursuant to Sections 1300 ET SEQ. of the California GCL, unless such holder
effectively withdraws or forfeits such right to appraisal, at which time the
holder's Dissenting Shares shall be converted into and represent a right to
receive Merger Consideration in accordance with Section 3.1.
Section 3.7 TAX FREE REORGANIZATION. The parties intend to adopt this
Agreement as a tax-free plan of reorganization and to consummate the Merger in
accordance with the provisions of Section 368(a)(1)(A) of the Code. The parties
believe that the value of the Mylex Common Stock to be received in the Merger is
equal, in each instance, to the value of the BusLogic capital stock to be
surrendered in exchange therefor. The Mylex Common Stock issued in the Merger
will be issued solely in exchange for the BusLogic capital stock, and no other
transaction other than the Merger represents, provides for or is intended to be
consideration paid for the BusLogic capital stock. Except for Dissenting
Shares, no consideration that could constitute "other property" within the
meaning of Section 356 of the Code is being paid by Mylex for the BusLogic
capital stock in the Merger. The parties shall not take a position on any tax
returns inconsistent with this Section 3.7. In addition, Mylex represents now,
and as of the Closing Date, that it presently intends to continue BusLogic's
historic business or use a significant portion of BusLogic's business assets in
a business. At the Closing, officers of each of Mylex and BusLogic shall
execute and deliver officers' certificates in the forms of Exhibits "B-1" or "B-
2," respectively, hereto. The provisions and representations contained or
referred to in this Section 3.7 shall survive until the expiration of the
applicable statute of limitations.
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ARTICLE IV. ESCROW OF MERGER CONSIDERATION
Section 4.1 ESCROW OF MERGER CONSIDERATION. The delivery of the Merger
Consideration to the Principal Shareholders shall be subject to the delivery of
ten percent (10%) of the shares of Mylex Common Stock constituting the Merger
Consideration to be paid to each of the Principal Shareholders, rounded down to
the nearest number of whole shares to be issued to each of such shareholders,
("Escrowed Consideration") to an escrow account to be held pursuant to the terms
of the Escrow Agreement substantially in the form attached hereto as Exhibit "C"
("Escrow Agreement"). The Escrowed Consideration shall be held as security for
the obligations of BusLogic and the Principal Shareholders set forth in Article
VIII and shall be subject to reduction and offset in accordance with the
procedures set forth in the Escrow Agreement. Twelve months after the Closing,
the portion of the Escrowed Consideration not required to fulfill the
obligations of the Principal Shareholders set forth in Article VIII will be
distributed in accordance with Sections 3.1 and 3.5 to the Principal
Shareholders in proportion to their respective interests therein. In the event
that the Merger is approved by the shareholders of BusLogic, the Principal
Shareholders shall, without any further act of any of the Principal
Shareholders, be deemed to have consented to and approved (a) the use of the
Escrowed Consideration as collateral for the indemnification obligations under
Article VIII in the manner set forth in the Escrow Agreement, (b) the
appointment of Jesse Chen as the representative of the Principal Shareholders
(the "Representative") under the Escrow Agreement and as the attorney-in-fact
and agent for and on behalf of each of the Principal Shareholders (other than
holders of Dissenting Shares), and the taking by the Representative of any and
all actions and the making of any decisions required or permitted to be taken by
the Representative under the Escrow Agreement (including, without limitation,
the exercise of the power to: (i) authorize delivery to Mylex of Escrowed
Consideration in satisfaction of claims by Mylex pursuant to Article VIII; (ii)
agree to, negotiate, and enter into settlements and compromises of and comply
with orders of courts and awards of arbitrators with respect to such claims;
(iii) resolve any such claims; and (iv) take all actions necessary in the
judgment of the Representative for the accomplishment of the foregoing); and (c)
to all of the other terms, conditions and limitations in the Escrow Agreement.
In the event of any conflict between a provision of this Agreement and the
Escrow Agreement, such provision of the Escrow Agreement shall govern.
ARTICLE V. REPRESENTATIONS AND WARRANTIES
Section 5.1 REPRESENTATIONS AND WARRANTIES OF BUSLOGIC AND PRINCIPAL
SHAREHOLDERS. BusLogic and each of the Principal Shareholders, severally but
not jointly (with any representation or warranty made hereunder by a Principal
Shareholder with respect to any other shareholder of BusLogic being deemed to
have been made to the knowledge of such Principal Shareholder), represent and
warrant to Mylex that, except as disclosed in the corresponding section of the
BusLogic Disclosure Schedule attached as Schedule B ("BusLogic Disclosure
Schedule"):
a. ORGANIZATION, CORPORATE POWER AND GOOD STANDING OF BUSLOGIC. BusLogic
and each of its subsidiaries is a corporation duly organized, validly existing
in good standing under the laws of the State of California and has the corporate
power and authority to carry on its business as now conducted and to own or
lease its properties and other assets as now owned or leased. BusLogic and each
of its subsidiaries is duly qualified as a foreign corporation and is in good
standing under the laws of each jurisdiction where the nature of its business or
its ownership of property requires such qualification, except for such
jurisdictions (individually and in the aggregate) with respect to which the
failure to be so qualified and in good standing could not have a Material
Adverse Effect.
b. CAPITAL STRUCTURE AND TITLE TO SHARES.
i. The authorized capital stock of BusLogic consists of 15,000,000
shares of BusLogic Common Stock and 800,000 shares of BusLogic Preferred Stock.
As of the date of this Agreement, 9,304,275 shares of BusLogic Common Stock are
outstanding, 2,523,563 shares are reserved for issuance pursuant to the exercise
of any BusLogic Stock Options, and 800,000 shares of BusLogic Preferred Stock
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are issued and outstanding. All outstanding shares of BusLogic Common Stock and
BusLogic Preferred Stock are validly issued, fully paid and nonassessable and
not subject to any preemptive rights, rights of first refusal, or right of
rescission, and have been offered, issued, sold and delivered by BusLogic in
compliance with all registration or qualification requirements (or applicable
exemptions therefrom) of applicable federal and state securities laws. Each
share of BusLogic Preferred Stock is convertible into one share of BusLogic
Common Stock. There are no bonds, debentures, notes or other indebtedness
having the right to vote (or convertible into or exercisable for securities
having the right to vote) on any matter on which shareholders may vote ("Voting
Debt") of BusLogic issued or outstanding.
ii. Except as described in subsection (iii) below, there are no
options, warrants, calls, rights, commitments or agreements of any character to
which BusLogic or any of its subsidiaries is a party or by which any of them is
bound, obligating any of them to issue, deliver or sell, or cause to be issued,
delivered or sold, any additional shares of capital stock or any Voting Debt or
obligating any of them to grant, extend or enter into any such option, warrant,
call, right, commitment or agreement. Immediately after the Effective Time,
there will be no option, warrant, call, right or agreement obligating the
Surviving Corporation or any of its subsidiaries to issue, deliver or sell, or
cause to be issued, delivered or sold, any shares of capital stock or any Voting
Debt of any of them or obligating any of them to grant, extend or enter into any
such option, warrant, call, right or agreement (assuming no such right has been
granted by Mylex or any of its subsidiaries). There are no outstanding
contractual obligations of BusLogic or any of its subsidiaries to repurchase,
redeem or otherwise acquire any shares of its capital stock.
iii. Attached as Section 5.1(b)(1) of the BusLogic Disclosure
Schedule ("Shareholders List") is an accurate and complete list of each of the
shareholders of BusLogic Common Stock and BusLogic Preferred Stock, including
the name and address of each such shareholder, each capacity (director, officer,
employee or consultant), if any, in which each shareholder presently serves
BusLogic (or has served BusLogic within the last six months), the number of
shares of each class of BusLogic Capital Stock held by each shareholder, and the
date (by month and year) on which such shares were issued and the nature and
amount of consideration paid for such shares. Attached as Section 5.1(b)(2) of
the BusLogic Disclosure Schedule ("Options List") is an accurate and complete
list of each Person who has the right to acquire shares of BusLogic Common Stock
from BusLogic pursuant to any option, warrant, call, right, commitment or
agreement of any character, including, without limitation, BusLogic Options,
including the name of each such Person, each capacity (director, officers,
employee or consultant) in which such Person presently serves BusLogic (or
served BusLogic at the time such right became effective), the number of shares
of BusLogic Common Stock that such Person has the right to acquire (both at this
time and ultimately with the passage of time) and the nature and amount of
consideration payable to acquire such shares, the date (by month and year) on
which the right to acquire such shares became effective, and the plan and/or
agreement under which such right is memorialized.
iv. Each of the Principal Shareholders hereby represents and warrants
that (A) the description of the shares of BusLogic Capital Stock owned by it on
the Shareholders List is accurate and complete, (B) it owns no other shares, and
has no right to acquire shares, or BusLogic Capital Stock, whether directly or
indirectly from BusLogic or any other person (except as may be described on
Options List), (C) it has good and marketable title to such shares, free and
clear of any Lien, (D) no Person has the right to acquire, or has any claim with
respect to, any of such shares, and (E) it is the record and beneficial owner of
such shares. BusLogic and each of the Principal Shareholders hereby represents
and warrants that (A) the description of the outstanding shares of BusLogic
Capital Stock owned by BusLogic shareholders other than the Principal
Shareholders (the "Other Shareholders") on the Shareholders List is accurate and
complete (with respect to the Principal Shareholders, to their knowledge),
(B) to its knowledge, each Other Shareholder owns no other shares, and has no
right to acquire shares, of BusLogic Capital Stock, whether directly or
indirectly, from BusLogic or any other Person (except as may be described on the
Options List), (C) to its knowledge, each of the Other Shareholders has good and
marketable title to such shares shown on the Shareholders List as being owned by
it, free and clear of any Lien, (D) to its knowledge, no Person, other than
BusLogic, has the right to acquire, or has any claim with respect to, any of
such shares, and (E) to its knowledge, each of the Other Shareholders is the
record
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and beneficial owner of the shares of BusLogic Capital Stock shown on the
Shareholders List as being owned by it.
v. BusLogic owns all of the outstanding shares of capital stock of
each of its subsidiaries, free and clear of all Liens.
c. AUTHORITY.
i. BusLogic has all requisite corporate power and authority to enter
into this Agreement and to consummate the transactions that this Agreement
contemplates, subject to the approval and adoption of this Agreement and the
transactions it contemplates by the shareholders of BusLogic. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
by this Agreement have been duly authorized by all necessary corporate action on
the part of BusLogic. This Agreement has been duly executed and delivered by
BusLogic and constitutes a valid and legally binding obligation of BusLogic,
enforceable in accordance with its terms, subject to the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally and of general principles of equity.
ii. Each of the Principal Shareholders hereby represents and
warrants that it has the requisite legal capacity to execute and deliver this
Agreement, the Escrow Agreement, and, if applicable, the Non-Competition
Agreement substantially in the applicable form attached hereto as part of
Exhibit "D" ("Non-Competition Agreement") (collectively, the "Transaction
Agreements") and to perform their respective obligations under, and consummate
the transactions contemplated by, each of the Transaction Agreements. Each of
the Principal Shareholders hereby represents and warrants that each of the
Transaction Agreements to which it is a party constitutes the valid and legally
binding obligations of such Principal Shareholder, enforceable against such
Principal Shareholder in accordance with its respective terms, subject to the
effect of any applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally and of general principles of
equity.
iii. The execution and delivery of each of the Transaction
Agreements does not, and the consummation of the transactions contemplated by
each of the Transaction Agreements will not, (A) result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation, or
the loss of a material benefit, under, or the imposition of a Lien on any assets
of BusLogic or any of its subsidiaries pursuant to (any such violation, default,
right of termination, cancellation or acceleration, loss or imposition, a
"Violation"), any provision of the Articles of Incorporation or Bylaws of
BusLogic or any of its subsidiaries; or (B) subject to obtaining or making the
consents, approvals, orders, authorizations, registrations, declarations, and
filings referred to in paragraph (iv) below, result in any Violation with
respect to any loan or credit agreement, note, mortgage, indenture, lease, or
other agreement, obligation, instrument, license, judgment, order, decree,
statute, law, rule or regulation presently in effect and applicable to BusLogic,
any of its subsidiaries or any of the Principal Shareholders or its or their
respective properties or assets, which Violation could have (either individually
or in the aggregate) a Material Adverse Effect or impair the ability of any
Principal Shareholder to perform any of its obligations under any of the
Transaction Agreements.
iv. The execution and delivery of each of the Transaction Agreements,
and the consummation of the transactions contemplated by each of the Transaction
Agreements, by BusLogic or any of the Principal Shareholders will require no
consent, approval, order or authorization of, or registration, declaration or
filing with, any Governmental Entity, or any other Person, except for the filing
of the Merger Filing Documents with the Secretary of State, the filing of the
California Securities Application with the California Commission of Corporations
and the obtaining of the related permit, the approval of the Merger by the
shareholders of BusLogic, the filing with the California Franchise Tax Board of
an application for a tax clearance certificate for the Merger Subsidiary and the
obtaining of such certificate, and the filing by Mylex, as contemplated by
Section 3.2, of an S-8 Registration Statement with respect to the BusLogic stock
plans with the SEC.
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d. COMPLIANCE WITH APPLICABLE LAWS. BusLogic and its subsidiaries hold
all permits, licenses, variances, exemptions, order and approvals of all
Governmental Entities that are material to the operation of the business of
BusLogic and its subsidiaries and the failure of which to hold would have,
individually or in the aggregate, a Material Adverse Effect (the "BusLogic
Permits"). BusLogic and each of its subsidiaries is in compliance with the
terms of all applicable BusLogic Permits, except where the failure so to comply
could not have (either individually or in the aggregate) a Material Adverse
Effect. The business of BusLogic and each of its subsidiaries has not been
conducted and is not being conducted in violation of, and neither BusLogic nor
any of its subsidiaries is or has been in violation of, any Applicable Laws,
except any such violation which could not have (either individually or in the
aggregate) a Material Adverse Effect. Neither BusLogic nor any of its
subsidiaries has received any notice of any alleged violation of any Applicable
Laws, a violation of which would have a Material Adverse Effect on BusLogic. No
investigation by any Governmental Entity with respect to BusLogic or any of its
subsidiaries is pending or, to the knowledge of BusLogic or any Principal
Shareholder, threatened.
e. LITIGATION. There is no suit, action, proceeding, order or
investigation, at law or equity, (i) pending or, to the knowledge of BusLogic or
any Principal Shareholder, overtly threatened against or affecting BusLogic or
any of its subsidiaries or any of their respective properties or other assets,
or (ii) pending or, to the knowledge of each Principal Shareholder, threatened
against or affecting such Principal Shareholder or any of such Principal
Shareholder's properties or other assets, the outcome of which could impair the
ability of such Principal Shareholder to perform any of its obligations under
any of the Transaction Agreements.
f. FINANCIAL STATEMENTS. BusLogic has delivered to Mylex the balance
sheets of BusLogic as at January 31, 1993, 1994 and 1995, and the related
statements of income, retained earnings and changes in financial position for
the years then ended, audited by Price Waterhouse L.L.P., independent certified
public accountants, and the unaudited balance sheet of BusLogic as at October
31, 1995 (the "BusLogic Balance Sheet"), and the related unaudited statements of
income for the nine month period then ended, prepared by the management of
BusLogic (collectively, the "BusLogic Financial Statements"). Each of the
BusLogic Financial Statements fairly presents the financial condition and
results of operation of BusLogic as at the respective date and for the
respective periods in accordance with generally accepted accounting principles
consistently applied throughout the applicable period; provided, however, such
financial statements as at, and for the period ended, October 31, 1995 are
subject to normal recurring year end audit adjustments and do not include
footnotes.
