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 27, 1998
ORYX TECHNOLOGY CORP.
(Exact name of registrant as specified in its charter)
Delaware 1-12680 22-2115841
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
47341 Bayside Parkway, Fremont, California 94538
(Address of principal executive offices)
Registrant's telephone number, including area code: (510) 249-1144
-------------------------------------------------------------
This report on form 8-K, including all exhibits, contains 83 pages
<PAGE>
ITEM 2. DISPOSITION OF ASSETS
On February 27, 1998, Corus Investments Ltd., a Bahamas Company, acquired
8,000,000 shares of the authorized Class A Common Stock of Oryx Instruments and
Materials Corporation ("I&M") for a purchase price of $500,000 (the "Sale").
Prior to the sale, I&M was a wholly owned subsidiary of the Registrant. As part
of the Sale, I&M redeemed 8,000,000 of the 10,000,000 shares of Class A Common
Stock held by the Registrant for an aggregate redemption price of $1,500,000
payable as follows: (1) $500,000 immediately, (2) $333,333 on February 27, 1999,
and (3) $666,667 on February 27, 2000. After these transactions, the Registrant
owned approximately 19.9% of the outstanding shares of I&M.
As part of the Sale, the Registrant entered into a transition services
agreement with I&M and granted to I&M an exclusive license to produce, use and
sell the Registrant's Intragene(TM) technology in the former Soviet Union.
Copies of the press releases issued by the Registrant on February 18,
1998 and March 9, 1998, concerning the Sale are filed herewith as Exhibits 99.1
and 99.2 and are incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Not applicable.
(b) Pro forma financial information
INTRODUCTION TO PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
Pro Forma Condensed Balance Sheet
The following unaudited Pro Forma Condensed Balance Sheet reflects the
historical consolidated condensed balance sheet of Oryx Technology Corporation
("Oryx" and together with its subsidiaries, the "Company") at November 30, 1997
adjusted to give effect to the Stock Purchase and Reorganization Agreement dated
February 27, 1998, by and between Oryx and Corus Investment Ltd., and Oryx
Instruments and Materials Corporation (I&M), whereby I&M distributed certain
assets and liabilities to Oryx and redeemed 8,000,000 shares of I&M Class A
Common Stock held by Oryx.
The unaudited Pro Forma Condensed Balance Sheet should be read in
conjunction with historical financial statements and notes thereto and the
narrative sections included elsewhere herein. Because these transactions
occurred subsequent to November 30, 1997, actual adjustments and balances will
vary from those presented in the Pro Forma Condensed Balance Sheet. However,
management believes that any differences between actual adjustments and pro
forma adjustments will not have a material effect on the pro forma financial
statement.
Pro Forma Condensed Statement of Operations
The unaudited Pro Forma Condensed Statements of Operations for the
three years ended February 28, 1997 and the nine months ended November 30, 1997
are based upon the historical condensed consolidated statements of operations of
the Company for the respective periods after giving effect to pro forma
adjustments described in the notes thereto as if the redemption of shares of I&M
Class A Common Stock held by Oryx had been consummated on March 1, 1994.
The unaudited Pro Forma Condensed Statements of Operations should be
read in conjunction with the historical financial statements and notes thereto
of the Company and the narrative sections included elsewhere herein. The Pro
Forma Condensed Statements of Operations are not necessarily indicative of what
actual results of operations would have been for the period had the transaction
occurred on March 1, 1994 and do no purport to indicate the results of future
operations.
<PAGE>
ORYX TECHNOLOGY CORP.
PRO FORMA CONDENSED BALANCE SHEETS
November 30, 1997
(UNAUDITED)
<TABLE>
Pro Forma
Adjustments
Reflecting Pro Forma
Historical Disposition As Adjusted
------------------ ------------------- ------------------
ASSETS
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 761,000 $500,000 (A) $1,261,000
Accounts receivable, net 1,832,000 1,832,000
Inventories 4,274,000 (1,182,000) (B) 3,092,000
Other current assets 508,000 (31,000) (B) 477,000
-------- ------- ------ -------
Total current assets 7,375,000 6,662,000
Property and equipment, net 2,395,000 (541,000) (B) 1,854,000
Intangible assets, net 632,000 632,000
Other assets 272,000 1,000,000 (A) 1,212,000
(60,000) (B)
------------------ ----------------- ------------
$ 10,674,000 $10,360,000
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Borrowings $ 1,063,000 $1,063,000
Capital lease obligations 20,000 (7,000) (B) 13,000
Accounts payable 2,257,000 (265,000) (B) 1,992,000
Accrued liabilities 2,078,000 (707,000) (B) 1,371,000
----- --------- ---- ---------
Total current liabilities 5,418,000 4,439,000
Deferred Gain 665,000 (C) 665,000
Capital lease obligations, less current portion 38,000 38,000
Borrowings, less current portion 259,000 259,000
-------- ------- ------- -------
Total liabilities 5,715,000 5,401,000
----- --------- ---- ---------
Mandatorily redeemable securities 778,000 778,000
-------- ------- ------- -------
Stockholders' equity:
Series A 2% Convertible Cumulative Preferred
Stock, 4,500 shares issued and outstanding 107,000 107,000
Common Stock, 13,124,821 shares
issued and outstanding, 15,000 15,000
Additional paid in capital 19,617,000 19,617,000
Accumulated deficit (15,558,000) (15,558,000)
- ------------ ------------
Total stockholders' equity 4,181,000 4,181,000
----- --------- ----- ---------
$ 10,674,000 $10,360,000
============ ===========
NOTES TO PRO FORMA CONDENSED BALANCE SHEET
(Unaudited)
The Oryx stock purchase and reorganization pro forma adjustments have been made
to reflect the following:
(A) Redemption by I&M of 8,000,000 shares of I&M Class A Stock held by Oryx
for $500,000 in cash and $1,000,000 in a non-interest bearing promissory
note.
(B) Elimination of I&M assets and liabilities less certain assets and
liabilities distributed to Oryx prior to the redemption and estimated
transaction costs.
(C) Deferred gain on sale of Oryx's 8,000,000 shares of Class A Stock of I&M.
</TABLE>
ORYX TECHNOLOGY CORP.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Nine Months ended November 30, 1997
(UNAUDITED)
<TABLE>
Pro Forma
Adjustments
Reflecting Pro Forma
Historical Disposition As Adjusted
<S> <C> <C> <C>
Revenue $13,811,000 $(2,945,000) (A) $10,866,000
Cost of sales 11,714,000 (2,307,000) (B) 9,407,000
------------------ --------------- ----------
Gross profit 2,097,000 1,459,000
------------------ ----------
Operating expenses:
Marketing and selling 1,522,000 (866,000) (C) 656,000
General and administrative 3,298,000 (317,000) (D) 2,981,000
Research and development 3,624,000 (1,300,000) (E) 2,324,000
------------------ -----------------
Total operating expenses 8,444,000 5,961,000
------------------ -----------------
Loss from operations (6,347,000) (4,502,000)
Interest expense, net 166,000 166,000
Equity loss on investment -
Net gain on sale of investment (1,383,000) (1,383,000)
------------------ -----------------
Loss before income taxes (5,130,000) (3,285,000)
Provision for income taxes 42,000 42,000
------------------ -----------------
Net loss (5,172,000) (3,327,000)
Dividends and accretion (143,000) (143,000)
------------------ -----------------
Net loss attributable to
common shares ($5,315,000) ($3,470,000)
================== =================
Basic loss per common share: ($0.40) ($0.26)
================== =================
Shares used in basic loss calculation: 13,124,821 13,124,821
================== =================
</TABLE>
<PAGE>
<TABLE>
ORYX TECHNOLOGY CORP.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended February 28, 1997
(UNAUDITED)
Pro Forma
Adjustments
Reflecting Pro Forma
Historical Disposition As Adjusted
<S> <C> <C> <C>
Revenue $26,860,000 $(2,194,000) (A) $24,666,000
Cost of sales 18,475,000 (1,423,000) (B) 17,052,000
------------------ ---------------
Gross profit 8,385,000 7,614,000
------------------ ---------------
Operating expenses:
Marketing and selling 2,010,000 (978,000) (C) 1,032,000
General and administrative 4,499,000 (625,000) (D) 3,874,000
Research and development 3,101,000 (1,819,000) (E) 1,282,000
Acquired in-process research and 670,000 670,000
development
------------------ ---------------
Total operating expenses 10,280,000 6,858,000
------------------ ---------------
Income (loss) from operations (1,895,000) 756,000
Interest expense, net 10,000 10,000
Equity loss on investment 20,000 20,000
------------------ ---------------
Income (loss) before income taxes (1,925,000) 726,000
Provision for income taxes 40,000 40,000
------------------ ---------------
Net income (loss) (1,965,000) 686,0000
Dividends and accretion (47,000) (47,000)
------------------ ---------------
Net income (loss) attributable to
common shares ($2,012,000) $639,000
================== ===============
Basic income (loss) per common share: ($0.19) $0.06
Dilutive earnings per common share: - $0.04
================== ===============
Shares used in basic income (loss) 10,650,000 10,650,000
calculations:
Shares and common equivalent shares used in
dilutive earnings calculation: - 14,800,000 (F) 14,800,000
================== ===============
</TABLE>
<PAGE>
<TABLE>
ORYX TECHNOLOGY CORP.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended February 29, 1996
(UNAUDITED)
Pro Forma
Adjustments
Reflecting Pro Forma
Historical Disposition As Adjusted
<S> <C> <C> <C>
Revenue $16,136,000 $(858,000) (A) $15,278,000
Cost of sales 13,020,000 (1,017,000) (B) 12,003,000
----------------- -----------------
Gross profit 3,116,000 3,275,000
----------------- -----------------
Operating expenses:
Marketing and selling 1,387,000 (454,000) (C) 933,000
General and administrative 2,541,000 (373,000) (D) 2,168,000
Research and development 2,823,000 (739,000) (E) 2,084,000
----------------- -----------------
Total operating expenses 6,751,000 5,185,000
----------------- -----------------
Loss from operations (3,635,000) (1,910,000)
Interest expense, net 320,000 320,000
Equity loss on investment 195,000 195,000
----------------- -----------------
Loss before income taxes and extraordinary gain (4,150,000) (2,425,000)
Provision for income taxes 42,000 42,000
----------------- -----------------
Loss before extraordinary gain (4,192,000) (2,467,000)
Extraordinary gain from debt restructuring (1,433,000) (1,433,000)
----------------- -----------------
Net loss (2,759,000) (1,034,000)
Dividends and accretion (20,000) (20,000)
----------------- -----------------
Net loss attributable to
common shares ($2,779,000) ($1,054,000)
================== =================
Basic loss per common share before extraordinary gain: $ (0.73) $ (0.43)
Extraordinary gain from debt restructuring 0.25 0.25
------------------ -----------------
Basic loss per common share $ (0.48) $ (0.18)
================== =================
Shares used in basic loss calculations: 5,789,642 5,789,642
================== =================
</TABLE>
<PAGE>
<TABLE>
ORYX TECHNOLOGY CORP.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended February 28, 1995
(UNAUDITED)
Pro Forma
Adjustments
Reflecting Pro Forma
Historical Disposition As Adjusted
<S> <C> <C> <C>
Revenue $11,352,000 $(494,000) (A) $10,858,000
Cost of sales 8,172,000 (605,000) (B) 7,567,000
------------------ -----------------
Gross profit 3,180,000 3,291,000
------------------ -----------------
Operating expenses:
Marketing and selling 972,000 (308,000) (C) 664,000
General and administrative 1,738,000 1,738,000
Research and development 1,986,000 (910,000) (E) 1,076,000
Acquired in-process research and development 1,275,000 1,275,000
------------------ -----------------
Total operating expenses 5,971,000 4,753,000
------------------ -----------------
Loss from operations (2,791,000) (1,462,000)
Interest expense, net 154,000 154,000
Equity loss on investment 336,000 336,000
------------------ -----------------
Loss before income taxes (3,281,000) (1,952,000)
Provision for income taxes 8,000 8,000
------------------ -----------------
Net loss (3,289,000) (1,960,000)
Dividends and accretion (27,000) (27,000)
------------------ -----------------
Net loss attributable to
common shares ($3,316,000) ($1,987,000)
================== =================
Basic loss per common share: ($1.02) ($0.61)
================== =================
Shares used in basic loss calculations: 3,238,900 3,238,900
================== =================
</TABLE>
<PAGE>
NOTES TO PRO FORMA CONDENSED STATEMENT OF OPERATIONS
(Unaudited)
The Oryx stock purchase and reorganization pro forma adjustments have been made
to reflect the following:
(A) Reduction in revenues of I&M due to the redemption by I&M of 8,000,000
shares of I&M Class A Stock held by Oryx.
(B) Reduction in cost of revenues associated with I&M revenues.
(C) Reduction in marketing costs associated with the marketing and sale of
I&M products.
(D) Reduction in general and administrative costs associated with I&M
operations.
(E) Reduction in research and development associated with the development of
I&M products.
(F) Inclusion of dilutive common stock equivalents previously considered
anti-dilutive in a loss period.
<PAGE>
(c) Exhibits
2.1 Stock Purchase and Reorganization Agreement by and among the
Registrant, Corus Investment, Ltd. and Oryx Instruments and Materials
Corporation.
2.2 Stockholders' Agreement
2.3 Pledge Agreement
2.4 Promissory Note
99.1 Press release dated February 18, 1998 regarding consolidation of
operations.
99.2 Press release dated March 9, 1998, regarding the sale of 8,000,000
shares of Ory Instruments and Materials Corporation.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Date: March 16, 1998 ORYX TECHNOLOGY CORPORATION
By: /s/ Philip J. Micciche
----------------------
Philip J. Micciche
President and Chief Executive Officer
<PAGE>
Exhibit Index
Exhibit Number Description of Document
2.1 Stock Purchase and Reorganization Agreement by and among the
Registrant, Corus Investment, Ltd. and Oryx Instruments and Materials
Corporation.
2.2 Stockholders' Agreement
2.3 Pledge Agreement
2.4 Promissory Note
99.1 Press release dated February 18, 1998 regarding consolidation of
operations.
99.2 Press release dated March 9, 1998, regarding the sale of 8,000,000
shares of Oryx Instruments and Materials Corporation.
