EXHIBIT 4
EXECUTION COPY
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT (this "Agreement"), dated as of October 18,
2002, by and between Progress Software Corporation, a Massachusetts corporation
("Parent"), and eXcelon Corporation, a Delaware corporation (the "Company").
WHEREAS, the Company, Parent and Merger Sub, Inc., a Delaware
corporation and a newly-formed and wholly-owned direct subsidiary of Parent
("Merger Sub"), are, concurrently with the execution and delivery of this
Agreement, entering into an Agreement and Plan of Merger dated as of the date
hereof (the "Merger Agreement") which provides, among other things, that Merger
Sub will be merged with and into the Company pursuant to the terms and
conditions thereof (capitalized terms used but not defined herein shall have the
meanings respectively ascribed to them in the Merger Agreement); and
WHEREAS, as an essential condition and inducement to Parent's entering
into the Merger Agreement and in consideration therefor, Parent and Merger Sub
have required that the Company agree, and believing it to be in the best
interests of the Company, the Company has agreed, among other things, to grant
Parent the Option (as hereinafter defined) to purchase shares of Company Common
Stock at a price per share equal to the Exercise Price (as defined herein).
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein and in the Merger Agreement, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereby agree as follows:
ARTICLE 1
OPTION TO PURCHASE SHARES
1.1 Grant of Option.
(a) The Company hereby grants to Parent an irrevocable option to
purchase, in whole or in part, an aggregate of up to 1,475,000 duly authorized,
validly issued, fully paid and nonassessable shares of Company Common Stock
(representing approximately 19.9% of the outstanding shares of Company Common
Stock as of the date hereof) on the terms and subject to the conditions set
forth herein (the "Option"); provided, however, that in no event shall the
number of shares of Company Common Stock for which this Option is exercisable
exceed 19.9% of the issued and outstanding shares of Company Common Stock at the
time of exercise without giving effect to the issuance of any Option Shares (as
hereinafter defined). The number of shares of Company Common Stock that may be
received upon the exercise of the Option and the Exercise Price are subject to
adjustment as herein set forth.
(b) In the event that any additional shares of Company Common
Stock are issued or otherwise become outstanding after the date of this
Agreement (other than pursuant to this Agreement and other than pursuant to an
event described in Article III hereof), the number of shares of Company Common
Stock subject to the Option shall be increased so that, after such issuance,
such number together with any shares of Company Common Stock previously issued
pursuant hereto, equals 19.9% of the number of shares of Company Common Stock
then issued
and outstanding without giving effect to any shares subject to or issued or
issuable pursuant to the Option. Nothing contained in this Section 1.1(b) or
elsewhere in this Agreement shall be deemed to authorize the Company to breach
any provision of the Merger Agreement. As used herein, the term "Option Shares"
means the shares of Company Common Stock issuable pursuant to the Option, as the
number of such shares shall be adjusted pursuant to the terms hereof.
1.2 Exercise of Option.
(a) Parent may exercise the Option, as a whole or in part, at any
time and from time to time, commencing upon the Exercise Date and prior to the
Expiration Date. As used herein, the term "Exercise Date" means the date on
which Parent becomes entitled to receive the Termination Fee pursuant to Section
7.3(b) of the Merger Agreement. As used herein, the term "Expiration Date" means
the first to occur prior to the Parent's exercise of the Option pursuant to
Section 1.2(b) of:
(i) the Effective Time;
(ii) written notice of termination of this Agreement by Parent
to the Company;
(iii) the termination of the Merger Agreement under
circumstances where the Termination Fee could not become payable; or
(iv) the date that is twelve (12) months from the date of
termination of the Merger Agreement.
Notwithstanding the termination of the Option, Parent shall be entitled to
purchase those Option Shares with respect to which it has exercised the Option
in accordance with the terms hereof prior to the Expiration Date, and the
termination of the Option shall not affect any rights hereunder which by their
terms do not terminate or expire prior to or at the Expiration Date.
