AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
PEREGRINE SYSTEMS, INC.
FRENCH ACQUISITION CORPORATION
AND
UNITED SOFTWARE, INC.
EFFECTIVE AS OF AUGUST 29, 1997
INDEX OF EXHIBITS
EXHIBIT DESCRIPTION
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Exhibit A Affiliate Stockholders
Exhibit B Form of Declaration of Registration Rights
Exhibit C Form of Affiliates Agreement
Exhibit D Form of Voting Agreement
Exhibit E Form of Non-competition Agreement
Exhibit F Form of Affiliate Stockholder Indemnity Agreement
Exhibit G Form of Legal Opinion of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, PC
Exhibit H Form of Legal Opinion of Venture Law Group
Exhibit I Form of Legal Opinion of Stibbe, Simond, Monahan,
Duhot & Xxxxxx
Exhibit J Participating Stockholders
Exhibit K Escrow Fund Allocation
INDEX OF SCHEDULES
SCHEDULE DESCRIPTION
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2.1(b) Subsidiaries
2.2(a) Stockholder List
2.2(b) Restricted Stock List
2.2(c) Option List
2.3 Government Consents
2.4(c) Company Financial Statements
2.6 Business Changes
2.7 Tax Returns and Audits
2.9(a) Leased Real Property
2.9(c) Leased Equipment
2.10(b) Intellectual Property
2.10(c) Intellectual Property Licenses
2.11 Agreements, Contracts and Commitments
2.13 Government Permits and Licenses
2.14 Litigation
2.15 Insurance
2.17 Bank Accounts
2.19 Third Party Expenses
2.20(b) Employee Benefit Plans and Employee Agreements
2.20(d) Employee Plan Compliance
2.20(e) Pension Plans
2.20(g) Post Employment Obligations
2.20(h)(i) Effect of Transaction
2.20(h)(ii) Golden Parachutes
2.20(j) Officers, Directors, and Employees
5.1 Conduct of Business
6.5 Third Party Consents
6.6 Rule 145 Affiliates
TABLE OF CONTENTS
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ARTICLE I - THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 The Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Effective Time. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Effect of the Merger. . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Certificate of Incorporation; Bylaws. . . . . . . . . . . . . . . . 2
1.5 Directors and Officers. . . . . . . . . . . . . . . . . . . . . . . 3
1.6 Effect on Capital Stock . . . . . . . . . . . . . . . . . . . . . . 3
1.7 Appraisal Rights. . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.8 Surrender of Certificates . . . . . . . . . . . . . . . . . . . . . 6
1.9 No Further Ownership Rights in Company Common Stock . . . . . . . . 8
1.10 Lost, Stolen, or Destroyed Certificates . . . . . . . . . . . . . . 8
1.11 Tax and Accounting Consequences . . . . . . . . . . . . . . . . . . 8
1.12 Taking of Necessary Action; Further Action. . . . . . . . . . . . . 9
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE AFFILIATE
STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.1 Organization of the Company . . . . . . . . . . . . . . . . . . . . 9
2.2 Company Capital Structure . . . . . . . . . . . . . . . . . . . . .10
2.3 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
2.4 Company Financial Statements. . . . . . . . . . . . . . . . . . . .13
2.5 Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . .13
2.6 Business Changes. . . . . . . . . . . . . . . . . . . . . . . . . .14
2.7 Tax and Other Returns and Reports . . . . . . . . . . . . . . . . .17
2.8 Restrictions on Business Activities . . . . . . . . . . . . . . . .18
2.9 Title to Properties; Absence of Liens and Encumbrances. . . . . . .19
2.10 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . .20
2.11 Agreements, Contracts and Commitments . . . . . . . . . . . . . . .22
2.12 Interested Party Transactions . . . . . . . . . . . . . . . . . . .24
2.13 Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . . .24
2.14 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
2.15 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
2.16 Minute Books. . . . . . . . . . . . . . . . . . . . . . . . . . . .25
2.17 Bank Accounts.. . . . . . . . . . . . . . . . . . . . . . . . . . .25
2.18 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . .25
2.19 Brokers' and Finders' Fees. . . . . . . . . . . . . . . . . . . . .26
2.20 Employee Matters and Benefit Plans. . . . . . . . . . . . . . . . .26
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2.21 Certain Advances. . . . . . . . . . . . . . . . . . . . . . . . . .30
2.22 Representations Complete. . . . . . . . . . . . . . . . . . . . . .31
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB. . . .31
3.1 Organization of Parent and Merger Sub . . . . . . . . . . . . . . .31
3.2 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
3.3 Parent Common Stock . . . . . . . . . . . . . . . . . . . . . . . .32
3.4 SEC Documents; Parent Financial Statements. . . . . . . . . . . . .32
3.5 No Material Adverse Change. . . . . . . . . . . . . . . . . . . . .32
3.6 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
3.7 Brokers' and Finders' Fees. . . . . . . . . . . . . . . . . . . . .33
3.8 Securities Act Exemption. . . . . . . . . . . . . . . . . . . . . .33
ARTICLE IV - SECURITIES ACT COMPLIANCE; REGISTRATION . . . . . . . . . . . .33
4.1 Securities Act Exemption. . . . . . . . . . . . . . . . . . . . . .33
4.2 Stock Restrictions. . . . . . . . . . . . . . . . . . . . . . . . .33
4.3 Stockholders' Representations Regarding Securities Law Matters. . .34
4.4 Registration Rights . . . . . . . . . . . . . . . . . . . . . . . .34
ARTICLE V - CONDUCT PRIOR TO THE EFFECTIVE TIME. . . . . . . . . . . . . . .35
5.1 Conduct of Business of the Company. . . . . . . . . . . . . . . . .35
ARTICLE VI - ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . .38
6.1 Stockholder Approval. . . . . . . . . . . . . . . . . . . . . . . .38
6.2 Access to Information . . . . . . . . . . . . . . . . . . . . . . .38
6.3 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . .38
6.4 Public Disclosure . . . . . . . . . . . . . . . . . . . . . . . . .39
6.5 Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
6.6 Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . .39
6.7 Legal Conditions to the Merger. . . . . . . . . . . . . . . . . . .39
6.8 Blue Sky Laws . . . . . . . . . . . . . . . . . . . . . . . . . . .40
6.9 Best Efforts; Additional Documents and Further Assurances . . . . .40
6.10 Notification of Certain Matters . . . . . . . . . . . . . . . . . .40
6.11 Form S-8/S-3. . . . . . . . . . . . . . . . . . . . . . . . . . . .40
6.12 Nasdaq National Market Listing. . . . . . . . . . . . . . . . . . .40
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6.13 Voting Agreements . . . . . . . . . . . . . . . . . . . . . . . . .40
6.14 Non-Competition Agreements. . . . . . . . . . . . . . . . . . . . .41
6.15 Company Capital Structure; Subsidiaries . . . . . . . . . . . . . .41
6.16 Termination of United Kingdom Distributorship . . . . . . . . . . .42
6.17 Completion of Audit . . . . . . . . . . . . . . . . . . . . . . . .43
6.18 Filing of Tax Returns; Payment of Taxes . . . . . . . . . . . . . .43
6.19 Employment Agreements . . . . . . . . . . . . . . . . . . . . . . .43
6.20 No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . .43
6.21 Affiliate Stockholder Indemnification . . . . . . . . . . . . . . .44
6.22 Benefit Arrangements. . . . . . . . . . . . . . . . . . . . . . . .44
6.23 Reorganization. . . . . . . . . . . . . . . . . . . . . . . . . . .44
ARTICLE VII - CONDITIONS TO THE MERGER . . . . . . . . . . . . . . . . . . .44
7.1 Conditions to Obligations of Each Party to Effect the Merger. . . .44
7.2 Additional Conditions to Obligations of the Company . . . . . . . .45
7.3 Additional Conditions to the Obligations of Parent and Merger Sub .46
ARTICLE VIII - SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ESCROW. . . . . .48
8.1 Survival of Representations and Warranties. . . . . . . . . . . . .48
8.2 Escrow Arrangements . . . . . . . . . . . . . . . . . . . . . . . .49
ARTICLE IX - LIMITATION OF LIABILITY . . . . . . . . . . . . . . . . . . . .58
9.1 Limitation. . . . . . . . . . . . . . . . . . . . . . . . . . . . .58
ARTICLE X - TERMINATION, AMENDMENT AND WAIVER. . . . . . . . . . . . . . . .58
