As filed with the Securities and Exchange Commission on January 2, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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LECROY CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 13-2507777
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
700 CHESTNUT RIDGE ROAD, CHESTNUT RIDGE, NEW YORK 10977 (914) 425-2000
(Address and telephone number of registrant's principal executive offices)
LUTZ P. HENCKELS, PRESIDENT AND CHIEF EXECUTIVE OFFICER
LECROY CORPORATION
700 CHESTNUT RIDGE ROAD
CHESTNUT RIDGE, NEW YORK 10977
(914) 425-2000
(Name, address, including zip code, and telephone number, including area code,
of agent for service and registrant's principal executive offices)
Copy to:
ROGER D. FELDMAN, ESQ.
BINGHAM DANA LLP
150 FEDERAL STREET
BOSTON, MASSACHUSETTS 02110
(617) 951-8000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
----------------
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
========================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
TO BE REGISTERED BE REGISTERED PER SHARE (1) OFFERING PRICE REGISTRATION FEE
========================================================================================================
<S> <C> <C> <C> <C>
Common Stock, $.01 par value..... 454,148 shares $29.625 $13,454,134.50 $3,968.97
========================================================================================================
</TABLE>
(1) Calculated in accordance with Rule 457(c) based on the average of the high
and low prices reported on the Nasdaq National Market on December 31,
1997.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
Subject to Completion, dated January 2, 1998
PROSPECTUS
LECROY CORPORATION
454,148 Shares
Common Stock, $.01 Par Value
--------------------
This Prospectus of LeCroy Corporation, a Delaware corporation (the "Company" or
"LeCroy"), relates to up to 454,148 shares (the "Shares") of the Company's
common stock, par value $.01 per share (the "Common Stock"), being sold by
certain stockholders of the Company (the "Selling Stockholders") for their own
accounts. See "Selling Stockholders." The Company will not receive any proceeds
from the sale of Shares by the Selling Stockholders. The Common Stock is traded
on The Nasdaq Stock Market's National Market (the "Nasdaq National Market")
under the symbol "LCRY." On December 31, the last reported sale price of the
Common Stock on the Nasdaq National Market was $30.25 per share.
The Company will pay all of the expenses incident to the registration of the
Shares, estimated to be $22,050.
All or a portion of the Shares may be disposed of by the Selling Stockholders
hereunder from time to time in one or a combination of the following
transactions: (a) transactions (which may involve block transactions) on the
Nasdaq National Market, or otherwise, at market prices prevailing at the time
of sale or at prices related to such prevailing market prices; or (b) privately
negotiated transactions at negotiated prices, including underwritten offerings.
The Selling Stockholders may effect such transactions by selling the Shares
directly to purchasers or by selling the shares to or through underwriters,
brokers, or dealers, and such underwriters, brokers or dealers may receive
compensation in the form of discounts, concessions, or commissions from the
Selling Stockholders or the purchasers of the Shares for whom such
underwriters, brokers, or dealers may act as agent, or to whom they sell as
principal, or both (which compensation to a particular underwriter, broker, or
dealer might be in excess of customary commissions and/or be changed from time
to time). The Selling Stockholders and the underwriters, brokers, dealers,
and/or agents who participate in a sale of the Shares may be deemed
"underwriters" within the meaning of Section 2(11) of the Securities Act, and
the commissions paid or discounts allowed to any of the underwriters, brokers,
dealers, or agents in addition to the profits, if any, of the underwriters,
brokers, dealers, or agents should purchase any Shares as a principal may be
deemed to be underwriting discounts or commissions under the Securities Act.
See "Plan of Distribution."
Certain of the underwriters, brokers, dealers, or agents may have other
business relationships with the Company and/or its affiliates in the ordinary
course.
<PAGE>
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK. SEE "RISK
FACTORS AND CAUTIONARY STATEMENT" ON PAGE 4.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
-----------
No dealer, salesperson, or other person has been authorized to give any
information or to make any representations not contained in this Prospectus or
any Prospectus Supplement, and if given or made, such information or
representations must not be relied upon as having been authorized by the
Company. Neither this Prospectus nor any Prospectus Supplement constitutes an
offer to sell or a solicitation of an offer to buy any of the securities
offered hereby in any jurisdiction to any person to whom it is unlawful to make
such an offer in such jurisdiction. Neither the delivery of this Prospectus or
any Prospectus Supplement nor any sale made thereunder shall, under any
circumstances, create any implication that there has been no change in the
affairs of the Company since the date hereof or thereof.
- -------------------------------------------------------------------------------
Proceeds to Selling
Price to Public Stockholders
- -------------------------------------------------------------------------------
Per Share (l) (1)(2)
- -------------------------------------------------------------------------------
Total (1) (1)(2)
- -------------------------------------------------------------------------------
(1) The Selling Stockholders may from time to time effect the sale of the
Shares at prices and at terms then prevailing or at prices related to the
then-current market price, or in negotiated transactions. Under the
securities laws of certain states, the Shares may be sold in such states
only through registered or licensed brokers or dealers. See "Plan of
Distribution" and "Selling Stockholders."
(2) The Company has agreed to prepare and file this Prospectus and the related
Registration Statement and supplements and amendments thereto required by
the Securities Act with the Securities and Exchange Commission, and to
deliver copies of the Prospectus to the Selling Stockholders. The expenses
incurred in connection with the same, estimated at $22,050, will be
borne by the Company. The Selling Stockholders and any broker-dealers,
agents or underwriters who participate in a sale of the Shares may be
deemed "underwriters" within the meaning of the Securities Act, and any
commissions paid or discounts allowed to, and any profits received on
resale of the Shares by, any of them may be deemed to be underwriting
discounts or commissions under the Securities Act. See "Plan of
Distribution." The Company will not be responsible for any discounts,
concessions, commissions or other compensation due to any broker or dealer
in connection with the sale of any of the shares offered hereby, which
expenses will be borne by the Selling Stockholders.
IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS (AND SELLING GROUP
MEMBERS) MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK
ON NASDAQ IN ACCORDANCE WITH RULE 103 OF REGULATION M. SEE "PLAN OF
DISTRIBUTION."
The date of this Prospectus is _____________________, 1998.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the reporting requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files
periodic reports and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and other
information concerning the Company may be inspected and copies may be obtained
(at prescribed rates) at public reference facilities maintained by the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549
and at the regional offices of the Commission located at Seven World Trade
Center, 13th Floor, New York, New York 10048 and at Northwest Atrium Center,
500 W. Madison Street, Suite 1400, Chicago, Illinois 60661-2511. In addition,
electronically filed documents, including reports, proxy and information
statements and other information regarding the Company, can be obtained from
the Commission's Web site at: http://www.sec.gov. The Company's Common Stock is
listed on the Nasdaq National Market, and reports, proxy statements and other
information concerning the Company can also be inspected at the offices of the
National Association of Securities Dealers, Inc. at 1735 K Street, Washington,
D.C. 20006.
The Company has filed a Registration Statement on Form S-3 (the "Registration
Statement") under the Securities Act with the Commission with respect to the
Common Stock being offered pursuant to this Prospectus. As permitted by the
rules and regulations of the Commission, this Prospectus omits certain of the
information contained in the Registration Statement. For further information
with respect to the Company and the Common Stock being offered pursuant to this
Prospectus, reference is hereby made to such Registration Statement, including
the exhibits filed as part thereof. Statements contained in this Prospectus
concerning the provisions of certain documents filed with, or incorporated by
reference in, the Registration Statement are not necessarily complete, each
such statement being qualified in all respects by such reference. Copies of all
or any part of the Registration Statement, including the documents incorporated
by reference therein or exhibits thereto, may be obtained upon payment of the
prescribed rates at the offices of the Commission set forth above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
There is incorporated herein by reference the Annual Report on Form 10-K of the
Company for the Company's 1997 fiscal year filed with the Commission pursuant
to Section 13(a) of the Exchange Act, the Quarterly Report on Form 10-Q of the
Company for the Company's fiscal quarter ended September 30, 1997, filed with
the Commission pursuant to Section 13(a) of the Exchange Act, and the
Registration Statement on Form S-3 as filed with the Commission on February 20,
1997.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of the Common Stock shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing such documents. Any statement contained herein or in a document,
all or a portion of which is incorporated or deemed to be incorporated by
reference herein, shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document or portion thereof which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON, INCLUDING ANY
BENEFICIAL OWNER, TO WHOM A PROSPECTUS IS DELIVERED, UPON WRITTEN OR ORAL
REQUEST OF SUCH PERSON, A COPY OF ANY OR ALL OF THE INFORMATION THAT HAS BEEN
INCORPORATED BY REFERENCE HEREIN (OTHER THAN EXHIBITS TO THE INFORMATION UNLESS
SUCH EXHIBITS ARE INCORPORATED BY REFERENCE INTO THE INFORMATION THAT THE
PROSPECTUS INCORPORATES). SUCH WRITTEN REQUESTS SHOULD BE ADDRESSED TO LECROY
CORPORATION, ATTENTION: INVESTOR RELATIONS, 700 CHESTNUT RIDGE ROAD, CHESTNUT
RIDGE, NEW YORK 10977. TELEPHONE REQUESTS MAY BE DIRECTED TO THE INVESTOR
RELATIONS DEPARTMENT AT (914) 578-6021.
<PAGE>
RISK FACTORS AND CAUTIONARY STATEMENT
An investment in the Shares being offered herein involves a high degree of
risk. Prospective investors should consider carefully the risk factors
contained in the Registration Statement on Form S-3 filed with the Commission
on February 20, 1997 (the "February 1997 Registration Statement"), each of
which are incorporated herein by reference, before purchasing the Shares
offered hereby.
The documents incorporated by reference in this Prospectus contain, and
additional statements issued by the Company from time to time in public filings
or press releases or publicly made orally by officers of the Company with
respect to the Company contain or may contain, "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
Such statements are subject to certain risks and uncertainties, including
without limitation those discussed in the February 1997 Registration
Statement. Such forward-looking statements speak only as of the date on which
they are made, and the Company cautions readers not to place undue reliance on
such statements.
THE COMPANY
LeCroy Corporation develops, manufactures and sells signal analyzers,
principally high-performance digital oscilloscopes and related products.
Digital oscilloscopes capture electronic signals, convert them to digital form
and perform sophisticated measurements and analyses. The Company's digital
oscilloscope products are used by design engineers and researchers in a broad
range of industries, including electronics, computers and communications.
The Company's first business objective is to become a leading supplier of
high-performance digital oscilloscopes. The Company's second business objective
is to participate in broader markets by the use, directly and through licensing
and other arrangements with other manufacturers, of the Company's core
acquisition technology in dedicated signal analyzers.
The Company's wholly-owned subsidiary, LeCroy Merger Corporation, a Delaware
corporation ("Merger Sub"), merged with and into Digitech Industries, Inc., a
Delaware corporation ("Digitech"), pursuant to the terms of an Agreement and
Plan of Merger and Reorganization, dated as of December 10, 1997 (the "Merger
Agreement"), with the separate existence of Merger Sub ceasing and Digitech
continuing in existence as the surviving corporation (the "Surviving
Corporation"). The effect of the merger was as provided in the applicable
provisions of the Delaware General Corporation Law (the "DGCL"). Without
limiting the generality of the foregoing, and subject thereto, all of the
property, rights, privileges, powers, and franchises of Merger Sub and
Digitech, respectively, were vested in the Surviving Corporation, and all
debts, liabilities and duties of Merger Sub and Digitech, respectively, became
the debts, liabilities and duties of the Surviving Corporation. The transaction
was accounted for under Accounting Principles Board Opinion No. 16 as a
"pooling of interests."
The Company was founded and incorporated in the State of New York in 1964 and
reincorporated in the State of Delaware in 1995. The Company's principal
executive offices are located at 700 Chestnut Ridge Road, Chestnut Ridge, New
York 10977, and its phone number at that location is (914) 425-2000.
<PAGE>
SELLING STOCKHOLDERS
The Selling Stockholders acquired their shares of the Common Stock, in
a transaction exempt from the registration requirement of the Securities Act,
in connection with the Merger Agreement. Pursuant to the Merger Agreement,
Merger Sub was merged with and into Digitech, with the separate existence of
Merger Sub ceasing and Digitech continuing in existence as the Surviving
Corporation (the "Merger"). Under the terms of the Merger Agreement, (a) each
share of Digitech Common Stock issued and outstanding immediately before the
effectiveness of the Merger (other than any shares held by dissenting
stockholders and shares held directly or indirectly by Digitech, the Company or
any of their respective subsidiaries) was converted into and became 0.420220
shares of Common Stock and (b) each share of Digitech Preferred Stock
issued and outstanding immediately before the effectiveness of the Merger
(other than any shares held by dissenting stockholders and shares held directly
or indirectly by Digitech, the Company or any of their respective subsidiaries)
was converted to and became 147.077 shares of Common Stock. Under the
terms of the Merger Agreement, the Company has agreed to use its best efforts
to file with the Securities and Exchange Commission a Registration Statement on
Form S-3 (or other appropriate form) for the purpose of registering for resale
by the stockholders of Digitech the Common Stock into which the shares
of Digitech Common Stock and Preferred Stock are converted in the Merger (the
"Merger Shares").
The term Selling Stockholders includes the holders listed below and the
beneficial owners of the Merger Shares and their transferees, pledgees, donees,
and other successors.
As of January 2, 1998, with the exception of the Merger Shares, the Selling
Stockholders held of record no shares of the Company's outstanding Common
Stock. No Selling Shareholder has within the past three years held any
position, office or had any other material relationship with the Company or
its affiliates.
As of December 23, 1997 there were 6,956,522 shares of the Common Stock of the
Company issued and outstanding.
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock of the Company as of January 2, 1998 and as
adjusted to reflect the sale of all of the Common Stock offered hereby by the
Selling Stockholders.
<TABLE>
<CAPTION>
Name of Selling Shares Owned Shares to be Owned
Stockholders Prior to Offering Shares Offered (1) After Offering
<S> <C> <C> <C>
Robert B. Arnold 143,960 143,960 0
Millard E. Bronson 2,101 2,101 0
Ernest Courchene, Jr., Trustee 21,011 21,011 0
Charles Greer 5,830 5,830 0
Jeffrey D. Holden 12,606 12,606 0
Ann Lake 21,011 21,011 0
Thomas Quinlan 7,563 7,563 0
Robert W. Scharf 74,081 74,081 0
Dennis Stvan 16,808 16,808 0
David L. Vaughn 2,101 2,101 0
DLJ Venture Capital Fund 138,840 138,840 0
Sprout Capital V 8,236 8,236 0
</TABLE>
(1) See "Plan of Distribution."
<PAGE>
PLAN OF DISTRIBUTION
The sale or distribution of the Shares may be effected directly to purchasers
by the Selling Stockholders as principals or through one or more underwriters,
brokers, dealers or agents from time to time in one or more transactions (which
may involve crosses or block transactions) (i) on any exchange or in the
over-the-counter market, (ii) in transactions otherwise than in the
over-the-counter market or (iii) through the writing of options (whether such
options are listed on an options exchange or otherwise) on, or settlement of
short sales of, the Shares. Any of such transactions may be effected at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices, at varying prices determined at the time of sale or at
negotiated or fixed prices, in each case as determined by the Selling
Stockholders or by agreement between the Selling Stockholders and underwriters,
brokers, dealers or agents, or purchasers. The Selling Stockholders may effect
such transactions by selling the Shares directly to purchasers or by selling
shares to or through underwriters, brokers or dealers and such underwriters,
brokers or dealers may receive compensation in the form of discounts,
concessions or commissions from the Selling Stockholders or the purchasers of
the Shares for whom such underwriters, brokers or dealers may act as agent, or
to whom they sell as principal, or both (which compensation to a particular
underwriter, broker or dealer might be in excess of customary commissions or be
changed from time to time). The Selling Stockholders and any underwriters,
brokers, dealers or agents who participate in a sale of the Shares may be
deemed "underwriters" within the meaning of Section 2(11) of the Securities Act
and the commissions paid or discounts allowed to any of such underwriters,
brokers, dealers or agents in addition to any profits received on resale of the
Shares if any of such underwriters, brokers, dealers or agents should purchase
any Shares as a principal may be deemed to be underwriting discounts or
commissions under the Securities Act.
Certain of any such underwriters, dealers, brokers or agents may have other
business relationships with the Company and/or its affiliates in the ordinary
course.
Under the securities laws of certain states, the Shares may be sold in such
states only through registered or licensed brokers or dealers.
The Company will pay all of the expenses incident to the registration, offering
and sale of the Shares to the public hereunder other than commissions, fees and
discounts of underwriters, brokers, dealers and agents. The Company has agreed
to indemnify the Selling Stockholders and their officers, directors and
controlling persons (within the meaning of the Securities Act) against certain
liabilities, including liabilities under the Securities Act. The Company will
not receive any of the proceeds from the sale of any of the Shares by the
Selling Stockholders.
If all or a portion of the Shares are offered through an underwritten offering,
the terms of such underwritten offering, including the initial public offering
price, the names of the underwriters and the compensation, if any, of such
underwriters, will be set forth in an accompanying Prospectus Supplement.
Until the distribution of the Shares is completed, rules of the Commission may
limit the ability of any underwriters and any other person participating in the
distribution of the Shares to bid for and purchase the Common Stock. As an
exception to these rules, underwriters are permitted to engage in certain
transactions that stabilize the price of the Common Stock. Such transactions
consist of bids or purchases for the purpose of pegging, fixing or maintaining
the price of the Common Stock. If any underwriters create a short position in
the Shares in connection with the offering, selling more Shares than are set
forth on the cover page of this Prospectus, the underwriters may reduce that
short position by purchasing shares of Common Stock in the open market.
Purchases of the Common Stock for the purpose of stabilization or to reduce a
short position could cause the price of the Common Stock to be higher than it
might be in the absence of such purchases. In addition, rules of the Commission
may limit the timing of purchases and sales of shares of Common Stock by the
Selling Stockholders and any other such person. All of the foregoing may limit
the marketability of the Shares and the ability of any underwriter, broker,
dealer or agent to engage in market making activities.
<PAGE>
CERTAIN LEGAL MATTERS
The validity of the offered Common Stock will be passed upon for the Company by
Bingham Dana LLP, 150 Federal Street, Boston, Massachusetts. Roger D. Feldman,
a partner of Bingham Dana LLP, is an Assistant Secretary of the Company. As of
December 23, 1997, Mr. Feldman held as trustee of certain trusts an aggregate
of 103,195 shares of Common Stock. Mr. Feldman disclaims beneficial ownership
of such shares. Brian Keeler, a partner of Bingham Dana LLP, is an Assistant
Secretary of the Company.
EXPERTS
The consolidated financial statements of LeCroy Corporation appearing in
LeCroy's Annual Report (Form 10-K) for the year ended June 30, 1997, have been
audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon, included therein and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses in connection with the issuance and distribution of the
securities being registered, other than underwriting compensation, are:
Securities and Exchange Commission Registration Fee -------- $3,969
Nasdaq National Market Fees -------------------------------- $9,083
Fees of Registrar and Transfer Agent ----------------------- *$ 500
Legal Fees and Expenses ------------------------------------ *$2,500
Accounting Fees and Expenses ------------------------------- *$5,000
Miscellaneous ---------------------------------------------- *$1,000
Total --------------------------------------------------- $22,052
- ---------------
* Estimates
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law empowers a Delaware
corporation to indemnify its officers and directors and certain other persons
to the extent and under the circumstances set forth therein.
