SERIES C PREFERRED STOCK PURCHASE AGREEMENT
This Series C Preferred Stock Purchase Agreement (the "Agreement") dated
as of August 14, 1998, is entered into by and among GateField Corporation, a
Delaware corporation with offices at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Company"), and Actel Corporation, a California
corporation with offices at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇ (the "Purchaser"), in connection with the purchase of 300,000
shares of the Company's Series C Convertible Preferred Stock, par value $.10
(the "Preferred Stock"), initially convertible into up to 2,000,000 shares of
the Company's common stock, $.10 par value (the "Common Stock"), to be sold
to the Purchaser at the Closing (as defined below). The Certificate of
Designations setting forth the rights, restrictions, privileges and
preferences of the Preferred Stock (the "Certificate of Designations") is
attached hereto as Exhibit A. The solicitation of this Agreement and the
offer and sale of the Preferred Stock are being made in reliance upon the
provisions of Regulation D ("Regulation D") promulgated by the Securities and
Exchange Commission ("SEC") under the United States Securities Act of 1933,
as amended (the "Securities Act") or upon the provisions of Section 4(2) of
the Securities Act. The Preferred Stock and the Common Stock are sometimes
collectively referred to herein as the "Shares".
In consideration of the mutual promises, representations, warranties and
conditions set forth herein, and intending to be legally bound hereby, the
Company and the Purchaser agree as follows:
1. PURCHASE AND SALE OF PREFERRED STOCK; CLOSING CONDITIONS
1.1 PURCHASE AND SALE OF PREFERRED STOCK.
(a) PURCHASE OF PREFERRED STOCK. The Purchaser hereby agrees
to purchase and the Company agrees to sell to the Purchaser 300,000 shares of
Preferred Stock at a price of $10.00 per share for the aggregate purchase
price of $3,000,000 (the "Purchase Price"). The closing of the purchase of
such Preferred Stock shall take place at the "Closing," subject to the
satisfaction (or waiver) of the conditions thereto set forth in Sections 1.2
and 1.3 below:
(b) PAYMENT AND DELIVERY OF STOCK CERTIFICATES. On the
Closing Date (as defined below), (i) the Purchaser shall pay the Purchase
Price by wire transfer of immediately available funds to the Company, in
accordance with the Company's written instructions, against delivery of duly
executed stock certificates which the Purchaser is then purchasing and (ii)
the Company shall deliver to the Purchaser such stock certificates against
delivery of the Purchase Price.
(c) CLOSING DATES. Subject to the satisfaction (or waiver)
of the conditions thereto set forth in Sections 1.2 and 1.3 below, the date
and time of the issuance and sale of the Preferred Stock pursuant to this
Agreement (the "Closing Date") shall be 9:00 a.m. Pacific Daylight Time on
August 14, 1998 or at such time as the parties may mutually agree upon.
1.2 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY TO ISSUE
AND SELL THE PREFERRED STOCK. The obligation hereunder of the Company to
issue and sell the Preferred Stock to the Purchaser at the Closing is subject
to the satisfaction, at or before the Closing, of each of the conditions set
forth below. These conditions are for the Company's sole benefit and may be
waived by the Company at any time in its sole discretion.
(a) ACCURACY OF THE PURCHASER'S REPRESENTATIONS AND
WARRANTIES. The representations and warranties of the Purchaser contained in
this Agreement shall be true and correct as of the date when made and as of
the Closing Date as though made at such time.
(b) PERFORMANCE BY THE PURCHASER. The Purchaser shall have
performed, satisfied and complied in all respects with all covenants,
agreements and conditions required by this Agreement to be performed,
satisfied or complied with by the Purchaser at or prior to the Closing.
(c) NO INJUNCTION. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction which prohibits or adversely affects any of the transactions
contemplated by this Agreement, and no proceeding shall have been commenced
which may have the effect of prohibiting or adversely affecting any of the
transactions contemplated by this Agreement.
(d) DOCUMENTS. The Purchaser shall have delivered to the
Company:
(i) the Asset Purchase Agreement of even date
herewith between the Company and the Purchaser (the "Asset Purchase
Agreement"); and
(ii) the Product Marketing Agreement of even date
herewith between the Company and the Purchaser (the "Product Marketing
Agreement").
1.3 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE PURCHASER TO
ACQUIRE THE PREFERRED STOCK. The obligation of the Purchaser hereunder to
acquire and pay for the Preferred Stock at the Closing is subject to the
satisfaction, at or before the Closing Date, of each of the following
conditions. Each of these conditions is for the Purchaser's sole benefit and
may be waived by the Purchaser at any time in its sole discretion.
(a) ACCURACY OF THE COMPANY'S REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Company contained in this Agreement
shall be true and correct as of the date when made and as of the Closing Date
as though made at such time.
(b) PERFORMANCE BY THE COMPANY. The Company shall have
performed, satisfied and complied in all respects with all covenants,
agreements and conditions
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required by this Agreement to be performed, satisfied or complied with by the
Company at or prior to the Closing.