g. TAXES. BusLogic has filed when due, or obtained an extension to file,
all tax returns, reports and information in respect of taxes required to be
filed by it or any of its subsidiaries, and has timely paid, or has set up an
adequate reserve for the payment of, all taxes required to be paid as shown on
such returns. All such returns, reports and other information with respect to
any material tax liability of BusLogic are accurate and complete in all material
respects. Neither BusLogic nor any of its subsidiaries has any liability for
taxes in excess of the amounts paid or the reserves established by BusLogic. To
the knowledge of BusLogic and each Principal Shareholder, no deficiencies for
any material tax liability of BusLogic have been proposed, asserted or assessed
against BusLogic or any of its subsidiaries, except such deficiencies as are
fully reserved by BusLogic. There are no pending or, to the knowledge of
BusLogic or any Principal Shareholder, threatened audits, investigations or
claims in respect of taxes payable by BusLogic or any of its subsidiaries. None
of the federal income tax returns of BusLogic has been examined by or settled
with the United States Internal Revenue Service (the "IRS"), and no waiver
extending the statute of limitations with respect to any such return has been
requested or granted.
h. CERTAIN AGREEMENTS. Neither BusLogic nor any of its subsidiaries is a
party to any oral or written (i) partnership or joint venture agreement,
(ii) noncompetition or similar agreement that restricts BusLogic or any of its
subsidiaries from engaging in any type of business, (iii) agreement with any
executive officer or other employee of BusLogic or any of its subsidiaries, the
benefits of which are contingent, or the terms of which will change materially,
upon the occurrence of a transaction involving BusLogic of the nature of the
transactions contemplated by this Agreement, (iv) agreement with respect to any
executive officer of BusLogic or any of its subsidiaries providing any term of
employment or
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compensation guaranty, or (v) agreement or plan, including, without limitation,
any stock option plan, stock appreciation rights plan, restricted stock plan or
stock purchase plan, any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the occurrence of any
of the transactions contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement.
i. SUBSIDIARIES. BusLogic has no subsidiaries other than as described in
the BusLogic Disclosure Schedule, each of which is wholly-owned by BusLogic
except as noted in such schedule. BusLogic does not have any other subsidiaries
or any other interest, direct or indirect, in any corporation, partnership,
joint venture or other business entity.
j. ABSENCE OF CERTAIN CHANGES OR EVENTS. Neither BusLogic nor any of its
subsidiaries has incurred any material liability required by generally accepted
accounting principles to be included in the BusLogic Balance Sheet which is not
included therein. Since the date of the BusLogic Balance Sheet, there has been
no change, or, to the knowledge of BusLogic or any of the Principal
Shareholders, any event involving prospective change, in the business, assets,
condition (financial or otherwise) or results of operations of BusLogic or any
of its subsidiaries that has had, or is reasonably likely to have, (either
individually or in the aggregate) a Material Adverse Effect.
k. SHAREHOLDER APPROVAL REQUIRED. The affirmative vote of the holders of
the majority of the outstanding shares of BusLogic Common Stock and of BusLogic
Preferred Stock entitled to vote is the only vote of the holders of any class or
series of BusLogic capital stock necessary to approve this Agreement and the
transactions it contemplates.
l. BROKER'S AND FINDER'S FEES. Other than fees to be paid to legal and
accounting advisors acting as such, neither BusLogic nor any of its
subsidiaries, nor anyone acting on their behalf, has paid or become obligated to
pay any fee or commission to any broker, finder, intermediary, financial advisor
or consultant or other Person in connection with the transactions contemplated
by this Agreement, and, except as stated above, no Person is entitled to receive
from BusLogic or any of its subsidiaries any such fee or commission.
m. CORPORATE RECORDS; OTHER INFORMATION. The minute books of BusLogic and
its subsidiaries made available to Mylex constitute complete and accurate, in
all material respects, records of all meetings and actions taken by the Board of
Directors, committees of the Board of Directors and the shareholders of BusLogic
and each subsidiary. To the knowledge of BusLogic and the Principal
Shareholders, all documents and other written information (other than any
projections) as to existing facts relating to BusLogic and its subsidiaries, and
their respective assets and liabilities, not otherwise covered by a
representation and warranty in this Section 5.1, provided to Mylex by BusLogic,
or its agents, in connection with this Agreement are accurate and complete in
all material respects, except to the extent specifically supplemented or
corrected before the date of this Agreement with additional documents or written
information provided to Mylex.
n. BOOKS AND RECORDS.
i. The books, records and accounts of BusLogic and its subsidiaries
(A) are in all material respects accurate and complete, (B) have been maintained
in accordance with good business practices on a basis consistent with prior
years, (C) are stated in reasonable detail and accurately and fairly reflect the
transactions and dispositions of the assets of BusLogic and its subsidiaries,
and (d) accurately and fairly reflect the basis for the BusLogic Financial
Statements.
ii. BusLogic has devised and maintains a system of internal
accounting controls sufficient to provide reasonable assurances that (A)
transactions are executed in accordance with management's general or specific
authorization, (B) transactions are recorded as necessary (1) to permit
preparation of financial statements in conformity with generally accepted
accounting principles or any other criteria applicable to such statements, and
(2) to maintain accountability for assets, and (C) the amount recorded
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for assets on the books and records of BusLogic and its subsidiaries is compared
with the existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
o. LABOR AND EMPLOYMENT MATTERS.
i. BusLogic and each of its subsidiaries is and has been in
compliance in all material respects with all Applicable Laws respecting
employment and employment practices, terms and conditions of employment and
wages and hours, and such laws respecting employment discrimination, equal
opportunity, affirmative action, worker's compensation, occupational safety and
health requirements and unemployment insurance and related matters, a failure to
be in compliance with which (either individually or in the aggregate) could have
a Material Adverse Effect and is not engaged in and has not engaged in any
unfair labor practice, the engagement in which (either individually or in the
aggregate) could have a Material Adverse Effect.
ii. Neither BusLogic nor any of its subsidiaries is delinquent or in
arrears in payments to any of its officers, directors, employees or agents for
any wages, salaries, commission, bonuses or other direct compensation for any
services performed by them or benefits required to be provided or amounts
required to be reimbursed to such officers, directors, employees or agents.
iii. If the employment of any such officers, directors, employees or
agents terminates for any reason, neither BusLogic, any of its subsidiaries,
Mylex, Merger Subsidiary nor the Surviving Corporation will, pursuant to any
agreement in effect, or by reason of any act or omission by BusLogic or any of
its subsidiaries, before the Effective Time, be liable to any of such officers,
directors, employees or agents for so-called "severance pay" or any other
payments, benefits or damages.
iv. There is no material controversy pending or, to the knowledge of
BusLogic and each of the Principal Shareholders, threatened between BusLogic and
any of its subsidiaries and any of their respective employees or consultants or
former employees or consultants.
v. Neither BusLogic nor any subsidiary (i) has ever been or is now
subject to a union organizing effort, (ii) is subject to any collective
bargaining agreement with respect to any of its employees, (iii) is subject to
any other contract, written or oral, with any trade or labor union, employees'
association or similar organization, or (iv) has any material current labor
disputes. BusLogic and each of its subsidiaries has good labor relations, and
has no knowledge of any facts indicating that the consummation of the
transactions contemplated hereby or by any of the other Transaction Agreements
will have a material adverse effect on such labor relations, and has no
knowledge that any of its Key Employees intends to leave its employ.
vi. Neither BusLogic nor any of its subsidiaries has any employment
contracts or consulting agreements currently in effect that are not terminable
at will (other than agreements with the sole purpose of providing for the
confidentiality of proprietary information or assignment of inventions). To the
knowledge of BusLogic, no employee of BusLogic or any of its subsidiaries is in
violation of any term of any employment contract, patent disclosure statement,
noncompetition agreement, or any other contract or agreement, or any restrictive
covenant, relating to the right of any such employee to be employed thereby, or
to use Proprietary Information of others, and the employment of such employees
does not subject BusLogic or any subsidiary to any claim by any other Person.
vii. A list of all employees, officers and consultants of BusLogic
and its subsidiaries and their current compensation is set forth on Schedule
5.1(o)(vii) of the BusLogic Disclosure Schedule. Such list also describes any
vested benefits, including, without limitation, vacation or sick pay, which each
Person on such list is entitled to receive from BusLogic.
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p. EMPLOYEE BENEFIT PLANS.
i. Section 5.1(p) of the BusLogic Disclosure Schedule lists each
employment, severance or other similar contract, arrangement or policy and each
plan or arrangement (written or oral) providing for insurance coverage
(including any self-insured arrangements), workers' benefits, vacation benefits,
severance benefits, disability benefits, death benefits, hospitalization
benefits, retirement benefits, deferred compensation, profit-sharing, bonuses,
stock options, stock purchase, phantom stock, stock appreciation or other forms
of incentive compensation or post-retirement insurance, compensation or benefits
for employees, consultants or directors which (A) is not a BusLogic Employee
Plan (as defined in 5.1(p)(ii), (B) is entered into, maintained or contributed
to, as the case may be, by BusLogic or any subsidiary and (C) covers any
employee or former employee of BusLogic or any subsidiary. Such contracts,
plans and arrangements as are described in this Section are herein referred to
collectively as the "BusLogic Benefit Arrangements." Each BusLogic Benefit
Arrangement has been maintained in substantial compliance with its terms and
with the requirements prescribed by any and all Applicable Laws. BusLogic has
made available or delivered to Mylex an accurate and complete copy or
description of each BusLogic Benefit Arrangement.
ii. With respect to all employees and former employees of BusLogic or
any subsidiary, neither BusLogic nor any subsidiary presently maintains,
contributes to or has any liability (including current or potential multi-
employer plan withdrawal liability) under any (A) non-qualified deferred
compensation or retirement plan or arrangement that is an "employee pension
benefit plan" as defined in Section 3(2) of ERISA, (B) qualified defined
contribution retirement plan or arrangement that is an employee pension benefit
plan, (C) qualified defined benefit pension plan or arrangement that is an
employee pension benefit plan, (D) "multi-employer plan" as defined in Section
3(37) of ERISA, (E) unfunded or funded medical, health or life insurance plan or
arrangement for present or future retirees or present or future terminated
employees that is an "employee welfare benefit plan" as defined in Section 3(1)
of ERISA, or (F) any other employee welfare benefit plan (collectively, the
"BusLogic Employee Plans").
iii. With respect to each of the BusLogic Employee Plans listed in
the BusLogic Disclosure Schedule, BusLogic has furnished to Mylex accurate and
complete copies of (A) the plan documents, (B) the most recent determination
letter received from the Internal Revenue Service, (C) the latest actuarial
valuation, (D) the latest financial statement, (E) the last Form 5500 Annual
Report, and (F) all related trust agreements, insurance contracts or other
funding agreements that implement the plan. Neither BusLogic nor any
subsidiary, nor any of their respective directors, officers, employees or any
other "fiduciary," as defined in Section 3(21) of ERISA, has any liability for
failure to comply with ERISA or the Code for any action or failure to act in
connection with the administration or investment of any such plan.
iv. All insurance contracts or funding agreements that implement any
of the employee benefit plans listed in the BusLogic Disclosure Schedule are
fully insured or reserved in amounts sufficient to pay all claims incurred.
v. There has been no amendment to, written interpretation or
announcement (whether or not written) by BusLogic or any subsidiary relating to,
or change in employee participation or coverage under, any BusLogic Employee
Plan or BusLogic Benefit Arrangement that would increase materially the expense
of maintaining such BusLogic Employee Plan or BusLogic Benefit Arrangement above
the level of the expense incurred in respect thereof for the fiscal year ended
January 31, 1995.
vi. No benefit payable or which may become payable by BusLogic or any
subsidiary pursuant to any BusLogic Employee Plan or any BusLogic Benefit
Arrangement or as a result of or arising under this Agreement shall constitute
an "excess parachute payment" (as defined in Section 280G(b)(1) of the Code)
which is subject to the imposition of an excise tax under Section 4999 of the
Code or which would not be deductible by reason of Section 280G of the Code.
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q. INSURANCE. BusLogic and each of its subsidiaries maintains the
insurance listed in the BusLogic Disclosure Schedule. The BusLogic Disclosure
Schedule describes all such insurance coverage, including, without limitation,
by nature and amount of coverage, term, insurer, premium, deductible and non-
standard exclusions. All policies of insurance and fidelity or surety bonds
insuring BusLogic or any of its subsidiaries, or their business, assets,
employees, officers or directors, are in full force and effect. BusLogic and
each of its subsidiaries is in compliance, in all material respects, with the
terms of such policies and instruments. As of the date of this Agreement, there
are no claims by BusLogic or any of its subsidiaries under any such policy or
instrument as to which any insurance company is denying liability or defending
under a reservation of rights clause. Neither BusLogic nor any subsidiary has
been refused any insurance relating to its business, nor has any insurance
carrier to which BusLogic or any subsidiary has applied for insurance during the
last three years limited any coverage relating to their respective businesses.
r. CONTRACTS.
i. The BusLogic Disclosure Schedule contains a complete and correct
list of all agreements, contracts and commitments of the following types,
written or oral, to which BusLogic or any subsidiary is a party on the date of
this Agreement and which is in effect on the date of this Agreement or, pursuant
to its terms, may be in effect in the future:
(A) mortgages, indentures, security agreements, guarantees,
pledges and other agreements and instruments relating in any way to the
borrowing of money or extension of credit (other than with respect to normal
payment terms for trade debt incurred in the ordinary course of its business);
(B) employment, consulting or agency agreements;
(C) collective bargaining agreements or contracts with any labor
union;
(D) bonus, profit-sharing, compensation, stock option, pension,
retirement, deferred compensation, severance or other plans, trusts or funds for
the benefit of employees (whether or not legally binding and to the extent not
included in Section 5.1(p)(i) and (ii) of the BusLogic Disclosure Schedule);
(E) sales, agency, dealer, manufacturer's representative or
distributorship agreements;
(F) agreements, orders or commitments for the purchase by
BusLogic of raw materials, supplies or finished products exceeding or which may
exceed $30,000 in any consecutive 12-month period;
(G) agreements, orders or commitments for the sale by BusLogic
of its products exceeding or which may exceed $30,000 in any consecutive 12-
month period;
(H) licenses of patent, copyright, trademark or other rights
relating to any Intellectual Property and Proprietary Information, whether as a
licensor or licensee (other than standard "shrink-wrap", end-user license
agreements to which BusLogic is a party, provided that any form of license
agreement under which Buslogic is the licensor shall be included in the BusLogic
Disclosure Schedule);
(I) leases of real or personal property requiring annual rental
payments of more than $30,000;
(J) contracts containing covenants purporting to limit
BusLogic's or any of its subsidiaries' freedom to compete in any type of
business in any geographic area;
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(K) brokerage or finder's agreements;
(L) partnership or joint venture agreements or arrangements or
any other agreements that involve the sharing of profits with other persons;
(M) any agreement with any of its officers, directors or
shareholders or their respective affiliates or relatives or any entity in which
any of such Persons has an economic interest or equity participation; or
(N) other agreements, contracts and commitments that involve or
may involve payments or receipts of more than $30,000 in any consecutive 12-
month period or otherwise are material to BusLogic or any of its subsidiaries.
