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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): September 30, 1997
ROSS TECHNOLOGY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 0-27016 74-2507960
(STATE OR OTHER JURISDICTION (COMMISSION IRS EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
5316 Highway 290 West, Suite 500, Austin, Texas 78735-8930
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code: (512) 436-2000
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ITEM 5. OTHER EVENTS.
On September 30, 1997, Ross Technology, Inc., a Delaware corporation (the
"Registrant" of the "Company"), consummated its previously announced
Recapitalization Transaction (as defined below) with Fujitsu Limited, a
Japanese corporation and the Registrant's majority stockholder ("Fujitsu").
Pursuant to a Stock Purchase Agreement dated September 30, 1997 between the
Registrant and Fujitsu (the "Stock Purchase Agreement"), the Registrant sold
500,000 shares (the "Shares") of a new Series B Convertible Preferred Stock to
Fujitsu. Upon execution of the Stock Purchase Agreement, Fujitsu paid
$50,000,000 (the "Guarantee Payment"), on behalf of the Registrant, directly to
The Dai-Ichi Kangyo Bank, Limited, New York Branch ("DKB") in partial payment
of the Registrant's outstanding indebtedness to DKB and in satisfaction of
Fujitsu's obligations pursuant to certain loan guarantees provided by Fujitsu
to DKB with respect to certain debt obligations of the Registrant. The
Registrant then sold and issued the Shares to Fujitsu in full and complete
satisfaction of the Registrant's obligation to reimburse Fujitsu for the
Guarantee Payment.
The foregoing description of the Stock Purchase Agreement is qualified in
its entirety by reference to the Stock Purchase Agreement, a copy of which is
attached hereto as Exhibit 10.1 and incorporated herein in its entirety by
reference.
The principal terms of the Series B Preferred Stock are described in the
letter of intent between the Registrant and Fujitsu dated September 10, 1997, a
copy of which was filed by the Registrant as a part of Exhibit 99.1 to the
Registrant's Current Report on Form 8-K dated September 10, 1997. Such
description is qualified in its entirety by reference to the Certificate of
Designation of Series B Convertible Preferred Stock of the Registrant, a copy
of which is attached hereto as Exhibit 3.1 and incorporated herein in its
entirety by reference.
In connection with entering into the Stock Purchase Agreement, Fujitsu has
provided the Company with written confirmation that it will facilitate (through
a guarantee) (the "Credit Facilitation") a line of credit for the Company of
$20,000,000 from DKB (approximately $6 million of which has already been
borrowed by the Company). The sale of the Series B Preferred Stock to Fujitsu,
together with the Credit Facilitation, are referred to collectively as the
"Recapitalization Transaction".
A pro forma condensed consolidated balance sheet of the Registrant which
reflects the issuance of the Shares of Series B Preferred Stock to Fujitsu and
the repayment of $50,000,000 of the Registrant's obligations to DKB is attached
hereto as Exhibit 99.1 and incorporated herein in its entirety by reference.
In connection with entering into, and as a condition to consummation of
the transactions contemplated by, the Stock Purchase Agreement, the Company
also entered into an Agreement for Reimbursement of Wafer Payments and Fujitsu
dated as of September 30, 1997 (the "Reimbursement Agreement") pursuant to
which the Company and Fujitsu settled all disputes between them or their
respective
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affiliates relating to silicon wafer and die deliveries prior to July 1, 1997
in exchange for a payment from Fujitsu to the Company of $2,254,257 and
provided mutual releases of silicon-related claims for periods through June 30,
1997 (except for certain warranty claims by the Company and certain invoices
rendered in the ordinary course by Fujitsu for purchases by the Company). The
foregoing description of the Reimbursement Agreement is qualified in its
entirety by reference to such agreement, a copy of which is attached hereto as
Exhibit 10.2 and incorporated herein in its entirety by reference.
In addition, on September 30, 1997, Fujitsu and the Company entered into a
letter agreement (the "Wafer Supply Agreement in Principle") which sets forth
the parties' agreement in principle on the terms of a wafer supply agreement.
The Stock Purchase Agreement, the Reimbursement Agreement and the Wafer
Supply Agreement in Principle were approved by the Special Committee of the
Registrant's Board of Directors (the "Special Committee") comprised of Fred T.
May, the Registrant's Chairman of the Board, who is not associated in any way
with Fujitsu. In connection with this transaction, the Special Committee had
independent legal and financial advice and received an opinion dated September
30, 1997 from an independent investment banking firm to the effect that, as of
that date, the Recapitalization Transaction was fair to Registrant's
stockholders (other than Fujitsu) and the Registrant from a financial point of
view.
On September 30, 1997, the Registrant issued a press release announcing
the foregoing transactions, a copy of which is attached hereto as Exhibit 99.2
and incorporated herein in its entirety by reference.
Item 7. Exhibits.
3.1 Certificate of Designation of Series B Convertible Preferred Stock of
the Registrant.
10.1 Stock Purchase Agreement between Fujitsu Limited and the Registrant
dated as of September 30, 1997.
10.2 Agreement for Reimbursement of Wafer Payments between the Registrant
and Fujitsu Limited dated as of September 30, 1997.
99.1 Pro Forma Condensed Consolidated Balance Sheet of the Registrant as of
August 31, 1997.
99.2 Press release dated September 30, 1997.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
ROSS TECHNOLOGY, INC.
Date: October 3, 1997 By:/s/ FRANCIS S. (KIT) WEBSTER III
-------------------------------------
Francis S. (Kit) Webster III
Chief Financial Officer and
Secretary
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description
- ------- -----------
<S> <C>
3.1 Certificate of Designation of Series B Convertible Preferred
Stock of the Registrant.
10.1 Stock Purchase Agreement between Fujitsu Limited and the
Registrant dated as of September 30, 1997.
10.2 Agreement for Reimbursement of Wafer Payments between the
Registrant and Fujitsu Limited dated as of September 30, 1997.
99.1 Pro Forma Condensed Consolidated Balance Sheet of the Registrant
as of August 31, 1997.
99.2 Press Release dated September 30, 1997.
</TABLE>
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EXHIBIT 3.1
CERTIFICATE OF DESIGNATION OF
SERIES B CONVERTIBLE PREFERRED STOCK
OF
ROSS TECHNOLOGY, INC.
ROSS Technology, Inc., (hereinafter called the "Corporation"), a
corporation organized and existing under and by virtue of the General
Corporation Law of the State of Delaware, does hereby certify:
1. The name of the corporation is ROSS Technology, Inc.
2. The certificate of incorporation of the Corporation authorizes
the issuance of 75,000,000 shares of Preferred Stock, $.001 par value, and
expressly vests in the Board of Directors of the corporation the authority
provided therein to provide for the issuance of said shares in series and by
filing a certificate pursuant to the applicable law of the State of Delaware,
to establish from time to time the number of shares to be included in each such
series, and to fix the designation, powers, preferences and rights of the
shares of each such series and the qualifications, limitations, or restrictions
thereof.
3. The Corporation previously authorized a series of Preferred
Stock designated the "Series A Convertible" issue of Preferred Stock. The
Certificate of Incorporation of the Corporation was amended to delete the
Series A Convertible Preferred Stock, such series is no longer authorized and
no shares of such series are currently issued and outstanding.
4. The Board of Directors of the Corporation, pursuant to the
authority expressly vested in it as aforesaid, has adopted the following
resolutions creating a "Series B Convertible" issue of Preferred Shares:
RESOLVED, that a series of the class of authorized Preferred Stock of
the Corporation be and hereby is created, and that the designation and amount
thereof and the voting powers, preferences and relative participating, optional
and other special rights of the shares of such series, and the qualifications,
limitations or restrictions thereof are as follows:
SERIES B CONVERTIBLE PREFERRED STOCK
1. Designation And Amount. The shares of such series shall be
designated "Series B Convertible Preferred Stock" (the "Series B Preferred
Stock") and the number of shares constituting such series shall be 500,000.
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2. Dividends.
(a) The Series B Preferred Stock shall be entitled to receive
dividends when and as declared by the Board of Directors out of funds legally
available therefor; provided, however, that no dividends shall be declared or
paid upon the Common Stock or any other stock ranking on liquidation junior to
the Series B Preferred Stock (such stock being referred to hereinafter
collectively as "Junior Stock") unless (i) after the payment of the dividend on
the Common Stock and Junior Stock (and the simultaneous dividend on the Series
B Preferred Stock) the Company's net worth exceeds the aggregate liquidation
preference of the Series B Preferred Stock (provided that this clause (i) shall
not apply if the dividend is approved by the holders of a majority of the
outstanding shares of Series B Preferred Stock) and (ii) there shall be
simultaneous declaration or payment, as applicable, of a dividend upon the
Series B Preferred Stock.
(b) In the case of any dividend being declared upon the Common
Stock, the dividend which shall be declared upon each share of Series B
Preferred Stock as a condition to such dividend upon the Common Stock shall be
equal in amount to the dividend payable upon that number of shares of Common
Stock acquirable upon conversion of a share of Series B Preferred Stock
immediately before the declaration of such dividend, with such conversion being
based on the then applicable Conversion Price determined in accordance with
Section 5(a) as of the record date for the declaration of such dividend on the
Common Stock.
(c) In the case of any dividend being declared upon any class of
Junior Stock that is convertible into Common Stock, the amount of the dividend
which shall be declared upon each share of Series B Preferred Stock as a
condition to such dividend on Junior Stock, divided by the number of shares of
Common Stock acquirable upon conversion of a share of Series B Preferred Stock,
shall equal the amount of the dividend declared upon each share of such class
of Junior Stock, divided by the number of shares of Common Stock acquirable
upon conversion of a share of such class of Junior Stock, in each case assuming
such conversion occurred immediately before the declaration of such dividend.
(d) In the case of any dividend being declared upon any class of
Junior Stock (other than Common Stock) that is not convertible into Common
Stock, the amount of the dividend which shall be declared upon each share of
Series B Preferred Stock as a condition to such dividend on such Junior Stock
shall be as determined by the Board of Directors at the time of such
declaration.
(e) Holders of shares of Series B Preferred Stock shall be
entitled to share equally, share for share, in all such dividends declared upon
the Series B Preferred Stock.
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3. Liquidation, Dissolution Or Winding Up.
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of shares of Series B
Preferred Stock then outstanding shall be entitled to be paid out of the assets
of the Corporation available for distribution to its stockholders, after and
subject to the payment in full of all amounts required to be distributed to the
holders of any Preferred Stock of the Corporation ranking on liquidation prior
and in preference to the Series B Preferred Stock (such Preferred Stock that is
senior to the Series B Preferred Stock being referred to hereinafter as "Senior
Stock") upon such liquidation, dissolution or winding up, but before any
payment shall be made to the holders of Common Stock or other Junior Stock, an
amount equal to $100.00 per share ("Liquidation Preference") (subject to
adjustment in the event of any stock dividend, stock split, stock distribution
or combination with respect to such shares). If upon any such liquidation,
dissolution or winding up of the Corporation, the remaining assets of the
Corporation available for the distribution to its stockholders after payment in
full of amounts required to be paid or distributed to holders of any other
Senior Stock shall be insufficient to pay the holders of shares of Series B
Preferred Stock the full amount to which they shall be entitled, the holders of
shares of Series B Preferred Stock, and any class of stock ranking on
liquidation on a parity with the Series B Preferred Stock (such Preferred Stock
ranking on liquidation on parity with the Series B Preferred Stock being
referred to as "Parity Stock"), shall share ratably in any distribution of the
remaining assets and funds of the Corporation in proportion to the respective
amounts which would otherwise be payable with respect to the shares held by
them upon such distribution if all amounts payable on or with respect to said
shares were paid in full. Except as set forth in this clause (a), holders of
shares of Series B Preferred Stock shall not be entitled to any distribution in
the event of liquidation, dissolution or winding up of the Corporation.
(b) The merger or consolidation of the Corporation with or into
any other corporation or entity, or the sale or conveyance of all or
substantially all the assets of the Corporation, shall not be deemed to be a
liquidation, dissolution or winding up of the Corporation for purposes of this
Section 3.
4. Voting.
(a) Series B Preferred Stock shall not be entitled to vote in
elections of directors. Series B Preferred Stock shall be entitled to vote on
such matters as provided herein and on such other matters as to which such
stock is, as a matter of law, entitled to vote.
(b) With respect to any matter as to which Series B Preferred
Stock is entitled to vote, each issued and outstanding share of Series B
Preferred Stock shall be entitled to a number of votes equal to the number of
shares of Common Stock into which each such share of Series B Preferred Stock
is convertible (as adjusted from time to time pursuant to Section 5 hereof).
Except as otherwise provided by law, or by the provisions
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of paragraph (c) and (d) below, holders of Series B Preferred Stock entitled
to vote, shall vote together with the holders of any other Preferred Stock and
Common Stock as a single class.
(c) The consent of holders of at least a majority of the
outstanding shares of Series B Preferred Stock, voting separately as a single
class, in person or by proxy, either in writing without a meeting or at a
special or annual meeting of stockholders called for such purpose, shall be
necessary to amend, modify or repeal any provision of the Certificate of
Incorporation (including any provision of the Certificate of Designation of
Series B Convertible Preferred Stock) in any manner which would adversely
affect the powers, preferences or special rights of the Series B Preferred
Stock. The authorization or creation of any shares of any class or series of
Senior Stock or Parity Stock of the Corporation or the reclassification of any
authorized stock of the Corporation into any such Senior Stock or Parity Stock,
or the creation or authorization of any obligation or security convertible into
or evidencing the right to purchase shares of any such Senior Stock or Parity
Stock shall be deemed to adversely affect the Series B Preferred Stock. The
authorization or creation of any shares of any class or series of Junior Stock
of the Corporation or the reclassification of any authorized stock of the
Corporation into any such Junior Stock, or the creation or authorization of any
obligation or security convertible into or evidencing the right to purchase
shares of any such Junior Stock shall be deemed not to adversely affect the
powers, preferences or special rights of the Series B Preferred Stock.
(d) Unless the vote or consent of the holders of a greater number
of shares shall then be required by law, the consent of the holders of at least
a majority of the outstanding shares of Series B Preferred Stock, voting
together as a separate class, in person or proxy, either in writing without a
meeting or at a special or annual meeting of stockholders called for such
purpose, shall be necessary to authorize or effect (i) any sale, lease,
transfer or other disposition of all or substantially all of the assets of the
Corporation; (ii) any merger or consolidation or other reorganization of the
Corporation with or into another corporation; (iii) the acquisition by the
Corporation of another corporation whether by means of a purchase of stock or
the purchase of all or substantially all of the assets of such corporation or
otherwise if holders of the Common Stock of the Corporation are entitled to
vote to authorize or effect such acquisition; (iv) a liquidation, winding up or
dissolution of the Corporation or adoption of any plan of the same.
5. Conversion Rights.
(a) Definitions.
"Conversion Price" shall mean the Market Price of the Common
Stock; except that (i) during the two year period following the initial
issuance of shares of Series B Preferred Stock, the Conversion Price shall be
equal to $2.50; and (ii) on the occurrence of a Special Conversion Event, the
Conversion Price shall be equal to the
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lower of Market Price and $2.00; provided that the Conversion Price shall in no
event be less than $1.00.
