------------------------------------------
COMMON STOCK EXCHANGE AGREEMENT
BETWEEN
PEREGRINE SYSTEMS, INC.
AND
GOLDMINE SOFTWARE CORPORATION
DATED AS OF DECEMBER 14, 1999
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TABLE OF CONTENTS
PAGE
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SECTION 1 Authorization and Sale of Common Stock................................1
1.1 Authorization of Peregrine Common Stock.......................1
1.2 Authorization of GoldMine Common Stock........................1
1.3 Peregrine and GoldMine Common Stock Exchange..................1
1.4 Closing Date..................................................1
SECTION 2 Representations and Warranties of Peregrine...........................2
2.1 Organization and Standing; Certificate and Bylaws.............2
2.2 Corporate Power...............................................2
2.3 Authorization.................................................2
2.4 Brokers or Finders............................................2
2.5 SEC Filings; Parent Financial Statements......................2
2.6 No Material Adverse Change....................................3
2.7 Peregrine Investment Representations..........................3
SECTION 3 Representations and Warranties of GoldMine............................4
3.1 Organization and Standing; Certificate and Bylaws.............4
3.2 Corporate Power...............................................4
3.3 Subsidiaries..................................................4
3.4 Capitalization................................................5
3.5 Authorization.................................................5
3.6 Compliance with Other Instruments, None Burdensome, etc.......6
3.7 GoldMine Registration Rights..................................6
3.8 Governmental Consent, etc.....................................6
3.9 Brokers or Finders............................................6
3.10 GoldMine Financial Statements.................................6
3.11 Changes.......................................................7
3.12 Intellectual Property.........................................7
3.13 GoldMine Investment Representation............................7
SECTION 4 Covenants of GoldMine.................................................8
4.1 Financial Information.........................................8
4.2 Transfer of Information Rights................................9
4.3 Inspection....................................................9
4.4 Termination of Covenants......................................9
4.5 Transferability of Peregrine Common...........................9
SECTION 5 Covenants of Peregrine................................................9
5.1 Confidentiality...............................................9
5.2 Transferability of GoldMine Common...........................10
5.3 Standoff Agreement...........................................10
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TABLE OF CONTENTS
(CONTINUED)
PAGE
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SECTION 6 Preemptive Right.....................................................10
6.1 Peregrine's Preemptive Right.................................10
6.2 Termination of Preemptive Right..............................12
SECTION 7 Restrictions on Transferability; Compliance with Securities Act......12
7.1 Restrictions on Transferability..............................12
7.2 Restrictive Legend...........................................12
7.3 Notice of Proposed Transfers.................................13
SECTION 8 Right of First Refusal on Peregrine Sale.............................13
8.1 GoldMine Right of First Refusal..............................13
8.2 Failure to Exercise Rights...................................14
8.3 Termination of Right of First Refusal........................14
SECTION 9 Miscellaneous........................................................14
9.1 Governing Law................................................14
9.2 Survival.....................................................14
9.3 Successors and Assigns.......................................14
9.4 Entire Agreement; Amendment..................................14
9.5 Notices, etc.................................................14
9.6 Expenses.....................................................16
9.7 Attorneys' Fees..............................................16
9.8 Counterparts.................................................16
9.9 Severability.................................................16
9.10 Titles and Subtitles.........................................16
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PEREGRINE SYSTEMS, INC.
AND GOLDMINE SOFTWARE CORPORATION
COMMON STOCK EXCHANGE AGREEMENT
This Agreement (the "Agreement") is made as of December 14, 1999 by and
between Peregrine Systems, Inc., (the "Peregrine") a Delaware corporation,
and GoldMine Software Corporation ("GoldMine"), a Delaware corporation.
SECTION 1
AUTHORIZATION AND SALE OF COMMON STOCK
1.1 AUTHORIZATION OF PEREGRINE COMMON STOCK. Peregrine has authorized
the sale and issuance of 1,121,966 shares of its common stock, $.001 par
value per share ("Peregrine Common") to GoldMine.
1.2 AUTHORIZATION OF GOLDMINE COMMON STOCK. GoldMine has authorized the
sale and issuance of 5,395,642 shares of its common stock, $.001 par value
per share ("GoldMine Common") to Peregrine.
1.3 PEREGRINE AND GOLDMINE COMMON STOCK EXCHANGE. Subject to the terms
and conditions hereof, on the Closing Date (as defined below) Peregrine will
issue and sell to GoldMine a total of 1,121,966 newly issued shares of
Peregrine Common and GoldMine will issue and sell to Peregrine a total of
5,395,642 newly issued shares of GoldMine Common, each issuance and sale
occurring concurrently with the other (the "Stock Exchange"). The parties
agree that the shares issued and exchanged under this Agreement are
equivalent in value. At the Closing Date, Peregrine will deliver to GoldMine
a stock certificate evidencing 1,121,966 shares of Peregrine Common
registered in the name of GoldMine, and GoldMine will deliver to Peregrine a
stock certificate evidencing 5,395,642 shares of GoldMine Common registered
in the name of Peregrine.
1.4 CLOSING DATE. The agreement of the parties hereto to deliver stock
certificates pursuant to the Stock Exchange and to undertake the performance
of their respective obligations hereunder and under the related agreements
contemplated by this Agreement are subject to the prior approvals of the
South African Reserve Bank and the Johannesburg Stock Exchange, applications
for which GoldMine will use its immediate reasonable best efforts to obtain.
