EXHIBIT 1
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AMENDED AND RESTATED
AGREEMENT AND PLAN OF REORGANIZATION
AMONG
▇▇▇▇▇ CORPORATION,
A DELAWARE CORPORATION
("▇▇▇▇▇"),
SEE ACQUISITION CORPORATION,
A DELAWARE CORPORATION AND WHOLLY-OWNED
SUBSIDIARY OF ▇▇▇▇▇,
AND
COMPCORE MULTIMEDIA, INC.,
A CALIFORNIA CORPORATION
DATED NOVEMBER 27, 1996
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TABLE OF CONTENTS
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ARTICLE I THE MERGER........................................................................... 1
Section 1.1 Effective Time of the Merger......................................................... 1
Section 1.2 Closing.............................................................................. 1
Section 1.3 Effects of the Merger................................................................ 1
Section 1.4 Directors and Officers............................................................... 2
ARTICLE II CONVERSION OF SECURITIES............................................................. 2
Section 2.1 Conversion of Capital Stock.......................................................... 2
Section 2.2 Exchange of Certificates............................................................. 3
Section 2.3 Escrow............................................................................... 4
Section 2.4 Appraisal Rights..................................................................... 5
ARTICLE III REPRESENTATIONS AND WARRANTIES OF COMPCORE........................................... 5
Section 3.1 Organization, Standing and Power..................................................... 5
Section 3.2 CompCore Capital Structure........................................................... 6
Section 3.3 Authority; Required Filings and Consents............................................. 6
Section 3.4 Financial Statements................................................................. 7
Section 3.5 Absence of Undisclosed Liabilities................................................... 7
Section 3.6 Accounts Receivable.................................................................. 7
Section 3.7 Inventory............................................................................ 8
Section 3.8 Absence of Certain Changes or Events................................................. 8
Section 3.9 Taxes................................................................................ 9
Section 3.10 Tangible Assets and Real Property.................................................... 9
Section 3.11 Intellectual Property................................................................ 10
Section 3.12 Bank Accounts........................................................................ 11
Section 3.13 Contracts............................................................................ 11
Section 3.14 Labor Difficulties................................................................... 12
Section 3.15 Trade Regulation..................................................................... 12
Section 3.16 Environmental Matters................................................................ 12
Section 3.17 Employee Benefit Plans............................................................... 13
Section 3.18 Compliance with Laws................................................................. 13
Section 3.19 Employees and Consultants............................................................ 13
Section 3.20 Litigation........................................................................... 13
Section 3.21 Restrictions on Business Activities.................................................. 14
Section 3.22 Governmental Authorization........................................................... 14
Section 3.23 Insurance............................................................................ 14
Section 3.24 Pooling of Interests................................................................. 14
Section 3.25 Interested Party Transactions........................................................ 14
Section 3.26 Registration Statement; Proxy Statement/Prospectus................................... 15
Section 3.27 No Existing Discussions.............................................................. 15
Section 3.28 Real Property Holding Corporation.................................................... 15
Section 3.29 Corporate Documents.................................................................. 15
Section 3.30 No Misrepresentation................................................................. 15
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇ AND SUB...................................... 15
Section 4.1 Organization......................................................................... 16
Section 4.2 ▇▇▇▇▇ Capital Structure.............................................................. 16
Section 4.3 Authority; No Conflict; Required Filings and Consents................................ 17
Section 4.4 SEC Filings; Financial Statements.................................................... 17
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Section 4.5 Absence of Undisclosed Liabilities................................................... 18
Section 4.6 Absence of Certain Changes or Events................................................. 18
Section 4.7 Intellectual Property................................................................ 19
Section 4.8 Agreements, Contracts and Commitments................................................ 19
Section 4.9 Litigation........................................................................... 19
Section 4.10 Compliance with Laws................................................................. 19
Section 4.11 Pooling of Interests................................................................. 20
Section 4.12 Interested Party Transactions........................................................ 20
Section 4.13 Registration Statement; Proxy Statement/Prospectus................................... 20
Section 4.14 Opinion of Financial Advisor......................................................... 20
Section 4.15 Interim Operations of Sub............................................................ 20
Section 4.16 No Existing Discussions.............................................................. 20
Section 4.17 Corporate Documents.................................................................. 20
Section 4.18 No Misrepresentation................................................................. 20
ARTICLE V CONDUCT OF BUSINESS.................................................................. 21
Section 5.1 Covenants of CompCore................................................................ 21
Section 5.2 Covenants of ▇▇▇▇▇................................................................... 22
Section 5.3 Cooperation.......................................................................... 23
ARTICLE VI ADDITIONAL AGREEMENTS................................................................ 23
Section 6.1 No Solicitation by CompCore.......................................................... 23
Section 6.2 No Solicitation by ▇▇▇▇▇............................................................. 24
Section 6.3 Proxy Statement/Prospectus; Registration Statement................................... 24
Section 6.4 Consents............................................................................. 24
Section 6.5 Current Nasdaq Quotation............................................................. 25
Section 6.6 Access to Information................................................................ 25
Section 6.7 Stockholders' Meetings............................................................... 25
Section 6.8 Legal Conditions to Merger........................................................... 25
Section 6.9 Public Disclosure.................................................................... 25
Section 6.10 Tax-Free Reorganization.............................................................. 25
Section 6.11 Pooling Accounting................................................................... 25
Section 6.12 Affiliate Agreements................................................................. 26
Section 6.13 Nasdaq Quotation..................................................................... 26
Section 6.14 Stock Options........................................................................ 26
Section 6.15 Brokers or Finders................................................................... 27
Section 6.16 Additional Agreements; Reasonable Efforts............................................ 27
Section 6.17 Expenses............................................................................. 27
Section 6.18 CompCore Financial Statements........................................................ 27
Section 6.19 Employee Benefits.................................................................... 27
ARTICLE VII CONDITIONS TO MERGER................................................................. 28
Section 7.1 Conditions to Each Party's Obligation to Effect the Merger........................... 28
Section 7.2 Additional Conditions to Obligations of ▇▇▇▇▇ and Sub................................ 28
Section 7.3 Additional Conditions to Obligations of CompCore..................................... 29
ARTICLE VIII TERMINATION AND AMENDMENT............................................................ 30
Section 8.1 Termination.......................................................................... 30
Section 8.2 Effect of Termination................................................................ 31
Section 8.3 Termination Fee...................................................................... 31
Section 8.4 Amendment............................................................................ 31
Section 8.5 Extension; Waiver.................................................................... 31
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ARTICLE IX ESCROW AND INDEMNIFICATION........................................................... 32
Section 9.1 Survival of Representations and Warranties........................................... 32
Section 9.2 Indemnification by CompCore Shareholders............................................. 32
Section 9.3 Procedures for Indemnification....................................................... 32
Section 9.4 Defense of Third Party Claims........................................................ 33
Section 9.5 Settlement of Third Party Claims..................................................... 33
Section 9.6 Manner of Indemnification............................................................ 33
Section 9.7 Shareholder Representative........................................................... 34
ARTICLE X GENERAL PROVISIONS................................................................... 34
Section 10.1 Notices.............................................................................. 34
Section 10.2 Interpretation....................................................................... 35
Section 10.3 Counterparts......................................................................... 36
Section 10.4 Severability......................................................................... 36
Section 10.5 Entire Agreement..................................................................... 36
Section 10.6 Governing Law........................................................................ 36
Section 10.7 Assignment........................................................................... 36
Section 10.8 Third Party Beneficiary.............................................................. 36
EXHIBITS
Exhibit A - Escrow Agreement
Exhibit B-1 - Form of Employment Agreement - ▇▇▇▇▇
Exhibit B-2 - Form of Employment Agreement - Cismas
Exhibit C - Form of Non-Competition Agreements
Exhibit D - Opinion of Counsel to CompCore
Exhibit E - Opinion of Counsel to ▇▇▇▇▇
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TABLE OF DEFINED TERMS
CROSS-REFERENCES
TERMS IN AGREEMENT
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Affiliate........................................................................................ Section 6.12
Affiliate Agreement.............................................................................. Section 6.12
Agreement........................................................................................ Preamble
Assumed Option................................................................................... Section 6.14
Bechtolsheim Note................................................................................ Section 3.2
Certificate(s)................................................................................... Section 2.2
Change of Control................................................................................ Section 6.2
Closing.......................................................................................... Section 1.2
Closing Date..................................................................................... Section 1.2
Code............................................................................................. Preamble
CompCore......................................................................................... Preamble
CompCore Acquisition Proposal.................................................................... Section 6.1
CompCore Authorizations.......................................................................... Section 3.22
CompCore Balance Sheets.......................................................................... Section 3.5
CompCore Common Stock............................................................................ Section 2.1
CompCore Components.............................................................................. Section 3.11
CompCore Disclosure Schedule..................................................................... Article III
CompCore Employee Plan(s)........................................................................ Section 3.17
CompCore Financial Statements.................................................................... Section 3.4
CompCore Intellectual Property Rights............................................................ Section 3.11
CompCore Option Plan............................................................................. Section 2.1
CompCore Options................................................................................. Section 2.1
CompCore Preferred Stock......................................................................... Section 3.2
CompCore Product................................................................................. Section 3.11
CompCore Shareholders' Meeting................................................................... Section 3.26
CompCore Transaction Expenses.................................................................... Section 6.17
Confidentiality Agreement........................................................................ Section 6.6
Constituent Corporations......................................................................... Section 1.3
Conversion Number................................................................................ Section 2.1
date hereof...................................................................................... Section 10.2
date of this agreement........................................................................... Section 10.2
Dissenting Shareholders.......................................................................... Section 2.4
Dissenting Shares................................................................................ Section 2.4
Effective Time................................................................................... Section 1.1
Employment Agreements............................................................................ Section 7.2
Environmental Permits............................................................................ Section 3.16
Escrow........................................................................................... Section 2.3
Escrow Agent..................................................................................... Section 2.3
Escrow Agreement................................................................................. Section 2.3
Escrow Shares.................................................................................... Section 2.3
Exchange Act..................................................................................... Section 3.3
Exchange Agent................................................................................... Section 2.2
Exchange Fund.................................................................................... Section 2.2
Floor............................................................................................ Section 9.2
GAAP............................................................................................. Section 3.4
GCL.............................................................................................. Section 1.1
Governmental Entity.............................................................................. Section 3.3
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CROSS-REFERENCES
TERMS IN AGREEMENT
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Hazardous Material............................................................................... Section 3.16
Hazardous Materials Activities................................................................... Section 3.16
incentive stock options.......................................................................... Section 6.14
include, includes and including.................................................................. Section 10.2
Indemnification Claim............................................................................ Section 9.3
Indemnitee....................................................................................... Section 9.3
Joint Proxy Statement............................................................................ Section 3.26
knowledge........................................................................................ Article III
Licensed Intellectual Property................................................................... Section 3.11
made available................................................................................... Section 10.2
Material Adverse Affect.......................................................................... Article III
Material Tangible Assets......................................................................... Section 3.10
Merger........................................................................................... Preamble
Merger Agreement................................................................................. Section 1.1
NNM.............................................................................................. Section 2.2
Officers' Certificates........................................................................... Section 1.1
Original Agreement............................................................................... Preamble
Registration Statement........................................................................... Section 3.26
Returns.......................................................................................... Section 3.9
Rule 145......................................................................................... Section 6.12
SEC.............................................................................................. Section 3.3
Securities Act................................................................................... Section 3.3
Shareholder Representative....................................................................... Section 9.7
Sub.............................................................................................. Preamble
Subsidiary....................................................................................... Article IV
Surviving Corporation............................................................................ Section 1.3
Tax(es).......................................................................................... Section 3.9
Termination Date................................................................................. Section 9.1
Third Party Claim................................................................................ Section 9.4
Transaction Documents............................................................................ Section 3.3
United States real property holding corporation.................................................. Section 3.28
without limitation............................................................................... Section 10.2
▇▇▇▇▇............................................................................................ Preamble
▇▇▇▇▇ Acquisition Proposal....................................................................... Section 6.2
▇▇▇▇▇ Balance Sheets............................................................................. Section 4.4
▇▇▇▇▇ Common Stock............................................................................... Section 2.1
▇▇▇▇▇ Disclosure Schedule........................................................................ Article IV
▇▇▇▇▇ Group...................................................................................... Section 9.2
▇▇▇▇▇ Intellectual Property Rights............................................................... Section 4.7
▇▇▇▇▇ Losses..................................................................................... Section 9.2
▇▇▇▇▇ Material Contract.......................................................................... Section 4.8
▇▇▇▇▇ Option Plans............................................................................... Section 4.2
▇▇▇▇▇ Plans...................................................................................... Section 6.19
▇▇▇▇▇ Preferred Stock............................................................................ Section 4.2
▇▇▇▇▇ Product.................................................................................... Section 4.7
▇▇▇▇▇ Purchase Plan.............................................................................. Section 4.2
▇▇▇▇▇ Reports.................................................................................... Section 4.4
▇▇▇▇▇ Stockholders' Meeting...................................................................... Section 3.26
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AMENDED AND RESTATED AGREEMENT AND PLAN OF REORGANIZATION
AMENDED AND RESTATED AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement"),
dated as of November 27, 1996, by and among ▇▇▇▇▇ Corporation, a Delaware
corporation ("▇▇▇▇▇"), See Acquisition Corporation, a Delaware corporation and a
wholly-owned subsidiary of ▇▇▇▇▇ ("Sub"), and CompCore Multimedia, Inc., a
California corporation ("CompCore").
WHEREAS, the Boards of Directors of ▇▇▇▇▇, Sub and CompCore deem it
advisable and in the best interests of each corporation and its respective
stockholders that ▇▇▇▇▇ and CompCore combine in order to advance the long-term
business interests of ▇▇▇▇▇ and CompCore;
WHEREAS, the combination of ▇▇▇▇▇ and CompCore shall be effected by the
terms of this Agreement through a transaction (the "Merger") in which Sub will
merge with and into CompCore, CompCore will become a wholly-owned subsidiary of
▇▇▇▇▇ and the shareholders of CompCore will become stockholders of ▇▇▇▇▇;
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, for accounting purposes, it is intended that the Merger shall be
accounted for as a pooling of interests; and
WHEREAS, in consideration of the foregoing, the parties have previously
entered into an Agreement and Plan of Reorganization dated as of October 20,
1996 (the "Original Agreement"), which the parties now desire to amend and
restate in the form set forth below;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth below, the
parties hereby amend and restate the Original Agreement as follows:
ARTICLE I
THE MERGER
Section 1.1 EFFECTIVE TIME OF THE MERGER. Subject to the provisions of
this Agreement, an agreement of merger (the "Merger Agreement") containing the
substantive provisions of this Article I and Article II and in such form as is
required by the relevant provisions of the California General Corporation Law
(the "GCL") shall be duly prepared, executed and acknowledged by Sub and by
CompCore as the Surviving Corporation (as defined in Section 1.3(a)) and
thereafter delivered to the Secretary of State of the State of California for
filing, along with certificates of officers ("Officers' Certificates") of the
Constituent Corporations (as defined in Section 1.3(a)), as soon as practicable
on or after the Closing Date (as defined in Section 1.2). The Merger shall
become effective upon the filing of the Merger Agreement and the Officers'
Certificates with the Secretary of State of the State of California or at such
time thereafter as is provided in the Merger Agreement (the "Effective Time").
Section 1.2 CLOSING. The closing of the Merger (the "Closing") will take
place at 10:00 a.m., Pacific Time, on a date to be specified by ▇▇▇▇▇ and
CompCore (the "Closing Date"), which shall be (i) no later than the second
business day after satisfaction of the latest to occur of the conditions set
forth in Sections 7.1, 7.2(b) (other than the delivery of the officers'
certificate referred to therein) and 7.3(b) (other than the delivery of the
officers' certificate referred to therein) provided that the other closing
conditions set forth in Article VII have been met or waived as provided in
Article VII at or prior to the Closing, at the offices of ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ &
Freidenrich, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ unless another date or
place is agreed to in writing by ▇▇▇▇▇ and CompCore.
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Section 1.3 EFFECTS OF THE MERGER.
(a) At the Effective Time (i) the separate existence of Sub shall cease and
Sub shall be merged with and into CompCore (the "Surviving Corporation"), (ii)
the Articles of Incorporation of CompCore shall be amended so that Article III
of such Articles of Incorporation shall read as follows: "The total number of
shares of all classes which this corporation shall have authority to issue shall
be 1,000, all of which shall consist of Common Stock, par value $.001 per
share," and, as so amended, such Articles of Incorporation shall be the Articles
of Incorporation of the Surviving Corporation, and (iii) the Bylaws of CompCore
as in effect immediately prior to the Effective Time shall be the Bylaws of the
Surviving Corporation. (Sub and CompCore are sometimes referred to herein as the
"Constituent Corporations.")