"Market Price" shall mean, as of any date, the value of the
Common Stock, determined based on the average closing sales price for such
stock on The Nasdaq National Market (or if not traded thereon, then on the
primary exchange on which the Common Stock is then traded) for the last five
consecutive trading days immediately prior to the date of determination, as
reported by the Wall Street Journal. In the absence of an established market
for the Common Stock, the Market Price shall be determined in good faith by
the Board of Directors of the Corporation.
"Special Conversion Event" shall mean and shall be deemed to
occur :
(i) in the event (x) the Corporation shall commence any case,
proceeding or other action under any law relating to bankruptcy, insolvency,
reorganization or relief of debtors, or seeking to adjudicate it a bankrupt or
insolvent or seeking reorganization, arrangement, winding-up, liquidation,
dissolution or other relief with respect to it or its debts, or (y) the
Corporation shall commence any case, proceeding or other action seeking
appointment of a receiver, trustee or custodian or other similar official for
it or for all or any substantial part of its assets, or if the Corporation
shall make a general assignment for the benefit of its creditors, or (z) there
shall be commenced against the Corporation, any case, proceeding or other
action of a nature referred to in clause (x) or (y) which results in an entry
of an order for adjudication or appointment or which remains undismissed for 60
days after commencement; or
(ii) upon the declaration of the existence of such an event by the
holders of a majority of the outstanding shares of Series B Preferred Stock at
any time during the ninety day period following any request by the Corporation
for funding or credit support from Fujitsu Limited ("Fujitsu") (including any
increase in Fujitsu's guarantee of the Corporation's debt or other obligations
in excess of $20,000,000, but excluding payments made by Fujitsu in the
ordinary course of business or as otherwise expressly agreed in writing by the
parties), which request is (a) made with respect to the Corporation's fiscal
year 1998 and is in excess of the requirements for funding by Fujitsu set forth
in the Corporation's financial plan for the fiscal year 1998 or (b) made with
respect to any fiscal period after the Corporation's fiscal year 1998 (each a
"Triggering Event"). Failure to declare a Special Conversion Event after any
Triggering Event shall not limit the right of the majority holders of the
Series B Preferred Stock to declare a Special Conversion Event within the
ninety day period following any other or subsequent Triggering Event.
(b) Each share of Series B Preferred Stock may be converted at
any time, at the option of the holder thereof, in the manner hereinafter
provided, into such number of fully-paid and nonassessable shares of Common
Stock as is determined by dividing the Liquidation Preference per share of
Series B Preferred Stock by the
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Conversion Price, defined above. On such conversion holders of the Series B
Preferred Stock shall be entitled to be paid an amount equal to any declared
and unpaid dividends.
(c) The Corporation shall not issue fractions of shares of Common
Stock upon conversion of Series B Preferred Stock. If any fraction of a share
of Common Stock would, except for the provisions of this paragraph (c), be
issuable upon conversion of any Series B Preferred Stock, the Corporation shall
in lieu thereof pay to the person entitled thereto an amount in cash equal to
the current value of such fraction, calculated to the nearest one-hundredth
(1/100) of a share, to be computed based upon the then applicable Conversion
Price.
(d) Whenever the Conversion Price shall be adjusted as provided
in Section 6 hereof, the Corporation shall forthwith cause a notice setting
forth any such adjustments to be sent by mail, first class, postage prepaid, to
each record holder of Series B Preferred Stock at his or its address appearing
on the stock register. Such notice shall set forth in reasonable detail the
facts requiring such adjustment and the conversion rate that will be effective
after such adjustment. If such notice relates to an adjustment resulting from
an event referred to in paragraph 6(c), such notice shall be included as part
of the notice required to be mailed and published under the provisions of
paragraph 6(c) hereof.
(e) In order to exercise the conversion privilege, the holder of
any Series B Preferred Stock to be converted shall surrender his or its
certificate or certificates therefore to the Corporation at its principal
office, and shall give written notice to the Corporation at such office that
the holder elects to convert the Series B Preferred Stock represented by such
certificates, or any number thereof. Such notice shall also state the name or
names (with address) in which the certificate or certificates for shares of
Common Stock which shall be issuable on such conversion shall be issued,
subject to any restrictions on transfer relating to shares of the Series B
Preferred Stock or shares of Common Stock upon conversion thereof and
applicable federal and state securities laws. If so required by the
Corporation, certificates surrendered for conversion shall be endorsed or
accompanied by written instrument or instruments of transfer, in form
satisfactory to the Corporation, duly authorized in writing. In case the
notice specifies a name or names other than the holder's name, such notice
shall be accompanied by payment of all transfer taxes payable upon the issuance
of the shares of Common Stock in such name or names. The date of receipt by
the Corporation of the certificates and notice shall be the conversion date. As
soon as practicable, and in any event within five business days after receipt
of such notice and the surrender of the certificate or certificates for Series
B Preferred Stock as aforesaid, and if applicable, the payment of all transfer
taxes, the Corporation shall deliver or cause to be delivered at such office to
such holder, (i) a certificate or certificates representing the number of
validly issued, fully paid and non-assessable shares of Common Stock issuable
on such conversion in accordance with the provisions hereof and cash as
provided in paragraph (c) of this Section 5 in respect of any fraction of a
share of Common Stock otherwise issuable upon such conversion; and (ii) if
less than the full amount of shares of Series B Preferred Stock
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evidenced by the surrendered certificate or certificates are being converted, a
new certificate or certificates for the number of shares of Series B Preferred
Stock evidenced by the surrendered certificate or certificates less the number
of shares of Series B Preferred Stock converted.
(f) The Corporation shall at all times when the Series B Preferred
Stock shall be outstanding reserve and keep available out of its authorized but
unissued stock, for the purposes of effecting the conversion of the Series B
Preferred Stock, such number of its duly authorized shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all
outstanding Series B Preferred Stock. Before taking any action which would
cause an adjustment reducing the Conversion Price below the then par value of
the shares of Common Stock issuable upon conversion of the Preferred Stock, the
Corporation will take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Corporation may validly and legally
issue fully-paid and nonassessable shares of such Common Stock at such adjusted
Conversion Price.
(g) All shares of Series B Preferred Stock which shall have been
surrendered for conversion as herein provided shall no longer be deemed to be
outstanding and all rights with respect to such shares, including the rights,
if any, to receive notices and to vote, shall forthwith cease and terminate
except only the right of the holders thereof to receive shares of Common Stock
in exchange therefor and payment of any declared and unpaid dividends thereon
upon such surrender. Any shares of Series B Preferred Stock so converted shall
be retired and canceled and shall not be reissued, and the Corporation may from
time to time take such appropriate action as may be necessary to reduce the
authorized Series B Preferred Stock accordingly.
6. Anti-Dilution and Notice Provision.
(a) In order to prevent dilution of the right granted hereunder,
the Conversion Price (except at such times when the Conversion Price equals the
Market Price pursuant to paragraph 5(a)) shall be subject to adjustment from
time to time in accordance with paragraph 6(b). At any given time the
Conversion Price, shall be that dollar (or part of a dollar) amount the payment
of which shall be sufficient at the given time to acquire one share of the
Corporation's Common Stock upon conversion of shares of Series B Preferred
Stock. Upon each adjustment of the Conversion Price pursuant to this Section
6, the registered holder of shares of Series B Preferred Stock shall thereafter
be entitled to acquire upon conversion, at the Conversion Price resulting from
such adjustment, the number of shares of the Corporation's Common Stock
obtainable by multiplying the Conversion Price in effect immediately prior to
such adjustment by the number of shares of the Corporation's Common Stock
acquirable immediately prior to such adjustment and dividing the product
thereof by the Conversion Price resulting from such adjustment.
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(b) In case the Corporation shall at any time subdivide its
outstanding shares of Common Stock into a greater number of shares, or declare
a dividend or make any other distribution upon the stock of the Corporation
payable in Common Stock, the Conversion Price in effect immediately prior to
such subdivision, dividend or distribution shall be proportionately reduced,
and, conversely, in case the outstanding shares of Common Stock of the
Corporation shall be combined into a smaller number of shares, the Conversion
Price in effect immediately prior to such combination shall be proportionately
increased. For purposes of this paragraph 6(b), in case the Corporation shall
take a record of the holders of its Common Stock for the purpose of entitling
them (x) to receive a dividend or other distribution payable in Common Stock,
or (y) to subscribe for or purchase Common Stock, then such record date shall
be deemed to be the date of the issue or sale of the shares of Common Stock
issued upon the declaration of such dividend or the making of such other
distribution.
(c) In the event that:
(1) the Corporation shall declare any cash dividend upon
its Common Stock, or
(2) the Corporation shall declare any dividend upon its
Common Stock payable in stock or make any special dividend or other
distribution to the holders of its Common Stock, or
(3) the Corporation shall offer for subscription pro rata
to the holders of its Common Stock any additional shares of stock of
any class or other rights, or
(4) there shall be any capital reorganization or
reclassification of the capital stock of the Corporation, including
any subdivision or combination of its outstanding shares of Common
Stock, or consolidation or merger of the Corporation with, or sale of
all or substantially all of its assets to, another corporation, or
(5) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Corporation.
then, in connection with such event, the Corporation shall give to the holders
of the Series B Preferred Stock:
(i) at least twenty (20) days' prior written notice of the
date on which the books of the Corporation shall close or a record
shall be taken for such dividend, distribution or subscription rights
or for determining rights to vote in respect of any such
reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up; and
(ii) in the case of any such reorganization,
reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up, at least
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twenty (20) days' prior written notice of the date when the same
shall take place. Such notice in accordance with the foregoing
clause (i) shall also specify, in the case of any such dividend,
distribution or subscription rights, the date on which the holders of
Common Stock shall be entitled thereto, and such notice in accordance
with the foregoing clause (ii) shall also specify the date on which
the holders of Common Stock shall be entitled to exchange their Common
Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up, as the case may be. Each such
written notice shall be given by first class mail, postage prepaid,
addressed to the holders of the Series B Preferred Stock at the
address of each such holder as shown on the books of the Corporation.
(d) If at any time or from time to time on or after the filing
date of this Certificate of Designation, the Corporation shall grant, issue or
sell any options, convertible securities or rights to purchase property (the
"Purchase Rights") pro rata to the record holders of any class of Common Stock
of the Corporation, then each holder (as of the date of such grant, issuance or
sale) of Series B Preferred Stock shall be entitled to acquire (within thirty
(30) days after the later to occur of the initial exercise date of such
Purchase Rights or receipt by such holder of the notice concerning Purchase
Rights to which such holder shall be entitled under paragraph 6(c)) and upon
the terms applicable to such Purchase Rights either:
(i) the aggregate Purchase Rights which such holder could have
acquired if it had held the number of shares of Common Stock
acquirable upon conversion of the Series B Preferred Stock
immediately before the grant, issuance or sale of such
Purchase Rights; provided that if any Purchase Rights were
distributed to holders of Common Stock without the payment of
additional consideration by such holders, corresponding
Purchase Rights shall be distributed to the exercising
holders of the Series B Preferred Stock as soon as possible
after such exercise and it shall not be necessary for the
exercising holder of the Series B Preferred Stock
specifically to request delivery of such rights; or
(ii) in the event that any such Purchase Rights shall have
expired or shall expire prior to the end of said thirty (30)
day period, the number of shares of Common Stock or the
amount of property which such holder could have acquired
upon such exercise at the time or times at which the
Corporation granted, issued or sold such expired Purchase
Rights.
(e) If any event occurs as to which, in the opinion of the Board
of Directors of the Corporation, the provisions of this Section 6 are not
strictly applicable or if strictly applicable would not fairly protect the
rights of the holders of the Series B
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Preferred Stock in accordance with the essential intent and principles of such
provisions, then the Board of Directors shall make an adjustment in the
application of such provisions, in accordance with such essential intent and
principles, so as to protect such rights as aforesaid, but in no event shall
any adjustment have the effect of increasing the Conversion Price as otherwise
determined pursuant to any of the provisions of this Section 6 except in the
case of a combination of shares of a type contemplated in paragraph 6(b) and
then in no event to an amount larger than the Conversion Price as adjusted
pursuant to paragraph 6(b). .
7. No Redemption Rights.
The Series B Preferred Stock shall not be subject to redemption,
whether at the option of either the Corporation or any holder of the Series B
Preferred Stock.
FURTHER RESOLVED, that the statements contained in the foregoing
resolutions creating and designating the said Series B Convertible issue of
Preferred Shares and fixing the number, powers, preferences and relative,
optional, participating, and other special rights and the qualifications,
limitations, restrictions, and other distinguishing characteristics thereof
shall, upon the effective date of said series, be deemed to be included in and
be a part of the certificate of incorporation of the corporation pursuant to
the provisions of Sections 104 and 151 of the General Corporation Law of the
State of Delaware.
[NEXT PAGE IS THE SIGNATURE PAGE]
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<PAGE> 11
IN WITNESS WHEREOF, said Corporation has caused this Certificate to
be signed by its Secretary, this 29th day of September, 1997. The signature
below shall constitute the affirmation or acknowledgment of the signatory,
under penalties of perjury, that the instrument is the act and deed of the
Corporation and that the facts stated herein are true.
