EXHIBIT E
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SERIES A CUMULATIVE CONVERTIBLE PREFERRED STOCK
PURCHASE AGREEMENT
BETWEEN
INTEL CORPORATION
AND
INTEGRATED CIRCUIT SYSTEMS, INC.
Dated as of December 23, 1999
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TABLE OF CONTENTS
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Page
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SECTION 1 - Authorization and Sale of the Preferred Stock.................. 2
1.1. Sale of the Preferred Stock.............................. 2
SECTION 2 - Closing Date; Delivery....................................... 2
2.1. Closing Date........................................... 2
2.2. Delivery............................................... 2
SECTION 3 - Representations and Warranties of the Company................ 2
3.1. Organization and Qualification; Subsidiaries........... 2
3.2. Capitalization; Subsidiaries........................... 3
3.3. Authority Relative to this Agreement................... 3
3.4. No Violation........................................... 4
3.5. Financial Statements................................... 4
3.6. Compliance with Applicable Laws........................ 5
3.7. Litigation............................................. 5
3.8. Certain Approvals...................................... 5
3.9. Employee Benefit Plans................................. 6
3.10. Taxes.................................................. 7
3.11. Environmental Matters.................................. 8
3.12. Absence of Certain Changes............................. 10
3.13. Brokers................................................ 11
3.14. Material Contracts..................................... 11
3.15. Issuance of Shares..................................... 12
3.16. Intellectual Property.................................. 12
3.17. Related Party Transactions............................. 13
3.18. Labor Relations and Employment......................... 14
3.19. Year 2000.............................................. 15
3.20. Real Estate............................................ 15
(a) Owned Properties................................. 15
(b) Leased Properties................................ 15
(c) Real Property Disclosure......................... 16
(d) No Proceedings................................... 16
(e) Condition and Operation of Improvements.......... 16
(f) Permits.......................................... 16
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3.21. Knowledge Qualification................................ 17
SECTION 4 - Representations and Warranties of Purchaser.................. 17
4.1. Organization........................................... 17
4.2. Authorization.......................................... 17
4.3. Experience............................................. 17
4.4. Investment............................................. 17
4.5. Rule 144............................................... 18
4.6. No Public Market....................................... 18
4.7. Access to Data......................................... 18
4.8. Brokers or Finders..................................... 18
SECTION 5 - Conditions to Closing of Purchaser........................... 18
5.1. Representations and Warranties Correct................. 18
5.2. Covenants.............................................. 19
5.3. Filing of Articles of Incorporation.................... 19
5.4. Ancillary Agreements................................... 19
5.5. Delivery of Preferred Shares........................... 19
5.6. Opinion of Company Counsel............................. 19
5.7. Addendum to Purchase Agreement......................... 19
5.8. Board and Shareholder Approval......................... 19
5.9. Good Standing Certificate.............................. 19
SECTION 6 - Conditions to Closing of Company............................. 20
6.1. Representations and Warranties Correct................. 20
6.2. Filing of Articles of Incorporation.................... 20
6.3. Ancillary Agreements................................... 20
6.4. Delivery of Purchase Price............................. 20
6.5. Addendum to Purchase Agreement......................... 20
6.6. Board and Shareholder Approval......................... 20
SECTION 7 - Affirmative Covenants of the Company......................... 20
7.1. Financial Information.................................. 20
7.2. Shareholder and Commission Reports..................... 21
SECTION 8 - Restrictions on Transferability of
Securities; Registration Rights........................... 22
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Page
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8.1. Restrictions on Transfer............................... 22
8.2. Restrictive Legend..................................... 22
8.3. Notice of Proposed Transfers........................... 22
8.4. Required Registration and Notice....................... 23
SECTION 9 - Miscellaneous................................................ 23
9.1. Governing Law.......................................... 23
9.2. Counterparts; Telecopied Signatures.................... 23
9.3. Termination............................................ 23
9.4. Survival............................................... 23
9.5. Successors and Assigns................................. 24
9.6. Entire Agreement; Amendment............................ 24
9.7. Notices, etc........................................... 24
9.8. Expenses............................................... 25
9.9. Severability........................................... 25
9.10. Titles and Subtitles................................... 25
EXHIBITS
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A. Amended and Restated Articles of Incorporation
B. Amendment No. 1 to Registration Agreement
C. Amendment No. 1 to Stockholders Agreement
D. Confidentiality Agreement
E. Opinion of Company Counsel
DISCLOSURE SCHEDULE
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SERIES A CUMULATIVE CONVERTIBLE PREFERRED STOCK
PURCHASE AGREEMENT
This Series A Cumulative Convertible Preferred Stock Purchase
Agreement ("Agreement") is made this 23rd day of December, 1999, between INTEL
CORPORATION, a Delaware corporation (the "Purchaser"), and INTEGRATED CIRCUIT
SYSTEMS, INC., a Pennsylvania corporation (the "Company").
WHEREAS, The Company and the Purchaser are executing and delivering
this Agreement in reliance upon the exemption from securities registration
afforded by Rule 506 under Regulation D ("Regulation D") as promulgated by the
United States Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933 (the "1933 Act") and Section 4(6) of the 1933 Act;
WHEREAS, The Company's Board of Directors has authorized a new series
of preferred stock, designated as its Series A Cumulative Convertible Preferred
Stock (the "Preferred Stock"), having the rights and preferences set forth in
the Amended and Restated Articles of Incorporation of Integrated Circuit
Systems, Inc. attached hereto as Exhibit "A" (the "Articles of Incorporation"),
and the Board and the Company's shareholders have approved the Articles of
Incorporation;
WHEREAS, The Preferred Stock is convertible into shares of Class A
Common Stock, par value $.01 per share, of the Company and Class L Common Stock,
par value $.01 per share, of the Company, upon the terms and subject to the
conditions set forth in the Articles of Incorporation (the Common Stock into
which the Preferred Stock is convertible being hereinafter referred to as the
"Conversion Shares");
WHEREAS, The Purchaser desires to purchase and the Company desires to
issue and sell, upon the terms and conditions set forth in this Agreement, (i)
an aggregate of Three Million Four Hundred Sixty Six Thousand Six Hundred Eights
(3,366,670) shares of Preferred Stock (the "Preferred Shares"), having a stated
value of Four Dollars ($4.00) per share, for an aggregate purchase price of
Thirteen Million Four Hundred Sixty Six Thousand Six Hundred Eighty Dollars
($13,466,680) (the "Purchase Price");
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering (1) Amendment No.1 to
the Registration Agreement dated May 11, 1999 among the Company, Investment
Stockholders specified therein, Executive Stockholders specified therein and
Other Stockholders specified therein, in the form attached hereto as Exhibit "B"
(the "Amended Registration Agreement"), pursuant to which the Company has agreed
to provide certain registration rights under the 1933 Act and the rules and
regulations promulgated thereunder, and applicable state securities laws; (2)
Amendment No.1 to the Stockholders Agreement dated May 11, 1999 among the ▇▇▇▇
Stockholders, the Bear ▇▇▇▇▇▇▇ Stockholders and the FirstBoston Stockholder, in
the form
attached hereto as Exhibit "C" (the "Amended Stockholders Agreement"); and (3) a
Confidentiality Agreement, in the form attached hereto as Exhibit "D" (the
"Confidentiality Agreement").
NOW, THEREFORE, the parties agree as follows:
SECTION 1
Authorization and Sale of
the Preferred Stock
1.1 Sale of the Preferred Stock. Subject to the terms and conditions
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hereof, the Company will issue and sell to the Purchaser and the Purchaser will
buy from the Company the Preferred Shares for the Purchase Price, payable via
wire transfer of immediately available Federal funds to an account designated in
writing by the Company at least one day prior to the Closing Date.