10.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . .58
10.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . .60
10.3 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . .60
10.4 Extension; Waiver . . . . . . . . . . . . . . . . . . . . . . . . .60
ARTICLE XI - GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . .60
11.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .60
11.2 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62
11.3 Interpretation. . . . . . . . . . . . . . . . . . . . . . . . . . .62
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TABLE OF CONTENTS (cont)
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11.4 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . 62
11.5 Entire Agreement; Assignment. . . . . . . . . . . . . . . . . . 63
11.6 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . 63
11.7 Other Remedies. . . . . . . . . . . . . . . . . . . . . . . . . 63
11.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 63
11.9 Currency. . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
11.10 Rules of Construction . . . . . . . . . . . . . . . . . . . . . 63
11.11 Specific Performance . . . . . . . . . . . . . . . . . . . . . 64
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AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (the "AGREEMENT") is made and
entered into effective as of August 29, 1997 by and among Peregrine Systems,
Inc., a Delaware corporation (the "PARENT"); French Acquisition Corporation, a
Delaware corporation and wholly-owned subsidiary of Parent (the "MERGER SUB");
United Software, Inc., a Delaware corporation (the "COMPANY"); Xxxxxxx Worms as
Securityholder Agent; ChaseMellon Shareholder Services, LLC as Escrow Agent; and
for purposes of Sections 2.1(b), 2.2, and 2.3(b) of Article II and Sections 6.10
and 6.20 of Article VI, certain stockholders of the Company listed on EXHIBIT A
attached hereto (the "AFFILIATE STOCKHOLDERS").
RECITALS
A. On August 29, 1997, the Boards of Directors of each of the Company and
Parent authorized the officers of the Company and Parent, respectively, to
execute and deliver a Memorandum of Understanding (the "Memorandum") setting
forth the terms and conditions upon which Parent would acquire the Company
through the statutory merger of Merger Sub with and into the Company (the
"Merger") and directed such officers to negotiate, execute, and deliver this
Agreement to memorialize the terms of the Merger set forth in the Memorandum.
B. The Boards of Directors of each of the Company, Parent, and Merger Sub
believe it to be in the best interests of each such company and their respective
stockholders that the parties consummate the Merger.
C. Pursuant to the Merger, among other things, and subject to the terms
and conditions of this Agreement, all of the issued and outstanding shares of
the Company's capital stock ("COMPANY CAPITAL STOCK") and all outstanding
options and other rights to acquire or receive shares of Company Capital Stock
shall be converted into the right to receive shares of Parent's Common Stock,
$0.001 par value per share ("PARENT COMMON STOCK"), at the rate determined
herein.
D. A portion of the shares of Parent Common Stock otherwise issuable by
Parent in connection with the Merger shall be placed in escrow by Parent, the
release of which amount shall be contingent upon certain events and conditions,
all as set forth in Article VIII hereof.
E. The Company, Parent, Merger Sub, and the Affiliate Stockholders desire
to make certain representations and warranties and other agreements in
connection with the Merger.
F. The parties intend, by executing this Agreement, to adopt a plan of
reorganization within the meaning of Section 368 of the Internal Revenue Code of
1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the covenants, promises, and
representations set forth herein, and for other good and valuable consideration,
intending to be legally bound hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. At the Effective Time (as defined in Section 1.2) and
subject to and upon the terms and conditions of this Agreement and the
applicable provisions of the Delaware General Corporation Law ("Delaware Law"),
Merger Sub shall be merged with and into the Company, the separate corporate
existence of Merger Sub shall cease, and the Company shall continue as the
surviving corporation and as a wholly-owned subsidiary of Parent. The Company
as the surviving corporation after the Merger is hereinafter sometimes referred
to as the "SURVIVING CORPORATION."
1.2 EFFECTIVE TIME. Unless this Agreement is earlier terminated pursuant
to Article X, the closing of the Merger (the "CLOSING") will take place as
promptly as practicable but no later than five (5) business days following
satisfaction or waiver of the conditions set forth in Article VII at the offices
of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation, 000 Xxxx Xxxx
Xxxx, Xxxx Xxxx, Xxxxxxxxxx 00000-0000, unless another place or time is agreed
to by Parent and the Company. The date upon which the Closing actually occurs
is referred to herein as the "CLOSING DATE." On the Closing Date, the parties
hereto shall cause the Merger to be consummated by filing a Certificate of
Merger (or like instrument) with the Secretary of State of the State of Delaware
(the "CERTIFICATE OF MERGER"), in accordance with the relevant provisions of
applicable law (the time of acceptance by the Secretary of State of Delaware of
such filing being referred to herein as the "EFFECTIVE TIME").
1.3 EFFECT OF THE MERGER. At the Effective Time, the effect of the Merger
shall be as provided in the applicable provisions of Delaware Law. Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time, all the property, rights, privileges, powers, and franchises of the
Company and Merger Sub shall vest in the Surviving Corporation, and all debts,
liabilities and duties of the Company and Merger Sub shall become the debts,
liabilities, and duties of the Surviving Corporation.
1.4 CERTIFICATE OF INCORPORATION; BYLAWS.
(a) Unless otherwise determined by Parent prior to the Effective
Time, at the Effective Time, the Certificate of Incorporation of Merger Sub
shall be the Certificate of Incorporation of the Surviving Corporation until
thereafter amended as provided by law and such Certificate of Incorporation;
PROVIDED, HOWEVER, that Article I of the Certificate of Incorporation of the
Surviving Corporation shall be amended to read as follows: "The name of the
corporation is Peregrine Asset Management Corporation."
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(b) The Bylaws of Merger Sub, as in effect immediately prior to the
Effective Time, shall be the Bylaws of the Surviving Corporation until
thereafter amended.
1.5 DIRECTORS AND OFFICERS. The director(s) of Merger Sub immediately
prior to the Effective Time shall be the initial director(s) of the Surviving
Corporation, each to hold office in accordance with the Certificate of
Incorporation and Bylaws of the Surviving Corporation. The officers of
Merger Sub immediately prior to the Effective Time shall be the initial
officers of the Surviving Corporation, each to hold office in accordance with
the Bylaws of the Surviving Corporation.
1.6 EFFECT ON CAPITAL STOCK. Subject to the terms and conditions of
this Agreement, as of the Effective Time, by virtue of the Merger and without
any action on the part of Merger Sub, the Company, or the holder of any
shares of the Company Capital Stock, the following shall occur:
(a) AGGREGATE SHARES OF PARENT COMMON STOCK. The aggregate
maximum number of shares of Parent Common Stock to be issued (including
Parent Common Stock to be reserved for issuance upon exercise of any of the
Company's options and warrants to be assumed by Parent) in exchange for the
acquisition by Parent of all outstanding Company Capital Stock and all
unexpired and unexercised options and warrants to acquire Company Capital
Stock (the "AGGREGATE SHARES OF PARENT COMMON STOCK") shall not exceed the
sum of (i) 1,891,051 and (ii) the number of shares of Incremental Parent
Common Stock (as defined below).