Name: /s/ FRANCIS S. (KIT) WEBSTER III
--------------------------------
Francis S. (Kit) Webster III
Chief Financial Officer
and Secretary
11
<PAGE> 1
EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
by and between
FUJITSU LIMITED,
as Buyer
and
ROSS TECHNOLOGY, INC.,
as Seller
Dated as of September 30, 1997
<PAGE> 2
<TABLE>
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<S> <C>
ARTICLE I PURCHASE AND SALE OF STOCK . . . . . . . . . . . . . . . . . . . . 1
1.1 Purchase of Stock . . . . . . . . . . . . . . . . . . . . . 1
1.2 Consideration . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Closing and Closing Date . . . . . . . . . . . . . . . . . . 2
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . . . . . 2
2.1 Authority . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Organization and Good Standing . . . . . . . . . . . . . . . 2
2.3 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . 3
2.3.1 Outstanding Stock . . . . . . . . . . . . . . . . . . 3
2.3.2 Options . . . . . . . . . . . . . . . . . . . . . . . 3
2.3.3 Other Arrangements . . . . . . . . . . . . . . . . . 3
2.4 Execution of Agreement Causes No Violation . . . . . . . . . 3
2.6 Financial Condition . . . . . . . . . . . . . . . . . . . . 4
2.6.1 Company Financial Statements . . . . . . . . . . . . 4
2.6.2 Undisclosed Liabilities . . . . . . . . . . . . . . . 4
2.6.3 Absence of Certain Changes . . . . . . . . . . . . . 5
2.7 No Proceedings . . . . . . . . . . . . . . . . . . . . . . . 5
2.8 Governmental Approvals . . . . . . . . . . . . . . . . . . . 5
2.9 Compliance with Laws . . . . . . . . . . . . . . . . . . . . 6
2.10 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.11 Intellectual Property . . . . . . . . . . . . . . . . . . . 6
2.11.1 Intellectual Property Rights . . . . . . . . . . . . 6
2.11.2 Absence of Infringement . . . . . . . . . . . . . . 7
2.11.3 Proprietary Software . . . . . . . . . . . . . . . . 7
2.11.4 Trade Secrets . . . . . . . . . . . . . . . . . . . 7
2.12 No Brokerage or Finder's Fees . . . . . . . . . . . . . . . 7
2.13 Material Misstatements or Omissions. . . . . . . . . . . . . 7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . . . 8
3.1 Authority . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.2 Organization and Good Standing . . . . . . . . . . . . . . . 8
3.3 Execution of Agreement Causes No Violation . . . . . . . . . 8
3.4 Investment Representation . . . . . . . . . . . . . . . . . 8
ARTICLE IV CONDITIONS PRECEDENT TO CLOSING . . . . . . . . . . . . . . . . . 8
4.1 Conditions Precedent to Obligations of Buyer . . . . . . . . 8
4.1.1 Representations and Warranties . . . . . . . . . . 9
4.1.2 Corporate Action . . . . . . . . . . . . . . . . . 9
4.1.3 No Prohibition of Transaction . . . . . . . . . . . 9
4.1.4 Opinion of Company's Counsel . . . . . . . . . . . 9
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
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<S> <C>
4.1.5 Nasdaq Listing . . . . . . . . . . . . . . . . . . 9
4.1.6 Consents . . . . . . . . . . . . . . . . . . . . . 9
4.1.7 Return of Guarantee . . . . . . . . . . . . . . . . 9
4.1.8 Certain Agreements . . . . . . . . . . . . . . . . 10
4.1.9 Supply Agreement in Principle . . . . . . . . . . . 10
4.2 Conditions Precedent to Obligations of Company . . . . . . . 10
4.2.1 Representations and Warranties . . . . . . . . . . 10
4.2.2 Corporate Action . . . . . . . . . . . . . . . . . 10
4.2.3 No Prohibition of Transaction . . . . . . . . . . . 10
4.2.4 Supply Agreement in Principle . . . . . . . . . . . 10
4.2.5 Nasdaq Listing . . . . . . . . . . . . . . . . . . 10
ARTICLE V CERTAIN OTHER COVENANTS OF THE PARTIES . . . . . . . . . . . . . . 11
5.1 Further Assurances and Disclosures . . . . . . . . . . . . . 11
5.2 Public Statements . . . . . . . . . . . . . . . . . . . . . 11
5.3 Other Actions . . . . . . . . . . . . . . . . . . . . . . . 11
5.4 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.5 Knowledge and Special Covenant of Buyer . . . . . . . . . . 11
5.6 Assurance Letter . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE VI INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.1 The Company's Indemnification . . . . . . . . . . . . . . . 12
6.2 Buyer's Indemnification . . . . . . . . . . . . . . . . . . 12
ARTICLE VII TERMINATION AND ABANDONMENT OF AGREEMENT . . . . . . . . . . . . 13
7.1 Grounds for Termination . . . . . . . . . . . . . . . . . . 13
7.1.1 Mutual Consent . . . . . . . . . . . . . . . . . . 13
7.1.2 Breach or Misrepresentation by the Company . . . . 13
7.1.3 Breach or Misrepresentation by Buyer . . . . . . . 13
7.1.4 Prohibition by Law . . . . . . . . . . . . . . . . 13
7.1.5 Failure to Close . . . . . . . . . . . . . . . . . 14
7.2 Effect of Termination . . . . . . . . . . . . . . . 14
ARTICLE VIII GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . 14
8.1 Schedules . . . . . . . . . . . . . . . . . . . . . . . . . 14
8.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 14
8.3 Assignment; No Third Party Beneficiaries . . . . . . . . . . 15
8.4 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.5 Entire Agreement; Amendments . . . . . . . . . . . . . . . . 15
8.6 Definitions . . . . . . . . . . . . . . . . . . . . . . . . 16
8.6.1 List of Defined Terms . . . . . . . . . . . . . . . 16
8.6.2 Accounting Terms . . . . . . . . . . . . . . . . . 16
8.6.3 Certain Specific Terms . . . . . . . . . . . . . . 16
8.6.4 Material Adverse Effect . . . . . . . . . . . . . . . 16
8.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 16
8.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
ii
<PAGE> 4
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") is made and entered into
as of September 30, 1997, by and between Fujitsu Limited, a Japanese
corporation ("Buyer"), and Ross Technology, Inc., a Delaware corporation (the
"Company").
RECITALS
A. The Company has filed a Certificate of Designation for the
Company's new Series B Convertible Preferred Stock, $.001 par value (the
"Series B Preferred Stock") in the form attached as Exhibit A. The Company's
financial plan for fiscal year 1998 and thereafter (the "Business Plan")
referred to below and in the Certificate of Designation has been separately
provided to Buyer for purposes of identification under a confirmatory letter
dated as of the date of this Agreement, and all references herein or in the
Certificate of Designation shall be to such Business Plan, without regard to
any subsequent amendment or modification.
B. Buyer desires to purchase from the Company and the Company
desires to sell to Buyer on the other terms and conditions set forth herein,
shares of the Series B Preferred Stock of the Company, with such rights,
preferences and restrictions as set forth in Exhibit A.
C. The Special Committee of the Board of Directors of the Company
has received a favorable opinion (the "Fairness Opinion") from Robertson,
Stephens & Company LLC, dated as of the date hereof, as to the fairness, as of
such date, to the Company's Stockholders (other than Buyer) and the Company,
from a financial point of view, of the recapitalization transaction.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants, agreements, representations and warranties contained in this
Agreement, and other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF STOCK
1.1 Purchase of Stock. Subject to the terms and conditions set
forth herein, the Company hereby agrees to sell, transfer and deliver to Buyer
on the Closing Date, and Buyer hereby agrees to purchase and accept from the
Company on the Closing Date, in exchange for the consideration described in
Section 1.2, Five Hundred Thousand (500,000) shares (the "Shares") of the
Company's Series B Preferred Stock, with the rights, preferences and
restrictions set forth in Exhibit A.
1.2 Consideration. At the Closing, Buyer shall pay consideration
valued at $50,000,000 to be delivered as follows: Buyer shall wire transfer to
Dai-Ichi Kangyo Bank, Ltd. ("DKB") on behalf of the Company, an aggregate
amount equal to Fifty Million Dollars (US$50,000,000) (the "Guarantee
Payment"), in partial payment of the Company's outstanding
1
<PAGE> 5
indebtedness to DKB; such payment being made in satisfaction of Buyer's
obligations under the Letters of Guaranty dated November 18, 1996 and February
20, 1997 between DKB and Buyer (collectively the "DKB Guarantees") pursuant to
which Buyer agreed to guarantee certain debt obligations of the Company. Upon
the terms and subject to the conditions contained herein, the Company will
sell, deliver and transfer the Shares to Buyer at the Closing, and Buyer will
purchase and accept the Shares from the Company, in full and complete
satisfaction of the Company's obligation to reimburse Buyer for the Guarantee
Payment.
1.3 Closing and Closing Date. The closing of the transactions
contemplated by this Agreement (the "Closing") shall take place at the Los
Angeles office of Morrison & Foerster on or before September 29, 1997, or on
such other date and at such other place as may be agreed upon in writing by the
parties (the "Closing Date").
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Buyer as of the date of
this Agreement and as of the Closing Date (except that those representations
and warranties which are stated as of a specific date shall, on the date of the
signing and on the Closing Date, be true and correct as of said specified date)
as follows:
2.1 Authority. The Company has the absolute and unrestricted
corporate right, power, authority and capacity to execute and deliver this
Agreement, and to perform the obligations hereunder. The execution and
delivery of this Agreement by the Company and the performance by the Company of
the transactions contemplated herein have been duly authorized by the Special
Committee of the Board of Directors of the Company and by the full Board of
Directors of the Company and no other corporate action by the Company is
necessary to authorize this Agreement and the transactions contemplated herein.
This Agreement has been duly executed by the Company and constitutes the legal,
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or affecting creditors' rights, and by general principles of equity. The
Company has delivered or will deliver to Buyer prior to Closing true and
correct copies of resolutions of the Special Committee of the Board of
Directors of the Company and resolutions of the full Board of Directors of the
Company authorizing the transactions contemplated herein.
2.2 Organization and Good Standing. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. The Company has full corporate power and authority to own,
lease and operate its assets, properties and business and to carry on its
business as it is now being and has since its organization been conducted. The
Company is qualified or otherwise authorized as a foreign corporation to
transact business in, and is in good standing in each other jurisdiction in
which such qualification or authorization is required by law and in which
failure to qualify or be authorized would have a material adverse effect on the
Company's business or properties.
2
<PAGE> 6
2.3 Capital Stock.
2.3.1 Outstanding Stock. The Company is authorized to
issue (i) One Hundred Million (100,000,000) shares of Common Stock, $.001 par
value, of which, 23,563,011 shares (excluding treasury shares) are issued and
outstanding as of September 25, 1997 and no additional shares of Common Stock
shall be issued after such date and prior to the Closing except in connection
with the exercise, if any, of employee stock options granted under option plans
disclosed in the Company SEC Filings and outstanding as of the date hereof, and
(ii) Seventy Five Million (75,000,000) shares of Preferred Stock, $.001 par
value, none of which are issued and outstanding. As of September 25, 1997,
321,429 shares of Common Stock are issued and held in the treasury of the
Company. Upon the filing of the Certificate of Designation, the Company will be
authorized to issue 500,000 shares of Series B Preferred Stock. No other class
of capital stock of the Company is authorized or outstanding. All outstanding
shares of the capital stock of the Company have been duly authorized and validly
issued and are fully paid and non-assessable. The issuance and sale of the
Shares has been duly authorized and upon payment therefor as provided herein,
the Shares will be validly issued, fully paid and non-assessable. There are no
bonds, debentures, notes or other indebtedness having general voting rights (or
convertible into securities having such rights) of the Company issued and
outstanding.
2.3.2 Options. Except for option plans disclosed in the
Company's SEC Filings and the grant of options approved by the Board of
Directors or a designated committee of the Board of Directors of the Company,
there are no outstanding rights, subscriptions, warrants, calls, preemptive
rights, options, conversion rights, commitments or other agreements of any kind
to issue, transfer, purchase or acquire, or any securities convertible into or
exchangeable for, any shares of any class of capital stock or other equity
interest of the Company, and there is no commitment of the Company to issue any
shares, warrants, options or other such rights or to distribute to holders of
any class of its capital stock any evidences of indebtedness or assets.
2.3.3 Other Arrangements. There are no outstanding
obligations of the Company to repurchase, redeem or otherwise acquire, any
shares of capital stock of the Company or affiliate of the Company or to
provide funds to make any investment (in the form of a loan, capital
contribution or otherwise) in any subsidiary or any other entity or to make or
pay any dividend in respect thereof. Except as provided in the Shareholders
Agreement dated November 10, 1995, (the "Shareholders Agreement") among the
Company, Buyer, Sun Microsystems, Inc. ("Sun Microsystems") and Roger D. Ross,
there are no outstanding obligations of the Company to file a registration
statement under the Securities Act of 1933, as amended (the "Securities Act")
or which otherwise relate to the registration of any securities of the Company
under the Securities Act. The Company acknowledges and agrees that the Common
Stock issuable on conversion of the Shares will have the benefits of the
registration rights set forth in the Shareholders Agreement.
2.4 Execution of Agreement Causes No Violation. The execution and
delivery of this Agreement and the consummation or performance of any of the
contemplated transactions will not, directly or indirectly: (i) contravene,
conflict with or result (with or without notice or lapse of time) in a
violation of (x) any of the provisions of the Certificate of
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<PAGE> 7
Incorporation or the Bylaws of the Company or (y) any resolution adopted by the
Board of Directors; (ii) contravene or conflict with, or result (with or
without notice or lapse of time) in a violation of any federal, state, local,
municipal, foreign or other law, statute, ordinance, rule, regulation,
directive or other legal requirement or any order, judgment, injunction,
ruling, decision, writ or sentence rendered by any court, agency or other
Governmental Authority ("Law") to which the Company, or any of the assets owned
or used by the Company, may be subject; (iii) contravene or conflict with, or
result (with or without notice or lapse of time) in a violation or material
breach of any of the provisions of, or give any person or entity the right
(with or without notice or lapse of time) to declare a default or exercise any
remedy under, or to accelerate the maturity or performance of or cancel,
terminate or modify, any contract, license, permit, or authorization to which
the Company is a party or under which the Company has any rights, or by which
the Company, or any of the assets owned or used by the Company, may be bound;
or (iv) result (with or without notice or lapse of time) in the imposition or
creation of any lien, charge, encumbrance, or other restriction upon or with
respect to any of the assets of the Company; other than (in the cases of
clauses (ii), (iii) and (iv) only) such as could not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect on the
Company. As used in this Agreement, the term "Material Adverse Effect" shall
mean, with respect to any party, a material adverse effect on the business,
assets, condition (financial or other) or operating results of such party,
taken as a whole.
2.5 Intentionally omitted.
2.6 Financial Condition.
2.6.1 Company Financial Statements. The financial
statements of the Company included in the Company filings with the Securities
and Exchange Commission (the "Company SEC Filings") have been prepared in
accordance with GAAP consistently applied and consistent with prior periods,
subject, in the case of unaudited interim financial statements, to year-end
adjustments (which consist of normal recurring accruals) and the absence of
certain footnote disclosures. The balance sheets of the Company included in
the Company SEC Filings fairly present in all material respects the financial
position of the Company as of their respective dates, and the related
statements of operations, stockholders' equity and cash flows included in the
Company SEC Filings fairly present in all material respects the results of
operations of the Company for the respective periods then ended, subject, in
the case of unaudited interim financial statements, to year-end adjustments
(which consist of normal recurring accruals) and the absence of certain
footnote disclosures.
2.6.2 Undisclosed Liabilities. Except (i) as disclosed in
the Company SEC Documents, including any exhibits to the SEC Filings, and (ii)
for liabilities and obligations (a) incurred subsequent to June 30, 1997 in the
ordinary course of business and consistent with past practice, or (b) pursuant
to the terms of this Agreement, the Company has no liabilities or obligations of
any nature, whether or not accrued, contingent or otherwise, that have, or could
reasonably be expected to have, a Material Adverse Effect on the Company, or
would be required by GAAP to be reflected on a balance sheet of the Company
(including the notes thereto).
4
<PAGE> 8
2.6.3 Absence of Certain Changes. Except as set forth in
the Company SEC Filings hereto, since June 30, 1997, the Company has not (i)
issued any stock, bonds or other corporate securities, (ii) borrowed any amount
or incurred any material liabilities (absolute or contingent), except in the
ordinary course of business, (iii) discharged or satisfied any lien or incurred
or paid any obligation or liability (absolute or contingent) other than current
liabilities shown on the balance sheet of the Company as of June 30, 1997 and
current liabilities incurred since the date of such balance sheet in the
ordinary course of business, (iv) declared or made any payment or distribution
to stockholders (in cash, stock or property) or purchased or redeemed any
shares of its capital stock or other securities, (v) mortgaged, pledged or
subjected to lien any of its assets, tangible or intangible, other than liens
for current real property taxes not yet due and payable, (vi) sold, assigned or
transferred any of its tangible assets, or canceled or compromised any debts or
claims except in the ordinary course of business or as otherwise contemplated
hereby, (vii) sold, assigned or transferred (except to Buyer) any patents,
trademarks, trade names, copyrights, trade secrets or other intangible assets,
(viii) made any changes in executive officer or executive compensation or
severance terms other than changes submitted in writing to the Board of
Directors of the Company or a designated committee of the Board and approved by
Buyer's representatives on the Board or such committee, (ix) changed any of its
accounting methods or practices, except as required by a change in GAAP, (x)
agreed, in writing or otherwise, to take any of the actions listed in clauses
(i) through (ix) above, (xi) suffered any material adverse effect or waived any
rights of substantial value, whether or not in the ordinary course of business,
except to the extent such material adverse effect or waiver of rights have been
disclosed in reasonable detail in meetings of the Board of Directors of the
Company in the presence of Buyer's representatives, or (xii) entered into any
material transaction (other than transactions between the Company and Buyer) or
otherwise conducted its business, except in the ordinary course of business or
as otherwise contemplated hereby.