In the event the regulatory approvals specified above have not obtained on or
before December 31, 1999, this Agreement and the related agreements
contemplated hereby shall terminate and shall have no further force or
effect. For purposes of this Agreement, the date of receipt of the second of
the two approvals shall be referred to herein as the "Closing Date."
1
SECTION 2
REPRESENTATIONS AND WARRANTIES OF PEREGRINE
Peregrine represents and warrants to GoldMine as follows:
2.1 ORGANIZATION AND STANDING; CERTIFICATE AND BYLAWS. Peregrine is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to carry on its business as presently conducted.
2.2 CORPORATE POWER. Peregrine has all requisite legal and corporate
power and authority to execute and deliver this Agreement, the Peregrine
Registration Rights Agreement of even date herewith (the "Peregrine
Registration Rights Agreement"), and the GoldMine Registration Rights
Agreement of even date herewith (the "GoldMine Registration Rights
Agreement") (collectively, the "Transaction Documents"), and to sell and
issue the Peregrine Common hereunder, and to carry out and perform its
obligations under the terms of the Transaction Documents.
2.3 AUTHORIZATION. All corporate action on the part of Peregrine, its
officers, directors and stockholders necessary for the authorization,
execution, delivery and performance by Peregrine of the Transaction
Documents, and the consummation of the transactions contemplated herein and
therein and for the authorization, sale, issuance and delivery of the
Peregrine Common being sold hereunder has been taken. The Transaction
Documents shall constitute legal, valid and binding obligations of Peregrine,
and the Transaction Documents are enforceable in accordance with their
respective terms. The Peregrine Common issued to GoldMine is duly and validly
issued, is fully paid and nonassessable, has been issued in compliance with
all applicable federal and state securities laws in all material respects,
and is free of any liens, encumbrances or preemptive rights, other than any
liens or encumbrances created by or imposed upon the holders through no
action of Peregrine; PROVIDED, HOWEVER, that the Peregrine Common is subject
to restrictions on transfer under applicable state and/or federal securities
laws and as provided by this Agreement.
2.4 BROKERS OR FINDERS. Peregrine has not engaged any brokers, finders
or agents and Peregrine has not incurred, and will not incur, directly or
indirectly, as a result of any action taken by Peregrine, any liability for
brokerage or finders' fees or agents' commissions or any similar charges in
connection with the Transaction Documents and the transactions contemplated
hereby or thereby.
2.5 SEC FILINGS; PARENT FINANCIAL STATEMENTS.
(a) Peregrine has filed all forms, reports, and documents required
to be filed by Peregrine with the Securities and Exchange Commission (the
"SEC") under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). All such required forms, reports and documents are referred to herein
as the "Peregrine SEC Reports." As of their respective filing dates (or if
amended or superseded by a filing prior to the date of this Agreement, then
on the date of such filing), the Peregrine SEC Reports (i) complied in all
material respects with the requirements of the Exchange Act and the rules and
regulations of the SEC thereunder applicable to such Peregrine SEC Reports
and (ii) did not contain any untrue statement of a material fact or omit to
state a material fact required
2
to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
(b) As of their respective dates (or if amended or superseded by a
filing prior to the date of this Agreement, then on the date of such filing),
each of the consolidated financial statements of Peregrine (including, in
each case, the notes thereto), included in the Peregrine SEC Reports (the
"Peregrine Financial Statements"), (i) complied as to form in all material
respects with the published rules and regulations of the SEC with respect
thereto; (ii) was prepared in accordance with generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the periods
indicated (except as may be indicated in the notes thereto or, in the case of
unaudited statements, as may be permitted by the SEC on Form 10-Q under the
Exchange Act); and (iii) fairly presented the consolidated financial position
of Peregrine and its subsidiaries as at the respective dates thereof and the
consolidated results of Peregrine's operations and cash flows for the periods
indicated (subject, in the case of unaudited financial statements, to normal
audit adjustments). There has been no change in Peregrine's accounting
policies except as described in the notes to the Peregrine Financial
Statements.
2.6 NO MATERIAL ADVERSE CHANGE. Since the date of the balance sheet
included in Peregrine's most recently filed report on Form 10-Q, Peregrine
has conducted its business in the ordinary course and there has not occurred
any material adverse change in the financial condition, liabilities, assets
or business of Peregrine.
2.7 PEREGRINE INVESTMENT REPRESENTATIONS. Peregrine hereby represents
and warrants to GoldMine with respect to the GoldMine Common that Peregrine
will receive in the Stock Exchange as follows:
2.7.1 EXPERIENCE. Peregrine is capable of evaluating the merits and
risks of its investment in GoldMine and has the capacity to protect its own
interests.
2.7.2 INVESTMENT. Peregrine is acquiring the GoldMine Common for
investment for its own account, not as a nominee or agent, and not with the
view to, or for resale in connection with, any distribution thereof.
Peregrine understands that the GoldMine Common to be purchased and the
underlying Common Stock has not been, and will not be, registered under the
Securities Act of 1933, as amended (the "Securities Act"), by reason of a
specific exemption from the registration provisions of the Securities Act,
the availability of which depends upon, among other things, the bona fide
nature of the investment intent and the accuracy of Peregrine's
representations as expressed herein.