The Amended and Restated By-Laws of the Company provide for indemnification of
officers and directors of the Company and certain other persons against
liabilities and expenses incurred by any of them in certain stated proceedings
and under certain stated conditions.
The Company has entered into indemnification agreements with its executive
officers and directors, pursuant to which the Company has agreed to indemnify
such persons to the fullest extent permitted by law, and providing for certain
other protections.
The Company maintains insurance for the benefit of its directors and officers
insuring such persons against certain liabilities, including liabilities under
applicable securities laws.
ITEM 16. EXHIBITS.
2 Agreement and Plan of Merger and Reorganization, between the
Registrant, the Selling Stockholders and Digitech Industries, Inc.
4.1 Specimen Certificate for Shares of the Registrant's Common Stock,
par value $.01 per share, incorporated by reference to Exhibit 4.1
to the Company's Registration Statement on Form S-1 (Reg. No.
33-95620).
5 Opinion of Bingham Dana LLP, counsel to the Company.
23.1 Consent of Bingham Dana LLP (included in Exhibit 5).
23.2 Consent of independent auditors, Ernst & Young LLP.
24 Power of Attorney (included on signature page).
ITEM 17. UNDERTAKINGS.
(A) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
<PAGE>
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(B) The undersigned registrant hereby undertakes to deliver or cause to
be delivered with the prospectus, to each person to whom the prospectus is sent
or given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Exchange Act; and, where
interim financial information required to be presented by Article 3 of
Regulation S-X is not set forth in the prospectus, to deliver, or cause to be
delivered to each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
(C) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
(D) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(E) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement to include any
material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3)To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE
REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS
ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO
DULY AUTHORIZED, IN THE VILLAGE OF CHESTNUT RIDGE, STATE OF NEW YORK, ON
JANUARY 2, 1998.
LECROY CORPORATION
By /s/ John C. Maag
JOHN C. MAAG
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
POWER OF ATTORNEY
Each person whose signature appears below hereby appoints John C. Maag
and Roger D. Feldman, and each of them singly, acting alone and without the
other, his true and lawful attorney-in-fact and agent with full power of
substitution and resubstitution in each of them, for him and his name, place
and stead, and in any and all capacities, to do and perform any and all acts
and to sign any and all amendments (including without limitation post-effective
amendments) to this registration statement on Form S-3 and to file the same,
with all exhibits thereto and other documents in connection therewith necessary
or advisable to enable the Registrant to comply with the Securities Act of
1933, as amended, and any rules, regulations and requirements of the Securities
and Exchange Commission in respect thereof, which amendments may make such
other changes in the Registration Statement as the aforesaid attorney-in-fact
executing the same deems appropriate.
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
SIGNATURE CAPACITY(-IES) DATE
Chairman of the Board of January 2, 1998
/s/ WALTER O. LECROY, JR. Directors and Director
--------------------------
WALTER O. LECROY, JR.
President, Chief Executive January 2, 1998
/s/ LUTZ P. HENCKEL Officer and Director
--------------------------
LUTZ P. HENCKELS
Vice President--Finance, January 2, 1998
/s/ JOHN C. MAAG Chief Financial Office
-------------------------- Secretary and Treasurer
JOHN C. MAAG (Principal Financial and
Accounting Officer)
Director January 2, 1998
/S/ ROBERT E. ANDERSON
--------------------------
ROBERT E. ANDERSON
Director January 2, 1998
/s/ WILLIAM G. SHEERER
--------------------------
WILLIAM G. SHEERER
Director January 2, 1998
/s/ DOUGLAS A. KINGSLEY
--------------------------
DOUGLAS A. KINGSLEY
<PAGE>
Exhibit 4.2
EXHIBIT INDEX
2 Agreement and Plan of Merger and Reorganization, between the
Registrant, the Selling Stockholders and Digitech Industries, Inc.
5 Opinion of Bingham Dana LLP, counsel to the Company.
23.1 Consent of Bingham Dana LLP (included in Exhibit 5).
23.2 Consent of independent auditors, Ernst & Young LLP.
<PAGE>
Exhibit 2
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
This Agreement and Plan of Merger and Reorganization (this "Agreement")
dated as of December 10, 1997, is by and among LeCroy Corporation ("LeCroy"), a
Delaware corporation; LeCroy Merger Corporation ("Merger Sub"), a Delaware
corporation that is a wholly owned subsidiary of LeCroy; Digitech Industries,
Inc. (the "Company"), a Delaware corporation; and the "Stockholders" listed in
the signature pages hereto (each, a "Stockholder," and collectively, the
"Stockholders"), who are the stockholders of the Company.
Whereas, the parties desire that Merger Sub be merged with and into the
Company (the "Merger"), subject to the terms and conditions set forth in this
Agreement; and
Whereas, for Federal income tax purposes, the parties intend and expect
that the Merger qualify as a reorganization under the provisions of Section
368(a) of the United States Internal Revenue Code of 1986, as amended (the
"Code"); and
Whereas, for accounting purposes, the parties intend and expect that the
Merger be accounted for as a "pooling of interests."
Certain terms used in this Agreement are defined in Section 18.
1. CLOSING. Subject to the other provisions of this Agreement, a closing
(the "Closing") will be held at the offices of Bingham Dana LLP, 150 Federal
Street, Boston, Massachusetts 02110, as soon as is reasonably practicable
following satisfaction or waiver of the conditions set forth in Sections 11
through 13 (the date on which the Closing actually occurs, the "Closing Date").
On the Closing Date, Merger Sub and the Company will execute a Certificate of
Merger (the "Merger Certificate") substantially in the form of the attached
Exhibit A and file it with the Delaware Secretary of State in order to cause
the Merger to be effected in accordance with the laws of the State of Delaware.
The Merger will be effective upon the filing of the Merger Certificate (the
"Effective Time"). For all purposes, all of the document deliveries and other
actions to occur at the Closing will be conclusively presumed to have occurred
at the same time, immediately before the Effective Time.
2. EFFECT OF MERGER. At the Effective Time, automatically and
without further action:
2.1. SURVIVING CORPORATION. Merger Sub will be merged with and into the
Company and the separate existence of Merger Sub will cease. The Company will
continue in existence as the surviving corporation in the Merger (the
"Surviving Corporation"). The effect of the Merger will be as provided in the
applicable provisions of the Delaware General Corporation Law (the "DGCL").
Without limiting the generality of the foregoing, and subject thereto, except
as otherwise provided herein, all of the property, rights, privileges, powers,
and franchises of Merger Sub and the Company, respectively, will vest in the
Surviving Corporation, and all of the debts, liabilities, and duties of Merger
Sub and the Company, respectively, will become the debts, liabilities, and
duties of the Surviving Corporation.
2.2. CERTIFICATE OF INCORPORATION. The Company's Certificate of
Incorporation, as in effect immediately before the Effective Time, will be
amended by the Merger Certificate (among other things, to reduce the Company's
authorized capital stock to one share of common stock), and as so amended will
be the Certificate of Incorporation of the Surviving Corporation.
2.3. BY-LAWS. The Company's by-laws, as in effect immediately before the
Effective Time, will be amended and restated to read in their entirety as set
forth in the attached Exhibit B, and as so amended and restated will be the
by-laws of the Surviving Corporation.
<PAGE>
2.4. DIRECTORS AND OFFICERS. From and after the Effective Time, the
respective officers and members of the Board of Directors of the Surviving
Corporation will consist of those persons named as such in the Merger
Certificate, each such person to hold office, subject to the applicable
provisions of the Certificate of Incorporation and the by-laws of the Surviving
Corporation, until the next annual meeting of directors or stockholders, as the
case may be, of the Surviving Corporation and until his successor is duly
elected or appointed and qualified.
2.5. CONVERSION OF COMPANY STOCK.
(A) COMPANY COMMON STOCK. Each share of Company Common Stock issued
and outstanding immediately before the Effective Time (other than any
Dissenting Shares (as defined in Section 2.7) and other than any shares
held directly or indirectly by LeCroy or the Company or any of their
respective Subsidiaries) will be converted into and become 0.420220
shares (such number of shares, as adjusted pursuant to Section 2.5(c),
the "Exchange Ratio") of LeCroy Common Stock, subject to adjustment as
provided in Section 2.5(c), to the escrow arrangements referred to in
Section 3.3, and to the payment of cash adjustments in lieu of the
issuance of fractional shares as provided in Section 3.6.
(B) COMPANY PREFERRED STOCK. Each share of Company Preferred Stock
issued and outstanding immediately before the Effective Time (other than
any Dissenting Shares (as defined in Section 2.7) and other than any
shares held directly or indirectly by LeCroy or the Company or any of
their respective Subsidiaries) will be converted into and become that
number of shares of LeCroy Common Stock into which that number of shares
of Company Common Stock into which such share of Company Preferred Stock
was convertible immediately before the Effective Time would have been
converted pursuant to Section 2.5(a), subject to adjustment as provided
in Section 2.5(c), to the escrow arrangements referred to in Section 3.3,
and to the payment of cash adjustments in lieu of the issuance of
fractional shares as provided in Section 3.6.
(C) ADJUSTMENT OF EXCHANGE RATIO. In the event that, subsequent to
the date of this Agreement but before the Effective Time, the shares of
LeCroy Common Stock or Company Stock (either Company Common Stock or
Company Preferred Stock or both) issued and outstanding as of the date of
this Agreement are increased, decreased, or changed into or exchanged for
a different number or kind of shares or securities through
reorganization, recapitalization, reclassification, stock dividend, stock
split, reverse stock split, or other similar changes in LeCroy's or the
Company's capitalization, then an appropriate and proportionate
adjustment will be made to the Exchange Ratio so that each holder of
Company Stock immediately before the Effective Time will receive pursuant
to this Section 2.5: (i) in the event of any such change with respect to
Company Stock, that number of shares of LeCroy Common Stock that such
holder would have received if such change had never occurred and (ii) in
the event of any such change with respect to LeCroy Common Stock, that
number of shares of LeCroy Common Stock that such holder would have
received as a result of such change if such change had occurred
immediately after the Effective Time (and such holders were treated for
purposes of such change as holders of LeCroy Common Stock).
2.6. CANCELLATION OF TREASURY STOCK, ETC. Each share of Company Common
Stock held directly or indirectly by LeCroy or the Company or any of their
respective Subsidiaries will be canceled and will cease to exist, and no
payment will be made with respect thereto.
2.7. DISSENTING SHARES. Each share of Company Common Stock or Company
Preferred Stock that, immediately before the Effective Time, was held by any
person who has duly exercised the appraisal rights afforded to dissenting
stockholders pursuant to Section 262 of the DGCL (such shares, collectively,
"Dissenting Shares") will not be converted into or represent the right to
receive the consideration referred to in Section 2.5 hereof. Instead, the
holders of Dissenting Shares will be entitled to receive payment of the
<PAGE>
appraised value of such shares in accordance with the provisions of such
Section 262, except that all Dissenting Shares held by Stockholders who
withdraw, fail to perfect, or otherwise lose their appraisal rights with
respect to Dissenting Shares will thereupon be deemed to have converted such
shares into shares of LeCroy Common Stock pursuant to Section 2.5 hereof.
2.8. CONVERSION OF MERGER SUB'S SHARES. Each share of the common stock,
$0.001 par value per share, of Merger Sub that was issued and outstanding
immediately before the Effective Time will be converted into and become one
share of the common stock, $0.001 par value, of the Surviving Corporation.
2.9. TAX TREATMENT. The parties intend and expect that the Merger will
qualify as a reorganization within the meaning of Section 368 of the Code.
2.10.ACCOUNTING TREATMENT. The parties intend and expect that the Merger
will be accounted for as a pooling of interests.
3. PROCEDURES; ESCROWED SHARES.
3.1. CERTIFICATES. After the Effective Time, stock certificates (each, a
"Certificate," and collectively, the "Certificates") representing shares of
Company Stock that have been converted into shares of LeCroy Common Stock in
the Merger will be conclusively deemed to represent such shares of LeCroy
Common Stock.
3.2. EXCHANGE OF CERTIFICATES. As promptly as practicable after the
Effective Time, LeCroy or its transfer agent for LeCroy Common Stock will send
to each Stockholder transmittal materials for use in exchanging their
Certificates for certificates for the shares of LeCroy Common Stock into which
such shares of Company Common Stock have been converted. Upon surrender of a
Certificate to LeCroy or its transfer agent, as the case may be, together with
a duly executed letter of transmittal and any other reasonably required
documents, the holder of such Certificate will be entitled to receive, in
exchange therefor, a certificate for the number of shares of LeCroy Common
Stock to which such holder is entitled (subject to the escrow arrangements
referred to in Section 3.3), and such Certificate will be canceled.
3.3. ESCROWED SHARES. Notwithstanding any other provision of this
Agreement, at the Closing, LeCroy and the Stockholders and the Escrow Agent
will execute and deliver an Escrow Agreement in the form of the attached
Exhibit C, under which the Stockholders will secure their indemnification
obligations hereunder by escrowing certain of the shares of LeCroy Common Stock
into which the shares of Company Stock are converted in the Merger (the
"Escrowed Shares").
3.4. DISTRIBUTIONS. No dividend or other distribution payable after the
Effective Time with respect to LeCroy Common Stock will be paid to the holder
of any unsurrendered Certificate until the holder thereof surrenders such
Certificate, at which time such holder will receive all dividends and
distributions, without interest thereon, previously payable but withheld from
such holder pursuant hereto.
3.5. NO TRANSFERS. After the Effective Time, no transfers of shares of
Company Stock will be made in the stock transfer books of the Company. If,
after the Effective Time, Certificates are presented (for transfer or
otherwise) to the Surviving Corporation or its transfer agent for Company
Stock, they will be canceled and exchanged for the shares of LeCroy Common
Stock deliverable in respect thereof as determined in accordance with this
Agreement (or returned to the presenting person, if such Certificate represents
Dissenting Shares).
3.6. NO FRACTIONAL SHARES. In lieu of the issuance of fractional shares
of LeCroy Common Stock, cash adjustments will be paid (without interest) to the
Stockholders in respect of any fractional share of LeCroy Common Stock that
would otherwise be issuable to them and the amount of such cash adjustments
will be determined by multiplying each relevant holder's fractional interest by
$36.00 (such amount to be proportionately adjusted to reflect stock splits,
<PAGE>
stock dividends, reverse stock splits, and other recapitalizations,
reorganizations, and similar events affecting LeCroy Common Stock and occurring
after the date of this Agreement). For purposes of determining whether, and in
what amounts, a particular Stockholder would be entitled to receive cash
adjustments under this section, shares held of record by such holder and
represented by two or more Certificates will be aggregated.
3.7. TERMINATION OF RIGHTS. After the Effective Time, holders of Company
Stock will cease to be, and will have no rights as, stockholders of the
Company, other than (i) in the case of shares other than Dissenting Shares, the
rights to receive shares of LeCroy Common Stock into which such shares have
been converted and/or payments in lieu of fractional shares, as provided in
this Agreement, and (ii) in the case of Dissenting Shares, the rights afforded
to the holders thereof under Section 262 of the DGCL.
3.8. ABANDONED PROPERTY. Neither LeCroy nor the Company nor any other
person will be liable to any holder or former holder of shares of Company Stock
for any shares, or any dividends or other distributions with respect thereto,
properly delivered to a public official pursuant to applicable abandoned
property, escheat, or similar laws.
3.9. LOST CERTIFICATES, ETC. In the event that any Certificate has been
lost, stolen, or destroyed, then upon receipt of appropriate evidence as to
such loss, theft, or destruction, and to the ownership of such Certificate by
the person claiming such Certificate to be lost, stolen, or destroyed, and the
receipt by LeCroy or its transfer agent for LeCroy Common Stock of appropriate
and customary indemnification, LeCroy or such transfer agent will issue in
exchange for such lost, stolen, or destroyed Certificate the shares of LeCroy
Common Stock and the fractional share payment, if any, deliverable in respect
thereof as determined in accordance with this Agreement.
4. COMPANY STOCK OPTIONS. After the Effective Time, each option to
purchase shares of Company Common Stock that is outstanding immediately before
the Effective Time and listed in Section 6.4 of the attached Disclosure
Schedule (a "Company Option") will be deemed to be an option granted pursuant
to LeCroy's Amended and Restated 1993 Stock Incentive Plan and the holder
thereof will be entitled, in accordance with the terms of such Company Option,
to purchase from LeCroy up to a number of whole shares of LeCroy Common Stock
equal to the product of (i) the number of shares of Company Common Stock
subject to such Company Option, multiplied by (ii) the Exchange Ratio, at a
price per share of LeCroy Common Stock determined by dividing the exercise
price per share of Company Common Stock provided for in such Company Option by
the Exchange Ratio. No scrip or fractional share interests will be issued in
connection with the exercise of any Company Option. Except for the foregoing,
each Company Option will remain subject after the Effective Time to the same
terms and conditions (including without limitation those with respect to dates
on which and the proportionate extent to which such Company Options may be
exercised) as were applicable to such Company Option immediately before the
Effective Time.
5. REGISTRATION OF LECROY COMMON STOCK.
(A) REGISTRATION STATEMENT. LeCroy will file with the SEC a registration
statement (the "Registration Statement") on Form S-3 or other appropriate form
for the purpose of registering for resale by the Stockholders all of the shares
of LeCroy Common Stock (including the Escrowed Shares) into which the shares of
Company Stock are converted in the Merger, as promptly as practicable (but in
any event within ten days) following the Closing Date. Thereafter, LeCroy will
use its best reasonable efforts to cause this registration statement to become
effective as promptly as practicable and to remain effective until the earlier
of (i) the first anniversary of the Effective Date, or (ii) such time at which
all of the shares registered have been resold pursuant to such registration
statement or otherwise.
(B) INDEMNIFICATION BY LECROY. LeCroy will indemnify each Stockholder,
the officers, directors, and partners of such Stockholder, and each person who
controls (within the meaning of the Securities Act) any of the foregoing, and
their respective successors and assigns, against any and all Damages arising
out of or based upon any untrue statement (or alleged untrue statement) of any
material fact contained in the Registration Statement, any preliminary or final
<PAGE>
prospectus contained therein, any amendment or supplement thereto, or any
document incorporated by reference therein, or any omission (or alleged
omission) to state therein any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading, or any violation by LeCroy, in connection
with the Registration Statement, of the Securities Act or any rule or
regulation promulgated thereunder, and will reimburse each such person for any
legal and other expenses reasonably incurred in investigating, preparing, or
defending any such claim; provided, however, that LeCroy will not be liable in
any such case to the extent that any such Damages arise out of or are based on
any untrue statement or omission made in reliance upon and in conformity with
written information furnished to LeCroy in a writing executed by such
Stockholder, officer, director, partner, or controlling person and stated to be
specifically for use in the Registration Statement.
(C) INDEMNIFICATION BY EACH STOCKHOLDER. Each Stockholder will indemnify
LeCroy and its officers and directors and each person, if any, who controls
(within the meaning of the Securities Act) any of the foregoing, and their
respective successors and assigns, against any and all Damages arising out of
or based upon any untrue statement (or alleged untrue statement) of any
material fact contained in the Registration Statement, any preliminary or final
prospectus contained therein, any amendment or supplement thereto, or any
document incorporated by reference therein, or any omission (or alleged
omission) to state therein any material fact required to be stated therein or
necessary to make the statement therein, in light of the circumstances in which
it was made, not misleading, but only if and to the extent that such statement
or omission was made in reliance upon and in conformity with written
information furnished to LeCroy in a writing executed by such Stockholder and
stated to be specifically for use in the Registration Statement, and will
reimburse each such person for any legal and other expenses reasonably incurred
in investigating, preparing, or defending any such claim; provided, that each
Stockholder's liability with respect to the Registration Statement will be
limited to an amount equal to the gross proceeds of sale (before deduction of
any selling expenses) of the securities sold by such Stockholder pursuant to
the Registration Statement.