(b) At and after the Effective Time, the Surviving Corporation shall possess
all the rights, privileges, powers and franchises of a public as well as of a
private nature, and be subject to all the restrictions, disabilities and duties
of each of the Constituent Corporations; and all and singular rights,
privileges, powers and franchises of each of the Constituent Corporations, and
all property, real, personal and mixed, and all debts due to either of the
Constituent Corporations on whatever account, as well as for stock subscriptions
and all other things in action or belonging to each of the Constituent
Corporations, shall be vested in the Surviving Corporation, and all property,
rights, privileges, powers and franchises, and all and every other interest
shall be thereafter as effectually the property of the Surviving Corporation as
they were of the Constituent Corporations, and the title to any real estate
vested by deed or otherwise, in either of the Constituent Corporations, shall
not revert or be in any way impaired; but all rights of creditors and all liens
upon any property of either of the Constituent Corporations shall be preserved
unimpaired, and all debts, liabilities and duties of the Constituent
Corporations shall thereafter attach to the Surviving Corporation, and may be
enforced against it to the same extent as if such debts and liabilities had been
incurred by it.
Section 1.4 DIRECTORS AND OFFICERS. The directors and officers of Sub
immediately prior to the Effective Time shall be the initial directors and
officers of the Surviving Corporation, each of whom will hold office in
accordance with the Articles of Incorporation and Bylaws of the Surviving
Corporation, in each case until their respective successors are duly elected or
appointed.
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 CONVERSION OF CAPITAL STOCK. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of Common Stock, no par value, of CompCore ("CompCore Common Stock") or
capital stock of Sub:
(a) CAPITAL STOCK OF SUB. Each issued and outstanding share of the capital
stock of Sub shall be converted into and become one fully paid and nonassessable
share of Common Stock, $.001 par value, of the Surviving Corporation.
(b) EXCHANGE RATIO FOR COMPCORE COMMON STOCK. Subject to Section 2.2, each
issued and outstanding share of CompCore Common Stock (other than Dissenting
Shares as defined in Section 2.4) shall be converted into the right to receive
0.6408 fully paid and nonassessable shares of Common Stock, $.001 par value, of
▇▇▇▇▇ ("▇▇▇▇▇ Common Stock"), which amount shall be subject to adjustment to
reflect any stock split or stock dividend effected between the date of this
Agreement and the Effective Time (the "Conversion Number"). All such shares of
CompCore Common Stock, when so converted, shall no longer be outstanding and
shall automatically be canceled and retired and shall cease to exist, and each
holder of a certificate representing any such shares shall cease to have any
rights with respect thereto, except the right to receive the shares of ▇▇▇▇▇
Common Stock and any cash in lieu of fractional shares of ▇▇▇▇▇ Common Stock to
be issued or paid in consideration therefor upon the surrender of such
certificate in accordance with this Article II.
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(c) COMPCORE STOCK OPTIONS. At the Effective Time, all then outstanding
options to purchase CompCore Common Stock (the "CompCore Options") issued under
CompCore's 1994 Stock Plan (the "CompCore Option Plan") not exercised as of the
Effective Time will be assumed by ▇▇▇▇▇ in accordance with Section 6.14.
Section 2.2 EXCHANGE OF CERTIFICATES. The procedures for exchanging
outstanding shares of CompCore Common Stock for ▇▇▇▇▇ Common Stock pursuant to
the Merger are as follows:
(a) EXCHANGE AGENT. As of the Effective Time, ▇▇▇▇▇ shall deposit with an
exchange agent designated by ▇▇▇▇▇ (the "Exchange Agent"), for the benefit of
the holders of shares of CompCore Common Stock, for exchange in accordance with
this Section 2.2, through the Exchange Agent, certificates representing the
shares of ▇▇▇▇▇ Common Stock issuable pursuant to Section 2.1 less the Escrow
Shares, as defined in Section 2.3 (such shares of ▇▇▇▇▇ Common Stock deposited
with the Exchange Agent, together with any dividends or distributions with
respect thereto, being hereinafter referred to as the "Exchange Fund"), in
exchange for outstanding shares of CompCore Common Stock.
(b) EXCHANGE PROCEDURES. As soon as reasonably practicable after the
Effective Time, the Exchange Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of CompCore Common Stock (each a "Certificate,"
and collectively, the "Certificates") whose shares were converted pursuant to
Section 2.1 and the Merger Agreement into the right to receive shares of ▇▇▇▇▇
Common Stock (i) a letter of transmittal, which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Exchange Agent and shall be in
such form and have such other provisions as ▇▇▇▇▇ and CompCore may reasonably
specify, and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for certificates representing shares of ▇▇▇▇▇ Common
Stock. Upon surrender of a Certificate for cancellation to the Exchange Agent or
to such other agent or agents as may be appointed by ▇▇▇▇▇, together with a duly
executed letter of transmittal, the holder of such Certificate shall be entitled
to receive in exchange therefor a certificate representing that number of whole
shares of ▇▇▇▇▇ Common Stock which such holder has the right to receive pursuant
to the provisions of Section 2.1(b) less such holder's pro rata portion of the
Escrow Shares, and the Certificate so surrendered shall immediately be canceled.
In the event of a transfer of ownership of CompCore Common Stock which is not
registered in the transfer records of CompCore, a certificate representing the
proper number of shares of ▇▇▇▇▇ Common Stock may be issued to a transferee if
the Certificate representing such CompCore Common Stock is presented to the
Exchange Agent, accompanied by all documents required to evidence and effect
such transfer and by evidence that any applicable stock transfer taxes have been
paid. Until surrendered as contemplated by this Section 2.2, each Certificate
shall be deemed at any time after the Effective Time to represent only the right
to receive upon such surrender the certificate representing shares of ▇▇▇▇▇
Common Stock and cash in lieu of any fractional shares of ▇▇▇▇▇ Common Stock as
contemplated by this Section 2.2. The instructions for effecting the surrender
of the Certificates shall set forth procedures that must be taken by the holder
of any Certificate that has been lost, destroyed or stolen. It shall be a
condition to the right of such holder to receive a certificate representing
shares of ▇▇▇▇▇ Common Stock that the Exchange Agent shall have received, along
with the letter of transmittal, a duly executed lost certificate affidavit,
including an agreement to indemnify ▇▇▇▇▇, signed exactly as the name or names
of the registered holder or holders appeared on the books of CompCore
immediately prior to the Effective Time, together with such other documents as
▇▇▇▇▇ or the Exchange Agent may reasonably require in connection therewith;
provided that such holder shall not be required to furnish a bond.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends or
other distributions declared or made after the Effective Time with respect to
▇▇▇▇▇ Common Stock with a record date after the Effective Time shall be paid to
the holder of any unsurrendered Certificate with respect to the shares of ▇▇▇▇▇
Common Stock represented thereby and no cash payment in lieu of fractional
shares shall be paid to any such holder pursuant to subsection (e) below until
the holder of record of such Certificate shall surrender such Certificate.
Subject to the effect of applicable laws, following surrender of any such
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Certificate, there shall be paid to the record holder of the certificates
representing whole shares of ▇▇▇▇▇ Common Stock issued in exchange therefor,
without interest, (i) at the time of such surrender, the amount of any cash
payable in lieu of a fractional share of ▇▇▇▇▇ Common Stock to which such holder
is entitled pursuant to subsection (e) below and the amount of dividends or
other distributions with a record date after the Effective Time previously paid
with respect to such whole shares of ▇▇▇▇▇ Common Stock, and (ii) at the
appropriate payment date, the amount of dividends or other distributions with a
record date after the Effective Time but prior to surrender and a payment date
subsequent to surrender payable with respect to such whole shares of ▇▇▇▇▇
Common Stock.
(d) NO FURTHER OWNERSHIP RIGHTS IN COMPCORE COMMON STOCK. All shares of
▇▇▇▇▇ Common Stock issued upon the surrender for exchange of shares of CompCore
Common Stock in accordance with the terms hereof (including any cash paid
pursuant to subsection (c) or (e) of this Section 2.2 and the Escrow Shares)
shall be deemed to have been issued in full satisfaction of all rights
pertaining to such shares of CompCore Common Stock, and there shall be no
further registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of CompCore Common Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for any reason, they
shall be canceled and exchanged as provided in this Section 2.2.
(e) NO FRACTIONAL SHARES. No certificate or scrip representing fractional
shares of ▇▇▇▇▇ Common Stock shall be issued upon the surrender for exchange of
Certificates, and such fractional share interests will not entitle the owner
thereof to vote or to any rights of a stockholder of ▇▇▇▇▇. Notwithstanding any
other provision of this Agreement, each holder of shares of CompCore Common
Stock exchanged pursuant to the Merger who would otherwise have been entitled to
receive a fraction of a share of ▇▇▇▇▇ Common Stock (after taking into account
all Certificates delivered by such holder) shall receive, in lieu thereof, cash
(without interest) in an amount equal to such fractional part of a share of
▇▇▇▇▇ Common Stock multiplied by the average of the last reported sale prices of
▇▇▇▇▇ Common Stock, as reported on the Nasdaq National Market (the "NNM"), on
each of the ten (10) trading days immediately preceding the date of the
Effective Time.
(f) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund which
remains undistributed to the shareholders of CompCore for one year after the
Effective Time shall be delivered to ▇▇▇▇▇, upon demand, and any shareholders of
CompCore who have not previously complied with this Section 2.2 shall thereafter
look only to ▇▇▇▇▇ for payment of their claim for ▇▇▇▇▇ Common Stock, any cash
in lieu of fractional shares of ▇▇▇▇▇ Common Stock, and any dividends or
distributions with respect to ▇▇▇▇▇ Common Stock.
(g) NO LIABILITY. Neither ▇▇▇▇▇ nor CompCore shall be liable to any holder
of shares of CompCore Common Stock or ▇▇▇▇▇ Common Stock, as the case may be,
for such shares (or dividends or distributions with respect thereto) delivered
to a public official pursuant to any applicable abandoned property, escheat or
similar law.
Section 2.3 ESCROW. At the Closing, ▇▇▇▇▇ will deduct from the number of
shares of ▇▇▇▇▇ Common Stock deliverable to the shareholders of CompCore
pursuant to Section 2.1 and will deposit into escrow (the "Escrow") certificates
representing ten percent (10%) of the shares of ▇▇▇▇▇ Common Stock issuable to
the shareholders of CompCore in the Merger on a pro rata basis (the "Escrow
Shares"). The Escrow Shares shall be held by First Trust of California (or such
other institution as shall be agreed upon by ▇▇▇▇▇ and the Shareholder
Representative (as defined in Section 9.7)), as escrow agent (the "Escrow
Agent"), in accordance with and subject to the provisions of an Escrow Agreement
substantially in the form of EXHIBIT A hereto (the "Escrow Agreement"). The
Escrow Shares shall be held as collateral for the indemnification obligations of
the persons who were shareholders of CompCore immediately prior to the Effective
Time under Article IX. Upon exercise of any of the Assumed Options (as defined
in Section 6.14) during the term of the Escrow Agreement, ten percent (10%) of
the shares of ▇▇▇▇▇ Common Stock issued upon such exercise will be deducted from
the number of shares otherwise issuable to the
4
holder thereof pursuant to Section 6.14, deposited into the Escrow and
thereafter treated as Escrow Shares.
Section 2.4 APPRAISAL RIGHTS. Any shares of CompCore Common Stock held by
shareholders of CompCore who properly exercise and perfect the dissenters'
appraisal rights set forth in Chapter 13 of the GCL ("Dissenting Shares") shall
not be converted into the right to receive ▇▇▇▇▇ Common Stock but shall instead
be converted into the right to receive such consideration as may be determined
to be due with respect to such Dissenting Shares pursuant to the provisions of
the GCL. CompCore shall give ▇▇▇▇▇ prompt notice of any demand received by
CompCore for appraisal of CompCore Common Stock, and ▇▇▇▇▇ shall have the right
to control all negotiations and proceedings with respect to such demand.
CompCore agrees that, except with the prior written consent of ▇▇▇▇▇ or as
required under the GCL, it will not voluntarily make any payment with respect
to, or settle or offer to settle, any such demand for appraisal. Each holder of
Dissenting Shares (a "Dissenting Shareholder") who, pursuant to the provisions
of the GCL, becomes entitled to payment of the value of shares of CompCore
Common Stock shall receive payment therefor (but only after the value therefor
shall have been agreed upon or finally determined pursuant to the provisions of
the GCL). In the event that any holder of shares of CompCore Common Stock fails
to make an effective demand for payment or otherwise loses his or her status as
a Dissenting Shareholder, ▇▇▇▇▇ shall, as of the later of the Effective Time or
the occurrence of such event, issue and deliver, upon surrender by such
Dissenting Shareholder of its Certificate or Certificates, the shares of ▇▇▇▇▇
Common Stock and any cash payment in lieu of fractional shares, in each case
without interest thereon, to which such Dissenting Shareholder would have been
entitled to under Section 2.1 and the Merger Agreement (less such Dissenting
Shareholder's pro rata portion of the Escrow Shares).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF COMPCORE
In this Agreement, any reference to a "Material Adverse Effect" with respect
to any entity or group of entities means a material adverse effect on the
business, assets (including intangible assets), financial condition, or results
of operations of such entity and its subsidiaries, taken as a whole.
In this Agreement, any reference to a party's "knowledge" means such party's
actual knowledge after reasonable inquiry of its directors, officers, and other
management level employees reasonably believed to have knowledge of such
matters.
Except as disclosed in the disclosure schedule provided to ▇▇▇▇▇ on or
before the date of the Original Agreement (the "CompCore Disclosure Schedule"),
CompCore represents and warrants to ▇▇▇▇▇ as follows:
Section 3.1 ORGANIZATION, STANDING AND POWER. CompCore is a corporation
duly organized, validly existing and in good standing under the laws of the
State of California, has all requisite corporate power to own, lease and operate
its properties and to carry on its business as currently being conducted and as
currently proposed to be conducted, and is duly qualified to do business and is
in good standing in each jurisdiction in which the failure to be so qualified
and in good standing would have a Material Adverse Effect on CompCore. CompCore
has delivered true and correct copies of the Articles of Incorporation and
Bylaws of CompCore, each as amended to date, to ▇▇▇▇▇. CompCore is not in
violation of any of the provisions of its Articles of Incorporation, Bylaws or
other charter documents. CompCore does not directly or indirectly own any equity
or similar interest in, or any interest convertible or exchangeable or
exercisable for any equity or similar interest in, any corporation, partnership,
joint venture or other business association or entity.
Section 3.2 COMPCORE CAPITAL STRUCTURE.
(a) The authorized capital stock of CompCore consists of 20,000,000 shares
of CompCore Common Stock and 5,000,000 shares of Preferred Stock, no par value
("CompCore Preferred Stock"). As of the date
5
of the Original Agreement, 2,847,000 shares of CompCore Common Stock were issued
and outstanding, and held of record by those persons set forth on the CompCore
Disclosure Schedule. All such outstanding shares of CompCore Common Stock have
been duly authorized, validly issued, fully paid and are nonassessable, have
been issued in compliance with all applicable federal and state securities laws,
and are subject to no preemptive rights or rights of first refusal created by
statute, the charter documents of CompCore or any agreement to which CompCore is
a party or by which it is bound. As of the date of the Original Agreement, (i)
1,496,750 shares of CompCore Common Stock were reserved for issuance under the
CompCore Option Plan, 1,402,000 of which were subject to outstanding options
held by those persons set forth in the CompCore Disclosure Schedule, and 94,750
of which were reserved for future option grants and (ii) 198,122 shares of
CompCore Common Stock (plus an additional 35.244 shares accruing daily
thereafter) were reserved for issuance under a Convertible Promissory Note dated
July 1, 1996, in the principal amount of $1,000,000, payable to Andreas
Bechtolsheim (the "Bechtolsheim Note"). As of the date hereof, no shares of
CompCore Preferred Stock are issued or outstanding.
(b) Except as set forth in this Section 3.2, as of the date of the Original
Agreement, there were (i) no equity securities of any class of CompCore, or any
securities exchangeable into or exercisable for such equity securities, issued,
reserved for issuance, or outstanding and (ii) no outstanding subscriptions,
options, warrants, puts, calls, rights, or other commitments or agreements of
any character to which CompCore is a party or by which it is bound obligating
CompCore to issue, deliver, sell, repurchase or redeem, or cause to be issued,
delivered, sold, repurchased or redeemed, any equity securities of CompCore or
obligating CompCore to grant, extend, accelerate the vesting of, change the
exercise price of, or otherwise amend or enter into any such option, warrant,
call, right, commitment or agreement. There are no contracts, commitments or
agreements relating to voting, purchase or sale of CompCore's capital stock (i)
between or among CompCore and any of its shareholders or (ii) to the best
knowledge of CompCore, between or among any of CompCore's shareholders.
Section 3.3 AUTHORITY; REQUIRED FILINGS AND CONSENTS.
(a) CompCore has all requisite corporate power and authority to enter into
this Agreement and all other documents required to be executed and delivered by
CompCore hereunder, including the Merger Agreement (collectively, the
"Transaction Documents"), and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement and the other
Transaction Documents to which CompCore is or will be a party and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action on the part of CompCore, subject
only to the approval of the Merger by CompCore's Shareholders under the GCL.
This Agreement and the other Transaction Documents to which CompCore is or will
be a party have been or will be duly executed and delivered by CompCore and
constitute or will constitute the valid and binding obligations of CompCore,
enforceable against CompCore in accordance with their respective terms, except
as such enforceability may be limited by (i) bankruptcy, insolvency, moratorium
or other similar laws affecting or relating to creditors' rights generally, and
(ii) general principles of equity.