2.7.3 RULE 144. Peregrine acknowledges that the GoldMine Common
must be held indefinitely unless subsequently registered under the Securities
Act or unless an exemption from such registration is available. Peregrine is
aware of the provisions of Rule 144 promulgated under the Securities Act
which permit limited resale of shares purchased in a private placement
without registration under the Securities Act subject to the satisfaction of
certain conditions, including, among other things, the existence of a public
market for the shares and the availability of certain current public
information about GoldMine.
3
2.7.4 NO PUBLIC MARKET. Peregrine understands that no public
market now exists for the GoldMine Common and that GoldMine has made no
assurances that a public market will ever exist for the GoldMine Common.
2.7.5 ACCESS TO DATA. Peregrine has had an opportunity to discuss
GoldMine's business, management and financial affairs with GoldMine's
management and the opportunity to inspect GoldMine's facilities. It has also
had an opportunity to ask questions of officers of GoldMine, which questions,
if any, were answered to its satisfaction. It understands that such
discussions, as well as any written information issued by GoldMine, were
intended to describe certain aspects of GoldMine's business and prospects but
were not a thorough or exhaustive description.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF GOLDMINE
GoldMine represents and warrants to Peregrine as follows, subject to
the disclosures and exceptions (if any) set forth in the GoldMine Schedule of
Exceptions attached as EXHIBIT A hereto:
3.1 ORGANIZATION AND STANDING; CERTIFICATE AND BYLAWS. GoldMine is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to carry on its business as presently conducted and as proposed to
be conducted. GoldMine is duly qualified or licensed to do business and is in
good standing as a foreign corporation in each jurisdiction in which the
failure to be so qualified would have a material adverse affect on GoldMine's
business as now conducted. GoldMine has furnished Peregrine with copies of its
current Certificate of Incorporation and Bylaws. Said copies are true, correct
and complete.
3.2 CORPORATE POWER. GoldMine has all requisite legal and corporate
power and authority to execute and deliver this Agreement, the Peregrine
Registration Rights Agreement and the GoldMine Registration Rights Agreement
and to sell and issue the GoldMine Common hereunder, and to carry out and
perform its obligations under the terms of the Transaction Documents.
3.3 SUBSIDIARIES. Except as set forth in the Transaction Documents and
except for securities GoldMine owns free and clear of all liens, pledges,
charges, security interests, encumbrances, claims or infringements,
restriction of any nature (including any restriction on the voting of any
security, any restriction on the transfer of any security or other asset, any
restriction on the possession, exercise or transfer of any other attribute of
ownership of any asset) directly or indirectly through one or more
subsidiaries, and except for shares of capital stock or other similar
ownership interests of subsidiaries of GoldMine that are owned by certain
nominee equity holders as required by the applicable law of the jurisdiction
of organization of such subsidiaries (which shares or other interests do not
materially affect GoldMine's control of such subsidiaries), as of the date of
this Agreement, there are no equity securities, partnership interests or
similar ownership interests of any class of equity security of any direct or
indirect subsidiary of GoldMine, or any security exchangeable or convertible
into or exercisable for such equity securities, partnership interests or
4
similar ownership interests, issued, reserved for issuance or outstanding.
There are no subscriptions, options, warrants, equity securities, partnership
interests or similar ownership interests, calls, rights (including preemptive
rights), commitments or agreements of any character to which GoldMine or any
of its subsidiaries is a party or by which it is bound obligating GoldMine or
any of its subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, or repurchase, redeem or otherwise acquire any shares of
capital stock, partnership interests or similar ownership interests of
GoldMine or any of its direct or indirect subsidiaries or obligating GoldMine
or any of its direct or indirect subsidiaries to grant, extend, accelerate the
vesting of or enter into any such subscription, option, warrant, equity
security, call, right, commitment or agreement. Except as set forth in the
Transaction Documents, as of the date of this Agreement, there are no
registration rights and there is no voting trust, proxy, or other agreement or
understanding to which GoldMine or any of its direct or indirect subsidiaries
is a party or by which they are bound with respect to any equity security of
any class of GoldMine or with respect to any equity security, partnership
interest or similar ownership interest of any class of any of its direct or
indirect subsidiaries. Included in the GoldMine Schedule of Exceptions is a
listing of each subsidiary or affiliated company of GoldMine and each other
corporation, association or business entity in which GoldMine, directly or
indirectly, owns any equity interest, together with a description of the
nature and percentage of the equity interest held by GoldMine.
3.4 CAPITALIZATION. The authorized capital stock of GoldMine consists
of 200,000,000 shares of Common Stock, and there is no other class or series
of capital stock of GoldMine authorized. A total of 48,560,779 shares of
GoldMine Common are currently issued and outstanding (exclusive of the shares
of GoldMine Common issued to Peregrine in the Stock Exchange). All outstanding
shares of GoldMine Common have been duly authorized and validly issued, are
fully paid and nonassessable, and have been issued in compliance in all
material respects with all applicable federal and state securities laws.
GoldMine has reserved a total of 10,000,000 shares of GoldMine Common under
its 1999 GoldMine Stock Plan for the grant of options to officers, directors,
employees and consultants of GoldMine, of which there are outstanding option
grants for a total of 5,128,645 shares of GoldMine Common. The 5,395,642
shares of GoldMine Common issued to Peregrine in the Stock Exchange constitute
ten percent (10%) of the currently outstanding GoldMine Common (inclusive of
the GoldMine Common issued to Peregrine under this Agreement).