(D) INDEMNIFICATION PROCEEDINGS. Each party entitled to indemnification
pursuant to this Section 5 (the "Indemnifiee") will give notice to the party
required to provide indemnification pursuant to this Section 5 (the
"Indemnifior") promptly after such Indemnifiee acquires actual knowledge of any
claim as to which indemnity may be sought, and will permit the Indemnifior (at
his or its expense) to assume the defense of any claim or any litigation
resulting therefrom; provided, subject to the provisions of the next paragraph,
that the Indemnifiee may participate in such defense at his or its own expense;
and provided, further, that the failure by any Indemnifiee to give notice as
provided in this Section 5(d) will not relieve any Indemnifior of his or its
obligations under this Section 5 except if and to the extent that such
Indemnifior is actually prejudiced thereby. Except with the prior written
consent of an Indemnifiee, no Indemnifior, in the defense of any such claim or
litigation, will consent to entry of any judgment or enter into any settlement
that does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnifiee of a release from all liability in
respect of such claim or litigation.
Notwithstanding anything to the contrary herein, any Indemnifiee will
have the right to employ separate counsel to represent such Indemnifiee, if in
such Indemnifiee's reasonable opinion (based on advice of counsel), and subject
to the reasonable concurrence of the Indemnifior, there exists a substantial
actual conflict of interest between such Indemnifior and such Indemnifiee with
respect to such claim or litigation, such that representation of such
Indemnifior and such Indemnifiee by the same counsel is not appropriate, and in
such event the reasonable fees and expenses of such separate counsel of the
Indemnifiee will be borne by the Indemnifior.
In the event any Indemnifior exercises its right to assume the defense of
any such claim or litigation, then each Indemnifiee will cooperate with such
Indemnifior and will make available to such Indemnifior all such records,
materials, and information in the possession or control of such Indemnifiee as
may reasonably be required by such Indemnifior. Conversely, in the event that
an Indemnifiee is entitled hereunder to conduct such defense and is in fact
<PAGE>
directly or indirectly conducting such defense, then each Indemnifior will
cooperate with such Indemnifiee and will make available to such Indemnifiee all
such records, materials, and information in the possession or control of such
Indemnifior as may reasonably be required by such Indemnifiee.
(E) CONTRIBUTION IN LIEU OF INDEMNIFICATION. If the indemnification
provided for in this Section 5 is unavailable to, or insufficient to hold
harmless, a party that would have been an Indemnifiee in respect of any Damages
referred to herein, then each party that would have been an Indemnifior
thereunder will, in lieu of indemnifying such Indemnifiee, contribute to the
amount paid or payable by such Indemnifiee as a result of such Damages in such
proportion as is appropriate to reflect their relative fault in connection with
the statements or omissions that resulted in such Damages. Relative fault will
be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Indemnifior or
such Indemnifiee and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The parties agree that it would not be just and equitable if contribution
pursuant to this Section 5(e) were determined by pro rata allocation or by any
other method of allocation that does not take account of the equitable
considerations referred to above in this Section 5(e). No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
(F) SECTION 15 NOT APPLICABLE. The provisions of Section 15 hereof will
not apply to claims for indemnification arising under or in connection with
this Section 5 and/or the Registration Statement and the other transactions
contemplated by this Section 5.
(G) TIME LIMIT. Notwithstanding any other provision of this Agreement, no
party will be liable for indemnification or contribution under or in connection
with this Section 5 and/or the Registration Statement and the other
transactions contemplated by this Section 5 unless a written claim for such
indemnification or contribution is given by the person(s) entitled thereto to
the person(s) liable therefor by the first anniversary of the Closing Date.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to LeCroy as follows, subject
in each case to such exceptions as are specifically contemplated by this
Agreement or as are set forth in (i) the attached Disclosure Schedule, or (ii)
except as provided in the final sentence of Section 10.13, the disclosure
supplements contemplated by that section. Notwithstanding any other provision
of this Agreement (except the final sentence of Section 10.13), the Disclosure
Schedule, or any such disclosure supplement, each exception set forth in the
Disclosure Schedule or any such disclosure supplement will be deemed to qualify
each representation and warranty set forth in this Agreement (i) that is
specifically identified (by cross-reference or otherwise) in the Disclosure
Schedule or such disclosure supplement as being qualified by such exception, or
(ii) with respect to which the relevance of such exception is apparent on the
face of the disclosure of such exception set forth in the Disclosure Schedule
or such disclosure supplement, provided, in either case, that the relevant
facts are set forth in reasonable detail in the Disclosure Schedule or such
disclosure supplement.
6.1. INCORPORATION; AUTHORITY. The Company 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 own or lease
and operate its properties and to carry on its business as now conducted. The
Company has delivered to LeCroy complete and correct copies of its Certificate
of Incorporation and by-laws, in each case with all amendments thereto, which
Certificate of Incorporation and by-laws are in full force and effect.
6.2. AUTHORIZATION AND ENFORCEABILITY. The Company has all requisite
power and full legal right and authority (including due approval of its Board
of Directors and its stockholders, respectively) to enter into this Agreement,
to perform all of its agreements and obligations hereunder, and to consummate
the Merger and the other transactions contemplated hereby. This Agreement has
<PAGE>
been duly executed and delivered by the Company and constitutes a legal, valid,
and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as enforceability may be subject to the
effect of any applicable bankruptcy, insolvency, fraudulent conveyance,
moratorium, reorganization, marshaling, or other similar laws or rules of law
affecting creditors' rights and remedies generally, and to general principles
of equity. None of the stockholders of the Company will have any appraisal
rights under Section 262 of the DGCL by reason of the consummation of the
Merger or the other transactions contemplated hereby.
6.3. GOVERNMENTAL AND OTHER THIRD-PARTY CONSENTS, NON-CONTRAVENTION, ETC.
Except for the filing of the Merger Certificate and except as described in
Section 6.3 of the Disclosure Schedule, no consent, approval, or authorization
of or registration, designation, declaration, or filing with any governmental
authority, federal or other, or any other person, is required on the part of
the Company in connection with the execution, delivery, and performance of this
Agreement or the consummation of the Merger and the other transactions
contemplated hereby. Except as described in Section 6.3 of the Disclosure
Schedule, the execution, delivery, and performance of this Agreement and the
consummation of such transactions will not violate (a) any provision of the
Company's Certificate of Incorporation or by-laws, (b) any order, judgment,
injunction, award or decree of any court or state or federal governmental or
regulatory body applicable to the Company, or (iii) any judgment, decree,
order, statute, rule, regulation, agreement, instrument, or other obligation to
which the Company is a party or by or to which it or any of its assets is bound
or subject.
6.4. CAPITALIZATION. The authorized and outstanding capital stock and
other securities of the Company are as set forth in Section 6.4 of the
Disclosure Schedule. All of such outstanding shares of capital stock of the
Company are duly authorized, validly issued, fully paid, and non-assessable,
and all of such outstanding shares and other securities are owned of record as
set forth in Section 6.4 of the Disclosure Schedule, and were issued in
compliance with all applicable laws, including securities laws, and all
applicable preemptive or similar rights of any person. No person has any valid
right to rescind any purchase of any shares of the Company's capital stock or
other securities.
There are no agreements or other obligations to which the Company is a
party or by which it is bound to purchase or sell, and other than as set forth
in Section 6.4 of the Disclosure Schedule, no convertible or exchangeable
securities, options, warrants, or other rights to acquire from the Company any
shares of its capital stock or other securities. Section 6.4 of the Disclosure
Schedule sets forth the name of each person who holds any option or other right
to acquire shares of the Company's capital stock, the number and type of shares
subject to such option or right, and the per-share exercise price payable
therefor.
6.5. QUALIFICATION. The Company is duly qualified and in good standing as
a foreign corporation in all jurisdictions in which the character of its owned
or leased properties or the nature of its activities makes such qualification
necessary, except for such failures to be so qualified or in good standing as
would not, either individually or in the aggregate, be reasonably likely to
have a Material Adverse Effect on the Company.
6.6. SUBSIDIARIES. The Company owns all of the issued and outstanding
capital stock of Digitech International, Inc. The Company does not have any
other Subsidiaries or own any legal and/or beneficial interests in or to any
other business enterprise or other person. Digitech International, Inc. has not
incurred any liabilities, conducted any business, or entered into any contracts
or commitments, other than agreeing to indemnify each of two individuals from
and against liabilities incurred by reason of their service as directors of
such corporation.
6.7. FINANCIAL STATEMENTS. Included in Section 6.7 of the Disclosure
Schedule are copies of (i) the audited balance sheets of the Company as of the
last day of February in each of the years 1995 through 1997, inclusive (such
balance sheet as of February 28, 1997, the "Most Recent Balance Sheet," with
February 28, 1997, being the "Most Recent Balance Sheet Date"), and the related
audited statements of income and retained earnings and cash flows,
respectively, of the Company, for the fiscal years ended on such dates,
<PAGE>
certified by KPMG Peat Marwick LLP, independent public accountants, and (ii)
the unaudited balance sheet of the Company as of October 31, 1997, and the
related unaudited statements of income and retained earnings and cash flows,
respectively, of the Company, for the eight-month period ended on such date.
Each of such financial statements has been prepared in accordance with
generally accepted accounting principles applied on a basis consistent with
prior periods (except as may be described in the notes thereto); each of such
balance sheets presents fairly in all material respects the financial condition
of the Company as of its respective date; and each of such statements of income
and retained earnings and cash flows, respectively, presents fairly in all
material respects the results of operations and retained earnings, or cash
flows, as the case may be, of the Company for the period covered thereby; in
each case, subject, with respect to the unaudited financial statements referred
to in clause (ii) of this section, to the absence of footnote disclosure and to
normal, recurring end-of-period adjustments, the effect of which, both
individually and in the aggregate, is not and will not be material.
6.8. ABSENCE OF CERTAIN CHANGES. Since February 28, 1997, except as
disclosed in Section 6.8 of the Disclosure Schedule there has not been any: (i)
change in the assets, liabilities, sales, income, or business of the Company or
in its relationships with suppliers, customers, or lessors, other than changes
that were both in the ordinary course of business and have not caused, either
in any case or in the aggregate, a Material Adverse Effect on the Company; (ii)
acquisition or disposition by the Company of any material asset or property
other than in the ordinary course of business; (iii) damage, destruction or
loss, whether or not covered by insurance, materially and adversely affecting,
either in any case or in the aggregate, the business or any material property
of the Company; (iv) declaration, setting aside or payment of any dividend or
any other distributions in respect of any shares of capital stock of the
Company; (v) issuance of any shares of the capital stock of the Company or any
direct or indirect redemption, purchase, or other acquisition by the Company of
any such capital stock; (vi) loss of the services of any officer or key
employee or consultant, or (except in the ordinary course of business
consistent with past practice) any increase in the compensation, pension, or
other benefits payable or to become payable by the Company to any of its
officers or key employees or consultants, or any bonus payments or arrangements
made to or with any of them; (vii) forgiveness or cancellation of any debts or
claims by the Company or any waivers of any rights having a value to the
Company of more than $20,000 in any single instance and/or more than $100,000
in the aggregate, other than compromises of accounts receivable in the ordinary
course of business; (viii) entry by the Company into any transaction with any
of its Affiliates; (ix) incurrence by the Company of any obligations or
liabilities, whether absolute, accrued, contingent or otherwise (including
without limitation liabilities as guarantor or otherwise with respect to
obligations of others), other than obligations and liabilities incurred in the
ordinary course of business with persons other than Affiliates of the Company;
(x) incurrence or imposition of any Lien on any of the assets, tangible or
intangible, of the Company; or (xi) discharge or satisfaction by the Company of
any Lien or payment by the Company of any obligation or liability (fixed or
contingent) other than (A) current liabilities included in the Most Recent
Balance Sheet, (B) current liabilities to persons other than Affiliates of the
Company incurred since the Most Recent Balance Sheet Date in the ordinary
course of business, and (C) current liabilities incurred in connection with the
transactions contemplated hereby and disclosed in Section 6.8 of the Disclosure
Schedule.
6.9. PROPERTIES AND ASSETS. The Company has good and marketable title or
leasehold title, as the case may be, to all of its assets and properties that
it purports to own or lease, including without limitation all those reflected
in the unaudited balance sheet referred to in clause (ii) of Section 6.7 hereof
(except for properties or assets sold, consumed, or otherwise disposed of in
the ordinary course of business since the Most Recent Balance Sheet Date), all
free and clear of Liens on the Company's interest therein. All such properties
and assets are in good condition and repair, reasonable wear-and-tear excepted,
and are, and as of the Closing Date will be, adequate and sufficient to carry
on the business of the Company as presently conducted. Section 6.9(a) of the
Disclosure Schedule sets forth a complete and correct list of all capital
assets of the Company having a book or fair market value in excess of $5,000 as
of the date hereof.
The Company does not own any real property. The Company has not received
any notice that either the whole or any portion of any real property leased by
it is to be condemned, requisitioned, or otherwise taken by any public
authority or is to be the subject of any public improvements that may result in
<PAGE>
special assessments against or otherwise affect such real property. Section
6.9(b) of the Disclosure Schedule sets forth a complete and correct description
of all leases of Real Property to which the Company is a party. Complete and
correct copies of all such leases have been delivered to LeCroy. Each such
lease is valid and subsisting and no event or condition exists that
constitutes, or after notice or lapse of time or both could constitute, a
default thereunder by the Company, or to the best of its knowledge, any other
person. The leasehold interests of the Company are subject to no Lien, and the
Company is in quiet possession of the properties covered by such leases.
6.10. INTELLECTUAL PROPERTIES.
(a) Section 6.10 of the Disclosure Schedule lists all patents, patent
applications, trademarks, trade names, service marks, logos, registered
copyrights, and licenses that are material to the businesses of the Company as
now being conducted, other than licenses by the Company as licensee of
off-the-shelf software programs that have not been customized for its use
(collectively, and together with all unregistered copyrights, technology,
know-how, trade secrets, processes, formulas, and techniques that are material
to the Company's businesses, the "Intellectual Properties"). The Company owns,
or is licensed or otherwise has the full and unrestricted exclusive right to
use, without the payment of royalties or other further consideration except as
indicated in Section 6.10 of the Disclosure Schedule, all Intellectual
Properties, and no other intellectual property rights, privileges, licenses,
contracts, or other agreements, instruments, or evidences of interests are
material to the conduct of the businesses of the Company.
(b) In any instance where the Company's rights to Intellectual Properties
arise under a license or similar agreement (other than for off-the-shelf
software programs that have not been customized for its use), this is indicated
in Section 6.10 of the Disclosure Schedule and such rights by their terms are
licensed exclusively to the Company except as indicated in Section 6.10 of the
Disclosure Schedule. No other person has an interest in or right or license to
use any of the Intellectual Properties purported to be owned by the Company, or
to the best of the Company's knowledge, any of the Intellectual Properties that
by their terms are exclusively licensed to the Company. To the best of the
Company's knowledge, none of the Intellectual Properties is being infringed by
others, or is subject to any outstanding order, decree, judgment, or
stipulation. No litigation (or other proceedings in or before any court or
other governmental, adjudicatory, arbitral, or administrative body) relating to
any of the Intellectual Properties purported to be owned by the Company, or to
the best of the Company's knowledge, any of the Intellectual Properties that by
their terms are exclusively licensed to the Company, is pending (as evidenced
by the Company's receipt of service of process or other written notice of such
pendency), or to the best of the Company's knowledge, threatened, nor, to the
best of the Company's knowledge, is there any basis for any such litigation or
proceeding. The Company maintains reasonable security measures for the
preservation of the secrecy and proprietary nature of such of its Intellectual
Properties as constitute trade secrets or other confidential information.
(c) (i) The Company has not infringed or made unlawful use of, and is not
infringing or making unlawful use of, any intellectual property or other
proprietary or confidential information of any other person; and (ii) the
activities of the Company's current and past employees and contractors in
connection with their employment or contractual relationship with the Company
did not and do not violate any agreements or arrangements that any such
employees or consultants had or have with any former employer or any other
person. No litigation (or other proceedings in or before any court or other
governmental, adjudicatory, arbitratory, or administrative body) charging the
Company with infringement or unlawful use of any patent, trademark, service
mark, trade name, logo, copyright, trade secret, or other proprietary right is
pending (as evidenced by the Company's receipt of service of process or other
written notice of such pendency), or to the best of the Company's knowledge,
threatened; nor, to the best of the Company's knowledge, is there any basis for
any such litigation or proceeding.
(d) To the best of the Company's knowledge, no officer, director,
employee, or consultant of the Company is obligated under or bound by any
agreement or instrument, or any judgment, decree, or order of any court of
<PAGE>
administrative agency, that (i) conflicts or may conflict with his agreements
and obligations to use his best efforts to promote the interests of the
Company, (ii) conflicts or may conflict with the business or operations of the
Company, or (iii) restricts or may restrict the use or disclosure of any
information that may be useful to the Company.
(e) Each of Jeffrey D. Holden, Thomas Quinlan, Dennis Stvan, and David L.
Vaughn and each person who holds an option to purchase shares of Company Stock
has executed and delivered to the Company a Non-Competition Agreement in the
form of the attached Exhibit D.
6.11. INDEBTEDNESS. At the date hereof, the Company has no Indebtedness
outstanding except as set forth in Section 6.11 of the Disclosure Schedule. The
Company is not in default with respect to any outstanding Indebtedness or any
agreement, instrument, or other obligation relating thereto and no such
Indebtedness or any agreement, instrument, or other obligation relating thereto
purports to limit the issuance of any securities by the Company, or (except for
customary representations and warranties and affirmative and negative
covenants, and except as set forth in Section 6.11 of the Disclosure Schedule)
the operation of its businesses. Complete and correct copies of all agreements,
instruments, and other obligations (including all amendments, supplements,
waivers, and consents) relating to any Indebtedness of the Company have been
furnished to LeCroy.
6.12. ABSENCE OF UNDISCLOSED LIABILITIES. Except to the extent (a)
reflected or reserved against in the Most Recent Balance Sheet, or (b)
described in Section 6.12 of the Disclosure Schedule, the Company does not have
any liabilities or obligations of any nature, whether accrued, absolute,
contingent, or otherwise (including without limitation liabilities, as
guarantor or otherwise, in respect of obligations of others) that would be
required to be reflected or reserved against in a balance sheet prepared in
accordance with generally accepted accounting principles or referred to in the
notes thereto.
The Company calls attention to the fact that a substantial portion of its
business comes from Japan and other Asian countries, and that recent financial
problems of Asian banks, coupled with a general economic slowdown in Asia, may
cause loss or postponement of product orders from Asian markets, which could
have a Material Adverse Effect on the Company.
6.13.TAXES.
(A) BASIS, ETC. Set forth in Section 6.13(a) of the Disclosure Schedule
are the net operating loss, net capital loss, credit, minimum tax, charitable
contribution, and other Tax carryforwards (by type of carryforward and
expiration date, if any) of the Company.