SECTION 2
Closing Date; Delivery
2.1 Closing Date. The closing of the purchase and sale of the
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Preferred Shares hereunder (the "Closing") shall be held within two business
days after the date of this Agreement or on such other date upon which the
Company and the Purchaser shall agree (the date of the Closing is hereinafter
referred to as the "Closing Date").
2.2 Delivery. At the Closing, the Company will deliver to the
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Purchaser duly executed certificates representing the Preferred Shares being
purchased by Purchaser hereunder and the Purchaser will pay the Purchase Price
in the manner specified in Section 2.1.
SECTION 3
Representations and Warranties of the Company
The Company hereby represents and warrants to the Purchaser as
follows:
3.1 Organization and Qualification; Subsidiaries. The Company and
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each of its Subsidiaries (as hereinafter defined) is a corporation duly
organized, validly existing and in good standing under the laws of its state or
jurisdiction of incorporation and has all requisite corporate power and
corporate authority to own, lease and operate its properties and to carry on
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its business as now being conducted and is in good standing as a foreign
corporation in each jurisdiction where the properties owned, leased or operated,
or the business conducted, by it require such qualification and where failure to
be in good standing or to so qualify would have a Material Adverse Effect on the
Company. The term "Material Adverse Effect on the Company," as used in this
Agreement, means any effect, event, occurrence, change or state of facts that,
individually or aggregated with other effects, events, occurrences, changes or
states of facts, is, or is reasonably likely to be, materially adverse to (i)
the assets, liabilities, business, property, operations, condition as a whole
(financial or otherwise) of the Company and its Subsidiaries taken as a whole,
or (ii) the ability of the Company to perform its obligations under this
Agreement. The Company has heretofore made available to Purchaser a complete and
correct copy of its Articles of Incorporation, as amended, and By-Laws. The
following is a list of every corporation, limited liability company, partnership
or other business organization or entity of which the Company owns either
directly or through its Subsidiaries, (a) more than 50% of (i) the total
combined voting power of all classes of voting securities of such entity, (ii)
the total combined equity interests therein, or (iii) the capital or profit
interests therein, in the case of a partnership; or (b) or otherwise has the
power to vote or direct the voting of sufficient securities to elect a majority
of the board of directors or similar governing body of such entity (the
"Subsidiaries"): ICS Technologies, Inc., ICST, Inc., Integrated Circuit Systems
PTE Ltd. and MicroClock, Inc.
3.2 Capitalization; Subsidiaries. Upon filing the Articles of
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Incorporation with the Pennsylvania Department of State, the authorized capital
stock of the Company will consist of 68,366,670 shares, including 3,366,670
shares of Preferred Stock, 31,000,000 shares of Class A Common Stock, 31,000,000
shares of Class B Common Stock and 4,000,000 shares of Class L Common Stock
("Common Stock"). As of the close of business on November 12, 1999, 15,612,588
shares of Class A Common Stock were issued and outstanding, 5,653,079 shares of
Class B Common Stock were issued and outstanding and 2,362,852 shares of Class L
Common Stock were issued and outstanding. Prior to the date of this Agreement,
the Company had no shares of Preferred Stock authorized or issued and
outstanding. Except for (i) 6,868,000 shares of Class A Common Stock and 137,000
shares of Class L Common Stock reserved for issuance pursuant to outstanding
Options and rights granted under the Stock Plans, there are no existing options,
warrants, calls, subscriptions, or other rights, or other agreements or
commitments, obligating the Company to issue, transfer or sell any shares of
capital stock of the Company or any of its Subsidiaries, other than in favor of
the Company's senior secured lenders. All of the outstanding shares of capital
stock of each of the Company's Subsidiaries have been validly issued and are
fully paid and non-assessable.
3.3 Authority Relative to this Agreement.
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(a) The Company has all necessary corporate power and authority
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. Upon receipt of the Board of Directors and shareholder
approval as contemplated by Section 5.8,
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the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby will have been duly and validly authorized by
the Company Board and, to the extent necessary, the shareholders of the Company,
and no other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the transactions so contemplated. Upon
receipt of the Board of Directors and shareholder approval as contemplated by
Section 5.8, this Agreement has been duly and validly executed and delivered by
the Company, and, assuming this agreement constitutes a valid and binding
obligation of Purchaser, this Agreement will constitute a valid and binding
agreement of the Company, enforceable against the Company in accordance with its
terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws
affecting the rights of creditors generally, general equitable principles
(whether considered in a proceeding in equity or at law) and an implied covenant
of good faith and fair dealing.
(b) Other than in connection with, or in compliance with, the
provisions of the Pennsylvania Business Corporation Law of 1988 ("BCL") with
respect to the transactions contemplated hereby, and federal and state
securities laws, no authorization, consent or approval of, or filing with, any
Governmental Entity (as hereinafter defined) is necessary for the consummation
by the Company of the transactions contemplated by this Agreement. As used in
this Agreement, the term "Governmental Entity" means any government or
subdivision thereof, domestic, foreign or supranational or any administrative,
governmental or regulatory authority, agency, commission, tribunal or body,
domestic, foreign or supranational.
3.4 No Violation. Neither the execution or delivery of this
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Agreement by the Company nor the consummation by the Company of the transactions
contemplated hereby will (i) constitute a breach or violation of any provision
of the Articles of Incorporation or By-Laws of the Company, (ii) violate any
applicable law or other restriction of any governmental body or (iii) constitute
a breach or violation of any obligation, agreement, covenant, consideration or
condition contained in any indenture, mortgage, deed of trust, loan agreement,
note, lease or other contract to which the Company is a party or by which it or
any of its assets is subject.
3.5 Financial Statements. Since January 1, 1995, the Company has
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filed all forms, reports and documents ("SEC Reports") with the SEC required to
be filed by it pursuant to the federal securities laws and the SEC rules and
regulations thereunder. Copies of all such SEC Reports have been made available
to Purchaser by the Company or are publicly available on ▇▇▇▇▇. None of such SEC
Reports (as of their respective filing dates) contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading except as subsequently
disclosed. The audited and unaudited consolidated financial statements of the
Company included in the SEC Reports have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis (except
as otherwise stated in such financial statements, including the related notes)
and
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fairly present the financial position of the Company and its consolidated
Subsidiaries as of the dates thereof and the results of their operations and
changes in financial position for the periods then ended, subject, in the case
of the unaudited financial statements, to year-end audit adjustments. Except as
set forth in the SEC Reports, at the date of the most recent audited financial
statements of the Company included in the SEC Reports, neither the Company nor
any of its Subsidiaries had, and since such date neither the Company nor any of
such Subsidiaries has incurred, any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) which, individually or in
the aggregate, would be required to be disclosed in a balance sheet of the
Company prepared in accordance with generally accepted accounted principles
except liabilities incurred in the ordinary and usual course of business and
consistent with past practice, liabilities incurred in connection with the
transactions contemplated by this Agreement, and liabilities that would not
reasonably be expected to have a Material Adverse Effect on the Company.
3.6 Compliance with Applicable Laws. Except for matters relating to
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Environmental Laws (which matters are covered in Section 3.12 hereof) or matters
relating to real estate (which matters are covered in Section 3.20 hereof), (i)
the Company and its Subsidiaries possess all permits, licenses, certifications
and other governmental or regulatory authorizations and approvals necessary to
enable the Company and its Subsidiaries to carry on their business as presently
conducted except for such failures to have such permits, licenses,
certifications or regulatory authorizations or approvals that would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company, and all such permits are valid, and in full force
and effect and there exists no default thereunder and (ii) the operations of the
Company and its Subsidiaries have been conducted in compliance with all laws,
ordinances, regulations, judgments and decrees of any Governmental Entity
applicable to the Company or such Subsidiary or by which it may be bound, except
for possible violations which would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Company.