(b) In the event that Parent wishes to exercise the Option, Parent
shall send to the Company a written notice (such notice being herein referred to
as an "Exercise Notice" and the date of issuance of an Exercise Notice being
herein referred to as the "Notice Date"), indicating that Parent is exercising
the Option and specifying (i) the number of Option Shares to be purchased, (ii)
whether the aggregate Exercise Price will be paid in cash or by surrendering a
portion of the Option in accordance with Section 1.3(b) or a combination
thereof, and (iii) a place and date not earlier than two (2) Business Days nor
later than ten (10) Business Days after the Notice Date for the closing of such
purchase (the "Option Closing Date"); provided that, if the closing of the
purchase and sale pursuant to the Option (the "Option Closing") cannot be
consummated, by reason of any applicable order of a Governmental Authority
("Order"), the period of time that otherwise would run pursuant to this Section
1.2(b) shall run instead from the date on which such restriction on consummation
has expired or been terminated; and provided, further, without limiting the
foregoing, that if, in the reasonable opinion of Parent, prior notification to
or approval of any Governmental Authority is required in connection with such
purchase, the Company or Parent, as the case may be, shall promptly file the
required notice or application for approval and shall expeditiously process the
same and the period of time that
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otherwise would run pursuant to this Section 1.2(b) shall run instead from the
date on which any required notification periods shall have expired or been
terminated or all such approvals shall have been obtained and any requisite
waiting period or periods shall have elapsed. Notwithstanding any prior Exercise
Notice, Parent shall be entitled to rescind such Exercise Notice, without
penalty of any kind, and shall not be obligated to purchase any Option Shares in
connection with such exercise upon written notice to such effect to the Company.
(c) At any Option Closing, (i) the Company shall deliver to Parent
all of the Option Shares to be purchased by delivery of a certificate or
certificates evidencing such Option Shares in the denominations designated by
Parent in the Exercise Notice, and (ii) if the Option is exercised in part
and/or surrendered in part to pay the aggregate Exercise Price, the Company and
Parent shall execute and deliver an amendment to this Agreement reflecting the
Option Shares for which the Option has not been exercised and/or surrendered. If
at the time of issuance of any Option Shares pursuant to an exercise of all or
part of the Option hereunder, the Company shall have issued any rights or other
securities which are attached to or otherwise associated with the Company Common
Stock, then each Option Share issued pursuant to such exercise shall also
represent such rights or other securities with terms substantially the same as
and at least as favorable to Parent as are provided under any shareholder rights
agreement or similar agreement of the Company then in effect. At the Option
Closing, Parent shall pay to the Company by wire transfer of immediately
available funds to an account specified by the Company to Parent in writing at
least two Business Days prior to the Option Closing an amount equal to the
Exercise Price multiplied by the number of Option Shares to be purchased for
cash pursuant to this Article I; provided that the failure or refusal of the
Company to specify an account shall not affect the Company's obligation to issue
the Option Shares.
(d) Upon the delivery by Parent to the Company of the Exercise
Notice and the tender of the applicable aggregate Exercise Price in immediately
available funds or the requisite portion of the Option, Parent shall be deemed
to be the holder of record of the Option Shares issuable upon such exercise,
notwithstanding that the stock transfer books of the Company may then be closed,
that certificates representing such Option Shares may not then have been
actually delivered to Parent, or the Company may have failed or refused to take
any action required of it hereunder. The Company shall pay all expenses that may
be payable in connection with the preparation, issuance and delivery of stock
certificates under this Section 1.2 in the name of Parent or its designees,
stock certificates or a substitute option agreement in the name of the assignee,
transferee or designee of Parent and any filing fees and other expenses arising
from the performance of the transactions contemplated hereby, including pursuant
to the HSR Act; provided that Parent shall pay for any transfer taxes if stock
certificates are issued to anyone other than Parent.
(e) Certificates for the Option Shares delivered at an Option
Closing will have typed or printed thereon a restrictive legend which will read
substantially as follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE
REOFFERED OR SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE. SUCH SECURITIES ARE ALSO SUBJECT TO
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ADDITIONAL RESTRICTIONS ON TRANSFER AS SET FORTH IN THE STOCK OPTION
AGREEMENT DATED AS OF OCTOBER 18, 2002, A COPY OF WHICH MAY BE OBTAINED
FROM THE SECRETARY OF CHOPIN AT ITS PRINCIPAL EXECUTIVE OFFICES".
It is understood and agreed that (i) the references to restrictions
arising under the Securities Act in the above legend will be removed by delivery
of substitute certificate(s) without such reference if such Option Shares have
been registered pursuant to the Securities Act, such Option Shares have been
sold in reliance on and in accordance with Rule 144 under the Securities Act or
Parent has delivered to the Company a copy of a letter from the staff of the
SEC, or an opinion of counsel in form and substance reasonably satisfactory to
the Company and its counsel, to the effect that such legend is not required for
purposed of the Securities Act and (ii) the reference to restrictions pursuant
to this Agreement in the above legend will be removed by delivery of substitute
certificate(s) without such reference if the Option Shares evidenced by
certificate(s) containing such reference have been sold or transferred in
compliance with the provisions of this Agreement under circumstances that do not
require the retention of such references.