(B) ELECTIONS. All material elections with respect to Taxes (including
without limitation any elections under Sections 108(b)(5), 338(g), 565, 936(a),
or 936(e) of the Code or Treasury Regulation Sections 1.1502-20(g) or
1.1502-32(f)(2)) affecting the Company are described in Section 6.13(b) of the
Disclosure Schedule.
(C) FILING OF TAX RETURNS AND PAYMENT OF TAXES. The Company has timely
filed all Tax Returns required to be filed by it, each such Tax Return has been
prepared in compliance with all applicable laws and regulations, and all such
Tax Returns are true and accurate in all respects. All Taxes due and payable by
the Company have been paid, and the Company will not be liable for any
additional Taxes in respect of any taxable period ending on or before the
Closing Date in an amount that exceeds the corresponding reserve therefor, if
any, reflected in the accounting records of the Company. The Company has
delivered to LeCroy correct and complete copies of all Tax Returns filed by or
with respect to it with respect to taxable periods ended on or after February
28, 1985, and all relevant documents and information with respect thereto,
including without limitation examination reports and statements of deficiencies
assessed against or agreed to by the Company.
(D) AUDIT HISTORY. With respect to each taxable period of the Company
ended on or before February 28, 1992, either such taxable period has been
<PAGE>
audited by the relevant taxing authority or the time for assessing or
collecting Tax with respect to each such taxable period has closed and such
taxable period is not subject to review by any relevant taxing authority.
(E) DEFICIENCIES. No deficiency or proposed adjustment in respect of
Taxes that has not been settled or otherwise resolved has been asserted or
assessed by any taxing authority against the Company.
(F) LIENS. There are no Liens for Taxes (other than current Taxes not yet
due and payable) on the assets of the Company.
(G) EXTENSIONS TO STATUTE OF LIMITATIONS FOR ASSESSMENT OF Taxes. The
Company has not consented to extend the time in which any Tax may be assessed
or collected by any taxing authority.
(H) EXTENSIONS OF THE TIME FOR FILING TAX RETURNS. The Company has not
requested or been granted an extension of the time for filing any Tax Return to
a date on or after the Closing Date.
(I) PENDING PROCEEDINGS. There is no action, suit, taxing authority
proceeding, or audit with respect to any Tax now in progress, pending, or to
the best of the Company's knowledge, threatened, against or with respect to (i)
the Company, or (ii) any Affiliated Group with respect to a taxable period
during which the Company was a member of such Affiliated Group.
(J) NO FAILURES TO FILE TAX RETURNS. No claim has ever been made by a
taxing authority in a jurisdiction where the Company does not pay Tax or file
Tax Returns that the Company is or may be subject to Taxes assessed by such
jurisdiction.
(K) MEMBERSHIP IN AFFILIATED GROUPS, ETC. The Company has never been a
member of any Affiliated Group, or filed or been included in a combined,
consolidated, or unitary Tax Return.
(L) TAX ELECTIONS. The Company has not made and is not affected by any
elections under Code Sections 108(b)(5), 338(g), or 565, or Treasury
Regulations Sections 1.1502-20(g) or 1.1502-32(f)(2).
(M) ADJUSTMENTS UNDER SECTION 481. The Company will not be required, as a
result of a change in method of accounting for any period ending on or before
the Closing Date, to include any adjustment under Section 481(c) of the Code
(or any similar or corresponding provision or requirement under any Tax law) in
taxable income for any period ending on or after the Closing Date.
(N) TAX SHARING, ALLOCATION, OR INDEMNITY AGREEMENTS. The Company is not
a party to or bound by any Tax sharing or allocation agreement or has any
current or potential contractual obligation to indemnify any other person with
respect to Taxes.
(O) WITHHOLDING TAXES. The Company has withheld and paid all Taxes
required to have been withheld and paid by it in connection with amounts paid
or owing to any employee, creditor, independent contractor, or other person.
(P) FOREIGN PERMANENT ESTABLISHMENTS AND BRANCHES. Except as set forth in
Section 6.13(p) of the Disclosure Schedule, the Company does not have a
permanent establishment in any foreign country, as defined in the relevant tax
treaty between the United States of America and such foreign country, and does
not otherwise operate or conduct business through any branch in any foreign
country.
(Q) U.S. REAL PROPERTY HOLDING CORPORATION. The Company is not and has
not been a United States real property holding corporation within the meaning
of Code Section 897(c)(2), during the applicable period specified in Code
Section 897(c)(1)(A)(ii).
<PAGE>
(R) SAFE HARBOR LEASE PROPERTY. None of the property owned or used by the
Company is subject to a tax benefit transfer lease executed in accordance with
Section 168(f)(8) of the Internal Revenue Code of 1954, as amended by the
Economic Recovery Tax Act of 1981.
(S) TAX-EXEMPT USE PROPERTY. None of the property owned by the Company is
"tax-exempt use property" within the meaning of Section 168(h) of the Code.
(T) SECURITY FOR TAX-EXEMPT OBLIGATIONS. None of the assets of the
Company directly or indirectly secures any indebtedness, the interest on which
is tax-exempt under Section 103(a) of the Code, and the Company is not directly
or indirectly an obligor or a guarantor with respect to any such indebtedness.
(U) SECTION 341(F) CONSENT. The Company has not filed a consent under
Code Section 341(f) concerning collapsible corporations.
(V) PARACHUTE PAYMENTS. The Company has not made any payments, is not
obligated to make any payments, and is not a party to any agreement that under
certain circumstances could obligate it to make any payments, that will not be
deductible under Code Sections 162(m) or 280G.
6.14.EMPLOYEE BENEFIT PLANS.
(a) Except as described in Section 6.14(a) of the Disclosure Schedule,
the Company does not now maintain or contribute to, and has not in the current
or preceding six calendar years maintained or contributed to, any pension,
profit-sharing, deferred compensation, bonus, stock option, share appreciation
right, severance, group or individual health, dental, medical, life insurance,
survivor benefit, or similar plan, policy, or arrangement, whether formal or
informal, for the benefit of any director, officer, consultant or employee,
whether active or terminated, of the Company. Each of the arrangements set
forth in Section 6.14(a) of the Disclosure Schedule is hereinafter referred to
as an "Employee Benefit Plan," except that any such arrangement that is a
multi-employer plan will be treated as an Employee Benefit Plan only for
purposes of Sections 6.14(d)(iv), (vi), and (viii) and 6.14(g) below.
(b) The Company has delivered to LeCroy true, correct, and complete
copies of each Employee Benefit Plan, and with respect to each such Plan (i)
any associated trust, custodial, insurance, or service agreements, (ii) any
annual report, actuarial report, or disclosure materials (including
specifically any summary plan descriptions) submitted to any governmental
agency or distributed to participants or beneficiaries thereunder in the
current or any of the six preceding calendar years, and (iii) the most recently
received Internal Revenue Service ("IRS") determination letters and any
governmental advisory opinions or rulings.
(c) To the best of the Company's knowledge, each Employee Benefit Plan is
and has heretofore been maintained and operated in compliance with the terms of
such Plan and with the requirements prescribed (whether as a matter of
substantive law or as necessary to secure favorable tax treatment) by any and
all statutes, governmental or court orders, and governmental rules or
regulations in effect from time to time, including but not limited to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") and the
Code and applicable to such Plan. Each Employee Benefit Plan that is intended
to qualify under Section 401(a) of the Code and each trust forming part of an
Employee Benefit Plan which is intended to qualify under Section 501(c)(9) of
the Code is specifically so identified in Section 6.14(a) of the Disclosure
Schedule and has been determined by the IRS to be so qualified, and to the best
of the Company's knowledge, nothing has occurred since the date of the last
such determination as to each such Plan or trust that has resulted or is likely
to result in the revocation of such determination as to such Plan or trust.
(d) (i) There is no pending, or to the best of the Company's knowledge,
threatened, legal action, proceeding, or investigation, other than routine
claims for benefits, concerning any Employee Benefit Plan, or to the best of
<PAGE>
the Company's knowledge, any fiduciary or service provider thereof, and to the
best of the Company's knowledge, there is no basis for any such legal action,
proceeding, or investigation.
(ii) No liability (contingent or otherwise) to the Pension Benefit
Guaranty Corporation ("PBGC") or any multi-employer plan has been incurred by
the Company or any of its ERISA affiliates (other than insurance premiums
satisfied in due course).
(iii) No reportable event, or event or condition that presents a
material risk of termination by the PBGC, has occurred with respect to any
Employee Benefit Plan, or any retirement plan of an ERISA affiliate of the
Company, which is subject to Title IV of ERISA.
(iv) To the best of the Company's knowledge, no Employee Benefit
Plan nor any party in interest with respect thereof, has engaged in a
prohibited transaction that could subject the Company directly or indirectly to
liability under Section 409 or 502(i) of ERISA or Section 4975 of the Code.
(v) No communication, report, or disclosure has been made that, at
the time made, did not reflect accurately in all material respects the terms
and operations of any Employee Benefit Plan.
(vi) No Employee Benefit Plan provides welfare benefits subsequent
to termination of employment to employees or their beneficiaries (except to the
extent required by applicable state insurance laws and Title I, Part 6 of
ERISA), other than (A) coverage mandated by applicable law, (B) benefits the
full cost of which is borne by the current or former employees (or their
beneficiaries), and (C) benefits that have already been satisfied in full.
(vii) No benefits due under any Employee Benefit Plan have been
forfeited subject to the possibility of reinstatement (which possibility would
still exist at or after the Closing) except as required by applicable law.
(viii) The Company has not undertaken to maintain any Employee
Benefit Plan for any period of time and each such Plan is terminable at the
sole discretion of the Company, subject only to such constraints as may be
imposed by applicable law.
(e) With respect to each Employee Benefit Plan for which a separate fund
of assets is or is required to be maintained, full payment has been made of all
amounts that the Company is required, under the terms of each such Plan, to
have paid as contributions to that Plan as of the end of the most recently
ended plan year of that Plan, and no accumulated funding deficiency (as defined
in Section 302 of ERISA and Section 412 of the Code), whether or not waived,
exists with respect to any such Plan. The current value of the assets of each
such Employee Benefit Plan, as of the end of the most recently ended plan year
of that Plan, exceeded the current value of all accrued benefits under that
Plan.
(f) The execution of this Agreement and the consummation of the
transactions contemplated hereby will not result in any payment (whether of
severance pay or otherwise) becoming due from any Employee Benefit Plan to any
current or former director, officer, consultant, or employee of the Company or
result in the vesting, acceleration of payment, or increases in the amount of
any benefit payable to or in respect of any such current or former director,
officer, consultant, or employee. No representation or warranty is made as to
the foregoing with respect to actions taken by LeCroy after the Closing with
respect to the Employee Benefit Plans.
(g) No Employee Benefit Plan is a multi-employer plan.
(h) For purposes of this Section 6.14, "multi-employer plan," "party in
interest," "current value," "accrued benefit," "reportable event," and "benefit
liability" have the same meaning assigned such terms under Sections 3, 4043(b)
or 4001(a) of ERISA, and "ERISA affiliate" means any entity that under Section
414 of the Code is treated as a single employer with the Company.
<PAGE>
6.15. SAFETY AND ENVIRONMENTAL MATTERS. Except as set forth in
Section 6.15 of the Disclosure Schedule:
(a) None of the plants, offices, or properties in or on which the Company
carries on business nor any of the activities carried on by it are in violation
of any zoning, health, or safety law or regulation, including without
limitation the Occupational Safety and Health Act of 1970, as amended,
excluding only such violations as will not, either individually or in the
aggregate, have a Material Adverse Effect on the Company.
(b) Neither the Company, nor to the best of the Company's knowledge, any
operator of any real property presently or formerly owned, leased, or operated
by the Company is in violation or alleged violation of any judgment, decree,
order, law, license, rule or regulation pertaining to environmental matters,
including without limitation the Resource Conservation and Recovery Act
("RCRA"), the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended ("CERCLA"), the Superfund Amendments and
Reauthorization Act of 1986 ("SARA"), the Federal Clean Water Act, the Federal
Clean Air Act, the Toxic Substances Control Act, and applicable federal, state,
foreign, and local statutes, regulations, ordinances, orders, and decrees
relating to health, safety, or the environment (all of the foregoing,
collectively, "Environmental Laws"), excluding only such violations as will
not, either individually or in the aggregate, have a Material Adverse Effect on
the Company.
(c) The Company has not received notice from any third party, including
without limitation any federal, state, foreign, or local governmental
authority, that (i) the Company has been identified by the United States
Environmental Protection Agency (the "EPA") as a potentially responsible party
under CERCLA with respect to a site listed on the National Priorities List, 40
C.F.R. Part 300 Appendix B (1986); (ii) any hazardous waste as defined by 42
U.S.C. ss.6903(5), any hazardous substance as defined by 42 U.S.C. ss.
9601(14), any pollutant or contaminant as defined by 42 U.S.C. ss. 9601(33) or
any toxic substance, oil, or hazardous material or other chemical or substance
regulated by any Environmental Laws (collectively, "Hazardous Substances") that
the Company has generated, transported, handled, used, or disposed of has been
found at any site at which a federal, state, foreign, or local agency or other
third party has conducted or has ordered that the Company conduct a remedial
investigation, removal, or other response action pursuant to any Environmental
Law; or (iii) the Company is or will be a named party to any claim, action,
cause of action, complaint (contingent or otherwise), or legal or
administrative proceeding arising out of any third party's incurrence of costs,
expenses, losses, or damages of any kind whatsoever in connection with the
release of Hazardous Substances.
(d) (i) No portion of any real property presently or formerly owned,
leased, or operated by the Company has been used by the Company, or to the best
of the Company's knowledge, by any other person, for the handling, usage,
manufacturing, processing, storage, or disposal of Hazardous Substances except
in accordance in all material respects with applicable Environmental Laws; and
no underground tank or other underground storage receptacle for Hazardous
Substances is located on any real property presently owned, leased, or operated
by the Company, or to the best of the Company's knowledge, any real property
formerly owned, leased, or operated by it; (ii) in the course of the activities
conducted by the Company and to the best of the Company's knowledge, those of
any other operators of any real property presently or formerly owned, leased,
or operated by the Company, no Hazardous Substances have been generated,
stored, or used on such properties except in accordance with applicable
Environmental Laws; (iii) to the best of the Company's knowledge, there have
been no releases (i.e. any past or present releasing, spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
disposing, or dumping) or threatened releases of Hazardous Substances on, upon,
into, or from any real property presently or formerly owned, leased, or
operated by the Company; (iv) to the best of the Company's knowledge, there
have been no releases on, upon, from, or into any real property in the vicinity
of any real property presently or formerly owned, leased, or operated by the
Company that, through soil or groundwater contamination, may have come to be
located on, any of the real property presently or formerly owned, leased, or
operated by the Company; and (v) any Hazardous Substances that have been
generated by the Company, or to the Company's actual knowledge, by any other
person, on any real property presently or formerly owned, leased, or operated
by the Company, have been transported offsite only by carriers having an
identification number issued by the EPA and treated or disposed of only by
treatment or disposal facilities having, to the Company's actual knowledge,
valid permits as required under applicable Environmental Laws, which
transporters and facilities, to the Company's actual knowledge, have been and
are operating in compliance with such permits and applicable Environmental
Laws.
(e) No real property presently owned, leased, or operated by the Company,
and to the best of the Company's knowledge, no real property formerly owned,
leased, or operated by the Company, is subject to any Environmental Law
requiring the performance of any Hazardous Substances site assessment, the
removal or remediation of any Hazardous Substances, the giving of notice to any
governmental agency or other person, or the recording and/or delivery to any
governmental agency or other person of any environmental disclosure statement
or document, by reason of, or as a condition to the effectiveness of, the
Merger and/or any other transaction contemplated hereby.
6.16. LABOR RELATIONS. The Company is and has been in compliance in all
material respects with all federal and state laws respecting employment and
employment practices, terms and conditions of employment, wages and hours, and
nondiscrimination in employment, and is not and has not been engaged in any
unfair labor practice. There is no charge or proceeding pending, or to the best
of the Company's knowledge, threatened, against the Company alleging unlawful
discrimination in employment practices or unfair labor practice before any
court or agency, including without limitation the National Labor Relations
Board. There is no labor strike, dispute, work slow-down, or work stoppage
pending, or to the best of the Company's knowledge, threatened against or
involving the Company. No one has petitioned within the last five years or is
now petitioning for union representation of any of the employees of the
Company. No grievance or arbitration proceeding arising out of or under any
collective bargaining agreement is pending against the Company and no claim
therefor has been asserted. Except for employees covered by the collective
bargaining agreements listed in Section 6.16 of the Disclosure Schedule, none
of the employees of the Company is covered by any collective bargaining
agreement, and no collective bargaining agreement is currently being negotiated
by the Company. The Company has not experienced any work stoppage or other
material labor difficulty during the last five years.
6.17. LITIGATION. No litigation, arbitration, action, suit, proceeding,
or investigation (whether conducted by any judicial or regulatory body,
arbitrator, or other person) is pending (as evidenced by the Company's receipt
of service of process or other written notice of such pendency), or to the best
of the Company's knowledge, threatened, against the Company, nor is there any
basis therefor known to the Company.
6.18. CONTRACTS. Section 6.18 of the Disclosure Schedule sets forth a
complete and accurate list of all "Material Contracts" to which the Company is
a party or by or to which it or any of its assets or properties is bound or
subject. As used in this Agreement, the term "Material Contract" means every
agreement or understanding of any kind, written or oral, that is legally
enforceable by or against or otherwise binding on the Company and which is
material to the Company's business, and specifically includes without
limitation: (a) agreements with any current or former officer, director,
employee, consultant, or stockholder, or any partnership, corporation, joint
venture, or any other entity in which any such person has an interest; (b)
agreements with any labor union or association representing any employee; (c)
agreements for the provision of services by or to the Company, other than
agreements pursuant to which the Company can be expected over the next year to
pay or receive less than $50,000 in any case and less than $200,000 in the
aggregate; (d) bonds or other security agreements provided by any party in
connection with the business of the Company; (e) agreements for the purchase or
other acquisition or the sale or other disposition of assets or properties
(other than in the ordinary course of business), other than assets or
<PAGE>
properties having a value of less than $10,000 in the aggregate, or for the
grant to any person of any preferential rights to purchase any such assets or
properties; (f) joint venture agreements relating to the assets, properties, or
business of the Company or by or to which it or any of its assets or properties
is bound or subject; (g) agreements under which the Company agrees to indemnify
any party, to share tax liability of any party, or to refrain from competing
with any party; and (h) agreements with regard to Indebtedness. All of the
contracts listed in Section 6.18 of the Disclosure Schedule are in full force
and effect, and neither the Company, nor to the best of the Company's
knowledge, any other party thereto, is in default under or material breach of
any of the material terms thereof, nor does any event or condition exist that
after notice or lapse of time or both could constitute a default thereunder or
material breach thereof on the part of the Company, or to the best of the
Company's knowledge, any other party thereto. No approval or consent of any
person that has not already been obtained and listed in Section 6.18 of the
Disclosure Schedule is needed in order that the contracts listed in Section
6.18 of the Disclosure Schedule continue in full force and effect following the
consummation of the Merger and the other transactions contemplated hereby, and
no such contract includes any provision, the effect of which may be to
terminate (or give rise to a right of termination under) such contract, to
enlarge or accelerate any obligations of the Company thereunder, or to give
additional rights to any other person, as a result of the consummation of the
Merger or the other transactions contemplated hereby. The Company has delivered
to LeCroy true, correct, and complete copies of all such Material Contracts,
including all amendments, modifications, and supplements thereto.