BusLogic has delivered or made available to Mylex accurate and complete copies
of all material written agreements, contracts and commitments, together with all
amendments, and accurate descriptions of all material oral agreements, listed in
Section 5.1(r) of the BusLogic Disclosure Schedule. All such agreements,
contracts and commitments are in full force and effect and there are no events
or conditions that, after notice or lapse of time or both, would constitute a
default thereunder by BusLogic or any of its subsidiaries. To the knowledge of
BusLogic and each of the Principal Shareholders, no such agreement, contract or
commitment has been breached or cancelled by the other party thereto. Neither
BusLogic nor any Principal Shareholder has any knowledge of any expected breach
or cancellation by any other party of any such agreement, contract or
commitment. Since the date of the BusLogic Balance Sheet, to the knowledge of
BusLogic and each of the Principal Shareholders, no customer or supplier of
BusLogic or any of its subsidiaries has indicated that it will stop or decrease
its business with BusLogic or any subsidiary. BusLogic and its subsidiaries
have performed, in all material respects, all obligations that any of such
agreements, contracts or commitments require them to perform and has not
received any claim of default under any of such agreements, contracts or
commitments. Neither BusLogic nor any subsidiary has any knowledge or present
expectation that it is unlikely, in the future, to be able to perform any of its
material obligations under any such agreement, contract or commitment. Neither
BusLogic nor any subsidiary has any material liability for renegotiation of
government contracts or subcontracts, if any.
s. PATENTS, TRADEMARKS AND OTHER INTELLECTUAL PROPERTY RIGHTS.
i. Section 5.1(s) of the BusLogic Disclosure Schedule sets forth an
accurate and complete list of all the following intellectual property rights
belonging to BusLogic or its subsidiaries ("Intellectual Property"):
(A) all patents and patent applications owned or filed by
BusLogic or any subsidiary, and any amendment thereto, including in each case
the country of filing, filing number, date of issue, expiration date and title;
(B) all registered trademarks and trademark applications owned
or filed by BusLogic or any subsidiary, and any amendment thereto, including in
each case the country of filing, filing number, date of issue and expiration
date;
(C) all registered copyrights owned or filed by BusLogic or any
subsidiary and any amendment thereto, including in each case the country of
filing, filing number, date of issue and expiration date;
(D) all other trademarks, service marks, trade names and
copyrights and all computer software and trade secrets owned by BusLogic or any
subsidiary the inability of which to use could have a Material Adverse Effect;
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(E) all license or purchase agreements pursuant to which
BusLogic or any subsidiary acquired rights to any intellectual property (other
than standard "shrink-wrap", end-user license agreements) and all agreements,
oral or written, pursuant to which BusLogic or any subsidiary must pay royalties
or other sums to any Person with respect to any intellectual property (other
than off-the-shelf, commercially available software used in the ordinary course
of BusLogic's business), and any amendment thereto, and
(F) all license agreements, oral or written, pursuant to which
BusLogic or any subsidiary has granted any Person any rights with respect to any
of its intellectual property (other than standard "shrink-wrap", end-user
license agreements) and all agreements, oral or written, pursuant to which
BusLogic or any subsidiary is entitled to receive royalties or other sums from
any Person with respect to any intellectual property (other than such "shrink-
wrap" licenses), and any amendment thereto.
ii. BusLogic has made available or delivered to Mylex and its counsel
accurate and complete copies of all patents, applications and agreements
referred to in Section 5.1(s)(i). The patents and patent applications and
registered copyrights and trademarks and applications therefor listed in the
BusLogic Disclosure Schedule have been duly registered with, filed in or issued
by, as the case may be, each appropriate Governmental Entity. To the extent any
ownership of the Intellectual Property has been registered, BusLogic also is the
registered owner, in each case free and clear of all licenses or Liens.
iii. BusLogic and each subsidiary owns, or possesses adequate rights
to use, all the Intellectual Property and all inventions, processes, designs,
formulae, techniques, trade secrets, know-how, proprietary processes and
formulae, masks and related rights, confidential information, customer lists and
other proprietary rights, including, without limitation, bills of material, test
plans, production drawings and method and operation sheets, all source and
object codes, algorithms, architecture, structure, display screens, layouts,
development tools, procedures, tests and standards, together with all
manufacturing prototypes, blueprints, specifications, drawings, photomasters,
documasters, engineering data, and all recorded knowledge, documentation and
media constituting, describing, relating to or evidencing the same
(collectively, the "Proprietary Information") necessary for or material to the
conduct of their respective businesses, with no known conflict with or
infringement of the rights of any other Person, and free and clear of all Liens.
The operation of BusLogic's business and the business of each subsidiary does
not infringe, violate or misappropriate any patent, trademark, trade secret,
copyright or other intellectual property rights of any Person. BusLogic and
each subsidiary is in full compliance, in all material respects, with all
agreements pursuant to which each may have acquired, by license or otherwise,
any Intellectual Property or Proprietary Information.
iv. BusLogic has taken reasonable steps necessary to preserve the
confidential nature of all Proprietary Information. Each of the employees and
consultants of BusLogic and its subsidiaries and any other Persons who, either
alone or in concert with others, developed, invented, discovered, derived,
programmed or designed any trade secrets or other intellectual property rights
of BusLogic, or who have knowledge of or access to information relating to such
intellectual property rights, have executed confidentiality agreements and
assignments of intellectual property, in forms provided to Mylex, which, among
other provisions, put the other party to such agreement on notice that the
Proprietary Information is proprietary to BusLogic and not to be divulged or
misused. To the knowledge of BusLogic and each Principal Shareholder, the
Proprietary Information has not been used, divulged, or appropriated by, or for
the benefit of, any past or present employees or consultants of BusLogic or any
of its subsidiaries or other Persons or to the detriment of BusLogic or any of
its subsidiary.
v. To the knowledge of BusLogic and each Principal Shareholder, no
third party is infringing upon any of the Intellectual Property or Proprietary
Information, no claim exists that any of the Intellectual Property or
Proprietary Information is not valid or enforceable or infringes any
intellectual property rights of any other Person, and none of the Intellectual
Property or Proprietary Information is subject to any outstanding order, ruling,
decree, judgment or stipulation by any Governmental Authority.
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vi. To the knowledge of BusLogic and each Principal Shareholder,
neither BusLogic nor any subsidiary has, by action or omission, waived any of
its rights respecting any Intellectual Property or Proprietary Information.
BusLogic has the right to use, free and clear of any royalties, claims or rights
of others, all Intellectual Property and Proprietary Information, other than the
Intellectual Property described in Section 5.1(s)(i)(E) and Intellectual
Property licensed by BusLogic subject to a standard "shrink-wrap", end-user
license agreement.
vii. No licenses, sublicenses or other agreements relating to the
Intellectual Property or Proprietary Information would limit or restrict, in any
material respect, the rights of the Surviving Corporation to operate the
business conducted by BusLogic and its subsidiaries before the Closing Date or
grant to any Person any rights in any Intellectual Property or Proprietary
Information.
viii. The rights of BusLogic and its subsidiaries with respect to all
Intellectual Property is valid and enforceable, and BusLogic and each subsidiary
has the exclusive right to manufacture, market, license, sell or otherwise use
all Intellectual Property and Proprietary Information (other than as excepted in
Section 5.1(s)(vi)) in connection with their respective businesses. There are
no oppositions, cancellations or other similar proceedings pending or, to the
knowledge of BusLogic and each of the Principal Stockholders, threatened with
respect to any pending patent applications or copyright or trade mark
registrations of BusLogic or any of its subsidiaries.
ix. The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not constitute a
breach of any instrument or agreement governing any Intellectual Property, will
not cause the forfeiture or termination or give rise to a right of forfeiture or
termination of any Intellectual Property or impair the right of BusLogic or the
Surviving Corporation to use, sell or license any Intellectual Property or
portion thereof. Neither the manufacture, marketing, license, sale or intended
use of any product currently licensed or sold by BusLogic or any of its
subsidiaries or currently under development by BusLogic or any of its
subsidiaries violates any license, contract or agreement between BusLogic or any
of its subsidiaries and any third party or infringes any intellectual property
right of any other party.
t. ENVIRONMENTAL CONDITION AND GOVERNMENTAL AUTHORIZATIONS.
i. All Premises are free from contamination from any Hazardous
Materials that have caused or could cause Environmental Damages. Neither
BusLogic, any of its subsidiaries nor any other Person previously involved in
operations at any Premises caused or incurred any Environmental Damages with
respect to the Premises.
ii. Neither BusLogic, any of its subsidiaries nor any prior owner or
occupant of the Premises has received notice of any alleged violation of
Environmental Requirements or notice of any alleged liability for Environmental
Damages with respect to the Premises. There exists no writ, injunction, decree,
order or judgment outstanding, nor any claim, suit, proceeding, citation, fine,
penalty, directive, summons or investigation, pending or, to the knowledge of
BusLogic, threatened, relating to the ownership, use, maintenance or operation
of the Premises by any Person, any alleged violation of Environmental
Requirements respecting the Premises, or the suspected presence of any Hazardous
Materials on the Premises, nor does there exist any basis, for such claim, suit,
proceeding, citation, fine, penalty, directive, summons or investigation.
iii. There is not constructed, generated, manufactured, placed,
deposited, stored, disposed of or located on any Premises any Hazardous
Materials, or any transformers, capacitors, ballasts, or other equipment which
contains dielectric fluid containing polychlorinated biphenyls, or any asbestos.
u. REAL ESTATE. Section 5.1(u) of the BusLogic Disclosure Schedule sets
forth a list and summary description of (i) all real property owned by BusLogic
and each of its subsidiaries and all buildings and other structures located on
such real property; (ii) all leases, subleases or other agreements under which
BusLogic or any of its subsidiaries is lessor or lessee of any real property;
(iii) all options held by BusLogic
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or any subsidiary or contractual obligations on any of their parts to purchase
or acquire any interest in real property; and (iv) all options granted by
BusLogic or any of its subsidiaries or contractual obligations on any of their
parts to sell or dispose of any interest in real property. BusLogic is the
owner of record, lessee under the leases or holder of the options, as
appropriate, of each of the items described in Section 5.1(u) of the BusLogic
Disclosure Schedule. All leases, subleases and other agreements with respect to
such real property are in full force and effect and neither BusLogic nor any
subsidiary has received any notice of any default thereunder. BusLogic has good
and marketable title to all real property owned by BusLogic and its subsidiaries
and all buildings and other structures located on such real property, free and
clear of all Liens, except statutory liens securing payments not yet due. The
leasehold interests of BusLogic and its subsidiaries are subject to no Liens and
enjoy a right of quiet possession as against any Lien on the property. Each of
the options described in Section 5.1(u) of the BusLogic Disclosure Schedule is
in full force and effect and subject to no Lien. Except as separately
identified in Section 5.1(u) of the BusLogic Disclosure Schedule, no approval or
consent of any person is needed in order that the leases, options or other
agreements described in Section 5.1(u) of the BusLogic Disclosure Schedule
continue in full force and effect following the consummation of the transactions
contemplated by this Agreement. Neither such real property nor any current use
of such real property materially violates any local zoning or similar land use
laws or other governmental regulations. To the knowledge of BusLogic and each
of the Principal Shareholders, no current use of any of the properties or assets
of BusLogic or any of its subsidiaries depends on a nonconforming use or other
permit, the absence of which would materially limit the use of such properties
or assets as now being used. There do not exist any unsafe conditions on,
material defects in or need for material (either individually or in the
aggregate) repairs to, any real property, buildings, or improvements owned or
occupied by BusLogic or any of its subsidiaries.
v. TANGIBLE PROPERTY. Section 5.1(v) of the BusLogic Disclosure Schedule
sets forth all interests owned or claimed by BusLogic or any subsidiary
(including, without limitation, all options) in or to the plant, machinery,
equipment, furniture, leasehold improvements, fixtures, vehicles, structures,
and other tangible property that is material to their respective businesses
("Tangible Property"). To the knowledge of BusLogic and each of the Principal
Shareholders, (i) all material leases, conditional sale contracts, franchises or
licenses pursuant to which BusLogic or any of its subsidiaries may hold or use
any interest owned or claimed by BusLogic or any of its subsidiaries (including,
without limitation, all options) in or to Tangible Property are in full force
and effect and, with respect to the performance of BusLogic or any subsidiary
thereunder, there is no default or event of default or event which, with notice
or lapse of time or both, would constitute a default, and (ii) all Tangible
Property is in good operating condition and repair. During the past three
years, there has been no significant interruption of the operations of BusLogic
or any subsidiary due to inadequate maintenance of any Tangible Property. All
leases of personal property to which BusLogic or any of its subsidiaries is a
party are fully effective and afford BusLogic or the subsidiary peaceful and
undisturbed possession of the subject matter of the lease so long as it is not
in default thereunder.
w. INVENTORIES. The Inventory recorded on, and the Inventory created or
purchased since the date of, the BusLogic Balance Sheet, in excess of applicable
reserves, consists of a quantity and quality usable and salable in the ordinary
course of business of BusLogic and its subsidiaries, is not excessive or
obsolete, as determined by generally accepted accounting principles, and is not
damaged or defective, in any material respects, and meets, in all material
respects, all applicable specifications therefor disseminated by BusLogic.
x. ACCOUNTS RECEIVABLE. The Accounts Receivable reflected on the BusLogic
Balance Sheet (except those collected since such date) and such additional
Accounts Receivable as are reflected on the books of BusLogic are good and
collectible except to the extent of any reserves on the BusLogic Balance Sheet,
as subsequently modified consistent with past practices. All such Accounts
Receivable have been generated in the ordinary course of business and reflect a
bona fide obligation for the payment of goods or services provided by BusLogic
or any of its subsidiaries.
y. SUPPLIERS AND CUSTOMERS. Section 5.1(y) of the BusLogic Disclosure
Schedule sets forth BusLogic's 20 largest suppliers and 20 largest customers (in
each case by dollar volume) in 1994 and its
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20 largest suppliers and 20 largest customers (in each case by dollar volume) in
1995. BusLogic has no material disputes with any of its respective suppliers or
customers. No supplier or customer of BusLogic, a loss of which could have a
Material Adverse Effect or which is included on such schedule, has cancelled or
terminated, or, to the knowledge of BusLogic and each of its Principal
Shareholders, overtly threatened to cancel or terminate, its relationship with
BusLogic or has during 1995 decreased materially, or, to the knowledge of
BusLogic and each of its Principal Shareholders, threatened to decrease or limit
materially, its services, supplies or materials to BusLogic or any of its
subsidiaries or its usage or purchase of the Products or services of BusLogic or
any of its subsidiaries, as the case may be. Neither BusLogic nor any Principal
Shareholder has any knowledge that any such supplier or customer intends to
cancel or otherwise modify its relationship with BusLogic or any of its
subsidiaries or to decrease materially or limit its services, supplies or
materials to BusLogic or any of its subsidiaries or its usage or purchase of the
Products or services of BusLogic or any of its subsidiaries, as the case may be.