(b) The execution and delivery by CompCore of this Agreement and the other
Transaction Documents to which it is or will be a party does not, and the
consummation of the transactions contemplated hereby and thereby will not, (i)
conflict with, or result in any violation or breach of any provision of, the
Articles of Incorporation or Bylaws of CompCore, (ii) result in any violation or
breach of, or constitute (with or without notice or lapse of time, or both) a
default under, or give rise to a right of termination, cancellation or
acceleration of any material obligation or loss of any material benefit under,
any note, mortgage, indenture, lease, contract or other agreement or obligation
to which CompCore is a party or by which CompCore or any of its properties or
assets may be bound, or (iii) conflict with or violate any permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to CompCore or any of its properties or assets, except in
the case of clauses (ii) and (iii) above for any such conflicts, violations,
defaults, terminations, cancellations or accelerations which would not be
reasonably likely to have a Material Adverse Effect on CompCore.
6
(c) No consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or commission or
other governmental authority or instrumentality ("Governmental Entity") is
required by or with respect to CompCore in connection with the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby, except for (i) the filing by ▇▇▇▇▇ of the Registration Statement (as
defined in Section 3.26) with the Securities and Exchange Commission (the "SEC")
in accordance with the Securities Act of 1933, as amended (the "Securities
Act"), (ii) the filing of the Merger Agreement and Officer's Certificates with
the California Secretary of State in accordance with the GCL, (iii) the filing
of a certificate of merger with the Delaware Secretary of State, (iv) the filing
of the Joint Proxy Statement (as defined in Section 3.26) and related proxy
materials with the SEC in accordance with the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), (v) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
applicable federal and state securities laws, and (vi) such other consents,
authorizations, filings, approvals and registrations which, if not obtained or
made, would not have a Material Adverse Effect on CompCore and would not prevent
or materially alter or delay any of the transactions contemplated by this
Agreement.
Section 3.4 FINANCIAL STATEMENTS. CompCore has delivered to ▇▇▇▇▇ its
audited financial statements for the fiscal years ended September 30, 1996 and
September 30, 1995 and the period from November 12, 1993 (inception) to
September 30, 1994 (collectively, the "CompCore Financial Statements"). The
CompCore Financial Statements were prepared in accordance with generally
accepted accounting principles ("GAAP") applied on a consistent basis throughout
the periods involved. The CompCore Financial Statements present fairly the
financial position of CompCore as of the respective dates and the results of its
operations and cash flows for the periods indicated. CompCore maintains and will
continue to maintain a standard system of accounting established and
administered in accordance with GAAP.
Section 3.5 ABSENCE OF UNDISCLOSED LIABILITIES. CompCore does not have any
liabilities, either accrued or contingent (whether or not required to be
reflected in financial statements in accordance with GAAP), and whether due or
to become due, which individually or in the aggregate would be reasonably likely
to have a Material Adverse Effect on CompCore, other than (i) liabilities
reflected or provided for on the balance sheet as of September 30, 1996 (the
"CompCore Balance Sheet") contained in the CompCore Financial Statements, (ii)
liabilities specifically described in this Agreement or the CompCore Disclosure
Schedule, and (iii) normal or recurring liabilities incurred since September 30,
1996 in the ordinary course of business consistent with past practices.
Section 3.6 ACCOUNTS RECEIVABLE. The accounts receivable shown on the
CompCore Balance Sheet arose in the ordinary course of business and have been
collected or are collectible in the book amounts thereof, less an amount not in
excess of the allowance for doubtful accounts and returns provided for in the
CompCore Balance Sheet. The accounts receivable of CompCore arising after the
date of the CompCore Balance Sheet and prior to the Closing Date arose, or will
arise, in the ordinary course of business and have been collected or will be
collectible in the book amounts thereof, less allowances for doubtful accounts
and returns determined in accordance with the past practices of CompCore. None
of such accounts receivable is subject to any material claim of offset or
recoupment or counterclaim, and CompCore has no knowledge of any specific facts
that would be likely to give rise to any such claim. No material amount of such
accounts receivable is contingent upon the performance by CompCore of any
obligation and no agreement for deduction or discount has been made with respect
to any such accounts receivable.
Section 3.7 INVENTORY. The inventories shown on the CompCore Balance Sheet
or thereafter acquired by CompCore consist of items of a quantity and quality
usable or salable in the ordinary course of business. Since September 30, 1996,
CompCore has continued to replenish inventories in a normal and customary manner
consistent with past practices. CompCore has not received notice that it will
experience in the foreseeable future any difficulty in obtaining, in the desired
quantity and quality and at a reasonable price and upon reasonable terms and
conditions, the supplies or component products required for the
7
manufacture, assembly or production of its products. The value at which
inventories are carried reflect the inventory valuation policy of CompCore,
which is consistent with its past practice and in accordance with GAAP. Due
provision has been made on the books of CompCore, consistent with past
practices, to provide for all slow-moving, obsolete, or unusable inventories at
their estimated useful or scrap values, and such inventory reserves are adequate
to provide for such slow-moving, obsolete or unusable inventory and inventory
shrinkage.
Section 3.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since September 30,
1996, CompCore has conducted its business in the ordinary course and in a manner
consistent with past practices and, since such date, CompCore has not:
(a) suffered any event or occurrence that has had a Material Adverse Effect
on CompCore;
(b) suffered any damage, destruction or loss, whether covered by insurance
or not, materially and adversely affecting its properties or business;
(c) granted any material increase in the compensation payable or to become
payable by CompCore to its officers or employees;
(d) declared, set aside or paid any dividend or made any other distribution
on or in respect of the shares of its capital stock or declared any direct or
indirect redemption, retirement, purchase or other acquisition of such shares;
(e) issued any shares of its capital stock or any warrants, rights, or
options for, or entered into any commitment relating to such capital stock;
(f) made any change in the accounting methods or practices it follows,
whether for general financial or tax purposes, or any change in depreciation or
amortization policies or rates;
(g) sold, leased, abandoned or otherwise disposed of any real property or
any material amounts of machinery, equipment or other operating property other
than in the ordinary course of business;
(h) sold, assigned, transferred, licensed or otherwise disposed of any
patent, trademark, trade name, brand name, copyright (or pending application for
any patent, trademark or copyright), invention, work of authorship, process,
know-how, formula or trade secret or interest thereunder or other material
intangible asset except for standard end-user license transactions entered into
in the ordinary course of its business;
(i) entered into any material commitment or transaction (including without
limitation any borrowing or capital expenditure) other than in the ordinary
course of business;
(j) incurred any material liability, except in the ordinary course of
business and consistent with past practice;
(k) permitted or allowed any of its property or assets to be subjected to
any mortgage, deed of trust, pledge, lien, security interest or other
encumbrance of any kind, except for liens for current taxes not yet due and
purchase money security interests incurred in the ordinary course of business;
(l) made any capital expenditure or commitment for additions to property,
plant or equipment individually in excess of $20,000, or in the aggregate, in
excess of $75,000;
(m) paid, loaned or advanced any amount to, or sold, transferred or leased
any properties or assets to, or entered into any agreement or arrangement with
any of its officers, directors or shareholders or any affiliate of any of the
foregoing, other than employee compensation and benefits and reimbursement of
employment related business expenses incurred in the ordinary course of
business;
(n) agreed to take any action described in this Section 3.8 or which would
constitute a breach of any of the representations or warranties of CompCore
contained in this Agreement; or
8
(o) except as disclosed in the CompCore Disclosure Schedule, taken any other
action that would have required the consent of ▇▇▇▇▇ pursuant to Section 5.1 of
this Agreement (and which has not been obtained) had such action occurred after
the date of this Agreement.
Section 3.9 TAXES.
(a) For purposes of this Agreement, a "Tax" or, collectively, "Taxes," means
any and all material federal, state and local taxes of any country, assessments
and other governmental charges, duties, impositions and liabilities, including
taxes based upon or measured by gross receipts, income, profits, sales, use and
occupation, and value added, ad valorem, transfer, franchise, withholding,
payroll, recapture, employment, excise and property taxes, together with all
interest, penalties and additions imposed with respect to such amounts and any
obligations under any agreements or arrangements with any other person with
respect to such amounts and including any liability for taxes of a predecessor
entity.
(b) CompCore has accurately prepared and timely filed all returns,
estimates, information statements and reports required to be filed with any
taxing authority ("Returns") relating to any and all Taxes concerning or
attributable to CompCore or its operations and such Returns are true and correct
in all material respects and have been completed in all material respects in
accordance with applicable law.
(c) CompCore, as of the Closing Date: (i) will have paid all Taxes it is
required to pay prior to the Closing Date and (ii) will have withheld with
respect to its employees all Taxes required to be withheld, except where any
failure to make such payment or withholding would not be reasonably likely to
have a Material Adverse Effect on CompCore.
(d) There is no Tax deficiency outstanding or assessed or, to CompCore's
knowledge, proposed against CompCore that is not reflected as a liability on the
CompCore Balance Sheet nor has CompCore executed any agreements or waivers
extending any statute of limitations on or extending the period for the
assessment or collection of any Tax.
(e) CompCore has no material liabilities for unpaid Taxes that have not been
accrued for or reserved on the CompCore Balance Sheet, whether asserted or
unasserted, contingent or otherwise.
(f) CompCore is not a party to any tax-sharing agreement or similar
arrangement with any other party, or any contractual obligation to pay any Tax
obligations of, or with respect to any transaction relating to, any other person
or to indemnify any other person with respect to any Tax.
Section 3.10 TANGIBLE ASSETS AND REAL PROPERTY.
(a) CompCore owns or leases all tangible assets and properties which are
necessary for the conduct of its business as currently conducted or which are
reflected on the CompCore Balance Sheet or acquired since the date of the
CompCore Balance Sheet (the "Material Tangible Assets"). The Material Tangible
Assets are in good operating condition and repair, subject to reasonable wear
and tear. CompCore has good and marketable title to all Material Tangible Assets
that it owns (except properties, interests in properties and assets sold or
otherwise disposed of since the date of the CompCore Balance Sheet in the
ordinary course of business), free and clear of all mortgages, liens, pledges,
charges or encumbrances of any kind or character, except for liens for current
taxes not yet due and payable. Assuming the due execution and delivery thereof
by the other parties thereto, all leases of Material Tangible Assets to which
CompCore is a party are in full force and effect and valid, binding and
enforceable in accordance with their respective terms. The CompCore Disclosure
Schedule sets forth a true and correct list of all such leases, and true and
correct copies of all such leases have been provided to ▇▇▇▇▇.
(b) CompCore owns no real property. The CompCore Disclosure Schedule sets
forth a true and complete list of all real property leased by CompCore. Assuming
the due execution and delivery thereof by the other parties thereto, all such
real property leases are in full force and effect and valid, binding and
enforceable in accordance with their respective terms. True and correct copies
of all such real property leases have been provided to ▇▇▇▇▇.
9
Section 3.11 INTELLECTUAL PROPERTY.
(a) CompCore owns, or is licensed or otherwise possesses legally enforceable
rights to use, all patents, trademarks, trade names, service marks, copyrights
and mask works, and any applications for and registrations of such patents,
trademarks, trade names, service marks, copyrights and mask works and all
processes, formulae, methods, schematics, technology, know-how, computer
software programs or applications and tangible or intangible proprietary
information or material that are necessary to conduct the business of CompCore
as currently conducted, or as currently proposed to be conducted, the absence of
which rights would be reasonably likely to have a Material Adverse Effect on
CompCore (all of which are hereinafter referred to as the "CompCore Intellectual
Property Rights"), free and clear of all liens, claims or encumbrances. The
foregoing representation as it relates to Licensed Intellectual Property (as
defined below) is limited to CompCore's interest pursuant to licenses from third
parties, each of which is in full force and effect, is valid, binding and
enforceable and grants CompCore such rights to such intellectual property as are
necessary to the business of CompCore as currently conducted or currently
proposed to be conducted.
(b) The CompCore Disclosure Schedule contains an accurate and complete
dscription of (i) all patents and patent applications and all trademarks, trade
names, service marks and registered copyrights included in the CompCore
Intellectual Property Rights, including the jurisdictions in which each such
CompCore Intellectual Property Right has been issued or registered or in which
any such application for such issuance and registration has been filed, (ii) all
licenses, sublicenses, distribution agreements and other agreements to which
CompCore is a party and pursuant to which any person is authorized to use any
CompCore Intellectual Property Rights or has the right to manufacture,
reproduce, market or exploit any product of CompCore (a "CompCore Product") or
any adaptation, translation or derivative work based on any CompCore Product or
any portion thereof, (iii) all licenses, sublicenses and other agreements to
which CompCore is a party and pursuant to which CompCore is authorized to use
any third party technology, trade secret, know-how, process, patent, trademark
or copyright, including software ("Licensed Intellectual Property"), which is
used in the manufacture of, incorporated in or forms a part of any CompCore
Product, (iv) all joint development agreements to which CompCore is a party, and
(v) all agreements with Governmental Entities or other third parties pursuant to
which CompCore has obtained funding for research and development activities.
(c) CompCore is not, nor will it be as a result of the execution and
delivery of this Agreement or the performance of its obligations under this
Agreement, in breach of any license, sublicense or other agreement relating to
the CompCore Intellectual Property Rights or Licensed Intellectual Property, the
breach of which would be likely to have a Material Adverse Effect on CompCore.
(d) To CompCore's knowledge, all patents and registered trademarks, service
marks and copyrights claimed by or issued to CompCore which relate to any
CompCore Product are valid and subsisting. CompCore (i) has not received notice
that it has been sued in any suit, action or proceeding which involves a claim
of infringement of any patent, trademark, service ▇▇▇▇, copyright, trade secret
or other proprietary right of any third party, (ii) has no knowledge that the
manufacturing, marketing, licensing or sale of any CompCore Product infringes
any patent, trademark, service ▇▇▇▇, copyright, trade secret or other
proprietary right of any third party, and (iii) has no knowledge of any claim
challenging or questioning the validity or effectiveness of any license or
agreement relating to any CompCore Intellectual Property Rights or Licensed
Intellectual Property.
(e) All designs, drawings, specifications, source code, object code,
documentation, flow charts and diagrams incorporating, embodying or reflecting
any CompCore Product at any stage of its development (the "CompCore Components")
were written, developed and created solely and exclusively by employees of
CompCore without the assistance of any third party or were created by third
parties who assigned ownership of their rights with respect thereto to CompCore
by means of valid and enforceable agreements, which are listed and described in
the CompCore Disclosure Schedule and copies of which have been
10
provided to ▇▇▇▇▇. CompCore has at all times used commercially reasonable
efforts to treat the CompCore Products and CompCore Components as containing
trade secrets and has not disclosed or otherwise dealt with such items in such a
manner as to cause the loss of such trade secrets by their release into the
public domain.
(f) Each person currently or formerly employed by CompCore (including
independent contractors, if any) that has or had access to confidential
information of CompCore has executed and delivered to CompCore a confidentiality
and non-disclosure agreement in the form previously provided to ▇▇▇▇▇. To
CompCore's knowledge, neither the execution or delivery of any such agreement,
nor the carrying on of CompCore's business as currently conducted and as
currently proposed to be conducted by any such person, as an employee or
independent contractor, has or will conflict with or result in a breach of the
terms, conditions or provisions of, or constitute a default under, any contract,
covenant or instrument under which any of such persons is obligated.
Section 3.12 BANK ACCOUNTS. The CompCore Disclosure Schedule sets forth
the names and locations of all banks and other financial institutions at which
CompCore maintains accounts of any nature, the type of accounts maintained at
each such institution and the names of all persons authorized to draw thereon or
make withdrawals therefrom.
Section 3.13 CONTRACTS.
(a) Except as set forth in the CompCore Disclosure Schedule, CompCore is not
a party or subject to any agreement, obligation or commitment, written or oral:
(i) that calls for any fixed or contingent payment or expenditure or any
related series of fixed or contingent payments or expenditures by or to CompCore
totalling more than $50,000 in any calendar year;
(ii) with agents, advisors, salesmen, sales representatives, independent
contractors or consultants that are not cancelable by it on no more than thirty
(30) days' notice and without liability, penalty or premium;
(iii) that restricts CompCore from carrying on anywhere in the world its
business or any portion thereof as currently conducted;
(iv) to provide funds to or to make any investment in any other person or
entity (in the form of a loan, capital contribution or otherwise); or
(v) with respect to obligations as guarantor, surety, co-signer, endorser,
co-maker, indemnitor or otherwise in respect of the obligation of any other
person or entity;
(vi) for any line of credit, standby financing, revolving credit or other
similar financing arrangement;
(vii) with any distributor, original equipment manufacturer, value added
remarketer or other person for the distribution of any of the CompCore Products.
(b) To CompCore's knowledge, no party to any such contract, agreement or
instrument has expressed its intention to cancel, withdraw, modify or amend such
contract, agreement or instrument.