3.5 AUTHORIZATION. All corporate action on the part of GoldMine, its
officers, directors and stockholders necessary for the authorization,
execution, delivery and performance by GoldMine of the Transaction Documents,
and the consummation of the transactions contemplated herein and therein and
for the authorization, sale, issuance and delivery of the GoldMine Common
being sold hereunder has been taken. The Transaction Documents, when executed
and delivered by GoldMine, shall constitute legal, valid and binding
obligations of GoldMine, and the Transaction Documents are enforceable in
accordance with their respective terms. The GoldMine Common issued to
Peregrine is duly and validly issued, is fully paid and nonassessable, has
been issued in compliance with all applicable federal and state securities
laws, and is free of any liens, encumbrances or preemptive rights, other than
any liens or encumbrances created by or imposed upon the holders through no
action of GoldMine; PROVIDED, HOWEVER, that the GoldMine Common is subject to
restrictions on transfer under applicable state and/or federal securities laws
and as provided in this Agreement.
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3.6 COMPLIANCE WITH OTHER INSTRUMENTS, NONE BURDENSOME, ETC. GoldMine
is not in violation of any term of its Certificate of Incorporation or
Bylaws, as each are amended to date, or in any material respect of any term
of any mortgage, indebtedness, indenture, contract, agreement, instrument,
judgment or decree, and, to the best of its knowledge, is not in violation in
any material respect of any order, statute, rule or regulation applicable to
GoldMine. The execution, delivery and performance of and compliance with the
Transaction Documents and the issuance of the GoldMine Common hereunder have
not resulted and will not result in any violation of, or conflict with, or
constitute a default under, GoldMine's Certificate or Bylaws, as amended, any
of its agreements, any agreement to which GoldMine is a party or by which it
is bound, or any order, statute, rule or regulation applicable to GoldMine.
3.7 GOLDMINE REGISTRATION RIGHTS. Except as set forth in the GoldMine
Registration Rights Agreement, GoldMine is not under any contractual
obligation to register (as defined in Section 1 of the GoldMine Registration
Rights Agreement) any of its presently outstanding securities or any of its
securities which may hereafter be issued.
3.8 GOVERNMENTAL CONSENT, ETC. Except as provided in Section 1.4 above,
no consent, approval or authorization of or designation, declaration or
filing with any governmental authority on the part of GoldMine is required in
connection with the valid execution and delivery of the Transaction Documents
or the offer, sale or issuance of the GoldMine Common hereunder except
qualification (or taking such action as may be necessary to secure an
exemption from qualification, if available) of the offer and sale of the
GoldMine Common that are necessitated by the authorization and sale under
this Agreement of the GoldMine Common under applicable blue sky or state
securities laws, which filings and qualifications, if required, will be
accomplished in a timely manner.
3.9 BROKERS OR FINDERS. GoldMine has not engaged any brokers, finders
or agents and Peregrine has not incurred, and will not incur, directly or
indirectly, as a result of any action taken by GoldMine, any liability for
brokerage or finders' fees or agents' commissions or any similar charges in
connection with the Transaction Documents and the transactions contemplated
hereby.
3.10 GOLDMINE FINANCIAL STATEMENTS. Included with the GoldMine Schedule
of Exceptions are the audited consolidated balance sheet and audited
consolidated statements of operations and statements of cash flows for the
fiscal year ended December 31, 1998 for the former GoldMine Software
Corporation, the unaudited consolidated balance sheet as of June 30, 1999 and
as of October 31, 1999 and an unaudited consolidated pro forma income
statement for fiscal years ended June 30, 1998 and 1999 and actual results of
operations for the quarter ended September 30, 1999 and for the month ended
October 31, 1999 for GoldMine (collectively, the "Financial Statements"). The
GoldMine Financial Statements fairly present the consolidated financial
position of GoldMine and its subsidiaries as at the respective dates thereof
and the consolidated results of GoldMine's operations and cash flows for the
periods indicated and have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods indicated, except that the unaudited
Financial Statements do not contain footnotes and may be subject to year-end
audit adjustments, none of which is material. Except as set forth in the
unaudited consolidated balance sheet as of October 31, 1999, GoldMine has no
material liabilities, contingent or otherwise, other than (i) liabilities
incurred in the ordinary course
6
of business subsequent to October 31, 1999, and (ii) obligations under
contracts and commitments incurred in the ordinary course of business and not
required under GAAP to be reflected in GoldMine's unaudited consolidated
balance sheet at October 31, 1999, which, in both cases, individually or in
the aggregate, are not material to the financial condition or operating
results of GoldMine. Except as disclosed in the Financial Statements,
GoldMine is not a guarantor or indemnitor of any indebtedness of any other
person, firm or corporation.
3.11 CHANGES. Since October 31, 1999, there has not been any material
adverse change in the assets, liabilities, financial condition or operating
results of GoldMine from that reflected in the Financial Statements, or any
other event or condition that could reasonably be expected to have a material
adverse effect on the assets, properties, financial condition, operating
results, business or prospects of GoldMine.
3.12 INTELLECTUAL PROPERTY. GoldMine has taken reasonable security
measures to protect the secrecy, confidentiality and value of all trade
secrets, know-how, inventions, designs, processes and technical data required
to conduct its business. GoldMine has all right, title and interest in and to
all intangible property and technology or has obtained on reasonable terms
all permits, licenses and other authority necessary for the conduct of its
business. GoldMine is not infringing, and is not aware of any claimed
infringement of, any third party's patent, trademark, trade secret, trade
name or copyright and has not received any notice of any claimed
infringement. To GoldMine's knowledge, its officers and employees have not
improperly used and are not making improper use of any confidential
information or trade secrets of others, including those of any former
employer of an officer or employee. GoldMine does not believe it is or will
be necessary to utilize any inventions of any of its employees (or people it
currently intends to hire) made prior to their employment by GoldMine.