The consummation of the transactions contemplated by this Agreement will not, to
the knowledge of BusLogic or any Principal Shareholder, based on oral or written
comments of any of its suppliers or customers, adversely affect the relationship
of BusLogic with any such supplier or customer.
z. PRODUCTS; WARRANTY POLICIES.
i. No Product Liability claims have been made to or, to the
knowledge of BusLogic or any of the Principal Shareholders, threatened against
Buslogic or any of its subsidiaries relating to any Products designed,
manufactured or distributed by BusLogic or any of its subsidiaries, and there is
no legitimate basis for any such claim known to Buslogic or any Principal
Shareholder.
ii. The Products (A) are, and at all times have been, manufactured,
sold and marketed in compliance in all material respects with all Applicable
Laws; and (B) are, and at all times have been, fit for the ordinary purposes for
which they were intended and (C) conform in all material respects to any
specifications, promises or affirmations of fact made or agreed to in writing by
Buslogic or any of its subsidiaries, or with the authorization or consent of
BusLogic or any of its subsidiaries, on the Product's container or label or in
connection with its sale.
iii. Buslogic has obtained and maintains all consents, approvals and
clearances necessary in order to market the Products in all geographic areas in
which they are marketed, the failure of any of which to obtain or maintain could
have a Material Adverse Effect.
iv. To the knowledge of BusLogic and each of the Principal
Shareholders, there are no latent or patent design, manufacturing or other
defects with respect to any Products and no basis for any Governmental Entity to
order a recall of any Products. All Products contain adequate warnings,
presented in a reasonably prominent manner, in accordance with Applicable Laws
and current industry practice, with respect to their contents and use. There
are no statements, citations or decisions by any Governmental Entity that any
Product is defective or fails to meet any standards promulgated by any such
Governmental Entity. No Governmental Entity has ordered the recall of any
Products.
v. Schedule 5.1(z) of the BusLogic Disclosure Schedule sets forth all
of the express product warranty, repair and replacement policies and
obligations, formal and informal, of Buslogic and its subsidiaries relating to
the Products manufactured or sold since January 1, 1991.
aa. CERTAIN TRANSACTIONS AND AGREEMENTS. To the knowledge of BusLogic and
each of its Principal Shareholders, no officer or director of BusLogic or any
"affiliate" or "associate" (as those terms are defined in Rule 405 promulgated
under the Securities Act) of any such Person has had, either directly or
indirectly, a material interest in: (i) any Person which purchases or licenses
from, or sells, licenses or furnishes to, BusLogic or any subsidiary any goods,
property, technology or intellectual or other property rights or services; or
(ii) any contract or agreement to which BusLogic or any subsidiary is a party or
by which it may be bound or affected in any material respect. To the knowledge
of BusLogic and each of its Principal Shareholders, none of the officers of
BusLogic or any subsidiary, nor any member of their immediate families, has any
direct or indirect ownership interest in any firm or
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corporation that competes with BusLogic (except with respect to any interest in
less than one percent of the stock of any corporation whose stock is publicly
traded). None of such officers or directors, or any member of their immediate
families, is directly or indirectly interested in any contract or informal
arrangement with BusLogic or any subsidiary, except for normal compensation for
services as an officer, director or employee thereof. None of such officers or
directors or family members has any interest in any property, real or personal,
tangible or intangible, including inventions, patents, copyrights, trademarks or
trade names or trade secrets, used in or pertaining to the business of BusLogic
or any subsidiary, whether existing or contemplated by BusLogic, except for the
normal rights of a shareholder.
ab. COMPLETE DISCLOSURE. Neither this Agreement, nor any of the
certificates or documents required to be delivered by BusLogic to Mylex under
this Agreement as a condition to closing (other than any projections), taken
together, contains a statement of a material fact that is untrue, in any
material respect, or omits to state any material fact necessary in order to make
the statements contained herein and therein, in light of the circumstances under
which such statements were made, not misleading in any material respect.
Section 5.2 REPRESENTATIONS AND WARRANTIES OF MYLEX. Mylex represents and
warrants to BusLogic and the Principal Shareholders that, except as disclosed in
the corresponding section of the Mylex Disclosure Schedule attached hereto as
Schedule D ("Mylex Disclosure Schedule"):
a. ORGANIZATION, CORPORATE POWER AND GOOD STANDING. Mylex and each of
its subsidiaries, including Merger Subsidiary, is a corporation duly organized,
validly existing in good standing under the laws of the State of Florida or
California and has the corporate power and authority to carry on its business,
as now conducted, and to own or lease its properties and other assets as now
owned or leased.
b. CAPITAL STRUCTURE.
i. As of the date of this Agreement, the authorized capital stock of
Mylex consists of 25,000,000 shares of Common Stock (the "Mylex Common Stock").
As of December 12, 1995, 17,173,608 shares of Mylex Common Stock are outstanding
and 2,159,917 shares of Mylex Common Stock are reserved for issuance upon the
exercise of outstanding stock options granted under its stock option plans
(collectively, the "Mylex Stock Plans"). All outstanding shares of Mylex Common
Stock are validly issued, fully paid and nonassessable and not subject to any
preemptive rights or rights of first refusal. As of the date hereof, no Voting
Debt of Mylex has been issued or is outstanding.
ii. As of the date of this Agreement, the authorized capital stock of
Merger Subsidiary consists of 10,000 shares of Common Stock, all of which are
issued and outstanding and owned by Mylex.
iii. As of the date of this Agreement, except for this Agreement and
the Mylex Stock Plans, there are no options, warrants, calls, rights,
commitments or agreements of any character to which Mylex is a party or by which
it is bound, obligating Mylex to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or any Voting Debt of
Mylex or obligating Mylex to grant, extend or enter into any such option,
warrant, call, right, commitment or agreement. As of December 12, 1995, options
to acquire an aggregate of 2,159,917 shares of Mylex Common Stock are
outstanding, with options covering an aggregate of 705,487 of such shares being
vested. As of the date hereof, there are no outstanding contractual obligations
of Mylex to repurchase, redeem or otherwise acquire any shares of capital stock
of Mylex.
iv. Mylex owns all of the outstanding shares of capital stock of each
of its subsidiaries.
c. AUTHORITY.
i. Mylex and Merger Subsidiary each have all requisite corporate
power and authority to enter into this Agreement and the other Transaction
Agreements, to perform its respective obligations hereunder and thereunder, and
to consummate the transactions contemplated thereby. The execution
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and delivery of and the consummation of the transactions contemplated by this
Agreement and the other Transaction Agreements have been duly authorized by all
necessary corporate action on the part of Mylex and Merger Subsidiary. This
Agreement has been duly executed and delivered by Mylex and Merger Subsidiary,
the other Transaction Agreements, upon being executed and delivered at the
Closing, will be duly executed and delivered by Mylex and Merger Subsidiary, and
each of the Transaction Documents, when so executed and delivered, will
constitute a valid and binding obligation of Mylex and Merger Subsidiary, as the
case may be, enforceable in accordance with their respective terms, subject to
the effect of any applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors' rights generally and of general principles
of equity.
ii. The execution and delivery of this Agreement and the other
Transaction Agreements does not, and the consummation of the transactions
contemplated hereby and thereby will not, (A) result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation or the
loss of a material benefit under, or the creation of a Lien on any assets of
Mylex or Merger Subsidiary pursuant to, any provision of their respective
Articles of Incorporation or Bylaws, or (B) subject to obtaining or making the
consents, approvals, orders, authorizations, registrations, declarations, and
filings referred to in paragraph (iii) below, result in any Violation with
respect to any loan or credit agreement, note, mortgage, indenture, lease, or
other agreement, obligation, instrument, license, judgment, order, decree,
statute, law, rule or regulation presently in effect and applicable to Mylex,
Merger Subsidiary, or their respective properties or assets that would have a
material adverse effect on Mylex or impair the ability of Mylex to perform its
obligations under any of the Transaction Documents.
iii. The execution and delivery of this Agreement and the other
Transaction Agreements by Mylex or Merger Subsidiary, and the consummation of
the transactions contemplated by the Agreement and the other Transaction
Agreements, will require no consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity or any other
Person except for (A) the filing of the Merger Filing Documents with the
Secretary of State, and (B) the filing with the California Commissioner of
Corporations of a permit application pursuant to Section 25121 of the California
GCL ("California Securities Permit") with respect to the issuance of Mylex
Common Stock in the Merger.
d. COMPLIANCE WITH APPLICABLE LAWS. Mylex and its subsidiaries holds all
permits, licenses, variances, exemptions, order and approvals of all
Governmental Entities which are material to the operation of the business of
Mylex and its subsidiaries and the failure of which to hold would have,
individually or in the aggregate, a material adverse effect on Mylex (the "Mylex
Permits"). Mylex and each of its subsidiaries is in compliance with the terms
of all applicable Mylex Permits, except where the failure so to comply would not
have a material adverse effect on Mylex. The business of Mylex and its
subsidiaries is not being conducted in violation of, and neither Mylex nor any
of its subsidiaries is in violation of, any Applicable Law, except any such
violation which, individually or in the aggregate, would not have a material
adverse effect on Mylex. As of the date of this Agreement, neither Mylex nor
any of its subsidiaries has received any notice of any alleged violation of any
Applicable Laws, a violation of which would have a material adverse effect on
Mylex. No investigation by any Governmental Entity with respect to Mylex or any
of its subsidiaries is pending or, to the knowledge of Mylex, is threatened as
of the date of this Agreement.
e. LITIGATION. As of the date of this Agreement, there is no suit,
action, proceeding, order or investigation, at law or equity pending or, to the
knowledge of Mylex, overtly threatened against or affecting Mylex or any of its
subsidiaries, the outcome of which could have a material adverse effect on
Mylex.
f. FINANCIAL STATEMENTS. Mylex has delivered to BusLogic the balance
sheet of Mylex as at December 31, 1994, and the related statements of income,
retained earnings and changes in financial position for the year then ended,
audited by KPMG Peat Marwick LLP, independent certified public accountants, and
the unaudited balance sheet of Mylex as at September 30, 1995 (the "Mylex
Balance
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Sheet"), and the related unaudited statement of income for the period then
ended, prepared by the management of Mylex (collectively, the "Mylex Financial
Statements"). Each of the Mylex Financial Statements fairly presents the
financial condition and results of operation of Mylex as at the respective date
and for the respective periods in accordance with generally accepted accounting
principles consistently applied throughout the applicable periods; provided,
however, such financial statements as at, and for the period ended,
September 30, 1995 are subject to normal recurring year end audit adjustments
and do not include footnotes.
g. TAXES. Mylex has timely filed when due, or obtained an extension to
file, all tax returns, reports and information in respect of taxes required to
be filed by it or any of its subsidiaries, and has timely paid, or has set up an
adequate reserve for the payment of, all taxes required to be paid as shown on
such returns, in each case where the failure to do so would have a material
adverse effect on Mylex. All such returns, reports and other information with
respect to any material tax liability of Mylex are accurate and complete in all
material respects. Mylex has no material liability for taxes in excess of the
amounts paid or the reserves established by it. To the knowledge of Mylex, no
deficiencies with respect to any material tax liability of Mylex have been
proposed, asserted or assessed against Mylex, except such deficiencies as are
adequately reserved by Mylex. There are no pending or, to the knowledge of
Mylex, threatened audits, investigations or claims in respect of taxes payable
by Mylex or any of its subsidiaries. None of the federal income tax returns of
Mylex has been examined by or settled with the IRS, and no waiver extending the
statute of limitations has been requested or granted with respect thereto.
h. BROKER'S AND FINDER'S FEES. Other than fees to be paid to legal and
accounting advisors acting as such and to Needham & Company, neither Mylex nor
any of its subsidiaries, nor anyone acting on their behalf, has paid or become
obligated to pay any fee or commission to any broker, finder, intermediary,
financial advisor or financial consultant or other person in connection with the
transactions contemplated by this Agreement and, except as stated above, no
Person is entitled to receive from Mylex or Merger Subsidiary any such fee or
commission.
i. ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the date of the Mylex
Balance Sheet, there has been no change, or, to the knowledge of Mylex, any
event involving prospective change, in the business, assets, condition
(financial or otherwise) or results of operations of Mylex or any of its
subsidiaries that has had, or is reasonably likely to have, (either individually
or in the aggregate) a material adverse change in the business, assets,
condition (financial or otherwise) or results of operations of Mylex.
j. NO SHAREHOLDER VOTE. Neither the Merger nor any of the other
transactions contemplated by this Agreement or any of the other Transaction
Agreements requires the approval of the shareholders of Mylex.
k. SECURITIES LAW FILINGS. Mylex has provided to BusLogic a copy of
Mylex's annual report on Form 10-K for the year ended December 31, 1994 and its
quarterly reports on Form 10-Q for the quarters ended March 31, 1995, June 30,
1995, and September 30, 1995 (collectively, the "Periodic Reports"), and its
Prospectus, dated September 20, 1995 (the "Prospectus"). Neither any of the
Periodic Reports nor the Prospectus, at the time it was filed, contained a
statement of a material fact that was untrue, in any material respect, or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances in which they were
made, not materially misleading.
l. COMPLETE DISCLOSURE. Neither this Agreement, nor any of the
certificates or documents required to be delivered by Mylex to BusLogic under
this Agreement as a condition to closing (other than any projections), taken
together, contains a statement of a material fact that is untrue in any material
respect, or omits to state any material fact necessary in order to make the
statements contained herein and therein, in light of the circumstances under
which such statements were made, not misleading in any material respect.
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Section 5.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Notwithstanding
any right of BusLogic, or its Principal Shareholders, or Mylex to fully
investigate the affairs of the other party, and any knowledge of facts
determined or determinable by any of such parties pursuant to such investigation
or right of investigation, BusLogic and its Principal Shareholders and Mylex
each has the right to rely fully upon the representations, warranties, covenants
and agreements of the other parties contained in this Agreement. All such
representations, warranties, covenants, and agreements shall survive the
execution and delivery of this Agreement and the Closing and, except as
otherwise specifically provided in this Agreement, shall remain in effect after
the Closing until one year after the Effective Date, but shall terminate if the
Closing does not occur.
ARTICLE VI. COVENANTS OF THE PARTIES
Section 6.1 CONDUCT OF BUSINESS PENDING THE MERGER. Each of Mylex and
BusLogic, as applicable, agrees on its own behalf and on behalf of its
subsidiaries that, during the period from the date of this Agreement and
continuing until the Effective Time:
a. The business of BusLogic and its subsidiaries shall be conducted only
in the ordinary and usual course of its business and consistent with past
practices.
b. Neither BusLogic nor any of its subsidiaries shall:
i. sell or pledge or agree to sell or pledge any stock owned by it in
any of its subsidiaries;
ii. amend its Articles of Incorporation or Bylaws;
iii. split, combine or reclassify any shares of its outstanding
capital stock or declare, set aside or pay any dividend or other distribution
payable in cash, stock or property in respect of its capital stock, or directly
or indirectly redeem, purchase or otherwise acquire any shares of its capital
stock or other securities or shares of the capital stock or other securities of
any of its subsidiaries; or
iv. authorize for issuance, issue, sell, pledge, dispose of,
encumber, deliver, or agree or commit to issue, sell, pledge, or deliver, any
additional shares of, or rights of any kind to acquire any shares of, its
capital stock of any class or exchangeable into shares of stock of any class or
any Voting Debt (whether through the issuance or granting of options, warrants,
commitments, subscriptions, rights to purchase or otherwise), except the
issuance of BusLogic Common Stock upon the exercise of the presently outstanding
options under the BusLogic Stock Option Plan or the grant of additional options
under the BusLogic Stock Option Plan covering not in excess of 50,000 shares, in
the aggregate, of BusLogic Common Stock (none of which are exercisable prior to
the Effective Time); or
v. merge or consolidate with, or acquire, any entity or the
securities of any entity.
c. Neither BusLogic nor any of its subsidiaries shall:
i. acquire, sell, dispose of or otherwise transfer, lease, license,
mortgage, pledge or encumber any fixed or other assets material to it, other
than Inventory and then only in the ordinary and usual course of its business
and consistent with past practices;
ii. incur, assume or prepay any liability or obligation material to
it other than in the ordinary and usual course of its business and consistent
with past practices or modify or amend any existing contract, agreement,
commitment or arrangement with respect thereto;
iii. incur, assume or prepay any indebtedness or issue any debt
securities or modify or amend any existing contract, agreement, commitment or
arrangement with respect thereto;
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iv. assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations of
any other Person (other than a wholly-owned subsidiary), except for the
endorsement of checks and other negotiable instruments in the ordinary and usual
course of its business and consistent with past practices;
v. enter into, extend or renew any real property lease or modify or
amend any existing real property lease;
vi. modify or amend any of its other contracts, agreements, licenses,
commitments or arrangements other than in the ordinary and usual course of its
business and consistent with past practices and then only to the extent such
contracts, agreements, licenses, commitments or arrangements are not material to
it;
vii. make any loans, advances or capital contributions to, or
investments in, any other Person, other than to its subsidiaries in the ordinary
and usual course of its business and consistent with past practices and other
than advances for travel and business expenses which are incurred in the
ordinary and usual course of its business consistent with past practices;
viii. fail to maintain insurance presently in place or modify the
nature or amount of the coverages under such insurance;
ix. enter into any transaction not in the ordinary and usual course
of its business, other than a proposed agreement with Hewlett Packard described
in the BusLogic Disclosure Schedule;
x. change any of its accounting methods or practices;
xi. fail to maintain its equipment and other tangible assets in good
working condition and repair pursuant to the standards it has maintained prior
to the Effective Date, subject only to ordinary wear and tear;
xii. waive or release any material right or claim except in the
ordinary and usual course of its business and consistent with past practices;
xiii. license any of its intellectual property rights except in the
ordinary and usual course of its business and consistent with past practices; or
xiv. enter into any contract, agreement, commitment or arrangement
with respect to any of the foregoing.
d. BusLogic shall use its best efforts to preserve intact the business
organization of BusLogic and each of its subsidiaries and to keep available the
services of all present officers and Key Employees. BusLogic will use its best
efforts to carry on and preserve its business and the business of its
subsidiaries and its and their relationships with customers, suppliers and
others in substantially the same manner as it has prior to the date hereof. If
BusLogic becomes aware of a material deterioration in its relationship with any
such customer, supplier or Key Employee, it will promptly bring such information
to the attention of Mylex in writing and, if requested by Mylex, will exert its
best efforts to restore the relationship.
e. BusLogic shall not take any action that would render, or be reasonably
expected to render, untrue or inaccurate any representation or warranty made in
this Agreement.
f. Each of BusLogic and Mylex, and their respective subsidiaries, shall
not knowingly take any action, or knowingly omit to take any action, (i) to
jeopardize the treatment of the transactions contemplated by this Agreement as a
pooling of interests for accounting purposes, or (ii) to jeopardize
qualification of the Merger as a "reorganization" within the meaning of Section
368(a) of the Code.