(c) CompCore is not in default under or in breach or violation of, nor is
there any valid basis for any claim of default by CompCore under, or breach or
violation by CompCore of, any contract, commitment or restriction to which
CompCore is a party or by which CompCore or any of its properties or assets is
bound or affected, where such defaults, breaches, or violations would, in the
aggregate, have a Material Adverse Effect on CompCore. To CompCore's knowledge,
no other party is in default under or in breach or violation of, nor, to
CompCore's knowledge, is there any valid basis for any claim of default by any
other party under, or any breach or violation by any other party of, any
contract, commitment, or restriction to which CompCore is a party or by which
CompCore or any of its properties or assets is bound or affected, where such
defaults, breaches, or violations would, individually or in the aggregate, have
a Material Adverse Effect on CompCore.
11
Section 3.14 LABOR DIFFICULTIES. To CompCore's knowledge, CompCore is not
engaged in any unfair labor practice or in violation of any applicable laws
respecting employment, employment practices or terms and conditions of
employment. There is no unfair labor practice complaint against CompCore
pending, or to CompCore's knowledge threatened, before any Governmental Entity.
There is no strike, labor dispute, slowdown, or stoppage pending, or to
CompCore's knowledge threatened, against CompCore. CompCore is not now and has
never been subject to any union organizing activities. CompCore has not
experienced any work stoppage or other labor difficulty. To CompCore's
knowledge, (i) the consummation of the transactions contemplated by this
Agreement will not have a material adverse effect on its relations with CompCore
employees, and (ii) none of the CompCore employees intends to leave their
employment, whether as a result of the transactions contemplated by this
Agreement or otherwise.
Section 3.15 TRADE REGULATION. CompCore has not terminated its
relationship with or refused to ship CompCore Products to any dealer,
distributor, third party marketing entity or customer which had theretofore paid
or been obligated to pay CompCore in excess of $10,000 over any consecutive
twelve (12) month period. All of the prices charged by CompCore in connection
with the marketing or sale of any of their products or services have been in
compliance with all applicable laws and regulations. No claims have been
asserted or, to CompCore's knowledge, threatened against CompCore with respect
to the wrongful termination of any dealer, distributor or any other marketing
entity, discriminatory pricing, price fixing, unfair competition, false
advertising, or any other material violation of any laws or regulations relating
to anti-competitive practices or unfair trade practices of any kind, and, to
CompCore's knowledge, no specific situation, set of facts, or occurrence
provides any basis for any such claim.
Section 3.16 ENVIRONMENTAL MATTERS.
(a) As of the date hereof, except as set forth in the CompCore Disclosure
Schedule, no material amount of any substance that has been designated by
applicable law or regulation to be radioactive, toxic, hazardous or otherwise a
danger to human health or the environment, excluding office and janitorial
supplies, and other similar substances (a "Hazardous Material"), is present, as
a result of the actions of CompCore or, to CompCore's knowledge, as a result of
any actions of any third party or otherwise, in, on or under any property,
including the land and the improvements, ground water and surface water, that
CompCore has at any time owned, operated, occupied or leased. To the knowledge
of CompCore, no underground storage tanks are present under any property that
CompCore has at any time owned, operated, occupied or leased.
(b) At no time has CompCore transported, stored, used, manufactured,
disposed of, released or exposed its employees or others to Hazardous Materials
(collectively, "Hazardous Materials Activities") in violation of any law, rule,
regulation or treaty promulgated by any Governmental Entity, except for
Hazardous Materials Activities which have not had and are not likely to have a
Material Adverse Effect on CompCore.
(c) CompCore currently holds all environmental approvals, permits, licenses,
clearances and consents (the "Environmental Permits") necessary for the conduct
of its business as such businesses is currently being conducted, except for such
Environmental Permits the absence of which would not be likely to have a
Material Adverse Effect on CompCore.
(d) No action, proceeding, writ, injunction or claim is pending or, to the
knowledge of CompCore, threatened concerning any Environmental Permit or any
Hazardous Materials Activity of CompCore. CompCore is not aware of any fact or
circumstance which could reasonably be expected to involve CompCore in any
environmental litigation or impose upon CompCore any liability concerning
Hazardous Materials Activities which would be likely to have a Material Adverse
Effect on CompCore.
12
Section 3.17 EMPLOYEE BENEFIT PLANS.
(a) CompCore has set forth in the CompCore Disclosure Schedule (i) all
employee benefit plans, (ii) all bonus, stock option, stock purchase, incentive,
deferred compensation, supplemental retirement, severance and other similar
employee benefit plans, and (iii) all unexpired severance agreements, written or
otherwise, for the benefit of, or relating to, any current or former employee of
CompCore (individually, a "CompCore Employee Plan," and collectively, the
"CompCore Employee Plans").
(b) With respect to each CompCore Employee Plan, CompCore has made available
to ▇▇▇▇▇ a true and correct copy of (i) such CompCore Employee Plan and (ii)
each trust agreement and group annuity contract, if any, relating to such
CompCore Employee Plan.
(c) With respect to the CompCore Employee Plans, individually and in the
aggregate, no event has occurred, and, to the knowledge of CompCore, there
exists no condition or set of circumstances in connection with which CompCore
could be subject to any liability that would be reasonably likely to have a
Material Adverse Effect on CompCore.
(d) With respect to the CompCore Employee Plans, individually and in the
aggregate, there are no funded benefit obligations for which contributions have
not been made or properly accrued and there are no unfunded benefit obligations
which have not been accounted for by reserves, or otherwise properly footnoted
in accordance with GAAP, on the financial statements or books of CompCore, which
obligations would be reasonably likely to have a Material Adverse Effect on
CompCore.
(e) Except as described in or contemplated by this Agreement, CompCore is
not a party to any oral or written (i) union or collective bargaining agreement,
(ii) agreement with any officer or other key employee of CompCore, the benefits
of which are contingent, or the terms of which are materially altered, upon the
occurrence of a transaction involving CompCore of the nature contemplated by
this Agreement, (iii) agreement with any officer of CompCore providing any term
of employment or compensation guarantee or for the payment of compensation in
excess of $100,000 per annum, or (iv) agreement or plan, including any stock
option plan, stock appreciation right plan, restricted stock plan or stock
purchase plan, any of the benefits of which will be increased, or the vesting of
the benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the value of any of the benefits
of which will be calculated on the basis of any of the transactions contemplated
by this Agreement.
Section 3.18 COMPLIANCE WITH LAWS. CompCore has complied with, is not in
violation of, and has not received any notices of violation with respect to, any
statute, law or regulation applicable to the ownership or operation of its
business, except for failures to comply or violations which would not be likely
to have a Material Adverse Effect on CompCore.
Section 3.19 EMPLOYEES AND CONSULTANTS. The CompCore Disclosure Schedule
contains a list of the names of all employees and consultants of CompCore and
their salaries or wages, other compensation, dates of employment and positions.
Section 3.20 LITIGATION. There is no action, suit, proceeding, claim,
arbitration or investigation pending before any agency, court or tribunal or, to
the knowledge of CompCore, threatened against CompCore or any of its properties
or officers or directors (in their capacities as such) that, individually or in
the aggregate, could reasonably be expected to have a Material Adverse Effect on
CompCore. There is no judgment, decree or order against CompCore or, to the
knowledge of CompCore, any of its directors or officers (in their capacities as
such) that could prevent, enjoin or materially alter or delay any of the
transactions contemplated by this Agreement, or that could reasonably be
expected to have a Material Adverse Effect on CompCore. All litigation to which
CompCore is a party (or, to the knowledge of CompCore threatened to become a
party) is disclosed in the CompCore Disclosure Schedule.
Section 3.21 RESTRICTIONS ON BUSINESS ACTIVITIES. There is no agreement,
judgment, injunction, order or decree binding upon CompCore which has or could
reasonably be expected to have the effect of
13
prohibiting or materially impairing any current or future business practice of
CompCore, any acquisition of property by CompCore, or the conduct of business by
CompCore as currently conducted or as currently proposed to be conducted.
Section 3.22 GOVERNMENTAL AUTHORIZATION. CompCore has obtained each
governmental consent, license, permit, grant or other authorization of a
Governmental Entity that is required for the operation of the business of
CompCore (collectively, the "CompCore Authorizations"), and all of such CompCore
Authorizations are in full force and effect, except where the failure to obtain
or have any such CompCore Authorizations could not reasonably be expected to
have a Material Adverse Effect on CompCore.
Section 3.23 INSURANCE. CompCore has insurance policies of the type and in
amounts customarily carried by persons conducting businesses or owning assets
similar to those of CompCore. The CompCore Disclosure Schedule contains a list
and description of all such policies. There is no material claim pending under
any of such policies as to which coverage has been questioned, denied or
disputed by the underwriters of such policies. All premiums due and payable
under all such policies have been paid, and CompCore is otherwise in compliance
with the terms of such policies. CompCore has no knowledge of any threatened
termination of, or material premium increase with respect to, any of such
policies.
Section 3.24 POOLING OF INTERESTS. Neither CompCore nor, to its knowledge,
any of its directors, officers or shareholders has taken any action which would
interfere with Zoran's ability to account for the Merger as a pooling of
interests.
Section 3.25 INTERESTED PARTY TRANSACTIONS.
(a) To the knowledge of CompCore, no director, officer or shareholder of
CompCore has any interest in (i) any material equipment or other property or
asset, real or personal, tangible or intangible, including, without limitation,
any of the CompCore Intellectual Property Rights, used in connection with or
pertaining to the business of CompCore, (ii) any creditor, supplier, customer,
manufacturer, agent, representative, or distributor of any of the CompCore
Products, (iii) any entity that competes with CompCore, or with which CompCore
is affiliated or has a business relationship, or (iv) any agreement, obligation
or commitment, written or oral, to which CompCore is a party; PROVIDED, HOWEVER,
that no such person shall be deemed to have such an interest solely by virtue of
ownership of less than five percent (5%) of the outstanding stock or debt
securities of any publicly held company, the stock or debt securities of which
are traded on a recognized stock exchange or on the NNM.
(b) Except as contemplated by the Transaction Documents, CompCore is not a
party to any (i) agreement with any officer or other employee of CompCore the
benefits of which are contingent, or the terms of which are materially altered,
upon the occurrence of a transaction involving CompCore in the nature of any of
the transactions contemplated by this Agreement, or (ii) agreement or plan,
including, without limitation, any stock option plan, stock appreciation right
plan or stock purchase plan, any of the benefits of which will be increased, or
the vesting of benefits of which will be accelerated, by the occurrence of any
of the transactions contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement.
Section 3.26 REGISTRATION STATEMENT; PROXY STATEMENT/PROSPECTUS. The
information supplied by CompCore for inclusion in the registration statement on
Form S-4 pursuant to which shares of ▇▇▇▇▇ Common Stock issued in the Merger
will be registered with the SEC (the "Registration Statement") shall not at the
time the Registration Statement is declared effective by the SEC contain any
untrue statement of a material fact or omit to state any material fact required
to be stated in the Registration Statement or necessary in order to make the
statements in the Registration Statement, in light of the circumstances under
which they were made, not misleading. The information supplied by CompCore for
inclusion in the joint proxy statement/prospectus (the "Joint Proxy Statement")
to be sent to the shareholders of CompCore and ▇▇▇▇▇ in connection with the
meeting of CompCore's shareholders to consider this Agreement and the Merger
(the "CompCore Shareholders' Meeting") and in connection with the meeting
14
of Zoran's stockholders to consider the issuance of shares of ▇▇▇▇▇ Common Stock
pursuant to the Merger (the "▇▇▇▇▇ Stockholders' Meeting") shall not, on the
date the Joint Proxy Statement is first mailed to shareholders of CompCore or
▇▇▇▇▇, at the time of the CompCore Shareholders' Meeting, at the time of the
▇▇▇▇▇ Stockholders' Meeting, or at the Effective Time, contain any statement
which, at such time and in light of the circumstances under which it was made,
is false or misleading with respect to any material fact, or omit to state any
material fact necessary in order to make the statements made in the Joint Proxy
Statement not false or misleading; or omit to state any material fact necessary
to correct any statement in any earlier communication with respect to the
solicitation of proxies for the CompCore Shareholders' Meeting or the ▇▇▇▇▇
Stockholders' Meeting which has become false or misleading. If at any time prior
to the Effective Time any event relating to CompCore or any of its Affiliates,
officers or directors should be discovered by CompCore which should be set forth
in an amendment to the Registration Statement or a supplement to the Joint Proxy
Statement, CompCore shall promptly inform ▇▇▇▇▇.
Section 3.27 NO EXISTING DISCUSSIONS. As of the date hereof, CompCore is
not engaged, directly or indirectly, in any discussions or negotiations with any
other party with respect to a CompCore Acquisition Proposal (as defined in
Section 6.1).
Section 3.28 REAL PROPERTY HOLDING CORPORATION. CompCore is not a "United
States real property holding corporation" within the meaning of Section
897(c)(2) of the Code.
Section 3.29 CORPORATE DOCUMENTS. CompCore has furnished to ▇▇▇▇▇, or its
representatives, for its examination (i) its minute book containing all records
required to be set forth of all proceedings, consents, actions, and meetings of
the shareholders, the Board of Directors and any committees thereof and (ii) all
permits, orders, and consents issued by any Governmental Entity with respect to
CompCore. The corporate minute books and other corporate records of CompCore are
complete and accurate in all material respects, and the signatures appearing on
all documents contained therein are the true signatures of the persons
purporting to have signed the same. All actions reflected in such books and
records were duly and validly taken in compliance with the laws of the
applicable jurisdiction. CompCore has delivered or made available to ▇▇▇▇▇ or
its representatives true and complete copies of all documents which are referred
to in this Article III or in the CompCore Disclosure Schedule.
Section 3.30 NO MISREPRESENTATION. No representation or warranty by
CompCore in this Agreement, or any statement, certificate or schedule furnished
or to be furnished by or on behalf of CompCore pursuant to this Agreement, when
taken together, contains or shall contain any untrue statement of a material
fact or omits or shall omit to state a material fact required to be stated
therein or necessary in order to make such statements, in light of the
circumstances under which they were made, not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇ AND SUB
As used in this Agreement, the word "Subsidiary" means, with respect to any
party, any corporation or other organization, whether incorporated or
unincorporated, of which (i) such party or any other Subsidiary of such party is
a general partner (excluding partnerships, the general partnership interests of
which held by such party or any Subsidiary of such party do not have a majority
of the voting interest in such partnership) or (ii) at least a majority of the
securities or other interests having by their terms ordinary voting power to
elect a majority of the Board of Directors or others performing similar
functions with respect to such corporation or other organization is directly or
indirectly owned or controlled by such party or by any one or more of its
Subsidiaries, or by such party and one or more of its Subsidiaries.
15
Except as set forth in the disclosure schedule delivered by ▇▇▇▇▇ to
CompCore on or before the date of this Agreement and attached hereto (the "▇▇▇▇▇
Disclosure Schedule"), ▇▇▇▇▇ and Sub represent and warrant to CompCore as
follows:
Section 4.1 ORGANIZATION. Each of ▇▇▇▇▇, Sub and Zoran's Subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation, has all requisite corporate power to
own, lease and operate its property and to carry on its business as now being
conducted and as proposed to be conducted, and is duly qualified to do business
and is in good standing as a foreign corporation in each jurisdiction in which
the failure to be so qualified would have a Material Adverse Effect on ▇▇▇▇▇.
Except as set forth in the ▇▇▇▇▇ SEC Reports (as defined in Section 4.4) or the
▇▇▇▇▇ Disclosure Schedule, neither ▇▇▇▇▇ nor any of its Subsidiaries directly or
indirectly owns any equity or similar interest in, or any interest convertible
into or exchangeable or exercisable for, any corporation, partnership, joint
venture or other business association or entity.
Section 4.2 ▇▇▇▇▇ CAPITAL STRUCTURE.
(a) The authorized capital stock of ▇▇▇▇▇ consists of 20,000,000 shares of
▇▇▇▇▇ Common Stock and 3,000,000 shares of Preferred Stock, $.001 par value
("▇▇▇▇▇ Preferred Stock"). As of September 30, 1996: (i) 7,007,444 shares of
▇▇▇▇▇ Common Stock were issued and outstanding, all of which are validly issued,
fully paid and nonassessable; (ii) no shares of ▇▇▇▇▇ Common Stock were held in
the treasury of ▇▇▇▇▇ or by Subsidiaries of ▇▇▇▇▇; (iii) approximately 1,350,662
shares of ▇▇▇▇▇ Common Stock were reserved for issuance pursuant to stock
options granted and outstanding under Zoran's stock option plans (the "▇▇▇▇▇
Option Plans"), and rights outstanding under Zoran's employee stock purchase
plan (the "▇▇▇▇▇ Purchase Plan"); and (iv) 237,841 shares of ▇▇▇▇▇ Common Stock
were reserved for issuance upon exercise of outstanding warrants. No material
change in such capitalization has occurred between September 30, 1996 and the
date of this Agreement. As of the date of this Agreement, none of the shares of
▇▇▇▇▇ Preferred Stock are issued and outstanding. All shares of ▇▇▇▇▇ Common
Stock subject to issuance as specified above, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
shall be duly authorized, validly issued, fully paid and nonassessable. All of
the outstanding shares of capital stock of Sub are duly authorized, validly
issued, fully paid and nonassessable, and all such shares are owned by ▇▇▇▇▇
free and clear of all security interests, liens, claims, pledges, agreements,
limitations on Zoran's voting rights, charges or other encumbrances of any
nature.