2.7 No Proceedings. Except for claims asserted by Roger Ross and
certain ongoing litigation with respect to Reliance Computer Corp., each of
which has been disclosed to Buyer, and except for claims that have been
disclosed in the Company's filings with the Securities and Exchange Commission
and the Company's discussions, correspondence and proceedings involving NASDAQ
related to the recapitalization of the Company provided for herein (the "NASDAQ
Proceedings"), there is no claim, lawsuit, litigation, arbitration,
governmental or administrative enforcement action or inquiry or any
investigation ("Proceedings") pending or to the knowledge of the Company
threatened against the Company or affecting the Company or its properties or
rights, either alone or together with other similar actions, the outcome of
which would reasonably be expected to (i) have a Material Adverse Effect on the
Company, (ii) impair the ability of the Company to perform its obligations
under this Agreement, or (iii) prevent the consummation of transactions
contemplated herein, nor is there any judgment, decree, injunction, rule or
order of any Governmental Authority issued and outstanding against the Company
having, or which could reasonably be anticipated to have, any such effect.
2.8 Governmental Approvals. No filing, declaration or registration
with, or permit, authorization, consent or approval of, any federal, state,
local or foreign government, court, arbitral tribunal or arbitrator of any kind
or other administrative, governmental or other
5
<PAGE> 9
regulatory agency, commission, authority, board, bureau or instrumentality of
any kind (each, a "Governmental Authority") is required to be made or obtained
by the Company in connection with the execution and delivery of this Agreement
by the Company or the consummation by the Company of the transactions
contemplated herein, except for (i) the filing of a Certificate of Designation
with the Secretary of State of the State of Delaware in accordance with the
DGCL, (ii) the notice to stockholders of the Company required by NASDAQ and any
notice required to be made to NASDAQ in connection with the issuance of the
Shares, and (iii) such consents, approvals, orders or authorizations which if
not obtained, or registrations, declarations or filings which if not made,
would not materially adversely affect the ability of the Company to consummate
the transactions contemplated herein or the ability of the Company to conduct
its business after the Closing substantially as currently conducted by the
Company and would not otherwise have a Material Adverse Effect on the Company.
2.9 Compliance with Laws. The business of the Company is not being
conducted in default or violation of, and the Company is not in default under
or in violation of, any term, condition or provision of (i) its Certificate of
Incorporation or Bylaws, (ii) any material contract to which the Company is a
party, or (iii) any order of any Governmental Authority to which the Company is
or was subject, or any Law to which the Company is or was subject, except, in
the case of clauses (ii) and (iii) only, for such defaults or violations that,
in the aggregate, could not reasonably be expected to have a Material Adverse
Effect on the Company. Except for the NASDAQ Proceedings, no investigation or
review by any Governmental Authority or other entity with respect to the
Company is pending or, to the best knowledge of the Company, threatened, nor
has any Governmental Authority or other entity indicated an intention to
conduct the same, other than those investigations or reviews of which the
outcome would not reasonably be expected to have a Material Adverse Effect on
the Company.
2.10 Consents. Except for the waiver by Sun Microsystems of its
preemptive rights under the Shareholders Agreement (which such waiver has been
obtained), no consent, approval or other action of any third party is required
to be obtained by the Company in connection with the transactions contemplated
herein.
2.11 Intellectual Property.
2.11.1 Intellectual Property Rights. The Company owns, or
is licensed or otherwise has the right to use, all patents, patent rights,
trademarks, trademark rights, trade names, trade name rights, servicemarks,
copyrights, industrial models, mask works, trade secrets, know-how, algorithms
and processes, and applications for patents, trademarks, copyrights and
servicemarks (collectively, "Intellectual Property Rights") necessary for the
conduct of its business as presently conducted or as proposed to be conducted,
except where the failure to own or have licenses to such rights would not be
reasonably expected to have a Material Adverse Effect. The Company has valid
licenses to all copies of all Intellectual Property Rights that are not owned
by it and are used by it in connection with the conduct of its business ("Third
Party IP"), and the use by the Company of such Third Party IP, including
without limitation all modifications and enhancements thereto (whether or not
created by the Company), complies with such license (except for any such
failures to have such licenses or such noncompliance as would
6
<PAGE> 10
not, individually or in the aggregate, be reasonably expected to have a
Material Adverse Effect on the Company).
2.11.2 Absence of Infringement. The use by the Company of
all Intellectual Property Rights used in the conduct of its business as
presently conducted or as proposed to be conducted does not infringe the rights
of any person in any manner which has, or would reasonably be expected to have,
a Material Adverse Effect on the Company. No claims are pending or, to the
best knowledge of the Company, threatened by any person against the Company as
to the use of any Intellectual Property Rights. To the Company's best
knowledge, no third person is infringing on the Intellectual Property Rights of
the Company in a manner, which would reasonably be expected to have a Material
Adverse Effect on the Company.
2.11.3 Proprietary Software. The Company owns all right,
title and interest in and to all software marketed or licensed by the Company
to customers or held for use or in development for marketing and licensing to
customers (collectively, the "Proprietary Software"), except such software
which, if not so owned, would not be reasonably expected to have a Material
Adverse Effect on the Company.
2.11.4 Trade Secrets. Without limiting the generality of
the foregoing, no third party has claimed or notified the Company that any
person employed by or otherwise affiliated with the Company has, in respect of
his or her activities to date, violated any of the terms or conditions of his
or her employment contract with any third party, or disclosed or utilized any
trade secrets or proprietary information or documentation of any third party,
or interfered in the employment relationship between any third party and any of
its employees, and, to the best knowledge of the Company, no person employed
by or otherwise affiliated with the Company has employed any trade secrets or
any information or documentation proprietary of any former employer, or
violated any confidential relationship which such person may have had with any
third party, in connection with the development or sale of any products of the
Company, except for any such events that would not reasonably be expected to
have a Material Adverse Effect on the Company.
2.12 No Brokerage or Finder's Fees. Except for the fees of
Robertson, Stephens & Company LLC, charged in connection with their rendering
the Fairness Opinion, which fees are to be borne solely by the Company, neither
the Company nor any person acting on behalf of the Company has incurred any
liability to any broker, finder or agent for any brokerage fees, finder's fees,
commissions or similar amounts with respect to transactions contemplated by
this Agreement.
2.13 Material Misstatements or Omissions. No representation or
warranty by the Company contained in this Agreement or in the respective
schedules related thereto, and no document or certificate furnished or to be
furnished to Buyer in connection herewith or with the transactions contemplated
hereby, contains an untrue statement of a material fact or omits to state a
material fact necessary to make the statements of fact contained herein or
therein not misleading.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
As of the date hereof and again as of the Closing Date, Buyer
represents and warrants to the Company as follows:
3.1 Authority. The execution and delivery of this Agreement by
Buyer and the performance by Buyer of the transactions contemplated herein have
been duly authorized by Buyer, and no other corporate action on the party of
Buyer is necessary to authorize this Agreement and the performance of such
transactions. This Agreement constitutes the legal, valid and binding
obligation of Buyer, enforceable against it in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting creditors'
rights, and by general principles of equity. Buyer has the absolute and
unrestricted corporate right, power, and authority to execute and deliver this
Agreement, and to perform the obligations hereunder, and has duly authorized,
executed and delivered this Agreement.
3.2 Organization and Good Standing. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of Japan.
3.3 Execution of Agreement Causes No Violation. Neither the
execution and delivery of this Agreement nor the consummation or performance of
any of the contemplated transactions will, directly or indirectly: (a)
contravene, conflict with or result (with or without notice or lapse of time)
in a violation of (i) any of the provisions of the charter documents of Buyer
or (ii) any resolution adopted by the Board of Directors or the stockholders of
the Buyer; (b) materially contravene or conflict with, or result (with or
without notice or lapse of time) in a violation of any Law to which the Buyer,
or any of the assets owned or used by the Buyer, is subject; or (c) materially
contravene or conflict with, or result (with or without notice or lapse of
time) in a material violation or breach of any of the provisions of, or give
any person or entity the right (with or without notice or lapse of time) to
declare a default or exercise any remedy under, or to accelerate the maturity
or performance of or cancel, terminate or modify, any contract, license,
permit, or authorization to which Buyer is a party or under which Buyer has any
rights, or by which Buyer, or any of the assets owned or used by Buyer, may be
bound.
3.4 Investment Representation. Buyer is acquiring the Shares for
its own account, not as a nominee or agent, for investment and not with a view
to, or for resale in connection with, any distribution thereof. Buyer
understands that the Shares have not been registered under the Securities Act,
by reason of a specific exemption from the registration requirements of the Act
which depends upon, among other things, the bona fide nature of the investment
intent and the accuracy of Buyer's representation set forth in this Section
3.4.
ARTICLE IV
CONDITIONS PRECEDENT TO CLOSING
4.1 Conditions Precedent to Obligations of Buyer. The obligation
of Buyer to close the transactions contemplated by this Agreement is subject to
the satisfaction of each of the
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following conditions at the Closing Date. If Buyer waives all or any part of
any such condition, and closes the transactions contemplated hereby such waiver
shall release the Company from any covenant, obligation, agreement or condition
and from any liability for any loss or damage sustained by Buyer by reason of
the breach by the Company of such covenant, obligation, agreement or condition
contained herein, or by reason of any misrepresentation made by the Company
(except for intentional breaches or misrepresentations); provided that any
breach of any such covenant, obligation, agreement or any such
misrepresentation has been expressly and fully disclosed in writing to Buyer
prior to the Closing, with specific reference to the Section of this Agreement
breached.
4.1.1 Representations and Warranties. Each of the
representations and warranties of the Company set forth in this Agreement and
in the Schedules and other documents delivered in connection herewith and
pursuant to the transactions contemplated hereby shall be true and accurate in
all material respects. Buyer shall have received a certificate dated the
Closing Date, executed by an authorized officer of the Company, to the
foregoing effect.
4.1.2 Corporate Action All necessary corporate action
required to authorize the transactions contemplated hereby shall have been
taken, the Company shall have received the approval of the Special Committee of
the Board of Directors of the Company and the Board of Directors of the
Company, and the Company shall have executed and filed a Certificate of
Designation describing the rights, preferences, limitations and restrictions of
the Series B Preferred Stock (the "Certificate of Designation") in the form
attached as Exhibit A.
4.1.3 No Prohibition of Transaction. No Law shall have the
effect of making the transactions contemplated by this Agreement illegal or
otherwise prevent the transactions contemplated by this Agreement, and no
Proceeding shall be pending or threatened in which it will be or is sought to
restrain or prohibit or obtain damages or other relief in connection with this
Agreement or the consummation of the transactions contemplated hereby.
4.1.4 Opinion of Company's Counsel. Buyer shall have
received a legal opinion from, Irell & Manella LLP, counsel for the Company,
with respect to the matters set forth in Exhibit 4.1.4.
4.1.5 Nasdaq Listing. Nasdaq shall not have revoked or
amended in any materially adverse manner its previously issued letter which
confirmed that the Company's Common Stock would continue to be listed following
the closing of the transactions contemplated herein.
4.1.6 Consents. The Company shall have obtained all
consents of third parties required to consummate the transactions contemplated
herein, including all Governmental Approvals, which Buyer may reasonably deem
necessary or appropriate so that consummation of the transactions contemplated
herein will be in compliance with Law.
4.1.7 Return of Guarantee. On receipt of the Guarantee
Payment by DKB, and contemporaneously with the Closing, Buyer shall receive
from DKB the original DKB Guarantees canceled as of the Closing.
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<PAGE> 13
4.1.8 Certain Agreements. Buyer and the Company shall have
entered into an Agreement for Reimbursement of Wafer Payments, on terms
acceptable to Buyer and the Company, settling any and all claims between the
parties with respect to wafer supply matters and any related adjustment and/or
reimbursement obligations through the Closing Date.
4.1.9 Supply Agreement in Principle. Buyer and the
Company shall have agreed in principle to the material terms of a new Wafer
Supply Agreement.
4.2 Conditions Precedent to Obligations of the Company. The
obligation of the Company to close the transactions contemplated by this
Agreement is subject to the satisfaction of each of the following conditions at
the Closing Date. If the Company waives all or any part of any such condition,
and closes the transactions contemplated hereby such waiver shall release Buyer
from any covenant, obligation, agreement or condition and from any liability
for any loss or damage sustained by the Company by reason of the breach by
Buyer of such covenant, obligation, agreement or condition contained herein, or
by reason of any misrepresentation made by the Buyer (except for intentional
breaches or misrepresentations); provided that any breach of any such covenant,
obligation, agreement or any such misrepresentation has been expressly and
fully disclosed in writing to the Company prior to the Closing, with specific
reference to this Agreement.
4.2.1 Representations and Warranties. Each of the
representations and warranties of Buyer set forth in this Agreement and in the
Schedules and other documents delivered in connection herewith and pursuant to
the transactions contemplated hereby shall be true and correct in all material
respects. The Company shall have received a certificate dated the Closing
Date, executed by an authorized officer of Buyer, to the foregoing effect.
4.2.2 Corporate Action. All necessary corporate action,
required to authorize the transactions contemplated hereby, shall have been
taken and the Company shall have received the approval of the Special Committee
of the Board of Directors of the Company.
4.2.3 No Prohibition of Transaction. No Law shall have the
effect of making the transactions contemplated by this Agreement illegal or
otherwise prevent the transactions contemplated by this Agreement, and no
Proceeding shall be pending or threatened in which it will be or is sought to
restrain or prohibit or obtain damages or other relief in connection with this
Agreement for the consummation of the transactions contemplated hereby.
4.2.4 Supply Agreement in Principle. Buyer and the
Company shall have agreed in principle to the material terms of a new Wafer
Supply Agreement.
4.2.5 Nasdaq Listing. Nasdaq shall not have revoked or
amended in any materially adverse manner its previously issued letter which
confirmed that the Company's Common Stock would continue to be listed following
the closing of the transactions contemplated herein.
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ARTICLE V
CERTAIN OTHER COVENANTS AND UNDERSTANDINGS OF THE PARTIES
5.1 Further Assurances and Disclosures. The Company and Buyer
shall use their respective reasonable efforts to assure that all conditions
precedent to the Closing shall have been met including the obtaining of all
consents, if any, required to consummate the transaction contemplated herein.
The Company shall promptly disclose to Buyer any inaccurate information
provided in connection with the signing of this Agreement, and any new
information relating to any event occurring after the date of this Agreement
which makes any such Schedules incomplete or inaccurate; provided, however,
that none of such disclosures shall be deemed to modify, amend or supplement
the representations and warranties made in this Agreement or the Schedules.
5.2 Public Statements. Each party hereto agrees, before the
Closing, not to make, issue or release any further announcement, statement or
acknowledgment, whether to the public generally, or to suppliers or customers,
about the existence of, or the status of, the transactions provided for herein,
without first consulting with the other party hereto. Nothing in this section
shall prevent any party from making statements or filings in order to satisfy
such party's legal obligations.