3.7 Litigation. Except as set forth in the SEC Reports filed prior to
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the date of this Agreement or on Section 3.7 of the Disclosure Schedule, there
is no suit, claim, action, proceeding or investigation pending or, to the
knowledge of the Company, threatened, at law or in equity, or before any
Governmental Entity, against the Company or any of its Subsidiaries, and the
matters set forth on Section 3.7 of the Disclosure Schedule, individually or in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect on the Company or would reasonably be expected to prevent or materially
delay the consummation of the transactions contemplated by this Agreement.
Except as disclosed in the SEC Reports filed prior to the date of this Agreement
or on Section 3.7 of the Disclosure Schedule, neither the Company nor any of its
Subsidiaries is subject to any outstanding order, writ, injunction or decree.
3.8 Certain Approvals. The Company Board has taken any and all
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necessary and appropriate action to approve the transactions contemplated by
this Agreement.
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3.9 Employee Benefit Plans.
----------------------
(a) Section 3.9 of the Disclosure Schedule includes a list of
all material employee benefit plans and programs providing benefits to any
employee or former employee of the Company and its Subsidiaries sponsored or
maintained by the Company or any of its Subsidiaries or to which the Company or
any of its Subsidiaries contributes or is obligated to contribute ("Plans").
Without limiting the generality of the foregoing, the term "Plans" includes all
employee welfare benefit plans within the meaning of Section 3(1) of the
Employee Retirement Income Security Act of 1974, as amended, and the regulations
thereunder ("ERISA"), and all employee pension benefit plans within the meaning
of Section 3(2) of ERISA.
(b) With respect to each Plan, the Company has made available to
Purchaser a true, correct and complete copy of: (i) all plan documents, benefit
schedules, trust agreements, and insurance contracts and other funding vehicles;
(ii) the most recent Annual Report (Form 5500 Series) and accompanying schedule,
if any; (iii) the current summary plan description, if any; (iv) the most recent
annual financial report, if any; (v) the most recent actuarial report, if any;
and (vi) the most recent determination letter from the United States Internal
Revenue Service (the "IRS"), if any.
(c) The Company and each of its Subsidiaries has complied, and
is now in compliance, in all material respects with all provisions of ERISA, the
Internal Revenue Code of 1986, as amended, including the Treasury Regulations
thereunder (the "Code") and all laws and regulations applicable to the Plans.
With respect to each Plan that is intended to be a "qualified plan" within the
meaning of Section 401(a) of the Code ("Qualified Plans"),(i) such Plan is a
Qualified Plan within the meaning of Section 401(a) of the Code, (ii) such
Qualified Plans are within the remedial amendment period and (iii) the Company
will submit such Qualified Plans to the IRS for a favorable determination letter
within the remedial amendment period.
(d) All contributions required to be made to any Plan by
applicable law or regulation or by any plan document or other contractual
undertaking, and all premiums due or payable with respect to insurance policies
funding any Plan, for any period through the date hereof have been timely made
or paid in full or, to the extent not required to be made or paid on or before
the date hereof, have been fully reflected in the financial statements of the
Company included in the SEC Reports to the extent required under generally
accepted accounting principles.
(e) No Plan is subject to Title IV or Section 302 of ERISA or
Section 412 or 4971 of the Code. Without limiting the generality of the
foregoing, no Plan is a "multiemployer plan" within the meaning of Section
4001(a)(3) of ERISA (a "Multiemployer Plan") or a plan that has two or more
contributing sponsors at least two of whom are not under
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common control, within the meaning of Section 4063 of ERISA and which is subject
to Title IV of ERISA (a "Multiple Employer Plan").
(f) There does not now exist, nor do any circumstances exist
that could result in, any material liability under (i) Title IV of ERISA, (ii)
Section 302 of ERISA, (iii) Sections 412 and 4971 of the Code, (iv) the
continuation coverage requirements of section 601 et seq. of ERISA and Section
4980B of the Code, or (v) corresponding or similar provisions of foreign laws or
regulations, other than a liability that arises solely out of, or relates solely
to, the Plans, that would be a liability of the Company or any of its
Subsidiaries following the Effective Time. Without limiting the generality of
the foregoing, none of the Company, its Subsidiaries nor any ERISA Affiliate of
the Company or any of its Subsidiaries has engaged in any transaction described
in Section 4069 or Section 4204 or 4212 of ERISA. An "ERISA Affiliate" means any
entity, trade or business that is a member of a group described in Section
414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA that includes
the Company or any of its Subsidiaries, or that is a member of the same
"controlled group" as the Company or any of its Subsidiaries, pursuant to
Section 4001(a)(14) of ERISA.
3.10. Taxes.
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(a) The Company and each of its Subsidiaries has timely
filed all federal, state, local and foreign income Tax Returns (as hereinafter
defined) required to be filed by it in all jurisdictions in which it is required
to do so, and all other Tax Returns required to be filed by it, and such Tax
Returns are true and complete, and the Company and each of its Subsidiaries has
paid or caused to be paid all Taxes (as hereinafter defined) shown due on such
Tax Returns and has made adequate provision in the Company's financial
statements for payment of all Taxes that are not payable as of the date hereof
or have not been paid, in respect of all taxable periods or portions thereof
ending on or before the date hereof, except where the failure to so file or pay
or make adequate provision would not, individually or in the aggregate, have a
Material Adverse Effect on the Company. All Tax Returns for the Company in
respect of all years not barred by the statute of limitations have heretofore
been made available by the Company to Purchaser. There are no outstanding
Agreements, waivers or requests for waivers extending the statutory period of
limitation applicable to any Tax Return of the Company or any of its
Subsidiaries. Neither the Company nor any of its Subsidiaries (i) has been a
member of a group filing consolidated returns for federal income tax purposes
(except for the group of which the Company is the common parent), (ii) is a
party to or has any liability pursuant to a Tax sharing or Tax indemnity
agreement or any other agreement of a similar nature that remains in effect or
(iii) has any liability for the Taxes of any person (other than any of the
Company or its Subsidiaries) under Treas. Reg. (S) 1.1502-6 (or any similar
provision of state, local, or foreign law), as a transferee or successor, by
contract, or otherwise. No claim has ever been made by a taxing authority in a
jurisdiction where the Company or any of its Subsidiaries does not file Tax
Returns that such person is or may be subject to taxation by such jurisdiction.
None of the Company or its Subsidiaries will be required to include any item of
income in, or exclude any
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item of deduction from, taxable income for any taxable period (or portion
thereof) ending after the Closing Date as a result of any (i) change in method
of accounting for a taxable period ending on or prior to the Closing Date under
Code (S) 481(c) (or any corresponding or similar provision of state, local or
foreign income Tax law), (ii) "closing agreement" as described in Code (S) 7121
(or any corresponding or similar provision of state, local or foreign income Tax
law) or (iii) deferred intercompany gain or any excess loss account described in
Treasury Regulations under Code Section 1502. None of the Company or its
Subsidiaries is a party to any agreement, contract, arrangement or plan that has
resulted or would result, separately or in the aggregate, in the payment of any
"excess parachute payment" within the meaning of Code (S) 280G (or any
corresponding provision of state, local or foreign income Tax law).
(b) For purposes of this Agreement, the term "Taxes" means all
taxes, charges, fees, levies or other assessments, including, without
limitation, income, gross receipts, excise, property, sales, transfer, license,
payroll, withholding, capital stock and franchise taxes, imposed by the United
States or any state, local or foreign government or subdivision or agency
thereof, including any interest, penalties or additions thereto. For purposes of
this Agreement, the term "Tax Return" means any report, return or other
information or document required to be supplied to a taxing authority in
connection with Taxes.