1.3 Payments.
(a) The purchase and sale of the Option Shares pursuant to Section
1.2 of this Agreement shall be at a purchase price equal to $3.19 per Share (as
such amount may be adjusted pursuant to the terms hereof, the "Exercise Price"),
payable at Parent's option in cash, by surrender of a portion of the Option in
accordance with Section 1.3(b), or a combination thereof.
(b) Parent may elect to purchase Option Shares issuable, and pay
some or all of the aggregate Exercise Price payable, upon an exercise of the
Option by surrendering a portion of the Option with respect to such number of
Option Shares as is determined by dividing the (i) aggregate Exercise Price
payable in respect of the number of Option Shares being purchased in such manner
by (ii) the excess of the Fair Market Value (as defined below) per share of
Company Common Stock as of the last trading day preceding the Option Closing
Date over the per share Exercise Price. The "Fair Market Value" per share of
Company Common Stock shall be (i) if the Company Common Stock is listed on the
Nasdaq National Market ("NASDAQ"), national securities exchange or other
nationally recognized exchange or trading system as of the Option Closing Date,
the average of last reported sale prices per share of Company Common Stock
thereon for the ten (10) trading days immediately preceding the Option Closing
Date, or (ii) if the Company Common Stock is not listed on the NASDAQ, any
national securities exchange or other nationally recognized exchange or trading
system as of the Option Closing Date, the amount determined by a mutually
acceptable independent investment banking firm as the value per share the
Company Common Stock would have if publicly traded on a nationally recognized
exchange or trading system (assuming the absence of unusual market conditions
and no discount for minority interest, illiquidity or restrictions on transfer).
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ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of Parent.
(a) Due Organization, Authorization, etc. Parent is duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts. Parent has all requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby by Parent have been
duly authorized by all necessary corporate action on the part of Parent. This
Agreement has been duly executed and delivered by Parent and constitutes a
legal, valid and binding obligation of Parent, enforceable against Parent in
accordance with its terms. The execution, delivery and performance of this
Agreement by Parent will not constitute a violation of, conflict with, or result
in a default under, (i) any judgment, decree or order applicable to Parent or
(ii) any law, rule or regulation of any governmental body applicable to the
Parent or by which its properties or assets are bound or affected. The execution
and delivery of this Agreement by Parent does not, and the performance of this
Agreement by Parent will not, require Parent to obtain any consent, approval,
authorization or permit of, or filing by Parent with or notification by Parent
to, any governmental or regulatory authority, domestic or foreign, except (i)
compliance with the applicable requirements under the Exchange Act, (ii)
compliance with the HSR Act, if applicable and (iii) where the failure to obtain
such consents, approvals, authorizations or permits, or to make such filings or
notifications, would not prevent or delay the performance by Parent its
obligations under this Agreement.
(b) Parent hereby represents and warrants to the Company that any
Option Shares acquired by Parent upon exercise of the Option will not be taken
with a view to the public distribution thereof and will not be transferred or
otherwise disposed of except in a transaction registered or exempt from
registration under the Securities Act.
2.2 Representations and Warranties of the Company. The Company hereby
represents and warrants to Parent as follows:
(a) Due Authorization; Good Standing. The execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
(including the issuance and exercise of the Option) have been duly and validly
authorized by the Board of Directors of the Company and no other corporate
proceedings on the part of the Company are necessary to authorize this Agreement
or to consummate the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by the Company and constitutes a legal,
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms. The Company 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 execute and deliver this
Agreement.
(b) Option Shares. The Company has taken all necessary corporate
and other action to authorize and reserve for issuance, and to permit it to
issue, the Option Shares and all
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additional shares or other securities which may be issued pursuant to Article
III upon exercise of the Option, and, at all times from the date hereof until
such time as the obligation to deliver Option Shares hereunder terminates, will
have reserved for issuance upon exercise of the Option the Option Shares and
such other additional shares or securities, if any. All of the Option Shares and
all additional shares or other securities or property which may be issuable
pursuant to Article III, upon exercise of the Option and issuance pursuant
hereto, shall be duly authorized, validly issued, fully paid and nonassessable,
shall be delivered free and clear of all Liens of any nature whatsoever (other
than those imposed by reason of the action of Parent), and shall not be subject
to any preemptive or similar right of any Person.