5.3 Other Actions. Each party hereto agrees to execute and to
deliver such instruments, in form and substance mutually agreeable to the
parties, as another party may reasonably require in order to carry out the
terms of this Agreement or the transactions contemplated by this Agreement.
5.4 Expenses. All expenses incurred by any party hereto shall be
borne by the party incurring the same.
5.5 Acknowledgment of Buyer Regarding the Company's
Representations and Warranties. The Company shall not be liable for breach of
representation hereunder if the Company can establish by a clear preponderance
of the evidence both of the following:
(1) Buyer had Actual Knowledge at the time of execution of this
Agreement that the representation breached by the Company was false;
(2) No senior executive officer of the Company had knowledge
(excluding constructive knowledge) that the representation breached by the
Company was false.
Buyer shall be regarded as having Actual Knowledge of information that
was disclosed (a) in a written presentation to, or in a formal and detailed
oral presentation to, any meeting of the Board of Directors of the Company or
any of its committees on which one or more employees of Buyer serves, provided
that at least one such employee of Buyer was in fact present at such meeting
(and provided further that disclosure of such information by such Board or
committee member to Buyer is consistent with the confidentiality and fiduciary
duties of such Board or committee member to the Company); (b) in tangible
written form to any executive officer of Buyer by any executive officer of the
Company; or (c) in any filings made by the
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<PAGE> 15
Company with the Securities and Exchange Commission; in each case, provided
that such disclosure would put a reasonable recipient on notice of the
inaccuracy of such representation and that such disclosure was not superseded
by other inconsistent statements of Company representatives.
5.6 Assurance Letter. The Company acknowledges that, based on the
Business Plan through fiscal year 1998, the funding provided through the
purchase of the Series B Preferred Stock and the availability of a credit line
of $20 million guaranteed by Buyer, should (assuming the Company's timely
receipt of $13.5 million in funding through payments contemplated to be payable
to the Company under the Viper Development Agreement between the parties (dated
June 25, 1997) or otherwise provided to the Company by Buyer after the date
hereof and prior to March 31, 1998) avoid any cash flow shortages through
fiscal year 1998. Based on the foregoing, Buyer and the Company agree that
Buyer's obligations to the Company under that certain Letter dated June 18,
1997 from Buyer to the Company shall be fully satisfied and extinguished on and
as of the Closing.
ARTICLE VI
INDEMNIFICATION
6.1 The Company's Indemnification. The Company agrees to
indemnify, defend and hold harmless Buyer and its officers, directors,
shareholders, employees, agents and affiliates ("Indemnified Buyer") against
any and all losses, claims, damages or liabilities and actions, and any
reasonable legal or other expenses or costs incurred by any Indemnified Buyer
in connection with any such loss, claim, damage, liability or action,
regardless of whether an action or claim has been filed or asserted against an
Indemnified Buyer after the Closing Date, arising from, in connection with or
with respect to the following items (the "Indemnified Buyer Losses"): (a) any
misrepresentation made by the Company, or breach or inaccuracy of any
representation or warranty (whether made as of the signing of this Agreement,
as of the Closing or as of any other date specified in such representation or
warranty) made by the Company under this Agreement or in any other agreement or
document delivered pursuant hereto or in connection herewith or with the
closing of the transactions contemplated hereby (except for any such
unintentional breach, inaccuracy or misrepresentation that has been disclosed
by the Company to Buyer in writing prior to the closing, if Buyer elects to
close notwithstanding); (b) any nonfulfillment of or failure to comply with any
agreement, condition or covenant on the part of the Company under this
Agreement or any other agreement or document delivered pursuant hereto or in
connection herewith or with the closing of the transactions contemplated hereby
(except for any such unintentional nonfulfillment or failure to comply that has
been disclosed by the Company to Buyer in writing prior to the closing, if
Buyer elects to close notwithstanding).
6.2 Buyer's Indemnification. Buyer agrees to indemnify, defend
and hold harmless the Company against any and all losses, claims, damages or
liabilities or actions, and any reasonable legal or other expenses or costs
incurred by the Company in connection with any such loss, claim, damage,
liability or action, regardless of whether an action or claim has been filed or
asserted against the Company after the Closing Date, arising from, in
connection with or
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<PAGE> 16
with respect to the following items (the "Indemnified Seller Losses"): (a) any
misrepresentation made by Buyer, or breach or inaccuracy of any representation
or warranty made by Buyer under this Agreement or in any other agreement or
document delivered pursuant hereto or in connection herewith or with the
closing of the transactions contemplated hereby (except for any such
unintentional breach, inaccuracy or misrepresentation that has been disclosed
by Buyer to the Company in writing prior to the closing, if the Company elects
to close notwithstanding); (b) any nonfulfillment of or failure to comply with
any agreement, condition or covenant on the part of Buyer under this Agreement
or in any other agreement or document delivered pursuant hereto or in
connection herewith or with the closing of the transactions contemplated hereby
(except for any such unintentional nonfulfillment or failure to comply that has
been disclosed by Buyer to the Company in writing prior to the closing, if the
Company elects to close notwithstanding).
ARTICLE VII
TERMINATION AND ABANDONMENT OF AGREEMENT
7.1 Grounds for Termination. Upon notice given by the party
entitled to terminate under this Section 7.1 (except in the case of termination
under Section 7.1.1, where a written agreement between the parties shall be
required), this Agreement may be terminated and the transactions herein
contemplated may be abandoned at any time on or before the Closing Date only in
accordance with the following provisions:
7.1.1 Mutual Consent. By mutual consent of the Buyer and
the Company.
7.1.2 Breach or Misrepresentation by the Company. By
Buyer, upon a breach of any material representation, warranty, covenant or
agreement on the part of the Company set forth in this Agreement, or if any
material representation or warranty of the Company shall have become untrue, in
either case such that the conditions set forth in Section 4.1 would be
incapable of being satisfied by the Closing Date, provided that, in any case,
an intentional breach shall be deemed to cause such conditions to be incapable
of being satisfied for purposes of this Section 7.1.2.
7.1.3 Breach or Misrepresentation by Buyer. By the
Company, upon a breach of any material representation, warranty, covenant or
agreement on the part of Buyer set forth in this Agreement, of if any material
representation or warranty of Buyer shall have become untrue, in either case
such that the conditions set forth in Section 4.2 would be incapable of being
satisfied by the Closing Date, provided that, in any case, an intentional
breach shall be deemed to cause such conditions to be incapable of being
satisfied for purposes of this Section 7.1.3.
7.1.4 Prohibition by Law. By either Buyer or the Company,
if any Governmental Entity shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, execution order, decree, injunction or
other order (whether temporary, preliminary or permanent) which is in effect
and which has the effect of making, or any such Governmental Entity shall have
commenced, or threatened to commence, any proceeding which,
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if adversely determined, would have the effect of making, the Agreement illegal
or otherwise materially restricting or prohibiting consummation of the
Agreement.
7.1.5 Failure to Close. By either Buyer or the Company, if
the Closing has not occurred by 5:00 p.m. on September 30, 1997, Los Angeles
time.
7.2 Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 7.2, this Agreement shall forthwith become
void, there shall be no liability on the part of the Company or Buyer, its
officers, directors or stockholders to the other party hereto all rights and
obligations of any party hereto shall cease. Notwithstanding the foregoing,
nothing contained in Section 7.2 shall relieve any party hereto of any
Liability for breach of this Agreement, or for any misrepresentation hereunder,
or be deemed a waiver of any remedy otherwise available for such breach or
misrepresentation.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Schedules. The disclosures in the Schedules hereto are to be
taken as relating to the representations and warranties in the section of the
Agreement to which they expressly relate and to no other representation or
warranty in the Agreement (except where there is a specific cross-reference
contained herein) unless it would be otherwise obvious to any reasonable person
reviewing any such Schedules that such Schedules disclosed matters required to
be disclosed pursuant to other sections of the Agreement.
8.2 Notices. All notices, demands, and other communications
required or permitted hereunder shall be made in writing and shall be deemed to
have been duly given when delivered in person or by private courier or delivery
service, or transmitted by facsimile transmission (confirmed by receipt of
successful transmission in writing), or five days after being mailed by
certified or registered mail, postage prepaid, as indicated below. Any party
may change its address for notices by providing notice of the change to the
other parties.
Buyer: Fujitsu Limited
1015 Kamikodanaka
Nakahara-Ku, Kawasaki 211 Japan
Attention: Mr. T. Matsuoka
Phone: 011-81-44-754-8646
Fax: 011-81-44-754-8503
With a copy to: Morrison & Foerster
555 West Fifth Street, Suite 3500
Los Angeles, CA 90013-1024
Attention: Stephen P. Rothman, Esq.
Phone: (213) 892-5237
Fax: (213) 892-5454
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Morrison & Foerster
AIG Building, 7th Floor
1-1-3 Marunouchi, Chiyoda-ku
Tokyo 100 Japan
Attention: Ken Siegel
Phone: 011-81-3-3214-6522
Fax: 011-81-3-3214-6512
Company: Ross Technology, Inc.
5316 Highway
290 West, Suite 500
Austin, Texas 78735
Attention: Jack Simpson
Phone: (512) 436-2000
Fax: (512) 892-3402
With a copy to: Irell & Manella LLP
1800 Avenue of the Stars,
Suite 900
Los Angeles, CA 90067
Attention: David A. Dull, Esq.
Phone: (310) 277-1010
Fax: (310) 203-7199
8.3 Assignment; No Third Party Beneficiaries. Neither this
Agreement nor any part thereof shall be assignable by operation of law or
otherwise by any party without the prior written consent of the other parties;
provided, however, that Buyer shall be entitled to assign its rights and
obligations under this Agreement to any Subsidiary or Affiliate of Buyer
without the Company's consent. Nothing contained in this Agreement, express
or implied, is intended to confer upon any Person or entity other than the
parties hereto, and their successors in interest and permitted assignees, any
rights or remedies under or by reason of this Agreement unless expressly so
stated.
8.4 Waiver. The waiver by any party of any instance of any other
party's noncompliance with any obligation or responsibility herein shall not be
deemed a waiver of other instances or of any party's remedies for such
noncompliance.
8.5 Entire Agreement; Amendments. This Agreement and the
agreements, documents, schedules, exhibits and certificates specifically
referred to herein or required to be delivered pursuant to the terms hereof,
represent the entire, final agreement of the parties hereto with respect to the
subject matter hereof, superseding all prior agreements, understandings,
representations, warranties, discussions, negotiations and commitments of any
kind. This Agreement may not be amended or supplemented, nor may any rights be
waived, except is a writing signed by each of the parties affected thereby.
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8.6 Definitions.
8.6.1 List of Defined Terms. Exhibit 8.6.1 contains a
complete list of the terms defined in this Agreement and the sections of this
Agreement in which such definitions are found.
8.6.2 Accounting Terms. In this Agreement, "GAAP" means
generally accepted accounting principles as used in the United States. All
accounting terms not specifically defined herein shall be construed in
accordance with GAAP.
8.6.3 Certain Specific Terms. In this Agreement: (a) the
term "Affiliate" of a Person means a Person controlling, under common control
with or controlled by such Person; (b) the term "Person" means any individual,
partnership, joint venture, corporation, trust or incorporated organization or
any other business entity, in each case whether acting in an individual,
fiduciary or other capacity; (c) the term "Subsidiary" of a Person means a
corporation as to which 50% or more of the outstanding voting stock is owned or
controlled, directly or indirectly, by that Person.
8.6.4 Material Adverse Effect. Any determination under
this Agreement as to whether there has been (or is reasonably likely to be) a
Material Adverse Effect shall be made in comparison to the baseline expected
performance as provided in the Business Plan.
8.7 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.8 Governing Law. The validity, interpretation, enforceability,
and performance of this Agreement shall be governed by and construed in
accordance with the law of the State of California, without reference to its
conflicts of law rules.
[NEXT PAGE IS THE SIGNATURE PAGE]
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above mentioned.
Buyer: Fujitsu Limited,
a Japanese corporation
By: /s/ YOSHIRO YOSHIOKA
--------------------------------------
Name: Yoshiro Yoshioka
------------------------------------
Title: Senior Vice President and Group
President Computer Systems Group
---------------------------------
Company: ROSS Technology, Inc.,
a Delaware corporation
By: /s/ JACK W. SIMPSON
---------------------------------------
Name: Jack W. Simpson
-------------------------------------
Title: President and CEO
------------------------------------
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List of Exhibits
<TABLE>
<CAPTION>
Exhibit Content
- ------- -------
<S> <C>
Exhibit A Certificate of Designation
Exhibit 4.1.4 Form of Opinion of Company's Counsel
Exhibit 8.6.1 List of Defined Terms
</TABLE>
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EXHIBIT A
CERTIFICATE OF DESIGNATION OF
SERIES B CONVERTIBLE PREFERRED STOCK
OF
ROSS TECHNOLOGY, INC.
ROSS Technology, Inc., (hereinafter called the "Corporation"), a
corporation organized and existing under and by virtue of the General
Corporation Law of the State of Delaware, does hereby certify:
1. The name of the corporation is ROSS Technology, Inc.
2. The certificate of incorporation of the Corporation authorizes
the issuance of 75,000,000 shares of Preferred Stock, $.001 par value, and
expressly vests in the Board of Directors of the corporation the authority
provided therein to provide for the issuance of said shares in series and by
filing a certificate pursuant to the applicable law of the State of Delaware,
to establish from time to time the number of shares to be included in each such
series, and to fix the designation, powers, preferences and rights of the
shares of each such series and the qualifications, limitations, or restrictions
thereof.
3. The Corporation previously authorized a series of Preferred
Stock designated the "Series A Convertible" issue of Preferred Stock. The
Certificate of Incorporation of the Corporation was amended to delete the
Series A Convertible Preferred Stock, such series is no longer authorized and
no shares of such series are currently issued and outstanding.
4. The Board of Directors of the Corporation, pursuant to the
authority expressly vested in it as aforesaid, has adopted the following
resolutions creating a "Series B Convertible" issue of Preferred Shares:
RESOLVED, that a series of the class of authorized Preferred Stock of
the Corporation be and hereby is created, and that the designation and amount
thereof and the voting powers, preferences and relative participating, optional
and other special rights of the shares of such series, and the qualifications,
limitations or restrictions thereof are as follows:
SERIES B CONVERTIBLE PREFERRED STOCK
1. Designation And Amount. The shares of such series shall be
designated "Series B Convertible Preferred Stock" (the "Series B Preferred
Stock") and the number of shares constituting such series shall be 500,000.
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<PAGE> 23
2. Dividends.
(a) The Series B Preferred Stock shall be entitled to receive
dividends when and as declared by the Board of Directors out of funds legally
available therefor; provided, however, that no dividends shall be declared or
paid upon the Common Stock or any other stock ranking on liquidation junior to
the Series B Preferred Stock (such stock being referred to hereinafter
collectively as "Junior Stock") unless (i) after the payment of the dividend on
the Common Stock and Junior Stock (and the simultaneous dividend on the Series
B Preferred Stock) the Company's net worth exceeds the aggregate liquidation
preference of the Series B Preferred Stock (provided that this clause (i) shall
not apply if the dividend is approved by the holders of a majority of the
outstanding shares of Series B Preferred Stock) and (ii) there shall be
simultaneous declaration or payment, as applicable, of a dividend upon the
Series B Preferred Stock.