3.11. Environmental Matters.
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Except for such matters that, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect on the Company
(other than the representation with respect to the matters described in
paragraph (c) below, which is made without any Material Adverse Effect
qualification):
(a) with respect to the Business, the Company and its
Subsidiaries have complied and are in compliance with all Environmental and
Safety Requirements;
(b) without limiting the generality of the foregoing, the
Company and its Subsidiaries have obtained and complied with, and are in
compliance with, all permits, licenses and other authorizations that may be
required pursuant to Environmental and Safety Requirements for the occupation of
their facilities and the operation of the Business and all such permits,
licenses and authorizations may be relied upon for the lawful operation of the
Business and such facilities on and after the Closing without transfer,
reissuance or other governmental action;
(c) neither the Company nor any Subsidiary has received any
written or oral notice, report or other information regarding any actual or
alleged violation of Environmental and Safety Requirements, or any liabilities
or potential liabilities (whether accrued, absolute, contingent, unliquidated or
otherwise), including any investigatory, remedial
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or corrective obligations, relating to the Business or its past or current
facilities and arising under Environmental and Safety Requirements;
(d) none of the following exists at any property or facility
owned or operated by the Company or any Subsidiary in connection with the
Business: (i) underground storage tanks; (ii) asbestos-containing material in
any form or condition; (iii) materials or equipment containing polychlorinated
biphenyls; or (iv) landfills, surface impoundments, or disposal areas;
(e) with respect to the Business, neither the Company nor any
Subsidiary has treated, stored, disposed of, arranged for or permitted the
disposal of, transported, handled, or released any substance, including without
limitation any hazardous substance, or owned or operated any property or
facility (and no such property or facility is contaminated by any such
substance) in a manner that has given or would give rise to liabilities,
including any liability for response costs, corrective action costs, personal
injury, property damage, natural resources damages or attorney fees, or any
investigative, corrective or remedial obligations, pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA") or the Solid Waste Disposal Act, as amended ("SWDA") or any other
Environmental and Safety Requirements;
(f) no facts, events or conditions relating to the past or
present facilities, properties or operations of the Company, any Subsidiary, or
any of their respective affiliates or predecessors the Business will prevent,
hinder or limit continued compliance by the Business with Environmental and
Safety Requirements, give rise to any investigatory, remedial or corrective
obligations pursuant to Environmental and Safety Requirements, or give rise to
any other liabilities (whether accrued, absolute, contingent, unliquidated or
otherwise) pursuant to Environmental and Safety Requirements, including without
limitation any relating to onsite or offsite releases or threatened releases of
hazardous materials, substances or wastes, personal injury, property damage or
natural resources damage;
(g) neither this Agreement nor the consummation of the
transaction that is the subject of this Agreement will result in any obligations
for site investigation or cleanup, or notification to or consent of government
agencies or third parties, pursuant to any of the so-called "transaction-
triggered" or "responsible property transfer" Environmental and Safety
Requirements;
(h) with respect to the Business, neither the Company nor any
Subsidiary has, either expressly or by operation of law, assumed or undertaken
any liability, including without limitation any obligation for corrective or
remedial action, of any other person relating to Environmental and Safety
Requirements; and
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(i) for purposes of this Agreement, "Environmental and Safety
Requirements" shall mean all federal, state, local and foreign statutes,
regulations, ordinances and similar provisions having the force or effect of
law, all judicial and administrative orders and determinations, all contractual
obligations and all common law concerning public health and safety, worker
health and safety, and pollution or protection of the environment, including
without limitation all those relating to the presence, use, production,
generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, release, threatened
release, control, or cleanup of any hazardous materials, substances or wastes,
chemical substances or mixtures, pesticides, pollutants, contaminants, toxic
chemicals, petroleum products or byproducts, asbestos, polychlorinated
biphenyls, noise or radiation, as such of the foregoing are enacted or in
effect, prior to, on, or after the Closing Date.
3.12. Absence of Certain Changes. Except as disclosed in the SEC
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Reports, since July 3, 1999, through the date of this Agreement the Company (a)
has conducted its business only in the ordinary course consistent with past
practice and (b) has not:
(a) incurred any indebtedness for borrowed money, except
borrowings from banks (or other financial institutions) necessary to meet
ordinary course working capital requirements and to finance ordinary course
capital expenditures;
(b) mortgaged, pledged or subjected to any Lien, any asset or
related group of assets having a net book value in excess of $500,000;
(c) sold, leased, assigned or transferred any tangible asset
or related group of assets having a net book value in excess of $500,000 except
for the sale of inventory and obsolete or used machinery and equipment in the
ordinary course of business consistent with past practice;
(d) sold, leased, assigned or transferred any interest in real
estate having a net book value in excess of $500,000;
(e) sold, licensed, assigned or transferred any patents,
trademarks, trade names, copyrights, trade secrets or other intangible assets
having a fair market value in excess of $500,000 individually or in the
aggregate;
(f) waived or relinquished any right or claim or related group
of rights or claims except any such item which the Company believes has a fair
value of less than $500,000 individually or in the aggregate;
(g) (x) issued or sold any of its Common Stock or other equity
securities or any warrants, options or other rights to acquire its Common Stock
or other securities of the Company except for the issuance of Common Stock upon
exercise of Options outstanding
-10-
as of July 3, 1999, or (y) purchased or redeemed or agreed to purchase or redeem
any Common Stock or other equity securities;
(h) made or entered into binding commitment for any capital
expenditures or related group of capital expenditures in excess of $2,500,000;
(i) modified or amended in any material manner or terminated
any Material Contract (as hereinafter defined) other than the termination of any
such contract by its terms;
(j) granted any increase in the base compensation of, or made
any other material change in the employments terms for, any of its directors,
officers, and employees other than normal periodic increases or changes
reflecting or based upon changed responsibilities or duties made in the ordinary
course of business consistent with past practice or changes made pursuant to any
collective bargaining agreements or existing contracts;
(k) adopted, modified, or terminated any bonus, profit-
sharing, incentive, severance or other plan or contract for the benefit of any
of its directors, officers, and employees, other than for changes which do not
materially increase the aggregate cost of such plan or contract or which are
required by law or a collective bargaining agreement; or
(l) declared or paid any dividend or other distribution with
respect to the Common Stock.
3.13. Brokers. None of the Company, any of its Subsidiaries, or any
-------
of their respective officers, directors or employees has employed any broker or
finder or incurred any liability for any brokerage fees, commissions or finder's
fees in connection with the transactions contemplated by this Agreement.
3.14. Material Contracts. Except as set forth on Section 3.14 of the
------------------
Disclosure Schedule or filed as exhibits to the SEC Reports, neither the Company
nor any of its Subsidiaries is a party to any: (i) collective bargaining
agreement or contract with any labor union; (ii) bonus, pension, profit sharing,
retirement or other form of deferred compensation plan; (iii) stock purchase,
stock option, stock appreciation or similar plan; (iv) contract for the
employment of any officer, individual employee or other person on a full-time or
consulting basis involving an annual compensation commitment by the Company or a
Subsidiary in excess of $200,000; (v) agreement or indenture relating to the
borrowing of money in excess of $1,000,000 or to mortgaging, pledging or
otherwise placing a Lien (other than a Permitted Lien (as defined herein)) on
any material portion of the Company's assets; (vi) guaranty of any obligation
for borrowed money in excess of $1,000,000; (vii) lease or agreement under which
it is lessee of, or holds or operates any personal property owned by any other
party, for which the annual rental exceeds $250,000, (viii) contract or group of
related contracts with the same party for the
-11-
purchase of inventories, supplies or services, under which the undelivered
balance of such inventories, supplies or services has a selling price in excess
of $1,000,000; (ix) contract or group of related contracts with the same party
for the sale of products or services under which the undelivered balance of such
products or services has a sales price in excess of $1,000,000; (x) agreement
pertaining to Intellectual Property (as hereinafter defined) including, license
agreements or similar arrangements; or (xi) contract which prohibits or limits
the Company or a Subsidiary from freely engaging in business in the United
States or anywhere else in the world (all such contracts and agreements,
"Material Contracts"). The Company has provided or made available to Purchaser
(i) true and complete copies of all written Material Contracts, or (ii) with
respect to such Material Contracts that have not been reduced to writing, a
written description thereof, each of which is listed on Section 3.14 of the
Disclosure Schedule. Neither the Company nor any of its Subsidiaries is, or has
received any notice or has any knowledge that any other party is, in default in
any respect under any such Material Contract, except for those defaults which
would not reasonably be likely, either individually or in the aggregate, to have
a Material Adverse Effect on the Company; and there has not occurred any event
that, with the lapse of time or the giving of notice or both, would constitute
such a default by the Company or any of its Subsidiaries or, to the knowledge of
the Company, by any other party thereto. For purposes of this Agreement,
"Permitted Liens" shall mean (i) Liens for Taxes (other than those pursuant to
Section 412 of the Code) or governmental assessments, charges or claims, the
payment of which is not yet due, or for Taxes, the validity of which are being
contested in good faith by appropriate proceedings; (ii) statutory Liens
incurred in the ordinary course of business for sums not yet due or being
contested in good faith; (iii) Liens relating to deposits made in the ordinary
course of business; and (iv) Liens which do not individually or in the aggregate
materially interfere with or materially impair the conduct of the Business as it
is currently being conducted, or the value, marketability, use or ownership of
the asset to which it attaches.