6.19. POTENTIAL CONFLICTS OF INTEREST. No officer, director, or
stockholder of the Company (a) owns, directly or indirectly, any interest
(excepting not more than 5% stock holdings for investment purposes in
securities of publicly held and traded companies) in, or is an officer,
director, employee, or consultant of, any person that is a competitor, lessor,
lessee, customer, or supplier of the Company; (b) owns, directly or indirectly,
in whole or in part (other than solely as a result of his or its ownership of
Company Stock), any tangible or intangible property that the Company is using
or the use of which is necessary for the business of the Company; or (c) to the
best of the Company's knowledge, has any cause of action or other claim
whatsoever against, or owes any amount to, the Company, except for claims in
the ordinary course of business, such as for accrued vacation pay, accrued
benefits under Employee Benefit Plans, and similar matters and agreements.
6.20. INSURANCE. Section 6.20 of the Disclosure Schedule lists the
policies of theft, fire, liability, worker's compensation, life, property and
casualty, and other insurance owned or held by the Company. Such policies of
insurance are of the kinds, cover such risks, and are in such amounts and with
such deductibles and exclusions, as are consistent with prudent business
practice for companies in the Company's line of business and of a similar size
and location. All such policies are in full force and effect; are sufficient
for compliance by the Company with all requirements of law and of all
agreements to which the Company is a party; are valid, outstanding, and
enforceable policies and provide that they will remain in full force and effect
through the respective dates set forth in the Disclosure Schedule; and will not
in any way be affected by, or terminate or lapse as a result of the
consummation of, the transactions contemplated by this Agreement.
6.21. BANK ACCOUNTS, SIGNING AUTHORITY, POWERS OF ATTORNEY. Section 6.21
of the Disclosure Schedule sets forth a complete and accurate list of all bank,
brokerage, and other accounts, and all safe-deposit boxes, of the Company and
the persons with signing or other authority to act with respect thereto. Except
as so listed, the Company does not have any account or safe deposit box in any
bank, and no person has any power, whether singly or jointly, to sign any
checks on behalf of the Company, to withdraw any money or other property from
any bank, brokerage, or other account of the Company, or to act under any
agency or power of attorney granted by the Company at any time for any purpose.
Section 6.21 of the Disclosure Schedule also sets forth the names of all
persons authorized to borrow money or sign notes on behalf of the Company.
6.22. SUPPLIERS AND CUSTOMERS. Section 6.22 of the Disclosure Schedule
lists the ten largest suppliers and ten largest customers of the Company during
the preceding twelve-month period. The relationships of the Company with its
suppliers and customers are good commercial working relationships, and no
supplier or customer of material importance to the Company has canceled or
otherwise terminated, or threatened in writing to cancel or terminate, its
relationship with the Company or has during the last twelve months decreased
materially, or threatened to decrease or limit materially, its services,
supplies, or materials to the Company or its usage or purchase of the services
or products of the Company, except for normal cyclical changes related to
customers' businesses.
<PAGE>
6.23. EMPLOYMENT OF OFFICERS, EMPLOYEES. The name and current annual
salary and other compensation payable by the Company to each exempt non-hourly
employee whose current total annual compensation or estimated compensation from
the Company (including but not limited to wages, salary, commissions, normal
bonus, profit sharing, deferred compensation, and other extra compensation) is
$50,000 or more are as set forth in the letter dated December 8, 1997, from
Robert B. Arnold of the Company to Henry Bickel of LeCroy.
6.24. MINUTE BOOKS. The minute books of the Company made available to
LeCroy for inspection accurately record therein all material actions taken by
its Board of Directors, all committees thereof, and its stockholders.
6.25. BROKERS. No finder, broker, agent, or other intermediary has acted
for or on behalf of the Company in connection with the negotiation,
preparation, execution, or delivery of this Agreement or the consummation of
the Merger or the other transactions contemplated hereby.
6.26. COMPLIANCE WITH OTHER AGREEMENTS, LAWS, ETC. The Company has
complied with, and is in compliance with, (a) all laws, statutes, governmental
regulations and all judicial or administrative tribunal orders, judgments,
writs, injunctions, decrees or similar commands applicable to its business, (b)
all unwaived terms and provisions of all contracts, agreements and indentures
to which the Company is a party, or by which the Company or any of its
properties is subject, and (c) its Certificate of Incorporation and by-laws,
respectively, each as amended to date; in the case of the preceding clauses (a)
and (b), excepting only any such noncompliances that, both individually and in
the aggregate, have not resulted and will not result in any Material Adverse
Effect with respect to the Company. The Company has not been charged with, or
to the best of its knowledge, been under investigation with respect to, any
violation of any provision of any federal, state, or local law or
administrative regulation. The Company has and maintains and Section 6.26 of
the Disclosure Schedule sets forth a complete and correct list of, all such
licenses, permits, and other authorizations of governmental authorities as are
necessary for or material to the conduct of its businesses or in connection
with the ownership or use of its properties (other than those the absence of
which would not have a Material Adverse Effect on the Company), all of which
are in full force and effect, true and complete copies of all of which have
previously been delivered to LeCroy, and except as described in Section 6.26 of
the Disclosure Schedule, none of which will terminate or otherwise be adversely
affected as a result of the consummation of the Merger and the other
transactions contemplated hereby.
6.27. OWNERSHIP OF LECROY STOCK. Neither the Company, nor to the best of
the Company's knowledge, any of its affiliates or associates (as such terms are
defined under the Exchange Act) beneficially owns, directly or indirectly, or
is a party to any agreement (other than this Agreement), arrangement, or
understanding with respect to the acquisition, holding, voting, or disposition
of any shares of the capital stock or other securities of LeCroy, other than
through any mutual fund or other similar investment vehicle over which no
investment discretion is retained.
6.28. ACCOUNTING MATTERS. To the best of the Company's knowledge, neither
the Company, nor to the best of the Company's knowledge, any of its Affiliates,
has taken or agreed to take any action that would prevent the business
combination to be effected through the Merger from being accounted for as a
"pooling of interests."
6.29. DISCLOSURE. No representation or warranty of the Company in this
Agreement (including the exhibits and schedules hereto) or in any other
agreement, instrument, certificate, or other document delivered by the Company
in connection with this Agreement, the Merger, or any of the other transactions
contemplated hereby contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact required to be stated
therein or necessary to make the statements contained therein not false or
misleading.
<PAGE>
7. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS.
Each of the Stockholders hereby represents to LeCroy, with respect to
himself or itself only, and on a several but not joint basis, as follows:
7.1. AUTHORIZATION AND ENFORCEABILITY. Such Stockholder has all requisite
power and full legal right and authority (including, in the case of a
Stockholder who is not a natural person, due approval of its Board of Directors
stockholders, managers, and/or other persons exercising similar powers) to
enter into this Agreement, to perform all of such Stockholder's agreements and
obligations hereunder, and to consummate the transactions hereby contemplated
to be consummated by such Stockholders. This Agreement has been duly executed
and delivered by such Stockholder and constitutes a legal, valid, and binding
obligation of such Stockholder, enforceable against such Stockholder in
accordance with its terms, except as enforceability may be subject to the
effect of any applicable bankruptcy, insolvency, fraudulent conveyance,
moratorium, reorganization, marshaling, or other similar laws or rules of law
affecting creditors' rights and remedies generally, and to general principles
of equity.
7.2. GOVERNMENTAL AND OTHER THIRD-PARTY CONSENTS, NON-CONTRAVENTION, ETC.
No consent, approval, or authorization of or registration, designation,
declaration, or filing with any governmental authority, federal or other, or
any other person is required on the part of such Stockholder in connection with
this Agreement, the Merger, or any of the other transactions contemplated
hereby. The execution, delivery, and performance of this Agreement and the
consummation by such Stockholder of such transactions will not violate (a) in
the case of any Stockholder who is not a natural person, any provision of its
Certificate of Incorporation, by-laws, partnership or operating agreement,
and/or other constating documents, (b) any order, judgment, injunction, award
or decree of any court or state or federal governmental or regulatory body
applicable to such Stockholder, or (iii) any judgment, decree, order, statute,
rule, regulation, agreement, instrument, or other obligation to which such
Stockholder is a party or by or to which it or any of such Stockholder's assets
is bound or subject.
7.3. TITLE TO SHARES, ETC. Such Stockholder owns, as of the date hereof,
and will own, as of the Closing, in each case both of record and beneficially,
the shares of the Company's capital stock and other securities of the Company,
if any, indicated with respect to such Stockholder in Section 6.4 of the
Disclosure Schedule, all free and clear of Liens. Such Stockholder does not
own, either legally or beneficially, any other shares of capital stock or other
securities of the Company.
7.4. INVESTMENT REPRESENTATIONS. Such Stockholder has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risks of the investment in LeCroy Common Stock that such
Stockholder is making by reason of the Merger and the other transactions
contemplated by this Agreement. Such Stockholder's financial condition is such
that it is able to bear all economic risks of investment in LeCroy Common
Stock, including a complete loss of such Stockholder's investment. LeCroy has
provided such Stockholder with adequate access to financial and other
information concerning LeCroy (including without limitation, LeCroy's SEC
Reports) and such Stockholder has had the opportunity to ask questions of and
receive answers from LeCroy concerning the Merger and the other transactions
contemplated by this Agreement and to obtain from the LeCroy additional
information regarding an investment in LeCroy. Such Stockholder will acquire
shares of LeCroy Common Stock in the Merger solely for investment purposes,
with no present intention of distributing or reselling any of such shares or
any interest therein. Such Stockholder is aware that except as set forth in
this Agreement, such shares of LeCroy Common Stock will not be registered under
the Securities Act, and that neither such shares nor any interest therein may
be sold, pledged, or otherwise transferred unless such shares are registered
under the Securities Act or qualify for an exemption from such registration,
and the certificate(s) representing such shares will bear appropriate
restrictive legends referring to such restrictions on transfer.
7.5. DISCLOSURE. No representation or warranty of such Stockholder in
this Agreement (including the exhibits and schedules hereto) or in any other
agreement, instrument, certificate, or other document delivered by such
Stockholder in connection with this Agreement, the Merger, or any of the other
<PAGE>
transactions contemplated hereby contains or will contain any untrue statement
of a material fact or omits or will omit to state a material fact required to
be stated therein or necessary to make the statements contained therein not
false or misleading.
8. REPRESENTATIONS AND WARRANTIES OF LECROY AND MERGER SUB.
LeCroy and Merger Sub hereby jointly and severally represent and warrant
to the Company and the Stockholders as follows:
8.1. INCORPORATION; AUTHORITY. Each of LeCroy and Merger Sub 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 own or lease and operate its properties and to carry on its
business as now conducted. LeCroy has delivered to the Company complete and
correct copies of the Certificate of Incorporation and by-laws of Merger Sub,
in each case with all amendments thereto.
8.2. AUTHORIZATION AND ENFORCEABILITY. Each of LeCroy and Merger Sub has
all requisite power and full legal right and authority (including due approval
of its Board of Directors and (if necessary) its stockholder(s), respectively)
to enter into this Agreement, to perform all of its agreements and obligations
hereunder, and to consummate the Merger and the other transactions contemplated
hereby. This Agreement has been duly executed and delivered by each of LeCroy
and Merger Sub and constitutes a legal, valid, and binding obligation of each
of them, enforceable against each of them in accordance with its terms, except
as enforceability may be subject to the effect of any applicable bankruptcy,
insolvency, fraudulent conveyance, moratorium, reorganization, marshaling, or
other similar laws or rules of law affecting creditors' rights and remedies
generally, and to general principles of equity. None of the stockholders of
LeCroy or Merger Sub will have any appraisal rights under Section 262 of the
DGCL by reason of the consummation of the Merger or the other transactions
contemplated hereby.
8.3. GOVERNMENTAL AND OTHER THIRD-PARTY CONSENTS, NON-CONTRAVENTION, ETC.
Except for the filing of the Merger Certificate, no consent, approval, or
authorization of or registration, designation, declaration, or filing with any
governmental authority, federal or other, or any other person, is required on
the part of LeCroy or Merger Sub in connection with this Agreement, the Merger,
or any of the other transactions contemplated hereby. The execution, delivery,
and performance of this Agreement and the consummation of such transactions
will not violate (a) any provision of LeCroy's or Merger Sub's Certificate of
Incorporation or by-laws, (b) any order, judgment, injunction, award or decree
of any court or state or federal governmental or regulatory body applicable to
LeCroy or Merger Sub, or (iii) any judgment, decree, order, statute, rule,
regulation, agreement, instrument, or other obligation to which LeCroy or
Merger Sub is a party or by or to which either of them or any of their
respective assets is bound or subject.
8.4. MERGER SUB. Merger Sub has been organized for the specific purpose
of engaging in the Merger and the other transactions contemplated hereby and
has not incurred any liabilities, conducted any business, or entered into any
contracts or commitments, in each case except such as are in furtherance of or
incidental to such transactions.
8.5. LECROY'S SEC STATEMENTS, REPORTS AND DOCUMENTS. Since October 5,
1995, LeCroy has timely filed with the SEC all forms, reports, registration
statements, and documents required to be filed by it. LeCroy has delivered to
the Company true and complete copies of (i) its Annual Reports on Form 10-K for
its fiscal years ended June 30, 1996 and 1997, respectively, (ii) its proxy
statements relating to all meetings of its stockholders (whether annual or
special) held since October 5, 1995, and (iii) all other forms, reports
(including without limitation annual reports pursuant to Exchange Act rule
14a-3), registration statements, and documents filed or required to be filed by
it with, or provided or required to be provided by it to, the SEC since October
5, 1995 (collectively, all of the foregoing documents, "LeCroy's SEC Reports").
As of their respective dates, LeCroy's SEC Reports complied in all material
<PAGE>
respects with all applicable requirements of the Securities Act and the
Exchange Act and the rules and regulations promulgated thereunder, and did not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. None
of LeCroy's SEC Reports is required to be amended or supplemented as of the
date hereof. The financial statements (including any related notes) of LeCroy
included in LeCroy's SEC Reports were prepared in conformity with generally
accepted accounting principles applied on a consistent basis (except as
otherwise stated in the financial statements or, in the case of audited
statements, the related report of LeCroy's independent certified public
accountants) and present fairly in all material respects the consolidated
financial position, results of operations, changes in stockholders' equity, and
cash flows, as applicable, of LeCroy and its consolidated Subsidiaries as of
the dates and for the periods indicated; subject, in the case of unaudited
interim consolidated financial statements, to condensation, the absence of
footnote disclosure, and normal, recurring end-of-period adjustments, the
effect of which was not and will not be material.
Except to the extent (a) reflected or reserved against in LeCroy's
consolidated balance sheet as of June 30, 1997, included in its Annual Report
on Form 10-K for its fiscal year ended on that date, or (b) incurred with
persons other than any Affiliate of LeCroy in the ordinary course of business
after the date of such balance sheet, the Company does not have any liabilities
or obligations of any nature, whether accrued, absolute, contingent, or
otherwise (including without limitation liabilities, as guarantor or otherwise,
in respect of obligations of others) that would be required to be reflected or
reserved against in a balance sheet prepared in accordance with generally
accepted accounting principles or referred to in the notes thereto.
LeCroy calls attention to the fact that a substantial portion of its
business comes from Japan and other Asian countries, and that recent financial
problems of Asian banks, coupled with a general economic slowdown in Asia, may
cause loss or postponement of product orders from Asian markets, which could
have a Material Adverse Effect on LeCroy.
8.6. CERTIFICATE OF INCORPORATION AND BY-LAWS. LeCroy's Certificate of
Incorporation and by-laws set forth as Exhibits 3.1 through 3.4, respectively,
to LeCroy's Registration Statement on Form S-1 (Registration No. 33-95620), as
declared effective under the Securities Act on October 5, 1995, are complete
and correct copies thereof, and have not been amended since the date of such
filing. LeCroy has previously provided to the Company a complete and correct
copy of the Certificate of Incorporation and by-laws of Merger Sub, neither of
which has been amended or restated. Such Certificates of Incorporation and
by-laws of LeCroy and Merger Sub, respectively, are in full force and effect.
Neither LeCroy nor Merger Sub is in violation of any provisions of its
Certificate of Incorporation or by-laws.
8.7. CAPITALIZATION. The authorized capital of LeCroy consists of
45,000,000 shares of LeCroy Common Stock and 5,000,000 shares of Preferred
Stock, each $0.01 par value per share. No shares of such Preferred Stock are
issued and outstanding.
As of December 3, 1997, (i) 6,953,262 shares of LeCroy Common Stock were
issued and outstanding, all of which were duly authorized, validly issued,
fully paid and non-assessable, and (ii) options granted pursuant to the LeCroy
Stock Plans to acquire up to an aggregate of not more than 1,350,000 shares of
LeCroy Common Stock were outstanding. Since that date, no shares of LeCroy
Common Stock have been issued except upon exercise of options granted under the
LeCroy Stock Plans.
Except for stock options issued pursuant to the LeCroy Stock Plans, there
are no options, warrants, or other rights, agreements, arrangements, or
commitments of any character to which LeCroy is a party or by which it is bound
relating to the issued or unissued shares of the capital stock of LeCroy or any
of its Subsidiaries (including any agreement relating to the manner in which
any of such shares will be voted at any regular or special meeting of the
stockholders of LeCroy) or obligating LeCroy or any of its Subsidiaries to
issue or sell any shares of capital stock of, or other equity interests in,
LeCroy or any of its Subsidiaries. The shares of LeCroy Common Stock issuable
upon exercise of options issued pursuant to the LeCroy Stock Plans, when issued
<PAGE>
upon such exercise, will be duly authorized, validly issued, fully paid, and
non-assessable. The shares of LeCroy Common Stock into which shares of Company
Stock are converted in the Merger will, upon such conversion, be duly
authorized, validly issued, fully paid, and non-assessable and will not be
issued in violation of any preemptive rights.
There are no outstanding contractual obligations of LeCroy or any of its
Subsidiaries to repurchase, redeem, or otherwise acquire, or (except pursuant
to Section 5 hereof) to register any shares of any of them under the Securities
Act.
Each outstanding share of the capital stock of each of LeCroy's
Subsidiaries is duly authorized, validly issued, fully paid, and
non-assessable, owned by LeCroy, and free and clear of all Liens. There are no
outstanding contractual obligations of LeCroy or any of its Subsidiaries to
make any investment (in the form of a loan, capital contribution, or otherwise)
in any of LeCroy's Subsidiaries or any other person, other than guaranties by
the Company or any of its Subsidiaries with respect to the indebtedness of any
other of them.
8.8. BROKERS. Except for Johnson, Butler & Company, for whose
compensation LeCroy will be responsible, no finder, broker, agent, or other
intermediary has acted for or on behalf of LeCroy or Merger Sub in connection
with the negotiation, preparation, execution, or delivery of this Agreement or
the consummation of the transactions contemplated hereby.
8.9. OWNERSHIP OF COMPANY STOCK. Neither LeCroy nor Merger Sub, nor to
the best of LeCroy's knowledge, any of its affiliates or associates (as such
terms are defined under the Exchange Act) beneficially owns, directly or
indirectly, or is a party to any agreement (other than this Agreement),
arrangement, or understanding with respect to the acquisition, holding, voting,
or disposition of any shares of the capital stock or other securities of the
Company.