(b) In the case of any dividend being declared upon the Common
Stock, the dividend which shall be declared upon each share of Series B
Preferred Stock as a condition to such dividend upon the Common Stock shall be
equal in amount to the dividend payable upon that number of shares of Common
Stock acquirable upon conversion of a share of Series B Preferred Stock
immediately before the declaration of such dividend, with such conversion being
based on the then applicable Conversion Price determined in accordance with
Section 5(a) as of the record date for the declaration of such dividend on the
Common Stock.
(c) In the case of any dividend being declared upon any class of
Junior Stock that is convertible into Common Stock, the amount of the dividend
which shall be declared upon each share of Series B Preferred Stock as a
condition to such dividend on Junior Stock, divided by the number of shares of
Common Stock acquirable upon conversion of a share of Series B Preferred Stock,
shall equal the amount of the dividend declared upon each share of such class
of Junior Stock, divided by the number of shares of Common Stock acquirable
upon conversion of a share of such class of Junior Stock, in each case assuming
such conversion occurred immediately before the declaration of such dividend.
(d) In the case of any dividend being declared upon any class of
Junior Stock (other than Common Stock) that is not convertible into Common
Stock, the amount of the dividend which shall be declared upon each share of
Series B Preferred Stock as a condition to such dividend on such Junior Stock
shall be as determined by the Board of Directors at the time of such
declaration.
(e) Holders of shares of Series B Preferred Stock shall be
entitled to share equally, share for share, in all such dividends declared upon
the Series B Preferred Stock.
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<PAGE> 24
3. Liquidation, Dissolution Or Winding Up.
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of shares of Series B
Preferred Stock then outstanding shall be entitled to be paid out of the assets
of the Corporation available for distribution to its stockholders, after and
subject to the payment in full of all amounts required to be distributed to the
holders of any Preferred Stock of the Corporation ranking on liquidation prior
and in preference to the Series B Preferred Stock (such Preferred Stock that is
senior to the Series B Preferred Stock being referred to hereinafter as "Senior
Stock") upon such liquidation, dissolution or winding up, but before any
payment shall be made to the holders of Common Stock or other Junior Stock, an
amount equal to $100.00 per share ("Liquidation Preference") (subject to
adjustment in the event of any stock dividend, stock split, stock distribution
or combination with respect to such shares). If upon any such liquidation,
dissolution or winding up of the Corporation, the remaining assets of the
Corporation available for the distribution to its stockholders after payment in
full of amounts required to be paid or distributed to holders of any other
Senior Stock shall be insufficient to pay the holders of shares of Series B
Preferred Stock the full amount to which they shall be entitled, the holders of
shares of Series B Preferred Stock, and any class of stock ranking on
liquidation on a parity with the Series B Preferred Stock (such Preferred Stock
ranking on liquidation on parity with the Series B Preferred Stock being
referred to as "Parity Stock"), shall share ratably in any distribution of the
remaining assets and funds of the Corporation in proportion to the respective
amounts which would otherwise be payable with respect to the shares held by
them upon such distribution if all amounts payable on or with respect to said
shares were paid in full. Except as set forth in this clause (a), holders of
shares of Series B Preferred Stock shall not be entitled to any distribution in
the event of liquidation, dissolution or winding up of the Corporation.
(b) The merger or consolidation of the Corporation with or into
any other corporation or entity, or the sale or conveyance of all or
substantially all the assets of the Corporation, shall not be deemed to be a
liquidation, dissolution or winding up of the Corporation for purposes of this
Section 3.
4. Voting.
(a) Series B Preferred Stock shall not be entitled to vote in
elections of directors. Series B Preferred Stock shall be entitled to vote on
such matters as provided herein and on such other matters as to which such
stock is, as a matter of law, entitled to vote.
(b) With respect to any matter as to which Series B Preferred
Stock is entitled to vote, each issued and outstanding share of Series B
Preferred Stock shall be entitled to a number of votes equal to the number of
shares of Common Stock into which each such share of Series B Preferred Stock
is convertible (as adjusted from time to time pursuant to Section 5 hereof).
Except as otherwise provided by law, or by the provisions
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<PAGE> 25
of paragraph (c) and (d) below, holders of Series B Preferred Stock entitled
to vote, shall vote together with the holders of any other Preferred Stock and
Common Stock as a single class.
(c) The consent of holders of at least a majority of the
outstanding shares of Series B Preferred Stock, voting separately as a single
class, in person or by proxy, either in writing without a meeting or at a
special or annual meeting of stockholders called for such purpose, shall be
necessary to amend, modify or repeal any provision of the Certificate of
Incorporation (including any provision of the Certificate of Designation of
Series B Convertible Preferred Stock) in any manner which would adversely
affect the powers, preferences or special rights of the Series B Preferred
Stock. The authorization or creation of any shares of any class or series of
Senior Stock or Parity Stock of the Corporation or the reclassification of any
authorized stock of the Corporation into any such Senior Stock or Parity Stock,
or the creation or authorization of any obligation or security convertible into
or evidencing the right to purchase shares of any such Senior Stock or Parity
Stock shall be deemed to adversely affect the Series B Preferred Stock. The
authorization or creation of any shares of any class or series of Junior Stock
of the Corporation or the reclassification of any authorized stock of the
Corporation into any such Junior Stock, or the creation or authorization of any
obligation or security convertible into or evidencing the right to purchase
shares of any such Junior Stock shall be deemed not to adversely affect the
powers, preferences or special rights of the Series B Preferred Stock.
(d) Unless the vote or consent of the holders of a greater number
of shares shall then be required by law, the consent of the holders of at least
a majority of the outstanding shares of Series B Preferred Stock, voting
together as a separate class, in person or proxy, either in writing without a
meeting or at a special or annual meeting of stockholders called for such
purpose, shall be necessary to authorize or effect (i) any sale, lease,
transfer or other disposition of all or substantially all of the assets of the
Corporation; (ii) any merger or consolidation or other reorganization of the
Corporation with or into another corporation; (iii) the acquisition by the
Corporation of another corporation whether by means of a purchase of stock or
the purchase of all or substantially all of the assets of such corporation or
otherwise if holders of the Common Stock of the Corporation are entitled to
vote to authorize or effect such acquisition; (iv) a liquidation, winding up or
dissolution of the Corporation or adoption of any plan of the same.
5. Conversion Rights.
(a) Definitions.
"Conversion Price" shall mean the Market Price of the Common
Stock; except that (i) during the two year period following the initial
issuance of shares of Series B Preferred Stock, the Conversion Price shall be
equal to $2.50; and (ii) on the occurrence of a Special Conversion Event, the
Conversion Price shall be equal to the
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<PAGE> 26
lower of Market Price and $2.00; provided that the Conversion Price shall in no
event be less than $1.00.
"Market Price" shall mean, as of any date, the value of the
Common Stock, determined based on the average closing sales price for such
stock on The Nasdaq National Market (or if not traded thereon, then on the
primary exchange on which the Common Stock is then traded) for the last five
consecutive trading days immediately prior to the date of determination, as
reported by the Wall Street Journal. In the absence of an established market
for the Common Stock, the Market Price shall be determined in good faith by
the Board of Directors of the Corporation.
"Special Conversion Event" shall mean and shall be deemed to
occur :
(i) in the event (x) the Corporation shall commence any case,
proceeding or other action under any law relating to bankruptcy, insolvency,
reorganization or relief of debtors, or seeking to adjudicate it a bankrupt or
insolvent or seeking reorganization, arrangement, winding-up, liquidation,
dissolution or other relief with respect to it or its debts, or (y) the
Corporation shall commence any case, proceeding or other action seeking
appointment of a receiver, trustee or custodian or other similar official for
it or for all or any substantial part of its assets, or if the Corporation
shall make a general assignment for the benefit of its creditors, or (z) there
shall be commenced against the Corporation, any case, proceeding or other
action of a nature referred to in clause (x) or (y) which results in an entry
of an order for adjudication or appointment or which remains undismissed for 60
days after commencement; or
(ii) upon the declaration of the existence of such an event by the
holders of a majority of the outstanding shares of Series B Preferred Stock at
any time during the ninety day period following any request by the Corporation
for funding or credit support from Fujitsu Limited ("Fujitsu") (including any
increase in Fujitsu's guarantee of the Corporation's debt or other obligations
in excess of $20,000,000, but excluding payments made by Fujitsu in the
ordinary course of business or as otherwise expressly agreed in writing by the
parties), which request is (a) made with respect to the Corporation's fiscal
year 1998 and is in excess of the requirements for funding by Fujitsu set forth
in the Corporation's financial plan for the fiscal year 1998 or (b) made with
respect to any fiscal period after the Corporation's fiscal year 1998 (each a
"Triggering Event"). Failure to declare a Special Conversion Event after any
Triggering Event shall not limit the right of the majority holders of the
Series B Preferred Stock to declare a Special Conversion Event within the
ninety day period following any other or subsequent Triggering Event.
(b) Each share of Series B Preferred Stock may be converted at
any time, at the option of the holder thereof, in the manner hereinafter
provided, into such number of fully-paid and nonassessable shares of Common
Stock as is determined by dividing the Liquidation Preference per share of
Series B Preferred Stock by the
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<PAGE> 27
Conversion Price, defined above. On such conversion holders of the Series B
Preferred Stock shall be entitled to be paid an amount equal to any declared
and unpaid dividends.
(c) The Corporation shall not issue fractions of shares of Common
Stock upon conversion of Series B Preferred Stock. If any fraction of a share
of Common Stock would, except for the provisions of this paragraph (c), be
issuable upon conversion of any Series B Preferred Stock, the Corporation shall
in lieu thereof pay to the person entitled thereto an amount in cash equal to
the current value of such fraction, calculated to the nearest one-hundredth
(1/100) of a share, to be computed based upon the then applicable Conversion
Price.
(d) Whenever the Conversion Price shall be adjusted as provided
in Section 6 hereof, the Corporation shall forthwith cause a notice setting
forth any such adjustments to be sent by mail, first class, postage prepaid, to
each record holder of Series B Preferred Stock at his or its address appearing
on the stock register. Such notice shall set forth in reasonable detail the
facts requiring such adjustment and the conversion rate that will be effective
after such adjustment. If such notice relates to an adjustment resulting from
an event referred to in paragraph 6(c), such notice shall be included as part
of the notice required to be mailed and published under the provisions of
paragraph 6(c) hereof.
(e) In order to exercise the conversion privilege, the holder of
any Series B Preferred Stock to be converted shall surrender his or its
certificate or certificates therefore to the Corporation at its principal
office, and shall give written notice to the Corporation at such office that
the holder elects to convert the Series B Preferred Stock represented by such
certificates, or any number thereof. Such notice shall also state the name or
names (with address) in which the certificate or certificates for shares of
Common Stock which shall be issuable on such conversion shall be issued,
subject to any restrictions on transfer relating to shares of the Series B
Preferred Stock or shares of Common Stock upon conversion thereof and
applicable federal and state securities laws. If so required by the
Corporation, certificates surrendered for conversion shall be endorsed or
accompanied by written instrument or instruments of transfer, in form
satisfactory to the Corporation, duly authorized in writing. In case the
notice specifies a name or names other than the holder's name, such notice
shall be accompanied by payment of all transfer taxes payable upon the issuance
of the shares of Common Stock in such name or names. The date of receipt by
the Corporation of the certificates and notice shall be the conversion date. As
soon as practicable, and in any event within five business days after receipt
of such notice and the surrender of the certificate or certificates for Series
B Preferred Stock as aforesaid, and if applicable, the payment of all transfer
taxes, the Corporation shall deliver or cause to be delivered at such office to
such holder, (i) a certificate or certificates representing the number of
validly issued, fully paid and non-assessable shares of Common Stock issuable
on such conversion in accordance with the provisions hereof and cash as
provided in paragraph (c) of this Section 5 in respect of any fraction of a
share of Common Stock otherwise issuable upon such conversion; and (ii) if
less than the full amount of shares of Series B Preferred Stock
6
<PAGE> 28
evidenced by the surrendered certificate or certificates are being converted, a
new certificate or certificates for the number of shares of Series B Preferred
Stock evidenced by the surrendered certificate or certificates less the number
of shares of Series B Preferred Stock converted.
(f) The Corporation shall at all times when the Series B Preferred
Stock shall be outstanding reserve and keep available out of its authorized but
unissued stock, for the purposes of effecting the conversion of the Series B
Preferred Stock, such number of its duly authorized shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all
outstanding Series B Preferred Stock. Before taking any action which would
cause an adjustment reducing the Conversion Price below the then par value of
the shares of Common Stock issuable upon conversion of the Preferred Stock, the
Corporation will take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Corporation may validly and legally
issue fully-paid and nonassessable shares of such Common Stock at such adjusted
Conversion Price.
(g) All shares of Series B Preferred Stock which shall have been
surrendered for conversion as herein provided shall no longer be deemed to be
outstanding and all rights with respect to such shares, including the rights,
if any, to receive notices and to vote, shall forthwith cease and terminate
except only the right of the holders thereof to receive shares of Common Stock
in exchange therefor and payment of any declared and unpaid dividends thereon
upon such surrender. Any shares of Series B Preferred Stock so converted shall
be retired and canceled and shall not be reissued, and the Corporation may from
time to time take such appropriate action as may be necessary to reduce the
authorized Series B Preferred Stock accordingly.
6. Anti-Dilution and Notice Provision.
(a) In order to prevent dilution of the right granted hereunder,
the Conversion Price (except at such times when the Conversion Price equals the
Market Price pursuant to paragraph 5(a)) shall be subject to adjustment from
time to time in accordance with paragraph 6(b). At any given time the
Conversion Price, shall be that dollar (or part of a dollar) amount the payment
of which shall be sufficient at the given time to acquire one share of the
Corporation's Common Stock upon conversion of shares of Series B Preferred
Stock. Upon each adjustment of the Conversion Price pursuant to this Section
6, the registered holder of shares of Series B Preferred Stock shall thereafter
be entitled to acquire upon conversion, at the Conversion Price resulting from
such adjustment, the number of shares of the Corporation's Common Stock
obtainable by multiplying the Conversion Price in effect immediately prior to
such adjustment by the number of shares of the Corporation's Common Stock
acquirable immediately prior to such adjustment and dividing the product
thereof by the Conversion Price resulting from such adjustment.
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<PAGE> 29
(b) In case the Corporation shall at any time subdivide its
outstanding shares of Common Stock into a greater number of shares, or declare
a dividend or make any other distribution upon the stock of the Corporation
payable in Common Stock, the Conversion Price in effect immediately prior to
such subdivision, dividend or distribution shall be proportionately reduced,
and, conversely, in case the outstanding shares of Common Stock of the
Corporation shall be combined into a smaller number of shares, the Conversion
Price in effect immediately prior to such combination shall be proportionately
increased. For purposes of this paragraph 6(b), in case the Corporation shall
take a record of the holders of its Common Stock for the purpose of entitling
them (x) to receive a dividend or other distribution payable in Common Stock,
or (y) to subscribe for or purchase Common Stock, then such record date shall
be deemed to be the date of the issue or sale of the shares of Common Stock
issued upon the declaration of such dividend or the making of such other
distribution.