3.15. Issuance of Shares. Upon receipt of the Board of Directors and
------------------
shareholder approval as contemplated by Section 5.8, the Preferred Shares and
the Conversion Shares will be duly authorized and, upon issuance in accordance
with the terms of this Agreement or upon conversion of the Preferred Shares, as
applicable, the Preferred Shares and the Conversion Shares will be validly
issued, fully paid and non-assessable, and free from all taxes, liens and
charges with respect to the issue thereof and shall not be subject to preemptive
rights or other similar rights of securityholders of the Company (other than any
such rights created by the Purchaser).
3.16. Intellectual Property.
---------------------
(a) Section 3.16 of the Disclosure Schedule contains a
complete and accurate list of all (i) patented or registered Intellectual
Property (as hereinafter defined) owned or filed by the Company or any
Subsidiary, (ii) pending patent applications and applications for registration
of other Intellectual Property filed by or on behalf of the Company or any
Subsidiary, (iii) material unregistered trade names, corporate names, or
Internet domain names owned or
-12-
used by the Company or any Subsidiary, (iv) material unregistered trademarks,
service marks, copyrights and mask works owned or used by the Company or any
Subsidiary, (v) all computer software owned and/or used by the Company or any of
its Subsidiaries (other than mass-marketed software with a license fee of less
than $10,000) that is material to the Business, and (vi) all material licenses
or similar agreements or arrangements pertaining to Intellectual Property to
which the Company or its Subsidiaries is a party, either as licensee or
licensor. "Intellectual Property" means (i) all patents, patent applications and
patent disclosures; all inventions (whether or not patentable and whether or not
reduced to practice); (ii) all trademarks, service marks, trade names, logos,
slogans, corporate names and Internet domain names, and all the goodwill
associated with each of the foregoing; (iii) all mask works and registrations
and applications for registry thereof; (iv) all registered and unregistered
statutory and common law copyrights; (v) all registrations, applications and
renewals for any of the foregoing; and (vi) all trade secrets, confidential
information, ideas, formulae, compositions, know-how, manufacturing and
production processes and techniques, research information, drawings,
specifications, designs, plans, improvements, proposals, technical and computer
data, documentation and software, financial business and marketing plans,
customer and supplier lists and related information and marketing materials and
all other proprietary rights.
(b) Except as set forth on Section 3.16 of the Disclosure
Schedule, (i) the Company or one of its Subsidiaries owns all right, title and
interest to, or has a valid and enforceable license to use, all Intellectual
Property necessary for the operation of the businesses of the Company and its
Subsidiaries as presently conducted and free and clear of all Liens or other
encumbrances or restrictions; (ii) no claim by any other Person contesting the
validity, enforceability, use or ownership of any of the Intellectual Property
owned or used by the Company or any of its Subsidiaries (the "Company
Intellectual Property") has been made, is currently outstanding or, to the
knowledge of the Company, is threatened (including, without limitation, any
demand or request that the Company or its Subsidiaries license any rights from a
third Person); (iii) neither the Company nor its Subsidiaries have received any
notices of, nor are aware of any facts which indicate a likelihood of, any
infringement or misappropriation by, or conflict with, any third Person with
respect to the Company Intellectual Property; (iv) to the knowledge of the
Company, neither the Company nor its Subsidiaries have infringed,
misappropriated, or otherwise conflicted with any Intellectual Property or other
rights of any third Persons and neither the Company nor its Subsidiaries is
aware of any infringement, misappropriation or conflict which will occur as a
result of the continued operation of the business of the Company or its
Subsidiaries as currently conducted; (v) no loss or expiration of any of the
material Company Intellectual Property is threatened, pending or reasonably
foreseeable; (vi) the transactions contemplated by this Agreement will have no
Material Adverse Effect on the Company on the right, title and interest in and
to the Company Intellectual Property; and (vii) the Company and its Subsidiaries
have taken all necessary and desirable action to maintain and protect the
Company Intellectual Property and will continue to maintain and protect the
Company Intellectual Property to ensure that there is no effect on any of the
Company Intellectual Property that would have a Material Adverse Effect on the
Company.
-13-
3.17. Related Party Transactions. Except as set forth in Section 3.17
--------------------------
of the Disclosure Schedule hereto, and excluding intercompany arrangements
solely between or among the Company and any of its Subsidiaries (or solely
between or among Subsidiaries), no director, officer, partner, "affiliate" or
"associate" (as such terms are defined in Rule 12b-2 under the Securities
Exchange Act of 1934 (the "Exchange Act")) of the Company or any of its
Subsidiaries (i) has borrowed any monies from or has outstanding any
indebtedness or other similar obligations to the Company or any of its
Subsidiaries; (ii) owns any direct or indirect interest of any kind in, or is a
director, officer, employee, partner, affiliate or associate of, or consultant
or lender to, or borrower from, or has the right to participate in the
management, operations or profits of, any person or entity which is (1) a
competitor, supplier, customer, distributor, lessor, tenant, creditor or debtor
of the Company or any of its Subsidiaries, (2) engaged in a business related to
the business of the Company or any of its Subsidiaries, (3) participating in any
transaction to which the Company or any of its Subsidiaries is a party or (iii)
otherwise a party to any contract, arrangement or understanding with the Company
or any of its Subsidiaries.
3.18. Labor Relations and Employment.
------------------------------
(a) Except as set forth on Section 3.18(a) of the Disclosure
Schedule and except for matters which would not (other than in the case of
clauses (i), (ii), (iii),(iv), (vi), (vii) and (ix) of this sentence) be
reasonably likely to result in a Material Adverse Effect on the Company, (i)
there is no labor strike, dispute, slowdown, stoppage or lockout actually
pending, or, to the knowledge of the Company, threatened against the Company or
any of its Subsidiaries, and during the past three years there has not been any
such action; (ii) to the knowledge of the Company, no union claims to represent
the employees of the Company or any of its Subsidiaries; (iii) neither the
Company nor any of its Subsidiaries is a party to or bound by any collective
bargaining or similar agreement with any labor organization, or work rules or
practices agreed to with any labor organization or employee association
applicable to employees of the Company or any of its Subsidiaries; (iv) none of
the employees of the Company or any of its Subsidiaries is represented by any
labor organization and the Company does not have any knowledge of any current
union organizing activities among the employees of the Company or any of its
Subsidiaries, nor does any question concerning representation exist concerning
such employees; (v) the Company and its Subsidiaries are, and have at all times
been, in compliance with all applicable laws respecting employment and
employment practices, terms and conditions of employment, wages, hours of work
and occupational safety and health, and are not engaged in any unfair labor
practices as defined in the National Labor Relations Act or other applicable
law, ordinance or regulation; (vi) there is no unfair labor practice charge or
complaint against the Company or any of its Subsidiaries pending or, to the
knowledge of the Company, threatened before the National Labor Relations Board
or any similar state or foreign agency; (vii) there is no grievance arising out
of any collective bargaining agreement or other grievance procedure; (viii) no
charges with respect to or relating to the Company or any of its Subsidiaries
are pending
-14-
before the Equal Employment Opportunity Commission or any other agency
responsible for the prevention of unlawful employment practices; and (ix)
neither the Company nor any of its Subsidiaries has received notice of the
intent of any federal, state, local or foreign agency responsible for the
enforcement of labor or employment laws to conduct an investigation with respect
to or relating to the Company or any of its Subsidiaries and no such
investigation is in progress.