8.10. ACCOUNTING MATTERS. To the best of LeCroy's knowledge, neither
LeCroy nor Merger Sub, nor to the best of LeCroy's knowledge, any of their
respective Affiliates, has taken or agreed to take any action that would
prevent the business combination to be effected through the Merger from being
accounted for as a "pooling of interests."
8.11. DISCLOSURE. No representation or warranty of LeCroy or Merger Sub
in this Agreement (including the exhibits and schedules hereto) or in any other
agreement, instrument, certificate, or other document delivered by LeCroy
and/or Merger Sub in connection with this Agreement, the Merger, or any of the
other transactions contemplated hereby contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
required to be stated therein or necessary to make the statements contained
therein not false or misleading.
<PAGE>
9. MUTUAL COVENANTS.
9.1. SATISFACTION OF CONDITIONS. Each of the parties will use its best
reasonable efforts to cause the satisfaction as promptly as possible, but in
any event by December 29, 1997, of the conditions contained in Sections 11
through 13 of this Agreement that impose obligations on it or require action on
its part or the part of any of its stockholders or Affiliates.
9.2. POOLING AND TAX-FREE REORGANIZATION TREATMENT. No party will take or
cause or permit to be taken any action, whether before or after the Effective
Time, that would disqualify the Merger as a "pooling of interests" for
accounting purposes or as a "reorganization" within the meaning of Section
368(a) of the Code. LeCroy will use its best reasonable efforts to cause its
consolidated financial results covering at least 30 days of post-Merger
operations to be published as soon as practicable following such 30-day period.
9.3. AGREEMENTS OF AFFILIATES. The attached Affiliates Schedules of
LeCroy and the Company, respectively, list all persons whom the scheduling
party believes may be deemed to be "affiliates" of such party, as that term is
used in and for purposes of Accounting Series, Releases 130 and 135, as
amended, of the SEC.
Each of the Company and LeCroy will use its best reasonable efforts to
cause each person who is so identified as an affiliate of it to execute and
deliver to it as promptly as possible an executed copy of an Affiliate's
Agreement substantially in the form of Exhibit E ("Affiliate's Agreement(s)").
Each of the Stockholders who is listed in the attached Affiliates Schedule of
the Company agrees to execute and deliver an Affiliate's Agreement.
Before the Closing Date, each of the parties will (if necessary) amend
and supplement its Affiliates Schedule and will use its best reasonable efforts
to cause each additional person who is identified therein as an affiliate of it
to execute and deliver an Affiliate's Agreement in accordance with the
foregoing.
9.4. TAX MATTERS. The parties understand and agree that none of them is
making any representation or warranty with respect to the tax consequences of
this Agreement, the Merger, or the other transactions contemplated hereby. The
parties intend, however, that the Merger constitute a "tax-free reorganization"
under Section 368 of the Code, and agree to report the Merger as such on their
respective tax returns. Each of the parties will use its best reasonable
efforts to obtain, as promptly as is practicable following the date hereof and
in any event before the Effective Time of the Merger, such oral or written
assurances as it reasonably deems sufficient to enable the Company and LeCroy
to execute and deliver to the other a certificate substantially in the form of
that attached as an exhibit to the tax matters opinion of the other party's tax
counsel or accountants referred to in Section 11.3.
9.5. FURTHER ASSURANCES. Subject to the terms and conditions set forth in
this Agreement, from time to time both before and after the Effective Time,
each of the parties will use his or its best reasonable efforts, as promptly as
is practicable to take or cause to be taken all actions, and to do or cause to
be done all other things, as are necessary, proper, or advisable to consummate
and make effective the Merger and the other transactions contemplated hereby.
9.6. NASDAQ/NMS APPLICATION. LeCroy will promptly prepare and submit to
the National Association of Securities Dealers, Inc. a listing application
covering the shares of LeCroy Common Stock into which shares of Company Stock
are converted in the Merger, and will use its best reasonable efforts to cause
such shares to be approved for listing in the National Market System (the
"NMS") of the National Association of Securities Dealers, Inc., subject to
official notice of issuance.
9.7. INDEMNIFICATION OF DIRECTORS AND OFFICERS. If the Merger is
consummated, then to the fullest extent permitted under applicable law, and
subject to the procedures described in Section 15.4 hereof, the Surviving
<PAGE>
Corporation will indemnify, defend, and hold harmless each present and former
director or officer of the Company and its Subsidiary Digitech International,
Inc. from and against all Damages arising out of or pertaining to any action or
omission in their capacity as a director or officer of the Company or its
Subsidiary Digitech International, Inc., provided, that to the extent that any
matter for which a former director or officer of the Company or such Subsidiary
relates to a matter for which LeCroy and/or the Surviving Corporation is
entitled to indemnification under Section 15 hereof, the Surviving Corporation
will not be relieved of its indemnification obligations hereunder to such
former director or officer (except to the extent that the Surviving Corporation
is entitled to be indemnified in respect of such matter by such former director
or officer himself), but will be entitled to indemnification in respect of such
matter pursuant to Section 15 hereof. No Stockholder will be entitled to seek
indemnification or contribution, under this Section 9.7 or otherwise, by reason
of any amounts required to be paid pursuant to Section 15 of this Agreement.
LeCroy will provide to each former Company director or officer who
becomes a director or officer of LeCroy or any of its Subsidiaries (including
the Surviving Corporation) with such directors' and officers' liability
insurance coverage to the same extent that it provides such coverage to other
similarly situated directors or officers.
In the event that LeCroy or the Surviving Corporation consolidates or
merges with any other person and is not the surviving or resulting corporation
in such merger, then LeCroy or the Surviving Corporation, as the case may be,
will first make proper provision so that the surviving or resulting corporation
will honor the obligations of LeCroy or the Surviving Corporation, as the case
may be, under this Section 9.7.
The obligations of LeCroy and the Surviving Corporation under this
Section 9.7 may not be terminated or amended in such a manner as to adversely
affect the rights of any present or former director or officer of the Company
or its Subsidiary Digitech International, Inc. without the consent of such
affected director or officer. All present and former directors and officers of
the Company or its Subsidiary Digitech International, Inc., are intended
third-party beneficiaries of this Section 9.7.
9.8. EMPLOYEE BENEFITS.
(a) From and after the Effective Time until such time as the employees of
the Surviving Corporation are included in the benefit plans available to
LeCroy's and its Subsidiaries' employees generally, the Surviving Corporation
will maintain in effect the Employee Benefit Plans of Digitech as described in
Section 6.14 of the Disclosure Schedule, except the Digitech Supplemental
Health Plan (Officers) and the Term Life Insurance (Robert Arnold); and the
Surviving Corporation will maintain the Digitech Supplemental Health Plan
(Officers) in effect until February 28, 1998. From and after such time as the
employees of the Surviving Corporation are included in the benefit plans
available to LeCroy's and its Subsidiaries' employees generally, the Surviving
Corporation will provide or cause to be provided to all of its employees and
their dependents and "qualified beneficiaries" (as defined in Section
4980B(g)(1) of the Code) entitled to receive continuation coverage under COBRA
as of the Closing Date (the "Qualified Beneficiaries") with coverage under one
or more benefit plans (the "Successor Welfare Plans"), including without
limitation, health care coverage ("Coverage") that meets at least the following
requirements: (i) service with the Company prior to the Closing Date will be
credited against all service and waiting period requirements under Successor
Welfare Plans for those employees of the Surviving Corporation (and their
eligible dependents) who received coverage from the Company as of the Closing
Date, and (ii) the Successor Welfare Plans will not provide for any
pre-existing condition exclusion for those employees of the Surviving
Corporation (and their eligible dependents) who received coverage from the
Company as of the Closing Date (other than to the extent excluded from coverage
under an existing Company health plan). Notwithstanding the foregoing, the
Surviving Corporation will only be obligated to provide Coverage to employees,
dependents, and qualified beneficiaries to the extent that LeCroy or the
Surviving Corporation sponsors the same type of benefit plans that the Company
did as of the Closing Date.
(b) The Surviving Corporation will maintain the Company's existing 401(k)
plan for at least one year after the Closing Date. Thereafter, Surviving
<PAGE>
Corporation employees will be eligible to participate in LeCroy's 401(k) plan.
The service of each employee of the Company, both prior to and following the
Closing Date, will be credited as service under LeCroy's 401(k) plan for
purposes of eligibility and vesting.
10. CONDUCT OF THE COMPANY'S BUSINESS PENDING THE CLOSING. From and after
the date of this Agreement and until the Closing, except as otherwise
specifically agreed by LeCroy and the Company:
10.1.FULL ACCESS. Each of LeCroy and the Company will afford to the other
and its authorized representatives full access, upon request and reasonable
notice and during normal business hours, to all of the properties, books,
records, contracts, and documents of the requested party, and a reasonable
opportunity to make such investigations as the requesting party desires to
make, and will furnish or cause to be furnished to the requesting party and its
authorized representatives all such information with respect to the requested
party's affairs and businesses as the requesting party reasonably requests.
10.2. CARRY ON IN REGULAR COURSE. Each of LeCroy and the Company will (i)
use its best reasonable efforts to maintain its owned and leased properties in
good operating condition and repair and to make all necessary renewals,
additions, and replacements thereto, (ii) carry on its businesses diligently
and substantially in the same manner as heretofore, and (iii) in the case of
the Company, not make or institute any new, unusual, or novel methods of
manufacture, purchase, sale, lease, management, accounting, or operation or
take or permit to occur or exist any action or circumstance referred to in
Section 6.8 hereof, other than the scheduled repayment of Indebtedness of the
Company in the ordinary course of business from cash generated by operations.
10.3. NO DIVIDENDS, ISSUANCES, REPURCHASES, ETC. Neither LeCroy nor the
Company will declare, set aside, or pay any dividends (whether in cash, shares
of stock, other property, or otherwise) on, or make any other distribution in
respect of, any shares of its capital stock or other securities, or issue,
purchase, redeem, or otherwise acquire for value any shares of its capital
stock or other securities. The Company will not issue any shares of its capital
stock or other securities (including without limitation any options, warrants,
or other rights to acquire Company Stock), other than shares of Company Common
Stock issued upon the due exercise of vested stock options listed in Section
6.4 of the Disclosure Schedule (which exercises will be disclosed by the
Company in a supplement to the Disclosure Schedule pursuant to Section 10.13
hereof).
10.4. NO COMPENSATION CHANGES. The Company will not increase the
compensation payable or to become payable to any of its officers, directors,
key employees, or agents, or increase any bonus, insurance, pension, or other
benefit plan, payment, or arrangement made to, for, or with any such officers,
directors, key employees, or agents, nor will it effect any general or uniform
increase in the compensation payable or to become payable to its employees or
consultants, including without limitation any increase in the benefits under
any bonus or pension plan or other contract or commitment, except as described
in Section 10.4 of the Disclosure Schedule.
10.5.CONTRACTS AND COMMITMENTS WITH AFFILIATES. The Company will not
enter into any contract or commitment, or engage in any other transaction, with
any of its Affiliates, other than in the usual and ordinary course of business
and consistent with its normal past business practices.
10.6.PURCHASE AND SALE OF CAPITAL ASSETS. The Company will not purchase,
lease as lessee, license as licensee, or otherwise acquire any interest in, or
sell, lease as lessor, license as licensor, or otherwise dispose of any
interest in, any capital asset(s) (i) other than in the ordinary course of
business, or (ii) having a market value in excess of $20,000 in any instance,
or in excess of $50,000 in the aggregate.
10.7.INSURANCE. The Company will maintain the insurance referred
to on Section 6.20 of the Disclosure Schedule.
<PAGE>
10.8. PRESERVATION OF ORGANIZATION. The Company will use its best
reasonable efforts to preserve its business organization intact, to keep
available for the benefit of the Surviving Corporation its present officers and
key employees and consultants, and to preserve for the benefit of the Surviving
Corporation its present business relationships with its suppliers and customers
and others having business relationships with it.
10.9. NO DEFAULT. The Company will not take or omit to take any action,
or permit any action or omission to act, that would cause a default under or a
material breach of any of its material contracts, commitments, or obligations.
10.10. COMPLIANCE WITH LAWS. LeCroy and the Company will duly comply in
all material respects with all applicable laws, regulations, and orders.
10.11. ADVICE OF CHANGE. Each of LeCroy and the Company will promptly
advise the other in writing of any material adverse change in the advising
party's business, assets, condition (financial or otherwise), or operations.
10.12. NO SHOPPING. Neither the Company nor any of the Stockholders will
negotiate for, solicit, discuss, negotiate, or enter into any agreement or
understanding, whether or not binding, with respect to the issuance, sale, or
transfer of any of the capital stock or any material portion of the assets of
the Company (other than sales of inventory in the ordinary course of business)
or any merger or other business combination of the Company, to or with any
person other than LeCroy and Merger Sub.
10.13. DISCLOSURE SUPPLEMENTS. From time to time before the Closing, and
in any event immediately before the Closing, each of LeCroy, the Company, and
the Stockholders will promptly advise the others in writing of any matter
hereafter arising or becoming known to the disclosing person that, if existing,
occurring, or known at or before the date of this Agreement, would have been
required to be set forth or described in the Disclosure Schedule, or that is
necessary to correct any information in the Disclosure Schedule that is or has
become inaccurate. No such disclosure will be taken into account in determining
whether the conditions to (i) in the case of any such supplemental disclosure
by LeCroy, the respective obligations of the Company and the Stockholders, and
(ii) in the case of any such supplemental disclosure by the Company or any of
the Stockholders, the respective obligations of LeCroy and Merger Sub, to
consummate the transactions contemplated by this Agreement have been satisfied.
If the Merger is consummated, then for purposes of Section 15
("Indemnification"), such supplemental disclosures pursuant to this Section
10.13 will be deemed to have been made as of the date hereof, and no
indemnification will be payable in respect thereof by reason of the fact that
such disclosure was not made on the date hereof.
11. MUTUAL CONDITIONS TO THE PARTIES' OBLIGATIONS. The parties'
obligations to consummate the Merger are subject to the satisfaction (or waiver
by each such party, in his or its sole discretion) of each of the conditions
set forth in this section on or before the Closing Date. If the Merger is
consummated, such conditions will conclusively be deemed to have been satisfied
or waived.
11.1. NO INJUNCTIONS OR RESTRAINTS. No temporary restraining order,
preliminary or permanent injunction, or other order issued by any court of
competent jurisdiction, or other legal restraint or prohibition preventing the
consummation of the Merger, will be in effect, and no petition or request for
any such injunction or other order will be pending.
11.2. ACCOUNTING MATTERS. Each of the Company and LeCroy will have
received (i) all of the Affiliate's Agreements contemplated by Section 9.3 to
be received by it, and (ii) a letter from its accountants (KPMG Peat Marwick
LLP, in the case of the Company, and Ernst & Young LLP, in the case of LeCroy)
dated the Closing Date, in form reasonably satisfactory to it, and
substantially to the effect that in such accountants' opinion, the Merger, if
consummated in accordance with this Agreement, will appropriately be accounted
for under Accounting Principles Board Opinion No. 16 as a "pooling of
interests."
<PAGE>
11.3. TAX MATTERS. Each of the Company and LeCroy will have received a
written opinion of its tax counsel or accountants, addressed to it, dated as of
the Closing Date, in a form reasonably acceptable to the receiving party, and
to the effect that in such counsel's or accountants' opinion, the Merger will
constitute a "reorganization" under Section 368(a) of the Code.
11.4. EMPLOYMENT AGREEMENTS. The Company and each of Robert B. Arnold and
Robert W. Scharf will have executed and delivered employment agreements in the
forms thereof attached as exhibits to the letter dated December 8, 1997, from
Brian Keeler of Bingham Dana LLP to Stephen J. Geissler of Shipman & Goodwin
LLP.
11.5. SECURITIES LAW COMPLIANCE. All filings necessary under federal and
state securities laws to permit the issuance and delivery to the Stockholders
of the shares of LeCroy Common Stock into which shares of Company Stock will be
converted in the Merger will have been made, and any authorizations in
connection therewith from all applicable securities regulatory authorities will
have been obtained.
11.6. NMS LISTING. The shares of LeCroy Common Stock into which shares of
Company Stock will be converted in the Merger will have been authorized for
listing on the NMS, subject to official notice of issuance.
11.7. PROCEEDINGS AND DOCUMENTS SATISFACTORY. All proceedings in
connection with the transactions contemplated by this Agreement and all
certificates and other documents delivered to such party pursuant to this
Agreement or in connection with the Closing will be reasonably satisfactory to
such party and his or its counsel.
12. CONDITIONS TO THE COMPANY'S AND THE STOCKHOLDERS' OBLIGATIONS. The
obligations of the Company and each of the Stockholders, respectively, to
consummate the Merger are subject to the satisfaction (or waiver by the
Company, in its sole discretion) of each of the conditions set forth in this
section on or before the Closing Date. If the Merger is consummated, such
conditions will conclusively be deemed to have been satisfied or waived.
12.1. REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties made by LeCroy and/or Merger Sub in or pursuant to this Agreement or
in any statement, certificate, or other document delivered to the Company or
the Stockholders in connection with this Agreement, the Merger, or any of the
other transactions contemplated hereby will have been true and correct in all
material respects when made and will be true and correct in all material
respects at and as of the Closing (in each case, except that any representation
or warranty that expressly includes a materiality standard will have been and
be true and correct in all respects, giving effect to such standard), subject
only to the effect of any activities or transactions occurring after the date
hereof and either expressly contemplated by this Agreement or consented to in
writing by the Company.
12.2.COMPLIANCE WITH AGREEMENT. LeCroy and Merger Sub will have performed
and complied in all material respects with all of their respective obligations
under this Agreement to be performed or complied with by them before or at the
Closing, including without limitation the execution and delivery of all
documents to be executed and delivered by any of them in connection with this
Agreement and/or the consummation of the Merger and the other transactions
contemplated hereby.
12.3.CLOSING CERTIFICATE. LeCroy and Merger Sub will have executed and
delivered to the Company, at and as of the Closing, a certificate (without
qualification as to knowledge or materiality) certifying that the conditions
referred to in Sections 12.1 and 12.2 have been satisfied.
12.4.OPINION OF COUNSEL. Bingham Dana LLP, counsel to LeCroy and Merger
Sub, will have delivered to the Company a written legal opinion addressed to
the Company and the Stockholders, dated on and as of the Closing Date, and
substantially in the form of the attached Exhibit F.
<PAGE>
13. CONDITIONS TO LECROY'S AND MERGER SUB'S OBLIGATIONS. The obligations
of each of LeCroy and Merger Sub, respectively, to consummate the Merger are
subject to the satisfaction (or waiver by LeCroy, in its sole discretion) of
each of the conditions set forth in this section on or before the Closing Date.
If the Merger is consummated, such conditions will conclusively be deemed to
have been satisfied or waived.
13.1.REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties made by the Company and/or any of the Stockholders in or pursuant to
this Agreement or in any statement, certificate, or other document delivered to
LeCroy in connection with this Agreement, the Merger, or any of the other
transactions contemplated hereby will have been true and correct in all
material respects when made and will be true and correct in all material
respects at and as of the Closing (in each case, except that any representation
or warranty that expressly includes a materiality standard will have been and
be true and correct in all respects, giving effect to such standard), subject
only to the effect of any activities or transactions occurring after the date
hereof and either expressly contemplated by this Agreement or consented to in
writing by LeCroy.