(b) CONVERSION OF COMPANY COMMON STOCK. Each share of Common Stock
of the Company ("COMPANY COMMON STOCK") issued and outstanding immediately
prior to the Effective Time, including all shares of Common Stock issued and
outstanding as a result of the conversion of the Company's Series A Preferred
Stock or Series B Preferred Stock (collectively, the "COMPANY PREFERRED
STOCK") immediately prior to the Effective Time as contemplated by Section
6.1(b) but excluding any shares of Company Capital Stock to be cancelled
pursuant to Section 1.6(d) and any Dissenting Shares (as defined and to the
extent provided in Section 1.7(a)), will be cancelled and extinguished and
will be converted automatically into the right to receive 0.234829 shares of
Parent Common Stock (the "BASE EXCHANGE RATIO").
Of the total shares of Parent Common Stock issued pursuant to this
Section 1.6(b), ten percent (10%) shall be subject to the Escrow pursuant to
Article VIII below (with fractional shares as to any Stockholder to be
rounded down to a whole share) (the "ESCROW AMOUNT").
(c) INCREMENTAL EXCHANGE RATIO. In addition to the shares of
Parent Common Stock to be issued based on the Base Exchange Ratio in
accordance with the provisions of Section 1.6(b) above, each share of Company
Common Stock issued and outstanding immediately prior to the Effective Time,
including all shares issued and outstanding as a result of the conversion of
the Company Preferred Stock immediately prior to the Effective Time as
contemplated by Section 6.1(b) but excluding any shares of Company Capital
Stock to be cancelled pursuant to Section 1.6 (d) and any Dissenting Shares,
will be entitled to receive that fraction of a share of Parent Common Stock as
3
is equal to the Incremental Exchange Ratio (as defined herein), none of
which shares (the "INCREMENTAL PARENT COMMON STOCK") shall be included in the
Escrow Amount. The Incremental Exchange Ratio as used herein shall mean the
quotient (expressed as a decimal and rounded out to the nearest millionth of
a share of Parent Common Stock) that results from a fraction, the denominator
of which is the Total Company Common Stock (as defined herein) and the
numerator of which is itself a fraction, the numerator of which is Five
Hundred Thousand Dollars ($500,000) and the denominator of which is the per
share closing price of Parent Common Stock as of the second day immediately
preceding the Effective Time as reported on the Nasdaq National Market. The
Total Company Common Stock as used herein shall mean the aggregate Company
Common Stock outstanding immediately prior to the Effective Time, including
(i) all Company Common Stock issued as a result of the conversion of the then
outstanding Company Preferred Stock, (ii) all Company Common Stock issuable
upon exercise of the then outstanding options and other rights to acquire
Company Common Stock (whether or not they are exercisable) and (iii) all
Company Common Stock that would be issuable on a one-for-one basis in respect
of the 68,000 shares of Common Stock of Apsylog (as defined in Section 6.15)
held by the Apsylog Minority Stockholder (as defined in Section 6.15(a)
below). For purposes of this Agreement, reference to the Parent Common Stock
to be issued in connection with the Merger at the Effective Time shall be
deemed to include the Incremental Parent Common Stock, unless otherwise
specified. The "Base Exchange Ratio" and the "Incremental Exchange Ratio,"
when cumulated and added together, are referred to herein as the "COMMON
EXCHANGE RATIO."
(d) CANCELLATION OF PARENT-OWNED AND COMPANY-OWNED STOCK. Each
share of Company Capital Stock owned by Merger Sub, Parent, the Company or
any direct or indirect wholly-owned subsidiary of Parent or subsidiary of the
Company immediately prior to the Effective Time shall be cancelled and
extinguished without any conversion thereof.
(e) STOCK OPTIONS. At the Effective Time, all options and stock
purchase rights to purchase Company Common Stock (each a "Company Option")
then outstanding under the Company's 1997 Stock Plan (the "OPTION PLAN")
(whether or not exercisable and whether or not vested), or otherwise, shall
remain outstanding following the Effective Time and shall be assumed by
Parent in accordance with provisions described below.
(i) Each Company Option so assumed by Parent under this
Agreement shall continue to have, and be subject to, the same terms and
conditions set forth in the Option Plan and/or as provided in the respective
option agreements including any amendments thereto permitted by the Agreement
governing such Company Option immediately prior to the Effective Time, except
that (A) such Company Option shall be exercisable for that number of whole
shares of Parent Common Stock equal to the product of the number of shares of
Company Common Stock that were issuable upon exercise of such Company Option
immediately prior to the Effective Time multiplied by the Common Exchange
Ratio, rounded up to the nearest whole number of shares of Parent Common
Stock and (B) the per share exercise price for the shares of Parent Common
Stock issuable upon exercise of such assumed Company Option shall be equal to
the quotient determined by dividing the exercise price per share of Company
Common Stock at which such Company Option was exercisable
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immediately prior to the Effective Time by the Common Exchange Ratio, rounded
up to the nearest whole cent. Parent acknowledges and agrees that the
Company and each optionee will amend each Company Option prior to the
Effective Time to provide that such Company Options will become fully vested
and exercisable with respect to all shares subject thereto immediately prior
to the Effective Time.
(ii) It is the intention of the parties that the Company
Options assumed by Parent qualify following the Effective Time as incentive
stock options as defined in Section 422 of the Code to the extent the Company
Options qualified as incentive stock options immediately prior to the
Effective Time.
(iii) Promptly following the Effective Time, Parent will issue
to each holder of an outstanding Company Option a document evidencing the
foregoing assumption of such Company Option by Parent.
(iv) Prior to the Effective Time, the Company shall deliver to
each holder of shares of Company Capital Stock outstanding immediately prior
to the Effective Time which are then unvested or subject to a repurchase
option, risk of forfeiture, or other condition under any applicable
restricted stock purchase agreement or other agreement with the Company, a
written notice to the effect that the Company has waived its right (and
terminated such holder's obligations with respect) to such repurchase option,
risk of forfeiture, or similar condition such that such shares shall be fully
vested immediately prior to the Effective Time. The Company shall also
deliver to each holder of unvested Company Options written notice that such
Company Options shall become fully vested and exercisable with respect to all
shares subject thereto immediately prior to the Effective Time.
(v) Notwithstanding anything to the contrary in this Section
1.6, in lieu of assuming outstanding Company Options in accordance with
Section 1.6(d), Parent may, at its election, cause such outstanding Company
Options to be replaced by issuing substantially equivalent replacement stock
options in substitution therefor.
(f) CAPITAL STOCK OF MERGER SUB. Each share of Common Stock of
Merger Sub issued and outstanding immediately prior to the Effective Time
shall be converted into and exchanged for one validly issued, fully paid, and
nonassessable share of Common Stock of the Surviving Corporation. Each stock
certificate of Merger Sub evidencing ownership of any such shares shall
continue to evidence ownership of such shares of capital stock of the
Surviving Corporation.
(g) ADJUSTMENTS TO EXCHANGE RATIOS. The Common Exchange Ratio
shall be adjusted to reflect fully the effect of any stock split, reverse
split, stock dividend (including any dividend or distribution of securities
convertible into Parent Common Stock or Company Capital Stock),
reorganization, recapitalization or other like change with respect to Parent
Common Stock or Company Capital Stock occurring after the date hereof and
prior to the Effective Time, other than the
5
conversion of the Company Preferred Stock into Company Common Stock prior to
the Effective Time.