GoldMine is not aware of any violation by a third party of any of GoldMine's
patents, licenses, trademarks, trade names, service marks, copyrights, trade
secrets or other proprietary rights. No third party has any ownership
interest or claim as to any proprietary assets of GoldMine, nor has GoldMine
granted a license to any of its proprietary assets outside the ordinary
course of business.
3.13 GOLDMINE INVESTMENT REPRESENTATION. GoldMine hereby represents and
warrants to Peregrine with respect to the Peregrine Common that GoldMine will
receive in the Stock Exchange as follows:
3.13.1 EXPERIENCE. GoldMine is capable of evaluating the merits and
risks of its investment in Peregrine and has the capacity to protect its own
interests.
3.13.2 INVESTMENT. GoldMine is acquiring the Peregrine Common for
investment for its own account, not as a nominee or agent, and not with the
view to, or for resale in connection with, any distribution thereof. GoldMine
understands that the Peregrine Common to be purchased have not been, and will
not be, registered under the Securities Act by reason of a specific exemption
from the registration provisions of the Securities Act, the availability of
which depends upon, among other things, the bona fide nature of the
investment intent and the accuracy of GoldMine's representations as expressed
herein.
7
3.13.3 RULE 144. GoldMine acknowledges that the Peregrine Common
must be held indefinitely unless subsequently registered under the Securities
Act or unless an exemption from such registration is available. GoldMine is
aware of the provisions of Rule 144 promulgated under the Securities Act
which permit limited resale of shares purchased in a private placement
without registration under the Securities Act subject to the satisfaction of
certain conditions, including, among other things, the existence of a public
market for the shares and the availability of certain current public
information about Peregrine.
3.13.4 ACCESS TO DATA. GoldMine has had an opportunity to discuss
Peregrine's business, management and financial affairs with Peregrine's
management and the opportunity to inspect Peregrine's facilities. GoldMine
has also had an opportunity to ask questions of officers of Peregrine, which
questions, if any, were answered to its satisfaction. GoldMine understands
that such discussions, as well as any written information issued by
Peregrine, were intended to describe certain aspects of Peregrine's business
and prospects but were not a thorough or exhaustive description.
SECTION 4
COVENANTS OF GOLDMINE
4.1 FINANCIAL INFORMATION. GoldMine will furnish the following reports
to Peregrine for as long as Peregrine is a holder of any GoldMine Common:
(a) As soon as practicable after the end of each fiscal year, and
in any event within 90 days thereafter, consolidated balance sheets of
GoldMine and its subsidiaries, if any, as of the end of such fiscal year, and
consolidated statements of income and consolidated statements of cash flow of
GoldMine and its subsidiaries, if any, for such year, prepared in accordance
with GAAP and setting forth in each case in comparative form the figures for
the previous fiscal year, in all reasonable detail and audited by GoldMine's
independent public accountants.
(b) As soon as practicable after the end of each fiscal quarter,
and in any event within 45 days thereafter, an unaudited consolidated balance
sheet of GoldMine, as at the end of such quarter, and unaudited consolidated
statements of income for such quarter and for the current fiscal year to
date. Such financial statements shall be prepared in accordance with GAAP
(other than accompanying notes subject to year-end adjustments), in all
reasonable detail.
(c) As soon as practicable, but in any event at least 30 days prior
to the beginning of the fiscal year, an annual operating plan budget for the
next fiscal year broken down on a quarterly basis.
(d) For so long as Peregrine is eligible to receive reports under
this Section 4.1, Peregrine shall also have the right, at its expense, to
discuss the affairs, finances and accounts of GoldMine with GoldMine's
officers, all at such reasonable times and as often as may be reasonably
requested; provided, however, that GoldMine shall not be obligated to provide
any information that
8
its Board of Directors reasonably considers to be a trade secret or to contain
confidential information absent an undertaking to maintain the confidentiality
of such information.
4.2 TRANSFER OF INFORMATION RIGHTS. The information rights set forth in
Section 4.1 may be transferred to any transferee of the GoldMine Common which
is not a competitor of GoldMine, provided that GoldMine is given written
notice of such transfer, and provided further, that the right to receive the
information set forth in Section 4.1 may only be transferred to a holder of
not less than 100,000 shares of GoldMine Common.
4.3 INSPECTION. GoldMine will permit, during normal business hours and
following reasonable request and notice Peregrine, so long as Peregrine holds
any GoldMine Common, or any authorized agent or representative thereof, to
reasonably examine and make copies of and extracts from the records and books
of account of, and visit and, during normal business hours upon reasonable
request and notice, inspect the properties of GoldMine and any subsidiary, to
discuss the affairs, finances and accounts of GoldMine and any subsidiary
with the management of GoldMine and any subsidiary as to their affairs,
finances and accounts.
4.4 TERMINATION OF COVENANTS. The covenants set forth in Section 4.1
through 4.3 above shall terminate on and be of no further force or effect
upon the earlier of (i) the consummation of GoldMine's sale of its common
stock in an underwritten public offering pursuant to an effective
registration statement filed under the Securities Act, immediately subsequent
to which GoldMine shall be obligated to file annual and quarterly reports
with the Commission pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (the "Exchange Act"), or (ii) the registration by
GoldMine of a class of its equity securities under Section 12(b) or 12(g) of
the Exchange Act.