Exhibit 2.1
ORYX INSTRUMENTS AND MATERIALS CORPORATION
Stock Purchase and Reorganization Agreement
---------------------------------------
February 27, 1998
TABLE OF CONTENTS
<TABLE>
Page
<S> <C> <C>
1. Purchase and Sale of Stock; Distribution of Materials Business and Other Assets.........................24
1.1 Distribution of Materials Business and Other Assets and Assumption of Liabilities.......................24
1.2 Sale and Issuance of Stock..............................................................................25
1.3 Redemption of Stock.....................................................................................25
1.4 Closing.................................................................................................26
2. Representations and Warranties of I&M...................................................................28
2.1 Organization, Good Standing and Qualification...........................................................28
2.2 Capitalization and Voting Rights........................................................................28
2.3 Subsidiaries............................................................................................29
2.4 Authorization...........................................................................................29
2.5 Governmental Consents...................................................................................29
2.6 Litigation..............................................................................................29
2.7 Proprietary Information Agreements......................................................................30
2.8 Patents and Trademarks..................................................................................30
2.9 Compliance with Other Instruments.......................................................................30
2.10 Material Agreements; Action.............................................................................31
2.11 Permits. 31
2.12 Environmental and Safety Laws...........................................................................31
2.13 Manufacturing and Marketing Rights......................................................................32
2.14 Registration Rights.....................................................................................32
2.15 Corporate Documents.....................................................................................32
2.16 Title to Property and Assets............................................................................32
2.17 Financial Statements....................................................................................32
2.18 Employee Benefit Plans..................................................................................33
2.19 Insurance...............................................................................................33
2.20 Labor Agreements and Actions............................................................................33
3. Representations, Covenants and Warranties of OTC........................................................34
3.1 Organization, Good Standing and Qualification...........................................................34
3.2 Authorization...........................................................................................34
3.3 Patents and Trademarks..................................................................................34
3.4 Material Agreements; Action.............................................................................35
3.5 Environmental and Safety Laws...........................................................................35
3.6 Financial Statements....................................................................................35
3.7 Release of Liens........................................................................................35
3.8 Tax Matters.............................................................................................36
4. Representations and Warranties of the Purchaser.........................................................37
4.1 Authorization...........................................................................................37
4.2 Purchase Entirely for own Account.......................................................................38
4.3 Disclosure of Information...............................................................................38
4.4 Investment Experience...................................................................................38
4.5 Accredited Investor.....................................................................................38
4.6 Restricted Securities...................................................................................38
5. Conditions of Purchaser's Obligations at Closing........................................................38
5.1 Representations and Warranties..........................................................................39
5.2 Performance.............................................................................................39
5.3 Closing Certificates....................................................................................39
5.4 Government Approvals....................................................................................39
5.5 Proceedings and Documents...............................................................................39
5.6 Board of Directors......................................................................................39
5.7 Opinion of Company Counsel..............................................................................40
5.8 Distribution of Materials Business......................................................................40
5.9 Indebtedness............................................................................................40
6. Conditions of I&M's Obligations at Closing..............................................................40
6.1 Representations and Warranties..........................................................................40
6.2 Payment of Purchase Price...............................................................................40
6.3 Closing Certificate.....................................................................................40
6.4 Qualifications..........................................................................................40
7. Conditions of OTC's Obligations at Closing..............................................................41
7.1 Representations and Warranties..........................................................................41
7.2 Redemption Price........................................................................................41
7.3 Pledge Agreement and New Shares.........................................................................41
8. Post Closing Covenants..................................................................................41
8.1 Tax Matters and Post-Closing Cooperation................................................................41
8.2 Transition Services.....................................................................................43
8.3 Non Competition; Non Solicitation.......................................................................43
8.4 Intragene(TM)License......................................................................................43
9. Indemnification.........................................................................................43
9.1 Survival of Representations and Warranties..............................................................43
9.2 Indemnification.........................................................................................43
10. Miscellaneous...........................................................................................45
10.1 Successors and Assigns..................................................................................45
10.2 Governing Law...........................................................................................45
10.3 Counterparts............................................................................................45
10.4 Titles and Subtitles....................................................................................45
10.5 Notices. 45
10.6 Finder's Fee............................................................................................45
10.7 Expenses................................................................................................46
10.8 Amendments and Waivers..................................................................................46
10.9 Severability............................................................................................46
10.10 Arbitration of Disputes.................................................................................46
10.11 Entire Agreement........................................................................................47
</TABLE>
<PAGE>
SCHEDULES
SCHEDULE OF EXCEPTIONS
EXHIBIT A --........Form of Promissory Note
EXHIBIT B --........Form of Pledge Agreement
EXHIBIT C --........Form of Stockholders Agreement
EXHIBIT D --........Form of Services Agreement
<PAGE>
STOCK PURCHASE AND REORGANIZATION AGREEMENT
THIS STOCK PURCHASE AND REORGANIZATION AGREEMENT (this
"Agreement") is made as of the 27th day of February 1998, by and among Oryx
Technology Corp., a Delaware corporation ("OTC"), Corus Investment Ltd., a
Bahamas Company ("Purchaser") and Oryx Instruments and Materials Corporation, a
Delaware corporation and wholly-owned subsidiary of OTC ("I&M").
RECITALS
A. Purchaser and OTC desire to enter into a transaction pursuant
to which the ATI sputtering targets and materials division of
I&M (the "Materials Business"), together with certain other
assets of I&M, will be distributed to OTC and Purchaser shall
acquire an eighty percent (80%) ownership interest in I&M.
B. In order to accomplish this transaction, Purchaser desires to
purchase from I&M eight million (8,000,000) shares of Class A
Common Stock, par value $.001 (the "Common Stock") of I&M (the
"New Shares"), and I&M wishes to issue such Common Stock to
the Purchaser, on the terms set forth in this Agreement.
C. Immediately following the sale of the New Shares, I&M wishes
to redeem eight million (8,000,000) shares of the Common Stock
(the "Redeemed Shares") currently held by OTC, on the terms
set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and
covenants herein, the OTC, I&M and the Purchaser, intending to be legally bound,
agree as follows:
Purchase and Sale of Stock; Distribution of Materials Business and Other Assets
Distribution of Materials Business and Other Assets and Assumption of
Liabilities.
Immediately prior to the Closing (as defined below), I&M shall distribute
to OTC the assets comprising the materials business previously conducted by I&M
as well as certain other assets (the "Transferred Assets") as described in the
pro-forma I&M balance sheet and disclosure schedules dated as of February 28,
1998, as same shall be updated and upon OTC's completion of its annual audit for
the fiscal year ending February 28, 1998.
Simultaneously with the distribution to OTC of the Transferred Assets, OTC
shall assume the following liabilities of I&M (the "Transferred Liabilities") as
described in the pro-forma I&M balance sheet and disclosure schedules dated as
of February 28, 1998, as same shall be updated and upon OTC's completion of its
annual audit for the fiscal year ending February 28, 1998. Such Transferred
Liabilities shall include, but not be limited to:
(i) all accounts payable, deferred revenues, contract
liabilities, and other liabilities, contingent or non-contingent, but in each of
the foregoing items, only such as relating to the Materials Business, including
but not limited to the accounts payable and other liabilities (the "Assumed
Liabilities");
(ii) all payroll liabilities relating to the employment of each
person employed by I&M other than in the Materials Business on the Closing Date
(the "Retained I&M Employees") through and including the Closing Date (other
than for accrued vacation, sick pay, bonuses, and personal days which have
accrued, all of which remain the obligation of I&M); and
(iii) all payroll liabilities relating to the employment of those
I&M Employees employed in the Materials Business who are or otherwise identified
on Schedule 1.1.6 (the "Materials Business Employees"), whether arising before
or after the Closing Date.
Sale and Issuance of Stock.
At the Closing, I&M shall issue and sell to the Purchaser, and the
Purchaser shall purchase from I&M, the New Shares. The aggregate purchase price
payable by the Purchaser for such New Shares shall be Five Hundred Thousand
Dollars ($500,000) (the "Purchase Price").
Redemption of Stock.
(a)......At the Closing, immediately after the sale and issuance of
Stock described in Section 1.2 above, I&M shall redeem from OTC, and OTC shall
sell to I&M, the Redeemed Shares. The aggregate redemption price payable by I&M
for such Redeemed Shares shall be One Million Five Hundred Thousand Dollars
($1,500,000) (the "Redemption Price"). The Redemption Price shall be paid by I&M
as follows: (i) Five Hundred Thousand Dollars ($500,000) payable at the Closing
by wire transfer to an account designated by OTC (the "Closing Amount"); and
(ii) a non interest-bearing promissory note in the amount of One Million Dollars
($1,000,000) payable Three Hundred Thirty Three Thousand, Three Hundred Thirty
Three Dollars ($333,333) on the twelve (12) month anniversary of the Closing and
Six Hundred Sixty Six Thousand, Six Hundred Sixty Seven Dollars ($666,667) on
the twenty four (24) month anniversary of the Closing (the "Promissory Note").
The Promissory Note shall be in the form of Exhibit A to this Agreement. The
Promissory Note shall be secured by a pledge of Purchaser's interest in the New
Shares pursuant to a pledge agreement in the form of Exhibit B to this Agreement
(the "Pledge Agreement").
(b)......OTC agrees to promptly pay (and in no event later than three
(3) business days after the Closing Date), with the proceeds of the Closing
Amount, the debt owed to any creditors of OTC or I&M on that portion of
inventory which will be retained by I&M after the Closing Date, such amount to
be approximately $279,031. As security for such payment, OTC hereby pledges
2,000,000 shares of Common Stock of I&M to I&M, and agrees to deliver such
shares to I&M and execute any documents necessary to effect such transfer,
should OTC fail to comply with the provisions of this Section 1.3(b).
Closing.
(a) The closing (the "Closing") shall take place at the offices
of Morrison & Foerster LLP, 755 Page Mill Road, Palo Alto, California at 10:00
a.m. (Pacific time), on February 27, 1998, or at such other time and place as
I&M, the Purchaser and OTC may mutually agree upon orally or in writing (which
time and place is hereinafter referred to as the "Closing Date").
(b) At the Closing, I&M shall deliver to the Purchaser:
(i) a stock certificate representing the New Shares issuable to
the Purchaser pursuant to Section 1.2(a) above, and the Purchaser shall pay the
Purchase Price in cash;
(ii) resolutions (in form satisfactory to the Purchaser) of the
board of directors and the shareholders of I&M, as applicable, (A) authorizing
and reserving for issuance a sufficient number of shares of Common Stock, and
that the Common Stock, and (B) approving this Agreement and the other
transactions and agreements contemplated hereby; and
(c) At the Closing, OTC shall deliver to the Purchaser:
(i) a Certificate (the "OTC Closing Certificate") stating that,
except as expressly as set forth in the OTC Closing Certificate, (A) each of the
representations and warranties made by OTC in this Agreement was accurate in all
material respects as of the date of this Agreement, except with respect to the
matters contained in all supplements to or updates of the Schedule of Exceptions
(as defined in Section 2 below) delivered to the Purchaser at or prior to the
Closing, and is accurate in all material respects as of the Closing Date as if
made on the Closing Date, (B) each of the covenants and obligations that OTC is
required to have complied with or performed pursuant to this Agreement at or
prior to the Closing has been duly complied with and performed in all material
respects, and (C) each of the conditions set forth in Section 5 below has been
satisfied in all material respects;
(ii) resolutions (in form satisfactory to the Purchaser) of the
board of directors of OTC, authorizing the execution of this Agreement;
(iii) a Certificate or other document satisfactory to counsel to
Purchaser executed by KBK Financial ("KBK") which shall state that as of the
Closing Date, I&M has no liabilities for any indebtedness of OTC or any
affiliate of OTC to KBK other than the indebtedness of I&M to KBK ("OTC
Indebtedness") and that immediately following the Closing (after OTC has taken
such action which is contemplated by Section 1.3(b)) KBK shall have no liens on
the assets of I&M and that KBK has released and discharged all liens that it may
hold on the assets of I&M (other than assets relating to the Materials Business)
with respect to OTC Indebtedness; and
(iv) evidence satisfactory to Purchaser that any approvals
required by any governmental authority or other person shall have been obtained.
(d) At the Closing, OTC shall deliver to I&M a stock certificate
representing the Redeemed Shares purchased from OTC pursuant to Section 1.2(a)
above; and
(e) At the Closing, the Purchaser shall deliver to I&M:
(i) the Purchase Price in the manner contemplated by Section 1.2
above; and
(ii) a Certificate (the "Purchaser Closing Certificate") setting
forth the Purchaser's representations and warranties that, expressly as set
forth in the Purchaser Closing Certificate, (A) each of the representations and
warranties made by the Purchaser in this Agreement was accurate in all material
respects as of the date of this Agreement, and is accurate in all material
respects as of the Closing Date as if made on the Closing Date, (B) each of the
covenants and obligations that the Purchaser is required to have complied with
or performed pursuant to this Agreement at or prior to the Closing has been duly
complied with and performed in all material respects, and (C) each of the
conditions set forth in Sections 6 and 7 below has been satisfied in all
material respects.
(f) At the Closing, I&M shall deliver to OTC:
(i) the Redemption Price in the form described in Section 1.3
above;
(ii) an executed copy of a Stockholders Agreement in the form of
Exhibit C (the "Stockholders Agreement").
(g) At the Closing, Purchaser shall deliver to OTC:
(i) an executed copy of the Pledge Agreement;
(ii) an executed copy of the Stockholders Agreement;
(iii) evidence satisfactory to OTC of a letter of indemnity in
favor of I&M for $700,000, such letter to be irrevocable and to be effective for
not less than 12 months; and
(iv) the stock certificate representing the New Shares, together
with a stock power endorsed in blank.
Representations and Warranties of I&M.
I&M hereby represents and warrants to the Purchaser that,
except as set forth on a schedule of exceptions (the "Schedule of Exceptions")
furnished to the Purchaser and special counsel for the Purchaser, which
exceptions shall be deemed to be representations and warranties as if made
hereunder:
Organization, Good Standing and Qualification.
I&M is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all requisite
corporate power and authority to carry on its business as now conducted. The
Schedule of Exceptions contains all of the jurisdictions in which I&M is
qualified to do business. I&M is duly qualified to transact business and is in
good standing in each jurisdiction in which the failure to so qualify would have
a material adverse effect on its financial position, results of operations,
business or properties. I&M has all requisite power and authority to own and
operate its properties and assets, to execute and deliver this Agreement, to
issue and sell the New Shares and to carry out the provisions of this Agreement,
including the provisions of the redemption of the Redemption Shares.
Capitalization and Voting Rights.
(a) The authorized capital of I&M consists, or will consist
immediately prior to the Closing, of: (i) Twenty Million (20,000,000) shares of
Common Stock, all of which have been designated "Class A Common Stock," Ten
Million (10,000,000) shares of which are issued and outstanding, fully paid and
nonassessable all of which shares are held by OTC, and the rights, privileges
and preferences of which are described in the Amended Certificate of
Incorporation of I&M, a current copy of which has been provided to Purchaser
(the "Certificate of Incorporation"); (ii) Five Million shares of "Class B
Common Stock," par value $.001, none of which are issued and outstanding; and
(iii) Five Million (5,000,000) shares of "Preferred Stock," par value $.001,
none of which are issued and outstanding. As of the date of this Agreement,
options to purchase 1,047,000 shares of Common Stock are issued and outstanding
and held by the persons and in the amounts specified in the Schedule of
Exceptions, of which options to purchase 343,050 shares were exercisable as of
February 27, 1998 and held by the persons and in the amounts specified in the
Schedule of Exceptions (the "Existing Options"). Except for the Existing
Options, there are no outstanding options, subscriptions, calls, warrants,
rights (including conversion, exchange or preemptive rights) or agreements for
the purchase or acquisition from I&M of any shares of the capital stock or other
securities of I&M. I&M is not a party or subject to any agreement or
understanding, and, to the best of OTC's knowledge, there is no agreement or
understanding between any persons and/or entities, which affects or relates to
the voting or giving of written consents with respect to any security or by a
director of I&M.
(b) The New Shares will, upon payment for the same being received
pursuant to this Agreement, be duly and validly authorized and issued, fully
paid and nonassessable shares of Common Stock of the Company. Based in part upon
the representations of Purchaser, the offer and sale of the New Shares is exempt
from registration under the Securities Act of 1933, as amended and from
qualification under the California Corporate Securities Law of 1968. The Common
Stock to be issued pursuant to this Agreement has been duly authorized and
reserved for issuance.
Subsidiaries.
I&M does not have any subsidiaries. I&M does not have, or have a right
to, own or control, directly or indirectly, any interest in any other
corporation, association, or other business entity. I&M is not a participant in
any joint venture, partnership, or similar arrangement.
Authorization.
All corporate action on the part of I&M, its officers, directors and
stockholders necessary for the authorization, execution and delivery of this
Agreement and the performance of all obligations of I&M hereunder, and the
authorization, issuance, sale and delivery of the Common Stock being sold
hereunder and the redemption of Common Stock being redeemed hereunder constitute
valid and legally binding obligations of I&M, enforceable in accordance with
their respective terms, except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, and other laws of general application affecting
enforcement of creditors' rights generally.
Governmental Consents.
No consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any federal, state or
local governmental authority on the part of I&M is required in connection with
the execution and delivery of this Agreement or consummation of the transactions
contemplated hereby.
Litigation.
(a) There is no action, suit, proceeding or investigation pending
or currently threatened against I&M that questions the validity of this
Agreement or the right of I&M to enter into such agreement, or to consummate the
transactions contemplated hereby.