(c) NO INJUNCTION. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction which prohibits or adversely effects any of the transactions
contemplated by this Agreement, and no proceeding shall have been commenced
which may have the effect of prohibiting or adversely affecting any of the
transactions contemplated by this Agreement.
(d) THE LEGAL OPINION. The Company shall have delivered to
the Purchaser the opinion of ▇▇▇▇▇▇ Godward LLP, independent counsel to the
Company, with respect to the matters set forth in Exhibit B attached hereto,
dated as of the Closing Date.
(e) OFFICER'S CERTIFICATE. The Company shall have delivered
to the Purchaser a certificate in such form and substance as shall be
reasonably satisfactory to the Purchaser, executed by an executive officer of
the Company as of the Closing Date, to the effect that all of the conditions
to the Closing shall have been satisfied.
(f) REGISTRATION RIGHTS AGREEMENT. The Company and the
Purchaser shall have executed and delivered the Registration Rights Agreement
(the "Registration Rights Agreement") attached hereto as Exhibit C.
(g) CERTIFICATE AND DOCUMENTS. The Company shall have
delivered to the Purchaser:
(i) the Certificate of Incorporation of the
Company, as amended and in effect as of the date of the Closing including
the Certificate of Designations, certified by the Secretary of State of the
State of Delaware;
(ii) certificates, as of the most recent practicable
dates, as to the corporate good standing of the Company issued by the
Secretary of State of the State of Delaware and the Secretary of State of the
State of California;
(iii) the By-laws of the Company, as amended and in
effect as of the date of the Closing, certified by the Secretary of the
Company;
(iv) resolutions of the Board of Directors of the
Company authorizing and approving all matters in connection with this
Agreement and the transactions contemplated hereby, certified by the
Secretary of the Company as of the Closing Date;
(v) the Asset Purchase Agreement; and
(vi) the Product Marketing Agreement.
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(h) OTHER MATTERS. All corporate and other proceedings in
connection with the transactions contemplated by this Agreement and all
documents and instruments incident to such transactions shall be reasonably
satisfactory in substance and form to the Purchaser and its counsel, and the
Purchaser and its counsel shall have received all such counterpart originals
or certified or other copies of such documents as they may reasonably request.
2. REPRESENTATIONS AND WARRANTIES OF PURCHASER
The Purchaser represents and warrants to the Company that:
2.1 NO GOVERNMENT RECOMMENDATION OR APPROVAL. The Purchaser
understands that no United States federal or state agency, or similar agency
of any other country, has passed upon or made any recommendation or
endorsement of the Company or the offering of the Preferred Stock.
2.2 INTENT. The Purchaser is purchasing the Preferred Stock for
its own account and not with a view towards distribution and the Purchaser
has no present arrangement (whether or not legally binding) at any time to
sell the Shares to or through any person or entity; provided, however, that
by making the representations herein, the Purchaser does not agree to hold
the Shares for any minimum or other specific term and reserves the right to
dispose of the Shares at any time in accordance with Federal and state
securities laws applicable to such disposition. The Purchaser understands
that the Shares must be held indefinitely unless such Shares are subsequently
registered under the Securities Act or an exemption from registration is
available. The Purchaser has been advised or is aware of the provisions of
Rule 144 promulgated under the Securities Act.
2.3 SOPHISTICATED INVESTOR. The Purchaser is a sophisticated
investor (as described in Rule 506(b)(2)(ii) of Regulation D) and an
accredited investor (as defined in Rule 501 of Regulation D), and the
Purchaser has such experience in business and financial matters that it is
capable of evaluating the merits and risks of an investment in the Preferred
Stock. The Purchaser acknowledges that the investment in the Preferred Stock
is speculative and involves a high degree of risk.
2.4 INDEPENDENT INVESTIGATION. The Purchaser, in making its
decision to purchase the Preferred Stock subscribed for hereunder, has relied
upon an independent investigation made by it and/or its representatives and
has not relied on any oral or written representations or assurances from the
Company or any representative or agent of the Company, other than as set
forth in this Agreement and in the public filings of the Company. Prior to
the date hereof, the Purchaser has been furnished with and has reviewed the
Company's latest proxy statement and Annual Report on Form 10-K sent to the
Company's stockholders and all documents filed by the Company since March 31,
1998 pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), (such documents are
collectively referred to in this Agreement as the "Exchange Act Reports").
The Purchaser has had a reasonable opportunity to ask questions of and
receive answers from the Company concerning the Company and the offering of
securities and has received satisfactory answers to all inquiries it has
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made with respect to the Company and the Shares. The Purchaser acknowledges
the price and terms of the Shares offered hereby have been determined by
negotiation based, in part, on the market price for the Common Stock, and
does not necessarily bear any relationship to the assets, book value or
potential performance of the Company or any other recognized criteria of
value.
2.5 AUTHORITY. This Agreement has been duly authorized and
validly executed, and delivered by the Purchaser and is a valid and binding
agreement enforceable in accordance with its terms, subject to general
principles of equity and to bankruptcy or other laws affecting the
enforcement of creditors' rights generally.