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Section 6.2 COMPENSATION PLANS. During the period from the date of this
Agreement and continuing until the Effective Time, neither BusLogic nor any of
its subsidiaries will, without the prior written consent of Mylex (except as
required by applicable law or pursuant to existing contractual arrangements or
other plans or commitments disclosed to Mylex in writing under this Agreement):
(a) enter into, adopt or amend any bonus, profit sharing, compensation, stock
option (except as provided in Section 6.1(b)(iv)), pension, retirement, deferred
compensation, employment, severance, termination or other employee benefit,
welfare or insurance plan, agreement, trust, fund or other arrangement with any
of its officers, directors or employees (collectively, the "Compensation
Plans"), (b) grant or become obligated to grant any increase in the compensation
or fringe benefits of its directors, officers or employees (including any such
increase pursuant to any Compensation Plan), except, with respect to employees
other than officers and Key Employees, for increases in compensation in the
ordinary and usual course of its business and consistent with past practices;
(c) enter into or amend any employment, consulting or similar agreement or
arrangement with any of its directors, officers, employees or consultants,
(d) enter into or renew any contract, agreement, commitment or arrangement
providing for the payment to any of its directors, officers or employees of
compensation or benefits contingent, or materially alter the terms of such
contract, agreement, commitment or arrangement in favor of such individual, upon
the occurrence of any of the transactions contemplated by this Agreement or any
of the other Transaction Agreements, or (e) pay any bonus or other similar
remuneration to any of its directors, officers or employees exceeding
approximately $305,000 in the aggregate.
Section 6.3 LEGAL CONDITIONS TO MERGER. Mylex and BusLogic shall
(a) take, or cause to be taken, all actions necessary to comply promptly with
all legal requirements which may be imposed on such party or its subsidiaries
with respect to the Merger and to consummate the transactions contemplated by
this Agreement and the other Transactions Agreements, subject to the appropriate
vote or consent of shareholders, and (b) obtain (and cooperate with the other
party in it obtaining) any other consent, authorization, order or approval of,
or any exemption by, any Governmental Entity or any other Person that the Merger
and the other transactions contemplated by this Agreement or any of the other
Transaction Agreements may require or necessitate.
Section 6.4 SHAREHOLDERS' MEETING. As soon as practicable after the date
hereof, BusLogic shall take all action necessary under all Applicable Laws and
its Articles of Incorporation and Bylaws to duly convene a meeting of its
shareholders for the purpose of voting on the adoption of this Agreement and the
Merger. Subject to the fiduciary obligations of its directors, as advised by
Fenwick & West or other counsel knowledgeable concerning such corporate matters,
BusLogic shall include in any proxy statement the recommendation of its Board of
Directors in favor of the adoption of this Agreement and authorization of the
Merger by BusLogic's shareholders. BusLogic shall use its best efforts to
solicit proxies in favor of such adoption and authorization and shall take all
other actions necessary or reasonably believed by Mylex to be useful to secure
the shareholder approval required to effect the Merger under all Applicable
Laws. In connection with obtaining such approval by its shareholders, BusLogic
will provide to its shareholders, as soon as practicable after the date hereof,
such written materials concerning this Agreement and the Merger and other
transactions contemplated by the Transaction Agreements as is required by
Applicable Law (collectively, the "Solicitation Materials"). BusLogic will be
solely responsible for any statement, information or omission in the
Solicitation Materials relating to BusLogic or its affiliates. Mylex will be
solely responsible for any statement, information or omission in the
Solicitation Materials relating to Mylex and its affiliates. Each of Mylex and
BusLogic will ensure that all of the information it provides for inclusion in
the Solicitation Materials includes no statement of a material fact which is
untrue, in any material respect, or omits to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not materially misleading.
Section 6.5 NOTIFICATION OF CERTAIN MATTERS. Mylex shall give prompt
written notice to BusLogic, and BusLogic shall give prompt notice to Mylex, of
(a) the occurrence or nonoccurrence of any event, the occurrence or
nonoccurrence of which would, in the reasonable judgment of their respective
management, be likely to cause either (i) any representation or warranty of such
party contained in this Agreement to be untrue or inaccurate in any material
respect at any time from the date of this Agreement to the
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Effective Date, or (ii) any condition to Closing set forth herein to be
incapable of being satisfied, in any material respect, by the Closing Date, and
(b) any material failure of Mylex, Merger Subsidiary, BusLogic or any of the
Principal Shareholders as the case may be, or any of their respective officers,
directors, employees or agents, to comply with or satisfy any covenant,
condition or agreement required by this Agreement. The delivery of any notice
under this Section 6.5 shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
Section 6.6 PUBLIC ANNOUNCEMENTS. Except as provided in this Section,
neither Mylex, nor BusLogic or any Principal Shareholder, shall make any press
release or public announcement, including, without limitation, announcements by
any party for general reception by or dissemination to employees, agents or
customers, with respect to this Agreement, the Merger or any of the transactions
contemplated by this Agreement or the other Transaction Agreements without the
prior written consent of Mylex, in the case of BusLogic or any of the Principal
Shareholders, or BusLogic, in the case of Mylex, which consent shall not be
unreasonably withheld or delayed. Notwithstanding the foregoing, Mylex may make
any disclosure or announcement that it must make, in the opinion of its counsel,
under any Applicable Laws or regulations of any national securities exchange,
but must inform BusLogic of such disclosure or announcement before making it.
Section 6.7 TAX TREATMENT. Mylex and BusLogic shall each use its best
efforts to qualify the Merger, and its best efforts not to take any action to
cause the Merger not to qualify, as a reorganization within Section 368(a) of
the Code. From and after the Effective Date, (a) Mylex shall use best efforts
to cause the Surviving Corporation to continue BusLogic's historic business or
use a significant portion of BusLogic's historic business assets in a business,
within the meaning of Treasury Regulation Section 1.368-1(d), and (b) Mylex and
Merger Subsidiary shall, and Mylex shall cause the Surviving Corporation to,
treat the Merger as a "reorganization" within the meaning of Section 368(a) of
the Code and shall file such information with its income tax return as may be
required by Treasury Regulation Section 1.368-3 or other applicable law.
Section 6.8 FURTHER ASSURANCES. In the event that at any time after the
Effective Date any further action, including, without limitation, the execution
and delivery of further documents, is necessary or desirable to carry out the
purposes of this Agreement or any of the other Transaction Agreements, the
Principal Shareholders and the proper officers and shareholders, as required, of
BusLogic, Mylex and Merger Subsidiary shall promptly take such action.
Section 6.9 SECURITIES LAWS. As soon as possible after this Agreement has
been executed by all of its parties, Mylex and BusLogic shall file an
application for the California Securities Permit with the California Department
of Corporations as required under Section 25121 of the California GCL for the
qualification of the Mylex Common Stock to be offered in connection with the
Merger. In the preparation of the California Securities Application, BusLogic
and Mylex shall cooperate with each other and shall furnish the information
relating to BusLogic and Mylex, as the case may be, that the California GCL may
require the California Securities Application to set forth. Each of Mylex and
BusLogic agrees to use its best efforts to have the Commissioner of Corporations
approve the fairness of the terms and conditions of the transaction contemplated
by this Agreement in accordance with Section 25142 of the California GCL prior
to the solicitation of the approval of such transaction by the BusLogic
shareholders.
Section 6.10 NO OTHER NEGOTIATIONS. From the date hereof until the
earlier of termination of this Agreement or the Effective Time, neither BusLogic
nor Mylex will, or authorize or permit any of its officers, directors, employees
or affiliates, or any other Person on its behalf, to, directly or indirectly,
solicit or encourage any offer from any party or, subject to the fiduciary
obligations of its directors and officers, consider any inquiries or proposals
received from any other Person, participate in any negotiations regarding, or
furnish to any Person any information with respect to, or otherwise cooperate
with, facilitate or encourage any effort or attempt by any Person (other than
Mylex, in the case of BusLogic) concerning the possible disposition of all or
any substantial portion of its business, assets or capital stock by merger, sale
or any other means. Each of BusLogic and Mylex will promptly notify the other
orally and in writing of any such inquiries or proposals.
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Section 6.11 ACCESS TO INFORMATION. Until the Closing, Mylex and BusLogic
will each allow the other party and its agents reasonable access to its files,
books, records and offices and that of each of its subsidiaries, including,
without limitation, any and all information relating to taxes, commitments,
contracts, leases, licenses, real, personal and intangible property and
financial condition. Mylex and BusLogic will each cause its accountants to
cooperate with the other party and its agents in making available all financial
information reasonably requested, including, without limitation, the right to
examine all working papers pertaining to all financial statements prepared or
audited by such accountants.
Section 6.12 AFFILIATES AGREEMENTS. To ensure that the issuance of Mylex
Common Stock in the Merger complies with the Securities Act and that the Merger
will be accounted for as a "pooling of interests," concurrently with the
execution of this Agreement, BusLogic and Mylex will each deliver to the other a
letter identifying all persons who are, in its reasonable judgment, "affiliates"
of it at the time this Agreement is executed. Each of Mylex and BusLogic will
provide the other with all information and documents reasonably required to
evaluate this list for compliance with securities laws. Each of Mylex and
BusLogic will cause each of its affiliates to deliver to the other, within five
business days of the date of this Agreement, a written agreement (the "Affiliate
Agreement"), in substantially the applicable form attached hereto as part of
Exhibit "E" hereto, providing (a) that such Person (i) has not made and will not
make any disposition of capital stock of the corporation with respect to which
it is an affiliate in the 30 day period prior to the Effective Time, (ii) will
not offer to sell, sell or otherwise dispose of any of the Mylex Common Stock
issued to such Person in the Merger in violation of the Securities Act and Rule
145 promulgated thereunder, as they may be amended from time to time, and (iii)
will make no disposition of Mylex Common Stock after the Effective Time until
Mylex shall have publicly released a report including the combined financial
results of Mylex and BusLogic for a period of at least 30 days of combined
operations of Mylex and BusLogic; and (b) such other representations as may be
reasonably requested by Mylex, its accountants or its attorneys for the purpose
of ensuring "pooling of interests" accounting.
Section 6.13 PRINCIPAL SHAREHOLDER LETTERS. To ensure that the Merger
will qualify as a "tax-free" reorganization for federal income tax purposes,
BusLogic will cause each of the Principal Shareholders to execute, at or before
the Closing, a representation letter in substantially the form of Exhibit "F"
hereto (the "Principal Shareholder Letter"), with such changes thereto as may be
reasonably requested to permit counsel for Mylex to deliver the tax opinion
contemplated by Section 7.1(d), (a) stating that such shareholder has no present
plan or intention to sell or otherwise dispose of more than 50% of the shares of
Mylex Common Stock which such shareholder receives in the Merger, and (b) making
such other representations as may be reasonably requested by Mylex, its
accountants or its attorneys for the purpose of ensuring such tax treatment.
ARTICLE VII. CONDITIONS TO THE CLOSING
Section 7.1 CONDITIONS TO BUSLOGIC'S AND MYLEX'S OBLIGATIONS. The
obligations of BusLogic, Mylex and Merger Subsidiary to consummate the Merger
are subject to the fulfillment, at or before the Closing, of each of the
following conditions, any or all of which Mylex and BusLogic may waive in whole
or in part to the extent permitted by Applicable Laws:
a. SHAREHOLDER APPROVAL. This Agreement shall have been approved and
adopted, pursuant to Applicable Laws, by the affirmative vote of the holders of
the requisite percentage, under Applicable Laws and BusLogic's Articles of
Incorporation and Bylaws, of each class of BusLogic capital stock.
b. OTHER APPROVALS. All authorizations, consents, orders or approvals
of, or declarations or filings with, and all expirations of waiting periods
imposed by, any Governmental Entity that are necessary or advisable for the
consummation of the Merger or any of the other transactions contemplated by this
Agreement or any of the Transaction Agreements, including the California
Securities Permit, shall have been filed, occurred or been obtained, as the case
may be, (all such permits, approvals, filings and
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consents and the lapse of all such waiting periods being referred to as the
"Requisite Approvals") and all Requisite Approvals shall be in full force and
effect.
c. NO INJUNCTIONS, RESTRAINTS OR ILLEGALITY. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition (an "Injunction")
preventing the consummation of the Merger or any of the other transactions
contemplated by the Transaction Agreements shall be in effect, nor shall there
be any pending or threatened proceeding by any Governmental Entity or other
Person, seeking any of the foregoing. There shall not be any action taken, or
any Applicable Laws in effect, that makes illegal the consummation of the Merger
or any of the other transactions contemplated by the Transaction Agreements.
d. TAX OPINION. BusLogic and Mylex shall have received the opinion of
Brown & Bain, counsel to Mylex, dated as of the Closing Date and addressed to
Mylex, to the effect that the Merger will be treated for Federal income tax
purposes as a reorganization within the meaning of Section 368(a) of the Code,
and that BusLogic and Mylex will each be a party to that reorganization within
the meaning of Section 368(b) of the Code.
e. ESCROW AGREEMENT. Mylex, Merger Subsidiary, each of the Principal
Shareholders, the Representative and an escrow holder reasonably acceptable to
Mylex and the Representative shall have executed and delivered the Escrow
Agreement.
f. COVENANT NOT TO COMPETE. Each of Peter Harvey, Jesse Chen and
Hypertech Consultants Ltd. shall have executed and delivered to Mylex the Non-
Competition Agreement in the applicable form attached hereto as part of Exhibit
"D".
g. CALIFORNIA SECURITIES PERMIT. Mylex shall have received a permit from
the California Commissioner of Corporations in response to the California
Securities Application.