(b) Except as set forth in this Section 4.2 or as reserved for future grants
of options under the ▇▇▇▇▇ Option Plans or the ▇▇▇▇▇ Purchase Plan, there are
(i) no equity securities of any class of ▇▇▇▇▇, or any security exchangeable
into or exercisable for such equity securities, issued, reserved for issuance or
outstanding and (ii) no outstanding subscriptions, options, warrants, puts,
calls, rights or other commitments or agreements of any character to which ▇▇▇▇▇
is a party or by which it is bound obligating ▇▇▇▇▇ to issue, deliver, sell,
repurchase or redeem or cause to be issued, delivered, sold, repurchased or
redeemed any equity securities of ▇▇▇▇▇ or obligating ▇▇▇▇▇ to ▇▇▇▇▇, extend,
accelerate the vesting of, change the exercise price of or otherwise amend or
enter into any such option, warrant, call, right, commitment or agreement. To
the best knowledge of ▇▇▇▇▇, there are no voting trusts, proxies or other
agreements or understandings with respect to the shares of capital stock of
▇▇▇▇▇.
(c) The shares of ▇▇▇▇▇ Common Stock to be issued pursuant to the Merger,
when issued, will be duly authorized, validly issued, fully paid, and
nonassessable.
Section 4.3 AUTHORITY; NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) ▇▇▇▇▇ and Sub have all requisite corporate power and authority to enter
into this Agreement and the other Transaction Documents to which they are or
will be parties and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and the other Transaction
Documents to which ▇▇▇▇▇ or Sub is or will be a party and the consummation of
the transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate action on the part
16
of ▇▇▇▇▇ and Sub, respectively, subject only to the approval by Zoran's
stockholders of the issuance of ▇▇▇▇▇ Common Stock pursuant to the Merger. This
Agreement and the other Transaction Documents to which ▇▇▇▇▇ and/or Sub are
parties have been or will be duly executed and delivered by ▇▇▇▇▇ and/or Sub and
constitute or will constitute the valid and binding obligations of ▇▇▇▇▇ and/or
Sub, enforceable in accordance with their terms, except as such enforceability
may be limited by (i) bankruptcy laws and other similar laws affecting
creditors' rights generally and (ii) general principles of equity.
(b) The execution and delivery by ▇▇▇▇▇ and Sub of this Agreement and the
other Transaction Documents to which they are or will be parties does not, and
the consummation of the transactions contemplated hereby and thereby will not,
(i) conflict with, or result in any violation or breach of any provision of the
Certificate of Incorporation or Bylaws of ▇▇▇▇▇ or Sub, (ii) result in any
violation or breach of, or constitute (with or without notice or lapse of time,
or both) a default under, or give rise to a right of termination, cancellation
or acceleration of any material obligation or loss of any material benefit
under, any note, mortgage, indenture, lease, contract or other agreement,
instrument or obligation to which ▇▇▇▇▇ or Sub is a party or by which either of
them or any of their properties or assets may be bound, or (iii) conflict with
or violate any permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to ▇▇▇▇▇ or Sub or any of
its or their properties or assets, except in the case of clauses (ii) and (iii)
above for any such conflicts, violations, defaults, terminations, cancellations
or accelerations which would not be reasonably likely to have a Material Adverse
Effect on ▇▇▇▇▇.
(c) No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required by or with
respect to ▇▇▇▇▇ or any of its Subsidiaries in connection with the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby, except for (i) the filing by ▇▇▇▇▇ of the Registration Statement with
the SEC in accordance with the Securities Act, (ii) the filing of the Merger
Agreement and the Officers' Certificates with the California Secretary of State
in accordance with the GCL, (iii) the filing of a certificate of merger with the
Delaware Secretary of State, (iv) the filing of the Joint Proxy Statement and
related proxy materials with the SEC in accordance with the Exchange Act, (v)
such consents, approvals, orders, authorizations, registrations, declarations
and filings as may be required under applicable federal and state securities
laws and the laws of any foreign country and (vi) such other consents,
authorizations, filings, approvals and registrations which, if not obtained or
made, would not be reasonably likely to have a Material Adverse Effect on ▇▇▇▇▇.
Section 4.4 SEC FILINGS; FINANCIAL STATEMENTS.
(a) ▇▇▇▇▇ has filed and made available to CompCore all forms, reports and
documents required to be filed by ▇▇▇▇▇ with the SEC since December 31, 1995
other than registration statements on Form S-8 (collectively, the "▇▇▇▇▇ SEC
Reports"). The ▇▇▇▇▇ SEC Reports (i) at the time filed, complied in all material
respects with the applicable requirements of the Securities Act and the Exchange
Act, as the case may be, and (ii) did not at the time they were filed (or if
amended or superseded by a filing prior to the date of this Agreement, then on
the date of such filing) contain any untrue statement of a material fact or omit
to state a material fact required to be stated in such ▇▇▇▇▇ SEC Reports or
necessary in order to make the statements in such ▇▇▇▇▇ SEC Reports, in the
light of the circumstances under which they were made, not misleading. None of
Zoran's Subsidiaries is required to file any forms, reports or other documents
with the SEC.
(b) Each of the consolidated financial statements (including, in each case,
any related notes) contained in the ▇▇▇▇▇ SEC Reports, including any ▇▇▇▇▇ SEC
Reports filed after the date of this Agreement until the Closing, complied or
will comply as to form in all material respects with the applicable published
rules and regulations of the SEC with respect thereto, was or will be prepared
in accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes to such financial statements
or, in the case of unaudited statements, as permitted by Form 10-Q
17
promulgated by the SEC) and presented fairly or will present fairly, in all
material respects, the consolidated financial position of ▇▇▇▇▇ and its
Subsidiaries as at the respective dates and the consolidated results of its
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements were or are subject to normal and recurring
year-end adjustments which were not or are not expected to be material in
amount. The unaudited consolidated balance sheet of ▇▇▇▇▇ as of September 30,
1996 is referred to herein as the "▇▇▇▇▇ Balance Sheet."
Section 4.5 ABSENCE OF UNDISCLOSED LIABILITIES. Except as disclosed in the
▇▇▇▇▇ SEC Reports, ▇▇▇▇▇ and its Subsidiaries do not have any liabilities,
either accrued or contingent (whether or not required to be reflected in
financial statements in accordance with GAAP), and whether due or to become due,
which individually or in the aggregate would be reasonably likely to have a
Material Adverse Effect on ▇▇▇▇▇, other than (i) liabilities reflected or
provided for on the ▇▇▇▇▇ Balance Sheet, (ii) liabilities specifically described
in this Agreement, or in the ▇▇▇▇▇ Disclosure Schedule, and (iii) normal or
recurring liabilities incurred since September 30, 1996 in the ordinary course
of business consistent with past practices.
Section 4.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since September 30,
1996, ▇▇▇▇▇ has conducted its business in the ordinary course and in a manner
consistent with past practices and, since such date, except as disclosed in the
▇▇▇▇▇ SEC Reports, ▇▇▇▇▇ has not:
(a) suffered any event or occurrence that has had a Material Adverse Effect
on ▇▇▇▇▇;
(b) suffered any damage, destruction or loss, whether covered by insurance
or not, materially and adversely affecting its properties or business;
(c) declared, set aside or paid any divided or made any other distribution
on or in respect of the shares of its capital stock or declared any direct or
indirect redemption, retirement, purchase or other acquisition or such shares;
(d) issued any shares of its capital stock or any warrants, rights, or
options for, or entered into any commitment relating to such capital stock
except for options and rights to purchase shares of ▇▇▇▇▇ Common Stock granted
under the ▇▇▇▇▇ Option Plans and the ▇▇▇▇▇ Purchase Plan, in the ordinary course
of business and consistent with past practices, and shares of ▇▇▇▇▇ Common Stock
issued upon the exercise of stock options and rights;
(e) made any material change in the accounting methods or practices it
follows, whether for general financial or tax purposes, or any change in
depreciation or amortization policies or rates;
(f) sold, assigned, transferred, licensed or otherwise disposed of any
material patent, trademark, trade name, brand name, copyright (or pending
application for any patent, trademark or copyright), invention, work of
authorship, process, know-how, formula or trade secret or interest thereunder or
other material intangible asset except for transactions entered into in the
ordinary course of its business;
(g) entered into any material commitment or transaction (including without
limitation any borrowing or capital expenditure) other than in the ordinary
course of business;
(h) incurred any material liability, except in the ordinary course of
business and consistent with past practice;
(i) paid, loaned or advanced any amount to, or sold, transferred or leased
any properties or assets to, or entered into any agreement or arrangement with
any of its officers, directors or shareholders or any affiliate of any of the
foregoing, other than employee compensation and benefits and reimbursement of
employment related business expenses incurred in the ordinary course of
business;
(j) agreed to take any action described in this Section 4.6 or which would
constitute a breach of any of the representations or warranties of ▇▇▇▇▇
contained in this Agreement; or
18
(k) except as disclosed in the ▇▇▇▇▇ Disclosure Schedule, taken any other
action that would have required the consent of CompCore pursuant to Section 5.2
(and which has not been obtained) had such action occurred after the date of
this Agreement.
Section 4.7 INTELLECTUAL PROPERTY.
(a) ▇▇▇▇▇ owns, or is licensed or otherwise possesses legally enforceable
rights to use, all patents, trademarks, trade names, service marks, copyrights
and mask works, and any applications for and registrations of such patents,
trademarks, trade names, service marks, copyrights and mask works and all
processes, formulae, methods, schematics, technology, know-how, computer
software programs or applications and tangible or intangible proprietary
information or material that are necessary to conduct the business of ▇▇▇▇▇ as
currently conducted, or as currently proposed to be conducted, the absence of
which rights would be reasonably likely to have a Material Adverse Effect on
▇▇▇▇▇ (all of which are referred to as the "▇▇▇▇▇ Intellectual Property
Rights"), free and clear of all liens, claims or encumbrances.
(b) ▇▇▇▇▇ is not, nor will it be as a result of the execution and delivery
of this Agreement or the performance of its obligations under this Agreement, in
breach of any license, sublicense or other agreement relating to the ▇▇▇▇▇
Intellectual Property Rights, the breach of which would be likely to have a
Material Adverse Effect on ▇▇▇▇▇.
(c) To Zoran's knowledge, all patents and registered trademarks, service
marks and copyrights claimed by or issued to ▇▇▇▇▇ which relate to any product
of ▇▇▇▇▇ ("▇▇▇▇▇ Product") are valid and subsisting. ▇▇▇▇▇ (i) has not received
notice that it has been sued in any suit, action or proceeding which involves a
claim of infringement of any patent, trademark, service ▇▇▇▇, copyright, trade
secret or other proprietary right of any third party, (ii) has no knowledge that
the manufacturing, marketing, licensing or sale of any ▇▇▇▇▇ Product infringes
any patent, trademark, service ▇▇▇▇, copyright, trade secret or other
proprietary right of any third party, and (iii) has no knowledge of any claim
challenging or questioning the validity or effectiveness of any license or
agreement relating to any ▇▇▇▇▇ Intellectual Property Rights.
Section 4.8 AGREEMENTS, CONTRACTS AND COMMITMENTS. ▇▇▇▇▇ has not breached,
or received in writing any claim or threat that it has breached, any of the
terms or conditions of any material agreement, contract or commitment filed as
an exhibit to the ▇▇▇▇▇ SEC Reports ("▇▇▇▇▇ Material Contracts") in such a
manner as would permit any other party to cancel or terminate the same or would
permit any other party to collect material damages from ▇▇▇▇▇ under any ▇▇▇▇▇
Material Contract. Each ▇▇▇▇▇ Material Contract that has not expired or been
terminated is in full force and effect and is not subject to any material
default thereunder of which ▇▇▇▇▇ is aware by any party obligated to ▇▇▇▇▇
pursuant to such ▇▇▇▇▇ Material Contract.
Section 4.9 LITIGATION. Except as described in the ▇▇▇▇▇ SEC Reports,
there is no action, suit or proceeding, claim, arbitration or investigation
against ▇▇▇▇▇ pending or as to which ▇▇▇▇▇ has received any written notice of
assertion, which is reasonably likely to have a Material Adverse Effect on ▇▇▇▇▇
or a material adverse effect on the ability of ▇▇▇▇▇ to consummate the
transactions contemplated by this Agreement.
Section 4.10 COMPLIANCE WITH LAWS. ▇▇▇▇▇ has complied with, is not in
violation of, and has not received any notices of violation with respect to, any
federal, state or local statute, law or regulation with respect to the conduct
of its business, or the ownership or operation of its business, except for
failures to comply or violations which would not be reasonably likely to have a
Material Adverse Effect on ▇▇▇▇▇.
Section 4.11 POOLING OF INTERESTS. Neither ▇▇▇▇▇ nor, to its knowledge,
any of its directors, officers, or stockholders has taken any action which would
interfere with Zoran's ability to account for the Merger as a pooling of
interests.
Section 4.12 INTERESTED PARTY TRANSACTIONS. Except as set forth in the
▇▇▇▇▇ SEC Reports, since the date of Zoran's last proxy statement, no event has
occurred that would be required to be reported by
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▇▇▇▇▇ as a Certain Relationship or Related Transaction pursuant to Item 404 of
Regulation S-K promulgated by the SEC.
Section 4.13 REGISTRATION STATEMENT; PROXY STATEMENT/PROSPECTUS. The
information supplied by ▇▇▇▇▇ for inclusion in the Registration Statement shall
not at the time the Registration Statement is declared effective by the SEC
contain any untrue statement of a material fact or omit to state any material
fact required to be stated in the Registration Statement or necessary in order
to make the statements in the Registration Statement, in light of the
circumstances under which they were made, not misleading. The information
supplied by ▇▇▇▇▇ for inclusion in the Joint Proxy Statement shall not, on the
date the Joint Proxy Statement is first mailed to shareholders of ▇▇▇▇▇ or
CompCore, at the time of the CompCore Shareholders' Meeting, at the time of the
▇▇▇▇▇ Stockholders' Meeting, or at the Effective Time, contain any statement
which, at such time and in light of the circumstances under which it was made,
is false or misleading with respect to any material fact, or omit to state any
material fact necessary in order to make the statements made in the Joint Proxy
Statement not false or misleading; or omit to state any material fact necessary
to correct any statement in any earlier communication with respect to the
solicitation of proxies for the CompCore Shareholders' Meeting or the ▇▇▇▇▇
Stockholders' Meeting, which has become false or misleading. If at any time
prior to the Effective Time any event relating to ▇▇▇▇▇ or any of its
Affiliates, officers or directors should be discovered by ▇▇▇▇▇ which should be
set forth in an amendment to the Registration Statement or a supplement to the
Joint Proxy Statement, ▇▇▇▇▇ shall promptly inform CompCore.
Section 4.14 OPINION OF FINANCIAL ADVISOR. The financial advisor of ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇ & Co., Inc., has delivered to ▇▇▇▇▇ an opinion dated the date of
this Agreement to the effect that the Conversion Number is fair from a financial
point of view to the stockholders of ▇▇▇▇▇.
Section 4.15 INTERIM OPERATIONS OF SUB. Sub was formed solely for the
purpose of engaging in the transactions contemplated by this Agreement, has
engaged in no other business activities and has conducted its operations only as
contemplated by this Agreement.
Section 4.16 NO EXISTING DISCUSSIONS. As of the date hereof, ▇▇▇▇▇ is not
engaged, directly or indirectly, in any discussions or negotiations with any
other party with respect to a ▇▇▇▇▇ Acquisition Proposal (as defined in Section
6.2).
Section 4.17 CORPORATE DOCUMENTS. ▇▇▇▇▇ has furnished or made available to
CompCore, or its representatives, for its examination its minute book containing
all records required to be set forth of all proceedings, consents, actions, and
meetings of the shareholders, the Board of Directors and any committees thereof.
The corporate minute books and other corporate records of ▇▇▇▇▇ are complete and
accurate in all material respects, and the signatures appearing on all documents
contained therein are the true signatures of the persons purporting to have
signed the same. All actions reflected in such books and records were duly and
validly taken in compliance with the laws of the applicable jurisdiction. ▇▇▇▇▇
has delivered or made available to CompCore or its representatives true and
complete copies of all documents which are referred to in this Article IV or in
the ▇▇▇▇▇ Disclosure Schedule.
Section 4.18 NO MISREPRESENTATION. No representation or warranty by ▇▇▇▇▇
or Sub in this Agreement, or any statement, certificate or schedule furnished or
to be furnished by or on behalf of ▇▇▇▇▇ or Sub pursuant to this Agreement, when
taken together, contains or shall contain any untrue statement of a material
fact or omits or shall omit to state a material fact required to be stated
therein or necessary in order to make such statements, in light of the
circumstances under which they were made, not misleading.