2.6 NO LEGAL ADVICE FROM COMPANY. The Purchaser acknowledges that
it has had the opportunity to review this Agreement and the transactions
contemplated by this Agreement with his or its own legal counsel and tax
advisors. Except for any statements or representations of the Company made
in this Agreement and in the Exchange Act Reports, the Purchaser is relying
solely on such counsel and advisors and not on any statements or
representations of the Company or any of its representative or agents for
legal, tax or investment advice with respect to this investment, the
transactions contemplated by this Agreement or the securities laws of any
jurisdiction.
2.7 NO BROKERS. The Purchaser has taken no action which would
give rise to any claim by any person for brokerage commission, finder's fees
or similar payments by the Company relating to this Agreement or the
transactions contemplated hereby.
2.8 NOT AN AFFILIATE. Prior to the Closing, the Purchaser has not
been an officer, director or "affiliate" (as that term is defined in Rule 405
of the Securities Act) of the Company.
2.9 RELIANCE ON REPRESENTATIONS AND WARRANTIES. The Purchaser
understands that the Preferred Stock is being offered and sold to it in
reliance on specific provisions of United States federal and state securities
laws and that the Company is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and understandings
of the Purchaser set forth in this Agreement in order to determine the
applicability of such provisions.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Subject to and except as disclosed by the Company in APPENDIX A
annexed hereto (the "Disclosure Schedule"), the Company represents and
warrants to the Purchaser that:
3.1 COMPANY STATUS. The Company has registered the Common Stock
pursuant to Section 12(b) or 12(g) of the Exchange Act and is in full
compliance with all reporting requirements of the Exchange Act.
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3.2 CURRENT PUBLIC INFORMATION. The Exchange Act Reports include all
the filings made by the Company since March 31, 1998 pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act.
3.3 NO DIRECTED SELLING EFFORTS OR GENERAL SOLICITATION IN REGARD
TO THIS TRANSACTION. Neither the Company nor any of its affiliates nor any
distributor or any person acting on its or their behalf has conducted any
"directed selling efforts" with respect to the Preferred Stock, nor have they
made any offers or sales of any security or solicited any offers to buy any
security, under circumstances that would require registration of the offer,
issuance and sale of the Preferred Stock under the Securities Act.
3.4 CAPITALIZATION; ISSUANCE OF SHARES.
(a) As of the date of this Agreement, the authorized capital
stock of the Company consists of 65,000,000 shares of Common Stock, of which
41,971,495 shares are issued and outstanding, and 2,000,000 shares of series
preferred stock, of which 1,000,000 shares have been designated Series B
Preferred Stock, 1,000,000 shares of which shares are issued and outstanding,
and 300,000 shares of which have been designated Series C Preferred Stock
none of which is issued or outstanding. The Company has adopted and filed
the Certificate of Designations with the Secretary of State of the State of
Delaware. All of the issued and outstanding shares of Preferred Stock and
Common Stock have been duly and validly issued and are fully paid and
non-assessable. Except as set forth in Section 3.4 of the Disclosure
Schedule (i) no subscription, warrant, option, convertible security or other
right (contingent or otherwise) to purchase or acquire any shares of capital
stock of the Company is authorized or outstanding, (ii) the Company has no
obligation (contingent or otherwise) to issue any subscription, warrant,
option, convertible security or other such right or to issue or distribute to
holders of any shares of its capital stock any evidences of indebtedness or
assets of the Company, and (iii) the Company has no obligation (contingent or
otherwise) to purchase, redeem or otherwise acquire any shares of its
capital stock or any interest therein or to pay any dividend or make any
other distribution in respect thereof. All of the issued and outstanding
shares of capital stock of the Company have been offered, issued and sold by
the Company in compliance with applicable Federal and state securities laws.
(b) The issuance, sale and delivery of the Preferred Stock in
accordance with this Agreement and the issuance and delivery of the shares of
Common Stock issuable upon conversion of the Preferred Stock have been duly
authorized by all necessary corporate and stockholder action on the part of
the Company and all such shares shall be duly reserved for issuance. Upon
issuance of the Preferred Stock, the shares of Preferred Stock will be duly
and validly issued, fully paid and non-assessable; the shares of Common Stock
issuable upon conversion of the Preferred Stock, when issued and delivered in
accordance with the terms of the Preferred Stock, will be duly and validly
issued, fully paid and non-assessable.
(c) Except as set forth in Schedule 3.4 of the Disclosure
Schedule, there are no agreements, written or oral, between the Company and
any holder of its capital stock or any security convertible into its capital
stock, or to the best of the Company's knowledge, among any
6
such holders, relating to the acquisition (including, without limitation,
rights of first refusal or preemptive rights), disposition, registration
under the Securities Act, or voting of the capital stock of the Company.