(b) Within the past five years , there has not been (i) a
"plant closing" (as defined in the Worker Adjustment and Retraining Notification
("WARN") Act) affecting any site of employment or one or more facilities or
operating units within any site of employment or facility of the Company or any
of its Subsidiaries; or (ii) a "mass layoff" (as defined in the WARN Act)
affecting any site of employment or facility of the Company or any of its
Subsidiaries; nor has the Company or any of its Subsidiaries been affected by
any transaction or engaged in layoffs or employment terminations sufficient in
number to trigger application of any similar state or local law. None of the
employees of the Company or any of its Subsidiaries has suffered an "employment
loss" (as defined in the WARN Act) since three months prior to the date of this
Agreement.
3.19. Year 2000. The Company has conducted an assessment, testing and
---------
remediation of Year 2000 compliance issues as described in the SEC Reports.
Based on such assessment, testing and remediation, the Company believes that all
Information Technology used by the Company and its Subsidiaries are, and the
Company has no knowledge, after due inquiry, that the Information Technology
used by the Company's and its Subsidiaries' key suppliers, vendors and customers
are not, reasonably expected on a timely basis to be Year 2000 Compliant (as
defined below), except to the extent that a failure to do so would not
reasonably be expected, individually or in the aggregate, to have Material
Adverse Effect on the Company. "Year 2000 Compliant" means, with respect to the
Company's information technology, the information technology is designed to be
used prior to, during, and after the calendar Year 2000 A.D., and the
information technology used during each such time period will accurately
receive, provide and process date/time data (including, but not limited to,
calculating, comparing and sequencing) from, into and between the twentieth and
twenty-first centuries, including the years 1999 and 2000, and leap year
calculations and will not malfunction, cease to function, or provide invalid or
incorrect results as a result of date/time data. "Information Technology" means
the Company's internal application systems, infrastructure and procedures, and
manufacturing and control processes and other computer applications.
3.20. Real Estate.
-----------
(a) Owned Properties. There is no Real Property owned (the
----------------
"Owned Real Property") by the Company used by the Company in the operation of
the Company's business.
-15-
(b) Leased Properties. Section 3.20 of the Disclosure Schedule
-----------------
sets forth a list of all of the leases and subleases ("Leases") and each leased
and subleased parcel of real property in which the Company has a leasehold and
subleasehold interest (the "Leased Real Property"). Each of the Leases are in
full force and effect, and the Company holds a valid and existing leasehold or
subleasehold interest under each of the Leases described in Schedule 3.20. With
respect to each Lease set forth on Section 3.20 of the Disclosure Schedule: (i)
the Lease is legal, valid, binding, enforceable and in full force and effect;
(ii) the Lease will continue to be legal, valid, binding, enforceable and in
full force and effect on identical terms following the Closing; (iii) neither
the Company, nor, to the knowledge of the Company, any other party to the Lease,
is in breach or default, and no event has occurred which, with notice or lapse
of time, would constitute such a breach or default by the Company or permit
termination, modification or acceleration under the Lease by any other party
thereto; (iv) the Company has not, and, to the knowledge of the Company, no
third party has repudiated any provision of the Lease; (v) there are no
disputes, oral agreements, or forbearance programs in effect as to the Lease;
(vi) the Lease has not been modified in any respect, except to the extent that
such modifications are disclosed by the documents delivered to ICS; (vii) the
Company has not assigned, transferred, conveyed, mortgaged, deeded in trust or
encumbered any interest in the Lease (except for Permitted Liens); and (viii)
the Lease is fully assignable to ICS without the necessity of any consent or the
Company shall obtain all necessary consents prior to the Closing.
(c) Real Property Disclosure. Except as disclosed on Section
------------------------
3.20 of the Disclosure Schedule, there is no Real Property leased or owned by
the Company used in the Company's business. The Owned Real Property and Leased
Real Property is referred to collectively herein as the "Real Property."
(d) No Proceedings. There are no proceedings in eminent domain
--------------
or other similar proceedings pending or, to the knowledge of the Company,
threatened, affecting any portion of the Real Property (except for Permitted
Liens). There exists no writ, injunction, decree, order or judgment outstanding,
nor any litigation, pending or threatened, relating to the ownership, lease,
use, occupancy or operation by any person of the Real Property (except for
Permitted Liens).
(e) Condition and Operation of Improvements. All buildings and
---------------------------------------
other improvements included within the Real Property (the "Improvements") are in
good condition and repair and adequate to operate such facilities as currently
used, and there are no facts or conditions affecting any of the Improvements
which would, individually or in the aggregate, interfere with the use, occupancy
or operation thereof in a manner that would reasonably be expected to have a
Material Adverse Effect on the Company as currently used, occupied or operated
or intended to be used, occupied or operated. No Improvement or portion thereof
is dependent for its access, operation or utility on any land, building or other
improvement not included in the Real Property.
-16-
(f) Permits. All required or appropriate certificates of
-------
occupancy, permits, licenses, franchises, approvals and authorizations
(collectively, the "Real Property Permits") of all governmental authorities
having jurisdiction over the Real Property, the absence of which could have a
Material Adverse Effect on the Company, have been issued to the Company to
enable the Real Property to be lawfully occupied and used for all of the
purposes for which it is currently occupied and used have been lawfully issued
and are, as of the date hereof, in full force and effect. The Company has
delivered complete and correct copies of the Real Property Permits to Purchaser.
The Company has not received any notice from any governmental authority having
jurisdiction over the Real Property threatening a suspension, revocation,
modification or cancellation of any Real Property Permit and, to the knowledge
of the Company, there is no basis for the issuance of any such notice or the
taking of any such action.
3.21. Knowledge Qualification. Whenever a representation or warranty
-----------------------
contained herein is based on the knowledge of the Company, such representation
and warranty is made based on the actual knowledge of the officers or directors
of the Company and on the knowledge that the officers or directors of the
Company would have if it had conducted a diligent inquiry into the subject
matter of the representation or warranty.
SECTION 4
Representations and Warranties of Purchaser
Purchaser hereby represents and warrants to the Company as follows:
4.1. Organization. Purchaser is a corporation duly organized,
------------
validly existing and in good standing under the laws of its jurisdiction of
organization and has the power and authority to enter into the Transaction
Documents and to carry out the transactions contemplated thereby.
4.2. Authorization. It has all necessary corporate power and
-------------
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by its Board and no other corporate proceedings on the part
of it are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly executed
and delivered by Purchaser, and, assuming this agreement constitutes a valid and
binding obligation of the Company, this Agreement constitutes a valid and
binding agreement of Purchaser, enforceable against it in accordance with its
terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws
affecting
-17-
the rights of creditors generally, general equitable principles
(whether considered in a proceeding in equity or at law) and an implied covenant
of good faith and fair dealing.
4.3 Experience. It has experience in evaluating and investing in
----------
private placement transactions of securities in companies similar to the Company
so that it is capable of evaluating the merits and risks of its investment in
the Company and has the capacity to protect its own interests.