Section 7.2 CONDITIONS TO OBLIGATIONS OF MYLEX. The obligation of Mylex
to consummate the Merger is subject to the fulfillment, at or before the
Closing, of each of the following conditions, except to the extent waived by
Mylex:
a. REPRESENTATIONS AND WARRANTIES. The representations and warranties of
BusLogic and the Principal Shareholders set forth in this Agreement shall be
true and correct in all material respects as of the date of this Agreement and
as of the Closing Date, as though made on and as of the Closing Date, and Mylex
shall have received a certificate, signed on behalf of BusLogic by the President
and the Chief Financial Officer of BusLogic and signed by each of the Principal
Shareholders, to such effect; provided, however, such certificate may include
exceptions to such representations and warranties not included in the BusLogic
Disclosure Schedule to the extent any such exception is only applicable to such
representations and warranties as of the Closing Date and not as of the date of
this Agreement, but the inclusion of any such exception in such certificate
shall not affect the obligation of Mylex to consummate the Merger as a result of
any of the other conditions specified in this Section 7.2 not being satisfied.
b. PERFORMANCE OF OBLIGATIONS OF BUSLOGIC. BusLogic shall have performed
all obligations that this Agreement requires it to perform at or before the
Closing Date, and Mylex shall have received a certificate, signed on behalf of
BusLogic by the President and the Chief Financial Officer of BusLogic, to such
effect.
c. CONSENTS. BusLogic shall have obtained the consent or approval of
each Person (other than Governmental Entities) (i) whose consent or approval may
be necessary so as not to impair, terminate or otherwise adversely affect, in
any material respect, any obligation, right or interest of BusLogic or any of
its subsidiaries under any loan or credit agreement, note, mortgage, indenture,
lease, license or other agreement or instrument to which it is a party or bound
or by which any of its properties or assets may be affected, if such agreement
or instrument is material to BusLogic or such impairment, termination
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or affect could have a Material Adverse Effect, or (ii) the failure of which to
obtain could materially impair the ability of any Person to consummate or
perform any of its material obligations under any of the Transaction Agreements.
d. NO BURDENSOME CONDITION. There shall not be any action taken by any
Governmental Entity or any other Person, or any Applicable Laws in effect that,
in connection with the grant of a Requisite Approval, imposes any condition or
restriction upon the Surviving Corporation or on Mylex, including, without
limitation, any requirements relating to the disposition of assets, that could
materially and adversely impact the economic or business benefits to Mylex of
the transactions contemplated by this Agreement or any of the Transaction
Agreements or could have a material adverse effect on the Surviving Corporation
or Mylex.
e. NO ADVERSE DEVELOPMENTS. There shall be no actual or threatened
order, decree, or ruling by any court or Governmental Entity that, in the
reasonable judgment of the Board of Directors of Mylex, may have a Material
Adverse Effect. There shall have been no material adverse change (except as
disclosed in the BusLogic Disclosure Schedules before the execution of this
Agreement) in the business, assets, condition (financial or otherwise) or
results of operations of BusLogic or any of its subsidiaries since the date of
the BusLogic Balance Sheet, and Mylex shall have received a certificate from
BusLogic to such effect, signed by BusLogic's President and Chief Financial
Officer.
f. ACCOUNTING TREATMENT FOR MYLEX. Mylex shall have received a letter,
dated the Closing Date, from KPMG Peat Marwick LLP, Mylex's independent
auditors, addressed to Mylex and in form and substance satisfactory to Mylex, to
the effect that, based on its knowledge of Mylex and its subsidiaries and review
of the books and records of Mylex and its subsidiaries and the transactions
contemplated by the Transaction Agreements, and without reference to BusLogic
but relying on the "pooling letter" of BusLogic's auditors, as described in
subsection (h) below, with respect to BusLogic, the Merger must be accounted for
as a "pooling of interests" for financial reporting purposes and that such
accounting treatment is in accordance with generally accepted accounting
principles.
g. ACCOUNTING TREATMENT FOR BUSLOGIC. BusLogic shall have received a
letter, dated the Closing Date, from Price Waterhouse & Company, BusLogic's
independent auditors, addressed to BusLogic and in form and substance
satisfactory to Mylex, to the effect that, based on its knowledge of BusLogic
and its subsidiaries and its review of the books and records of BusLogic and its
subsidiaries, and without reference to Mylex, the Merger must be accounted for
as a "pooling of interests" for financial reporting purposes and that such
accounting treatment is in accordance with generally accepted accounting
principles.
h. FINANCIAL STATEMENTS. BusLogic shall have delivered to Mylex its
balance sheet as of December 31, 1995, and the related unaudited statement of
income for the one month then ended, prepared by the management of BusLogic, and
a certificate of its Chief Financial Officer stating that such financial
statements fairly present the financial condition and results of operations of
BusLogic as of such date and for such period in accordance with generally
accepted accounting principles consistently applied; provided, however, such
financial statements may be subject to normal recurring year end audit
adjustments and may not be accompanied by footnotes.
i. OPINION OF COUNSEL. Mylex and Merger Subsidiary shall have received
an opinion of Fenwick & West, counsel for BusLogic and its subsidiaries, in form
and substance reasonably acceptable to Mylex.
j. REQUISITE VOTE AND DISSENTING SHARES. Shareholders of BusLogic
holding BusLogic capital stock representing at least 90% of the aggregate voting
power of the shares of BusLogic capital stock outstanding immediately prior to
the Effective Time shall have voted to approve the Merger. The Dissenting
Shares shall not constitute more than 5% of the aggregate voting power of the
shares of BusLogic capital stock outstanding immediately prior to the Effective
Time.
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k. AFFILIATE AGREEMENTS. BusLogic shall have delivered to Mylex a list
of each Person who is an "affiliate" of Mylex for purposes of Rule 145 under the
Securities Act, and each such Person shall have executed, and delivered to
Mylex, an Affiliate Agreement.
l. PRINCIPAL SHAREHOLDER LETTER. Each Principal Shareholder shall have
executed, and delivered to Mylex, a Principal Shareholder Letter.
m. RESIGNATION OF DIRECTORS. The directors of BusLogic in office
immediately prior to the Effective Time shall have resigned as Directors of the
Surviving Corporation as of the Effective Time.
n. FAIRNESS OPINION. Mylex shall have received a written fairness
opinion with respect to the Merger acceptable to its Board of Directors.
o. OTHER DOCUMENTS. Mylex and Merger Subsidiary shall have received all
such other certified resolutions, certificates, documents or other instruments
as Mylex or its counsel may reasonably request, in form and substance reasonably
satisfactory to Mylex or its counsel, to carry out the intent of this Agreement.
Section 7.3 CONDITIONS TO OBLIGATIONS OF BUSLOGIC. The obligation of
BusLogic to consummate the Merger is subject to the fulfillment, at or before
the Closing, of each of the following conditions, except to the extent waived by
BusLogic:
a. REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Mylex set forth in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing Date, as though
made on and as of the Closing Date, and BusLogic shall have received a
certificate, signed on behalf of Mylex by the President and the Chief Financial
Officer of Mylex, to such effect; provided, however, such certificate may
include exceptions to such representations and warranties not included in the
Mylex Disclosure Schedule to the extent any such exception is only applicable to
such representations and warranties as of the Closing Date and not as of the
date of this Agreement, but the inclusion of any such exception is such
certificate shall not affect the obligation of BusLogic to consummate the Merger
as a result of any of the other conditions specified in this Section 7.3 not
being satisfied.
b. PERFORMANCE OF OBLIGATIONS OF MYLEX AND MERGER SUBSIDIARY. Mylex and
Merger Subsidiary shall have performed all obligations that this Agreement
requires them to perform at or before the Closing Date, and BusLogic shall have
received a certificate, signed on behalf of Mylex by the President and the Chief
Financial Officer of Mylex, to such effect.
c. NO ADVERSE DEVELOPMENTS. There shall be no actual or threatened
order, decree, or ruling by any Governmental Entity that, in the reasonable
judgment of the Board of Directors of BusLogic, would be likely to have a
material adverse effect on Mylex. There shall have been no material adverse
change (except as disclosed in the Mylex Disclosure Schedules before the
execution of this Agreement) in the business, assets, condition (financial or
otherwise) or results of operations of Mylex, since September 30, 1995, and
BusLogic shall have received a certificate from Mylex to such effect signed by
Mylex's President and Chief Financial Officer.
d. OPINION OF COUNSEL. BusLogic shall have received an opinion of Brown
& Bain, counsel for Mylex and Merger Subsidiary, in form and substance
reasonably acceptable to BusLogic.
e. OTHER DOCUMENTS. BusLogic shall have received all such other
certified resolutions, certificates, documents or other instruments as BusLogic
or its counsel may reasonably request, in form and substance reasonably
satisfactory to BusLogic or its counsel, to carry out the intent of this
Agreement.
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ARTICLE VIII. INDEMNIFICATION
Section 8.1 BUSLOGIC INDEMNIFICATION. BusLogic and the Principal
Shareholders shall indemnify and hold harmless Mylex, Merger Subsidiary, and
each of the respective officers, directors, employees, agents, affiliates and
associates, in their respective capacities as such (collectively, the
"Indemnified Persons"), to the fullest extent lawful, from and against: (a) any
and all actions, suits, claims, proceedings, costs, losses, liabilities,
damages, judgments, amounts paid in settlement in accordance with Section 8.5
and reasonable expenses (including, without limitation, reasonable attorneys'
fees and disbursements) (collectively, a "Loss" or "Losses") suffered or
incurred by any Indemnified Person to the extent relating to or arising out of
any inaccuracy in, or any breach, violation or nonobservance of, any of the
representations, warranties, covenants or agreements made by BusLogic or the
Principal Shareholders, or both, in this Agreement, any of the other Transaction
Agreements or any written agreements or certificates delivered in connection
with this Agreement; (b) any and all Losses relating to or arising out of any
other action or failure to act by BusLogic, or any of its employees, agents or
affiliates, with respect to the transactions contemplated by this Agreement or
any of the other Transaction Agreements; and (c) any and all Losses relating to
or arising out of a claim, action, suit or proceeding made or brought against an
Indemnified Person, by other than Mylex or any of its current or former
shareholders (acting in such shareholder capacity with respect to such claim,
action, suit or proceeding), with respect to any act by BusLogic or any of its
subsidiaries, or any of their respective officers, directors, employees and
agents (acting in that capacity), prior to the Effective Time, if the facts
giving rise to such Loss or the risk or possibility of such Loss is not
described, in reasonable detail, in the BusLogic Disclosure Schedule and only to
the extent such claim, action, suit or proceeding is not with respect to any
projections or prospects of BusLogic. Each Principal Shareholder's
indemnification obligations hereunder shall not exceed (y) a percentage of all
Losses with respect to which an Indemnified Person gives written notice pursuant
to Section 8.5 within six months of the Closing Date equal to his, her or its
Principal Shareholder Percentage, and (z) a percentage of all Losses with
respect to which an Indemnified Person gives such written notice after the end
of such six month period equal to 25% of his, her or its Principal Shareholder
Percentage. Notwithstanding the foregoing, the Principal Shareholders shall not
have any obligation to provide indemnity under this Section 8.1 with respect to
the first $300,000, in the aggregate, of Losses subject to clause (a) or (b)
above or with respect to the first $300,000, in the aggregate, of Losses subject
to clause (c) above and shall have no obligation to provide such indemnity with
respect to any Loss notice of which is given, pursuant to Section 8.5, after the
first anniversary of the Closing Date. In the event that any New Options are
exercised within six months of the Closing Date, the gross proceeds of each such
issuance shall be added, at the written election of the Representative provided
to Mylex prior to the end of such six-month period, to either, but not both, of
the $300,000 "baskets" described above.
Section 8.2 REIMBURSEMENT. Subject to the requirements of Section 8.5 and
the procedures described in the Escrow Agreement, each of the Principal
Shareholders shall reimburse the Indemnified Persons for all Losses for which
such Principal Shareholder is obligated to provide indemnity under Section 8.1
as such Losses are paid or incurred and promptly after such Principal
Shareholders is given written notice of such Losses, in reasonable detail. Such
reimbursement shall be made by such Principal Shareholder transferring to the
applicable Indemnified Person shares of Mylex Common Stock received in the
Merger with an aggregate value equal to the amount of such reimbursement, or, if
such Principal Shareholder does not, at the time of such reimbursement, hold
such shares with an aggregate value equal to such reimbursement amount, all of
such shares then held by such Principal Shareholder and cash in the amount by
which such aggregate value is less than such reimbursement amount. For purposes
of this Section 8.2, each of such shares shall be deemed to have a value equal
to the closing sale price of Mylex Common Stock on the NASDAQ National Market
System (the "Applicable Value") on the trading day immediately prior to the
Closing Date. To the extent that a Principal Shareholder reimburses the
Indemnified Persons for a Loss and a court of competent jurisdiction
subsequently determines, in a decision from which there is no right to appeal or
seek further judicial review, that the Indemnified Persons are not entitled to
such reimbursement, the Indemnified Persons shall promptly refund to such
Principal Shareholder an amount, in cash, equal to the portion of such Loss that
it reimbursed. The amount of each Loss with respect to which Mylex is entitled
to reimbursement hereunder (a) shall be
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reduced, to the extent applicable, to take into account any tax benefit derived
by Mylex as a result of such Loss and shall be increased, to the extent
applicable, to take into account any additional taxes payable by Mylex with
respect to such reimbursement, and (b) shall be reduced, to the extent
applicable, to take into account any payment with respect to such Loss received
by Mylex from any insurer and shall be increased, to the extent applicable, to
take into account any additional taxes payable by Mylex with respect to such
payment.
Section 8.3 MYLEX INDEMNIFICATION. Mylex shall indemnify and hold
harmless the Principal Shareholders (collectively, the "Indemnified
Shareholders") to the fullest extent lawful, from and against: (a) any and all
Losses suffered or incurred by any Indemnified Shareholder to the extent
relating to or arising out of any inaccuracy in, or any breach, violation or
nonobservance of, any of the representations, warranties, covenants or
agreements made by Mylex in this Agreement or in any of the other Transaction
Agreements; (b) any and all Losses relating to or arising out of any other
action or failure to act by Mylex, or any of its employees, agents or
affiliates, with respect to the transactions contemplated by this Agreement or
any of the Transaction Agreements; and (c) any and all Losses relating to or
arising out of a claim, action, suit or proceeding made or brought against an
Indemnified Shareholder, by other than BusLogic or any of its current or former
shareholders (acting in such shareholder capacity with respect to such claim,
action, suit or proceeding), with respect to any act by Mylex or any of its
subsidiaries, or any of their respective officers, directors, employees and
agents (acting in that capacity), prior to the Effective Time, if the facts
giving rise to such Loss or the risk or possibility of such Loss is not
described, in reasonable detail, in the Mylex Disclosure Schedule.
Notwithstanding the foregoing, Mylex shall not have any obligation to provide
indemnity under this Section 8.3 with respect to the first $300,000, in the
aggregate, of Losses subject to clause (a) or (b) above or with respect to the
first $300,000, in the aggregate, of Losses subject to clause (c) above, shall
have no obligation to provide such indemnity with respect to any Loss notice of
which is given, pursuant to Section 8.5, after the first anniversary of the
Closing Date and shall have no obligation to provide such indemnity with respect
to Losses aggregating in excess of the aggregate Applicable Value, on the
trading day immediately prior to the Closing Date, of the Mylex Common Stock to
be issued to BusLogic shareholders in the Merger.