3.5 ORGANIZATION AND QUALIFICATION. The Company is a corporation
duly incorporated and existing in good standing under the laws of the State
of Delaware and has the requisite corporate power to own its properties and
to carry on its business as now being conducted. The Company does not have
any subsidiaries, except for those listed in its Annual Report on Form 10-K
(or the exhibits attached thereto) filed with the SEC for the year ended
December 31, 1997. The Company and each such subsidiary is duly qualified as
a foreign corporation to do business and is in good standing in every
jurisdiction in which the nature of the business conducted or property owned
by it makes such qualification necessary other than those in which the
failure so to qualify would not have a Material Adverse Change (as defined
below). References to the "Company" in this Agreement shall also include
each subsidiary of the Company, except where the context otherwise requires.
3.6 AUTHORIZATION; ENFORCEMENT. (i) The Company has the requisite
corporate power and authority to enter into and perform this Agreement and to
issue the Shares in accordance with the terms hereof and thereof, (ii) the
execution, issuance and delivery of this Agreement, the Preferred Stock, the
Common Stock by the Company and the Registration Rights Agreement, and the
consummation by the Company of the transactions contemplated hereby and
thereby, including without limitation, the issuance of Common Stock upon the
conversion or exercise thereof, have been duly authorized by all necessary
corporate action, and no further consent or authorization of the Company or
its Board of Directors or stockholders is required, (iii) this Agreement and
the Registration Rights Agreement have been duly executed and delivered by
the Company, and (iv) this Agreement, the Registration Rights Agreement, and
the Preferred Stock constitute, and upon execution, issuance and delivery
thereof shall be, valid and binding obligations of the Company enforceable
against the Company in accordance with their terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, or
similar laws relating to, or affecting generally the enforcement of,
creditors' rights and remedies or by other equitable principles of general
application.
3.7 CORPORATE DOCUMENTS. The Company has furnished or made
available to the Purchaser true and correct copies of the Company's
Certificate of Incorporation, as in effect on the date hereof (the
"Certificate"), and the Company's By-Laws, as in effect on the date hereof
(the "By-Laws").
3.8 NO CONFLICTS. The execution, delivery and performance of this
Agreement, the sale and issuance of the Preferred Stock by the Company and
the issuance of common stock upon the conversion thereof, do not and will not
(i) result in a violation of or conflict with the Certificate or By-Laws or
(ii) violate, conflict with, or constitute a breach of or default (or an
event which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration
or cancellation of, any material agreement, indenture or instrument to which
the Company or any of its subsidiaries is a party, or result in a
7
violation of any Federal, state, local or foreign law, rule, regulation,
order, judgment or decree (including federal and state securities laws and
regulations) applicable to the Company or any of its subsidiaries or by which
any property or asset of the Company or any of its subsidiaries is bound or
affected, except for such conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations as would not, individually or in
the aggregate, have a Material Adverse Change. The business of the Company
is not being conducted in violation of any law, ordinance or regulations of
any governmental entity, except for possible violations which either singly
or in the aggregate do not and will not have a Material Adverse Change. The
Company is not required under Federal, state or local law, rule or regulation
in the United States to obtain any consent, authorization or order of, or
make any filing or registration with, any court or governmental agency in
order for it to execute, deliver or perform any of its obligations under this
Agreement or issue and sell the Shares in accordance with the terms hereof
and thereof (other than any SEC, NASD, Exchange or state securities filings
which may be required to be made by the Company subsequent to the Closing,
and any registration statement which may be filed pursuant hereto); provided
that, for purposes of the representation made in this sentence, the Company
is assuming and relying upon the accuracy of the relevant representations and
agreements of the Purchaser herein.
3.9 EXCHANGE ACT REPORTS; FINANCIAL STATEMENTS. The Company has
delivered or made available to the Purchaser true and complete copies of the
Exchange Act Reports (including, without limitation, proxy information and
solicitation materials). As of their respective dates, the Exchange Act
Reports complied in all material respects with the requirements of the
Exchange Act and rules and regulations of the SEC promulgated thereunder and
other Federal, state and local laws, rules and regulations applicable to such
Exchange Act Reports, and none of the Exchange Act Reports 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. The financial statements of the Company included in the Exchange
Act Reports comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC or
other applicable rules and regulations with respect thereto. Such financial
statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods
involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto or (ii) in the case of unaudited interim
statements, to the extent they may not include footnotes or may be condensed
or summary statements) and fairly present the financial condition of the
Company as of the dates thereof and the results of operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal year-end audit adjustments which in the aggregate will not be
material).
3.10 NO MATERIAL ADVERSE CHANGE. Since March 31, 1998, there has
been no material adverse change in the business, operations, properties,
prospects, condition, financial or otherwise, net worth, or results of
operations of the Company or its subsidiaries, except as described in the
Exchange Act Reports and the Disclosure Schedule ("Material Adverse Change").
3.11 NO UNDISCLOSED LIABILITIES. The Company and its subsidiaries
have no liabilities or obligations of any type, which in the aggregate exceed
$100,000, that are not fully
8
reflected or disclosed in the Exchange Act Reports, other than contractual
liabilities and those incurred in the ordinary course of the Company's or its
subsidiaries' respective businesses since March 31, 1998.