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ARTICLE V
CONDUCT OF BUSINESS
Section 5.1 COVENANTS OF COMPCORE. During the period from the date of the
Original Agreement and continuing until the earlier of the termination of this
Agreement or the Effective Time, CompCore agrees (except to the extent that
▇▇▇▇▇ shall otherwise consent in writing), to carry on its business in the
usual, regular and ordinary course in substantially the same manner as
previously conducted, to pay its debts and Taxes when due, subject to good faith
disputes over such debts or Taxes, to pay or perform its other obligations when
due, and, to the extent consistent with such business, to use all reasonable
efforts consistent with past practices and policies to (i) preserve intact its
present business organization, (ii) keep available the services of its present
officers and key employees and (iii) preserve its relationships with customers,
suppliers, distributors, licensors, licensees and others having business
dealings with it. CompCore shall promptly notify ▇▇▇▇▇ of any event or
occurrence not in the ordinary course of business of CompCore where such event
or occurrence would result in a breach of any covenant of CompCore set forth in
this Agreement or cause any representation or warranty of CompCore set forth in
this Agreement to be untrue as of the date of, or giving effect to, such event
or occurrence. Except as expressly contemplated by this Agreement, CompCore
shall not, without the prior written consent of ▇▇▇▇▇:
(a) Grant any options under any employee plan of CompCore, accelerate, amend
or change the period of exercisability under any outstanding options, or
authorize cash payments in exchange for any options granted under any of such
plans except as required by the terms of such plans or any related agreements in
effect as of the date of this Agreement;
(b) Transfer or license to any person or entity or otherwise extend, amend
or modify any rights to the CompCore Intellectual Property Rights other than in
the ordinary course of business consistent with past practices;
(c) Declare or pay any dividends on or make any other distributions (whether
in cash, stock or property) in respect of any of its capital stock, or split,
combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, or purchase or otherwise acquire, directly or
indirectly, any shares of its capital stock except from former employees,
directors and consultants in accordance with agreements providing for the
repurchase of shares in connection with any termination of service by such
party;
(d) Issue, deliver or sell or authorize or propose the issuance, delivery or
sale of, any shares of its capital stock or securities convertible into shares
of its capital stock, or subscriptions, rights, warrants or options to acquire,
or other agreements or commitments of any character obligating it to issue any
such shares or other convertible securities, other than the issuance of shares
of CompCore Common Stock upon the exercise of CompCore Options outstanding as of
the date of this Agreement;
(e) Acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial equity interest in or substantial portion of the assets
of, or by any other manner, any business or any corporation, partnership or
other business organization or division, or otherwise acquire or agree to
acquire any assets other than acquisitions involving aggregate consideration of
not more than $50,000;
(f) Sell, lease, license or otherwise dispose of any of its properties or
assets which are material, individually or in the aggregate, to the business of
CompCore, except for transactions entered into in the ordinary course of
business;
(g) Take any action to (i) increase or agree to increase the compensation
payable or to become payable to its officers or employees, (ii) grant any
additional severance or termination pay to, or enter into any employment or
severance agreements with, officers, (iii) grant any severance or termination
pay to, or enter into any employment or severance agreement, with any
non-officer employee, except in accordance with past practices, (iv) enter into
any collective bargaining agreement, or (v) establish, adopt, enter into or
21
amend in any material respect any bonus, profit sharing, thrift, compensation,
stock option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, trust, fund, policy or
arrangement for the benefit of any directors, officers or employees;
(h) Revalue any of its assets, including writing down the value of inventory
or writing off notes or accounts receivable other than in the ordinary course of
business;
(i) Incur any indebtedness for borrowed money or guarantee any such
indebtedness or issue or sell any debt securities or warrants or rights to
acquire any debt securities or guarantee any debt securities of others, other
than indebtedness incurred under outstanding lines of credit consistent with
past practice;
(j) Amend or propose to amend its Articles of Incorporation or Bylaws,
except as contemplated by this Agreement;
(k) Incur or commit to incur any individual capital expenditure in excess of
$20,000 or aggregate capital expenditures in excess of $75,000, in addition to
the existing commitments set forth in the CompCore Disclosure Schedule;
(l) Enter into or amend any agreements pursuant to which any third party is
granted exclusive marketing or manufacturing rights with respect to any CompCore
product;
(m) Amend or terminate any material contract, agreement or license to which
it is a party except in the ordinary course of business;
(n) Waive or release any material right or claim, except in the ordinary
course of business;
(o) Initiate any litigation or arbitration proceeding; or
(p) Take or agree to take, in writing or otherwise, any of the actions
described in Sections (a) through (o) above, or any action which is reasonably
likely to make any of CompCore's representations or warranties contained in this
Agreement or the Original Agreement untrue or incorrect in any material respect
on the date made (to the extent so limited) or as of the Effective Time.
Section 5.2 COVENANTS OF ▇▇▇▇▇. During the period from the date of the
Original Agreement and continuing until the earlier of the termination of this
Agreement or the Effective Time, ▇▇▇▇▇ agrees (except to the extent that
CompCore shall otherwise consent in writing), to carry on its business in the
usual, regular and ordinary course in substantially the same manner as
previously conducted, to pay its debts and Taxes when due, subject to good faith
disputes over such debts or Taxes, to pay or perform its other obligations when
due, and, to the extent consistent with such business, use all reasonable
efforts consistent with past practices and policies to (i) preserve intact its
present business organization, (ii) keep available the services of its present
officers and key employees and (iii) preserve its relationships with customers,
suppliers, distributors, licensors, licensees and others having business
dealings with it. ▇▇▇▇▇ shall promptly notify CompCore of any event or
occurrence not in the ordinary course of business of ▇▇▇▇▇ where such event or
occurrence would result in a breach of any covenant of ▇▇▇▇▇ set forth in this
Agreement or cause any representation or warranty of ▇▇▇▇▇ set forth in this
Agreement to be untrue as of the date of, or giving effect to, such event or
occurrence. Except as expressly contemplated by this Agreement, ▇▇▇▇▇ shall not,
without the prior written consent of CompCore:
(a) Grant any options under any employee plan of ▇▇▇▇▇ (except for options
and rights to purchase shares of ▇▇▇▇▇ Common Stock granted under the ▇▇▇▇▇
Option Plans and the ▇▇▇▇▇ Purchase Plan, in the ordinary course of business and
consistent with past practices), accelerate, amend or change the period of
exercisability under any outstanding options, or authorize cash payments in
exchange for any options granted under any of such plans except as required by
the terms of such plans or any related agreements in effect as of the date of
this Agreement;
(b) Declare or pay any dividends on or make any other distributions (whether
in cash, stock or property) in respect of any of its capital stock, or split,
combine or reclassify any of its capital stock or issue
22
or authorize the issuance of any other securities in respect of, in lieu of or
in substitution for shares of its capital stock, or purchase or otherwise
acquire, directly or indirectly, any shares of its capital stock except from
former employees, directors and consultants in accordance with agreements
providing for the repurchase of shares in connection with any termination of
service by such party;
(c) Sell, lease, license or otherwise dispose of any of its properties or
assets which are material, individually or in the aggregate, to the business of
▇▇▇▇▇, except for transactions entered into in the ordinary course of business;
(d) Amend or propose to amend its Certificate of Incorporation or Bylaws, in
any manner that materially affects the rights, preferences or privileges of the
holders of its capital stock, except as contemplated by this Agreement; or
(e) Take or agree to take, in writing or otherwise, any of the actions
described in Sections (a) through (d) above, or any action which is reasonably
likely to make any of CompCore's representations or warranties contained in this
Agreement or the Original Agreement untrue or incorrect in any material respect
on the date made (to the extent so limited) or as of the Effective Time.
Section 5.3 COOPERATION. Subject to compliance with applicable law, from
the date hereof until the Effective Time, each of ▇▇▇▇▇ and CompCore shall
confer on a regular and frequent basis with one or more representatives of the
other party to report operational matters of materiality and the general status
of ongoing operations and shall promptly provide the other party or its counsel
with copies of all filings made by such party with any Governmental Entity in
connection with this Agreement, the Merger and the transactions contemplated
hereby.
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.1 NO SOLICITATION BY COMPCORE.
(a) During the period from the date of the Original Agreement until the
earlier of the termination of this Agreement or the Effective Time, CompCore
shall not, directly or indirectly, through any officer, director, employee,
representative or agent, (i) solicit, initiate, or encourage any inquiries or
proposals that constitute, or could reasonably be expected to lead to, a
proposal or offer for a merger, consolidation, business combination, sale of
substantial assets, sale of shares of capital stock (including without
limitation by way of a tender offer) or similar transactions involving CompCore,
other than the transactions contemplated by this Agreement (any of the foregoing
inquiries or proposals being referred to in this Agreement as a "CompCore
Acquisition Proposal"), (ii) engage in negotiations or discussions concerning,
or provide any non-public information to any person or entity relating to, any
CompCore Acquisition Proposal, or (iii) agree to, approve or recommend any
CompCore Acquisition Proposal.
(b) CompCore shall notify ▇▇▇▇▇ no later than twenty-four (24) hours after
receipt by CompCore (or its advisors) of any CompCore Acquisition Proposal or
any request for nonpublic information in connection with a CompCore Acquisition
Proposal or for access to the properties, books or records of CompCore by any
person or entity that informs CompCore that it is considering making, or has
made, a CompCore Acquisition Proposal. Such notice shall be made orally and in
writing and shall indicate in reasonable detail the identity of the offeror and
the terms and conditions of such proposal, inquiry or contact.
Section 6.2 NO SOLICITATION BY ▇▇▇▇▇.
(a) During the period from the date of the Original Agreement until the
earlier of the termination of this Agreement or the Effective Time, ▇▇▇▇▇ shall
not, directly or indirectly, through any officer, director, employee,
representative or agent, (i) solicit, initiate, or encourage any inquiries or
proposals that constitute, or could reasonably be expected to lead to, a
proposal or offer for a merger, consolidation, business combination, sale of
substantial assets, sale of shares of capital stock (including without
limitation
23
by way of a tender offer) or similar transactions involving a Change of Control
(as hereinafter defined) of ▇▇▇▇▇ (any of the foregoing inquiries or proposals
being referred to in this Agreement as a "▇▇▇▇▇ Acquisition Proposal"), (ii)
engage in negotiations or discussions concerning, or provide any non-public
information to any person or entity relating to, any ▇▇▇▇▇ Acquisition Proposal,
or (iii) agree to, approve or recommend any ▇▇▇▇▇ Acquisition Proposal;
PROVIDED, HOWEVER, that nothing contained in this Agreement shall prevent ▇▇▇▇▇
or its Board of Directors from (A) furnishing non-public information to, or
entering into discussions or negotiations with, any person or entity in
connection with an unsolicited bona fide written ▇▇▇▇▇ Acquisition Proposal by
such person or entity or recommending such an unsolicited bona fide written
▇▇▇▇▇ Acquisition Proposal to the stockholders of ▇▇▇▇▇, if and only to the
extent that the Board of Directors of ▇▇▇▇▇ determines in good faith (after
consultation with outside legal counsel) that such action is necessary for such
Board of Directors to comply with its fiduciary duties to Zoran's stockholders
under applicable law, or (B) complying with Rule 14e-2 promulgated under the
Exchange Act with regard to a ▇▇▇▇▇ Acquisition Proposal.
(b) ▇▇▇▇▇ shall notify CompCore no later than twenty-four (24) hours after
receipt by ▇▇▇▇▇ (or its advisors) of any ▇▇▇▇▇ Acquisition Proposal or any
request for nonpublic information in connection with a ▇▇▇▇▇ Acquisition
Proposal or for access to the properties, books or records of ▇▇▇▇▇ by any
person or entity that informs ▇▇▇▇▇ that it is considering making, or has made,
a ▇▇▇▇▇ Acquisition Proposal. Such notice shall be made orally and in writing
and shall indicate in reasonable detail the identity of the offeror and the
terms and conditions of such proposal, inquiry or contact.
(c) As used in this Agreement, "Change of Control" means a transaction or
series of transactions pursuant to which any person (or group of persons) other
than the current affiliates of ▇▇▇▇▇ acquires more than fifty percent (50%) of
Zoran's outstanding voting securities or more than fifty percent (50%) of the
outstanding voting securities of an entity surviving any such transaction
involving ▇▇▇▇▇, or of any direct or indirect parent of such entity.
Section 6.3 PROXY STATEMENT/PROSPECTUS; REGISTRATION STATEMENT.
(a) ▇▇▇▇▇ and CompCore shall use all reasonable efforts to cause the
Registration Statement to become effective as soon after such filing as
practicable. The Joint Proxy Statement included in the Registration Statement
shall include the recommendation of the Board of Directors of CompCore in favor
of this Agreement and the Merger and the recommendation of the Board of
Directors of ▇▇▇▇▇ in favor of the issuance of shares of ▇▇▇▇▇ Common Stock
pursuant to the Merger.
(b) ▇▇▇▇▇ and CompCore shall make all necessary filings with respect to the
Merger under the Securities Act, the Exchange Act and applicable state blue sky
laws and the rules and regulations thereunder.
Section 6.4 CONSENTS. Each of ▇▇▇▇▇ and CompCore shall use all reasonable
efforts to obtain all necessary consents, waivers and approvals under any of
Zoran's or CompCore's material agreements, contracts, licenses or leases as may
be necessary or advisable to consummate the Merger and the other transactions
contemplated by this Agreement.
Section 6.5 CURRENT NASDAQ QUOTATION. ▇▇▇▇▇ agrees to continue the
quotation of ▇▇▇▇▇ Common Stock on the NNM during the term of this Agreement.
Section 6.6 ACCESS TO INFORMATION. Upon reasonable notice, CompCore and
▇▇▇▇▇ shall each afford to the officers, employees, accountants, counsel and
other representatives of the other, reasonable access, during normal business
hours during the period prior to the Effective Time, to all its properties,
books, contracts, commitments and records and, during such period, each of
CompCore and ▇▇▇▇▇ shall furnish promptly to the other (i) a copy of each
report, schedule, registration statement and other document filed or received by
it during such period pursuant to the requirements of federal securities laws
and (ii) all other information concerning its business, properties and personnel
as such other party may reasonably request. Unless otherwise required by law,
the parties will treat any such information which is nonpublic in
24
confidence in accordance with the Joint Confidentiality Agreement dated June 30,
1996 (the "Confidentiality Agreement") between ▇▇▇▇▇ and CompCore, which
Confidentiality Agreement shall continue in full force and effect in accordance
with its terms. No information or knowledge obtained in any investigation
pursuant to this Section 6.6 shall affect or be deemed to modify any
representation or warranty contained in this Agreement or the conditions to the
obligations of the parties to consummate the Merger.
Section 6.7 STOCKHOLDERS' MEETINGS. CompCore and ▇▇▇▇▇ each shall call a
meeting of its respective stockholders to be held as promptly as practicable for
the purpose of voting, in the case of CompCore, upon this Agreement and the
Merger and, in the case of ▇▇▇▇▇, upon the issuance of shares of ▇▇▇▇▇ Common
Stock pursuant to the Merger. CompCore and ▇▇▇▇▇ will, through their respective
Boards of Directors, recommend to their respective stockholders approval of such
matters and will coordinate and cooperate with respect to the timing of such
meetings and shall use their best efforts to hold such meetings on the same day
and as soon as practicable after the date hereof.
Section 6.8 LEGAL CONDITIONS TO MERGER. Each of ▇▇▇▇▇ and CompCore will
take all reasonable actions necessary to comply promptly with all legal
requirements which may be imposed on itself with respect to the Merger (which
actions shall include, without limitation, furnishing all information in
connection with approvals of or filings with any Governmental Entity) and will
promptly cooperate with and furnish information to each other in connection with
any such requirements imposed upon either of them or any of their Subsidiaries
in connection with the Merger. Each of ▇▇▇▇▇ and CompCore will take all
reasonable actions necessary to obtain (and will cooperate with each other in
obtaining) any consent, authorization, order or approval of, or any exemption
by, any Governmental Entity or other third party, required to be obtained or
made by CompCore, ▇▇▇▇▇ or any of their Subsidiaries in connection with the
Merger or the taking of any action contemplated thereby or by this Agreement.
Section 6.9 PUBLIC DISCLOSURE. ▇▇▇▇▇ and CompCore shall consult with each
other before issuing any press release or otherwise making any public statement
with respect to the Merger or this Agreement and shall not issue any such press
release or make any such public statement prior to such consultation, except as
may be required by law or by the rules of the NASD.
Section 6.10 TAX-FREE REORGANIZATION. ▇▇▇▇▇ and CompCore shall each use
its best efforts to cause the Merger to be treated as a reorganization within
the meaning of Section 368(a) of the Code.
Section 6.11 POOLING ACCOUNTING. ▇▇▇▇▇ and CompCore shall each use its
best efforts to cause the business combination to be effected by the Merger to
be accounted for as a pooling of interests. Each of ▇▇▇▇▇ and CompCore shall use
its best efforts (i) to cause its respective Affiliates (as defined in Section
6.12) not to take any action that would adversely affect the ability of ▇▇▇▇▇ to
account for the business combination to be effected by the Merger as a pooling
of interests and (ii) to cause its respective Affiliates to sign and deliver to
▇▇▇▇▇ a customary "pooling letter" in form and substance agreed upon by CompCore
and ▇▇▇▇▇ to the extent that receipt of such letter is required to assure the
availability of pooling of interests accounting treatment.