4.4 Investment. It is acquiring the Preferred Stock for investment
----------
for its own account, not as nominee or agent, and not with the view to, or for
resale in connection with, any distribution thereof. It understands that the
Preferred Stock has not been registered under the Securities Act by reason of a
specific exemption from the registration provisions of the Securities Act which
depends upon, among other things, the bona fide nature of the investment intent
and the accuracy of such Purchaser's representations as expressed herein.
4.5 Rule 144. It acknowledges that the Preferred Stock must be held
--------
indefinitely unless subsequently registered under the Securities Act or an
exemption from such registration is available. It is aware of the provisions of
Rule 144 promulgated under the Securities Act which permit limited resale of
securities purchased in a private placement subject to the satisfaction of
certain conditions, including (except as otherwise provided for in Rule 144(k)),
among other things, the existence of a public market for the securities, the
availability of certain current public information about the Company, the resale
occurring not less than two years after a party has purchased and paid for the
security to be sold, the sale being through a "broker's transaction" or in
transactions directly with a "market maker" and the amount of securities being
sold during any three-month period not exceeding specified limitations.
4.6 No Public Market. It understands that no public market now
----------------
exists for any of the securities issued by the Company and that it is uncertain
whether a public market will ever exist.
4.7 Access to Data. It has had an opportunity to discuss the
--------------
Company's business, management and financial affairs with the Company's
management and has had the opportunity to inspect the Company's facilities. It
understands that such discussions, as well as any written information issued by
the Company, were intended to describe the aspects of the Company's business and
prospects which it believes to be material but were not necessarily a thorough
or exhaustive description. Nothing contained in this Section 4.7 shall be
construed as a limitation of any of the representations and warranties contained
in Section 3.
4.8 Brokers or Finders. The Purchaser has not incurred, and will not
------------------
incur, directly or indirectly, as a result of any action taken by the Purchaser,
any liability for brokerage or finders' fees or agents' commissions or any
similar charges in connection with the Transaction Documents.
-18-
SECTION 5
Conditions to Closing of Purchaser
The obligation of the Purchaser at the Closing to purchase the
Preferred Stock is, at the option of the Purchaser, subject to the fulfillment
of the following conditions:
5.1 Representations and Warranties Correct. The representations and
--------------------------------------
warranties made by the Company in Section 3 hereof shall be true and correct
when made, and shall be true and correct as of the Closing Date. The Purchaser
shall have received a certificate signed on behalf of the Company, by an
authorized officer of the Company, to the effect set forth in this paragraph.
5.2 Covenants. All covenants, agreements and conditions contained in
---------
the Transaction Documents to be performed or complied with by the Company on or
prior to the Closing Date shall have been performed or complied with. The
Purchaser shall have received a certificate signed on behalf of the Company, by
an authorized officer of the Company, to the effect set forth in this paragraph.
5.3 Filing of Articles of Incorporation. The Articles of
-----------------------------------
Incorporation shall have been filed with the Secretary of the Commonwealth of
Pennsylvania.
5.4 Ancillary Agreements. The Company and the required number of
--------------------
signatories to the Registration Agreement shall have executed and delivered to
the Purchaser the Amended Registration Agreement. The Company and the required
number of signatories to the Stockholders Agreement shall have executed and
delivered to the Purchaser the Amended Stockholders Agreement. The Company shall
have executed and delivered to the Purchaser the Confidentiality Agreement.
5.5 Delivery of Preferred Shares. The Company shall have delivered
----------------------------
to the Purchaser duly executed certificates representing such number of
Preferred Shares as being purchased by Purchaser hereunder.
5.6 Opinion of Company Counsel. The Company shall have delivered to
--------------------------
the Purchaser an opinion of its counsel containing the opinions set forth in
Exhibit E attached hereto, and otherwise in a form reasonably acceptable to the
---------
Purchaser.
5.7 Addendum to Purchase Agreement. That certain Addendum "I"
------------------------------
Supplemental Provisions to Purchase Agreement - Goods (the "Purchase Addendum")
between the Company and the Purchaser shall have been executed and delivered by
the Company to the
-19-
Purchaser.
5.8 Board and Shareholder Approval. This Agreement, the Articles of
------------------------------
Incorporation, the Amended Registration Agreement, the Amended Shareholders
Agreement and the Purchase Addendum shall have been approved by the Company's
Board of Directors and the Articles of Amendment shall have been approved by the
Company's shareholders, in each case in accordance with applicable provisions of
the BCL, the Articles of Incorporation, the Company's By-laws and applicable
agreements.
5.9 Good Standing Certificate. The Purchaser shall have received a
-------------------------
good standing certificate with respect to the Company from the Secretary of the
Commonwealth of Pennsylvania.
SECTION 6
Conditions to Closing of Company
The Company's obligation to sell and issue the Preferred Stock at the
Closing Date is, at the option of the Company, subject to the fulfillment as of
the Closing Date of the following conditions:
6.1 Representations and Warranties Correct. The representations and
--------------------------------------
warranties made by the Purchaser in Section 4 hereof shall be true and correct
when made, and shall be true and correct as of the Closing Date.
6.2 Filing of Articles of Incorporation. The Articles of
-----------------------------------
Incorporation shall have been filed with the Pennsylvania Department of State.
6.3 Ancillary Agreements. The Purchaser shall have executed and
--------------------
delivered to the Company the Amended Stockholders Agreement, the Amended
Registration Agreement and the Confidentiality Agreement.
6.4 Delivery of Purchase Price. The Purchaser shall have delivered to
--------------------------
the Company funds in the total amount of Thirteen Million Four Hundred Sixty
Six Thousand Six Hundred Eighty Dollars ($13,466,680), in payment of the
Purchase Price, which may be evidenced by a check in such amount payable to the
Company or by wire transfer of such amount to the Company's bank account.
6.5 Addendum to Purchase Agreement. That Purchase Addendum shall
------------------------------
have been executed and delivered by the Purchaser to the Company.
-20-
6.6 Board and Shareholder Approval. This Agreement, the Articles of
------------------------------
Incorporation, the Amended Registration Agreement, the Amended Shareholders
Agreement and the Purchase Addendum shall have been approved by the Company's
Board of Directors and the Articles of Amendment shall have been approved by the
Company's shareholders, in each case in accordance with applicable provisions of
the BCL, the Articles of Incorporation, the Company's By-laws and applicable
agreements.
SECTION 7
Affirmative Covenants of the Company
The Company hereby covenants and agrees as follows:
7.1 Financial Information. At any time that the Company is not
---------------------
subject to the periodic reporting requirements of Section 13(a) or 15(d) of the
Exchange Act, as long as Purchaser retains at least 25% of the Preferred Stock
purchased hereunder (or a corresponding amount of Conversion Shares), the
Company will mail to the Purchaser:
(a) Within 90 days after the end of each fiscal year, a
consolidated balance sheet of the Company and its subsidiaries, if any, as of
the end of such fiscal year, and consolidated statements of income and
consolidated statements of changes in financial position of the Company and its
subsidiaries, if any, for such year, prepared in accordance with generally
accepted accounting principles, consistently applied, in reasonable detail and
audited by independent public accountants selected by the Company.
(b) Within 45 days after the end of each fiscal quarter, an
unaudited consolidated balance sheet of the Company and its subsidiaries, if
any, as of the end of such fiscal quarter, and unaudited consolidated statements
of income and consolidated statements of changes in financial position of the
Company and its subsidiaries, if any, for such quarter, prepared in accordance
with generally accepted accounting principles, consistently applied (not
including any accompanying notes), subject to changes resulting from year-end
audit adjustments.
(c) Within 30 days after the end of each month, an unaudited
consolidated balance sheet of the Company and its subsidiaries, if any, as of
the end of each such month, and unaudited consolidated statements of operations
of the Company and consolidated statements of changes in financial position, for
such month, prepared in accordance with generally accepted accounting
principles, consistently applied (not including any accompanying notes), subject
to changes resulting from year-end audit adjustments.