(b) There is no action, suit, proceeding or investigation pending
or currently threatened in writing against I&M that might result, either
individually or in the aggregate, in any material adverse changes in the assets,
condition, affairs or prospects of I&M, financially or otherwise, or any change
in the current equity ownership of I&M. I&M is not a party or subject to the
provisions of any order, writ, injunction, judgment or decree of any court or
government agency or instrumentality. There is no action, suit, proceeding or
investigation by I&M currently pending or that I&M intends to initiate.
Proprietary Information Agreements.
Each of the I&M Employees, and all other persons who have been
employees of or independent contractors to I&M since January 1, 1996 have
executed a Proprietary Information and Inventions Agreement in the form provided
to the Purchaser, except where the failure to have signed such an agreement
would not have a material adverse effect on I&M's business or prospects, and
such agreements are in full force and effect.
Patents and Trademarks.
(a) I&M has valid title and, except for commercially licensed
software, exclusive ownership of all patents, trademarks, service marks, trade
names, copyrights, trade secrets, information, proprietary rights and processes
necessary for its business as proposed to be conducted after the date hereof
without any conflict with or infringement of the rights of others, and I&M has
taken all reasonable steps to preserve the title and ownership of such patents,
trademarks, service marks, trade names, copyrights, trade secrets, information,
proprietary rights and processes necessary for I&M's business. The Schedule of
Exceptions lists all patents owned by or licensed to I&M, all patent
applications filed on behalf of I&M, all trademark registrations owned by I&M
and all trade names used by I&M in its business.
(b) I&M has not received any communications alleging that I&M has
violated or, by conducting its business as proposed, would violate any of the
patents, trademarks, service marks, trade names, copyrights or trade secrets or
other proprietary rights of any other person or entity.
(c) Immediately following the Closing, I&M shall have such rights
as are legally necessary for its to conduct its business as presently conducted
(other than the Materials Business) without infringing any patent, trademark,
copyright or trade secret of OTC.
Compliance with Other Instruments.
I&M is not in violation or default of any provision of its
Certificate of Incorporation or Bylaws, or of any instrument, judgment, order,
writ, decree or contract to which it is a party or by which it is bound, or, to
the best of I&M's knowledge, any provision of any federal or state statute, rule
or regulation applicable to I&M. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby will not
result in any such violation or be in conflict with or constitute, with or
without the passage of time and giving of notice, either a default under any
such provision, instrument, judgment, order, writ, decree or contract or an
event that results in the creation of any lien, charge or encumbrance upon any
assets of I&M or the suspension, revocation, impairment, forfeiture, or
non-renewal of any material permit, license, authorization, or approval
applicable to I&M, its business or operations or any of its assets or
properties.
Material Agreements; Action.
(a) Except for agreements explicitly contemplated hereby, there
are no agreements, understandings or proposed transactions between I&M and any
of its officers, directors, affiliates, or any affiliate thereof.
(b) There are no agreements, understandings, instruments,
contracts, proposed transactions, judgments, orders, writs or decrees to which
I&M is a party or by which it is bound, other than in the ordinary course of
business or those contemplated by this Agreement, that may involve (i)
obligations (contingent or otherwise) of, or payments to I&M in excess of
$50,000, (ii) the license of any patent, copyright, trade secret or other
proprietary right to or from I&M, (iii) ongoing obligations of I&M to any of its
employees, officers or directors, (iii) provisions restricting or affecting the
development, manufacture or distribution of I&M's products or services or (iv)
any other obligations material to I&M's business.
(c) Except for any transactions undertaken in order to facilitate
the transfer of the Materials Business to OTC, I&M has not (i) declared or paid
any dividends or authorized or made any distribution upon or with respect to any
class or series of its capital stock, (ii) incurred any indebtedness for money
borrowed or any other liabilities individually in excess of $10,000 or, in the
case of indebtedness and/or liabilities individually less than $10,000, in
excess of $50,000 in the aggregate, (iii) made any loans or advances to any
person, other than ordinary advances for travel expenses and five (5) day wage
advances, or (iv) sold, exchanged or otherwise disposed of any of its assets or
rights, other than the sale of its inventory in the ordinary course of business.
Permits.
I&M has all franchises, permits, licenses, and any similar
authority necessary for the conduct of its business as now being conducted by
it, the lack of which could materially and adversely affect the business,
properties, prospects, or financial condition of I&M. I&M is not in default in
any material respect under any of such franchises, permits, licenses, or other
similar authority.
Environmental and Safety Laws.
I&M (a) has never violated, and is presently in compliance
with, all federal, state, and local environmental and health and safety laws,
rules, regulations, ordinances and by-laws ("Environmental Laws") applicable to
its business and properties; (b) has not generated, manufactured, refined,
transported, treated, stored, handled, disposed of, transferred, produced, or
processed any pollutant, toxic substance, hazardous waste, hazardous substance,
hazardous material, oil, or petroleum product ("Hazardous Materials") as defined
under any Environmental Law, or any solid waste, in any manner contrary to law,
and has no knowledge of the release or threat of release of any Hazardous
Materials from its products, properties or facilities in any manner contrary to
law; (c) has not (i) entered into or been subject to any consent decree,
compliance order, or administrative order with respect to any environmental or
health and safety matter relating to its business or any of its properties or
facilities, (ii) received notice under the citizen suit provision of any
Environmental Law in connection with its business or any of its properties or
facilities, (iii) received any request for information, notice, demand letter,
administrative inquiry, or formal or informal compliant or claim with respect to
any environmental or health and safety matter relating to its business or any of
its properties or facilities, or (iv) been subject to or threatened with any
governmental or citizen enforcement action with respect to any environmental or
health and safety matter relating to its business or any of its properties or
facilities, and has no reason to believe that any matter described in (i) to
(iv) above will be forthcoming. No lien has been imposed on any of the
properties or facilities of I&M by any governmental agency at the federal, state
or local level in connection with the presence of any Hazardous Materials.
Manufacturing and Marketing Rights.
I&M has not granted rights to manufacture, produce, assemble,
license, market, or sell its products to any other person other than in the
ordinary course of business as set forth in Schedule 2.13 attached, and is not
bound by any agreement that affects I&M's rights to develop or manufacture its
products.
Registration Rights.
I&M has not granted or agreed to grant any registration
rights, including piggyback rights, to any person or entity.
Corporate Documents.
Except for amendments necessary to satisfy representations and
warranties or conditions contained herein (the form of which amendments has been
approved by the Purchaser), the Certificate of Incorporation and Bylaws of I&M
are in the form previously provided to counsel for the Purchaser.
Title to Property and Assets.
As of Closing I&M will own, and will have good, valid and
marketable title to all property and assets purported to be owned by it or
necessary to conduct its business as presently conducted, free and clear of all
mortgages, liens, loans and encumbrances of any kind whatsoever, other than
equipment which is leased. The Schedule of Exceptions contains an accurate
listing of all personal property assets and inventory of I&M as of ______, 1998,
together with a statement of the book and depreciated value of such assets as
reflected on the books and records of I&M.
Financial Statements.
I&M has delivered to the Purchaser the unaudited financial
statements of I&M (balance sheet and profit and loss statement, statement of
stockholders' equity and statement of cash flows, including notes hereto) for
the fiscal year ending on February 28, 1997, the unaudited financial statements
of I&M (balance sheet and profit and loss statement) for each of the first,
second and third quarters of fiscal year 1998, and for the two monthly periods
following the end of the third fiscal quarter 1998 (the "Financial Statements").
The Financial Statements have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods indicated and with each other, except that the Financial Statements may
not contain all footnotes required by generally accepted accounting principles.
The Financial Statements are correct, complete and in accordance with the books
and records of I&M and fairly and accurately present the financial condition and
operating results of I&M as of the dates, and for the periods, indicated
therein, subject in the case of those Financial Statements relating to fiscal
year 1998 to normal year-end adjustments. Except as set forth in the Financial
Statements, I&M does not have material liabilities, contingent or otherwise,
other than (i) liabilities incurred in the ordinary course of business
subsequent to November 30, 1997 and (ii) obligations under contracts and
commitments incurred in the ordinary course of business and not required under
generally accepted accounting principles to be reflected in the Financial
Statements, which, in both cases, individually or in the aggregate, are not
material to the financial condition or operating results of I&M. Except as
disclosed in the Financial Statements, I&M is not a guarantor or indemnitor of
any indebtedness of any other person, firm or corporation. I&M maintains and
will continue to maintain a standard system of accounting established and
administered in accordance with generally accepted accounting principles.
Employee Benefit Plans.
I&M does not have any "Employee Benefit Plan" as defined in
the Employee Retirement Income Security Act of 1974 other than medical, dental,
vision, life insurance, and 401(k) plans provided through OTC. The execution of
this Agreement, the Pledge Agreement and the Promissory Note, and the
consummation of the actions contemplated hereby or thereby, will not cause any
amounts to become due to any executives, officers, directors or employees of
I&M.
Insurance.
The Schedule of Exceptions contains a description of the
policies of insurance under which the business, property and employees of I&M
are insured.
Labor Agreements and Actions.
(a) I&M is not bound by or subject to (and none of its assets or
properties is bound by or subject to) any written or oral, express or implied,
contract, commitment or arrangement with any labor union, and no labor union has
requested or, to the best of I&M's knowledge, has sought to represent any of the
employees, representatives or agents of I&M. There is no strike or other labor
dispute involving I&M pending, or to the best of I&M's knowledge, threatened,
nor is I&M aware of any labor organization activity involving I&M's employees.
(b) I&M is not aware that any officer or key employee, or that any
group of key employees, intends to terminate their employment with I&M, nor does
I&M have a present intention to terminate the employment of any of the
foregoing. The employment of each officer and employee of I&M is terminable at
the will of I&M. The Schedule of Exceptions contains a complete list of the
current employees of I&M and their current rates of compensation.
(c) To the best of I&M's knowledge, I&M has complied in all material
respects with all applicable state and federal equal employment opportunity and
other laws related to employment.
Representations, Covenants and Warranties of OTC.
OTC hereby represents and warrants to the Purchaser that,
except as set forth on a schedule of exceptions (the "Schedule of Exceptions")
furnished to the Purchaser and special counsel for the Purchaser, specifically
identifying the relevant subparagraph hereof, which exceptions shall be deemed
to be representations and warranties as if made hereunder:
Organization, Good Standing and Qualification.
OTC is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. OTC has all requisite
power and authority to execute and deliver this Agreement, and to perform its
obligations hereunder.
Authorization.
All corporate action on the part of OTC, its respective
officers, directors and stockholders necessary for the authorization, execution
and delivery of this Agreement and the Stockholders Agreement, the performance
of all obligations of OTC hereunder and thereunder constitute valid and legally
binding obligations of OTC, enforceable in accordance with their respective
terms, except as limited by applicable bankruptcy, insolvency, reorganization,
moratorium, and other laws of general application affecting enforcement of
creditors' rights generally.
Patents and Trademarks.
(a) OTC has not received and, to the knowledge of OTC, I&M has
not received, any communication alleging that I&M has violated or, by conducting
its business as proposed, would violate any of the patents, trademarks, service
marks, trade names, copyrights, trade secrets or other proprietary rights of any
other person or entity.
(b) Immediately following the Closing, I&M shall have such
rights as are legally necessary for it to conduct its business as presently
conducted (other than the Materials Business) without infringing any patent,
trademark, copyright or trade secret of OTC.
Material Agreements; Action.
Except for agreements explicitly contemplated hereby, to the
knowledge of OTC, there are no agreements or understandings with respect to
existing transactions or proposed transactions between I&M and any of its
officers, directors, affiliates, or any affiliate thereof.
Environmental and Safety Laws.
To the best of OTC's knowledge, in the conduct of the
Materials Business I&M (a) has never violated, and is presently in compliance
with, all federal, state, and local environmental and health and safety laws,
rules, regulations, ordinances and by-laws ("Environmental Laws") applicable to
its business and properties; (b) has not generated, manufactured, refined,
transported, treated, stored, handled, disposed of, transferred, produced, or
processed any pollutant, toxic substance, hazardous waste, hazardous substance,
hazardous material, oil, or petroleum product ("Hazardous Materials") as defined
under any Environmental Law, or any solid waste, in any manner contrary to law,
and has no knowledge of the release or threat of release of any Hazardous
Materials from its products, properties or facilities in any manner contrary to
law; (c) has not (i) entered into or been subject to any consent decree,
compliance order, or administrative order with respect to any environmental or
health and safety matter relating to its business or any of its properties or
facilities, (ii) received notice under the citizen suit provision of any
Environmental Law in connection with its business or any of its properties or
facilities, (iii) received any request for information, notice, demand letter,
administrative inquiry, or formal or informal compliant or claim with respect to
any environmental or health and safety matter relating to its business or any of
its properties or facilities, or (iv) been subject to or threatened with any
governmental or citizen enforcement action with respect to any environmental or
health and safety matter relating to its business or any of its properties or
facilities, and has no reason to believe that any matter described in (i) to
(iv) above will be forthcoming. No lien has been imposed on any of the
properties or facilities of I&M by any governmental agency at the federal, state
or local level in connection with the presence of any Hazardous Materials.
Financial Statements.
To OTC's knowledge, the Financial Statements have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods indicated and with each other, except
that the Financial Statements may not contain all footnotes required by
generally accepted accounting principles. To OTC's knowledge the Financial
Statements are correct, complete and in accordance with the books and records of
I&M and fairly and accurately present the financial condition and operating
results of I&M as of the dates, and for the periods, indicated therein, subject
in the case of those financial Statements relating to fiscal year 1998 to normal
year-end adjustments.
Release of Liens.
OTC covenants to pay off all of the encumbrances on all
inventory retained by I&M promptly after the Closing.
Tax Matters.
(a) Definitions. For purposes of this Agreement, the following
definitions shall apply:
(1) The term "Group" shall mean, individually and collectively,
(i) I&M, (ii) OTC, and (iii) any individual, trust, corporation, partnership or
any other entity as to which I&M is liable for Taxes incurred by such individual
or entity either as a transferee, or pursuant to Treasury Regulations Section
1.1502-6, or pursuant to any other provision of federal, territorial, state,
local or foreign law or regulations.
(2) The term "Taxes" shall mean all taxes, however, denominated,
including any interest, penalties or other additions to tax that may become
payable in respect thereof, imposed by any federal, territorial, state, local or
foreign government or any agency or political subdivision of any such
government, which taxes shall include, without limiting the generality of the
foregoing, all income or profits taxes (including, but not limited to, federal
income taxes and state income taxes), payroll and employee withholding taxes,
unemployment insurance, social security taxes, sales and use taxes, ad valorem
taxes, excise taxes, franchise taxes, gross receipts taxes, business license
taxes, occupation taxes, real and personal property taxes, stamp taxes,
environmental taxes, transfer taxes, workers' compensation, Pension Benefit
Guaranty Corporation premiums and other governmental charges, and other
obligations of the same or of a similar nature to any of the foregoing, which
the Group is required to pay, withhold or collect.
(3) The term "Returns" shall mean all reports, estimates,
declarations of estimated tax, information statements and returns relating to,
or required to be filed in connection with, any Taxes, including information
returns or reports with respect to backup withholding and other payments to
third parties.
(b) Returns Filed and Taxes Paid. All Returns required to be filed by
or on behalf of members of the Group have been duly filed on a timely basis and
such Returns are true, complete and correct. All Taxes shown to be payable on
the Returns or on subsequent assessments with respect thereto have been paid in
full on a timely basis, and no other Taxes are payable by the Group with respect
to items or periods covered by such Returns (whether or not shown on or
reportable on such Returns) or with respect to any period prior to the date of
this Agreement. Each member of the Group has withheld and paid over all Taxes
required to have been withheld and paid over, and complied with all information
reporting and backup withholding requirements, including maintenance of required
records with respect thereto, in connection with amounts paid or owing to any
employee, creditor, independent contractor, or other third party. There are no
liens on any of the assets of any member of the Group with respect to Taxes,
other than liens for Taxes not yet due and payable or for Taxes that a member of
the Group is contesting in good faith through appropriate proceedings and for
which appropriate reserves have been established. I&M has never been a member of
an affiliated group filing consolidated returns other than a group of which I&M
and OTC were the only members. Neither I&M nor any member of the Group do
business in or derive income from any state, local, territorial or foreign
taxing jurisdiction other than those for which all Returns have been furnished
to Purchaser.