4.5 TRANSFERABILITY OF PEREGRINE COMMON. GoldMine shall have the right,
immediately following the Closing Date, to request the registration of all or
any portion of the shares of Peregrine Common received in the Stock Exchange
pursuant to the Peregrine Registration Rights Agreement. In the event of such
request, it is the intent of the parties to permit GoldMine to liquidate its
shares of Peregrine Common within 90 days of the date of this Agreement,
subject to required regulatory comments or approvals.
SECTION 5
COVENANTS OF PEREGRINE
5.1 CONFIDENTIALITY. Peregrine agrees that it will maintain the
confidentiality of any information obtained by it, pursuant to this Agreement
or by virtue of its relationship as a stockholder of GoldMine, which is not
otherwise lawfully available from other sources, excluding the disclosure of
information of a non-technical nature, including summary financial
information, if Peregrine is obligated to disclose such non-technical
information to its stockholders.
9
5.2 TRANSFERABILITY OF GOLDMINE COMMON. Peregrine agrees that until
after the Expiration Date (as defined below), it will not sell or dispose of,
whether in a private placement or public offering, more than 2,312,418 shares
of GoldMine Common received in the Stock Exchange prior to the completion by
GoldMine of an initial public offering of its capital stock, whether for its
own account or the account of others, subject, however, to the right of
Peregrine to include up to such number of shares in such public offering if
such offering is underwritten and the inclusion of such shares is otherwise
consistent with the terms the GoldMine Registration Rights Agreement.
Peregrine agrees that until after the Expiration Date, it will not sell or
dispose of any of the 2,312,418 shares of GoldMine Common not sold pursuant
to a registration statement for GoldMine's initial underwritten public
offering except pursuant to the volume limitations of Rule 144 of the
Securities Act. Peregrine agrees that it will not sell or dispose of the
remaining 3,083,224 shares acquired by it in the Stock Exchange until after
the Expiration Date. For purposes of this Agreement, the "Expiration Date"
shall mean the later of one year after the closing of GoldMine's initial
public offering of its common stock in a firmly underwritten offering or two
years after the date of this Agreement; provided that in any event the
limitation under this Section 5.2 shall expire on December 31, 2002.
5.3 STANDOFF AGREEMENT. Peregrine agrees in connection with the initial
underwritten public offering of GoldMine Common that, upon request of
GoldMine or the managing underwriters it will not to sell, make any short
sale of, loan, grant any option for the purchase of, or otherwise dispose of
any GoldMine Common (other than GoldMine Common included in the registration)
without the prior written consent of GoldMine or such managing underwriters
for such period of time (not to exceed 180 days from the effective date of
such registration) as may be requested by GoldMine or such managing
underwriters; provided, however, that the requirement of this Section 5.3
shall be effective only if each of the officers and directors of GoldMine and
all stockholders of 5% or more of the securities of GoldMine also agree to
such restrictions.
SECTION 6
PREEMPTIVE RIGHT
6.1 PEREGRINE'S PREEMPTIVE RIGHT.
(a) PREEMPTIVE RIGHT. GoldMine hereby grants to Peregrine a right
to purchase its Preemptive Right Pro Rata Share of any New Securities (as
defined in this Section 6.1(a)) which GoldMine may, from time to time,
propose to sell and issue. A "Preemptive Right Pro Rata Share," for purposes
of this Agreement, is the ratio that the sum of the shares of GoldMine Common
issued in the Stock Exchange then held by Peregrine bears to the sum of the
number of shares of GoldMine Common then outstanding (including shares of
GoldMine Common issuable upon conversion of any then outstanding equity
securities convertible into GoldMine Common) plus the number of shares of
GoldMine Common issued to Peregrine in accordance with this Section 6.
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(b) DEFINITION OF NEW SECURITIES. Except as set forth below, "New
Securities" shall mean any shares of capital stock of GoldMine, including
common stock and preferred stock, whether authorized or not, and rights,
options or warrants to purchase said shares of common stock or preferred
stock, and securities of any type whatsoever that are, or may become,
convertible into said shares of common stock or preferred stock.
Notwithstanding the foregoing, "New Securities" does not include (i) the
GoldMine Common being sold to Peregrine pursuant to this Agreement, (ii)
securities offered in a firm underwriting to the public pursuant to a
registration statement under the Securities Act, (iii) stock options granted
in connection with the acquisition of another corporation or business by
GoldMine by merger, purchase of substantially all of the assets or shares or
other reorganization, (iv) up to 10,000,000 shares of GoldMine Common
(inclusive of outstanding option grants as of the date of this Agreement as
set forth in Section 3.4 above) or related options exercisable for such
common stock issued prior to or after the date hereof to employees, officers
and directors of, and consultants to, GoldMine pursuant to any arrangement
approved by the Board of Directors of GoldMine or to customers, vendors or
distributors as approved by the Board of Directors of GoldMine in support of
commercial relationships, (v) up to 1,435,000 shares of GoldMine Common (or
related options) exercisable for such common stock previously issued to key
employees of GoldMine Front Office Division, Inc., (vi) stock issued
proportionately to all GoldMine stockholders in connection with any stock
split, stock dividend or recapitalization by GoldMine, or (vii) up to 40,000
shares of GoldMine Common to be issued in settlement of existing litigation.