Section 6.12 AFFILIATE AGREEMENTS. ▇▇▇▇▇ and CompCore have provided each
other with a list of those persons who are, in Zoran's or CompCore's respective
reasonable judgment, "affiliates" of ▇▇▇▇▇ or CompCore, respectively, within the
meaning of Rule 145 promulgated under the Securities Act ("Rule 145"). (Each
such person who is an "affiliate" of ▇▇▇▇▇ or CompCore within the meaning of
Rule 145 is referred to herein as an "Affiliate.") ▇▇▇▇▇ and CompCore shall
provide each other such information and documents as CompCore or ▇▇▇▇▇ shall
reasonably request for purposes of reviewing such list and shall notify the
other party in writing regarding any change in the identity of its Affiliates
prior to the Closing Date. CompCore has delivered or caused to be delivered to
▇▇▇▇▇ from each of the Affiliates of CompCore an executed Affiliate Agreement by
which such Affiliate of CompCore has agreed to comply with the applicable
requirements of Rule 145 ("Affiliate Agreement"). ▇▇▇▇▇ shall be entitled to
place appropriate legends on the certificates evidencing any ▇▇▇▇▇ Common Stock
to be received by such
25
Affiliates of CompCore pursuant to the terms of this Agreement, and to issue
appropriate stop transfer instructions to the transfer agent for the ▇▇▇▇▇
Common Stock, consistent with the terms of the Affiliate Agreements.
Section 6.13 NASDAQ QUOTATION. ▇▇▇▇▇ shall use its best efforts to cause
the shares of ▇▇▇▇▇ Common Stock to be issued in the Merger to be approved for
quotation on the NNM, subject to official notice of issuance, prior to the
Closing Date.
Section 6.14 STOCK OPTIONS.
(a) At the Effective Time, each outstanding CompCore Option, whether vested
or unvested, shall be deemed to constitute an option (an "Assumed Option") to
acquire, on the same terms and conditions as were applicable under the CompCore
Option, such number of shares of ▇▇▇▇▇ Common Stock as the holder of such
CompCore Option would have been entitled to receive pursuant to the Merger had
such holder exercised such option in full immediately prior to the Effective
Time (rounded down to the nearest whole share), at a price per share (rounded up
to the nearest whole cent) equal to (x) the aggregate exercise price per share
of CompCore Common Stock otherwise purchasable pursuant to such CompCore Option
immediately prior to the Effective Time divided by (y) the number of full shares
of ▇▇▇▇▇ Common Stock deemed purchasable pursuant to such CompCore Option in
accordance with the foregoing; PROVIDED, HOWEVER, that, in the case of any
CompCore Option to which Section 422 of the Code applies ("incentive stock
options"), the option price, the number of shares purchasable pursuant to such
option and the terms and conditions of exercise of such option shall be
determined in order to comply with Section 425(a) of the Code and PROVIDED
FURTHER, that in the case of any Assumed Option that remains outstanding as of
the termination of the Escrow (as provided in Article IX and the Escrow
Agreement) the number of shares of ▇▇▇▇▇ Common Stock issuable upon the
subsequent exercise of such Assumed Option shall be reduced in proportion to any
reduction in the number of shares of ▇▇▇▇▇ Common Stock received by holders of
Assumed Options exercised prior to the termination of the Escrow as a result of
any distribution of Escrow Shares to members of the ▇▇▇▇▇ Group pursuant to
Article IX and the Escrow Agreement.
(b) As soon as practicable after the Effective Time, ▇▇▇▇▇ shall deliver to
the participants in the CompCore Option Plan an appropriate notice setting forth
such participants' rights pursuant thereto and the grants pursuant to the
CompCore Option Plan shall continue in effect on the same terms and conditions
(subject only to the adjustments required by this Section 6.14 after giving
effect to the Merger). ▇▇▇▇▇ shall comply with the terms of the CompCore Option
Plan and ensure, to the extent required by and subject to the provisions of the
CompCore Option Plan, that the Assumed Options representing assumed CompCore
Options which qualified as incentive stock options prior the Effective Time
continue to qualify as incentive stock options after the Effective Time.
(c) ▇▇▇▇▇ shall take all corporate action necessary to reserve for issuance
a sufficient number of shares of ▇▇▇▇▇ Common Stock for delivery under the
Assumed Options. Within thirty (30) days after the Effective Time, ▇▇▇▇▇ shall
file a registration statement on Form S-8 (or any successor or other appropriate
forms), or another appropriate form, with respect to the shares of ▇▇▇▇▇ Common
Stock subject to the Assumed Options and shall use its best efforts to maintain
the effectiveness of such registration statement or registration statements (and
maintain the current status of the prospectus or prospectuses in connection
therewith) for so long as any Assumed Options remain outstanding. With respect
to those individuals who subsequent to the Merger will be subject to the
reporting requirements under Section 16(a) of the Exchange Act, where
applicable, ▇▇▇▇▇ shall administer the Assumed Options in a manner that complies
with Rule 16b-3 promulgated under the Exchange Act.
(d) Employees of CompCore as of the Effective Time shall be permitted to
participate in the ▇▇▇▇▇ Employee Stock Purchase Plan commencing on the first
enrollment date following the Effective Time, subject to compliance with the
eligibility provisions of such plan.
26
Section 6.15 BROKERS OR FINDERS. Each of ▇▇▇▇▇ and CompCore represents, as
to itself, its Subsidiaries and its Affiliates, that no agent, broker,
investment banker, financial advisor or other firm or person is or will be
entitled to any broker's or finder's fee or any other commission or similar fee
in connection with any of the transactions contemplated by this Agreement except
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLC, financial advisor to CompCore, whose fees will be paid by
CompCore in accordance with CompCore's agreement with such firm (a copy of which
has been delivered by CompCore to ▇▇▇▇▇ prior to the date of this Agreement),
and ▇▇▇▇▇▇▇▇▇▇▇ & Co., Inc., financial advisor to ▇▇▇▇▇, whose fees and expenses
will be paid by ▇▇▇▇▇ in accordance with Zoran's agreement with such firm (a
copy of which has been delivered by ▇▇▇▇▇ prior to the date of this Agreement),
in each case subject to the provisions of Section 6.17, and each of ▇▇▇▇▇ and
CompCore agrees to indemnify and hold the other harmless from and against any
and all claims, liabilities or obligations with respect to any other fees,
commissions or expenses asserted by any person on the basis of any act or
statement alleged to have been made by such party or its Affiliate.
Section 6.16 ADDITIONAL AGREEMENTS; REASONABLE EFFORTS. Subject to the
terms and conditions of this Agreement, each of the parties agrees to use all
reasonable efforts to take, or cause to be taken, all action and to do, or cause
to be done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement, including cooperating fully with the other party, including by
provision of information. In case at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement or to vest the Surviving Corporation with full title to all
properties, assets, rights, approvals, immunities and franchises of either of
the Constituent Corporations, the proper officers and directors of each party to
this Agreement shall take all such necessary action.
Section 6.17 EXPENSES. The parties shall each pay their own legal,
accounting and financial advisory fees and other out-of-pocket expenses related
to the negotiation, preparation and carrying out of the Original Agreement and
this Agreement and the transactions herein contemplated. In the event the Merger
is consummated, legal, accounting and financial advisory fees and expenses and
other out-of-pocket expenses incurred by CompCore relating to the negotiation,
preparation and carrying out of this Agreement and the transactions herein
contemplated (the "CompCore Transaction Expenses") shall be borne by the
Surviving Corporation, subject to Zoran's rights to indemnification under
Section 9.2(a) with respect to CompCore Transaction Expenses in excess of
$1,000,000, in aggregate. A schedule of all CompCore Transaction Expenses
incurred or to be incurred through the Closing shall be submitted to ▇▇▇▇▇ not
later than two (2) business days prior to the Closing.
Section 6.18 EMPLOYEE BENEFITS. All CompCore employees who remain
employees of ▇▇▇▇▇, CompCore or any other Subsidiary of ▇▇▇▇▇ following the
Effective Time shall be entitled to participate in all employee benefit plans
and programs (the "▇▇▇▇▇ Plans") that are available to other ▇▇▇▇▇ employees
holding comparable positions. The ▇▇▇▇▇ Plans shall give full credit for each
participant's period of continuous service with CompCore prior to the Effective
Time, to the extent permitted by such ▇▇▇▇▇ Plans. In the case of medical and
health insurance coverage, ▇▇▇▇▇ shall cause the Surviving Corporation to
continue to insure CompCore employees under CompCore's existing insurance plans
or provide them with the opportunity to participate in ▇▇▇▇▇ Plans providing
generally comparable medical and health insurance coverage.
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ARTICLE VII
CONDITIONS TO MERGER
Section 7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligations of each party to this Agreement to effect
the Merger shall be subject to the satisfaction prior to the Closing Date of the
following conditions:
(a) This Agreement and the Merger shall have been approved and adopted by
the affirmative vote of the holders of a majority of the outstanding shares of
CompCore Common Stock, and the issuance of shares of ▇▇▇▇▇ Common Stock pursuant
to the Merger shall have been approved by the stockholders of ▇▇▇▇▇.
(b) All authorizations, consents, orders or approvals of, or declarations or
filings with, or expirations of waiting periods imposed by, any Governmental
Entity the failure of which to obtain or comply with would be reasonably likely
to have a Material Adverse Effect on ▇▇▇▇▇ or CompCore shall have been filed,
occurred or been obtained.
(c) The Registration Statement shall have become effective under the
Securities Act and shall not be the subject of any stop order or proceedings
seeking a stop order.
(d) No temporary restraining order, preliminary or permanent injunction or
other order issued by any court of competent jurisdiction or other legal or
regulatory restraint or prohibition preventing the consummation of the Merger or
limiting or restricting Zoran's conduct or operation of the business of ▇▇▇▇▇ or
CompCore after the Merger shall have been issued, nor shall any proceeding
brought by a domestic administrative agency or commission or other domestic
Governmental Entity, seeking any of the foregoing be pending; nor shall there be
any action taken, or any statute, rule, regulation or order enacted, entered,
enforced or deemed applicable to the Merger which makes the consummation of the
Merger illegal.
(e) ▇▇▇▇▇ and CompCore shall have received letters from Price Waterhouse LLP
dated the date of the Joint Proxy Statement and confirmed in writing at the
Effective Time and addressed to ▇▇▇▇▇ and CompCore stating that the business
combination to be effected by the Merger will qualify as a pooling of interests
transaction under GAAP.
(f) The shares of ▇▇▇▇▇ Common Stock to be issued in the Merger shall have
been approved for quotation on the NNM.
(g) ▇▇▇▇▇ shall have received all permits and other authorizations required
under applicable state blue sky laws for the issuance of shares of ▇▇▇▇▇ Common
Stock pursuant to the Merger.
Section 7.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF ▇▇▇▇▇ AND SUB. The
obligations of ▇▇▇▇▇ and Sub to effect the Merger are subject to the
satisfaction of each of the following conditions, any of which may be waived in
writing exclusively by ▇▇▇▇▇ and Sub:
(a) The representations and warranties of CompCore set forth in the Original
Agreement and this Agreement shall be true and correct in all material respects
as of the date of the Original Agreement and the date of this Agreement,
respectively, and (except to the extent such representations and warranties
speak as of an earlier date) as of the Closing Date as though made on and as of
the Closing Date, except for (i) changes contemplated by this Agreement and (ii)
where the failure to be true and correct would not be reasonably likely to have
a Material Adverse Effect on CompCore, or a material adverse effect upon the
consummation of the transactions contemplated hereby; and ▇▇▇▇▇ shall have
received a certificate to such effect signed on behalf of CompCore by the chief
executive officer and the chief financial officer of CompCore.
(b) CompCore shall have performed in all material respects all obligations
required to be performed by it under this Agreement at or prior to the Closing
Date, and ▇▇▇▇▇ shall have received a certificate to
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such effect signed on behalf of CompCore by the chief executive officer and the
chief financial officer of CompCore.
(c) ▇▇▇▇▇ shall have received from CompCore written evidence that the
execution, delivery and performance of CompCore's obligations under this
Agreement have been duly and validly approved and authorized by the Board of
Directors and the shareholders of CompCore.
(d) ▇▇▇▇▇ shall have received a written opinion from ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ &
Freidenrich, A Professional Corporation, counsel to ▇▇▇▇▇, to the effect that
the Merger will be treated for Federal income tax purposes as a tax-free
reorganization within the meaning of Section 368(a) of the Code.
(e) ▇▇▇▇▇ shall have been furnished with evidence satisfactory to it of the
consent or approval of those persons whose consent or approval shall be required
in connection with the Merger under the material contracts of CompCore, as set
forth on SCHEDULE 7.2(E) hereto.
(f) ▇▇▇▇▇ shall have received from each of the Affiliates of CompCore an
executed Affiliate Agreement.
(g) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall have executed and delivered
Employment Agreements in the form of EXHIBITS B-1 AND B-2 hereto, respectively
(the "Employment Agreements").
(h) Each person listed in the preamble to EXHIBIT C hereto shall have
executed and delivered to ▇▇▇▇▇ Non-Competition Agreements, in the form of
EXHIBIT C hereto.
(i) ▇▇▇▇▇ shall be satisfied in its sole discretion that not less than
ninety percent (90%) of CompCore's key employees listed on SCHEDULE 7.2(I)
hereto are ready, willing and able to remain employed by CompCore or ▇▇▇▇▇ after
the Effective Time on terms reasonably satisfactory to ▇▇▇▇▇.
(j) The Merger shall have been approved by the affirmative vote of the
holders of not less than ninety-two percent (92%) of the outstanding shares of
CompCore Common Stock.
(k) ▇▇▇▇▇ shall have received a legal opinion from ▇▇▇▇▇▇ Godward LLP,
counsel to CompCore, substantially in the form of EXHIBIT D hereto.
(l) The Escrow Agreement shall have been executed and delivered by the
Shareholder Representative (as defined in Section 9.7) and the Escrow Agent.
(m) The Bechtolsheim Note shall have been converted in full into shares of
CompCore Common Stock in accordance with its terms.
Section 7.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF COMPCORE. The
obligation of CompCore to effect the Merger is subject to the satisfaction of
each of the following conditions, any of which may be waived, in writing,
exclusively by CompCore:
(a) The representations and warranties of ▇▇▇▇▇ and Sub set forth in the
Original Agreement and this Agreement shall be true and correct in all material
respects as of the date of the Original Agreement and the date of this
Agreement, respectively, and (except to the extent such representations speak as
of an earlier date) as of the Closing Date as though made on and as of the
Closing Date, except for (i) changes contemplated by this Agreement and (ii)
where the failure to be true and correct would not be reasonably likely to have
a Material Adverse Effect on ▇▇▇▇▇ and its Subsidiaries, taken as a whole, or a
material adverse effect upon the consummation of the transactions contemplated
hereby; and CompCore shall have received a certificate to such effect signed on
behalf of ▇▇▇▇▇ by the chief executive officer and the chief financial officer
of ▇▇▇▇▇. For purposes of the foregoing condition, neither Zoran's failure to
achieve operating results predicted by financial analysts nor reductions in the
trading price of ▇▇▇▇▇ Common Stock, as reported on the NNM, occurring at any
time or from time to time between the date hereof and the Closing Date, shall be
deemed to be an event or occurrence having a Material Adverse Effect on ▇▇▇▇▇.
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(b) ▇▇▇▇▇ and Sub shall have performed in all material respects all
obligations required to be performed by them under this Agreement at or prior to
the Closing Date, and CompCore shall have received a certificate to such effect
signed on behalf of ▇▇▇▇▇ by the chief executive officer and the chief financial
officer of ▇▇▇▇▇.
(c) CompCore shall have received from ▇▇▇▇▇ and Sub written evidence that
the execution, delivery and performance of Zoran's and Sub's obligations under
this Agreement have been duly and validly approved and authorized by the Boards
of Directors and stockholders of ▇▇▇▇▇ and Sub.
(d) CompCore's shareholders shall have received the opinion of ▇▇▇▇▇▇
Godward LLP, counsel to CompCore, to the effect that the Merger will be treated
for Federal income tax purposes as a tax-free reorganization within the meaning
of Section 368(a) of the Code.
(e) CompCore shall have received copies of Affiliate Agreements executed by
each Affiliate of ▇▇▇▇▇.
(f) ▇▇▇▇▇ shall have executed and delivered the Employment Agreements.
(g) CompCore shall have received a legal opinion from ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ &
Freidenrich, A Professional Corporation, counsel to ▇▇▇▇▇, substantially in the
form of EXHIBIT E hereto.
(h) The Escrow Agreement shall have been executed and delivered by ▇▇▇▇▇ and
the Escrow Agent.
(i) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ shall have been duly elected as a member of Zoran's
Board of Directors, effective as of the Effective Time.