Section 8.4 REIMBURSEMENT. Subject to the requirements of Section 8.5,
Mylex shall reimburse the Indemnified Shareholders, in cash, for all Losses for
which indemnity is available under Section 8.3 as such Losses are paid or
incurred and promptly after Mylex is given written notice of such Losses, in
reasonable detail. To the extent that Mylex reimburses the Indemnified
Shareholders for a Loss and a court of competent jurisdiction subsequently
determines, in a decision from which there is no right to appeal or seek further
judicial review, that the Indemnified Shareholders are not entitled to such
reimbursement, each of the Indemnified Shareholders with respect to such Loss
shall promptly refund to Mylex an amount, in cash, equal to the portion of
Mylex's reimbursement with respect to such Loss that it received. The amount of
each Loss with respect to which a Principal Shareholder is entitled to
reimbursement hereunder (a) shall be reduced, to the extent applicable, to take
into account any tax benefit derived by such Principal Shareholder as a result
of such Loss and shall be increased, to the extent applicable, to take into
account any additional taxes payable by such Principal Shareholder with respect
to such reimbursement, and (b) shall be reduced, to the extent applicable, to
take into account any payment with respect to such Loss received by such
Principal Shareholder from any insurer and shall be increased, to the extent
applicable, to take into account any additional taxes payable by such Principal
Shareholder with respect to such payment.
Section 8.5 NOTICE. An Indemnified Person shall provide written notice to
the Representative of the Principal Shareholders, and an Indemnified Shareholder
shall provide written notice to Mylex, of any claim with respect to which it
seeks indemnification hereunder promptly after discovering any matters giving
rise to such claim. The failure of any Indemnified Person or Indemnified
Shareholder to give notice as provided in this Section shall not relieve the
Principal Shareholders or Mylex, respectively, of their obligations under this
Article VIII unless the failure materially and adversely affects the ability of
the Principal Shareholders or Mylex, as the case may be, to defend any related
action, suit or proceeding. In case any such action, suit, claim or proceeding
is brought against an Indemnified Person or an Indemnified Shareholder, the
Principal Shareholders or Mylex, respectively, shall be entitled to
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participate in the defense and, at their election, assume control of the defense
with counsel reasonably acceptable to such Indemnified Person or Indemnified
Shareholder, by delivering written notice to such effect to the Indemnified
Person or Indemnified Shareholder. Upon delivery of such notice to the
Indemnified Person or Indemnified Shareholder and approval of such counsel by
the Indemnified Person or Indemnified Shareholder, the Principal Shareholders
will not be liable under Sections 8.1 or 8.2, and Mylex will not be liable under
Section 8.3 or 8.4, respectively, for any legal or other expenses subsequently
incurred by such Indemnified Person or Indemnified Shareholder, respectively, in
connection with the defense of such action, suit, claim or proceeding unless
such Indemnified Person or Indemnified Shareholder and one of the Principal
Shareholders or Mylex, respectively, are defendants and each of them have one or
more different defenses to the claims in such matter. The Principal
Shareholders and Mylex shall not be liable for any settlement of any action,
suit, claim or proceeding with respect to an Indemnified Person or an
Indemnified Shareholder, respectively, effected without their prior written
consent, such consent not to be unreasonably withheld or delayed. The Principal
Shareholders shall not, without the Indemnified Person's prior written consent,
and Mylex shall not, without prior written consent of a Majority-in-Interest (as
defined in Section 9.3) of the Indemnified Shareholders or of the
Representative, which consent shall not be unreasonably withheld or delayed,
settle or compromise or consent to entry of any judgment in any action, suit, or
proceeding in which such Indemnified Person or Indemnified Shareholder is a
defendant.
ARTICLE IX. TERMINATION, AMENDMENT OR WAIVER
Section 9.1 TERMINATION. This Agreement may be terminated at any time
before the Effective Time:
a. by the mutual written consent of BusLogic and Mylex upon approval by
their respective Boards of Directors;
b. by either Mylex or BusLogic upon written notice to the other party if
any Governmental Entity of competent jurisdiction shall have issued a final
permanent order enjoining or otherwise prohibiting the consummation of the
transactions contemplated by this Agreement or any of the other Transaction
Agreements and the time for each appeal or petition for reconsideration of such
order shall have expired without such appeal or petition being granted;
c. by either Mylex or BusLogic upon written notice to the other if any of
the conditions to its performance hereunder set forth in Article VII have not
been satisfied, or the Merger has not been consummated, on or before
February 15, 1996, for reasons other than a breach of this Agreement by the
party seeking termination;
d. by BusLogic upon written notice to Mylex if the average closing sale
price of the Mylex Common Stock on the NASDAQ National Market System for the 20
trading days ending two business days before the Closing Date is $13.30 or less;
or
e. by Mylex upon written notice to BusLogic if the average closing sale
price of the Mylex Common Stock on the NASDAQ National Market System for the 20
trading days ending two business before the Closing Date is $24.70 or more.
Section 9.2 EFFECT OF TERMINATION.
a. If either Mylex or BusLogic terminates this Agreement pursuant to
Section 9.1, this Agreement shall become void and there shall be no further
liability or obligation on the part of BusLogic, Mylex, Merger Subsidiary or
their respective officers or directors or the Principal Shareholders except (a)
with respect to Sections 5.1(l) and 5.2(h) (Broker's and Finder's Fees), 11.2
(Fees and Expenses), and 11.4 (Confidentiality), and (b) with respect to any
liabilities or damages incurred or suffered by a party
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as a result of the breach by the other party of any of its other
representations, warranties, covenants or agreements set forth in this
Agreement.
b. Notwithstanding any implication to the contrary herein, (i) Mylex
shall have no right to terminate this Agreement as a result of the fairness
opinion condition specified in Section 7.2(o) not being satisfied, unless Mylex,
within ten (10) business days of BusLogic receiving written notice of such
termination, pays $1,000,000, in cash, to BusLogic, and (ii) if the shareholders
of BusLogic fail to approve the Merger by the requisite vote specified in
Section 7.2(k) on or before February 15, 1996, and all of the conditions to
BusLogic's obligations to consummate the Merger specified in Section 7.3 (the
"BusLogic Conditions") shall have been satisfied, BusLogic shall pay $1,000,000,
in cash, to Mylex, as liquidated damages, within ten (10) business days of the
vote of BusLogic's shareholders with respect to the Merger having been taken or
February 15, 1996 (whichever shall first occur), and, if the Merger is not
consummated by February 15, 1996, all of the BusLogic Conditions have been
satisfied, and a Change or Control of BusLogic occurs on or before January 15,
1997, BusLogic shall pay to Mylex, as liquidated damages, within ten (10)
business days of such Change of Control occurring (or as otherwise described in
the definition of "Bust-Up Fee"), the Bust-Up Fee, less the above-referenced
$1,000,000 payment, if previously made.
Section 9.3 AMENDMENT. This Agreement may not be amended except by a
written instrument approved and executed by all parties to this Agreement;
provided, however, the Principal Shareholders shall be deemed to have approved
any amendment if Principal Shareholders holding shares of BusLogic capital stock
representing, as of the date hereof, 50% or more of the voting power of BusLogic
(a "Majority-in-Interest") agree to such amendment, or the Representative agrees
to such amendment, and such amendment, pursuant to its terms, does not modify
the rights or obligations hereunder of any Principal Shareholder differently, in
any material respect, than it modifies the rights or obligations hereunder of
all the Principal Shareholders (a "Disproportionate Effect").
Section 9.4 WAIVER. No failure or delay on the part of any party in
exercising any right under this Agreement or under any of the other Transaction
Agreements shall operate as a waiver of such right; nor shall any single or
partial exercise of any such right preclude any other or future exercise of such
right or the exercise of any other such right. No waiver of any right or
obligation under this Agreement or under any of the other Transaction Agreements
shall be enforceable against a party unless made in a writing, specifying such
waiver, executed by such party; provided, however, the Principal Shareholders
shall be deemed to have approved any waiver if Principal Shareholders holding a
Majority-in-Interest agree to such waiver or the Representative agrees to such
waiver and such waiver does not have a Disproportionate Effect.
ARTICLE X. POST-CLOSING COVENANT
Section 10.2 INSURANCE AND INDEMNIFICATION. Subsequent to the Closing, to
the extent permitted by applicable law, Mylex shall cause BusLogic to include an
indemnification provision in its Bylaws which is no less beneficial, taken as a
whole, to the officers, directors and agents of BusLogic than the
indemnification provision in BusLogic's bylaws, as in effect on December 1,
1995. During the one year period commencing on the Closing Date, Mylex shall
either cause BusLogic to acquire and maintain in place "run-off" or "tail"
directors and officers liability coverage (based on such coverage in place at
the Closing). In the event the premium for such "run-off" or "tail coverage" is
in excess of the lesser of $50,000 or 150% of the present annual premium for
such existing coverage, the present officers or directors of BusLogic shall be
obligated to pay such excess to Mylex. Notwithstanding any implication to the
contrary hereunder, none of the Principal Shareholders or any of their
affiliates shall have any right to indemnification by BusLogic under BusLogic's
Bylaws or Articles, or pursuant to the California Corporations Code, with
respect to any claim brought against such Principal Shareholder, in such
capacity, by Mylex.
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ARTICLE XI. MISCELLANEOUS AND GENERAL
Section 11.1 DEFINITIONS. As used in this Agreement, capitalized terms
shall have the meanings set forth, or in the section specified by, the attached
Schedule A.
Section 11.2 FEES AND EXPENSES. Each of Buslogic and Mylex shall pay all
fees and expenses that it incurs in connection with the Merger, this Agreement
and the transactions contemplated by this Agreement or the other Transaction
Agreements, including, without limitation, all professional and other fees
(whether or not the Closing occurs).
Section 11.3 NOTICES. All notices, requests, demands, claims, and other
communications under this Agreement shall be in writing. Any notice, request,
demand, claim, or other communication under this Agreement shall be deemed duly
given (and shall be effective five business days after) if it is sent by
registered or certified mail, return receipt requested, postage prepaid, and
addressed to the intended recipient at the address set forth on Exhibit J
hereto. Any party may send any notice, request, demand, claim or other
communication to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
party may change the address to which notices, requests, demands, claims, and
other communications are to be delivered by giving the other parties notice of
such change in the manner set forth in this Agreement.
Section 11.4 CONFIDENTIALITY. BusLogic and Mylex have entered into a
Confidentiality Agreement, dated November 17, 1995 (the "Confidentiality
Agreement"), which shall be in force and effect and bind each of the parties to
this Agreement (including each of the Principal Shareholders as if he were a
direct party to this Agreement) through the date of this Agreement and
thereafter. If the Merger is consummated, however, the Confidentiality
Agreement shall have no further force or effect with respect to, and shall no
longer bind, Mylex or BusLogic after the consummation of the Merger with respect
to any disclosures or use of confidential or other information subject to the
Confidentiality Agreement, but shall nevertheless continue to have force and
effect with respect to and bind each of the Principal Shareholders.
Section 11.5 NO THIRD-PARTY BENEFICIARIES. This Agreement shall not
confer any rights or remedies upon any Person other than the parties to this
Agreement and their respective successors and permitted assigns; provided,
however, that (a) the provisions in Article III concerning payment of the Merger
Consideration are intended to be for the benefit of the holders of the Cancelled
Shares and (b) the provisions in Article VIII concerning indemnification are
intended to be for the benefit of the Indemnified Persons specified in Article
VIII and their respective legal representatives.
Section 11.6 GOVERNING LAW. This Agreement shall be governed by the laws
of the State of California (regardless of the laws that might be applicable
under principles of conflicts of law) as to all matters, including, without
limitation, matters of validity, construction, effect and performance.
Section 11.7 ENTIRE AGREEMENT. This Agreement (including the attached
Exhibits and Schedules) embodies the entire agreement and understanding of the
parties with respect to the transactions it and they contemplate and supersedes
all prior written or oral commitments, arrangements or understandings with
respect to such matters, other than the Confidentiality Agreement. There are no
other restrictions, agreements, promises, warranties, covenants or undertakings
with respect to the transactions contemplated by this Agreement (including the
attached Exhibits and Schedules).
Section 11.8 ATTORNEYS' FEES. In the event that any action or proceeding,
including, without limitation, arbitration, is commenced by any party for the
purpose of enforcing any provision of this Agreement, the parties to such
action, proceeding or arbitration shall be entitled to recover, as part of any
award, judgment, decision or other resolution of such action, proceeding or
arbitration, their related reasonable attorneys' fees and expenses.
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Section 11.9 SEVERABILITY. If any one or more of the provisions of this
Agreement are held to be invalid, illegal or unenforceable, the validity,
legality or enforceability of the remaining provisions of this Agreement shall
not be affected. To the extent permitted by Applicable Law, each party waives
any provision of law which renders any provision of this Agreement invalid,
illegal or unenforceable in any respect.
Section 11.10 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
each of which shall be deemed an original.
Section 11.11 HEADINGS. The Article, Section and Subsection headings
herein are for convenience of reference only, do not constitute part of this
Agreement and shall not limit or otherwise affect any of the Agreement's
provisions.
Section 11.12 CONSTRUCTION. Each and every provision of this Agreement
and the other Transaction Agreements shall be construed as though all of the
parties participated equally in the drafting of the same. Consequently, the
parties acknowledge and agree that any rule of construction that a document is
to be construed against the drafting party shall not be applicable either to
this Agreement or such other agreements.
Section 11.13 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon the parties hereto and their respective successors and assigns and shall
inure to the benefit of the parties to this Agreement. Notwithstanding the
foregoing, no party to this Agreement shall have any right to assign any of its
rights or obligations hereunder to any other Person.
Section 11.14 REFERENCES. Unless otherwise specified, references in this
Agreement to "Sections," "Subsections" or "Articles" refer to the sections,
subsections or articles in this Agreement.
Section 11.15 ADDITIONAL CONDITIONS. Notwithstanding any implication or
statement to the contrary herein, (a) either party may terminate this Agreement,
by giving the other party written notice of such termination, received by the
other party by 6:00 p.m., California time, on December 20, 1995 (the
"Termination Time"), if (i) such party is not satisfied, in its sole discretion,
with the results of its due diligence review of the other party with respect to
the matters referenced in the representations and warranties of the other party
herein and the exceptions thereto discussed in the other party's disclosure
schedule attached hereto, or (ii) either of the parties has given the other
party written notice that it does not accept the Agreement of Merger, Escrow
Agreement, each of the Non-Competition Agreements, Affiliate Agreement and
Principal Shareholder Agreement that are to be attached hereto as exhibits, and
(b) Mylex may terminate this Agreement, by giving BusLogic written notice of
such termination, received by BusLogic by the Termination Time, if any of the
Principal Shareholders has not executed, and delivered to Mylex, this Agreement
by 6:00 p.m., California time, on December 20, 1995.
Section 11.16 SHAREHOLDER VOTE. The parties acknowledge that Section 6.4
of this Agreement calls for a meeting of BusLogic's shareholders for the purpose
of voting on the adoption of this Agreement and the Merger, and agree that each
Principal Shareholder's execution and delivery of this Agreement does not
constitute a vote in favor of the adoption of this Agreement or the Merger.
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IN WITNESS WHEREOF, each of the parties below have caused this Agreement
and Plan of Reorganization to be duly executed as of the day and year first
above written.
PRINCIPAL SHAREHOLDERS MYLEX CORPORATION
By: /s/ Al Montross
- ---------------------- -----------------------------------------------
- ---------------------- Name: Al Montross
- ---------------------- Title: President
- ----------------------
- ----------------------
- ---------------------- BUSLOGIC ACQUISITION CORP.
- ----------------------
By: /s/ Al Montross
-----------------------------------------------
Name: Al Montross
Title: President
BUSLOGIC INC.