(c)Tax Deficiencies; Audits; Statutes of Limitations. The Returns of
the Group have never been audited by a government or taxing authority, nor is
any such audit in process, pending or threatened (either in writing or verbally,
formally or informally). No deficiencies exist or have been asserted (either in
writing or verbally, formally or informally) or are expected to be asserted with
respect to Taxes of the Group, and no member of the Group has received notice
(in writing, formally or informally) or expects to receive notice that it has
not filed a Return or paid Taxes required to be filed or paid by it. The Group
is neither a party to any action or proceeding for assessment or collection of
Taxes, nor has such event been asserted or threatened (in writing, formally or
informally) against the Group or any of its assets. No waiver or extension of
any statute of limitations is in effect with respect to Taxes or Returns of the
Group. I&M and each member of the Group have disclosed on its federal income tax
returns all positions taken therein that could give rise to a substantial
understatement penalty within the meaning of Code Section 6662.
(d) Tax Sharing Agreements. I&M is not (nor has it ever been) a party
to any tax sharing agreement.
(e) Section 338 Election. OTC is the Parent and I&M is a member of
an affiliated group filing consolidated income tax returns and OTC has the
authority to consent to the Code Section 338(h)(10) election and similar state
elections with respect to this transaction.
Representations and Warranties of the Purchaser. Purchaser hereby represents
and warrants that:
Authorization.
Purchaser has full power and authority to enter into this
Agreement, the Stockholders Agreement and the Pledge Agreement and to conduct
its business as presently and proposed to be conducted. The execution and
delivery by Purchaser of the Agreement, the Stockholders Agreement and the
Pledge Agreement have been authorized by all necessary corporate action. The
Agreement, the Stockholders Agreement and the Pledge Agreement constitute the
valid, binding and legally enforceable agreements of Purchaser, enforceable in
accordance with their respective terms, except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, and other laws of general
application affecting enforcement of creditors' rights generally.
Purchase Entirely for own Account.
The New Shares will be acquired by Purchaser for investment
for the Purchaser's own account, not as a nominee or agent, and not with a view
to the resale or distribution of any part thereof. Purchaser has no present
intention of selling, granting any participation in, or otherwise distributing
the New Shares. .
Disclosure of Information.
Purchaser believes it has received all the information it
considers necessary or appropriate for deciding whether to purchase the New
Shares. The Purchaser further represents that it has had an opportunity to ask
questions and receive answers from I&M and OTC regarding the terms and
conditions of the offering of the New Shares and the business, properties,
prospects and financial condition of I&M. The foregoing, however, does not limit
or modify the representations and warranties of I&M in Section 2 of this
Agreement or the right of the Purchaser to rely thereon.
Investment Experience.
Purchaser is an investor in securities of companies in the
development stage and acknowledges that it is able to fend for itself, can bear
the economic risk of its investment, and has such knowledge and experience in
financial or business matters that it is capable of evaluating the merits and
risks of the investment in the New Shares.
Accredited Investor.
Purchaser is an "accredited investor" within the meaning of
Securities and Exchange Commission ("SEC") Rule 501 of Regulation D, as
presently in effect.
Restricted Securities.
Purchaser understands that the New Shares are "restricted
securities" under the federal securities laws inasmuch as they are being
acquired from I&M in a transaction not involving a public offering and that
under such laws and applicable regulations such securities may be resold without
registration under the Act, only in certain limited circumstances. In this
connection, the Purchaser represents that it is familiar with SEC Rule 144, as
presently in effect, and understands the resale limitations imposed hereby and
by the Act.
Conditions of Purchaser's Obligations at Closing.
The obligations of Purchaser to consummate the transactions
described in this Agreement are subject to the fulfillment on or before the
Closing of each of the following conditions, the waiver of which shall not be
effective against the Purchaser unless the Purchaser shall consent thereto in
writing:
Representations and Warranties.
(a) The representations and warranties of I&M in Section 2 of
this Agreement shall be true and correct on and as of the Closing Date with the
same effect as though such representations and warranties had been made on and
as of the Closing Date.
(b) The representations and warranties of OTC in Section 3 of
this Agreement shall be true and correct on and as of the Closing Date with the
same effect as though such representations and warranties had been made on and
as of the Closing Date.
Performance.
OTC and I&M shall have performed and complied with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by them on or before the Closing.
Closing Certificates.
An officer of I&M and OTC respectively shall deliver to the
Purchaser at the Closing a Closing Certificate stating that the respective
conditions specified in Sections 5 have been fulfilled and, with respect to the
certificate to be delivered by I&M, stating that there shall have been no
adverse change in the business, affairs, operations, properties, assets or
condition of I&M since December 31, 1997.
Government Approvals.
All authorizations, approvals, consents or permits, if any, of
any governmental authority or regulatory body of the United States or of any
state that are required in connection with this Agreement, including but not
limited to the lawful issuance and sale of the Securities pursuant to this
Agreement, shall be duly obtained and effective as of the Closing. There shall
have been no suit, action, investigation, inquiry, or other proceeding
instituted or threatened by any governmental authority or other person with
respect to the transactions contemplated by this Agreement
Proceedings and Documents.
All corporate and other proceedings in connection with the
transactions contemplated at the Closing and all documents incident thereto
shall be reasonably satisfactory in form and substance to the Purchaser's
special counsel, and they shall have received all such counterpart original and
certified or other copies of such documents as they may reasonably request.
Board of Directors.
Mitch Underseth of the Board of Directors of I&M shall have
tendered his resignation as a member of the Board.
Opinion of Company Counsel.
The Purchaser shall have received from Wise and Shepard LLP,
counsel for I&M and OTC, an opinion, dated as of the Closing, in form and
substance satisfactory to Purchaser and its counsel.
Distribution of Materials Business.
I&M shall have completed the transactions described in Section
1.1 of this Agreement.
Indebtedness.
I&M shall have no obligations, and its assets shall not be
subject to any obligations or liens, relating to any indebtedness of OTC or any
affiliate thereof (other than I&M) to KBK.
Conditions of I&M's Obligations at Closing.
The obligations of I&M to the Purchaser under this Agreement
are subject to the fulfillment on or before the Closing of each of the following
conditions by the Purchaser:
Representations and Warranties.
The representations and warranties of the Purchaser contained
in Section 4 shall be true in all material respects on and as of the Closing
Date with the same effect as though such representations and warranties had been
made on and as of the Closing Date.
Payment of Purchase Price.
The Purchaser shall have delivered to I&M the Purchase Price
specified in Section 1.2 and shall have performed and complied with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing.
Closing Certificate.
The Purchaser shall deliver to I&M at the Closing the
Purchaser Closing Certificate stating that the conditions specified in Sections
6 and 7 have been fulfilled.
Qualifications.
All authorizations, approvals, or permits, if any, of any
governmental authority or regulatory body of the United States or of any state
that are required in connection with the lawful issuance and sale of the
Securities pursuant to this Agreement shall be duly obtained and effective as of
the Closing.
Conditions of OTC's Obligations at Closing.
The obligations of OTC to I&M and the Purchaser under this
Agreement are subject to the fulfillment on or before the Closing of each of the
following conditions by the Purchaser:
Representations and Warranties.
The representations and warranties of the Purchaser contained
in Section 4 shall be true in all material respects on and as of the Closing
Date with the same effect as though such representations and warranties had been
made on and as of the Closing Date.
Redemption Price.
I&M shall have delivered to OTC the Redemption Price.
Pledge Agreement and New Shares.
Purchaser shall have delivered to OTC an executed copy of the
Pledge Agreement and stock certificate for the New Shares together with a stock
power endorsed in blank.
Post Closing Covenants.
Tax Matters and Post-Closing Cooperation.
(a) OTC shall pay all Taxes arising from the transfer of the
Materials Business from I&M to OTC. In addition, OTC shall pay all other Taxes
that may be due after the Closing Date that are allocable to the period prior to
and including the Closing Date attributable to I&M's operations. In order
appropriately to apportion any of these Taxes relating to a period that includes
(but that would not, but for this section, close on) the Closing Date, the
parties hereto will, to the extent permitted by applicable law, elect with the
relevant taxing authorities to treat for all purposes the Closing Date as the
last day of a taxable period of I&M, and such period shall be treated as a
"Short Period" and a "Pre-Closing Period" for purposes of this Agreement. In any
case where applicable law does not permit I&M to treat the Closing Date as the
last day of a Short Period, then for purposes of this Agreement, the portion of
such Taxes that is attributable to the operations of I&M for such Interim Period
(as defined below) shall be (i) in the case of Taxes that are not based on
income or gross receipts, the total amount of such Taxes for the period in
question multiplied by a fraction, the numerator of which is the number of days
in the Interim Period, and the denominator of which is the total number of days
in the entire period in question, and (ii) in the case of Taxes that are based
on income or gross receipts, the Taxes that would be due with respect to the
Interim Period, if such Interim Period were a Short Period. "Interim Period"
means with respect to any Taxes imposed on I&M on a periodic basis for which the
Closing Date is not the last day of a Short Period, the period of time beginning
on the first day of the actual taxable period that includes (but does not end
on) the Closing Date and ending on and including the Closing Date.
(b) OTC shall pay to I&M the amount by which any Taxes are imposed on
I&M or Purchaser to the extent such Taxes exceed the amount of Taxes that would
have been imposed if I&M had never been part of a unitary group or combined
group for state tax purposes.
(c) If in any period ending after the Closing Date I&M earns any
credit or recognizes any loss which cannot be applied against its tax liability
for such period, and is permitted by law to carry back such credit or loss to a
period ending on or prior to the Closing Date, and if the Group shall receive a
tax reduction for the period to which such credit or loss is properly carried
back, then OTC shall immediately remit to I&M the amount of such tax reduction
up to the amount which the Group would have received if such carryback were the
only item giving rise to a tax reduction for such period. OTC agrees that it
will cooperate with Purchaser and I&M and their respective representatives, in a
prompt and timely manner, in connection with (i) the preparation and filing of,
and (ii) any administrative or judicial proceedings involving, any return of tax
or information filed or required to be filed by or for I&M.
(d) I&M shall file and control any Returns required to be filed by I&M
after the Closing Date. OTC agrees that it shall provide, and shall cause its
accountants and other representatives to provide, to I&M on a timely basis the
information, including but not limited to all work papers and records relating
to I&M, that it or the accountants or other representatives have within their
control and that may be reasonably necessary or related to (i) the preparation
of any and all Returns, information returns and reports required to be filed by
I&M with governmental agencies and (ii) audits or other tax determinations or
proceedings by or before such agencies, such information to be provided in the
form in which it has in the past been maintained by OTC, its accountants or
other representatives.
(e) OTC shall, at its sole cost and expense, deliver to I&M at the
earliest practicable date, but not later than 30 days after the Closing Date,
clearance certificates, such as those issued by the State of California pursuant
to California Revenue and Taxation Code Section 6812 (sales tax) and California
Unemployment Insurance Code Section 1732 (employment taxes) and dated not
earlier than 15 days before the Closing Date certifying that I&M is not liable
for any amounts referred to in California Revenue and Taxation Code Section 6811
or California Unemployment Insurance Code Section 1731 and that I&M is not
required to withhold any purchase price thereunder (and would not be so required
in an asset purchase).
(f) Section 338(h)(10) Election. Provided that the parties mutually
agree, they shall each timely take any and all actions necessary to effect
elections with respect to I&M under Code Section 338(h)(10) (and the Treasury
Regulations promulgated thereunder) and any comparable provisions of state,
local or foreign law (collectively and separately the "338(h)(10) Election").
I&M shall be responsible for, and control, the preparation and filing of such
election.
Transition Services.
OTC shall provide I&M with human resources and accounting
services of a scope and type comparable to those provided to I&M prior to the
Closing for a period of one year after the Closing, and MIS services for six
months, the first three months at no charge, with the next three months at 50%
of OTC's cost. I&M shall pay OTC a reasonable charge for such services, based on
the OTC's cost of providing such services, which shall be pursuant to a services
agreement substantially in the form attached hereto as Exhibit D (the "Services
Agreement").
Non Competition; Non Solicitation.
Neither I&M nor OTC shall, for a period of five years from the
Closing Date, compete in the business of the other as such business is
constituted immediately following the Closing or proposed to be conducted after
the consummation of the transactions contemplated by this Agreement. Each of the
parties agrees that it will not solicit or hire the current, past or future
employees or full-time independent contractors or consultants of the other for a
period of two years following the Closing Date.
Intragene(TM) License.
Within ten days after the Closing Date, OTC and I&M shall
enter into a license agreement under which OTC grants I&M the exclusive right to
produce, use and sell OTC's Intragene(TM) technology in the territory consisting
of the former territories and states of the former Soviet Union and under which
I&M shall pay to OTC a four percent (4%) royalty of its net revenues, as
customarily defined, derived from the sale of such Intragene(TM) technology (the
"License Agreement").
Indemnification.
Survival of Representations and Warranties.
The warranties, representations and covenants of OTC, I&M and
the Purchaser contained in or made pursuant to this Agreement shall survive the
execution and delivery of this Agreement and the Closing and shall in no way be
affected by any investigation of the subject matter thereof made by or on behalf
of the Purchaser or I&M for a period of two (2) years after the Closing, except
for the provisions of Sections 3.8 and 8.1, which shall continue in full force
and effect until all applicable statutes of limitations, including waivers and
extensions, have expired with respect to each matter addressed therein.
Indemnification.
(a) From and after the Closing Date, OTC shall protect, defend, indemnify and
hold harmless I&M from any and all Taxes (including without limitation any
obligation to contribute to the payment of any Taxes determined on a
consolidated, combined or unitary basis with respect to a group of corporations
that includes or included the I&M) which are (i) imposed on the OTC or any
member (other than I&M) of the consolidated, unitary or combined group which
includes or included I&M that I&M pays, otherwise satisfies in whole or in part,
or results in liens or encumbrances on any assets of I&M; and (ii) imposed on
I&M in respect of its income, business, property or operations or for which I&M
may otherwise be liable (A) for any taxable period prior to the Closing Date,
(B) resulting by reason of the several liability of I&M pursuant to Treasury
Regulations section 1.1502-6 or any analogous state, local or foreign law or
regulation or by reason of I&M having been a member of any consolidated,
combined or unitary group on or prior to the Closing Date, (C) resulting from
I&M ceasing to be a member of the affiliated group (within the meaning of
Section 1504(a) of the Code) that includes OTC, (D) in respect of any
Post-Closing Period, attributable to events, transactions, sales, deposits,
services or rentals occurring, received or performed in a Pre-Closing Period,
(E) in respect of any Post-Closing Period, attributable to any items of income
or gain of a partnership reporting I&M as a partner, to the extent such items
are properly attributable to periods of the partnership ending on or before the
Closing Date, (F) attributable to any discharge of indebtedness that may result
from any capital contributions by OTC (or an affiliate of OTC) to I&M of any
inter-company indebtedness owed by I&M to OTC (or an affiliate of OTC), or (G)
resulting from the breach of OTC's covenant set forth in Section 8.1; provided,
however, that OTC's liability under the foregoing provisions of this paragraph
shall be reduced as to any item to the extent that such item was specifically
and fully reserved for in the December 31, 1997 financial statements.
(b) I&M will, as to any Taxes in respect of which OTC has agreed to
indemnify I&M, promptly inform OTC of, and permit the participation of OTC in,
any investigation, audit or other proceeding by or with the Internal Revenue
Service or any other taxing authority empowered to administer or enforce such a
Tax and will not consent to the settlement or final determination in such
proceeding without the prior written consent of OTC (which consent will not be
unreasonably withheld).