13.2.COMPLIANCE WITH AGREEMENT. The Company and each of the Stockholders
will have performed and complied in all material respects with all of their
respective obligations under this Agreement to be performed or complied with by
them before or at the Closing, including without limitation the execution and
delivery of all documents to be executed and delivered by any of them in
connection with this Agreement and/or the consummation of the Merger and the
other transactions contemplated hereby.
13.3.CLOSING CERTIFICATE. The Company and the Stockholders will have
executed and delivered to LeCroy, at and as of the Closing, a certificate
(without qualification as to knowledge or materiality) certifying with respect
to themselves that the conditions referred to in Sections 13.1 and 13.2 have
been satisfied.
13.4.OPINION OF COUNSEL. Shipman & Goodwin LLP, counsel to the Company
and the Stockholders, will have delivered to LeCroy a written legal opinion
addressed to LeCroy, dated on and as of the Closing Date, and substantially in
the form of the attached Exhibit G.
14. OTHER COVENANTS. In order to induce LeCroy and Merger Sub to enter
into this Agreement and to consummate the Merger and the other transactions
contemplated hereby, each of the Stockholders hereby severally agrees and
covenants as follows, which covenants will be in addition and without prejudice
to any other confidentiality, inventions, noncompetition, nonsolicitation,
and/or other agreements and covenants to which any of the Stockholders may be
subject from time to time, including without limitation under the employment
agreements referred to in Section 11.4. While Section 14.2 applies only to
certain specified Stockholders, all other provisions of this Section 14 apply
to all of the Stockholders.
14.1.CONFIDENTIAL INFORMATION. If the Merger is consummated, such
Stockholder will maintain the confidentiality of all confidential, sensitive,
or proprietary information of the Surviving Corporation, including without
limitation with respect to its businesses, finances, affairs, and technology,
which will be and remain the exclusive property of the Surviving Corporation;
and unless previously authorized in writing by LeCroy, and except with respect
to information that has otherwise become public through no action or omission
on the part of such Stockholder, will not disclose any such information to any
third party, or use it for any purpose other than (if applicable) in the
discharge of such Stockholder's employment responsibilities in the ordinary
course of the Surviving Corporation's business.
14.2.NON-COMPETITION, ETC. In the cases of Robert B. Arnold and Robert W.
Scharf, for a period of three years after the Closing Date (which period will
automatically be extended by a period of time equal to any period in which such
Stockholder is in breach of any obligations under this Section 14.2), such
Stockholder will not engage, directly or indirectly (except as a stockholder,
<PAGE>
director, officer, consultant, and/or employee of LeCroy and/or the Surviving
Corporation), as a proprietor, equityholder, investor (except as a passive
investor holding not more than 5% of the outstanding capital stock of a
publicly held company), lender, partner, director, officer, employee,
consultant, or representative, or in any other capacity, anywhere in the world
(such Stockholder hereby acknowledging that the Company currently is doing
business worldwide) in the Restricted Business, or any other business presently
being conducted by the Company.
14.3.NON-SOLICITATION OF EMPLOYEES, ETC. During the three-year period
following the Closing Date (the "Restricted Period"), such Stockholder will not
directly or indirectly recruit, solicit, induce, or attempt to induce any of
the employees or independent contractors of the Surviving Corporation to
terminate their employment or contractual relationship with the Surviving
Corporation; and will not assist any other person to do so, or be a proprietor,
equityholder, investor (except as a passive investor holding not more than 5%
of the capital stock of a publicly held company), lender, partner, director,
officer, employee, consultant, or representative of any person who does or
attempts to do so.
14.4.NON-SOLICITATION OF CUSTOMERS, SUPPLIERS, ETC. During the Restricted
Period, such Stockholder will not directly or indirectly solicit, divert, take
away, or attempt to divert or take away, from the Surviving Corporation any of
the business or patronage of any of its customers, clients, accounts, vendors,
or suppliers, or induce or attempt to induce any such person to reduce the
amount of business it does with the Surviving Corporation with respect to the
Restricted Business, and will not assist any other person to do so, or be a
proprietor, equityholder, investor (except as a passive investor holding not
more than 5% of the capital stock of a publicly held company), lender, partner,
director, officer, employee, consultant, or representative of any person who
does or attempts to do so.
14.5.NON-DISPARAGEMENT. During the Restricted Period, such Stockholder
will not disparage, deprecate, or make any negative comment with respect to the
Surviving Corporation or its businesses, operations, properties, or prospects,
except in the context of any litigation arising under this Agreement.
14.6.EQUITABLE REMEDIES. Such Stockholder hereby acknowledges that any
breach by him of his obligations under this Section 14 would cause substantial
and irreparable damage to LeCroy and the Surviving Corporation, and that money
damages would be an inadequate remedy therefor, and accordingly, acknowledges
and agrees that each of LeCroy and the Surviving Corporation will be entitled
to an injunction, specific performance, and/or other equitable relief to
prevent the breach of such obligations (in addition to all other rights and
remedies to which they may be entitled in respect of any such breach).
14.7.MODIFICATION. In the event that a court of competent jurisdiction
determines that any of the provisions of this Section 14 would be unenforceable
as written because they cover too extensive a geographic area, too broad a
range of activities, or too long a period of time, or otherwise, then such
provisions will automatically be modified to cover the maximum geographic area,
range of activities, and period of time as may be enforceable, and in addition,
such court is hereby expressly authorized so to modify this Agreement and to
enforce it as so modified. No invalidity or unenforceability of any section of
this Agreement or any portion thereof will affect the validity or
enforceability of any other section or of the remainder of such section.
15. INDEMNIFICATION.
15.1.INDEMNIFICATION BY LECROY AND MERGER SUB. Subject to the limitations
set forth in Section 15.6 hereof, LeCroy and Merger Sub, jointly and severally,
will indemnify, defend, and hold harmless each of the Stockholders, and if the
Merger is not consummated, also the Company, and each of their respective
directors, officers, employees, agents, representatives, and other Affiliates,
from and against any and all Damages related to or arising, directly or
indirectly, out of or in connection with any breach by LeCroy and/or Merger Sub
of any representation, warranty, covenant, agreement, obligation, or
<PAGE>
undertaking made by LeCroy and/or Merger Sub in this Agreement (including any
schedule or exhibit hereto), or any other agreement, instrument, certificate,
or other document delivered by or on behalf of LeCroy and/or Merger Sub in
connection with this Agreement, the Merger, or any of the other transactions
contemplated hereby.
15.2.INDEMNIFICATION BY THE STOCKHOLDERS AND THE COMPANY. Subject to the
limitations set forth in Section 15.6 hereof, each of the Stockholders,
severally and not jointly, and if the Merger is not consummated, also the
Company, will indemnify, defend, and hold harmless LeCroy, and if the Merger is
consummated, also the Surviving Corporation, and each of their respective
directors, officers, employees, agents, representatives, and other Affiliates,
from and against any and all Damages related to or arising, directly or
indirectly, out of or in connection with:
(i) any breach by the Company of any representation, warranty, covenant,
agreement, obligation, or undertaking made by the Company in this Agreement
(including any schedule or exhibit hereto), or any other agreement, instrument,
certificate, or other document delivered by or on behalf of the Company in
connection with this Agreement, the Merger, or any of the other transactions
contemplated hereby; or
(ii) the environmental matters disclosed in Section 6.15 of the
Disclosure Schedule (to the extent that the aggregate Damages in respect of
such matters exceed the applicable reserve therefor, if any, shown in the
Company's balance sheet as of October 31, 1997, delivered to LeCroy as referred
to in Section 6.7 hereof), but only to the extent of the first $250,000 of the
aggregate amount of such indemnifiable Damages plus one-half of the excess over
$250,000 of the aggregate amount of such Damages; provided, that claims for
indemnification under this clause (ii) of this Section 15.2 may only be made
against the "Environmental Escrow Fund" (as defined in the Escrow Agreement)
and no recourse in respect of any such claims may be had against the "General
Escrow Fund" (as defined in the Escrow Agreement) or any other assets of any
Stockholder.
Notwithstanding any other provision of this Agreement, each Stockholder's
liability for indemnification under this Section 15.2 will be limited to such
Stockholder's Pro Rata Portion of the Damages for which such Stockholder would
be liable hereunder but for this limitation.
15.3.INDEMNIFICATION BY EACH STOCKHOLDER. Subject to the limitations set
forth in Section 15.6 hereof, each of the Stockholders, severally and not
jointly, will indemnify, defend, and hold harmless LeCroy, and if the Merger is
consummated, also the Surviving Corporation, and each of their respective
directors, officers, employees, agents, representatives, and other Affiliates,
from and against any and all Damages related to or arising, directly or
indirectly, out of or in connection with any breach by such Stockholder in his
individual capacity of any representation, warranty, covenant, agreement,
obligation, or undertaking made by such Stockholder in his individual capacity
in this Agreement (including any schedule or exhibit hereto), or any other
agreement, instrument, certificate, or other document delivered by or on behalf
of such Stockholder in his individual capacity in connection with this
Agreement, the Merger, or any of the other transactions contemplated hereby.
15.4.CLAIMS. In the event that any party hereto (the "Indemnified Party")
desires to make a claim against another party hereto (the "Indemnifying Party,"
which term includes all indemnifying parties if more than one) in connection
with any third-party litigation, arbitration, action, suit, proceeding, claim,
or demand at any time instituted against or made upon it for which it may seek
indemnification hereunder (a "Third-Party Claim"), the Indemnified Party will
promptly notify the Indemnifying Party of such Third-Party Claim and of its
claims of indemnification with respect thereto, provided, that failure to give
such notice will not relieve the Indemnifying Party of its indemnification
obligations under this section except to the extent, if any, that the
Indemnifying Party has actually been prejudiced thereby. Upon receipt of such
notice from the Indemnified Party, the Indemnifying Party will be entitled to
participate in the defense of such Third-Party Claim. If each of the following
conditions is satisfied, the Indemnifying Party may assume the defense of such
Third-Party Claim, and in the case of such an assumption the Indemnifying Party
will have the authority to negotiate, compromise, and settle such Third-Party
Claim, provided, that the Indemnifying Party will not agree to any settlement
of such Third-Party Claim that does not include an unconditional release of all
liability of each Indemnified Party with respect to such Third-Party Claim:
<PAGE>
(i) The Indemnifying Party confirms in writing that it is obligated
hereunder to indemnify the Indemnified Party with respect to such
Third-Party Claim; and
(ii) The Indemnified Party does not give the Indemnifying Party
written notice, within 20 days after such Indemnified Party's receipt of
the notice required by the preceding clause (i), that the Indemnified
Party's counsel has determined, in its reasonable opinion, that an
irreconcilable conflict of interest make separate representation by the
Indemnified Party's counsel advisable.
The Indemnified Party will retain the right to employ its own counsel and
to participate in the defense of any Third-Party Claim, the defense of which
has been assumed by an Indemnifying Party pursuant hereto, but such Indemnified
Party will bear and will be solely responsible for its own costs and expenses
in connection with such participation.
15.5.PAYMENT OF CLAIMS. In the event of any claims for indemnification
hereunder, the claimant will advise the party or parties who are required to
provide indemnification therefor in writing of the amount and circumstances
surrounding such claim. With respect to liquidated claims, if within thirty
days the other party has not contested such claim in writing, such other party
will pay the full amount thereof within ten days after the expiration of such
period. Any amount payable by an Indemnifying Party in respect of
indemnification pursuant to this Agreement may be set off and deducted by the
Indemnified Party from and against any amounts that may otherwise be or become
payable by such Indemnified Party to such Indemnifying Party.
15.6.LIMITATIONS OF LIABILITY.
(A) THRESHOLD. No Indemnifying Party will be required to indemnify an
Indemnified Party hereunder until such time as the aggregate amount of Damages
for which (i) LeCroy, and if the Merger is not consummated, also Merger Sub, or
if the Merger is consummated, also the Surviving Corporation, and in any case
their respective directors, officers, employees, representatives, and other
Affiliates, on the one hand, or (ii) the Stockholders, and if the Merger is not
consummated, the Company, and in any case their respective directors, officers,
employees, representatives, and other Affiliates, as the case may be, on the
other, are otherwise entitled to indemnification pursuant to this Agreement
exceeds $170,000, whereupon such Indemnified Parties will be entitled to
indemnification for the full amount of all such Damages, without regard to such
threshold amount; provided, that Damages (i) in respect of breaches of
post-closing covenants contained herein, and/or (ii) indemnifiable under
Section 15.2(ii) hereof, will be indemnifiable in full and will not be subject
to such threshold amount.
(B) MAXIMUM LIABILITY. If the Merger is consummated, the maximum
liability of any Stockholder for indemnification hereunder will not exceed the
value of the shares of LeCroy Common Stock (including Escrowed Shares) into
which such Stockholder's shares of Company Stock are converted in the Merger,
which for this purpose will be conclusively deemed to be $36.00 per share of
LeCroy Common Stock (such amount to be proportionately adjusted to reflect
stock splits, stock dividends, reverse stock splits, and other
recapitalizations, reorganizations, and similar events affecting LeCroy Common
Stock and occurring after the date of this Agreement).
(C) TIME LIMIT. No Indemnifying Party will be liable for any Damages
hereunder unless a written claim for indemnification is given by the
Indemnified Party to the Indemnifying Party with respect thereto by (i) with
respect to any breach of the representations and warranties set forth in
Sections 6.7, 6.8, 6.9, 6.11, 6.12, 6.28, 8.5 (to the extent that it relates to
financial statements, schedules, and information), and/or 8.10, 30 days after
the delivery to LeCroy of the audit report of Ernst & Young LLP with respect to
LeCroy's consolidated financial statements as at June 30, 1998, and for its
fiscal year then ended, and (ii) with respect to indemnification pursuant to
Section 15.2(ii) hereof, the fifth anniversary of the Closing Date, and (iii)
with respect to any other breach of this Agreement, the first anniversary of
the Closing Date.
<PAGE>
(D) TAX AND INSURANCE BENEFITS. The amount of any Damages otherwise
payable to any Indemnified Party hereunder will be reduced (i) to the extent
that such Indemnified Party actually realizes, by reason of such Damages, any
tax benefit that is not offset by any corresponding adjustment of the tax
attributes of such Indemnified Party or any of his or its assets (e.g., any tax
deduction available to such Indemnified Party in respect of such Damages will
not be deemed to result in a tax benefit to such Indemnified Party to the
extent that such deduction results in a decrease in such Indemnified Party's
tax basis in any securities or other assets), and (ii) by any insurance
proceeds actually received by such Indemnified Party in respect thereof, to the
extent that such reduction is permitted without reduction of the amount of such
proceeds payable under the applicable insurance policy.
Each Indemnified Party will use reasonable efforts to collect any Damages
from any available insurer before attempting to collect from the Stockholders,
but nothing herein will preclude LeCroy from filing any claim against the
Stockholders and/or the escrow fund established pursuant to the Escrow
Agreement at any time. If any Indemnified Party recovers any amount from any
insurer after payment to such Indemnified Party by one or more Indemnifying
Parties of all Damages suffered or incurred by such Indemnified Party in
respect of the matters to which such insurance payment relates, then such
Indemnified Party will promptly pay over to such Indemnifying Parties the
amount so recovered, to the extent not in excess of the amount previously paid
by such Indemnifying Party to such Indemnified Party in respect of such matter.
15.7.SUBROGATION. An Indemnifying Party who indemnifies an Indemnified
Party pursuant to this Section 15 will, upon indefeasible payment in full of
the amount owed with respect to such matter pursuant to this Section 15, be
subrogated to the extent of such payment to the rights of such Indemnified
Party against all other persons in respect of the matter for which such
indemnification payment was made, to the extent permitted by applicable
insurance policies of such Indemnified Party, and upon such subrogation may
assert such rights against such other persons.
15.8.EXCLUSIVE REMEDIES. The parties acknowledge and agree that their
sole and exclusive remedies in respect of any and all claims relating to any
breach or purported breach of any representation, warranty, covenant,
agreement, obligation, or undertaking contained in this Agreement (including
any schedule or exhibit hereto), or any other agreement, instrument,
certificate, or other document delivered by or on behalf of any party hereto in
connection with this Agreement (other than the Employment Agreements), the
Merger, or any of the other transactions contemplated hereby will be pursuant
to the indemnification provisions of this Section 15. No breach of any such
representation, warranty, covenant, agreement, obligation, or undertaking will
give rise to any right of any party hereto to rescind this Agreement or any of
the transactions contemplated hereby.
15.9.APPLICABILITY. The provisions of this Section 15 will not apply to
claims for indemnification or contribution arising under or in connection with
Section 5 hereof and/or the Registration Statement and the other transactions
contemplated by that Section 5.
16. RELEASES. If the Merger is consummated, then effective as of the
Effective Time, each of the Stockholders, for himself or itself and his or its
heirs, legatees, successors, and assigns, hereby fully and irrevocably
releases, remises, and discharges the Surviving Corporation and its officers,
directors, employees, agents, representatives, successors, and assigns from any
and all Damages, regardless of whether known, unknown, or unknowable, and
regardless of whether absolute, contingent, or otherwise, and regardless of
whether at law, in equity, or otherwise, without limitation, whether now
existing or arising in the future, in each case to the extent based on actions,
omissions, and/or events occurring at or before the Effective Time, including
without limitation all rights to indemnification and/or contribution, but
excluding Damages and rights of indemnification arising expressly under this
Agreement and claims for accrued but unpaid salaries and reimbursable expenses
<PAGE>
(the aggregate amount of which salaries and expenses does not exceed $750,000).
Furthermore, each of such releasing persons hereby irrevocably agrees not to
sue, or to commence, maintain, or aid in the prosecution of any litigation,
arbitration, or other action or proceeding against or adverse to any of such
released persons, or otherwise to seek any recourse against any of such
released persons, in respect of any matter hereby released or purported or
attempted to be released.
17. TERMINATION.
(a) This Agreement may be terminated at any time before the Effective
Time by agreement of LeCroy and the Company, notwithstanding the approval of
this Agreement and/or of the Merger by the stockholders of any party.
(b) If (i) any temporary restraining order, preliminary or permanent
injunction, or other order issued by any court of competent jurisdiction, or
other binding legal restraint or prohibition preventing the consummation of the
Merger or the other transactions contemplated hereby is at any time in effect
for a period of more than 20 consecutive days, or (ii) the Closing does not
occur on or before January 2, 1998, then either LeCroy or the Company may
terminate this Agreement by delivering written notice to the other at any time
after the close of business on date such termination right arises hereunder,
provided that such failure to close is not the result of a breach of this
Agreement by the terminating party (including, in the case of any such
termination by LeCroy, any breach by Merger Sub, or in the case of any such
termination by the Company, any breach by any of the Stockholders).
(c) Any termination of this Agreement will not affect the rights or
obligations of any party arising, or based on actions or omissions occurring,
before such termination. The provisions of Sections 15 ("Indemnification"), 18
("Definitions"), and 19 ("General") will
survive any termination of this Agreement.
<PAGE>
18. DEFINITIONS.
18.1.CERTAIN DEFINED TERMS. As used in this Agreement, the following
terms have the following respective meanings:
"Affiliate" means, with respect to any person, any other person (i) that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with such person, or (ii) who is a
family member or relative of any person described in the preceding clause (i).
When used with reference to the Company, the term "Affiliate" includes the
Stockholders.