(h) FRACTIONAL SHARES. No fraction of a share of Parent Common
Stock will be issued, but in lieu thereof, each holder of shares of Company
Capital Stock who would otherwise be entitled to a fraction of a share of
Parent Common Stock (after aggregating all fractional shares of Parent Common
Stock to be received by such holder) shall be entitled to receive from Parent
an amount of cash (rounded to the nearest whole cent) equal to the product of
(i) such fraction and (ii) the Parent Price Per Share (as defined in Section
8.2(d)(ii)).
1.7 APPRAISAL RIGHTS.
(a) Notwithstanding any provision of this Agreement to the
contrary, any shares of Company Capital Stock held by a holder who has
demanded and perfected appraisal rights for such shares in accordance with
Delaware Law and who, as of the Effective Time, has not effectively withdrawn
or lost such appraisal rights ("DISSENTING SHARES"), shall not be converted
into or represent a right to receive Parent Common Stock pursuant to Section
1.6, but the holder thereof shall only be entitled to such rights as are
granted by Delaware Law.
(b) Notwithstanding the provisions of subsection (a), if any holder
of shares of Company Capital Stock who demands appraisal of such shares under
Delaware Law shall effectively withdraw or lose (through failure to perfect
or otherwise) the right to appraisal, then, as of the later of the Effective
Time or the occurrence of such event, such holder's shares shall
automatically be converted into and represent only the right to receive
Parent Common Stock and fractional shares as provided in Section 1.6, without
interest thereon, upon surrender of the certificate representing such shares
of Company Capital Stock.
(c) The Company shall give Parent (i) prompt notice of any written
demands for appraisal of any shares of Company Capital Stock, withdrawals of
such demands, and any other instruments served pursuant to Delaware Law and
received by the Company and (ii) the opportunity to participate in all
negotiations and proceedings with respect to demands for appraisal under
Delaware Law. The Company shall not, except with the prior written consent
of Parent, voluntarily make any payment with respect to any demands for
appraisal of Company Capital Stock or offer to settle or settle any such
demands.
1.8 SURRENDER OF CERTIFICATES.
(a) EXCHANGE AGENT. ChaseMellon Shareholder Services, LLC shall
act as exchange agent (the "EXCHANGE AGENT") in the Merger.
(b) PARENT TO PROVIDE COMMON STOCK. Promptly after the Effective
Time, Parent shall make available to the Exchange Agent for exchange in
accordance with this Article I, the aggregate number of shares of Parent
Common Stock issued pursuant to Section 1.6 in exchange for
6
outstanding shares of Company Capital Stock; provided that, on behalf of the
holders of Company Capital Stock, Parent shall deposit into an escrow account
a number of shares of Parent Common Stock equal to the Escrow Amount out of
the aggregate number of shares of Parent Common Stock otherwise issuable
pursuant to Section 1.6(b). The portion of the Escrow Amount contributed on
behalf of each holder of Company Capital Stock shall be in proportion to the
aggregate number of shares of Parent Common Stock which such holder would
otherwise be entitled to receive under Section 1.6(b) by virtue of ownership
of outstanding shares of Company Capital Stock immediately prior to the
Effective Time.
(c) EXCHANGE PROCEDURES. Promptly after the Effective Time, the
Surviving Corporation shall cause to be mailed to each holder of record of a
certificate or certificates (the "CERTIFICATES") which immediately prior to
the Effective Time represented outstanding shares of Company Capital Stock
whose shares were converted into the right to receive shares of Parent Common
Stock pursuant to Section 1.6, (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the
Exchange Agent and shall be in such form and have such other provisions as
Parent may reasonably specify) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for certificates representing
shares of Parent Common Stock. Upon surrender of a Certificate for
cancellation to the Exchange Agent or to such other agent or agents as may be
appointed by Parent, together with such letter of transmittal, duly completed
and validly executed in accordance with the instructions thereto, the holder
of such Certificate shall be entitled to receive in exchange therefor a
certificate representing the number of whole shares of Parent Common Stock
(less the number of shares of Parent Common Stock, if any, to be deposited in
the Escrow Fund (as defined in Section 8.2) on such holder's behalf pursuant
to Article VIII hereof), plus cash in lieu of fractional shares in accordance
with Section 1.6, to which such holder is entitled pursuant to Section 1.6,
and the Certificate so surrendered shall forthwith be cancelled. As soon as
practicable after the Effective Time, and subject to and in accordance with
the provisions of Article VIII hereof, Parent shall cause to be distributed
to the Escrow Agent (as defined in Article VIII) a certificate or
certificates representing that number of shares of Parent Common Stock equal
to the Escrow Amount which shall be registered in the name of the Escrow
Agent. Such shares shall be beneficially owned by the holders on whose
behalf such shares were deposited in the Escrow Fund and shall be available
to compensate Parent as provided in Article VIII. Until so surrendered, each
outstanding Certificate that, prior to the Effective Time, represented shares
of Company Capital Stock will be deemed from and after the Effective Time,
for all corporate purposes, to evidence the ownership of the number of full
shares of Parent Common Stock into which such shares of Company Capital Stock
shall have been so converted and the right to receive an amount in cash in
lieu of the issuance of any fractional share in accordance with Section 1.6.
(d) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends
or other distributions declared or made after the Effective Time with respect
to Parent Common Stock with a record date after the Effective Time will be
paid to the holder of any unsurrendered Certificate with respect to the
shares of Parent Common Stock represented thereby until the holder of record
of such Certificate shall surrender such Certificate. Subject to applicable
law, following surrender of any
7
such Certificate, there shall be paid to the record holder of the
certificates representing whole shares of Parent Common Stock issued in
exchange therefor, without interest, at the time of such surrender, the
amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such whole shares of Parent
Common Stock.
(e) TRANSFERS OF OWNERSHIP. If any certificate for shares of
Parent Common Stock is to be issued in a name other than that in which the
certificate surrendered in exchange therefor is registered, it will be a
condition of the issuance thereof that the certificate so surrendered will be
properly endorsed and otherwise in proper form for transfer and that the
person requesting such exchange will have paid to Parent or any agent
designated by it any transfer or other taxes required by reason of the
issuance of a certificate for shares of Parent Common Stock in any name other
than that of the registered holder of the certificate surrendered, or
established to the satisfaction of Parent or any agent designated by it that
such tax has been paid or is not payable.
(f) NO LIABILITY. Notwithstanding anything to the contrary in this
Section 1.8, none of the Exchange Agent, the Surviving Corporation, or any
party hereto shall be liable to a holder of shares of Parent Common Stock or
Company Capital Stock for any amount properly paid to a public official
pursuant to any applicable abandoned property, escheat, or similar law.
1.9 NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All shares of
Parent Common Stock issued upon the surrender for exchange of shares of
Company Common Stock in accordance with the terms hereof (including any cash
paid in respect thereof) shall be deemed to have been issued in full
satisfaction of all rights pertaining to such shares of Company Common Stock,
and there shall be no further registration of transfers on the records of the
Surviving Corporation of shares of Company Common Stock which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be cancelled and exchanged as provided in this Article I.
1.10 LOST, STOLEN, OR DESTROYED CERTIFICATES. In the event any
certificate evidencing shares of Company Capital Stock shall have been lost,
stolen, or destroyed, the Exchange Agent shall issue in exchange for such
lost, stolen or destroyed certificate, upon the making of an affidavit of
that fact by the holder thereof, such shares of Parent Common Stock and cash
for fractional share, if any, as may be required pursuant to Section 1.6;
PROVIDED, HOWEVER, that Parent may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed certificate to deliver a bond in such sum as it may reasonably
direct as indemnity against any claim that may be made against Parent or the
Exchange Agent with respect to the certificate alleged to have been lost,
stolen or destroyed.