(c) From and after the Closing Date, OTC shall protect, defend,
indemnify and hold harmless I&M from any and all costs, claims, damage, expenses
and liabilities, including but not limited to attorneys' fees and expenses
related to or arising out of (i) the operation of the Materials Business,
whether by I&M prior to the Closing or OTC following the Closing; (ii) I&M's
practices and conduct with respect to employment, employees and independent
contractors prior to the Closing, regardless of whether any such employees or
independent contractors are, following the Closing, employed by or under
contract to I&M; and (iii) any breach of any material representation, warranty
or covenant of OTC contained in this Agreement.
Miscellaneous.
Successors and Assigns.
Except as otherwise provided herein, the terms and conditions
of this Agreement shall inure to the benefit of and be binding upon the
respective successors and assigns of the parties. Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns, any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
Governing Law.
This Agreement shall be governed by and construed under the
laws of the State of California as applied to agreements among California
residents entered into and to be performed entirely within California.
Counterparts.
This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
Titles and Subtitles.
The titles and subtitles used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement.
Notices.
Unless otherwise provided, any notice required or permitted
under this Agreement shall be given in writing and shall be deemed effectively
given upon personal delivery to the party to be notified or upon deposit with
the United States Post Office, by registered or certified mail, postage prepaid
and addressed to the party to be notified at the address indicated for such
party on the signature page hereof, or at such other address as such party may
designate by ten (10) days' advance written notice to the other parties.
Finder's Fee.
Each party respectively represents that it neither is nor will
be obligated for any finders' fee or commission in connection with this
transaction. The Purchaser agrees to indemnify and to hold harmless I&M and OTC
from any liability for any commission or compensation in the nature of a
finders' fee (and the costs and expenses of defending against such liability or
asserted liability) for which the Purchaser or any of its officers, partners,
employees, or representatives is responsible. OTC agrees to indemnify and hold
harmless the Purchaser from any liability for any commission or compensation in
the nature of a finders' fee (and the costs and expenses of defending against
such liability or asserted liability) for which OTC or any of its officers,
employees or representatives is responsible.
Expenses.
Irrespective of whether the Closing is effected, OTC on the
one hand and the Purchaser on the other hand shall each pay all costs and
expenses that each incurs with respect to the negotiation, execution, delivery
and performance of this Agreement and the other agreements and transactions
described herein. If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement or such other agreements, the prevailing
party shall be entitled to reasonable attorney's fees, costs and necessary
disbursements, in addition to any other relief to which such party may be
entitled.
Amendments and Waivers.
Any term of this Agreement may be amended (either generally or
in a particular instance and either retroactively or prospectively), only with
the written consent of I&M, OTC and the Purchaser. No waiver shall be effective
unless executed in writing by the party making such waiver. No waiver shall be
effective prospectively unless it so explicitly states. Any amendment or waiver
effected in accordance with this paragraph shall be binding upon any successor
in interest to the party making such amendment or waiver, and the persons
affected thereby.
Severability.
If one or more provisions of this Agreement is (are) held to
be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
Arbitration of Disputes.
The parties shall submit any dispute under this agreement to
binding arbitration in San Francisco, California pursuant to the commercial
arbitration rules of the American Arbitration Association as modified by this
Agreement. Such arbitration shall be conducted before a single arbitrator chosen
mutually by the parties and after the exchange of all relevant documents. No
discovery shall be allowed prior to the arbitration other than the
aforementioned exchange of documents, which exchange shall be made in good faith
by both parties. The arbitrator shall conduct a maximum of 5 days of hearings,
after which she shall render a written decision with findings of fact and
reasons for same. The decision shall be rendered within sixty (60) days after
the last hearing date. The costs of arbitration shall be shared equally by the
parties. The arbitrator, in his award, may in his discretion award attorneys'
fees and other costs and expenses to the prevailing party.
Entire Agreement.
This Agreement and the documents referred to herein constitute
the entire agreement among the parties and no party shall be liable or bound to
any other party in any manner by any warranties, representations, or covenants
except as specifically set forth herein or therein.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this
Reorganization Agreement as of the date first above written.
I&M:
ORYX INSTRUMENTS AND MATERIALS CORPORATION
By:
Name: ______________________________
Title: _______________________________
Address: ___________________________
---------------------------
PURCHASER:
CORUS INVESTMENT LIMITED
By:
Name: ______________________________
Title: _______________________________
Address: ___________________________
---------------------------
OTC:
ORYX TECHNOLOGY CORP.
By:
Name: ______________________________
Title: _______________________________
Address: ___________________________
---------------------------
Exhibit 2.2
ORYX INSTRUMENTS AND MATERIALS CORPORATION
Stockholders Agreement
February 27, 1998
<PAGE>
<TABLE>
TABLE OF CONTENTS
Page
<S> <C> <C>
1. Registration Rights.............................................................................2
1.1 Definitions..............................................................................................2
1.2 Company Registration.....................................................................................3
1.3 Obligations of the Company...............................................................................4
1.4 Furnish Information......................................................................................6
1.5 Expenses of Company Registration.........................................................................6
1.6 Underwriting Requirements. Other Limitations............................................................7
1.7 Delay of Registration....................................................................................7
1.8 Indemnification..........................................................................................7
1.9 Reports Under Securities Exchange Act of 1934...........................................................10
1.10 Form S-3 Registration...................................................................................11
1.11 Assignment of Registration Rights.......................................................................12
1.12 "Market Stand-Off" Agreement............................................................................13
1.13 Termination of Registration Rights......................................................................13
2. Covenants......................................................................................13
2.1 Delivery of Financial Statements........................................................................13
2.2 Inspection..............................................................................................14
2.3 Termination of Information and Inspection Covenants.....................................................14
2.4 Board of Directors......................................................................................14
2.5 Right of First Offer; Limitation on Options Issuance....................................................14
3. Miscellaneous..................................................................................16
3.1 Successors and Assigns..................................................................................16
3.2 Governing Law...........................................................................................17
3.3 Counterparts............................................................................................17
3.4 Titles and Subtitles....................................................................................17
3.5 Notices.................................................................................................17
3.6 Expenses................................................................................................17
3.7 Amendments and Waivers..................................................................................17
3.8 Severability............................................................................................18
3.9 Aggregation of Stock....................................................................................18
3.10 Entire Agreement; Amendment; Waiver.....................................................................18
</TABLE>
<PAGE>
Stockholders Agreement
THIS STOCKHOLDERS AGREEMENT ("Agreement") is made as of the
27th day of February, 1998, by and among Oryx Instruments and Materials
Corporation, a Delaware corporation (the "Company") and the stockholders listed
on the signature page of this Agreement (the "Stockholders").
RECITALS
A. The Company and each Stockholder are parties to the Stock
Purchase and Reorganization Agreement of even date herewith (the "Reorganization
Agreement") and desire to make provisions for the election of certain members of
the Board of Directors of the Company and other matters.
NOW, THEREFORE, the parties hereby agree as follows:
Registration Rights.
The Company covenants and agrees as follows:
Definitions.
For purposes of this Section 1:
The term "Act" means the Securities Act of
1933, as amended.
The term "Common Stock" means the validly
issued and outstanding Common Stock or Common Stock
Equivalents or any other securities convertible into
Common Stock of the Issuer.
The term "Form S-3" means such form under
the Act as in effect on the date hereof or any
substitute registration form under the Act
subsequently adopted by the SEC and then in effect
which form permits inclusion or incorporation of
substantial information by reference to other
documents filed by the Company with the SEC.
The term "Holder" means any person owning or
having the right to acquire Registrable Securities or
any assignee thereof in accordance with Section 1.11
hereof.
The term "1934 Act" shall mean the
Securities Exchange Act of 1934, as amended.
The term "register," "registered," and
"registration" refer to a registration effected by
preparing and filing a registration statement or
similar document in compliance with the Act, and the
declaration or ordering of effectiveness of such
registration statement or document.
The term "Registrable Securities" means any
Common Stock of the Company issued including all
Common Stock issued as (or issuable upon the
conversion or exercise of any warrant, right or other
security which is issued as) a dividend or other
distribution, excluding in all cases, however, any
Registrable Securities sold by a person in a
transaction in which its rights under this Section 1
are not assigned.
The number of shares of "Registrable
Securities then outstanding" shall be determined by
the number of shares of Common Stock outstanding
which are, and the number of shares of Common Stock
issuable pursuant to then exercisable or convertible
securities which are, Registrable Securities.
The term "SEC" shall mean the Securities and
Exchange Commission.
Company Registration.
If (but without any obligation to do so) the Company
proposes to register (including for this purpose a registration effected by the
Company for stockholders other than the Holders) any of its stock or other
securities under the Act in connection with the public offering of such
securities solely for cash (other than a registration relating solely to the
sale of securities to participants in a Company stock plan, a registration on
any form which does not include substantially the same information as would be
required to be included in a registration statement covering the sale of the
Registrable Securities), the Company shall, at such time, promptly give each
Holder written notice of such registration. Upon the written request of each
Holder given within twenty (20) days after mailing of such notice by the Company
in accordance with Section 3.5, the Company shall, subject to the provisions of
Section 1.6, cause to be registered under the Act all of the Registrable
Securities that each such Holder has requested to be registered.
Obligations of the Company.
Whenever required under this Section 1 to effect the
registration of any Registrable Securities, the Company shall, as expeditiously
as reasonably possible:
Prepare and file with the SEC a registration
statement with respect to such Registrable Securities
and use its best efforts to cause such registration
statement to become effective, and, upon the request
of the Holders of a majority of the Registrable
Securities registered thereunder, keep such
registration statement effective for a period of up
to one hundred twenty (120) days or until the
distribution contemplated in the Registration
Statement has been completed; provided, however, that
(i) such 120-day period shall be extended for a
period of time equal to the period the Holder
refrains from selling any securities included in such
registration at the request of an underwriter of
Common Stock (or other securities) of the Company;
and (ii) in the case of any registration of
Registrable Securities on Form S-3 which are intended
to be offered on a continuous or delayed basis, such
120-day period shall be extended, if necessary, to
keep the registration statement effective until all
such Registrable Securities are sold, provided that
Rule 415, or any successor rule under the Act,
permits an offering on a continuous or delayed basis,
and provided further that applicable rules under the
Act governing the obligation to file a post-effective
amendment permit, in lieu of filing a post-effective
amendment which (i) includes any prospectus required
by Section 10(a)(3) of the Act or (ii) reflects facts
or events representing a material or fundamental
change in the information set forth in the
registration statement, the incorporation by
reference of information required to be included in
(i) and (ii) above to be contained in periodic
reports filed pursuant to Section 13 or 15(d) of the
1934 Act in the registration statement.
Prepare and file with the SEC such
amendments and supplements to such registration
statement and the prospectus used in connection with
such registration statement as may be necessary to
comply with the provisions of the Act with respect to
the disposition of all securities covered by such
registration statement.
Furnish to the Holders such numbers of
copies of a prospectus, including a preliminary
prospectus, in conformity with the requirements of
the Act, and such other documents as they may
reasonably request in order to facilitate the
disposition of Registrable Securities owned by them.
Use its best efforts to register and qualify
the securities covered by such registration statement
under such other securities or blue sky laws of such
jurisdictions as shall be reasonably requested by the
Holders; provided that the Company shall not be
required in connection therewith or as a condition
thereto to qualify to do business or to file a
general Consent to service of process in any such
states or jurisdictions.
In the event of any underwritten public
offering, enter into and perform its obligations
under an underwriting agreement, in usual and
customary form, with the managing underwriter of such
offering. Each Holder participating in such
underwriting shall also enter into and perform its
obligations under such an agreement.
Notify each Holder of Registrable securities
covered by such registration statement at any time
when a prospectus relating thereto is required to be
delivered under the Act of the happening of any event
as a result of which the prospectus included in such
registration statement, as then in effect, includes
an untrue statement of a material fact or omits to
state a material fact required to be stated therein
or necessary to make the statements therein not
misleading in the light of the circumstances then
existing.
Cause all such Registrable Securities
registered pursuant hereunder to be listed on each
securities exchange on which similar securities
issued by the Company are then listed.
Provide a transfer agent and registrar for
all Registrable Securities registered pursuant
hereunder and a CUSIP number for all such Registrable
securities, in each case not later than the effective
date of such registration.
Furnish Information.
It shall be a condition precedent to the obligations
of the Company to take any action pursuant to this
Section 1 with respect to the Registrable Securities
of any selling Holder that such Holder shall furnish
to the Company such information regarding itself, the
Registrable Securities held by it, and the intended
method of disposition of such securities as shall be
required to effect the registration of such Holder's
Registrable Securities.
The Company shall have no obligation with
respect to any registration requested pursuant to
Section 1.10 if, due to the operation of subsection
1.4(a), the number of shares or the anticipated
aggregate offering price of the Registrable
Securities to be included in the registration does
not equal or exceed the number of shares or the
anticipated aggregate offering price required to
originally trigger the Company's obligation to
initiate such registration as specified in subsection
subsection 1.10(b)(ii).
Expenses of Company Registration.
The Company shall bear and pay all expenses incurred in
connection with any registration, filing or qualification of Registrable
Securities with respect to the registrations pursuant to Section 1.2 for each
Holder (which right may be assigned as provided in Section 1.11), including
(without limitation) all registration, filing, and qualification fees, printers
and accounting fees relating or apportionable thereto. The fees and
disbursements of counsel for the selling Holders, if any, shall be paid by such
Holders, as shall any underwriting discounts and commissions relating to
Registrable Securities.
Underwriting Requirements. Other Limitations.
In connection with any offering involving an underwriting of
shares of the Company's capital stock, the Company shall not be required under
Section 1.2 to include any of the Holder's securities in such underwriting if
(i) it is the initial public offering of the Company's securities or (ii) unless
the Holder accepts the terms of the underwriting as agreed upon between the
Company and the underwriters selected by it (or by other persons entitled to
select the underwriters), and then only in such quantity as the underwriters
determine in their sole discretion will not jeopardize the success of the
offering by the Company. If the total amount of securities, including
Registrable Securities, requested by stockholders to be included in such
offering exceeds the amount of securities sold other than by the Company that
the underwriters determine in their sole discretion is compatible with the
success of the offering, then the Company shall be required to include in the
offering only that number of such securities, including Registrable Securities,
which the underwriters determine in their sole discretion will not jeopardize
the success of the offering (the securities so included to be apportioned pro
rata among the selling stockholders according to the total amount of securities
entitled to be included therein owned by each selling Stockholder or in such
other proportions as shall mutually be agreed to by such selling stockholders).
For purposes of the preceding parenthetical concerning apportionment, for any
selling stockholder which is a holder of Registrable Securities and which is a
partnership or corporation, the partners, retired partners and stockholders of
such holder, or the estates and family members of any such partners and retired
partners and any trusts for the benefit of any of the foregoing persons shall
all be deemed to be a single "selling stockholder," and any pro-rata reduction
with respect to such "selling stockholder" shall be based upon the aggregate
amount of shares carrying registration rights owned by all entities and
individuals included in such "selling stockholder," as defined in this sentence.
Delay of Registration.
No Holder shall have any right to obtain or seek an
injunction restraining or otherwise delaying any such registration as the result
of any controversy that might arise with respect to the interpretation or
implementation of this Section 1.
Indemnification.
In the event any Registrable Securities are included in a
registration statement under this Section 1:
To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, any
underwriter (as defined in the Act) for such Holder
and each person, if any, who controls such Holder or
underwriter within the meaning of the Act or the 1934
Act, against any losses, claims, damages,, or
liabilities (joint or several) to which they may
become subject under the Act, or the 1934 Act,
insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out
of or are based upon any of the following statements,
omissions or violations (collectively a "Violation"):
(i) any untrue statement or alleged untrue statement
of a material fact contained in such registration
statement, including any preliminary prospectus or
final prospectus contained therein or any amendments
or supplements thereto, (ii) the omission or alleged
omission to state therein a material fact required to
be stated therein, or necessary to make the
statements therein not misleading, or (iii) any
violation or alleged violation by the Company of the
Act, the 1934 Act, or any rule or regulation
promulgated under the Act, or the 1934 Act; and the
Company will pay to each such Holder, underwriter or
controlling person any legal or other expenses
reasonably incurred by them in connection with
investigating or defending any such loss, claim,
damage, liability, or action; provided, however, that
the indemnity agreement contained in this subsection
1.8(a) shall not apply to amounts paid in settlement
of any such loss, claim, damage, liability, or action
if such settlement is effected without the consent of
the Company (which consent shall not be unreasonably
withheld), nor shall the Company be liable in any
such case for any such loss, claim, damage,
liability, or action to the extent that it arises out
of or is based upon a Violation which occurs in
reliance upon and in conformity with written
information furnished expressly for use in connection
with such registration by any such Holder,
underwriter or controlling person.