3.12 NO UNDISCLOSED EVENTS OR CIRCUMSTANCES. No event or
circumstance has occurred or exists with respect to the Company or its
subsidiaries or their respective businesses, properties, prospects,
operations or condition, financial or otherwise, which, under applicable law,
rule or regulation, requires disclosure in the Exchange Act Reports or public
disclosure prior to the date hereof by the Company and which has not been so
disclosed.
3.13 NO BROKERS. The Company has taken no action which would give
rise to any claim by any person for brokerage commissions, finder's fees or
similar payments by the Purchaser relating to this Agreement or the
transactions contemplated hereby.
3.14 LITIGATION. There is no action, suit or proceeding, or
governmental inquiry or investigation, pending, or, to the best of the
Company's knowledge, any basis therefor or threat thereof, against the
Company, which questions the validity of this Agreement or the right of the
Company to enter into it, or which might result, either individually or in
the aggregate, in a Material Adverse Change.
3.15 INTELLECTUAL PROPERTY. Set forth in the Disclosure Schedule
is a true and complete list of all patents, patent applications, trademarks,
service marks, trademark and service ▇▇▇▇ applications, trade names,
copyright registrations and licenses presently used by the Company or
necessary for the conduct of the Company's business as conducted and as
proposed to be conducted, as well as any agreement under which the Company
has access to any confidential information used by the Company in its
business (collectively, the "Intellectual Property Rights"). The Company
owns, or has the right to use under the agreements or upon the terms
described in the Disclosure Schedule, all of the Intellectual Property
Rights, and has taken all actions reasonably necessary to protect the
Intellectual Property Rights. The business conducted or proposed by the
Company does not and will not cause the Company to infringe or violate any of
the patents, trademarks, service marks, trade names, copyrights, licenses,
trade secrets or other intellectual property rights of any other person or
entity. The Company is not aware that any employee is obligated under any
contract (including any license, covenant or commitment of any nature), or
subject to any judgment, decree or order of any court or administrative
agency, that would conflict or interfere with (i) the performance of
employee's duties as an officer, employee or director of the Company, (ii)
the use of such employee's best efforts to promote the interests of the
Company or (iii) the Company's business as conducted or proposed to be
conducted. No other person or entity (including without limitation any prior
employer of any employee of the Company) has any right to or interest in any
inventions, improvements, discoveries or other confidential information
utilized by the Company in its business.
3.16 MATERIAL CONTRACTS AND OBLIGATIONS. Section 3.19 of the
Disclosure Schedule lists each material agreement to which the Company is a
party or subject, including without limitation all material employment and
consulting agreements, employee benefit,
9
bonus, pension, profit-sharing, stock option, stock purchase and similar
plans and arrangements, and distributor and sales representative agreements.
The Disclosure Schedule lists each agreement with any stockholder, officer or
director of the Company, or any "affiliate" or "associate" of such persons
(as such terms are defined in the rules and regulations promulgated under the
Securities Act), including without limitation any agreement or other
arrangement providing for the furnishing of services by, rental of real or
personal property from, or otherwise requiring payments to, any such person
or entity and any agreement relating to the Intellectual Property Rights.
The Company has delivered to counsel to the Purchaser copies of all of the
foregoing agreements. All of such agreements and contracts are valid,
binding and in full force and effect.
3.17 EMPLOYEES. All employees of the Company whose employment
responsibility requires access to confidential or proprietary information of
the Company have executed and delivered nondisclosure and assignment of
invention agreements in the form attached to that certain Stock Purchase
Agreement by and among the Company and the purchasers listed therein dated as
of November 10, 1997 (the "Series B Agreement"), and all of such agreements
are in full force and effect.
3.18 ERISA. The Company does not have or otherwise contribute to
or participate in any employee benefit plan subject to the Employee
Retirement Income Security Act of 1974.
3.19 BOOKS AND RECORDS. The minute books of the Company contain
complete and accurate records of all meetings and other corporate actions of
its stockholders and its Board of Directors and committees thereof. The
Company has delivered to counsel to the Purchaser copies of all of the
minutes of all meetings and other corporate actions of its stockholders and
its Board of Directors and committees thereof held or taken since January 1,
1996.
3.20 DISCLOSURES. Neither this Agreement nor any Attachment or
Exhibit hereto, nor any report, certificate or instrument furnished to any
Purchaser or its counsel in connection with the transactions contemplated by
this Agreement, when read together, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary in order to make the statements contained herein or therein, in
light of the circumstances under which they were made, not misleading. The
Company knows of no information or fact which has or would have a Material
Adverse Change which has not been disclosed in the Disclosure Schedule.
4. COVENANTS
4.1 REGISTRATION RIGHTS. The Company agrees that, at the Closing,
it will enter into a Registration Rights Agreement with the Purchaser, in the
form of Exhibit C attached hereto.