(c) No Conflict; Required Filings and Consents. The execution and
delivery by the Company of this Agreement do not, and the performance of this
Agreement shall not, (i) conflict with or violate the certificate of
incorporation or bylaws of the Company, (ii) conflict with or violate any Law or
Order in each case applicable to the Company or by which its properties or
assets are bound or affected, or (iii) result in any breach or violation of or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or impair the Company's rights or alter the
rights or obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a Lien on any of the properties or assets of the Company pursuant
to, any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which the Company is a
party or by which the Company or its properties or assets is bound or affected,
except in the case of clause (ii) or (iii) above, for any such conflicts,
breaches, violations, defaults or other occurrences that would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.
The execution and delivery by the Company of this Agreement do not, and the
performance of this Agreement shall not, require the Company to, obtain any
Approval of any Person or Approval of, observe any waiting period imposed by, or
make any filing with or notification to, any Governmental Authority, domestic or
foreign, except for compliance with applicable requirements of the Securities
Act, the Exchange Act and Blue Sky Laws, the foreign competition laws or where
the failure to obtain such Approvals, or to make such filings or notifications,
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(d) Takeover Laws. The Board of Directors of the Company has,
prior to the date hereof, approved this Agreement, the Merger Agreement and the
Merger and the other transactions contemplated hereby and thereby and such
approval is sufficient to render inapplicable to this Agreement, the Merger
Agreement, the Offer, the Merger and any other transactions contemplated hereby
and thereby, the restrictions of Section 203 of the DGCL. No Delaware law or
other takeover statute or similar Law and no provision of the certificate of
incorporation or bylaws of the Company or any Material Agreement to which the
Company is a party (a) would or would purport to impose restrictions which might
adversely affect or delay the consummation of the transactions contemplated by
this Agreement, or (b) as a result of the consummation of the transactions
contemplated by this Agreement, the Company or the Surviving Corporation by
Parent or Merger Sub (i) would or would purport to restrict or impair the
ability of Parent to vote or otherwise exercise the rights of a shareholder with
respect to securities of the Company or any of its Subsidiaries that may be
acquired or controlled by Parent or (ii) would or would purport to entitle any
Person to acquire securities of the Company.
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ARTICLE 3
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
In addition to the adjustment in the number of shares of Company Common
Stock that may be purchased upon exercise of the Option pursuant to Section 1.1
of this Agreement, the number of shares of Company Common Stock that may be
purchased upon the exercise of the Option and the Exercise Price shall be
subject to adjustment from time to time as provided in this Article III. In the
event of any change in the number of issued and outstanding shares of Company
Common Stock by reason of any stock dividend, split-up, merger, reorganization,
recapitalization, combination, conversion, exchange of shares, spin-off or other
change in the corporate or capital structure of the Company which would have the
effect of diluting or otherwise diminishing Parent's rights hereunder, the
number and kind of Option Shares or other securities subject to the Option and
the Exercise Price therefor shall be appropriately adjusted so that Parent shall
receive upon exercise (or, if such a change occurs between exercise and Option
Closing, upon Option Closing) of the Option the number and kind of shares or
other securities or property that Parent would have received in respect of the
Option Shares that Parent is entitled to purchase upon exercise of the Option if
the Option had been exercised (or the purchase thereunder had been consummated,
as the case may be) immediately prior to such event or the record date for such
event, as applicable. The rights of Parent under this Section shall be in
addition to, and shall in no way limit, its rights against the Company for
breach of any provision of the Merger Agreement.
ARTICLE 4
REGISTRATION RIGHTS OF OPTION SHARES
4.1 Demand Registration. If requested by Parent at any time and from
time to time after receipt by Parent of Option Shares (the "Registration
Period"), the Company shall use its reasonable best efforts, as promptly as
practicable, to effect the registration under the Securities Act and any
applicable state law (a "Demand Registration") of such number of Option Shares
owned by or issuable to Parent in accordance with the method of sale or other
disposition contemplated by Parent, including a "shelf" registration statement
under Rule 415 of the Securities Act or any successor provision, and to obtain
all consents or waivers of other parties that are required therefor. The Company
shall keep such Demand Registration effective for a period of not less than nine
months, unless, in the written opinion of counsel to the Company, which opinion
shall be delivered to Parent and which shall be satisfactory in form and
substance to Parent and its counsel, such registration under the Securities Act
is not required in order to lawfully sell and distribute such Option Shares in
the manner contemplated by Parent. The Company shall only have the obligation to
effect two Demand Registrations pursuant to this Article IV; provided, that only
requests relating to a registration statement that has become effective under
the Securities Act shall be counted for purposes of determining the number of
Demand Registrations made. The Company shall be entitled to postpone for up to
ninety (90) days from receipt of Parent's request for a Demand Registration the
filing of any registration statement in connection therewith if the Board of
Directors of the Company determines in its good faith reasonable judgment, that
such registration would materially interfere with or require premature
disclosure of, and have a material adverse effect on, any material acquisition,
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reorganization or other transaction involving the Company or any other agreement
under active negotiation by the Company, which, if signed, the Company would be
required by the Exchange Act and the rules thereunder to file with the SEC;
provided, however, that the Company shall not have postponed any Demand
Registration pursuant to this sentence during the twelve (12) month period
immediately preceding the date of delivery of Parent's request for a Demand
Registration.