1.11 TAX AND ACCOUNTING CONSEQUENCES. It is intended by the parties
hereto that the Merger shall (i) constitute a reorganization within the
meaning of Section 368 of the Code and (ii) qualify for accounting treatment
as a purchase.
8
1.12 TAKING OF NECESSARY ACTION; FURTHER ACTION. If, at any time after
the Effective Time, any such further action is necessary or desirable to
carry out the purposes of this Agreement and to vest the Surviving
Corporation with full right, title, and possession to all assets, property,
rights, privileges, powers, and franchises of the Company and Merger Sub, the
officers and directors of the Company and Merger Sub are fully authorized in
the names of their respective corporations or otherwise to take, and will
take, all such lawful and necessary action.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND THE AFFILIATE STOCKHOLDERS
The Company hereby represents and warrants, and, for purposes of Sections
2.1(b) and 2.2, the Company and, to the best of their knowledge, each of the
Affiliate Stockholders, severally, hereby represent and warrant, and, for
purposes of Section 2.3(b), each Affiliate Stockholder severally hereby
represents and warrants with respect to such Affiliate Stockholder, to Parent
and Merger Sub, subject to the specific exceptions disclosed in the
disclosure letter and schedules thereto (each referencing the appropriate
section numbers of this Article II as to which an exception exists) delivered
by the Company and the Affiliate Stockholders to Parent (the "Company
Schedules") and dated as of the date hereof, as follows:
2.1 ORGANIZATION OF THE COMPANY.
(a) The Company is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Delaware, and each
Subsidiary (as defined herein) is a corporation duly organized, validly
existing, and in good standing under the laws of its respective jurisdiction
of incorporation. The Company and each Subsidiary has the corporate power
and authority to own, lease, and operate its assets and property and to carry
on its business as now being conducted and as proposed to be conducted and is
duly qualified or licensed to do business and is in good standing in each
jurisdiction where the character of the properties owned, leased, or operated
by it or the nature of its activities makes such qualification or licensing
necessary, except where the failure to be so qualified would not have a
material adverse effect on the condition (financial or otherwise), business,
net worth, assets (including intangible assets), properties, operations,
obligations, liabilities (fixed or contingent), or prospects ("Material
Adverse Effect") of the Company or such Subsidiary.
(b) Schedule 2.1(b) sets forth a complete list of each corporation,
partnership, limited liability company, joint venture, business trust or
association, or other entity in which the Company, directly or indirectly,
holds an equity interest (each, a "Subsidiary" and collectively, the
"Subsidiaries"). The term "Subsidiary" shall not include Apsylog (UK) Ltd., a
corporation organized under the laws of England and, except for the
representations made in this Section 2.1(b), A-Net and Net (as defined in
Section 6.15(a)). Schedule 2.1(b) identifies for each Subsidiary the issued
and
9
outstanding capital stock, the identity and address of each holder of the
issued and outstanding capital stock of such Subsidiary, and the number of
shares of capital stock of each Subsidiary held by such holder (as updated
prior to the Closing to reflect the transactions contemplated by Section
6.15(a)). Except as set forth in Schedule 2.1(b), and in any event without
exception prior to the Closing, all of the outstanding shares of the capital
stock of each Subsidiary have been duly authorized and validly issued, are
fully paid and nonassessable, and are wholly owned by the Company, directly
or indirectly through a Subsidiary, free and clear of any lien, adverse
claim, security interest, equity or other encumbrance. Except as described
in Schedule 2.1(b), there are no options, warrants, calls, rights,
commitments or agreements of any character, written or oral, to which any
Subsidiary is a party or by which any Subsidiary is bound, obligating such
Subsidiary to issue, deliver, sell, repurchase or redeem, or cause to be
issued, delivered, sold, repurchased or redeemed, any shares of such
Subsidiary's capital stock.
(c) The Company has made available to Parent a true and correct
copy of its Certificate of Incorporation and Bylaws and similar constituent
documents of each Subsidiary, each as amended to date, and each such
instrument is in full force and effect. Neither the Company nor any
Subsidiary is in violation of any of the provisions of its Certificate of
Incorporation or Bylaws or equivalent governing instruments.
2.2 COMPANY CAPITAL STRUCTURE.
(a) The authorized Company Capital Stock consists of 15,000,000
shares of authorized Common Stock, par value $0.001 per share, of which
1,941,066 shares are issued and outstanding, and 10,000,000 shares of
authorized Preferred Stock, par value $0.001 per share. Of the authorized
Preferred Stock, 3,898,084 shares have been designated as Series A Preferred
Stock, of which 819,101 shares are issued and outstanding, and 2,009,530
shares have been designated as Series B Preferred Stock, of which 2,009,530
shares are issued and outstanding. The Company Capital Stock is held of
record by the persons with the addresses of record and in the amounts
identified on Schedule 2.2(a). Immediately after giving effect to the
transactions contemplated by Section 6.15(a) of this Agreement, the Company
will have issued and outstanding 1,941,066 shares of Common Stock (not
including 68,000 shares which may be issued to the Apsylog Minority Holder as
defined in Section 6.15(a) below), 3,898,084 shares of Series A Preferred
Stock, and 2,009,530 shares of Series B Preferred Stock. All outstanding
shares of Company Capital Stock are (and any shares issued pursuant to the
transactions contemplated by Section 6.15(a) will be) duly authorized,
validly issued, fully paid, and non-assessable and not subject to preemptive
rights created by statute, the Certificate of Incorporation or Bylaws of the
Company or any agreement or document to which the Company is a party or by
which it is bound. Each outstanding share of Company Preferred Stock is
presently convertible into one share of Company Common Stock. Except as
described in Schedule 2.2(b) or Schedule 2.2(c), there are no options,
warrants, calls, rights, commitments or agreements of any character, written
or oral, to which the Company is a party or by which it is bound obligating
the Company to issue, deliver, sell, repurchase or redeem, or cause to be
issued, delivered, sold, repurchased or redeemed, any shares of Company
Capital Stock.
10
(b) Of the 1,941,066 shares of Company Common Stock outstanding,
1,563,708 shares were issued pursuant to restricted stock purchase agreements
granting repurchase options in favor of the Company in the event of a
termination of employment ("Restricted Stock"). Schedule 2.2(b) identifies
each employee of the Company or any Subsidiary who holds Restricted Stock and
specifies the vesting schedule for such Restricted Stock, the extent to which
such shares of Restricted Stock are vested to date, and whether the vesting
of such Restricted Stock will accelerate as a result of the transactions
contemplated by this Agreement.
(c) The Company has reserved 1,000,000 shares of Common Stock for
issuance to employees and consultants pursuant to the Option Plan, of which
134,500 shares are subject to outstanding, unexercised options and 488,142
shares remain available for future grant. Schedule 2.2(c) sets forth for
each outstanding Company Option the name of the holder of such option, the
address of such holder, the number of shares of Common Stock subject to such
option, the exercise price and the vesting schedule of such option, including
the extent vested to date, and whether the exercisability of such option will
be accelerated and become exercisable by the transactions contemplated by
this Agreement. Except as described in Schedule 2.2(c), there are no
options, warrants, calls, rights, commitments or agreements of any character,
written or oral, to which the Company is a party or by which it is bound
obligating the Company to grant, extend, accelerate the vesting of, change
the price of, otherwise amend or enter into any such option, warrant, call,
right, commitment, or agreement. The holders of Company Options or any other
options or rights set forth in Schedule 2.2(c) have been or will be given, or
shall have properly waived, any required notice prior to the Merger.