(c) NOTICE OF RIGHT. In the event GoldMine proposes to undertake an
issuance of New Securities, it shall give Peregrine written notice of its
intention, describing the type of New Securities and the price and terms upon
which GoldMine proposes to issue the same. Peregrine shall have 15 days from
the date of receipt of any such notice to agree to purchase shares of such
New Securities (up to the amount referred to in subsection 6.1(a)), for the
price and upon the terms specified in the notice, by giving written notice to
the Company and stating therein the quantity of New Securities to be
purchased.
(d) EXERCISE OF RIGHT. If Peregrine exercises its preemptive right
under this Agreement, the closing of the purchase of the New Securities with
respect to which such right has been exercised shall take place within 60
days after Peregrine gives notice of such exercise, which period of time
shall be extended in order to comply with applicable laws and regulations.
Upon exercise of such right, GoldMine and Peregrine shall be obligated to
consummate the purchase contemplated thereby and shall use their best efforts
to secure any approvals required in connection therewith.
(e) LAPSE AND REINSTATEMENT OF RIGHT. In the event Peregrine fails
to exercise its preemptive right provided in this Section 6.1 within said 15
day period, GoldMine shall have 90 days thereafter to sell or enter into an
agreement (pursuant to which the sale of New Securities covered thereby shall
be closed, if at all, within 60 days from the date of said agreement) to sell
the New Securities not elected to be purchased by Peregrine at the price and
upon the terms no more favorable to the purchasers of such securities than
specified in GoldMine's notice. In the event GoldMine has not sold the New
Securities or entered into an agreement to sell the New Securities within
said 90 day period (or sold and issued New Securities in accordance with the
foregoing within 60 days from the
11
date of said agreement), GoldMine shall not thereafter issue or sell any New
Securities without first offering such securities to Peregrine in the manner
provided above.
(f) ASSIGNMENT. The right of Peregrine to purchase any part of the
New Securities may be assigned in whole to any transferee which is not a
competitor of GoldMine.
6.2 TERMINATION OF PREEMPTIVE RIGHT. The preemptive right granted under
Section 6.1 of this Agreement shall terminate on and be of no further force
or effect upon the earlier of (i) the consummation of GoldMine's sale of its
common stock in an underwritten public offering pursuant to an effective
registration statement filed under the Securities Act immediately subsequent
to which GoldMine shall be obligated to file annual and quarterly reports
with the Commission pursuant to Section 13 or 15(d) of the Exchange Act or
(ii) the registration by GoldMine of a class of its equity securities under
Section 12(b) or 12(g) of the Exchange Act.
SECTION 7
RESTRICTIONS ON TRANSFERABILITY; COMPLIANCE WITH SECURITIES ACT
7.1 RESTRICTIONS ON TRANSFERABILITY. Neither the Peregrine Common nor
the GoldMine Common shall be transferable except in compliance with the
provisions of the Securities Act and applicable state securities laws.
7.2 RESTRICTIVE LEGEND. Each certificate representing Peregrine Common
and GoldMine Common issued under this Agreement ("Restricted Securities"),
shall (unless otherwise permitted by the provisions of Section 7.3 below) be
stamped or otherwise imprinted with a legend substantially in the following
form (in addition to the legend required under applicable state securities
laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT. COPIES
OF THE AGREEMENT COVERING THE PURCHASE OF THESE SHARES 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.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO LIMITATIONS
ON TRANSFER AND MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS
OF AN AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF
WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.
12
7.3 NOTICE OF PROPOSED TRANSFERS. The holder of each certificate
representing Restricted Securities, by acceptance thereof, agrees to comply
in all respects with the provisions of this Section 7.3. Prior to any
proposed transfer of any Restricted Securities, unless there is in effect a
registration statement under the Securities Act covering the proposed
transfer, the holder thereof shall give written notice to the Issuer of such
holder's intention to effect such transfer. Each such notice shall describe
the manner and circumstances of the proposed transfer in sufficient detail,
and shall be accompanied (except in transactions in compliance with Rule 144)
by either (i) a written opinion of legal counsel who shall be reasonably
satisfactory to the issuer addressed to the issuer and reasonably
satisfactory in form and substance to the issuer's counsel, to the effect
that the proposed transfer of the Restricted Securities may be effected
without registration under the Securities Act, or (ii) a "no action" letter
from the Commission, a copy of any holder's request (together with all
supplements or amendments thereto) for which shall have been provided to the
issuer, at or prior to the time of first delivery to the Commission's Staff,
to the effect that the transfer of such securities without registration will
not result in a recommendation by the staff of the Commission that action be
taken with respect thereto, whereupon the holder of such Restricted
Securities shall be entitled to transfer such Restricted Securities in
accordance with the terms of the notice delivered by the holder to the
Issuer. Each certificate evidencing the Restricted Securities transferred as
herein provided shall bear the appropriate restrictive legend set forth in
Section 7.3 above, except that such certificate shall not bear such
restrictive legend if, (i) in the opinion of counsel for the issuer, such
legend is not required in order to establish compliance with any provisions
of the Securities Act, (ii) the Restricted Securities have been held by the
holder for more than two years, and the holder represents to counsel for the
issuer that it is not an affiliate of the issuer and shall not become an
affiliate of the issuer without resubmitting the Restricted Securities for
reimposition of the legend, or (iii) the Restricted Securities have been sold
pursuant to Rule 144(k) and the share certificate is accompanied by a
representation by the holder that it is not an affiliate of the issuer, has
not been an affiliate during the three month period prior to the sale and has
held the shares for more than two years.