4.2 Incidental Registration. If the Company effects a registration
under the Securities Act of Company Common Stock for its own account or for any
other stockholders of the Company (other than on Form S-4 or Form S-8, or any
successor form), Parent shall have the right to participate in such registration
(an "Incidental Registration" and, together with a Demand Registration, a
"Registration"); provided, however, that, if the managing underwriters of such
offering advise the Company in writing that in their opinion the number of
shares of Company Common Stock requested to be included in such Incidental
Registration exceeds the number which can be sold in such offering, the Company
shall include therein (i) first all shares proposed to be included therein by
the Company and (ii) second the shares requested to be included therein by
Parent pro rata with the shares intended to be included therein by any other
stockholder of the Company. Participation by Parent in any Incidental
Registration shall not affect the obligation of the Company to effect Demand
Registrations under this Article IV. The Company may withdraw any registration
under the Securities Act that gives rise to an Incidental Registration without
the consent of Parent.
4.3 Representations and Warranties; Listing. In connection with any
Registration pursuant to this Article IV, (i) the Company and Parent shall
provide each other and any underwriter of the offering with customary
representations, warranties, covenants, indemnification and contribution
obligations in connection with such Registration, and (ii) the Company shall use
reasonable best efforts to cause any Option Shares included in such Registration
to be approved for listing on NASDAQ or any national securities exchange upon
which the Company's securities are then listed, subject to official notice of
issuance, which notice shall be given by the Company upon issuance. The costs
and expenses incurred by the Company in connection with any Registration
pursuant to this Article IV (including any fees related to Blue Sky
qualifications and SEC filing fees) (the "Registration Expenses") shall be borne
by the Company, excluding legal fees of Parent's counsel, fees of any other
advisors to Parent such as financial advisors or accountants, and underwriting
discounts or commissions with respect to Option Shares to be sold by Parent
included in a Registration.
4.4 Termination of Rights. Notwithstanding anything contained in this
Article IV to the contrary, Parents right to participate in a Registration
pursuant to Sections 4.1 and 4.2 shall terminate upon the earlier to occur of:
(i) the date that all such Option Shares held or entitled to be held under this
Agreement shall have first become eligible for sale under Rule 144 (or any
similar rule then in force) during any three (3)-month period; (ii) the date
that all such Option Shares held or entitled to be held under this Agreement may
immediately be sold under Rule 144(k) (or any similar rule then in force) or
(iii) two (2) years from the date of this Agreement.
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ARTICLE 5
REPURCHASE RIGHTS; SUBSTITUTE OPTIONS
5.1 Repurchase Rights.
(a) Subject to Section 6.1, at any time on or after the Exercise
Date and prior to the Expiration Date, Parent shall have the right (the
"Repurchase Right") to require the Company to repurchase from Parent (i) the
Option or any part thereof as Parent shall designate at a price (the "Option
Repurchase Price") equal to the amount, subject to clause (iii) of Section
6.1(a), by which (A) the Market/Offer Price (as defined below) exceeds (B) the
Exercise Price, multiplied by the number of Option Shares as to which the Option
is to be repurchased and (ii) such number of the Option Shares as Parent shall
designate at a price (the "Option Share Repurchase Price") equal to the
Market/Offer Price multiplied by the number of Option Shares so designated. The
term "Market/Offer Price" shall mean the highest of (i) the highest price per
share of Company Common Stock offered or paid in any Acquisition Proposal or any
acquisition by any Person or group, in a single transaction or a series of
related transactions, after the date hereof of 10% or more of the outstanding
shares of capital stock of the Company, (ii) the highest closing price for
shares of Company Common Stock during the 10 trading days ending on the second
trading day prior to the date Parent gives the Repurchase Notice (as hereinafter
defined), or (iii) in the event of a sale of all or substantially all of the
Company's assets, the sum of the net price paid in such sale for such assets
plus the current market value of the remaining net assets of the Company as
determined by a nationally recognized investment banking firm selected by Parent
and reasonably acceptable to the Company, divided by the number of shares of
Company Common Stock issued and outstanding at the time of such sale, which
determination, absent manifest error, shall be conclusive for all purposes of
this Agreement. In determining the Market/Offer Price, the value of
consideration other than cash shall be determined by a nationally recognized
investment banking firm selected by Parent and reasonably acceptable to the
Company, which determination, absent manifest error, shall be conclusive for all
purposes of this Agreement.