(d) As a result of the Merger, Parent will be the record and sole
beneficial owner of all outstanding Company Capital Stock and all rights to
acquire or receive Company Capital Stock. At or before the Effective Time,
any rights of any holder or prospective holder of the Company's securities to
cause such securities to be registered under the United States Securities Act
of 1933, as amended (the "Securities Act"), and any information rights,
voting rights, rights of co-sale, rights to maintain equity percentage,
rights of first refusal and the like that may exist for the benefit of any
such holder or prospective holder shall have been terminated, except as
expressly contemplated by this Agreement.
2.3 AUTHORITY.
(a) The Company has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of the Company, subject only to the
approval of the Merger by the Company's stockholders. The vote required of
the Company's stockholders to duly approve the Merger is a majority of the
outstanding shares of Company Common Stock and a majority of the outstanding
shares of Company Preferred Stock, each voting as a separate class (in each
case with each share of Company Preferred Stock being entitled to a number of
votes equal to the number of whole shares of Company Common Stock into which
such share of Company
11
Preferred Stock could be converted on the record date for the vote). The
Company's Board of Directors has unanimously approved the Merger and this
Agreement. This Agreement has been duly executed and delivered by the
Company and constitutes the valid and binding obligation of the Company,
enforceable in accordance with its terms. Except as set forth on Schedule
2.3(a), subject only to the approval of the Merger by the Company's
stockholders, the execution and delivery of this Agreement by the Company and
the Affiliate Stockholders does not, and, as of the Effective Time, the
consummation of the transactions contemplated hereby will not, conflict with,
or result in any violation of, or default under (with or without notice or
lapse of time, or both), or give rise to a right of termination, cancellation
or acceleration of any obligation or loss of any benefit under (any such
event, a "CONFLICT") (i) any provision of the Certificate of Incorporation or
Bylaws of the Company or (ii) any mortgage, indenture, lease, contract or
other agreement or instrument, permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to the Company, any Subsidiary, or either of their respective
properties or assets. No consent, waiver, approval, order, or authorization
of, or registration, declaration or filing with, any court, administrative
agency or commission or other federal, state, county, local or foreign
governmental authority, instrumentality, agency or commission ("GOVERNMENTAL
ENTITY") or any third party (so as not to trigger any Conflict), is required
by or with respect to the Company, any Subsidiary, in connection with the
execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby, except for (i) the filing of the
Certificate of Merger with the Delaware Secretary of State, (ii) such
consents, waivers, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable federal and
state securities laws, and (iii) such other consents, waivers,
authorizations, filings, approvals, and registrations which are set forth on
Schedule 2.3(a).
(b) Each Affiliate Stockholder has all requisite power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
authorized by all necessary action on the part of such Affiliate Stockholder.
This Agreement has been duly executed and delivered by such Affiliate
Stockholder and constitutes the valid and binding obligation of such
Affiliate Stockholder, enforceable in accordance with its terms. Except as
set forth on Schedule 2.3(b), the execution and delivery of this Agreement by
such Affiliate Stockholder does not, and, as of the Effective Time, the
consummation of the transactions contemplated hereby will not, conflict with,
or result in a Conflict under (i) any provision of the constituent documents
of such Affiliate Stockholder (if such Affiliate Stockholder is other than an
individual) or (ii) any mortgage, indenture, lease, contract or other
agreement or instrument, permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to such
Affiliate Stockholder. No consent, waiver, approval, order, or authorization
of, or registration, declaration or filing with, any Governmental Entity or
any third party (so as not to trigger any Conflict), is required by or with
respect to such Affiliate Stockholder, in connection with the execution and
delivery of this Agreement or the consummation of the transactions
contemplated hereby, except for (i) the filing of the Certificate of Merger
with the Delaware Secretary of State, (ii) such consents, waivers, approvals,
orders, authorizations, registrations, declarations and filings as
12
may be required under applicable federal and state securities laws, and
(iii) such other consents, waivers, authorizations, filings, approvals, and
registrations which are set forth on Schedule 2.3(b).
2.4 COMPANY FINANCIAL STATEMENTS.
(a) (i) The audited unconsolidated statements of income of each
Subsidiary for each of the fiscal years ended December 31, 1995 and December
31, 1996, (ii) the audited unconsolidated balance sheets of each Subsidiary
at December 31 for each such fiscal year, (iii) the unaudited consolidated
statements of income of Apsylog for the six months ended June 30, 1997, and
(iv) the audited consolidated balance sheet of Apsylog at June 30, 1997 are
complete and correct in all material respects, have been prepared in
accordance with generally accepted accounting principles ("GAAP") in France
applied on a consistent basis throughout the periods indicated (except that
the financial statements do not have notes thereto), and fairly present the
consolidated financial position of Apsylog and its consolidated results of
operations and the financial position and results of operations of each
Subsidiary, as the case may be, as of the respective dates and for the
respective periods indicated, subject, in the case of the unaudited financial
statements, to normal year-end adjustments. The Company's audited balance
sheet at June 30, 1997 is hereinafter referred to as the "Company Balance
Sheet," and all such financial statements are hereinafter referred to as the
"Company Financial Statements."
(b) No Subsidiary has any liability, indebtedness, obligation,
expense, claim, deficiency, guaranty or endorsement of any type, whether
accrued, absolute, contingent, matured, unmatured or other (whether or not
required to be reflected in the Company Financial Statements in accordance
with GAAP) which (i) has not been reflected in the Company Balance Sheet or
(ii) has not arisen in the ordinary course of the Company's business since
June 30, 1997 consistent in nature and amount with past practices and which
does not exceed $15,000 individually or $45,000 in the aggregate.
(c) A true and correct copy of the Company Financial Statements is
attached to the Company Schedules as Schedule 2.4 (c).
(d) For purposes only of this Section 2.4, the term "Subsidiary"
shall not include Apsylog GmbH, a corporation organized under the laws of
Germany. Neither the Company nor Apsylog GmbH has engaged in any material
business operations since its incorporation. The only assets of the Company
consist of shares of the capital stock of Apsylog. Neither Apsylog GmbH nor
the Company has any material liabilities, and Apyslog GmbH has no material
assets.
2.5 ACCOUNTS RECEIVABLE. All accounts receivable shown on the Company
Balance Sheet (net of reserves indicated on the Company Balance Sheet) or
thereafter acquired until the Effective Time (net of reserves accrued in the
normal course of business and consistent with past practice) arose and are
collectible within 180 days from the date recorded, except that the value of
any account receivable, the collection of which is doubtful or which is
subject to a defense or set-off, has been written down to an amount not in
excess of net realizable value or adequate reserves or allowances
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therefor have been provided. The values at which accounts receivable are
carried reflect the accounts receivable valuation policy of the Company,
which is consistent with its past practice and in accordance with GAAP
applied on a consistent basis. None of the receivables of the Company or any
Subsidiary is subject to any claim of offset, recoupment, set off, or
counterclaim, and, to the knowledge of the Company, there are no facts or
circumstances (whether asserted or unasserted) that would give rise to any
claim. No receivables are contingent upon the performance by the Company or
any Subsidiary of any obligation or contract. No person or entity has any
lien, charge, pledge, security interest, or other encumbrance on any such
receivables, and no agreement for deduction or discount has been made with
respect to any of such receivables.