By: /s/ Jesse Chen
-----------------------------------------------
Name: Jesse Chen
Title: President
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SCHEDULE A
DEFINITIONS
The following terms shall have the meanings specified in the following
section of the Agreement:
DEFINED WORD SECTION WHERE DEFINED
------------ ---------------------
affiliate Section 5.1(aa)
Affiliate Agreement Section 6.12
Agreement Opening paragraph
Agreement of Merger Section 1.1
Applicable Value Section 8.2
Articles Section 11.14
associate Section 5.1(aa)
BusLogic Opening paragraph
BusLogic Balance Sheet Section 5.1(f)
BusLogic Benefit Arrangements Section 5.1(p)(i)
BusLogic Common Stock Section 3.1(a)
BusLogic Conditions Section 9.2(b)
BusLogic Disclosure Schedule Section 5.1
BusLogic Employee Plans Section 5.1(p)(ii)
BusLogic Financial Statements Section 5.1(f)
BusLogic Permits Section 5.1(d)
BusLogic Preferred Stock Section 3.1(b)
BusLogic Options Section 3.2
BusLogic Stock Option Plan Section 3.2
California GCL Section 1.1
California Securities Application Section 5.2(c)(iii)
California Securities Permit Section 5.2(c)(iii)
Cancelled Shares Section 3.4
Closing Section 1.2
Closing Date Section 1.2
Compensation Plans Section 6.2
Confidentiality Agreement Section 11.4
Dissenting Shares Section 3.6
Effective Time Section 1.3
employee pension benefit plan Section 5.1(p)(ii)
employee welfare benefit plan Section 5.1(p)(ii)
Escrow Agreement Section 4.1
Escrowed Consideration Section 4.1
excess parachute payment Section 5.1(p)(vi)
Exchange Agent Section 3.5
fiduciary Section 5.1(p)(iii)
incentive stock option Section 3.2
Indemnified Persons Section 8.1
Indemnified Shareholders Section 8.3
Injunction Section 7.1(c)
Intellectual Property Section 5.1(s)(i)
IRS Section 5.1(g)
Loss and Losses Section 8.1
Merger Recitals
Merger Filing Documents Section 1.3
Merger Subsidiary Opening paragraph
multi-employer plan Section 5.1(p)(ii)
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DEFINED WORD SECTION WHERE DEFINED
------------ ---------------------
Mylex Opening paragraph
Mylex Balance Sheet Section 5.2(f)
Mylex Common Stock Section 3.1(a)
Mylex Disclosure Schedule Section 5.2
Mylex Financial Statements Section 5.2(f)
Mylex Permits Section 5.2(d)
Mylex Stock Plans Section 5.2(b)(i)
New Options Section 3.2
Non-Competition Agreement Section 7.1(f)
Options List Section 5.1(b)(iii)
other property Section 3.7
Other Shareholders Section 5.1(b)(iv)
Periodic Reports Section 5.2(k)
pooling of interests Section 7.2(g) and (h)
Principal Shareholder Letter Section 6.13
Proprietary Information Section 5.1(s)(iii)
reorganization Section 6.1(f)
Representative Section 4.1
Requisite Approvals Section 7.1(b)
SEC Section 3.2
Secretary of State Section 1.3
Sections Section 11.14
severance pay Section 5.1(o)(iii)
Shareholders List Section 5.1(b)(iii)
Solicitation Materials Section 6.4
Subsections Section 11.14
Subsidiary Stock Section 3.1(c)
Surviving Corporation Section 1.1
Surviving Corporation Stock Section 3.1(c)
Tangible Property Section 5.1(v)
Transaction Agreements Section 5.1(c)(ii)
Violation Section 5.1(c)(iii)
Voting Debt Section 5.1(b)(i)
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As used in this Agreement, the following terms shall have the meanings
specified below:
ACCOUNTS RECEIVABLE: means all notes and accounts receivable held by
BusLogic or any of its subsidiaries and all notes, bonds and other evidences of
indebtedness of any Person held by BusLogic relating to the business of
BusLogic.
APPLICABLE LAWS: means all applicable provisions of all (i)
constitutions, treaties, statutes, laws (including the common law), rules,
regulations, ordinances, permits, concessions, grants, franchises, licenses,
orders or other governmental authorization or approval of any Governmental
Authority, (ii) Governmental Approvals and (iii) orders, decisions, judgments,
awards and decrees of or agreements with any Governmental Authority.
BUSINESS DAY: means each weekday that is not a holiday under federal
or California law.
BUSLOGIC STOCK OPTION PLAN: means the BusLogic 1990 Equity Incentive
Plan, as amended.
BUST-UP FEE: means an amount equal to the greater of (a) $5,000,000,
and (b) fifty percent (50%) of the aggregate gross consideration received,
directly or indirectly, by BusLogic or any of its shareholders in connection
with, or as a result of a transaction or transactions constituting, a Change of
Control and the value of any additional gross consideration received, directly
or indirectly, by any BusLogic shareholder as a result of any subsequent related
sale of securities or assets by BusLogic or sale of BusLogic capital stock by
any such shareholder, net, in each such case with respect to such fifty percent
(50%) calculation, of the out-of-pocket costs arising directly and solely from
the transaction or transactions effecting such Change of Control incurred and
paid by the BusLogic shareholders and not subsequently reimbursed by a third
party, all as described, in reasonable detail, in a written notice from BusLogic
received by Mylex within five (5) business days after the closing of each such
transaction, in excess of the aggregate Applicable Value, on the date hereof, of
the Mylex Common Stock to be issued to BusLogic shareholders in the Merger. Any
payment of such gross consideration which is not cash shall be deemed to have a
value, for purposes of this Agreement, equal to its fair market value on the
date of the closing of the related transaction, which, for a security of a class
that is publicly traded, shall be its last reported trading price on the trading
day immediately prior to the date for such closing. In the event all of the
consideration to be received in a Change of Control is shares of equity
securities publicly traded in the United States and freely transferable (subject
only to a "pooling" lock-up), the Bust-Up Fee may be paid in cash (as provided
in Section 9.2(b)) or with shares of such equity securities, which securities
must be transferred to Mylex within ten (10) business days of (i) the Change of
Control occurring (if such Change of Control is not treated as a "pooling"), or
(ii) the "pooling" lock-up period expiring (if such Change of Control is treated
as a pooling).
CHANGE OF CONTROL: means the occurrence of any of the following
(whether in one transaction or a series of related transactions): (a) a
reorganization, merger or consolidation of BusLogic as a result of which the
outstanding shares of BusLogic capital stock are exchanged or converted into
cash, property and/or securities not issued by BusLogic; (b) the dissolution or
liquidation of BusLogic; (c) the sale of all or a majority (either
quantitatively or qualitatively) of the assets of BusLogic; or (d) upon any
Person or any group (within the meaning thereof in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended), other than Peter Harvey, Jesse
Chen or Lister Chang, or any of their respective affiliates, beneficially
holding voting securities of BusLogic, or securities exchangeable for,
convertible into or exercisable for voting securities of BusLogic, aggregating
in excess of fifty percent (50%) of the voting power of the then outstanding
voting securities of BusLogic.
CODE: means the Internal Revenue Code of 1986, as amended, and all
rules and regulations promulgated under that Code.
EQUIPMENT: means all machinery, equipment, furniture, fixtures, and
tools used in connection with the manufacture, design and sales of the Products
and the administration of the business of BusLogic and its subsidiaries.
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ENVIRONMENTAL CLAIM: means any claim based upon, arising out of or
otherwise in respect of any inaccuracy in or any breach of any representation,
warranty, covenant or agreement of BusLogic or the Principal Shareholders
contained in this Agreement related to the environment.
ENVIRONMENTAL DAMAGES: means all claims, judgments, damages, losses,
penalties, fines, liabilities (including strict liability), costs and expenses,
including, without limitation, costs and expenses of defense of any claim and of
any settlement of claims, including, reasonable attorneys' fees and expenses,
that are incurred at any time as a result of the existence of Hazardous
Materials upon, about or beneath the Premises, migrating or threatening to
migrate to or from the Premises or arising in any manner whatsoever out of any
violation of Environmental Requirements pertaining to the Premises or any
activities on the Premises or from the past or present operations of BusLogic,
including, without limitation:
(1) damages for personal injury, or injury to property or natural
resources, occurring upon or off of the Premises, whether
foreseeable or unforeseeable, including, without limitation,
claims brought by or on behalf of employees of BusLogic, lost
profits, consequential damages, interest and penalties;
(2) diminution in the value of the Premises and damages for the loss
of or restriction on the use of, or adverse impact on the
marketing of, the Premises or of any amenity of the Premises;
(3) fees incurred for the services of attorneys, consultants,
contractors, experts, laboratories and all other costs and
liabilities (including, without limitation, liabilities to
indemnify any Person for costs) incurred in connection with the
investigation or remediation of Hazardous Materials or violation
of Environmental Requirements, including, without limitation, the
preparation of any feasibility studies or reports or the
performance of any cleanup, remedial, removal, containment,
restoration or monitoring work required by any Governmental
Authority, or reasonably necessary to make full economic use of
the Premises or any other property or otherwise expended in
connection with such conditions; and
(4) damages and claims (including, without limitation, those of the
type described in clauses (i)-(iii) above) resulting from the
off-site disposal of Hazardous Materials derived from the use,
generation, storage, treatment, transportation or disposal of
Hazardous Materials by or on behalf of BusLogic.
ENVIRONMENTAL REQUIREMENTS: means all Applicable Laws relating to the
protection of human health or the environment, including, without limitation:
(1) all requirements pertaining to reporting, licensing, permitting,
investigation or remediation of emissions, discharges, releases
or threatened releases of Hazardous Materials into the air,
surface, water, groundwater or land, or relating to the
manufacture, generation, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous
Materials; and
(2) all requirements pertaining to the protection of the health and
safety of employees or the public.
ERISA: means the Employee Retirement Income Security Act of 1974, as
amended.
EXCHANGE ACT: means the Securities and Exchange Act of 1934, as
amended.
GENERAL CLAIM: means any claim (other than an Environmental Claim,
Tax Claim or Product Liability Claim) based upon, arising out of or otherwise in
respect of any inaccuracy in or any breach of any representation, warranty,
covenant or agreement of BusLogic or any Principal Shareholders contained in
this Agreement.
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GOVERNMENTAL APPROVAL: means an authorization, consent, approval,
permit, license or exemption of registration or filing with, or report or notice
to, any Governmental Authority.
GOVERNMENTAL AUTHORITY OR GOVERNMENTAL ENTITY: means any nation or
government, any state or other political subdivision and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, including, without limitation, any government
authority, agency, department, board, commission or instrumentality of the
United States, any State of the United States, any political subdivision of any
State and any tribunal or arbitrator(s) of competent jurisdiction.
HAZARDOUS MATERIALS: means any substance:
(1) the presence of which requires investigation, removal or
remediation under any Applicable Law; or
(2) that is or becomes defined as a "hazardous waste" or "hazardous
substance" under any Applicable Law, including, without
limitation, the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. section 9601 ET SEQ.)
and the Resource Conversation and Recovery Act (42 U.S.C. section
6901 ET SEQ.); or
(3) that is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic, or otherwise hazardous and
is or becomes regulated by any Governmental Authority or
Applicable Law; or
(4) the presence of which causes or threatens to cause a nuisance
upon the Premises or to adjacent properties or poses or threatens
to pose a hazard to the Premises or to the health or safety of
any Person on or about the Premises; or
(5) that contains gasoline, diesel fuel or other petroleum
hydrocarbons; or
(6) that contains PCBs or asbestos.
INVENTORY: means all inventories of raw materials, work in progress,
finished products and supplies of BusLogic and its subsidiaries.
KEY EMPLOYEES: means each of the persons listed on the attached
Schedule D.
LIEN: means any mortgage, pledge, adverse claim, security interest,
encumbrance, title defect, title retention agreement, voting trust agreement,
encumbrance, option, lien, charge or claim or interest of any kind.
MATERIAL ADVERSE EFFECT: means a material adverse effect on the
business, assets, prospects (to the knowledge of the Person making the related
representation and warranty), condition (financial or otherwise) or results of
operation of BusLogic or any of its subsidiaries.
MERGER CONSIDERATION: means the Mylex Common Stock issued in exchange
for the BusLogic Common Stock and BusLogic Preferred Stock pursuant to Section
3.1(a) and (b), the Surviving Corporation Stock issued in exchange for the
Subsidiary Stock pursuant to Section 3.1(c) and the New Options.
MYLEX STOCK OPTION PLAN: means the Mylex 1993 Stock Option Plan, as
amended.
PERSON: means any individual, corporation, partnership, firm, joint
venture, association, joint-stock company, trust, unincorporated organization,
Governmental Authority or other entity.
PREMISES: means all real property at any time owned, leased or
operated by BusLogic or any predecessor of BusLogic.
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PRINCIPAL SHAREHOLDERS: means each officer and director of BusLogic
who holds, of record or beneficially (other than as a result of holding stock
options) shares of BusLogic capital stock and each other Person who holds, of
record or beneficially (other than as a result of holding stock options),
outstanding shares of BusLogic capital stock representing 1% or more of its
voting power, and each of their respective affiliates (other than family
members) who hold, of record or beneficially (other than as a result of holding
stock options), shares of BusLogic capital stock, in each such case (i) as of
the Closing Date, and (ii) as of December 1, 1995 if such Person holds, of
record or beneficially (other than as a result of holding stock options), shares
of BusLogic capital stock as of the Closing Date, and any transferee of shares
of BusLogic capital stock transferred by any such Person after December 1, 1995,
but prior to the Closing; provided, however, notwithstanding the foregoing,
neither Cyrus Logic Co-Partnership nor Trinity International Consulting Inc.
shall be Principal Shareholders.
PRINCIPAL SHAREHOLDER PERCENTAGE: means for each Principal
Shareholder a fraction, the numerator of which shall be the total number of
shares of Mylex Common Stock received as Merger Consideration by such Principal
Shareholder and the denominator of which shall be the total number of Shares of
Mylex Common Stock received as Merger Consideration by all BusLogic
shareholders.
PRODUCTS: means all products manufactured, marketed or distributed by
BusLogic and each of its subsidiaries.
PRODUCT LIABILITY: means any liability to which Mylex, the Surviving
Corporation or any other successor to any business of BusLogic may become
subject insofar as such liability arises out of or otherwise relates to any
express or implied representation, warranty, agreement or guaranty made or
claimed to have been made by BusLogic, or imposed or asserted to be imposed by
operation of law, in connection with any Products produced before the Closing.
PRODUCT LIABILITY CLAIM: means any claim, whether for negligence,
strict liability, breach of representation, breach of warranty,
misrepresentation or otherwise, based upon, arising out of or otherwise in
respect of any Products Liability.
SECURITIES ACT: means the Securities Act of 1933, as amended.
TAX CLAIM: means any claim based upon, arising out of or otherwise in
respect of any inaccuracy in or any breach of any representation, warranty,
covenant or agreement of BusLogic or the Principal Shareholders contained in
this Agreement related to taxes.
TAX, TAXES, TAXABLE: means, except where the context otherwise
requires, all Federal, state, local and foreign income, profit, franchise, gross
receipts, payroll, sales, employment, worker's compensation, use, property,
withholding, excise, occupancy, environmental, and other taxes, duties or
assessments of any nature whatsoever, together with all interest, penalties and
additions imposed with respect to such amounts.
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SIGNATURE
Pursuant to the requirement of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
MYLEX CORPORATION
Dated: March 8, 1996 By: /s/ Colleen Gray
------------------
Colleen Gray
Vice President Finance and
Chief Financial Officer
5
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6