ARTICLE VIII
TERMINATION AND AMENDMENT
Section 8.1 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time (with respect to Sections 8.1(b) through 8.1(i), by
written notice by the terminating party to the other party):
(a) by the mutual written consent of ▇▇▇▇▇ and CompCore;
(b) by either ▇▇▇▇▇ or CompCore if the Merger shall not have been
consummated by February 28, 1997 (provided that the right to terminate this
Agreement under this Section 8.1(b) shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the cause of or
resulted in the failure of the Merger to occur on or before such date);
(c) by either ▇▇▇▇▇ or CompCore if a court of competent jurisdiction or
other Governmental Entity shall have issued a nonappealable final order, decree
or ruling or taken any other action, in each case having the effect of
permanently restraining, enjoining or otherwise prohibiting the Merger, except
if the party relying on such order, decree or ruling or other action has not
complied with its obligations under Section 6.8 of this Agreement;
(d) by ▇▇▇▇▇, if the Board of Directors of CompCore shall have withdrawn or
modified its recommendation of this Agreement or the Merger in a manner adverse
to ▇▇▇▇▇ or shall have publicly announced or disclosed to any third party its
intention to do any of the foregoing;
(e) by CompCore, if the Board of Directors of ▇▇▇▇▇ shall have withdrawn or
modified its recommendation of this Agreement or the Merger in a manner adverse
to CompCore or shall have publicly announced or disclosed to any third party its
intention to do any of the foregoing;
(f) by ▇▇▇▇▇ if the shareholders of CompCore shall fail to approve this
Agreement and the Merger at the CompCore Shareholders' Meeting, or by CompCore
if the stockholders of ▇▇▇▇▇ shall fail to
30
approve the issuance of ▇▇▇▇▇ Common Stock pursuant to the Merger at the ▇▇▇▇▇
Stockholders' Meeting;
(g) by ▇▇▇▇▇ or CompCore, if there has been a material breach of any
representation, warranty, covenant or agreement on the part of the other party
set forth in this Agreement, which breach (i) causes the conditions set forth in
Section 7.2(a) or (b) (in the case of termination by ▇▇▇▇▇) or 7.3(a) or (b) (in
the case of termination by CompCore) not to be satisfied and (ii) shall not have
been cured within ten (10) business days following receipt by the breaching
party of written notice of such breach from the other party;
(h) by ▇▇▇▇▇ if the condition specified in Section 7.2(j) is not satisfied;
or
(i) by CompCore if, without CompCore's prior written consent, there has been
a Change of Control of ▇▇▇▇▇ pursuant to a ▇▇▇▇▇ Acquisition Proposal that has
not been approved by a majority of Zoran's Board of Directors.
Section 8.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement as provided in Section 8.1, there shall be no liability or obligation
on the part of ▇▇▇▇▇, CompCore, Sub or their respective officers, directors,
shareholders or Affiliates, except as set forth in Section 8.3 and further
except to the extent that such termination results from the willful breach by a
party of any of its representations, warranties or covenants set forth in this
Agreement; provided that, the provisions of Sections 6.6 (second sentence),
6.15, 6.17 and 8.3 of this Agreement shall remain in full force and effect and
survive any termination of this Agreement.
Section 8.3 TERMINATION FEE. ▇▇▇▇▇ shall pay CompCore a termination fee of
$1,000,000 if: (i) CompCore terminates this Agreement pursuant to Section
8.1(i), (ii) the Change of Control of ▇▇▇▇▇ contemplated by the ▇▇▇▇▇
Acquisition Proposal is consummated within twelve (12) months following such
termination, and (iii) immediately prior to such termination, CompCore was not
in breach of any of its material obligations under this Agreement.
Section 8.4 AMENDMENT. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of Directors,
at any time before or after approval of the matters presented in connection with
the Merger by the shareholders of CompCore and the stockholders of ▇▇▇▇▇, but,
after any such approval, no amendment shall be made which by law requires
further approval by such shareholders or stockholders without such further
approval. This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto.
Section 8.5 EXTENSION; WAIVER. At any time prior to the Effective Time,
the parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (iii) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party.
ARTICLE IX
ESCROW AND INDEMNIFICATION
Section 9.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. If the Merger
occurs, all of the representations and warranties contained in this Agreement
shall survive the Closing Date and shall continue in full force and effect until
the earlier of (i) twelve months following the Effective Time or (ii) the date
on which ▇▇▇▇▇ releases its audited consolidated financial statements for the
year ending December 31, 1997 (the "Termination Date"), except for the
representations and warranties of CompCore set forth in Section 3.9, which shall
survive until the applicable statutes of limitations expire.
31
Section 9.2 INDEMNIFICATION BY COMPCORE SHAREHOLDERS.
(a) Subject to the terms and conditions contained herein, each of the
shareholders of CompCore shall indemnify, defend and hold harmless ▇▇▇▇▇, its
officers, directors, employees and attorneys, all Subsidiaries and Affiliates of
▇▇▇▇▇, and the respective officers, directors, employees and attorneys of such
entities (all such persons and entities being collectively referred to as the
"▇▇▇▇▇ Group") from, against, for and in respect of any and all losses, damages,
costs and expenses (including reasonable legal fees and expenses) which any
member of the ▇▇▇▇▇ Group may sustain or incur which are caused by or arise out
of (i) any inaccuracy in or breach of any of the representations, warranties or
covenants made by CompCore in this Agreement, including the CompCore Disclosure
Schedule or (ii) any CompCore Transaction Expenses in excess of $1,000,000, in
aggregate (collectively, "▇▇▇▇▇ Losses"). References to shareholders of
CompCore, CompCore shareholders or words of similar import in this Article IX
shall be deemed to be references to the persons who were shareholders of
CompCore immediately prior to the Effective Time.
(b) No shareholder of CompCore shall be required to indemnify any member of
the ▇▇▇▇▇ Group for any ▇▇▇▇▇ Losses until the aggregate amount of all ▇▇▇▇▇
Losses under all claims shall exceed $50,000 (the "Floor"); provided, however,
that if the aggregate amount of ▇▇▇▇▇ Losses in respect of such claims exceeds
the Floor, the shareholders of CompCore shall indemnify such member or members
of the ▇▇▇▇▇ Group for all ▇▇▇▇▇ Losses (including the initial $50,000) in
respect of such claims, subject to the further limitations set forth herein; and
provided, further, except as specifically provided in Section 9.2(d), the
maximum aggregate liability of the shareholders of CompCore pursuant to Section
9.2(a) shall in no event exceed the value of the Escrow Shares, as determined
pursuant to the Escrow Agreement.
(c) The obligation of the shareholders of CompCore to indemnify members of
the ▇▇▇▇▇ Group for a ▇▇▇▇▇ Loss under this Article IX is subject to the
condition that the Shareholder Representative shall have received a claim for
such ▇▇▇▇▇ Loss on or before the Termination Date.
(d) The provisions of Section 9.2(b) and (c) above and 9.6 below shall not
limit, in any manner any remedy at law or in equity to which any member of the
▇▇▇▇▇ Group shall be entitled against CompCore or any shareholder of CompCore as
a result of willful fraud or intentional misrepresentation by CompCore, any
shareholder of CompCore or any of their respective representatives or any rights
▇▇▇▇▇ has or may have under any state or federal securities laws.
Section 9.3 PROCEDURES FOR INDEMNIFICATION.
(a) As used in this Article IX, the term "Indemnitee" means the member or
members of the ▇▇▇▇▇ Group seeking indemnification hereunder.
(b) A claim for indemnification hereunder (an "Indemnification Claim") shall
be made by Indemnitee by delivery of a written notice to the Shareholder
Representative and the Escrow Agent requesting indemnification and specifying
the basis on which indemnification is sought in reasonable detail (and shall
include relevant documentation related to the Indemnification Claim), the amount
of the asserted ▇▇▇▇▇ Losses and, in the case of a Third Party Claim (as defined
in Section 9.4), containing (by attachment or otherwise) such other information
as Indemnitee shall have concerning such Third Party Claim.
(c) If the Indemnification Claim involves a Third Party Claim, the
procedures set forth in Section 9.4 hereof shall be observed by Indemnitee and
the Shareholder Representative.
(d) The Escrow Agent will not release any Escrow Shares held in the Escrow
Account pursuant to an Indemnification until such Indemnification Claim has been
resolved in accordance with Section 9.6 below.
Section 9.4 DEFENSE OF THIRD PARTY CLAIMS. Should any claim be made, or
suit or proceeding be instituted against an Indemnitee which, if prosecuted
successfully, would be a matter for which such Indemnitee is entitled to
indemnification under this Article IX (a "Third Party Claim"), the obligations
32
and liabilities of the parties hereunder with respect to such Third Party Claim
shall be subject to the following terms and conditions:
(a) Indemnitee shall give the Shareholder Representative and the Escrow
Agent written notice of any such claim promptly after receipt by Indemnitee of
notice thereof, and the Shareholder Representative may undertake control of the
defense thereof by counsel of its own choosing reasonably acceptable to
Indemnitee. Indemnitee may participate in the defense through its own counsel at
its own expense. The assumption of the defense of any Third Party Claim by the
Shareholder Representative shall be an acknowledgment by the Shareholder
Representative that such Third Party Claim is subject to indemnification under
the provisions of this Article IX. If, however, the Shareholder Representative
fails or refuses to undertake the defense of such Third Party Claim within
fifteen (15) days after written notice of such claim has been delivered to the
Shareholder Representative by Indemnitee, Indemnitee shall have the right to
undertake the defense, compromise and, subject to Section 9.5, settlement of
such Third Party Claim with counsel of its own choosing. In the circumstances
described in the preceding sentence, Indemnitee shall, promptly upon its
assumption of the defense of such Third Party Claim, make an Indemnification
Claim as specified in Section 9.3(b), which shall be deemed an Indemnification
Claim that is not a Third Party Claim for the purposes of the procedures set
forth herein. Failure of Indemnitee to furnish written notice to the Shareholder
Representative or the Escrow Agent of a Third Party Claim shall not release the
shareholders of CompCore from their obligations hereunder, except to the extent
they are prejudiced by such failure.
(b) Indemnitee and the Shareholder Representative shall cooperate with each
other in all reasonable respects in connection with the defense of any Third
Party Claim, including making available records relating to such claim and
furnishing employees of Indemnitee as may be reasonably necessary for the
preparation of the defense of any such Third Party Claim or for testimony as
witness in any proceeding relating to such claim.
Section 9.5 SETTLEMENT OF THIRD PARTY CLAIMS. Unless the Shareholder
Representative has failed to fulfill its obligations under this Article IX, no
settlement by Indemnitee of a Third Party Claim shall be made without the prior
written consent by or on behalf of the Shareholder Representative, which consent
shall not be unreasonably withheld or delayed. If the Shareholder Representative
has assumed the defense of a Third Party Claim as contemplated by Section 9.4,
no settlement of such Third Party Claim may be made by the Shareholder
Representative without the prior written consent by or on behalf of Indemnitee,
which consent shall not be unreasonably withheld or delayed, unless such
settlement includes a complete release of all claims against Indemnitee.
Section 9.6 MANNER OF INDEMNIFICATION.
(a) To provide a fund against which members of the ▇▇▇▇▇ Group may assert
claims of indemnification under this Article IX, the Escrow Shares shall be
withheld and deposited into Escrow pursuant to the Escrow Agreement in
accordance with the provisions of Section 2.3 hereof. The Escrow Shares so
deposited shall be held and distributed in accordance with the Escrow Agreement.
(b) Each claim for indemnification asserted against the shareholders of
CompCore pursuant to this Article IX shall be made only in accordance with the
Escrow Agreement, subject to the provisions of Section 9.2(d) hereof.
Section 9.7 SHAREHOLDER REPRESENTATIVE. For purposes of this Agreement the
shareholders of CompCore, without any further action on the part of any such
shareholder, shall be deemed to have consented to the appointment of ▇▇▇▇▇▇ ▇.
▇▇▇▇▇ as the representative of such shareholders (the "Shareholder
Representative"), as the attorney-in-fact for and on behalf of each such
shareholder, and the taking by the Shareholder Representative of any and all
actions and the making of any decisions required or permitted to be taken by him
under this Agreement, including, without limitation, the exercise of the power
to (i) execute the Escrow Agreement, (ii) authorize delivery to ▇▇▇▇▇ of the
Escrow Shares, or any portion thereof, in satisfaction of Indemnification
Claims, (iii) agree to, negotiate, enter into settlements
33
and compromises of, and demand arbitration and comply with orders of courts and
awards of arbitrators with respect to such Indemnification Claims, (iv) resolve
any Indemnification Claims and (v) take all actions necessary in the judgment of
the Shareholder Representative for the accomplishment of the foregoing and all
of the other terms, conditions and limitations of this Agreement and the Escrow
Agreement. Accordingly, the Shareholder Representative has unlimited authority
and power to act on behalf of each shareholder of CompCore with respect to this
Agreement and the Escrow Agreement and the disposition, settlement or other
handling of all Indemnification Claims, rights or obligations arising from and
taken pursuant to this Agreement. The shareholders of CompCore will be bound by
all actions taken by the Shareholder Representative in connection with this
Agreement, and ▇▇▇▇▇ shall be entitled to rely on any action or decision of the
Shareholder Representative. The Shareholder Representative will incur no
liability with respect to any action taken or suffered by him in reliance upon
any notice, direction, instruction, consent, statement or other document
believed by him to be genuine and to have been signed by the proper person (and
shall have no responsibility to determine the authenticity thereof), nor for any
other action or inaction, except his own willful misconduct, bad faith or gross
negligence. In all questions arising under this Agreement or the Escrow
Agreement, the Shareholder Representative may rely on the advice of counsel, and
for anything done, omitted or suffered in good faith by the Shareholder
Representative based on such advice, the Shareholder Representative will not be
liable to anyone. The Shareholder Representative will not be required to take
any action involving any expense unless the payment of such expense is made or
provided for in a manner satisfactory to him. At any time during the term of the
Escrow Agreement, holders of a majority of the Escrow Shares can appoint a new
Shareholder Representative by written consent by sending notice and a copy of
the written consent appointing such new Shareholder Representative signed by
holders of a majority of the Escrow Shares to ▇▇▇▇▇ and the Escrow Agent. Such
appointment will be effective upon the later of the date indicated in the
consent or the date such consent is received by ▇▇▇▇▇ and the Escrow Agent.
ARTICLE X
GENERAL PROVISIONS
Section 10.1 NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally or by commercial
delivery service, or mailed by registered or certified mail (return receipt
requested) or sent via facsimile (with confirmation of receipt) to the parties
at the following addresses (or at such other address for a party as shall be
specified by like notice):
(a) if to ▇▇▇▇▇ or Sub, to:
▇▇▇▇▇ Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ & Freidenrich
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
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(b) if to CompCore, to
CompCore Multimedia, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Cooley Godward LLP
Five ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
(c) if to the Shareholder Representative, to
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
c/o CompCore Multimedia, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ Godward LLP
Five ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Section 10.2 INTERPRETATION. When a reference is made in this Agreement to
an Article or Section, such reference shall be to an Article or Section of this
Agreement unless otherwise indicated. The words "include," "includes" and
"including" when used herein shall be deemed in each case to be followed by the
words "without limitation." The phrase "made available" in this Agreement shall
mean that the information referred to has been made available if requested by
the party to whom such information is to be made available. The phrases "the
date of this Agreement," "the date hereof," and terms of similar import, unless
the context otherwise requires, shall be deemed to refer to November 27, 1996.
The table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
Section 10.3 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
35
Section 10.4 SEVERABILITY. In the event that any provision of this
Agreement, or the application thereof, becomes or is declared by a court of
competent jurisdiction to be illegal, void or unenforceable, the remainder of
this Agreement will continue in full force and effect and the application of
such provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further agree
to replace such void or unenforceable provision of this Agreement with a valid
and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of such void or unenforceable provision.
Section 10.5 ENTIRE AGREEMENT. Except as otherwise set forth herein, this
Agreement (including the documents and the instruments referred to herein)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, other than the Confidentiality Agreement.
Section 10.6 GOVERNING LAW. This Agreement shall be governed and construed
in accordance with the laws of the State of California without regard to any
applicable conflicts of law.
Section 10.7 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns.
Section 10.8 THIRD PARTY BENEFICIARY. Nothing contained in this Agreement
is intended to confer upon any person other than the parties hereto and their
respective successors and permitted assigns, any rights, remedies or obligations
under, or by reason of this Agreement, except that (i) the persons who are
shareholders of CompCore immediately prior to the Effective Time (and their
successors and assigns) are express intended third party beneficiaries of
Articles I and II, Section 6.8 and Article IX, (ii) the persons who hold
CompCore Options immediately prior to the Effective Time (and their lawful
successors and assigns) are express intended third party beneficiaries of
Section 6.14, (iii) each of the foregoing persons is an express intended third
party beneficiary of Section 6.11 and, to the extent relevant to any of the
foregoing, Article X and as such are entitled to rely on the provisions hereof
as if a party hereto.
IN WITNESS WHEREOF, ▇▇▇▇▇, Sub and CompCore have caused this Agreement to be
signed by their respective officers thereunto duly authorized as of the date
first written above.
COMPCORE MULTIMEDIA, INC. ▇▇▇▇▇ CORPORATION
By: By:
Title: Title:
SEE ACQUISITION CORPORATION
By:
Title:
36