(b) Parent shall exercise its Repurchase Right by delivering to
the Company written notice (a "Repurchase Notice") stating that Parent elects to
require the Company to repurchase all or a portion of the Option and/or the
Option Shares as specified therein. The closing of the Repurchase Right (the
"Repurchase Closing") shall take place in the United States at the place, time
and date specified in the Repurchase Notice, which date shall not be less than
two business days nor more than ten business days from the date on which the
Repurchase Notice is delivered. At the Repurchase Closing, subject to the
receipt of a writing evidencing the surrender of the Option and/or certificates
representing Option Shares, as the case may be, the Company shall deliver to
Parent the Option Repurchase Price therefor or the Option Share Repurchase Price
therefor, as the case may be, or the portion thereof that the Company is not
then prohibited under applicable law and regulation from so delivering. At the
Repurchase Closing, (i) the Company shall pay to Parent the Option Repurchase
Price for the portion of the Option which is to be repurchased or the Option
Shares Repurchase Price for the number of Option Shares to be repurchased, as
the case may be, by wire transfer of immediately available funds to an account
specified by Parent at least 24 hours prior to the Repurchase Closing and (ii)
if the Option is repurchased only in part, the Company and Parent shall execute
and deliver an
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amendment to this Agreement reflecting the Option Shares for which the Option is
not being repurchased.
(c) To the extent that the Company is prohibited under applicable
law or regulation from repurchasing the portion of the Option or the Option
Shares designated in such Repurchase Notice, the Company shall immediately so
notify Parent and thereafter deliver, from time to time, to Parent the portion
of the Option Repurchase Price and the Option Share Repurchase Price,
respectively, that it is no longer prohibited from delivering, within five (5)
Business Days after the date on which the Company is no longer so prohibited;
provided, however, that if the Company at any time after delivery of a
Repurchase Notice is prohibited under applicable Law from delivering to Parent
the full amount of the Option Repurchase Price and the Option Share Repurchase
Price for the Option or Option Shares to be repurchased, respectively, Parent
may rescind the exercise of the Repurchase Right, whether in whole, in part or
to the extent of the prohibition, and, to the extent rescinded, no part of the
amounts, terms or the rights with respect to the Option or Repurchase Right
shall be changed or affected and such rights shall remain as if such Repurchase
Right was not exercised.
5.2 Substitute Option.
(a) In the event that the Company enters into an agreement (i) to
consolidate with or merge into any person, other than Parent or any Subsidiary
of Parent (each an "Excluded Person"), and the Company is not the continuing or
surviving corporation of such consolidation or merger, (ii) to permit any
Person, other than an Excluded Person, to merge into the Company and the Company
shall be the continuing or surviving or acquiring corporation, but, in
connection with such merger, the then outstanding shares of Company Common Stock
shall be changed into or exchanged for stock or other securities of any other
Person or cash or any other property or the then outstanding shares of Company
Common Stock shall after such merger represent less than 50% of the outstanding
shares and share equivalents of the merged or acquiring company, or (iii) to
sell or otherwise transfer all or substantially all of its assets to any Person,
other than an Excluded Person, then, and in each such case, the agreement
governing such transaction shall make proper provision so that, unless earlier
exercised by Parent, the Option shall, upon the consummation of any such
transaction and upon the terms and conditions set forth herein, be converted
into, or exchanged for, an option (the "Substitute Option") for Substitute
Option Shares (as hereinafter defined), at the election of Parent, of either (x)
the Acquiring Corporation (as hereinafter defined) or (y) any Person that
controls the Acquiring Corporation.