(c) In the event that:
(1) the Corporation shall declare any cash dividend upon
its Common Stock, or
(2) the Corporation shall declare any dividend upon its
Common Stock payable in stock or make any special dividend or other
distribution to the holders of its Common Stock, or
(3) the Corporation shall offer for subscription pro rata
to the holders of its Common Stock any additional shares of stock of
any class or other rights, or
(4) there shall be any capital reorganization or
reclassification of the capital stock of the Corporation, including
any subdivision or combination of its outstanding shares of Common
Stock, or consolidation or merger of the Corporation with, or sale of
all or substantially all of its assets to, another corporation, or
(5) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Corporation.
then, in connection with such event, the Corporation shall give to the holders
of the Series B Preferred Stock:
(i) at least twenty (20) days' prior written notice of the
date on which the books of the Corporation shall close or a record
shall be taken for such dividend, distribution or subscription rights
or for determining rights to vote in respect of any such
reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up; and
(ii) in the case of any such reorganization,
reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up, at least
8
<PAGE> 30
twenty (20) days' prior written notice of the date when the same
shall take place. Such notice in accordance with the foregoing
clause (i) shall also specify, in the case of any such dividend,
distribution or subscription rights, the date on which the holders of
Common Stock shall be entitled thereto, and such notice in accordance
with the foregoing clause (ii) shall also specify the date on which
the holders of Common Stock shall be entitled to exchange their Common
Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up, as the case may be. Each such
written notice shall be given by first class mail, postage prepaid,
addressed to the holders of the Series B Preferred Stock at the
address of each such holder as shown on the books of the Corporation.
(d) If at any time or from time to time on or after the filing
date of this Certificate of Designation, the Corporation shall grant, issue or
sell any options, convertible securities or rights to purchase property (the
"Purchase Rights") pro rata to the record holders of any class of Common Stock
of the Corporation, then each holder (as of the date of such grant, issuance or
sale) of Series B Preferred Stock shall be entitled to acquire (within thirty
(30) days after the later to occur of the initial exercise date of such
Purchase Rights or receipt by such holder of the notice concerning Purchase
Rights to which such holder shall be entitled under paragraph 6(c)) and upon
the terms applicable to such Purchase Rights either:
(i) the aggregate Purchase Rights which such holder could have
acquired if it had held the number of shares of Common Stock
acquirable upon conversion of the Series B Preferred Stock
immediately before the grant, issuance or sale of such
Purchase Rights; provided that if any Purchase Rights were
distributed to holders of Common Stock without the payment of
additional consideration by such holders, corresponding
Purchase Rights shall be distributed to the exercising
holders of the Series B Preferred Stock as soon as possible
after such exercise and it shall not be necessary for the
exercising holder of the Series B Preferred Stock
specifically to request delivery of such rights; or
(ii) in the event that any such Purchase Rights shall have
expired or shall expire prior to the end of said thirty (30)
day period, the number of shares of Common Stock or the
amount of property which such holder could have acquired
upon such exercise at the time or times at which the
Corporation granted, issued or sold such expired Purchase
Rights.
(e) If any event occurs as to which, in the opinion of the Board
of Directors of the Corporation, the provisions of this Section 6 are not
strictly applicable or if strictly applicable would not fairly protect the
rights of the holders of the Series B
9
<PAGE> 31
Preferred Stock in accordance with the essential intent and principles of such
provisions, then the Board of Directors shall make an adjustment in the
application of such provisions, in accordance with such essential intent and
principles, so as to protect such rights as aforesaid, but in no event shall
any adjustment have the effect of increasing the Conversion Price as otherwise
determined pursuant to any of the provisions of this Section 6 except in the
case of a combination of shares of a type contemplated in paragraph 6(b) and
then in no event to an amount larger than the Conversion Price as adjusted
pursuant to paragraph 6(b). .
7. No Redemption Rights.
The Series B Preferred Stock shall not be subject to redemption,
whether at the option of either the Corporation or any holder of the Series B
Preferred Stock.
FURTHER RESOLVED, that the statements contained in the foregoing
resolutions creating and designating the said Series B Convertible issue of
Preferred Shares and fixing the number, powers, preferences and relative,
optional, participating, and other special rights and the qualifications,
limitations, restrictions, and other distinguishing characteristics thereof
shall, upon the effective date of said series, be deemed to be included in and
be a part of the certificate of incorporation of the corporation pursuant to
the provisions of Sections 104 and 151 of the General Corporation Law of the
State of Delaware.
[NEXT PAGE IS THE SIGNATURE PAGE]
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<PAGE> 32
IN WITNESS WHEREOF, said Corporation has caused this Certificate to
be signed by its Secretary, this 29th day of September, 1997. The signature
below shall constitute the affirmation or acknowledgment of the signatory,
under penalties of perjury, that the instrument is the act and deed of the
Corporation and that the facts stated herein are true.
Name: /s/ FRANCIS S. (KIT) WEBSTER III
--------------------------------
Francis S. (Kit) Webster III
Chief Financial Officer
and Secretary
11
<PAGE> 33
EXHIBIT 4.1.4
FORM OF OPINION OF COMPANY'S COUNSEL
September 30, 1997
Fujitsu Limited
1015 Kamikodanaka
Nakahara-ku, Kawasaki 211
Japan
Re: ROSS Technology, Inc. Series B
Convertible Preferred Stock
Dear Sirs:
We have acted as counsel to ROSS Technology, Inc., a Delaware
corporation (the "COMPANY"), in connection with the Stock Purchase Agreement
dated as of September 30, 1997 (the "AGREEMENT"), between the Company and
Fujitsu Limited, a Japanese corporation ("BUYER"). We are delivering this
opinion to you pursuant to Section 4.1.4 of the Agreement. Capitalized terms
used and not otherwise defined herein shall have the meanings assigned thereto
in the Agreement.
We have made such investigations and examined such documents and
records as we have deemed necessary for the purpose of rendering this opinion.
In such investigations and examinations, we have assumed that the execution,
delivery and performance of any agreements or consents are within the powers of
each signatory and have been duly authorized and validly carried out, except to
the extent that we have expressly rendered an opinion on such party's authority
in this opinion. We have also assumed the genuineness of all signatures on
original or certified copies, the authenticity of documents submitted to us as
originals and the conformity to original or certified copies of all copies
submitted to us as certified or reproduction copies. In addition, as to certain
factual matters, with your permission we have obtained from public officials
and from officers of the Company such certificates and assurances, and we have
examined such questions of law, as we have deemed necessary for the purposes of
rendering this opinion.
We express no opinions with respect to the need for any consents,
approvals, authorizations and permits of, and filings with any Governmental
Entity or any other Person required to be obtained by Buyer in connection with
the execution and delivery of the Agreement and the consummation of the
transactions contemplated thereby.
<PAGE> 34
Fujitsu Limited
September 30, 1997
Page 2
On the basis of the foregoing, and subject to the qualifications set
forth below, we are of the opinion that:
1. The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware. The Company has
the requisite corporate power and authority to carry on its business as it is
now being conducted.
2. The Company has the requisite corporate power and authority to
execute and deliver the Agreement and to execute and file the Certificate of
Designation and to consummate the transactions contemplated by each document.
The execution and delivery of the Agreement and the consummation of the
transactions contemplated thereby and the execution and filing of the
Certificate of Designation have been duly authorized by the Company's Board of
Directors. No other corporate proceedings on the part of the Company are
necessary to authorize the execution and delivery of the Agreement and the
consummation of the transactions contemplated thereby. The Agreement
constitutes the valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms.
3. The Shares have been duly and validly authorized for issuance and
sale to the Buyer by the Company, and upon receipt by the Company of
consideration for the Shares pursuant to the terms of the Agreement, the Shares
will be validly issued, fully paid and nonassessable, and will be entitled to
the rights, privileges and preferences set forth in the Certificate of
Designation.
4. The Common Stock into which the Shares may be converted has been
duly and validly authorized for issuance to the Buyer by the Company; and upon
conversion of the Shares into shares of Common Stock pursuant to the terms of
the Certificate of Designation, such shares will be validly issued, fully paid
and nonassessable.
The opinion expressed in paragraph 1 with respect to good standing is
based solely upon the certificate of good standing issued by the appropriate
governmental agency of the State of Delaware, and no opinion is expressed
herein with respect to such matters beyond the dates as of which such
certificates were issued.
The opinions set forth above are subject to and limited by the
following:
(a) The effect of bankruptcy, insolvency, reorganization, moratorium
and other laws and court decisions or other legal or equitable principles
relating to, limiting or affecting the enforcement of creditors' rights
generally, including, but not limited to, fraudulent transfers or conveyances,
preferences and equitable subordination.
<PAGE> 35
Fujitsu Limited
September 30, 1997
Page 3
(b) The discretion of any court of competent jurisdiction in awarding
equitable remedies, including but not limited to specific performance or
injunctive relief.
(c) The availability of indemnification and other remedies may be
limited by federal or state securities laws.
(d) The effect of any securities laws.
Our opinion is limited to the laws of the State of California, the
Delaware General Corporation Law and the federal laws of the United States of
America. We express no opinions as to the laws of any other jurisdiction or as
to choice of law or conflicts of law rules.
This opinion is intended solely for the benefit of Buyer pursuant to
Section 4.1.4 of the Agreement, and is not to be made available to or relied
upon by any other person or entity or by Buyer for any other purpose or in any
other context without our prior written consent.
Very truly yours,
Irell & Manella LLP
<PAGE> 36
EXHIBIT 8.6.1
List of Defined Terms
The following terms are defined in the Sections indicated:
"Affiliate" Section 8.6.3
"Agreement" Prelude
"Buyer" Prelude
"Certificate of Designation" Section 4.1.4
"Closing" Section 1.3
"Closing Date" Section 1.3
"Company" Prelude
"Company SEC Filings" Section 2.6
"DKB Guarantees" Section 1.2
"Fairness Opinion" Recital C
"GAAP" Section 8.6.2
"Governmental Authority" Section 2.8
"Guarantee Payment" Section 1.2
"Indemnified Buyer" Section 6.1
"Indemnified Buyer Losses" Section 6.1
"Indemnified Seller Losses" Section 6.2
"Intellectual Property Rights" Section 2.11.1
"Law" Section 2.4
"Material Adverse Effect" Section 2.4
"NASDAQ Proceedings" Section 2.7
"Person" Section 8.6.3
"Proceedings" Section 2.7
"Proprietary Software" Section 2.11.4
19
<PAGE> 37
"Securities Act" Section 2.3.3
"Series B Preferred Stock" Recital A
"Shareholders Agreement" Section 2.3.3
"Shares" Section 1.1
"Subsidiary" Section 8.6.3
"Third Party IP" Section 2.11.1
20
<PAGE> 1
EXHIBIT 10.2
AGREEMENT FOR
REIMBURSEMENT OF WAFER PAYMENTS
BETWEEN
ROSS TECHNOLOGY, INC. AND FUJITSU LIMITED
This Agreement for Reimbursement of Wafer Payments (the "Agreement") is made
and agreed to as of September 30, 1997, by and between ROSS Technology, Inc.
("Ross") with its principal offices at 5316 Highway 290 West, Suite 500,
Austin, Texas, USA, and Fujitsu Limited ("FJ") with its registered offices at
1-1, Kamikodanaka 4-chome, Nakahara-ku, Kawasaki-shi, Kanagawa, 211-88, Japan
(together, the "Parties").
Recitals
WHEREAS, the Parties wish to fully and finally settle all disputes which are
related in any way to wafer and die deliveries from FJ to Ross prior to July 1,
1997; and
WHEREAS, FJ and Ross have agreed that the payment to be made under this
Agreement shall settle all disputes between the Parties, and any affiliates of
the Parties, over wafer and die deliveries with respect to such period; and
WHEREAS, the terms of this Agreement have been reviewed by an independent
committee of the Board of Directors of Ross and this committee has determined
that the terms of this Agreement are in the best interests of Ross;
NOW, THEREFORE, in consideration of premises and the terms and conditions set
forth herein, both Parties hereby agree as follows:
1. WAFER YIELD PAYMENT
1.1. Both Parties agree that the amount of the Wafer Yield Payment
will be US$2,254,257.00 (the "Wafer Yield Payment").
1.2. FJ agrees to pay the Wafer Yield Payment on or prior to
October 20, 1997, provided that FJ receives, prior to October 6, (a) a copy of
this Agreement and (b) a copy of the letter forwarded by FJ to Ross, dated the
date hereof, confirming the parties' agreement on the principal terms of a
wafer purchase agreement governing the purchase of wafers and dies by Ross from
FJ from and after July 1, 1997 (the "Confirmation Letter"), each duly executed
by Ross.
1.3. Ross' agreement to the terms of this Agreement, including
without limitation the release contained in Section 1.4, shall be subject to and
contingent upon (a) the execution of the Confirmation Letter by both Parties
and (b) the receipt by Ross of the Wafer Yield Payment described in Section 1.1.
1.4. Subject to the provisions of Section 1.3 above, Ross does
hereby and forever release and discharge FJ and each subsidiary and affiliated
corporation of FJ as well as the successors, shareholders, officers, directors,
assigns, agents, employees and representatives of each of them, past or
present, from any and all cause or causes
<PAGE> 2
of action, actions, damages, losses, claims, liabilities, and demands of
whatsoever kind or character, known or unknown, suspected to exist or not
suspected to exist, anticipated or not anticipated, whether statutory or common
law, heretofore or hereafter arising out of, connected with or incidental to
FJ's supply to Ross of wafers or dies prior to July 1, 1997, including with
respect to the yields of any such wafers and the performance of any such wafers
(or the related dies) on a stand-alone basis or as incorporated into Ross
products; provided, however, that such release shall not extend to, and shall
not be deemed to alter or diminish in any respect, any claims by Ross for
refund, repair or replacement of defective products based upon breach of the
express warranty that the Parties have agreed will apply to wafers and dies
supplied by FJ and accepted by Ross on or after September 30, 1996. Ross
acknowledges that the foregoing release is part of a compromise of disputed
claims and agrees that it shall not be deemed or construed as an admission of
liability or responsibility by either Party for any purpose.
1.5. Subject to the effectiveness of Section 1.4 above, FJ does
hereby and forever release and discharge Ross and each subsidiary and
affiliated corporation of Ross as well as the successors, shareholders,
officers, directors, assigns, agents, employees and representatives of each of
them, past or present, from any and all cause or causes of action, actions,
damages, losses, claims, liabilities, and demands of whatsoever kind or
character, known or unknown, suspected to exist or not suspected to exist,
anticipated or not anticipated, whether statutory or common law, heretofore or
hereafter arising out of, connected with or incidental to FJ's supply to Ross
of wafers or dies, including with respect to the yields of any such wafers and
the performance of any such wafers (or the related dies) on a stand-alone basis
or as incorporated into Ross products; provided, however, that such release
shall not extend to, and shall not be deemed to alter or diminish in any
respect, Ross' obligations with respect to invoices rendered by FJ in the
ordinary course for shipments of wafers or dies. FJ acknowledges that the
foregoing release is part of a compromise of disputed claims and agrees that it
shall not be deemed or construed as an admission of liability or responsibility
by either Party for any purpose.
1.6. WAIVER OF CALIFORNIA CIVIL CODE SECTION 1542. EACH PARTY
HEREBY WAIVES ALL RIGHTS ARISING UNDER CALIFORNIA CIVIL CODE SECTION 1542 OR
UNDER ANY ANALOGOUS REQUIREMENT OF LAW. SECTION 1542 PROVIDES THAT:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE
TIME OF EXECUTING THE RELEASE WHICH, IF KNOWN BY HIM, MUST
HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."