"Affiliated Group" has the meaning ascribed to it in Section 1504 of the
Code, and in addition includes any analogous combined, consolidated, or unitary
group, as defined under any applicable state, local, or foreign income Tax law.
"Company Common Stock" means, collectively, the Company's Common Stock
and its Non-Voting Common Stock, Series A, both $0.01 par value per share.
"Company Preferred Stock" means the Voting Convertible Preferred Stock of
the Company, $100 par value per share.
"Company Stock" means, collectively, the Company Common Stock and
the Company Preferred Stock.
"Damages" means all damages, losses, claims, demands, actions, causes of
action, suits, litigations, arbitrations, liabilities, costs, and expenses,
including court costs and the reasonable fees and expenses of legal counsel.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC thereunder, as in effect as of the
relevant time of reference.
"Indebtedness," as applied to any person, means (a) all indebtedness of
such person for borrowed money, whether current or funded, or secured or
unsecured, (b) all indebtedness of such person for the deferred purchase price
of property or services represented by a note or other security, (c) all
indebtedness of such person created or arising under any conditional sale or
other title retention agreement (even if the rights and remedies of the seller
or lender under such agreement in the event of default are limited to
repossession or sale of specific property), (d) all indebtedness of such person
secured by a purchase money mortgage or other Lien to secure all or part of the
purchase price of property subject to such mortgage or other Lien, (e) all
obligations of such person under leases that have been or must be, in
accordance with generally accepted accounting principles, recorded as capital
leases in respect of which such person is liable as lessee, (f) any liability
of such person in respect of banker's acceptances or letters of credit, and (g)
all indebtedness referred to in clauses (a), (b), (c), (d), (e), or (f) above
that is directly or indirectly guaranteed by such person or which such person
has agreed (contingently or otherwise) to purchase or otherwise acquire or in
respect of which such person has otherwise assured a creditor against loss.
"knowledge," when used to qualify a representation or warranty in this
Agreement, has the following meaning: Where a representation or warranty is
made to the best of the Company's knowledge, or with a similar qualification,
the Company will be conclusively deemed to have knowledge of any matter with
respect to which (i) any Stockholder who is active in the Company's day-to-day
operations, (ii) the Company's chief executive and/or financial officers, or
(iii) any other senior executive officer of the Company, has actual knowledge
or would have knowledge after conducting a reasonable investigation. Where a
representation or warranty is made to the best of LeCroy's or Merger Sub's
knowledge, or with a similar qualification, LeCroy and Merger Sub will be
conclusively deemed to have knowledge of any matter with respect to which (i)
LeCroy's or Merger Sub's chief executive and/or financial officers, or (ii) any
other senior executive officer of LeCroy or Merger Sub, has actual knowledge or
would have knowledge after conducting a reasonable investigation.
<PAGE>
"LeCroy Common Stock" means the Common Stock, $0.01 par value, of
LeCroy.
"LeCroy Stock Plans" means, collectively, LeCroy's Amended and Restated
1993 Stock Incentive Plan, 1995 Non-Employee Director Stock Option Plan, and
1995 Employee Stock Purchase Plan.
"Liens" means any and all liens, claims, mortgages, security interests,
pledges, options, rights of first offer or refusal, charges, encumbrances,
limitations on voting rights, and restrictions on transfer of any kind, except,
in the case of references to securities, those arising under applicable
securities laws solely by reason of the fact that such securities were issued
pursuant to exemptions from registration under such securities laws.
"Material Adverse Effect" means, with reference to any person, any
material adverse effect on the condition (financial or otherwise), operations,
business, assets, rights, liabilities, obligations, or prospects of such
person, or on such person's ability to consummate the transactions hereby
contemplated.
"person" (regardless of whether capitalized) means any natural person,
entity, or association, including without limitation any corporation,
partnership, limited liability company, government (or agency or subdivision
thereof), trust, joint venture, or proprietorship.
"Pro Rata Portion" means, with respect to a Stockholder, the percentage
indicated opposite such Stockholder's name below:
Name Pro Rata Portion
Robert B Arnold 31.70%
Millard E. Bronson 0.46%
Ernest E. Courchene Jr., 4.63%
as trustee
Charles Greer 1.28%
Jeffrey D. Holden 2.78%
Ann Lake 4.63%
Thomas Quinlan 1.67%
Robert W. Scharf 16.31%
Dennis Stvan 3.70%
David L. Vaughn 0.46%
DLJ Venture Capital Fund 1.81%
Sprout Capital V 30.57%
Total: 100%
"Restricted Business" means the design, manufacture, and distribution of
communication test instruments (hardware, computers, software) for protocol
analysis, monitoring, performance verification, transmission testing,
installation failure detection, fault diagnostics, and preventative maintenance
of LAN and WAN communications networks.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC thereunder, as in effect as of the relevant
time of reference.
"Subsidiary" or "Subsidiaries" means, with respect to any person, any
corporation a majority (by number of votes) of the outstanding shares of any
class or classes of which will at the time be owned by such person or by a
<PAGE>
Subsidiary of such person, if the holders of the shares of such class or
classes (a) are ordinarily, in the absence of contingencies, entitled to vote
for the election of a majority of the directors (or persons performing similar
functions) of the issuer thereof, even though the right so to vote has been
suspended by the happening of such a contingency, or (b) are at the time
entitled, as such holders, to vote for the election of a majority of the
directors (or persons performing similar functions) of the issuer thereof,
whether or not the right so to vote exists by reason of the happening of a
contingency.
"Tax" or "Taxes" means any federal, state, local, or foreign income,
gross receipts, franchise, estimated, alternative minimum, add-on minimum,
sales, use, transfer, registration, value added, excise, natural resources,
severance, stamp, occupation, premium, windfall profit, environmental, customs,
duties, real property, personal property, capital stock, intangibles, social
security, unemployment, disability, payroll, license, employee, or other tax or
levy, of any kind whatsoever, including any interest, penalties, or additions
to tax in respect of the foregoing.
"Tax Return" means any return, declaration, report, claim for refund,
information return, or other document (including any related or supporting
estimates, elections, schedules, statements, or information) filed or required
to be filed in connection with the determination, assessment, or collection of
any Tax or the administration of any laws, regulations, or administrative
requirements relating to any Tax.
18.2. TERMS DEFINED ELSEWHERE. The following terms are defined herein in
the sections identified below:
TERM SECTION TERM SECTION
Affiliate's Agreement(s) 9.3 Indemnified Party 15.4
Agreement Preamble Indemnifying Party 15.4
CERCLA 6.15(b) Intellectual Properties 6.10
Certificate 3.1 IRS 6.14(b)
Closing 1 LeCroy Preamble
Closing Date 1 LeCroy's SEC Reports 8.5
Code Recitals Material Contract 6.18
Company Preamble Merger 1
Company Option 4 Merger Sub Preamble
DGCL 2.1 Most Recent Balance Sheet 6.7
Dissenting Shares 2.7 Most Recent Balance 6.7
Effective Time 1 Sheet Date
Employee Benefit Plan 6.14(a) NMS 9.6
Environmental Laws 6.15(b) PBGC 6.14(d)(ii)
EPA 6.15(c) RCRA 6.15(b)
ERISA 6.14(c) Registration Statement 5
Escrowed Shares 3.3 Restricted Period 14.3
Exchange Ratio 2.6(a) SARA 6.15(b)
Hazardous Substances 6.15(c) Stockholder(s) Preamble
Indemnifiee 5(d) Stockholder Representative 19.3
Indemnifior 5(d) Third-Party Claim 15.3
<PAGE>
19. GENERAL.
19.1.COOPERATION. Each of the parties will cooperate with the others and
use its best reasonable efforts to prepare all necessary documentation, to
effect all necessary filings, and to obtain all necessary permits, consents,
approvals, and authorizations of all governmental bodies and other third
parties necessary to consummate the transactions contemplated by this
Agreement.
19.2.SURVIVAL OF PROVISIONS. The provisions of this Agreement, including
without limitation the representations and warranties of the parties, and the
provisions of the other documents executed and delivered in connection with
this Agreement, the Merger, and the other transactions contemplated hereby will
be deemed material, and, notwithstanding any investigation by or on behalf of
any other party, will be deemed to have been relied on by each other party, and
subject to the provisions of Section 15.6(c) hereof, will survive the Closing
and the consummation of the Merger and the other transactions contemplated
hereby until the first anniversary of the Closing Date.
19.3.STOCKHOLDER REPRESENTATIVE. Each of the Stockholders hereby appoints
Robert B. Arnold (the "Stockholder Representative"), as such Stockholder's
agent to receive on such Stockholder's behalf notices and other correspondence
and service of copies of any summons, complaint, and/or other process that may
be served in any litigation, action, or other proceeding. Such service of
process may be made by delivery of a copy of such process to the Stockholder
Representative in accordance with Section 19.6, with a copy sent at the same
time and by the same means to such Stockholder (if such Stockholder has
previously provided an address to LeCroy in writing for this purpose, whether
before or after the date hereof); and each of the Stockholders hereby
irrevocably authorizes and directs the Stockholder Representative to accept
such service on such Stockholder's behalf and agrees that the Stockholder
Representative will incur no liability to such Stockholder in connection with
the Stockholder Representative's actions or omissions in his capacity as such,
except such as may be directly caused by the Stockholder Representative's bad
faith or wilful misconduct. Each of the Stockholders hereby irrevocably agrees
that a final judgment in any action or proceeding will be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this section will affect the right of any person to
serve legal process in any other manner permitted by law.
19.4.EXPENSES. LeCroy, on the one hand, and the Stockholders, on the
other, will be responsible for and will pay all of their own respective
expenses in connection with the negotiation and preparation of this Agreement
and the consummation of the Merger and the other transactions contemplated
hereby; and no such expenses will be charged, directly or indirectly, to the
Company.
19.5.BENEFITS OF AGREEMENT; NO ASSIGNMENTS; NO THIRD-PARTY
BENEFICIARIES.
(a) This Agreement will bind and inure to the benefit of the parties
hereto and their respective heirs, successors, and permitted assigns.
(b) No party will assign any rights or delegate any obligations hereunder
without the consent of the other parties, and any attempt to do so will be
void.
(c) Nothing in this Agreement is intended to or will confer any rights or
remedies on any person other than the parties hereto and their respective
heirs, successors, and permitted assigns, except as expressly provided in
Sections 9.7 and 15 hereof.
19.6.NOTICES. All notices, requests, payments, instructions, or other
documents to be given hereunder will be in writing or by written
telecommunication, and will be deemed to have been duly given if (i) delivered
personally (effective upon delivery), (ii) mailed by registered or certified
mail, return receipt requested, postage prepaid (effective five business days
after dispatch), (iii) sent by a reputable, established courier service that
guarantees next business day delivery (effective the next business day), or
<PAGE>
(iv) sent by telecopier followed within 24 hours by confirmation by one of the
foregoing methods (effective upon receipt of the telecopy in complete, readable
form), addressed as follows (or to such other address as the recipient party
may have furnished to the sending party for the purpose pursuant to this
section):
(a) If to LeCroy, Merger Sub, and/or (after the Effective Time), the
Company to:
LeCroy Corporation
700 Chestnut Ridge Road
Chestnut Ridge, New York 10977
Attention: Lutz P. Henckels
President and CEO
Telecopier No. (914) 578-5989
<PAGE>
with a copy sent at the same time and by the same means to:
Roger D. Feldman, Esq.
Bingham Dana LLP
150 Federal Street
Boston, Massachusetts 02110
Telecopier No. (617) 951-8736
(b) If to any of the Stockholders and/or (before the Effective Time) the
Company, to the Stockholder Representative in care of:
Digitech Industries, Inc.
55 Kenosia Avenue
Danbury, Connecticut 06813
Telecopier No. (203) 797-2682
with a copy sent at the same time and by the same means to:
Stephen J. Geissler, Esq.
Shipman & Goodwin LLP
One American Row
Hartford, Connecticut 06103-2819
Telecopier No. (860) 251-5199
19.7.COUNTERPARTS. This Agreement may be executed by the parties in
separate counterparts, each of which when so executed and delivered will be an
original, but all of which together will constitute one and the same agreement.
In pleading or proving this Agreement, it will not be necessary to produce or
account for more than one such counterpart.
19.8.CAPTIONS. The captions of sections or subsections of this Agreement
are for reference only and will not affect the interpretation or construction
of this Agreement.
19.9.EQUITABLE RELIEF. Each of the parties hereby acknowledges that any
breach by him or it of his or its obligations under this Agreement would cause
substantial and irreparable damage to the parties, and that money damages would
be an inadequate remedy therefor, and accordingly, acknowledges and agrees that
each other party will be entitled to an injunction, specific performance,
and/or other equitable relief to prevent the breach of such obligations.
19.10. CONSTRUCTION. The language used in this Agreement is the language
chosen by the parties to express their mutual intent, and no rule of strict
construction will be applied against any party.
19.11. WAIVERS. No waiver of any breach or default hereunder will be
valid unless in a writing signed by the waiving party. No failure or other
delay by any party exercising any right, power, or privilege hereunder will be
or operate as a waiver thereof, nor will any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power, or privilege.
19.12. ENTIRE AGREEMENT. This Agreement, together with the exhibits and
schedules hereto and the other agreements, instruments, certificates, and other
documents referred to herein as having been or to be executed and delivered in
connection with the transactions contemplated hereby, contains the entire
<PAGE>
understanding and agreement among the parties, and supersedes any prior
understandings or agreements among them, or between or among any of them, with
respect to the subject matter hereof. Notwithstanding the foregoing, the
provisions of the Confidentiality Agreement dated as of September 2, 1997, by
and between the Company and LeCroy, will survive the execution and delivery of
this Agreement and the consummation of the Merger.
19.13. GOVERNING LAW. This Agreement will be governed by and interpreted
and construed in accordance with the internal laws of the State of Delaware, as
applied to contracts under seal made, and entirely to be performed, within
Delaware, and without reference to principles of conflicts or choice of laws.
19.14. AMENDMENT. This Agreement may not be amended, modified, or
supplemented except by a writing duly executed by LeCroy, Merger Sub, the
Company, and Stockholders holding shares of Company Stock representing not less
than two-thirds of the voting power of all shares of Company Stock then
outstanding (calculated on a fully diluted basis); provided, that no such
amendment, modification, or supplement that disparately and adversely affects
any Stockholder will be effective without the written consent of such
Stockholder.
[The rest of this page is intentionally left blank.]
<PAGE>
Executed and delivered under seal as of the date first above written.
LECROY: LECROY CORPORATION
By /s/ John C. Maag
------------------------------
Name: John C. Maag
Title: V.P. Finance
MERGER SUB: LECROY MERGER CORPORATION
By /s/ John C. Maag
------------------------------
Name: John C. Maag
Title: Vice President
COMPANY: DIGITECH INDUSTRIES, INC.
By /s/ Robert B. Arnold
------------------------------
Name: Robert B. Arnold
Title: President & CEO
STOCKHOLDERS: /s/ Robert B. Arnold
------------------------------
Robert B. Arnold
/s/ Millard E. Bronson
------------------------------
Millard E. Bronson
/s/ Ernest Courchene, Jr.
------------------------------
Ernest Courchene, Jr., as Trustee
and not individually
/s/ Charles Greer
------------------------------
Charles Greer
/s/ Jeffrey D. Holder
------------------------------
Jeffrey D. Holden
<PAGE>
/s/ Ann Lake
------------------------------
Ann Lake
/s/ Thomas Quinlan
------------------------------
Thomas Quinlan
/s/ Robert W. Scharf
------------------------------
Robert W. Scharf
/s/ Dennis Stvan
------------------------------
Dennis Stvan
/s/ David L. Vaughn
------------------------------
David L. Vaughn
DLJ VENTURE CAPITAL FUND
By: DLJ FUND ASSOCIATES,
its general partner
By /s/ Richard E. Kroon
-------------------------
Richard E. Kroon
General Partner
SPROUT CAPITAL V
By: DLJ ASSOCIATES V,
its general partner
By /s/ Richard E. Kroon
-------------------------
Richard E. Kroon
General Partner
<PAGE>
EXHIBITS AND SCHEDULES
EXHIBITS*
A Merger Certificate
B By-Laws of the Surviving Corporation
C Escrow Agreement
D Form of Non-Competition Agreement
E Affiliate's Agreement
F Legal Opinion of Bingham Dana LLP
G Legal Opinion of Shipman & Goodwin LLP
SCHEDULES*
Disclosure Schedule of the Company
Affiliates Schedules of LeCroy and the Company, respectively
* Copies of Exhibits and Schedules to the Agreement and Plan of Merger and
Reorganization will be furnished to the Securities and Exchange Commission upon
request.
<PAGE>
Exhibit 5
BINGHAM DANA LLP
150 FEDERAL STREET
BOSTON, MASSACHUSETTS 02110-1726
January 2, 1998
LeCroy Corporation
700 Chestnut Ridge Road
Chestnut Ridge, New York 10977
Dear Ladies and Gentlemen:
We have acted as counsel for LeCroy Corporation, a Delaware corporation
(the "Company"), in connection with the registration under the Securities Act
of 1933, as amended, of 454,148 shares of the Company's Common Stock, par value
$.01 per share (the "Shares"), pursuant to a Registration Statement on Form S-3
(the "Registration Statement"), filed with the Securities and Exchange
Commission on January 2, 1998, all of which Shares will be issued pursuant to
the terms of an Agreement and Plan of Merger and Reorginization, dated as of
December 10, 1997 (the "Merger Agreement"), between the Company, LeCroy Merger
Corporation, a Delaware corporation and wholly-owned subsidiary of the Company,
Digitech Industries, Inc., a Delaware corporation ("Digitech"), and the
stockholders of Digitech.
As such counsel, we have reviewed the corporate proceedings of the
Company with respect to the authorization of the issuance of the Shares. We
have also examined and relied upon originals or copies, certified or otherwise
identified or authenticated to our satisfaction, of such corporate records,
instruments, agreements or other documents of the Company, and certificates of
officers of the Company as to certain factual matters, and have made such
investigation of law and have discussed with officers and representatives of
the Company such questions of fact, as we have deemed necessary or appropriate
to enable us to express the opinions rendered hereby.
In our examination, we have assumed the genuineness of all signatures,
the conformity to originals of all documents reviewed by us as copies, the
authenticity and completeness of all original documents reviewed by us in
original or copy form and the legal competence of each individual executing a
document.
We have also assumed that the Shares were issued and delivered or will be
delivered, as the case may be, in accordance with the terms of the Asset
Purchase Agreement. As to all matters of fact, we have relied entirely upon the
determinations, representations and statements of the Company; and we have
assumed, without independent inquiry, the accuracy of all such determinations,
representations and statements.
This opinion is limited solely to the Delaware General Corporation Law as
applied by courts located in Delaware.
Based upon and subject to the foregoing, we are of the opinion that the
Shares are validly issued, fully paid and non-assessable.
<PAGE>
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this firm under the heading
"Certain Legal Matters" in the Prospectus included in the Registration
Statement.
Very truly yours,
/s/ Bingham Dana LLP
BINGHAM DANA LLP
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of LeCroy Corporation
for the registration of 454,148 shares of its common stock and to the
incorporation by reference therein of our report dated August 5, 1997, with
respect to the consolidated financial statements and schedule of LeCroy
Corporation included in its Annual Report (Form 10-K) for the year ended June
30, 1997, filed with the Securities and Exchange Commission.
Hackensack, New Jersey /s/ ERNST & YOUNG LLP
December 23, 1997