To the extent permitted by law, each selling
Holder will indemnify and hold harmless the Company,
each of its directors, each of its officers who has
signed the registration statement, each person, if
any, who controls the Company within the meaning of
the Act, any underwriter, any other Holder selling
securities in such registration statement and any
controlling person of any such underwriter or other
Holder, against any losses, claims, damages, or
liabilities (joint or several) to which any of the
foregoing persons may become subject, under the Act
or the 1934 Act, insofar as such losses, claims,
damages, or liabilities (or actions in respect
thereto) arise out of or are based upon any
Violation, in each case to the extent (and only to
the extent) that such Violation occurs in reliance
upon and in conformity with written information
furnished by such Holder expressly for use in
connection with such registration; and each such
Holder will pay any legal or other expenses
reasonably incurred by any person intended to be
indemnified pursuant to this subsection 1.8(b), in
connection with investigating or defending any such
loss, claim, damage, liability, or action; provided,
however, that the indemnity agreement contained in
this subsection 1.8(b) shall not apply to amounts
paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected
without the consent of the Holder, which consent
shall not be unreasonably withheld.
Promptly after receipt by an indemnified
party under this Section 1.8 of notice of the
commencement of any action (including any
governmental action), such indemnified party will, if
a claim in respect thereof is to be made against any
indemnifying party under this Section 1.8, deliver to
the indemnifying party a written notice of the
commencement thereof and the indemnifying party shall
have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any
other indemnifying party similarly noticed, to assume
the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that
an indemnified party (together with all other
indemnified parties which may be represented without
conflict by one counsel) shall have the right to
retain one separate counsel, with the fees and
expenses to be paid by the indemnifying party, if
representation of such indemnified party by the
counsel retained by the indemnifying party would be
inappropriate due to actual or potential differing
interests between such indemnified party and any
other party represented by such counsel in such
proceeding. The failure to deliver written notice to
the indemnifying party within a reasonable time of
the commencement of any such action, if prejudicial
to its ability to defend such action, shall relieve
such indemnifying party of any liability to the
indemnified party under this Section 1.8, but the
omission so to deliver written notice to the
indemnifying party will not relieve it of any
liability that it may have to any indemnified party
otherwise than under this Section 1.8.
If the indemnification provided for in this
Section 1.8 is held by a court of competent
jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim,
damage, or expense referred to therein, then the
indemnifying party, in lieu of indemnifying such
indemnified party hereunder, shall contribute to the
amount paid or payable by such indemnified party as a
result of such loss, liability, claim, damage, or
expense in such proportion as is appropriate to
reflect the relative fault of the indemnifying party
on the one hand and of the indemnified party on the
other in connection with the statements or omissions
that resulted in such loss, liability, claim, damage,
or expense as well as any other relevant equitable
considerations. The relative fault of the
indemnifying party and of the indemnified party shall
be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a
material fact or the omission to state a material
fact relates to information supplied by the
indemnifying party or by the indemnified party and
the parties' relative intent, knowledge, access to
information, and opportunity to correct or prevent
such statement or omission.
Notwithstanding the foregoing, to the extent
that the provisions on indemnification and
contribution contained in the underwriting agreement
entered into in connection with the underwritten
public offering are in conflict with the foregoing
provisions, the provisions in the underwriting
agreement shall control.
The obligations of the Company and Holders
under this Section 1.8 shall survive the completion
of any offering of Registrable Securities in a
registration statement under this Section 1, and
otherwise.
Reports Under Securities Exchange Act of 1934.
With a view to making available to the Holders the benefits
of Rule 144 promulgated under the Act and any other rule or regulation of the
SEC that may at any time permit a Holder to sell securities of the Company to
the public without registration or pursuant to a registration on Form S-3, the
Company agrees to:
make and keep public information available, as those
terms are understood and defined in SEC Rule 144, at
all times after ninety (90) days after the effective
date of the first registration statement filed by the
Company for the offering of its securities to the
general public;
take such action, including the voluntary
registration of its Common Stock under Section 12 of
the 1934 Act, as is necessary to enable the Holders
to utilize Form S-3 for the sale of their Registrable
Securities, such action to be taken as soon as
practicable after the end of the fiscal year in which
the first registration statement filed by the Company
for the offering of its securities to the general
public is declared effective;
file with the SEC in a timely manner all reports and
other documents required of the Company under the Act
and the 1934 Act; and
furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a
written statement by the Company that it has complied
with the reporting requirements of SEC Rule 144 (at
any time after ninety (90) days after the effective
date of the first registration statement filed by the
Company), the Act and the 1934 Act (at any time after
it has become subject to such reporting
requirements), or that it qualifies as a registrant
whose securities may be resold pursuant to Form S-3
(at any time after it so qualifies), (ii) a copy of
the most recent annual or quarterly report of the
Company and such other reports and documents so filed
by the Company, and (iii) such other information as
may be reasonably requested in availing any Holder of
any rule or regulation of the SEC which permits the
selling of any such securities without registration
or pursuant to such form.
Form S-3 Registration.
The Holders shall have the right to request that the Company
file a registration statement on Form S-3 no more than once every twelve months,
and in any case no more than twice. In case the Company shall receive from any
Holder a written request or requests that the Company effect a registration on
Form S-3 and any related qualification or compliance with respect to all or a
part of the Registrable Securities owned by such Holder (which request meets the
terms and conditions of this section), the Company will:
promptly give written notice of the proposed
registration, and any related qualification or
compliance, to all other Holders (if any exist); and
as soon as practicable, effect such registration and
all such qualifications and compliances as may be so
requested and as would permit or facilitate the sale
and distribution of all or such portion of such
Holder's or Holders' Registrable Securities as are
specified in such request, together with all or such
portion of the Registrable Securities of any other
Holder or Holders joining in such request as are
specified in a written request given within 15 days
after receipt of such written notice from the
Company; provided, however, that the Company shall
not be obligated to effect any such registration,
qualification or compliance, pursuant to this Section
1.10: (i) if Form S-3 is not available for such
offering by the Holders; (ii) if the Holders,
together with the holders of any other securities of
the Company entitled to inclusion in such
registration, propose to sell Registrable Securities
and such other securities (if any) at an aggregate
price to the public (net of any underwriters'
discounts or commissions) of less than $500,000;
(iii) if the Company shall furnish to the Holders a
certificate signed by the President of the Company
stating that in the good faith judgment of the Board
of Directors of the Company, it would be seriously
detrimental to the Company and its stockholders for
such Form S-3 Registration to be effected at such
time, in which event the Company shall have the right
to defer the filing of the Form S-3 registration
statement for a period of not more than 120 days
after receipt of the request of the Holder or Holders
under this Section 1.10; provided, however, that the
Company shall not utilize this right more than twice
in any twelve month period; (iv) if the Company has,
within the twelve (12) month period preceding such
registration request, already effected one
registration on Form S-3 for the Holders pursuant to
this Section 1.10 or more than two such
registrations; or (v) in any particular jurisdiction
in which the Company would be required to qualify to
do business or to execute a general consent to
service of process in effecting such registration,
qualification or compliance.
Subject to the foregoing with respect to Form S-3
registrations, the Company shall file a registration
statement covering the Registrable Securities and
other securities so requested to be registered as
soon as practicable after receipt of the request or
requests of the Holders. All expenses incurred in
connection with a registration requested pursuant to
Section 1.10, including (without limitation) all
registration, filing, qualification, printer's and
accounting fees and counsel for the Company, but
excluding any underwriters' discounts or commissions
associated with Registrable Securities, and the Fees
and disbursements of counsel for the selling Holder
or Holders shall be borne by the Company.
Assignment of Registration Rights.
The rights to cause the Company to register Registrable
Securities pursuant to this Section 1 may be assigned (but only with all related
obligations) by a Holder to (i) any partner or retired partner of any Holder
that is a partnership, (ii) any family member or trust for the benefit of any
individual Holder, or (iii) a transferee or assignee of such securities who
after such assignment or transfer, holds at least 500,000 shares of Registrable
Securities or all of the Registrable Securities purchased by a Holder under the
Reorganization Agreement (subject to appropriate adjustment for stock splits,
stock dividends, combinations and other recapitalizations); provided: (a) the
Company is, within a reasonable time after such transfer, furnished with written
notice of the name and address of such transferee or assignee and the securities
with respect to which such registration rights are being assigned; (b) such
transferee or assignee agrees in writing to be bound by and subject to the terms
and conditions of this Agreement, including without limitation the provisions of
Section 1.12 below; and (c) such assignment shall be effective only if
immediately following such transfer the further disposition of such securities
by the transferee or assignee is restricted under the Act. For the purposes of
determining the number of shares of Registrable Securities held by a transferee
or assignee, the holdings of transferees and assignees of a partnership who are
partners or retired partners of such partnership (including spouses and
ancestors, lineal descendants and siblings of such partners or spouses who
acquire Registrable Securities by gift, will or intestate succession) shall be
aggregated together and with the partnership; provided that all assignees and
transferees who would not qualify individually for assignment of registration
rights shall have a single attorney-in-fact for the purpose of exercising any
rights, receiving notices or taking any action under this Section 1.
"Market Stand-Off" Agreement.
All Holders hereby agree that, during the period of duration
specified by the Company and an underwriter of common stock or other securities
of the Company, following the date of a sale to the public pursuant to a
registration statement of the Company filed under the Act, each shall not, to
the extent requested by the Company and such underwriter, directly or indirectly
sell, offer to sell, contract to sell (including, without limitation, any short
sale), grant any option to purchase or otherwise transfer or dispose of (other
than to donees who agree to be similarly bound) any securities of the Company
held by it at any time during such period except common stock included in such
registration; provided, however, that:
all officers and directors of the Company and all
holders of more than three percent (3%) of the
Company's shares enter into similar agreements of
equal duration; and
such market stand-off time period shall not exceed
three hundred sixty-five (365) days.
In order to enforce the foregoing covenant, the
Company may impose stop-transfer instructions with
respect to the Registrable Securities of each Holder
(and the shares or securities of every other person
subject to the foregoing restriction) until the end
of such period.
Notwithstanding the foregoing, the obligations
described in this Section 1.12 shall not apply to a
registration relating solely to employee benefit
plans on Form S-1 or Form S-8 or similar forms which
may be promulgated in the future, or a registration
relating solely to a Commission Rule 145 transaction
on Form S-14 or Form S-15 or similar forms which may
be promulgated in the future.
Termination of Registration Rights.
No Holder shall be entitled to exercise any right provided for in this
Section 1 after three (3) years following the consummation of the sale of
securities pursuant to a registration statement filed by the Company under the
Act in connection with the initial firm commitment underwritten offering of its
securities to the general public.
Covenants.
Delivery of Financial Statements.
As long as a Stockholder continues to hold shares of Common
Stock of the Company, the Company shall deliver to such Stockholder:
as soon as practicable, but in any event within one
hundred twenty (120) days after the end of each
fiscal year of the Company, an income statement for
such fiscal year, a balance sheet of the Company and
statement of stockholder's equity as of the end of
such year, and a schedule as to the sources and
applications of funds for such year, such year-end
financial reports to be in reasonable detail,
prepared in accordance with generally accepted
accounting principles ("GAAP"), and certified by the
Chief Financial Officer or President of the Company;
and
as soon as practicable, but in any event within
forty-five (45) days after the end of each calendar
quarter, an unaudited balance sheet and income
statement and schedule as to the sources and
application of funds as of the end of such fiscal
quarter, such reports to be prepared in accordance
with GAAP (with the exception of footnotes that may
be required by GAAP).
Inspection.
As long as an Stockholder holds not less than 500,000 shares
of Common Stock, the Company shall permit such Stockholder, at such
Stockholder's expense, to visit and inspect the Company's properties, to examine
its books of account and records and to discuss the Company's affairs, finances
and accounts with its officers, all at such reasonable times as may be requested
by the Stockholder; provided, however, that the Company shall not be obligated
pursuant to this Section 2.2 to provide access to any information which it
reasonably considers to be a trade secret or similar confidential information.
Termination of Information and Inspection Covenants.
The covenants set forth in subsections 2.1(c) and Section
2.2 shall terminate as to the Stockholder and be of no further force or effect
when the sale of securities pursuant to a registration statement filed by the
Company under the Act in connection with the firm commitment underwritten
offering of its securities to the general public is consummated or when the
Company first becomes subject to the periodic reporting requirements of Sections
12(g) or 15(d) of the 1934 Act, whichever event shall first occur.
Board of Directors.
For so long as Oryx Technology Corp. shall own not less than
fifty percent (50%) of the shares of Common Stock held by it immediately
following the Closing of the Reorganization Agreement, the Company agrees to
nominate, and each of the Stockholders agrees to vote all shares held by it in
favor of the election of one (1) designee of Oryx Technology Corp. to the Board
of Directors of the Company (the "Oryx Designee"). The Board of Directors shall
initially consist of the Oryx Designee, three other persons nominated by Corus
Investment Ltd., and the chief executive officer of the Company.
Right of First Offer; Limitation on Options Issuance
Subject to the terms and conditions specified in this
paragraph 2.5, the Company hereby grants to each Stockholder a right of first
offer with respect to future sales by the Company of its Shares (as hereinafter
defined). For purposes of this Section 2.5, Stockholder includes any general
partners and affiliates of Stockholder. A Stockholder shall be entitled to
apportion the right of first offer hereby granted it among itself and its
partners and affiliates in such proportions as it deems appropriate.
Each time the Company proposes to offer any shares of, or
securities convertible into or exercisable for any shares of, any class of its
capital stock ("Shares"), the Company shall first make an offering of such
Shares to each Stockholder in accordance with the following provisions:
The Company shall deliver a notice by mail or
facsimile ("Notice") to Stockholder stating (i) its
bona fide intention to offer such shares, (ii) the
number of such Shares to be offered, and (iii) the
price and terms, if any, upon which it proposes to
offer such Shares.
Within 15 calendar days after giving of the Notice,
Stockholder may elect to purchase or obtain, at the
price and on the terms specified in the Notice, up to
that portion of such Shares which equals the
proportion that the number of shares of Common Stock
issued and held by Stockholder bears to the total
number of shares of common stock of the Company then
outstanding.
If all Shares which Stockholder is entitled to obtain
pursuant to subsection 2.5(b) are not elected to be
obtained as provided in subsection 2.5(b) hereof, the
Company may, during the 90-day period following the
expiration of the period provided in subsection 2.5
(b) hereof, offer the remaining unsubscribed portion
of such Shares to any person or persons at a price
not less than, and upon terms no more favorable to
the offeree than those specified in the Notice. If
the Company does not enter into an agreement for the
sale of the Shares within such period, or if such
agreement is not consummated within 90 days of the
execution thereof, the right provided hereunder shall
be deemed to be revived and such Shares shall not be
offered unless first re-offered to Stockholder in
accordance herewith.
The right of first offer in this paragraph 2.5 shall
not be applicable (i) to the issuance or sale of up
to 3,333,333 shares of Common Stock (or options
therefor) to employees, directors, or consultants to
the Company or the issuance or sale of up to an
additional 701,754 additional shares of Common Stock
(or options therefor) to such persons provided that
the sale or option price is no less than the purchase
price per share of Common Stock paid to Oryx
Technology Corp. by the Company for the redemption of
its shares of Common Stock pursuant to the
Reorganization Agreement (such numbers of shares,
together with the price limitations thereon, are
referred to below as the "Option Limit"), (ii) to or
after consummation of a bona fide, firmly
underwritten public offering of shares of common
stock, registered under the Act, (iii) to the
issuance of securities in connection with a bona fide
business acquisition of or by the Company, whether by
merger, consolidation, sale of assets, sale or
exchange of stock or otherwise, or (iv) to up to
400,000 shares of Common Stock, warrants exercisable
for shares of Common Stock, or other securities or
rights convertible into Common Stock to persons or
entities with which the Company has business
relationships provided that the pre-money valuation
of the Company implicit in the purchase price of such
securities is no less than $3,500,000. The Company
shall not issue or sell Common Stock or options
therefor in amounts in excess of amounts permitted
by, or at prices lower than those permitted by, the
Option Limit without the written consent of Oryx
Technology Corp.