2.6 BUSINESS CHANGES. Since the date of the Company Balance Sheet (or
such other date specifically set forth herein), except as otherwise
contemplated by this Agreement or described in Schedule 2.6, the Company and
each Subsidiary have conducted their businesses only in the ordinary and
usual course and, without limiting the generality of the foregoing:
(a) Neither the Company nor any Subsidiary has sustained any damage,
destruction, or loss by reason of fire, explosion, earthquake, casualty, labor
trouble (including but not limited to any claim of wrongful discharge or other
unlawful labor practice), requisition or taking of property by any government or
agent thereof, windstorm, embargo, riot, act of God or public enemy, flood,
accident, revocation of license or right to do business, total or partial
termination, suspension, default or modification of contracts, governmental
restriction or regulation, other calamity, or other similar or dissimilar event
(whether or not covered by insurance) that would result in a Material Adverse
Effect on the Company or any Subsidiary.
(b) There have been no changes in the condition (financial or
otherwise), business, net worth, assets, properties, operations, obligations,
liabilities (fixed or contingent), or prospects of the Company or any Subsidiary
which, individually or in the aggregate, have resulted or may be reasonably
expected (whether before or after the Effective Time) to result in a Material
Adverse Effect on the Company or any Subsidiary.
(c) Neither the Company nor any Subsidiary has issued, or authorized
for issuance, any equity security, bond, note or other security, except for
shares of Company Common Stock issued upon the exercise of outstanding Company
Options, except for shares of Company Common Stock and Company Options listed in
Schedule 2.2, or accelerated the vesting of any employee stock benefits
(including vesting under stock purchase agreements or exercisability of Company
Options). Neither the Company nor any Subsidiary has granted or entered into
any commitment or obligation to issue or sell any such equity security, bond,
note or other security of the Company or such Subsidiary, whether pursuant to
offers, stock option agreements, stock bonus agreements, stock purchase plans,
incentive compensation plans, warrants, calls, conversion rights or otherwise,
except for shares of Company Common issued upon the exercise of the Company
Options.
-14-
(d) Neither the Company nor any Subsidiary has incurred any
additional debt for borrowed money, nor incurred any obligation or liability
(fixed, contingent, or otherwise) except in the ordinary and usual course of
business and in no event greater than $15,000 on an individual basis.
(e) Neither the Company nor any Subsidiary has paid any obligation or
liability (fixed, contingent, or otherwise), or discharged or satisfied any lien
or encumbrance, or settled any liability, claim, dispute, proceeding, suit, or
appeal, pending or threatened against it or any of its assets or properties,
except for current liabilities included in the Company Balance Sheet and current
liabilities incurred since the date of the Company Balance Sheet in the ordinary
and usual course of business.
(f) Neither the Company nor any Subsidiary has declared, set aside
for payment, or paid any dividend, payment, or other distribution on or with
respect to any share of its capital stock.
(g) Neither the Company nor any Subsidiary has purchased, redeemed,
or otherwise acquired or committed itself to acquire, directly or indirectly,
any share or shares of its capital stock.
(h) Neither the Company nor any Subsidiary has mortgaged, pledged,
otherwise encumbered, or subjected to lien any of its assets or properties,
tangible or intangible, nor has it committed itself to do any of the foregoing,
except for liens for current taxes which are not yet due and payable and
purchase money liens arising out of the purchase or sale of products or services
made in the ordinary and usual course of business.
(i) Neither the Company nor any Subsidiary has disposed of, or agreed
to dispose of, any asset or property, tangible or intangible, except in the
ordinary and usual course of business, and in each case for a consideration at
least equal to the book value of such asset or property, nor has the Company or
any Subsidiary leased or licensed to others (including officers and directors of
the Company), or agreed so to lease or license, any asset or property, except
for the licensing of the Company's software to customers, distributors, and
resellers in the ordinary course of business, nor has the Company or any
Subsidiary discontinued any product line or the production, sale, or other
disposition of any of its products or services.
(j) Neither the Company nor any Subsidiary has purchased or agreed to
purchase or otherwise acquire any debt or equity securities of any corporation,
partnership, joint venture, firm, or other entity. Neither the Company nor any
Subsidiary has made any expenditure or commitment for the purchase, acquisition,
construction, or improvement of a capital asset, except in the ordinary and
usual course of business, and the aggregate amount of all such expenditures and
commitments made in the ordinary and usual course of business has not exceeded
$25,000 for the Company and the Subsidiaries, taken as a whole.
-15-
(k) Neither the Company nor any Subsidiary has entered into any
transaction or contract, or made any commitment to do the same, except in the
ordinary and usual course of business and not involving an amount in any case in
excess of $15,000 (excluding agreements under which the obligation of payment or
performance has been satisfied in full or which, if not satisfied, do not and
will not have a Material Adverse Effect on the Company or any Subsidiary).
Neither the Company nor any Subsidiary has waived any right of substantial value
or cancelled any debts or claims in excess of $15,000 or voluntarily suffered
any extraordinary losses other than in the ordinary and usual course of
business.
(l) Neither the Company nor any Subsidiary has sold, assigned,
transferred, or conveyed, or committed itself to sell, assign, transfer or
convey, any Company Intellectual Property Rights (as defined in Section 2.10),
except for the licensing of software to customers, distributors, and resellers
in the ordinary course of business, and neither the Company nor any Subsidiary
has entered into any product development, technology or product sharing, or
similar strategic arrangement with any other party.
(m) Except as set forth in Section 1.6(e), neither the Company nor
any Subsidiary has effected or agreed to effect any amendment or supplement to
any employee profit sharing, stock option, stock purchase, pension, bonus,
incentive, retirement, medical reimbursement, life insurance, deferred
compensation or any other employee benefit plan or arrangement.
(n) Neither the Company nor any Subsidiary has paid or committed
itself to pay to or for the benefit of any of its directors, officers,
employees, or shareholders any compensation of any kind other than wages,
salaries, and benefits at times and rates in effect prior to June 30, 1997 other
than regularly scheduled increases for employees other than officers in the
ordinary course of business for the period after June 30, 1997.
(o) Neither the Company nor any Subsidiary has effected or agreed to
effect any change, including by way of hiring or involuntary termination, in the
employment or engagement terms of any of its directors, executive officers, or
key employees.
(p) Since April 10, 1997, the Company has not effected or committed
itself to effect any amendment or modification of its Certificate of
Incorporation or Bylaws, and no Subsidiary has effected or committed itself to
effect any amendment to its constituent documents.
(q) To the knowledge of the Company, no statute has been enacted nor
has any rule or regulation been adopted (whether before or after the date of the
Company Balance Sheet) which may reasonably be expected to result in a Material
Adverse Effect on the Company or any Subsidiary.
(r) The Company has not changed in any way its accounting methods or
practices (including any change in depreciation or amortization policies or
rates, any changes in policies in making or reversing accruals, or any change in
capitalization of software development costs).
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(s) Neither the Company nor any Subsidiary has made any loan to any
person or entity, and neither the Company nor any Subsidiary has guaranteed the
payment of any loan or debt of any person or entity, except for (x) travel or
similar advances made to employees in connection with their employment duties in
the ordinary course of business, consistent with past practices and (y) accounts
receivable incurred in the ordinary course of business consistent with past
practices.
(t) Neither the Company nor any Subsidiary has changed the prices or
royalties set or charged by the Company or such Subsidiary.
(u) Neither the Company nor any Subsidiary has negotiated or agreed
to do any of the things described in the preceding clauses (a) through (t)
(other than negotiations with Parent and its representatives regarding the
transactions contemplated by this Agreement.)