4.2 RESERVATION OF COMMON STOCK. As of the date hereof, the
Company has reserved and the Company shall continue to reserve and keep
available at all times,
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free of preemptive rights, 2,000,000 shares of Common Stock for the purpose
of enabling the Company to satisfy any obligation to issue shares of its
Common Stock upon conversion of the Preferred Stock. The number of shares so
reserved shall be increased to reflect stock splits and stock dividends and
distributions.
4.3 LISTING OF SHARES. The Company hereby agrees, promptly
following the Closing, to take such action to cause the shares of Common
Stock issuable upon conversion of the Preferred Stock to be listed on the
Exchange as promptly as possible but no later than 90 days following the
Closing Date. The Company further agrees, if the Company applies to have its
Common Stock traded on any principal stock exchange or market, it will
include the shares of Common Stock issuable upon conversion of the Preferred
Stock in such application and will take such other action as is necessary or
desirable to cause the Shares to be listed on such other exchange or market
as promptly as possible.
4.4 EXCHANGE ACT REGISTRATION. The Company will cause its Common
Stock to continue to be registered under Section 12(g) or 12(b) of the
Exchange Act, will comply in all respects with its reporting and filing
obligations under the Exchange Act, and will not take any action or file any
document (whether or not permitted by the Exchange Act or the rules
thereunder) to terminate or suspend such registration or to terminate or
suspend its reporting and filing obligations under the Exchange Act. The
Company will take all action under its control to continue the listing and
trading of its Common Stock on the Exchange and will comply in all respects
with the Company's reporting, filing and other obligations under the bylaws
or rules of the NASD, the Nasdaq Stock Market Inc. and the Exchange.
4.5 LEGENDS. The Shares, and certificates evidencing the same
shall, upon the effectiveness of the Registration Statement to be filed
pursuant to the Registration Rights Agreement described in Section 4.1 (the
"Registration Statement") be free of legends (except as provided in Section
5.1 below), "stop transfers," so-called, "stock transfer restrictions," or
other restrictions.
4.6 CORPORATE EXISTENCE. The Company will take all steps
necessary to preserve and continue the corporate existence of the Company.
4.7 RIGHT OF FIRST REFUSAL
(a) Until such time as the earlier of (i) the date that the
Company first reports Annual Net Income (as defined below) of Fifteen Million
Dollars ($15,000,000) and (ii) the date that the Purchaser owns less than
1,000,000 shares (subject to appropriate adjustment for any stock dividend,
stock split, combination or similar recapitalization) of common stock, or
common stock issuable upon conversion of Preferred Stock, the Purchaser shall
have the right of first refusal to purchase all or part of its pro rata share
of any New Securities (as defined below) which the Company may, from time to
time, propose to sell and issue, subject to the terms and conditions set
forth below. The Purchaser's pro rata share, for purposes of this Section
4.7, shall equal a fraction, the numerator of which is the sum of (1) the
number of shares of common stock then held by such Purchaser, (2) the number
of shares of common stock issuable upon conversion or exercise of shares
11
of Preferred Stock then held by the Purchaser, and (3) the number of shares
of common stock issuable upon conversion or exercise of the other convertible
securities, options, rights or warrants then held by such Purchaser, and the
denominator of which is the sum of (1) the total number of shares of common
stock then outstanding, (2) the number of shares of common stock issuable
upon conversion or exercise of then outstanding preferred stock, and (3) the
total number of shares of common stock issuable upon conversion or exercise
of all then outstanding convertible securities, options, rights and warrants.
"Annual Net Income", as used herein, means the net income of the Company for
a full fiscal year as reported in the Company's audited financial statements
for such year, adjusted, however, by excluding from revenue for such fiscal
year any extraordinary or non-recurring revenue and any up-front license fees
which entitle the licensee-payor to license rights for a period in excess of
one year.
(b) "New Securities" shall mean any shares of capital stock
of the Company whether now authorized or not, and rights, options or warrants
to purchase capital stock, and securities of any type whatsoever which are,
or may become, convertible into capital stock; provided, however, that the
term "New Securities" does not include:
(i) shares of Preferred Stock issued or issuable to
the Purchaser pursuant to the terms of this Agreement or the shares of common
stock issued or issuable upon conversion of such securities;
(ii) shares of common stock issued or issuable as a
dividend or distribution on the Preferred Stock or the Series B Convertible
Preferred Stock;
(iii) securities issued for the acquisition of
another corporation by the Company by merger, purchase of substantially all
the assets of such corporation or another reorganization resulting in the
ownership by the Company of not less than a majority of the voting power of
such corporation;
(iv) shares of common stock issued or issuable to
directors or employees of or consultants to the Company pursuant to a plan or
arrangement approved by a majority of the members of the Company's Board of
Directors then in office;
(v) shares of common stock issued or issuable to
Halifax Fund L.P. or Capital Ventures International or their permitted
transferees, pursuant to warrants outstanding on the date hereof;
(vi) shares of common stock issued or issuable to
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and Ton ▇▇▇▇▇ or their permitted
transferees, pursuant to warrants outstanding on the date hereof;
(vii) shares of common stock issued or issuable to
Siemens Aktiengesellschaft ("Siemens"), pursuant to Section 5.1 of that
certain License Agreement between the Company and Siemens dated October 22,
1997, or upon the exercise of warrants to purchase shares of common stock
outstanding on the date hereof;
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(viii) shares of common stock issued or issuable upon
conversion of shares of the Company's Series B Convertible Preferred Stock;
(ix) shares of common stock issued or issuable to
holders of Series B Convertible Preferred Stock pursuant to Section 4.8 of
the Series B Agreement; or
(x) securities issued as a result of any stock
split, stock dividend or reclassification of common stock, distributable on a
pro rata basis to all holders of common stock.