The right of first refusal set forth in this Section
2.5 may not be assigned or transferred, except that
such right is assignable by Stockholder to any wholly
owned subsidiary or parent of, or to any corporation
or entity that is, within the meaning of the Act,
controlling, controlled by or under common control
with, Stockholder. The right of first refusal and
limitations on the Company imposed by this Section
2.5 shall terminate upon the closing of an initial
public offering of the Company's Common Stock
pursuant to an effective registration statement under
the Act.
Within thirty (30) days of the date hereof, Corus
Investment Ltd. Shall cause to be executed an
irrevocable letter of credit in substantially the
form attached hereto as Exhibit A.
Any breach by the Company of the obligations set
forth in Section 2.4 or subsections 2.5(d) or (f)
shall cause all indebtedness of the Company under
that certain $1,000,000 promissory note in favor of
Oryx Technology Corp. by the Company pursuant to the
Reorganization Agreement to accelerate as provided in
such note.
Miscellaneous.
Successors and Assigns.
Except as otherwise provided herein, the terms and
conditions of this Agreement shall inure to the benefit of and be binding upon
the respective successors and assigns of the parties (including transferees of
any shares of Registrable Securities). Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
Governing Law.
This Agreement shall be governed by and construed under the
laws of the State of Delaware, without regard to conflict of laws provisions
thereof.
Counterparts.
This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
Titles and Subtitles.
The titles and subtitles used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement.
Notices.
Unless otherwise provided, any notice required or permitted
under this Agreement shall be given in writing and shall be deemed effectively
given upon personal delivery to the party to be notified or upon deposit with
the United States Post Office, by registered or certified mail, postage prepaid
and addressed to the party to be notified at the address indicated for such
party on the signature page hereof, or at such other address as such party may
designate by ten (10) days' advance written notice to the other parties.
Expenses.
If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the prevailing party shall be entitled to
obtain from the non-prevailing party reasonable attorneys' fees, costs and
necessary disbursements in addition to any other relief to which such party may
be entitled.
Amendments and Waivers.
Any term of this Agreement with respect to Section 1 only
may be amended, only with the written consent of the Company and the holders of
a majority of the Registrable Securities then outstanding. For all other
amendments, the written consent of all parties shall be required. No waiver
shall be effective unless in writing signed by the person charged with making
such waiver. Any amendment or waiver effected in accordance with this paragraph
shall be binding upon each holder of any Registrable Securities then
outstanding, each future holder of all such Registrable Securities, and the
Company.
Severability.
If one or more provisions of this Agreement are held to be
unenforceable under applicable law, such provision shall be excluded from this
Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
Aggregation of Stock.
All shares of Registrable Securities held or acquired by
affiliated entities or persons shall be aggregated together for the purpose of
determining the availability of any rights under this Agreement.
Entire Agreement; Amendment; Waiver.
This Agreement constitutes the full and entire understanding
and agreement between the parties with regard to the subject hereof.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this
Stockholders Agreement as of the date first above written.
ORYX INSTRUMENTS AND MATERIALS CORPORATION
By:__________________________________________________
Name:________________________________________________
Title:_______________________________________________
Address:_____________________________________________
ORYX TECHNOLOGY CORP.
By:__________________________________________________
Name:________________________________________________
Title:_______________________________________________
Address:_____________________________________________
CORUS INVESTMENT LTD.
By:__________________________________________________
Name:________________________________________________
Title:_______________________________________________
Address:_____________________________________________
Exhibit 2.3
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "Pledge Agreement"), dated as of
February 27, 1998, is made by and between Corus Investment Ltd., a Bahamas
corporation (the "Pledgor"), and Oryx Technology Corp., a Delaware corporation
(the "Pledgee").
RECITALS
A. The Pledgor, Pledgee and Oryx Instruments and Materials
Corporation (the "Pledged Share Issuer") have entered into a Stock Purchase and
Reorganization Agreement dated of even date herewith (the "Reorganization
Agreement"), pursuant to which the Pledged Share Issuer has agreed to pay the
Pledgee the sum of One Million Dollars ($1,000,000) pursuant to a promissory
note of even date herewith (the "Note") issued as partial consideration for the
redemption of eight million (8,000,000) shares of the Pledged Share Issuer's
Class A Common Stock from Pledgee, and a Stockholders Agreement of even date
herewith (the "Stockholders Agreement")
B. In order to secure the obligations of the Pledged Share
Issuer under the Reorganization Agreement, the Pledgor and Pledgee have agreed
to enter into this Pledge Agreement.
NOW, THEREFORE, in order to induce the Pledgee to enter into
the Reorganization Agreement and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Pledgor hereby
agrees, for the benefit of the Pledgee, as follows:
ARTICLE I
DEFINITIONS
Certain Terms. The following terms when used in this Pledge Agreement,
including its preamble and recitals, shall have the following meanings:
"Distributions" means all cash dividends, cash distributions,
stock dividends, liquidating dividends, shares of stock resulting from (or in
connection with the exercise of) stock splits, reclassifications, warrants,
options, non-cash dividends, mergers, consolidations, and all other
distributions (whether similar or dissimilar to the foregoing) on or with
respect to any Pledged Shares or other shares of capital stock or other equity
securities constituting Pledged Collateral, but shall not include Dividends.
"Event of Default" means: (i) Pledged Share Issuer has failed
to pay any installment of principal under the Note within five (5) business days
after it has become due or the Note is otherwise in default and Pledgee has
given Pledgor written notice that such a default has occurred; (ii) Pledgor or
the Pledged Share Issuer has failed to perform any of its material obligations
under the Reorganization Agreement or the Stockholders Agreement and has failed
to correct such default within ten (10) business days after Pledgee has given
Pledgor or the Pledged Share Issuer, as the case may be, written notice thereof;
or (iii) Pledgor or the Pledged Share Issuer shall file a voluntary action in
bankruptcy or seek similar relief pursuant to a court action or an involuntary
bankruptcy petition shall be filed against either of them and not discharged
within sixty (60) days and Pledgor shall not have within five (5) business days
within such event assumed Pledged Share Issuer's obligations under the
Promissory Note and demonstrated to the reasonable satisfaction of the holder
that Corus is financially capable of honoring such obligations.
"Pledge Agreement" is defined in the preamble hereto.
"Pledged Collateral" is defined in Section 2.1.
"Pledged Share Issuer" means Oryx Instruments and Materials
Corporation, a Delaware corporation.
"Pledged Shares" means the eight million (8,000,000) shares of
the Pledged Share Issuer's Class A Common Stock issued to the Pledgor pursuant
to the Reorganization Agreement, and all other shares of capital stock or other
equity securities of the Pledged Share Issuer issued to the Pledgor from time to
time as defined in Section 2.1 below.
"Pledgor" is defined in the preamble hereto.
"Reorganization Agreement" is defined in paragraph A of the
Recitals hereto.
"Stockholders Agreement" is defined in paragraph A of the
Recitals hereto.
"UCC" means the California Uniform Commercial Code.
1.2 Reorganization Agreement Definitions Unless otherwise defined
herein or the context otherwise requires, terms used in this Pledge Agreement,
including its preamble and recitals, have the meanings provided in the
Reorganization Agreement.
ARTICLE II
PLEDGE
2.1 Guaranty of Obligation and Grant of Security Interest. The Pledgor
hereby guarantees the obligations of the Pledged Share Issuer to pay all amounts
that may become due from the Pledge Share Issuer to Pledgee under the
Reorganization Agreement (the "Obligations"). Under the terms of this guaranty,
Pledgee shall have recourse against Pledgor only to the Pledged Collateral, as
defined below, and to no other assets of Pledgor under any circumstances.
Pledgor pledges, assigns, and hypothecates, transfers, and delivers to the
Pledgee and hereby grants to the Pledgee, for Pledgee's benefit, a continuing
security interest in, all of the Pledgor's right, title, and interest in and to
the following, whether now or hereafter existing or acquired (the "Pledged
Collateral"):
(a) the Pledged Shares as are identified in Attachment 1 hereto;
(b) all Distributions, interest, and other payments and rights with
respect to any Pledged Shares;
(c) all certificates, instruments or other writings
representing or evidencing the Pledged Shares; and
(d) all proceeds of any of the foregoing.
Delivery of Pledged Collateral. All certificates, instruments or other writings
representing or evidencing any Pledged Collateral, including all Pledged Shares,
shall be delivered to and held by or on behalf of the Pledgee pursuant hereto,
shall be in suitable form for transfer by delivery, and shall be accompanied by
all necessary instruments of transfer or assignment, duly executed in blank, all
in form and substance satisfactory to the Pledgee. The Pledgee shall have the
right, at any time when an Event of Default exists, after having given written
notice to the Pledgor, to transfer to or to register in its name or the name of
any of its nominees any or all of the Pledged Shares, subject only to the
provisions of Section 4.4. In addition, the Pledgee shall have the right at any
time to exchange certificates, instruments or other writings representing or
evidencing Pledged Shares for certificates, instruments or other writings of
smaller or larger denominations.
Continuing Security Interest. This Pledge Agreement shall create a continuing
security interest in the Pledged Collateral and shall:
(e) remain in full force and effect until payment in full of the
Obligations;
(f) be binding upon the Pledgor and its successors, transferees, and
assigns, and
(g) inure, together with the rights and remedies of the Pledgee
hereunder, to the benefit of the Pledgee and its successors and
assigns. Upon the payment in full of the Obligations, the security
interest granted herein shall terminate and all rights to the
Pledged Collateral shall revert to the Pledgor. Upon any such
termination, the Pledgee will, at the Pledgor's sole expense,
deliver to the Pledgor, without any representations, warranties or
recourse of any kind whatsoever, all certificates representing or
evidencing all Pledged Shares, together with all other Pledged
Collateral held by the Pledgee hereunder, and execute and deliver
to the Pledgor such documents as the Pledgor shall reasonably
request to evidence such termination.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Pledgor, relying on the representations and warrantees of
the Pledgee and the Pledged Share Issuer in the Reorganization Agreement,
represents and warrants to the Pledgee as follows:
Ownership, No Liens, etc. The Pledgor is the record legal and beneficial owner
of, and has good and marketable title to (and has full right and authority to
pledge and assign) such Pledged Collateral, free and clear of any Lien.
Valid Security Interest. Upon the delivery of the stock certificates evidencing
such Pledged Collateral to the Pledgee, this Pledge Agreement will be effective
to create, as security for the Obligations, a valid, perfected, first priority
security interest in such Pledged Collateral.
Authorization. Pledgor is a corporation duly organized, validly existing and in
good standing under the laws of Bahamas and has all requisite corporate power
and authority to execute and perform its obligations under this Agreement.
Pledgor is duly authorized to execute this Agreement and this Agreement
constitutes the legal, valid and binding obligation of Pledgor and is
enforceable in accordance with its terms.
ARTICLE IV
COVENANTS
Protect Collateral; Further Assurances, etc. The Pledgor agrees that it will not
(i) sell, assign, transfer, surrender or otherwise dispose of, or grant any
option, warrant or other right or interest with respect to, any of the Pledged
Collateral, (ii) directly or indirectly create incur, assume or suffer to exist
any Lien upon or with respect to any of the Pledged Collateral, except for the
Lien created by this Pledge Agreement. The Pledgor will defend the security
interest herein granted unto the Pledgee in and to the Pledged Collateral
against the claims and demands of all Persons whomsoever.
Stock Powers, etc. The Pledgor agrees that all Pledged Shares (and all other
shares of capital stock or other equity securities constituting Pledged
Collateral) delivered by the Pledgor pursuant to this Pledge Agreement will be
accompanied by duly executed undated blank stock powers, or other equivalent
instruments of transfer acceptable to the Pledgee. The Pledgor will, from time
to time upon the request of the Pledgee, promptly deliver to the Pledgee such
stock powers, instruments, and similar documents, satisfactory in form and
substance to the Pledgee, with respect to the Pledged Collateral as the Pledgee
may reasonably request and will, from time to time upon the request of the
Pledgee when an Event of Default exists, promptly transfer any Pledged Shares or
other shares of common stock or other equity securities constituting Pledged
Collateral into the name of any nominee designated by the Pledgee.
Continuous Pledge. The Pledgor will, at all times, keep pledged to the Pledgee
pursuant hereto and deliver to Pledgee all other shares of capital stock or
other equity securities constituting Pledged Collateral, all Distributions with
respect thereto, and all other securities, instruments, proceeds, and rights
from time to time received by or distributable to the Pledgor in respect of any
Pledged Collateral.
Voting Rights; Distributions, etc. The Pledgor agrees:
(h) promptly upon receipt thereof by the Pledgor and without any
request therefor by the Pledgee or any other Person, to deliver to
the Pledgee, all Distributions, and proceeds of the Pledged
Collateral, all of which shall be held by the Pledgee as
additional Pledged Collateral; and
(i) while any Event of Default exists and the Pledgee has notified the
Pledgor of the Pledgee's intention to exercise its voting power
under this Section 4.4(b):
(i) the Pledgee may exercise (to the exclusion of the Pledgor)
the voting power and all other incidental rights of ownership
with respect to any Pledged Shares or other shares of capital
stock or other equity securities interests constituting
Pledged Collateral and the Pledgor hereby grants the Pledgee
an irrevocable proxy, coupled with an interest exercisable
under such circumstances, to vote the Pledged Shares and such
other Pledged Collateral; and
(ii) promptly to deliver to the Pledgee such additional proxies
and other documents as may be necessary to allow the Pledgee
to exercise such voting power. The Pledgee agrees that unless
an Event of Default exists and the Pledgee shall have given
the notice referred to in Section 4.4(b), the Pledgor shall
have the exclusive voting power with respect to any shares of
capital stock or other equity securities (including any of
the Pledged Shares) constituting Pledged Collateral, and the
Pledgee shall, upon the written request of the Pledgor,
promptly deliver such proxies and other documents, if any, as
shall be reasonably requested by the Pledgor which are
necessary to allow the Pledgor to exercise voting power with
respect to any such share of capital stock or other equity
securities (including any of the Pledged Shares) constituting
Pledged Collateral.
ARTICLE V
THE PLEDGEE
Pledgee Appointed Attorney-in-Fact. The Pledgor hereby irrevocably appoints the
Pledgee the Pledgor's attorney-in-fact, with full authority in the place and
stead of the Pledgor and in the name of the Pledgor or otherwise, from time to
time in the Pledgee's discretion after an Event of Default exists, to take any
action and to execute any instrument which the Pledgee may deem necessary or
advisable to accomplish the purposes of this Pledge Agreement including, without
limitation,
(j) to ask, demand, collect, sue for, recover, compromise,
receive and give acquittance and receipts for moneys due and
to become due under or in respect of any of the Pledged
Collateral;
(k) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with
clause (a) above;
(l) to file any claims or take any action or institute any
proceedings which may be deemed necessary or desirable for
the collection of any of the Pledged Collateral or otherwise
to enforce the rights of the Pledgee with respect to any of
the Pledged Collateral;
(m) to perform the affirmative obligations of the Pledgor
hereunder (including all obligations of the Pledgor pursuant
to Section 4.1);
(n) to execute and deliver for and on behalf of the Pledgor any
and all instruments, documents, agreements, and other
writings necessary or advisable for the exercise on behalf of
the Pledgor of any rights, benefits or options created or
existing under or pursuant to the Pledged Collateral; and
(o) to execute endorsements, assignments or other instruments of
conveyance and transfer.