SECTION 8
RIGHT OF FIRST REFUSAL ON PEREGRINE SALE
8.1 GOLDMINE RIGHT OF FIRST REFUSAL. Any time Peregrine desires to sell
any of its shares of GoldMine Common pursuant to the terms of a bona fide
offer received from a third party (a "Buyer"), Peregrine shall submit a
written offer to sell such shares (the "Offered Shares") to GoldMine on terms
and conditions, including price, not less favorable to GoldMine than those on
which Peregrine proposes to sell such Offered Shares to such third party (the
"Offer"). The Offer shall disclose the identity of the proposed purchaser or
transferee, the number of Offered Shares, the terms of the proposed sale and
any other material facts relating to the sale. If GoldMine elects to purchase
the Offered Shares, then, within 15 days after receipt of the Offer, GoldMine
shall give written notice to Peregrine of its agreement to purchase all, but
not less than all, of the Offered Shares from Peregrine on the terms and
conditions as set forth in the Offer, and such purchase shall take place
within 60 days after GoldMine gives notice of its agreement to purchase.
13
8.2 FAILURE TO EXERCISE RIGHTS. In the event that GoldMine does not
purchase all of the Offered Shares pursuant to and within time period set
forth above, such Offered Shares may be sold by Peregrine at any time within
90 days thereafter. Any such sale shall be at not less than the price nor
upon other terms and conditions more favorable to the purchaser than those
specified in the Offer. Any Offered Shares not sold within such 90-day period
shall thereafter again be subject to the requirements of this Section 8.
8.3 TERMINATION OF RIGHT OF FIRST REFUSAL. The right of first refusal
granted under this Section 8 shall terminate and be of no further force or
effect upon the occurrence of any of the events specified in Section 6.2. In
addition, this right of first refusal shall not apply to any shares of
GoldMine Common permitted or required to be included in GoldMine's initial
public offering under the GoldMine Registration Rights Agreement or any sale
of GoldMine Common under Rule 144.
SECTION 9
MISCELLANEOUS
9.1 GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of California without giving effect to the
conflict of laws principles thereof.
9.2 SURVIVAL. The representations and warranties made herein shall
survive any investigation made by GoldMine or Peregrine and the closing of
the transactions contemplated hereby for a period of two years following such
closing.
9.3 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.
9.4 ENTIRE AGREEMENT; AMENDMENT. This Agreement, the Peregrine
Registration Rights Agreement and the GoldMine Registration Rights Agreement
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 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.
9.5 NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be delivered by facsimile
upon proper confirmation of receipt or mailed by registered or certified
mail, postage prepaid, or otherwise delivered by hand or by messenger,
addressed (a) if to a GoldMine, to the following address:
14
GoldMine Software Corporation
0000 Xxxxx Xxxxxxx Xxxx.
Xxxxxxxx Xxxxxxx, XX 00000
Attn: General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or at such other address as GoldMine shall have furnished to Peregrine in
writing,
with a copy to:
Holme, Xxxxxxx & Xxxx LLP
0000 Xxxxxxx Xx., #0000
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or (b) if to any other holder of any securities of either GoldMine or
Peregrine, at such address as such holder shall have furnished either
GoldMine or Peregrine in writing, or, until any such holder so furnishes an
address to either GoldMine or Peregrine, then to and at the address of the
last holder of such securities of either GoldMine or Peregrine who has so
furnished an address to either GoldMine or Peregrine, or (c) if to Peregrine,
to the following address:
Peregrine Systems, Inc.
00000 Xxxx Xxxxx Xxxxx
Xxx Xxxxx, XX 00000
Attn: Chief Executive Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or at such other address as Peregrine shall have furnished to GoldMine in
writing,
with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
15
Each such notice or other communication shall for all purposes of this
Agreement be treated as effective or having been given when delivered if
delivered personally or sent by telegram or telex, or, if sent by mail, at
the earlier of its receipt or 72 hours after the same has been deposited in
the United States mail, addressed and mailed as aforesaid.
9.6 EXPENSES. Each of Peregrine and GoldMine shall bear its own
expenses incurred on its behalf with respect to this Agreement, the Peregrine
Registration Rights Agreement, the GoldMine Registration Rights Agreement and
the transactions contemplated hereby and thereby and any amendments or
waivers hereto.
9.7 ATTORNEYS' FEES. In the event of any litigation in a court of
competent jurisdiction arising in connection with this Agreement and the
Exhibits hereto and the transactions contemplated hereby, the prevailing
party in judgment shall be entitled to recover reasonable legal fees and
costs in connection with such action.
9.8 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.
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.
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.
[Signature Page to Follow]
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The foregoing agreement is hereby executed as of the date first above
written.
"PEREGRINE":
PEREGRINE SYSTEMS, INC.
a Delaware corporation
/s/ XXXXXXX X. XXXXXX
---------------------------------------
Signature
Xxxxxxx X. Xxxxxx
---------------------------------------
Print Name
Vice President
---------------------------------------
Title
"GOLDMINE":
GOLDMINE SOFTWARE CORPORATION
a Delaware corporation
/s/ XXXXXXX XXXXXXX
---------------------------------------
Signature
Xxxxxxx Xxxxxxx
---------------------------------------
Print Name
Vice President and General Counsel
---------------------------------------
Title