EACH PARTY ACKNOWLEDGES THAT IT HAS BEEN FULLY INFORMED BY ITS COUNSEL
CONCERNING THE EFFECT AND IMPORT OF THIS RELEASE UNDER CALIFORNIA CIVIL CODE
SECTION 1542 AND OTHER REQUIREMENTS OF LAW.
<PAGE> 3
2. CONFIDENTIALITY
2.1. This Agreement and all documents and discussions relating to
this Agreement are confidential information and are to be disclosed only to
employees of a Party who have a justifiable need to know. If either Party
needs to submit this Agreement to any third party, including any governmental
entity, court or regulatory body, such Party shall inform the other Party of
such requested submission in writing with the reasons and factual details of
the request. Subject to the requirements of applicable law, the order of any
court and the order or regulations of any governmental agency, each Party
agrees to use good faith to comply with the reasonable requests of the other
Party relating to the disclosure or nondisclosure of the terms of this
Agreement.
2.2. The Parties shall consult with each other regarding the
wording and substance of any and all press releases, announcements or other
public statements with respect to the transactions contemplated hereby. The
Parties further agree to use good faith to comply with the reasonable requests
of the other Party relating to any such press release, announcement or public
statement.
3. ASSIGNMENT
Neither this Agreement nor any of the rights or obligations created
herein may be assigned, delegated, pledged or otherwise encumbered or disposed
of, in whole or in part, by either Party without written consent of the other
Party. Any attempt to do so without the other Party's prior consent shall be
null and void.
4. ENTIRE AGREEMENT; GOVERNING LAW
This Agreement contains the entire agreement of both parties and
supersedes any and all prior agreements between both parties relating to the
subject matter hereof. This Agreement is to be governed by the laws of
California without regard to the laws of conflict of laws thereof.
5. COUNTERPARTS
This Agreement may be executed in counterparts each of which shall
constitute an original instrument but all of which, taken together, shall
constitute one and the same instrument.
<PAGE> 4
IN WITNESS WHEREOF, both parties have caused their respective authorized
representatives to execute this Agreement as of the date first written above.
ROSS TECHNOLOGY, INC. FUJITSU LIMITED
/s/ JACK SIMPSON /s/ HIROHIKO KONDO
-------------------------- ------------------------------
Name: Jack Simpson Name: Hirohiko Kondo
Title: President and CEO Title: Group Senior Vice President
------------------------- ------------------------------
LSI Products Group
------------------------------
<PAGE> 1
EXHIBIT 99.1
The following pro forma condensed consolidated balance sheet of the
Company is based upon the Company's consolidated historical balance sheet, as
adjusted to give effect to the sale and issuance of $50 million of Series B
Convertible Preferred Stock to Fujitsu Limited, its majority stockholder, and
the retirement of $50 million of debt previously guaranteed by Fujitsu. The
pro forma condensed consolidated balance sheet as of August 31, 1997 gives
effect to this transaction as if it occurred on August 31, 1997. The pro forma
adjustments are based upon available information and certain assumptions that
the Company believes are reasonable. The pro forma balance sheet does not
purport to represent what the Company's financial position would actually have
been had this transaction in fact occurred at or on such date, or to project
the Company's financial position at any future date.
The pro forma adjustments include proceeds from the issuance of $50 million of
preferred stock net of $595,000 of expenses and the retirement of $50 million
of debt.
PRO FORMA
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
AUGUST 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........................ $ 3,244 $ 3,244
Trade accounts receivable........................ 5,679 5,679
Receivable from Fujitsu.......................... 725 725
Inventory........................................ 17,618 17,618
Prepaid expenses and other assets................ 3,034 -- 3,034
-------- -------- --------
Total current assets....................... 30,300 30,300
Property and equipment, net........................ 13,542 -- 13,542
-------- -------- --------
Total assets....................................... $ 43,842 -- $ 43,842
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable........................... $ 12,932 595 $ 13,527
Accrued liabilities.............................. 4,357 4,357
Payable to Fujitsu............................... 7,834 7,834
Notes payable.................................... 50,000 (50,000) 0
-------- -------- --------
Total current liabilities.................. 75,123 (49,405) 25,718
Stockholders' equity:
Preferred stock................................... 0 49,405 49,405
Common stock...................................... 23 23
Additional paid-in capital........................ 82,574 82,574
Accumulated deficit............................... (112,627) -- (112,627)
-------- -------- --------
(30,030) 49,405 19,375
Less: treasury stock............................... (1,251) -- (1,251)
-------- -------- --------
Total stockholders' equity.................. (31,281) 49,405 18,124
-------- -------- --------
Total liabilities and stockholders' equity.......... $ 43,842 $ 49,405 $ 43,842
======== ======== ========
</TABLE>
<PAGE> 1
EXHIBIT 99.2
[ROSS TECHNOLOGY, INC. PRESS RELEASE LETTERHEAD]
ROSS TECHNOLOGY CLOSING $50 MILLION
RECAPITALIZATION AND DEBT REDUCTION; ANNOUNCES
OTHER AGREEMENTS WITH FUJITSU LIMITED
Austin, Texas, September 30, 1997 -- ROSS Technology, Inc. (Nasdaq:
RTEC) ("ROSS" or the "Company) announced today that it had executed definitive
agreements (including a Stock Purchase Agreement) to sell $50 million of a new
Series B Convertible Preferred Stock ("Preferred Stock") to its majority
shareholder, Fujitsu Limited ("Fujitsu" or "Buyer"), in a recapitalization. The
proceeds from the sale will reduce its bank indebtedness. Funding of the
transaction is planned to be completed on October 1, 1997.
Following the stock sale and debt reduction, ROSS' maximum aggregate
bank debt guaranteed by Fujitsu will be $20 million. On September 30, 1997, pro
forma, giving effect to the reduction of bank indebtedness described above, the
Company had $6 million of bank debt outstanding.
-more-
<PAGE> 2
RTEC/Recapitalization
Page 2
The Company's listing on the Nasdaq National Market is expected to
continue due to this recapitalization. The Nasdaq Stock Market had established
several criteria for the continued listing of the Company's stock on the Nasdaq
National Market; among such criteria were the completion of the
recapitalization and facilitation of the bank line of credit described above.
The Company believes that it has complied with the criteria for continued
listing except for the filing of a Current Report on Form 8-K by October 3,
1997, which would include a pro forma balance sheet as of August 31, 1997,
reflecting the results of the recapitalization. The Company intends to file the
Form 8-K on or before the required date to complete the specific requirements
for continued Nasdaq listing.
In conjunction with the recapitalization, ROSS and Fujitsu also entered
into an Agreement in Principle covering pricing and other business terms of a
Wafer Supply Agreement for silicon wafers purchased by ROSS from Fujitsu after
June 30, 1997. The parties anticipate promptly completing a definitive Wafer
Supply Agreement based upon the Agreement in Principle. The parties also
executed a Reimbursement Agreement regarding pricing for silicon wafers
purchased by the Company from Fujitsu prior to July 1, 1997, and including
mutual releases of silicon-related claims for the periods through June 30, 1997
(except for certain warranty claims by the Company and certain invoices
rendered in the ordinary course by Fujitsu for purchases by the Company).
Pursuant to the Reimbursement Agreement, Fujitsu will pay the Company
approximately $2.3 million, which amount had previously been accrued in the
Company's financial statements.
-more-
<PAGE> 3
RTEC/Recapitalization
Page 3
Jack W. Simpson, Sr., President and Chief Executive Officer of the
Company, stated that, "By reducing our bank debt from $56 million to $6
million, by having a line of credit to enable borrowing of an additional $14
million, and with shareholders' equity at October 1, 1997, estimated to be over
$20 million, we believe we will have the financial structure required to move
the business forward to implement our turnaround plan. The employees and
management of ROSS very much appreciate the strong support demonstrated by
Fujitsu. Our attention will now clearly be focused on developing the
world-class 64-bit Viper microprocessor under our Joint Development Agreement
with Fujitsu, and we will be hiring additional talent to supplement the
Company's current development team."
"In addition, our attention to improved yields and cost reduction for
our current products will continue and we expect progress over time. Our
current 32-bit products are being enhanced with a 250 MHz processor and our
sales force continues to expand with highly competent, experienced sales people.
The entire ROSS organization is focused on 'Making Things Happen.'"
"This recapitalization, including the $50 million reduction in debt, is
a major financial event in the turnaround of ROSS and our challenge is to now
deliver the results indicated in our three-year business plan. The plan is
challenging but doable with the talent that is at ROSS and the additional
talent we expect to attract."
- more -
<PAGE> 4
RTEC/Recapitalization
Page 4
The Stock Purchase Agreement, the Reimbursement Agreement, the Agreement
in Principal, and the amendment to the Joint Development Agreement were
approved by a Special Committee of the Company's Board of Directors comprised
of Fred T. May, the Company's Chairman of the Board, who is not associated in
any way with the Fujitsu. In connection with this transaction, the Special
Committee had independent legal and financial advice and received an opinion
dated September 30, 1997, from an independent investment banking firm to the
effect that, as of such date, the recapitalization transaction (comprising the
stock sale and the bank debt guarantee by Fujitsu) was fair to the Company's
stockholders (other than Fujitsu) and the Company from a financial point of
view.
The Stock Purchase Agreement contains the following provision, among
others: "The Company acknowledges that, based on the Business Plan through
fiscal year 1998, the funding provided through the purchase of the Series B
Preferred Stock and the availability of a credit line of $20 million guaranteed
by Buyer, should (assuming the Company's timely receipt of $13.5 million in
funding through payments contemplated to be payable to the Company under the
Viper Development Agreement between the parties (dated June 25, 1997) [the
"Joint Development Agreement"] or otherwise provided to the Company by Buyer
after the date hereof and prior to March 31, 1998) avoid any cash flow
shortages through fiscal year 1998. Based on the foregoing, Buyer and the
Company agree that Buyer's obligations to the Company under that certain Letter
dated June 18, 1997 from Buyer to the Company shall be fully satisfied and
extinguished on and as of the Closing" (of the recapitalization). (In the
Letter dated June 18, 1997, Fujitsu stated that "In accordance with our plan
for ROSS Technology, we (Fujitsu) are ready to provide the necessary funding
through debt guarantees or other types of financing for ROSS Technology not
to incur cash flow shortages through April 1, 1998.")
F. S. (Kit) Webster III, Chief Financial Officer of the Company, noted
that the Company and its independent public accountants would be reviewing
whether the foregoing provision of the Stock Purchase Agreement has any impact
on the Company's past financial statements.
- more-
<PAGE> 5
RTEC/Recapitalization
Page 5
Mr. Webster also noted that, as previously announced, the Company and
Fujitsu have been discussing the final specifications for the 64-bit
microprocessor design to be developed under the Joint Development Agreement and
that Fujitsu's funding obligations and rights to the intellectual property
under the Joint Development Agreement could be affected if the parties
ultimately fall to agree. On September 29, 1997, the Company and Fujitsu
entered into an amendment to the Joint Development Agreement which redefined
certain milestone objectives in reflection of the discussions, which are
continuing.
The principal terms of The Preferred Stock include:
1. The Preferred Stock may be converted in whole or in part into
Common Stock at any time. The number of Common shares into
which the Preferred Stock may be converted, except when a
Special Conversion Condition applies, will be the liquidation
preference per share ($100.00) divided by the average of the
closing prices of the Common Stock on the five trading days
immediately prior to the date of conversion (but in no event
less than $1.00) (the "Market Price"). The Common Stock
issuable upon conversion is eligible for registration at the
Company's expense under an existing Shareholders Agreement.
2. There are two Special Conversion Conditions: (1) For two years
from the date of closing, the number of shares of Common Stock
into which the Preferred Stock may be converted will be the
liquidation preference per share ($100.00) divided by $2.50.
(2) Not withstanding (1), if ROSS declares bankruptcy, or if
ROSS requests future additional funding or credit support from
Fujitsu, subject to certain limited exceptions, the number of
shares of Common Stock into which the Preferred Stock may be
converted will be the liquidation preference per share
($100.00) divided by the lower of The Market Price or $2.00.
- more -
<PAGE> 6
RTEC/Recapitalization
Page 6
3. The Preferred Stock carries no stated dividend but will
participate pro rata in any dividends on the Common Stock on
an "as converted" basis. The Preferred Stock has no voting
rights for directors but may vote as a class on certain
matters.
4. No Nasdaq listing or trading market is planned for the
Preferred Stock.
SAFE HARBOR STATEMENT UNDER PRIVATE SECURITIES LITIGATION REFORM AD OF 1995:
To the extent that this release contains forward-looking statements
with respect to the financial condition, results of operations and business of
the Company, such statements are subject to certain risks and uncertainties that
could cause actual results to differ materially and adversely from those set
forth in the forward-looking statements, including without limitation,
the availability of financial resources adequate to the Company's short-,
medium- and long-term needs, the Company's dependence on the timely development,
pre-production qualification, manufacture, introduction and customer acceptance
of new higher-speed, higher-margin products, the ability of the Company to
successfully implement its strategy of expanding into the system products
business, the various effects on revenue, margins, inventories and operating
expenses of repositioning the Company's product lines and overall business, the
effects of building and maintaining product inventories in the Company's hands
and in its distribution channels, product return and credit risks with
distributors, resellers and customers, the Company's dependence on distributors
and resellers for certain product sales to end-users, the impact on revenue,
margins and inventories of rapidly changing technology, competition, downward
pricing pressures and allocations of product among different distribution
channels, the effects of routine price degradation over time in each of the
Company's product lines, varying customer demand for the Company's products,
supply and manufacturing constraints and costs, the Company's dependence on
outside suppliers for wafer fabrication and raw materials, components and
certain manufacturing services, changes in plans, programs or expenses for
research, development, sales or marketing, the Company's ability to build and
maintain adequate staff infrastructures in the areas of microprocessor design,
product engineering and development, sales and marketing, finance, accounting,
and administration, supplier disputes, customer warranty claims, general
economic conditions, and the other risks and uncertainties described from time
to time in the Company's public announcements and Securities and Exchange
Commission filings, including without limitation the Form S-1 and Final
Prospectus filed in November 1995 and the Company's Current, Quarterly and
Annual Reports on Forms 8-K, 10-Q and 10-K, respectively. The Company cautions
the foregoing list of important factors is not exclusive. The Company does
not undertake to update any written or oral forward-looking statement that may
be made from time to time by or on behalf of the Company.
- more -
<PAGE> 7
RTEC/Recapitalization
Page 7
ROSS OVERVIEW
ROSS Technology, founded in 1988, is a majority-owned subsidiary of
Fujitsu Limited. A minority position in ROSS is held by Sun Microsystems, Inc.
As of June 30, 1997, the Company's outstanding Common Stock was held 60 percent
by Fujitsu, 5 percent by Sun, and 35 percent by employees and the public. The
Company's objective is to produce extremely high SPARC performance in a very
compact space, leading the industry in delivering the most SPARC computing
power per cubic inch. ROSS is one of the industry's most prominent suppliers of
SPARC microprocessors and SPARC system products to both the OEM and end-user
markets.
# # #
NOTE TO EDITORS
ROSS and the ROSS logo are registered trademarks of ROSS Technology, Inc. All
SPARC trademarks are trademarks or registered trademarks of SPARC
International. Products bearing SPARC trademarks are based upon an architecture
developed by Sun Microsystems, Inc.