The Pledgor hereby acknowledges, consents, and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest,
which power of attorney shall remain in full force and effect until this Pledge
Agreement is terminated and the security interests created hereby are released
in accordance with the terms hereof.
<PAGE>
Pledgee May Perform. If the Pledgor fails to perform any agreement contained
herein, the Pledgee may perform, or cause performance of, such agreement, and
the expenses of such Person incurred in connection therewith shall be payable by
the Pledgor pursuant to Section 6.4.
ARTICLE VI
REMEDIES
Certain Remedies. Upon the occurrence of any Event of Default:
(p) The Pledgee may exercise in respect of the Pledged Collateral, in
addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a
secured party on default under the UCC (whether or not the UCC
applies to the affected Pledged Collateral) and also may, without
notice except as specified below, sell the Pledged Collateral or
any part thereof at public or private sale, at any of the
Pledgee's offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as the Pledgee may deem
commercially reasonable.
(q) The Pledgee may:
(i) endorse any checks, drafts, or other writings in the
Pledgor's name to allow collection of the Pledged Collateral,
(ii) take control of any proceeds of the Pledged Collateral, and
(iii)execute (in the name, place, and stead of the Pledgor)
endorsements, assignments, stock powers, and other
instruments of conveyance or transfer with respect to all or
any of the Pledged Collateral.
Compliance with Restrictions. If any consent, approval or authorization of any
state, municipal or other governmental department, agency or authority shall be
necessary to effectuate any sale or other disposition of the Pledged Collateral,
or any part thereof, the Pledgor shall execute such applications and other
instruments as may be required in connection with securing any such consent,
approval or authorization, and will otherwise use its best efforts to secure the
same.
Application of Proceeds. All cash proceeds received by the Pledgee in respect of
any sale of, collection from, or other realization upon, all or any part of the
Pledged Collateral shall be applied to the Obligations then due and payable as
provided in the Reorganization Agreement.
Indemnity and Expenses. The Pledgor hereby indemnifies and holds harmless the
Pledgee from and against any and all claims, losses, and liabilities arising out
of or resulting from this Pledge Agreement (including enforcement of this Pledge
Agreement), except claims, losses, or liabilities resulting from the gross
negligence or willful misconduct of the Pledgee. Upon demand, the Pledgor will
pay to the Pledgee the amount of any and all expenses including reasonable
attorney costs (whether related to a suit or action or any reviews of or appeals
from a judgment or decree therein or in connection with non-judicial action),
which the Pledgee may incur in connection with: (r) the custody, preservation,
use or operation of, or the sale of, collection from, or other realization upon,
any of the Pledged Collateral;
(s) the exercise or enforcement of any of the rights of the Pledgee
hereunder; or
(t) the failure by the Pledgor to perform or observe any of the
provisions hereof.
ARTICLE VII
MISCELLANEOUS PROVISIONS
Security Interest Absolute. All rights of the Pledgee and security
interests hereunder, and all of the obligations of the Pledgor hereunder,
shall be absolute and unconditional, irrespective of:
(u) any lack of validity or enforceability of the Reorganization
Agreement, stockholders Agreement or any other agreement or
instrument relating thereto;
(v) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations, or any other
amendment or waiver of or any consent to any departure from the
Stockholders Agreement or the Reorganization Agreement;
(w) any exchange, release or non-perfection of any other collateral,
or any release or amendment or waiver of or consent to departure
from any guaranty, for all or any of the Obligations; or
(x) any other circumstances which might otherwise constitute a defense
available to, or a discharge of, the Pledgor.
Amendments. No amendment to or waiver of any provision of this Pledge Agreement
and no consent to any departure by the Pledgor herefrom shall in any event be
effective unless the same shall be in writing and signed by the Pledgee, and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which it is given.
Notices. All notices and other communications provided hereunder shall be in
writing and addressed, delivered or transmitted to such party at its address or
facsimile number set forth below its signature on this Pledge Agreement or at
such other address or facsimile number as may be designated by such party in a
notice to the other party. Any notice, if mailed and properly addressed
certified registered mail postage pre-paid or if properly addressed and sent by
prepaid courier service, shall be deemed given when received; any notice,
transmitted by facsimile shall be deemed given when transmitted provided it is
followed up by one of the other two means of notice as aforesaid.
No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of the Pledgee, any right, remedy, power, or privilege
hereunder, shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or
privilege.
Successors and Assigns. The provisions of this Pledge Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that the Pledgor may not assign or transfer any
of its rights or obligations under this Pledge Agreement without the prior
written consent of the Pledgee.
Counterparts. This Pledge Agreement may be executed in any number of separate
counterparts, each of which, when so executed, shall be deemed an original, and
all of said counterparts taken together shall be deemed to constitute but one
and the same instrument.
Severability. The illegality or unenforceability of any provision of this Pledge
Agreement or any instrument or agreement required hereunder shall not in any way
affect or impair the legality or enforceability of the remaining provisions of
this Pledge Agreement or any instrument or agreement required hereunder.
Governing Law. This Pledge Agreement shall be governed by, and construed in
accordance with, the laws of the State of California, without giving effect to
conflict of law principles.
IN WITNESS WHEREOF, the Pledgor and the Pledgee have caused
this Pledge Agreement to be duly executed and delivered by their duly authorized
officers as of the day and year first above written.
Corus Investment Ltd., a Bahamas corporation, as Pledgor
By:
Its:
Oryx Technology Corp., a Delaware corporation as Pledgee
By:
Its:
<PAGE>
Schedule 1
to
Pledge Agreement
Pledged Shares
No. of
Shares
Issuer Pledged
Oryx Instruments and Materials Corporation-- 8,000,000
20,000,000 shares of Class A Common Stock Shares
authorized
Exhibit 2.4
PROMISSORY NOTE
$1,000,000 Fremont, California
February 27, 1998
FOR VALUE RECEIVED, Oryx Instruments and Materials
Corporation, a Delaware corporation ("Promisor") promises to pay Oryx Technology
Corp., a Delaware corporation ("OTC"), at its principal office, or such other
place as OTC shall designate, the principal sum of One Million Dollars payable
as follows: Three Hundred Thirty Three Thousand, Three Hundred Thirty Three
Dollars ($333,333) on February 27, 1999 (the "First Payment Date") and Six
Hundred Sixty Six Thousand, Six Hundred Sixty Seven Dollars ($666,667) on
February 27, 2000 (the "Final Payment Date"). Promisor and OTC agree that all
interest is included in such principal sums and that no additional interest
shall be added to either payment. The entire outstanding balance of principal
shall in any event be due and payable on the Final Payment Date. If either of
the payments is due on a day that is not a business day, the payment shall be
made on the next succeeding business day. All principal amounts due hereunder
shall be immediately due and payable in the event of the voluntary or
involuntary bankruptcy of Promisor, Promisor's failure to pay its debts
substantially when due, Promissor's insolvency, Promisor's suffering any
judgment lien to be filed against its assets without discharge within ten (10)
days, or any breach of OTC's rights under Section 2.4 or subsections 2.5(d) or
(f) of the Stockholders Agreement of even date herewith.
Principal amounts are payable in lawful money of the United
States of America, or cancellation of indebtedness of the Promisor. The Promisor
may prepay any amount due hereunder, without premium or penalty.
In the event OTC incurs any costs or fees in order to enforce
payment of this Note or any portion thereof, Promisor shall pay to OTC, in
addition to such amounts as are owed pursuant to this Note, such costs and fees
of collection, including, without limitation, a reasonable sum for attorneys'
fees.
As security for the full and timely payment of this Note by
Promisor, Corus Investment Ltd. ("Corus") has pledged and granted to OTC a
security interest in 8,000,000 shares of Common Stock of Promisor owned by Corus
(the "Pledged Stock") pursuant to a Pledge Agreement between Corus and OTC of
even date herewith.
Acceptance of partial or delinquent payment from Promisor, or
the failure of OTC to exercise any of the rights created hereby or to enforce
promptly any of the provisions of this Note, shall not constitute a waiver of
the right to exercise such rights or to enforce any such provisions.
<PAGE>
As used herein, Promisor includes the successors, assigns and
distributees of Promisor.
This Note is made under and shall be construed in accordance
with the laws of the State of California, without regard to the conflict of law
provisions thereof.
ORYX INSTRUMENTS AND MATERIALS CORPORATION,
a Delaware Corporation
By: _________________________________________
Name: _______________________________________
Title: ______________________________________
Exhibit 99.1
Wednesday February 18, 9:03 am Eastern Time
Company Press Release
Oryx Technology Consolidates Operations
Intends to Sell TTS Instruments Division
FREMONT, Calif.--(BUSINESS WIRE)--February 18, 1998--Oryx Technology Corp.
(NASDAQ:ORYX - news) today announced that it has consolidated operations,
increasing its focus on its more profitable materials businesses. The company
also announced its plan to sell its Instruments Division. These announcements
are in line with the company's previously announced strategy to reduce costs and
raise additional capital to accelerate development of its advanced SurgX ESD
surge protection technology.
Under the reorganization, the company's SurgX division, which designs,
manufactures and markets proprietary advanced surge protection components, will
be consolidated with Oryx's specialized materials business, the company's
original core business. Recently this group, which is a leading supplier of
sputtering target assemblies to the rigid memory disk market, celebrated 20
years of operation.
In conjunction with this consolidation, the company also announced that it has
reached an agreement to sell its Instruments Division, a manufacturer of process
monitoring systems which analyze rigid disk and semiconductor wafer surfaces for
chemical contamination, to a private investor group. Terms of the sale will be
disclosed when the definitive agreement is reached.
The company's Power Products group will continue to be managed as a stand alone
operation. This division designs, manufactures and markets custom and standard
AC/DC switching power supplies and high density DC/DC power conversion products
for various electronics products.
Commenting on the restructuring, Phil Micciche, President and Chief Executive
Officer of Oryx, said, "We are pleased to announce that we have reached an
agreement in principle to sell the Instruments Division as this will
significantly reduce our operating expenses and allow us to focus additional
financial resources on furthering development of our proprietary SurgX
technology. We believe our SurgTape and SurgX Liquid technologies represent
significant market opportunities for Oryx, and focusing our efforts on these
markets is in the best long-term interests of our shareholders. The expected
divestiture of Instruments group and the restructuring of SurgX under the
Materials Division represents a monthly reduction in operating losses of
approximately $250,000 to Oryx," concluded Micciche.
Headquartered in Fremont, California, Oryx Technology Corp. is a technology
management Company with a proprietary portfolio of high technology products in
surge protection, power supplies and specialized materials and material
analysis. The Company's customers include key OEM's in the fast growing
information industry including: IBM, Seagate Technology and Xerox. Oryx's common
stock trades on the NASDAQ Small Cap Issues Market under the symbol ORYX.
Certain matters discussed in this release are forward-looking and involve a
number of risks and uncertainties. The Company's actual results could differ
materially from those described for a variety of factors. Such factors could
include, but are not limited to, those discussed in "Risk Factors" and
"Management's Discussion and Analysis" in the Company's form 10-KSB, as amended,
filed for the fiscal year ended February 28, 1997 with the Securities and
Exchange Commission and various other filings. Among the factors that could
cause actual results to differ materially are the following: changes in customer
commitments, maintenance of gross margin levels, market acceptance of new
products both technically and commercially, successful product development
efforts, inability to pass on price increase to customers, unavailability of
products, management of cost controls and cash resources, need for additional
financing, and strong competition.
For more information on Oryx Technology Corp. please call (800) PRO-INFO, ORYX
Contact:
Oryx Technology Corp.
Philip Micciche/Mitchel Underseth
510/492-2080
or
Financial Relations Board
Jordan Goldstein (Analysts)
Hannah Bruce (General Info.)
415/986-1591
Exhibit 99.2
Monday March 9, 12:01 pm Eastern Time
Company Press Release
Oryx Sells Power Products Subsidiary and Instruments
Division
FREMONT, Calif.--(BUSINESS WIRE)--March 9, 1998--Oryx Technology Corp.
(NASDAQ:ORYX - news) today announced that it has signed definitive agreements to
sell its Oryx Power Products business and 80% of Oryx Instruments & Materials
Corporation (I&M), as part of its overall restructuring efforts.
The Power Products subsidiary was purchased by Todd Products Corp., a leading
designer and manufacturer of switching power supplies located in Long Island,
N.Y. Upon closing, Oryx will receive a $2 million cash payment. Thereafter,
based on certain performance criteria over a 14-month period, Oryx potentially
will receive an additional payout of $4 million. Todd Products will assume
certain liabilities of the business. Further terms were not disclosed.
For the fiscal year ended Feb. 28, 1998, the Power Products subsidiary, which
designs, manufactures, and markets custom and standard AC/DC switching power
supplies and high density DC/DC power conversion products for various
electronics products, and provides contract manufacturing services, lost
approximately $3.7 million on revenues of approximately $10 million.
Oryx also announced that it has completed the sale of 80% of its I&M subsidiary,
a manufacturer of process monitoring and simulation instrumentation for the
rigid disk and semiconductor industries, to a private investor group. Current
management will continue to run I&M under the new ownership. Oryx will retain a
seat on the Board of Directors.
Prior to the sale, Oryx separated the Materials portion of I&M and consolidated
those operations with Oryx's SurgX subsidiary. For the fiscal year ended Feb.
28, 1998, the Materials portion of I&M earned approximately $1.7 million on
revenues of approximately $5.0 million.
Oryx Technology Corp., the parent company, expects to report final financial
results for the fiscal year ended Feb. 28, 1998 on May 28, 1998.
Commenting on these transactions, Phil Micciche, president and Chief Executive
Officer of Oryx said, "With the successful completion of these deals, the sale
of a portion of our holdings in DAS Devices, Inc., and other recent licensing
and matching funds agreements, we will have raised cash, notes, cash
equivalents, and other assets of approximately $7 million since last August.
Clearly, we are very pleased with the progress we have made to raise the
necessary funds to invest in further development of our SurgX ESD surge
protection technology.
"To date, this technology has received high marks from our corporate
manufacturing partners, and we are very excited about our potential opportunity
in the $1 billion electrostatic discharge protection devices market. Our
corporate resources can now be used to accelerate SurgX time-to-market. Based on
current estimates, we expect to benefit from the commercialization of this
product by calendar year-end."
About the Companies
Oryx Technology Corp. is an advanced materials technology company focusing on
surge protection technology and specialized materials. Its proprietary SurgX
technology provides board test and integrated circuit level protection against
electrostatic discharge. The company also manufactures specialized materials
products based on its patented Intragene system for joining engineering
materials.
The company's customers include key OEM's in the fast growing information
industry including: Bussmann and Seagate. Oryx's common stock trades on the
NASDAQ Small Cap Issues Market under the symbol ORYX.
Todd Products Corp.
Founded in 1968 and headquartered in Brentwood, N.Y., Todd Products Corp. is a
leading designer and manufacturer of standard, modified standard, custom and
value-added switching power supplies for the Electronic Equipment Market (EOEM).
These power supplies are used in a wide variety of Original Equipment
Manufacturer (OEM) applications.
Market segments include telecommunication, computer, medical, bus systems, and
control instrumentation/test systems. Todd's products range is one of the
broadest available, with single and multiple outputs, from 150 watts to 1500
watts.
Forward-Looking Statements
Certain matters discussed in this release are forward-looking and involve a
number of risks and uncertainties. The company's actual results could differ
materially from those described for a variety of factors. Such factors could
include, but are not limited to, those discussed in "Risk Factors" and
"Management's Discussion and Analysis" in the company's form 10-KSB, as amended,
filed for the fiscal year ended Feb. 28, 1997 with the Securities and Exchange
Commission and various other filings.
Among the factors that could cause actual results to differ materially are the
following: changes in customer commitments, maintenance of gross margin levels,
market acceptance of new products both technically and commercially, successful
product development efforts, inability to pass on price increase to customers,
unavailability of products, management of cost controls and cash resources, need
for additional financing, and strong competition.
For more information of Oryx via fax, at no cost, dial 1-800/PRO-INFO, ticker
symbol ORYX.