(c) In the event the Company intends to issue New Securities,
it shall give the Purchaser written notice of such intention, describing the
type of New Securities to be issued, the price thereof and the general terms
upon which the Company proposes to effect such issuance. The Purchaser shall
have 15 days from the date of its receipt of any such notice to agree to
purchase all or part of its pro rata share of New Securities for the price
and upon the general terms and conditions specified in the Company's notice
by giving written notice to the Company stating the quantity of New
Securities to be so purchased. In the event the Purchaser elects not to
purchase all of its pro rata share of New Securities, the Company may issue
the New Securities described in the Company's notice within 45 days after the
expiration of such 15-day period, for the price and upon the general terms
and conditions specified in the Company's notice to the Purchaser.
4.8 SALE OF SHARES UNDER RULE 144. From and after the Closing, at
the request of any holder of Shares (or other Registrable Securities (as
defined in the Registration Rights Agreement)) who proposes to sell the same
in compliance with Rule 144 under the Securities Act, the Company shall (a)
promptly furnish to such holder a written statement as to its compliance with
the filing requirements of the SEC as set forth in Rule 144, as the same may
be amended from time to time, and (b) make such additional filings of reports
with the SEC as will enable the holders of Registrable Securities to make
sales thereof pursuant to such Rule. The Company shall provide its transfer
agent with appropriate instructions and/or opinions of counsel in order for
any restrictive legend contained on the certificates for the Shares (or other
Registrable Securities) to be removed when appropriate and for such holders
to sell, transfer and/or dispose of the Registrable Securities in accordance
with Rule 144.
5. LEGENDS
5.1 LEGENDS. The certificates evidencing the Preferred Stock and
certificates evidencing any shares of Common Stock issued upon conversion of
the Preferred Stock prior to the effectiveness of the Registration Statement
and, except as hereinafter provided in this Section 5.1, after effectiveness
of the Registration Statement, will bear the following legend (the "Legend"):
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR OFFERED FOR SALE
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES
UNDER SAID ACT AND ANY APPLICABLE STATE
13
SECURITIES LAWS OR AN APPLICABLE EXEMPTION FROM SUCH REGISTRATION
REQUIREMENTS.
At the Closing, the Company will issue to the transfer agent for its
common stock (and to any substitute or replacement transfer agent for its
common stock coterminous with the Company's appointment of any such
substitute or replacement transfer agent) irrevocable instructions in form
and substance reasonably satisfactory to the Purchaser. It is the intent and
purpose of such instructions to require the transfer agent for the common
stock from time to time to issue certificates evidencing the Shares free of
the Legend during the following periods and under the following circumstances
and without consultation by the transfer agent with Company or its counsel
and without the need for any further advice or instruction to the transfer
agent by or from the Company or its counsel:
(a) At any time from and after the effectiveness of the
Registration Statement, except during periods when use of the Registration
Statement is suspended (as described in Section 7 of the Registration Rights
Agreement):
(i) upon any surrender of one or more Preferred
Stock certificates for conversion into Common Stock, to the extent such
surrender is accompanied by a conversion notice requesting the issuance of
certificates evidencing Common Stock free of the Legend and either containing
or also accompanied by representations to the effect that the holder of the
surrendered securities intends to effect one or more sales of such Shares
pursuant to and in accordance with the Registration Statement, including the
prospectus delivery requirements applicable thereto; and
(ii) upon any surrender of one or more certificates
evidencing Shares and which bear the Legend, to the extent accompanied by a
notice requesting the issuance of new certificates free of the Legend to
replace those surrendered and containing or also accompanied by
representations by the holder of the surrendered securities to the effect of
those described in Section 5.1(a)(i) above.
(b) At any time from and after the Closing Date, upon any
surrender of one or more certificates evidencing Shares and which bear the
Legend, to the extent accompanied by a notice requesting the issuance of new
certificates free of the Legend to replace those surrendered and containing
or also accompanied by representations that (i) the holder thereof is
permitted to dispose thereof pursuant to Rule 144 promulgated under the
Securities Act or (ii) the holder intends to effect the sale or other
disposition of such securities, whether or not pursuant to the Registration
Statement, to a purchaser or purchasers who will not be subject to the
registration requirements of the Securities Act, or (iii) such holder is not
then subject to such requirements.