(b) The Substitute Option shall have the same terms as the Option;
provided, however, that if the terms of the Substitute Option cannot, because of
applicable Law, be the same as the Option, such terms shall be as similar as
possible and to the extent permitted by applicable Law in no event less
advantageous to Parent than the Option. The issuer of the Substitute Option
shall enter into an agreement with Parent in substantially the same form and
terms as this Agreement (including the terms of this Article V) to memorialize
the terms of the Substitute Option. The Substitute Option shall be exercisable
for such number of Substitute Option Shares as is equal to the Market/Offer
Price multiplied by the number of shares of Company Common Stock for which the
Option was exercisable immediately prior to the event described in the first
sentence of Section 5.2(a), divided by the Average Price (as hereinafter
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defined). The exercise price of the Substitute Option per Substitute Option
Share shall then be equal to the Exercise Price multiplied by a fraction, the
numerator of which shall be the number of shares of Company Common Stock for
which the Option was exercisable immediately prior to the event described in the
first sentence of Section 5.2(a) and the denominator of which shall be the
number of Substitute Option Shares for which the Substitute Option is
exercisable.
(c) In addition to any other restrictions or covenants, the
Company agrees that it shall not enter or agree to enter into any transaction
described in Section 5.2(a) unless the Acquiring Corporation and any Person that
controls the Acquiring Corporation assume in writing all the obligations of the
Company hereunder and agree for the benefit of Parent to comply with this
Article V.
(d) For purposes of this Section 5.2, the following terms have the
meanings indicated:
"Acquiring Corporation" shall mean (i) the continuing or
surviving Person of a consolidation or merger with the Company (if
other than the Company), (ii) the Company in a consolidation or merger
in which the Company is the continuing or surviving or acquiring
person, and (iii) the transferee of all or substantially all of the
Company's assets.
"Substitute Option Shares" shall mean the shares of capital
stock (or similar equity interest) with the greatest voting power in
respect of the election of directors (or other persons similarly
responsible for direction of the business and affairs) of a Person.
"Average Price" shall mean the average closing price per
Substitute Option Share, on the principal trading market on which such
shares are traded as reported by a nationally recognized source, for
the ten (10) trading days ending on the second trading day preceding
the consolidation, merger or sale in question, but in no event higher
than the closing price of the Substitute Option Shares on such market
on the day preceding such consolidation, merger or sale; provided,
however, that if the Company is the issuer of the Substitute Option,
the Average Price shall be computed with respect to a share of common
stock issued by the Person merging into the Company or by any entity
which controls or is controlled by such person, as Parent may elect.
ARTICLE 6
MISCELLANEOUS
6.1 Total Profit.
(a) Notwithstanding any other provision of this Agreement, in no
event shall Parent's Total Profit (as hereinafter defined) exceed $1,200,000,
less the amount of any Termination Fee paid pursuant to Section 7.3(b) of the
Merger Agreement, and, if it otherwise would exceed such amount, Parent, at its
sole election, shall either (i) reduce the number of shares of Company Common
Stock subject to this Option, (ii) deliver to the Company for cancellation
Option Shares previously purchased by Parent, (iii) limit the amount of the
Option Repurchase Price or the Option Share Repurchase Price, (iv) pay cash to
the Company, or (v)
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any combination thereof, so that Parent's actually realized Total Profit shall
not exceed such amount after taking into account the foregoing actions.
(b) As used herein, the term "Total Profit" shall mean the
aggregate amount (before taxes) of the following: (i) the amount received by
Parent pursuant to the Company's repurchase of the Option (or any portion
thereof) pursuant to Section 5.1, (ii) (x) the amount received by Parent
pursuant to the Company's repurchase of Option Shares pursuant to Section 5.1,
less (y) Parent's purchase price for such Option Shares, (iii) (x) the net cash
amounts (and the fair market value of any other consideration, valued as of the
date of receipt of such consideration by the Parent) received by Parent pursuant
to any consummated arm's-length sales of Option Shares (or any other securities
into which such Option Shares are converted or exchanged) to any unaffiliated
party, less (y) Parent's purchase price of such Option Shares, (iv) any cash
amounts (and the fair market value of any other consideration, valued as of the
date of receipt of such consideration by the Parent) received by Parent pursuant
to any consummated arm's-length transfers of the Option (or any portion thereof)
to any unaffiliated party, and (v) any amount equivalent to the foregoing with
respect to the Substitute Option.
6.2 Further Assurances. From time to time, at the other party's request
and without further consideration, each party hereto shall execute and deliver
such additional documents and take all such further action as may be necessary
or desirable to consummate the transactions contemplated by this Agreement,
including, without limitation, to vest in Parent good and marketable title, free
and clear of all Liens (other than those imposed by reason of the action of
Parent), to any Option Shares purchased hereunder.