(d) Within 30 days after the end of each fiscal year, an annual
budget
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for the ensuing fiscal year.
7.2 Shareholder and Commission Reports. At any time that the Company
----------------------------------
is subject to the periodic reporting requirements of Section 13(a) or 15(d) of
the Exchange Act, as long as Purchaser retains at least 25% of the Preferred
Stock purchased hereunder (or a corresponding amount of Conversion Shares), the
Company will deliver to the Purchaser copies of annual reports and copies of all
other documents, reports and information furnished by the Company to its
shareholders or filed with or supplied to any securities exchange or pursuant to
the requirements of such exchange or, as the case may be, the SEC pursuant to
the 1933 Act or the Exchange Act.
SECTION 8
Restrictions on Transferability of Securities; Registration Rights
8.1 Restrictions on Transfer. The Preferred Stock and the Conversion
------------------------
Shares will be subject to the restrictions on transfers set forth in Section 8
hereof. The Purchaser will cause any proposed transferee of the securities held
by the Purchaser to agree to take and hold such securities subject to the
provisions and upon the conditions specified in this Section 8.
8.2 Restrictive Legend. The Preferred Stock shall be (unless
------------------
otherwise permitted by the provisions of Section 8.3 below) stamped or otherwise
imprinted with a legend in substantially the following form (in addition to any
legend required under applicable state securities laws):
THIS PREFERRED STOCK AND THE SHARES INTO WHICH IT MAY BE CONVERTED
HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT.
COPIES OF THE PURCHASE AGREEMENT DATED DECEMBER 23, 1999, COVERING THE
PURCHASE OF THESE SECURITIES AND RESTRICTING THEIR TRANSFER MAY BE
OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF
THIS CERTIFICATE TO THE SECRETARY OF THE CORPORATION AT THE PRINCIPAL
OFFICE OF THE CORPORATION.
8.3 Notice of Proposed Transfers. The Purchaser by its acceptance of
----------------------------
the Preferred Stock agrees to comply in all respects with the provisions of this
Section 8.3. Prior to
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any proposed transfer of the Preferred Stock or Conversion Shares, unless there
is in effect a registration statement under the Securities Act covering the
proposed transfer, the Purchaser shall give written notice to the Company of its
intention to effect such transfer. Such notice shall describe the manner and
circumstances of the proposed transfer in sufficient detail to evidence
compliance with securities laws, and shall be accompanied (except in
transactions in compliance with Rule 144) by either (i) a written opinion of the
in-house counsel of the Purchaser or other legal counsel who shall be reasonably
satisfactory to the Company addressed to the Company and reasonably satisfactory
in form and substance to the Company's counsel, to the effect that the proposed
transfer of the Preferred Stock or the Conversion Shares may be effected without
registration under the Securities Act, or (ii) a "no action" letter from the SEC
to the effect that the distribution of such securities without registration will
not result in a recommendation by the staff of the SEC that action be taken with
respect thereto, whereupon the Purchaser shall be entitled to transfer such
Preferred Stock or the Conversion Shares in accordance with the terms of the
notice delivered by the Purchaser to the Company. The certificate evidencing the
Preferred Stock or the Conversion Shares, as applicable, transferred as above
provided shall bear the appropriate restrictive legend set forth in Section 8.2
above, except that such certificate shall not bear such restrictive legend if in
the opinion of counsel for the Company such legend is not required in order to
establish compliance with any provisions of the Securities Act.
8.4 Required Registration and Notice. The holder of the Preferred
--------------------------------
Stock and the Conversion Shares (the Preferred Stock and the Conversion Shares
being collectively referred to as the "Registrable Shares") will be entitled to
the registration rights set forth in the Amended Registration Agreement.
SECTION 9
Miscellaneous
9.1 Governing Law. This Agreement shall be governed in all respects
-------------
by the internal laws of the State of Pennsylvania.
9.2 Counterparts; Telecopied Signatures. This Agreement and any of
-----------------------------------
the Transaction Documents may be executed in counterparts, each of which shall
be deemed an original, and all of which together shall constitute one
instrument. The execution signatures of any party pursuant to this Agreement
and any of the Transaction Documents may be delivered by telecopy, and any
execution signature so delivered shall have the same legal force and effect as
the delivery of an ink execution signature. At the request of any other party,
each party delivering execution signatures via telecopier will promptly provide
original ink execution signatures following the date hereof.
9.3 Termination. This Agreement may be terminated and the
-----------
transactions
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contemplated hereby may be abandoned by either party upon written notice to the
other party if approval of this Agreement and the transactions contemplated
thereby by the Board of Directors or shareholders of the Company is not obtained
by January 31, 1999. In the event of the termination of this Agreement pursuant
to this Section 9.3, this Agreement shall forthwith become void and have no
effect, without any liability on the part of any party or its directors,
officers or shareholders, other than the provisions of Section 9.8 hereof, which
shall survive any such termination. Nothing contained in this Section 9.3 shall
relieve any party from liability for any breach of any covenant of this
Agreement or any breach of warranty or any misrepresentation.
9.4 Survival. The representations, warranties, covenants and
--------
agreements made herein shall survive any investigation made by the Purchaser and
the Closing for a period of one year following the Closing Date, except for
Article VII hereof, which shall survive the Closing and shall expire only in
accordance with its terms.
9.5 Successors and Assigns. Except as otherwise provided herein, the
----------------------
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto,
provided, however, that the rights of the Purchaser to purchase the Preferred
Stock shall not be assignable without the consent of the Company, which consent
shall not be unreasonably withheld; and provided further that the Company may
not assign its rights hereunder.
9.6 Entire Agreement; Amendment. This Agreement and the other
---------------------------
documents delivered pursuant hereto at the Closing constitute the full and
entire understanding and agreement between the parties with regard to the
subjects hereof and thereof, and no party shall be liable or bound to any other
party in any manner by any warranties, representations or covenants except as
specifically set forth herein or therein. Except as expressly provided herein,
neither this Agreement and the other documents delivered pursuant hereto at the
Closing, nor any term hereof or thereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the party against whom
enforcement of any such amendment, waiver, discharge or termination is sought.
9.7 Notices, etc. All notices and other communications required or
-------------
permitted hereunder shall be in writing and shall be delivered personally, by
overnight courier, or by messenger, addressed to the other party at the address
set forth below, or at such other address as such party shall furnish to the
other in writing in accordance with this Section.
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If to Company: Integrated Circuit Systems, Inc.
23435 Boulevard of the Generals
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
3000 Two ▇▇▇▇▇ Square
▇▇/▇▇/ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
If to Purchaser: Intel Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇, ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Each such notice or other communication shall for all purposes of this
Agreement be treated as effective or having been given upon actual receipt of
delivery or refusal of delivery by the intended recipient.
9.8 Expenses. The Company and the Purchaser shall each bear its own
--------
expenses incurred on its behalf with respect to this Agreement and the
transactions contemplated hereby; except that the Company will reimburse the
Purchaser all out-of-pocket fees and expenses, including attorneys' and
accountants' fees, whether incurred prior to, on or after the date hereof, in
connection with the consummation of all transactions contemplated by this
Agreement, up to a maximum of all such fees and expenses of $20,000.
9.9 Severability. In the event that any provision of this Agreement
------------
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision.
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9.10 Titles and Subtitles. The titles and subtitles used in this
--------------------
Agreement are used for convenience only and are not considered in construing or
interpreting this Agreement.
IN WITNESS WHEREOF, the parties have duly executed this Agreement
under seal as of the day and year first above mentioned.
INTEGRATED CIRCUIT SYSTEMS, INC.
BY: /S/ ▇▇▇▇ ▇. ▇▇▇
------------------------------------
Title: President and cheif executive
officer
INTEL CORPORATION
BY: /S/ Arvind Sodhni
-------------------------------------
Title: Vice President and Treasurer
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