In addition, and if applicable, the Company shall reissue the Preferred
Stock and the share of Common Stock issuable upon conversion thereof without
the Legend at such time as (i) the holder thereof is permitted to dispose
thereof pursuant to Rule 144 under the Securities Act or (ii) the holder
14
intends to effect a sale thereof to a purchaser or purchasers who will not be
subject to the registration requirements of the Securities Act, or (iii) the
holder is not then subject to such requirements.
5.2 NO OTHER LEGEND OR STOCK TRANSFER RESTRICTIONS. No legend has
been or shall be placed on the share certificates representing the Preferred
Stock and no instructions or "stop transfers," so called, "stock transfer
restrictions," so called, or other restrictions have been or shall be given
to the Company's transfer agent with respect thereto, other than as set forth
in this Section 5.
5.3 PURCHASER'S COMPLIANCE. Nothing in this section shall affect
in any way the Purchaser's obligations under and agreement to comply with all
applicable securities laws upon resale of the Shares.
6. CHOICE OF LAW AND VENUE
THIS AGREEMENT SHALL BE CONSTRUED UNDER THE LAWS OF THE STATE OF
CALIFORNIA, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW OR CHOICE OF
LAW, EXCEPT TO THE EXTENT THAT THE LAW OF THE STATE OF DELAWARE REGULATES THE
COMPANY'S ISSUANCE OF SECURITIES.
7. ASSIGNMENT; ENTIRE AGREEMENT; AMENDMENT
7.1 ASSIGNMENT. This Agreement may not be assigned by the
Purchaser or the Company to any other person or entity. Notwithstanding the
foregoing, the provisions of this Agreement shall inure to the benefit of,
and be enforceable by, any entity which shall succeed to all or substantially
all of the assets and liabilities of Purchaser by merger or purchase.
7.2 ENTIRE AGREEMENT; AMENDMENT. This Agreement, the Preferred
Stock, the Common Stock, the Registration Rights Agreement, and the other
agreements and documents delivered pursuant hereto constitute the full and
entire understanding and agreement between the parties with regard to the
subject hereof and thereof and supersede all prior agreements and
understandings relating to such subject matter, 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 in this Agreement or therein.
Except as expressly provided in this Agreement, neither this Agreement nor
any term hereof 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.
8. PUBLICITY
The Company agrees that it will not disclose, and will not include in
any public announcement, the name of the Purchaser without its consent,
unless and until such disclosure is required by law or applicable regulation,
and then only to the extent of such requirement and subject to the prior
review of the content of such disclosure by the Purchaser.
15
9. NOTICES, ETC.; EXPENSES; INDEMNITY
9.1 NOTICES. Any notice, demand, request or other communication
required or permitted to be given by either the Company or the Purchaser
pursuant to the terms of this Agreement shall be in writing and shall be
deemed to have been duly given when delivered personally or by facsimile,
with a hard copy to follow by overnight delivery by a reputable courier:
If to the Company, at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: President, Facsimile No: (▇▇▇) ▇▇▇-▇▇▇▇, or at such other address
or addresses as may have been furnished in writing by the Company to the
Purchaser, with a copy to ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇ ▇▇▇▇
▇▇▇▇ Square, 4th Floor, ▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇, Facsimile No: (▇▇▇) ▇▇▇-▇▇▇▇; or
If to the Purchaser, at its address set forth above, or at such other
address or addresses as may have been furnished to the Company in writing by
such Purchaser, with a copy to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., Esq., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Facsimile
No: (▇▇▇) ▇▇▇-▇▇▇▇.
9.2 INDEMNIFICATION. Each party ("Indemnifying Party") shall
indemnify the other party against any loss, liabilities, expenses, cost or
damages (including reasonable attorney's fees) incurred as a result of the
Indemnifying Party's breach of any representation, warranty, covenant or
agreement in this Agreement.
10. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which shall be enforceable against the parties actually executing such
counterparts, and all of which together shall constitute one instrument.
11. SURVIVAL; SEVERABILITY
The representations, warranties, covenants and agreements of the parties
hereto shall survive the Closing. 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; provided that the absence of such
provision does not materially change the economic benefit of this Agreement
to any party.
12. TITLE AND SUBTITLES
The titles and subtitles used in this Agreement are used for convenience
only and are not to be considered in construing or interpreting this
Agreement.
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17
IN WITNESS WHEREOF, the parties have signed this Agreement the day and
year first written above.
GATEFIELD CORPORATION
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
(Print Name)
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
(Sign Name)
Title: Chief Executive Officer
-------------------------------------
(Position, if applicable)
PURCHASER:
ACTEL CORPORATION
By: ▇▇▇▇ ▇. East
-------------------------------------
(Print Name)
By: /s/ ▇▇▇▇ ▇. East
-------------------------------------
(Sign Name)
Title: President & Chief Executive Officer
-------------------------------------
(Position, if applicable)