6.3 Division of Option; Lost Options. The Agreement (and the Option
granted hereby) are exchangeable, without expense, at the option of Parent, upon
presentation and surrender of this Agreement at the principal office of the
Company, for other agreements providing for Options of different denominations
entitling the holder thereof to purchase, on the same terms and subject to the
same conditions as are set forth herein, in the aggregate the same number of
Option Shares purchasable hereunder. Upon receipt by the Company of evidence
reasonably satisfactory to it of the loss, theft or destruction or mutilation of
this Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, the Company will execute and deliver a new agreement of
like tenor and date.
6.4 Certain Filings; Listing.
(a) If so requested by Parent, promptly after the date hereof, the
Company shall make all filings which are required under any applicable Law, and
the parties shall furnish to each other such necessary information and
reasonable assistance as may be requested in connection with the preparation of
filings and submissions to any Governmental Authority, including, without
limitation, filings under the provisions of any applicable Law. The Company
shall supply Parent with copies of all correspondence, filings or communications
(or memoranda setting forth the substance thereof) between the Company and its
representatives and any Governmental Authority with respect to this Agreement
and the transactions contemplated hereby.
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(b) If the Company Common Stock or any other securities to be
acquired upon exercise of the Option are then listed on NASDAQ (or any national
securities exchange or other nationally recognized exchange or trading system),
the Company, upon the request of Parent, will promptly file an application to
list the shares of Company Common Stock or such other securities to be acquired
upon exercise of the Option on NASDAQ (and any such other national securities
exchange or other nationally recognized exchange or trading system) and will use
reasonable best efforts to obtain approval of such listing as promptly as
practicable.
(c) Each of Parent and the Company shall use reasonable best
efforts to make all filings with, and to obtain consents of, all third parties
and regulatory and governmental authorities necessary to the consummation of the
transactions contemplated by this Agreement.
6.5 Notices. All notices, claims, demands and other communications
hereunder shall be deemed to have been duly given or made in accordance with the
terms set forth in the Merger Agreement.
6.6 Interpretation. When a reference is made in this Agreement to
Sections, subsections, Schedules or Exhibits, such reference shall be to a
Section, subsection, Schedule or Exhibit to this Agreement unless otherwise
indicated. The words "include," "includes" and "including" when used herein
shall be deemed in each case to be followed by the words "without limitation."
The word "herein" and similar references mean, except where a specific Section
or Article reference is expressly indicated, the entire Agreement rather than
any specific Section or Article. The table of contents and the headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
6.7 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible to the fullest extent
permitted by applicable Law in a mutually acceptable manner in order that the
terms of this Agreement remain as originally contemplated to the fullest extent
possible.
6.8 Entire Agreement; No Third Party Beneficiaries. This Agreement
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, and is not intended to confer upon any Person other than
the parties hereto any rights or remedies hereunder.
6.9 Amendments; Assignment. This Agreement may not be amended except by
written agreement by all the parties. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and
permitted assigns. Neither this Agreement nor any of the rights, interests or
obligations under this Agreement, including without limitation, the rights
granted in Articles 1, 4 and 5, shall be assigned, in whole or in part, by any
of the parties without the prior written consent of the other parties, and any
purported assignment without such consent shall be void; provided, however, that
Parent may assign its rights and
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obligations hereunder to any direct or indirect wholly owned subsidiary of
Parent without such consent.
6.10 Failure or Indulgence Not Waiver; Remedies Cumulative. No failure
or delay on the part of any party hereto in the exercise of any right hereunder
will impair such right or be construed to be a waiver of, or acquiescence in,
any breach of any representation, warranty or agreement herein, nor will any
single or partial exercise of any such right preclude other or further exercise
thereof or of any other right. All rights and remedies existing under this
Agreement are cumulative to, and not exclusive to, and not exclusive of, any
rights or remedies otherwise available.
6.11 Governing Law; Enforcement. This Agreement and the rights and
duties of the parties hereunder shall be governed by, and construed in
accordance with, the Law of the State of Delaware. The parties agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions of this Agreement in the state
courts in the State of Delaware, this being in addition to any other remedy to
which they are entitled at law or in equity. In addition, each of the parties
hereto, (a) consents to submit itself to the personal jurisdiction of the state
courts in the State of Delaware the event any dispute arises out of this
Agreement or any transaction contemplated hereby, (b) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other request
for leave from any such court, (c) agrees that it will not bring any action
relating to this Agreement or any transaction contemplated hereby in any court
other than the state courts in the State of Delaware and (d) waives any right to
trial by jury with respect to any action related to or arising out of this
Agreement or any transaction contemplated hereby.
6.12 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Stock
Option Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
PROGRESS SOFTWARE CORPORATION
By: /s/ Xxxxxx X. Xxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Chief Executive Officer
EXCELON CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chief Executive Officer
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