2.7 TAX AND OTHER RETURNS AND REPORTS.
(a) DEFINITION OF TAXES. For the purposes of this Agreement, "TAX"
or, collectively, "TAXES" means any and all federal, state, local, and foreign
taxes, assessments, and other governmental charges, duties, impositions and
liabilities, including taxes based upon or measured by gross receipts, income,
profits, sales, use and occupation, and value added, ad valorem, transfer,
franchise, withholding, payroll, recapture, employment, excise and property
taxes, together with all interest, penalties and additions imposed with respect
to such amounts and any obligations under any agreements or arrangements with
any other person with respect to such amounts and including any liability for
taxes of a predecessor entity.
(b) TAX RETURNS AND AUDITS. Except as set forth in Schedule 2.7:
(i) The Company and each Subsidiary as of the Effective Time
will have accurately prepared and timely filed all required federal, state,
local, and foreign returns, estimates, information statements, and reports
("RETURNS") relating to any and all Taxes of the Company, any Subsidiary, or
their operations, and such Returns are true and correct in all material respects
and have been completed in accordance with applicable law.
(ii) The Company and each Subsidiary as of the Effective Time:
(A) will have paid or accrued all Taxes it is required to pay or accrue and (B)
will have withheld with respect to its employees all federal, state, or foreign
income taxes, FICA, FUTA, and other Taxes required to be withheld.
(iii) Neither the Company nor any Subsidiary has been
delinquent in the payment of any Tax nor is there any Tax deficiency
outstanding, proposed or assessed against the Company or any Subsidiary, nor has
the Company or any Subsidiary executed any waiver of any statute of limitations
on or extending the period for the assessment or collection of any Tax.
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(iv) No audit or other examination of any Return of the
Company or any Subsidiary is presently in progress, nor has the Company or
any Subsidiary been notified of any request for such an audit or other
examination.
(v) Neither the Company nor any Subsidiary has any liability
for unpaid federal, state, local, or foreign Taxes which have not been
accrued or reserved against in accordance with GAAP on the Company Balance
Sheet, whether asserted or unasserted, contingent or otherwise. The accruals
for the Taxes of the Company and the Subsidiaries shown on the Company
Balance Sheet are sufficient to discharge the Taxes for all periods (or the
portion of any period) ending on or prior to the date of the Company Balance
Sheet, and no Taxes will be incurred by the Company or any Subsidiary between
that date and the Closing Date, except in the ordinary course of business.
(vi) The Company has provided to Parent copies of all federal,
state, and foreign income and all state sales and use Tax Returns of the Company
or any Subsidiary for all periods since the date of incorporation.
(vii) There are (and as of immediately following the Closing
there will be) no liens, pledges, charges, claims, security interests or other
encumbrances of any sort ("Liens") on the assets of the Company or any
Subsidiary relating to or attributable to Taxes, other than Liens for Taxes not
yet due and payable.
(viii) None of the Company's assets is treated as "tax-exempt
use property" within the meaning of Section 168(h) of the Code.
(ix) As of the Effective Time, there will not be any contract,
agreement, plan or arrangement, including but not limited to the provisions of
this Agreement, covering any employee or former employee of the Company or any
Subsidiary that, individually or collectively, could give rise to the payment of
any amount that would not be deductible pursuant to Section 280G or 162 of the
Code.
(x) Neither the Company or any Subsidiary has filed any consent
agreement under Section 341(f) of the Code or agreed to have Section 341(f)(2)
of the Code apply to any disposition of a subsection (f) asset (as defined in
Section 341(f)(4) of the Code) owned by the Company or any Subsidiary.
(xi) Neither the Company nor any Subsidiary is party to a tax
sharing or allocation agreement nor does the Company owe any amount under any
such agreement.
(xii) The Company is not, and has not been at any time, a
"United States real property holding corporation" within the meaning of Section
897 of the Code.
2.8 RESTRICTIONS ON BUSINESS ACTIVITIES. There is no agreement
(noncompetition, field of use, or otherwise), judgment, injunction, order or
decree binding upon the Company or any
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Subsidiary of the Company which has or reasonably could be expected to have
the effect of prohibiting or impairing any business practice of the Company
or any Subsidiary, any acquisition of property (tangible or intangible) by
the Company or any Subsidiary, or the conduct of business by the Company or
any Subsidiary. Without limiting the foregoing, neither the Company nor any
Subsidiary has entered into any agreement under which the Company or any
Subsidiary is restricted from selling, licensing or otherwise distributing
any of its products to any class of customers, in any geographic area, during
any period of time or in any segment of the market.
2.9 TITLE TO PROPERTIES; ABSENCE OF LIENS AND ENCUMBRANCES; CONDITION OF
EQUIPMENT.
(a) Neither the Company nor any Subsidiary owns any real property,
nor has the Company or any Subsidiary ever owned any real property. Schedule
2.9(a) sets forth a list of all real property currently leased by the Company
and the Subsidiaries, the name of the lessor, and the date of the lease and
each amendment thereto. All such current leases are in full force and
effect, are valid and effective in accordance with their respective terms,
and there is not, under any of such leases, any material existing default or
event of default (or event which with notice or lapse of time, or both, would
constitute a material default). To the knowledge of the Company, neither its
operations nor the operation of the Subsidiaries on any such real property,
nor such real property, including improvements thereon, violate any
applicable building code, zoning requirement, or classification, or pollution
control ordinance or state relating to the particular property to such
operations, and such non-violation is not dependent, in any instance, on
so-called non-conforming use exceptions.
(b) The Company and the Subsidiaries have good and valid title to,
or, in the case of leased properties and assets, valid leasehold interests in,
all of their tangible properties and assets, real, personal and mixed, used or
held for use in their business, free and clear of any Liens, except as reflected
in the Company Financial Statements, except for liens created by the lessors of
such properties or assets, and except for Liens for Taxes not yet due and
payable and such imperfections of title and encumbrances, if any, which are not
material in character, amount or extent, and which do not materially detract
from the value, or materially interfere with the present use, of the property
subject thereto or affected thereby.
(c) All equipment owned or leased by the Company and the Subsidiaries
is listed in Schedule 2.9(c), except individual pieces of equipment owned by the
Company or a Subsidiary with an individual book value of less than $5,000. All
facilities, machinery, equipment, fixtures, vehicles, and other properties
owned, leased, or used by the Company and the Subsidiaries are in good operating
condition, except for ordinary wear and tear, and repair and are reasonably fit
and usable for the purposes for which they are being used, except where a
failure to be in such condition would not have a Material Adverse Effect on the
Company or any Subsidiary.
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2.10 INTELLECTUAL PROPERTY.
(a) The Company or one of the Subsidiaries owns, or is validly
licensed to use, all patents, trademarks, trade names, service marks,
copyrights, and any applications therefor, maskworks, net lists, schematics,
technology, know-how, computer software programs or applications (in both source
code and object code form), and tangible or intangible proprietary information
or material that are used in the business of the Company and the Subsidiaries
(excluding Commercial Software Rights (as defined herein)) as currently
conducted or as proposed to be conducted (the "COMPANY INTELLECTUAL PROPERTY
RIGHTS"). Neither the Company nor any Subsidiary uses or is licensed to use,
and none of their products include or incorporate, any (i) software distributed
free of charge on a trial basis for which a paid license would be required for
commercial distribution, (ii) software whose ownership has been retained by a
third party who controls its distribution, or (iii) any other code obtained from
the public domain.
(b) Schedule 2.10(b) sets forth a complete list of all patents,
registered and material unregistered trademarks, registered and material
unregistered copyrights, trade names and service marks, and any applications
therefor, included in the Company Intellectual Property Rights, and specifies
the jurisdictions in which each such Company Intellectual Property Right has
been issued or registered or in which an application for such issuance and
registration has been filed, including the respective registration or
application numbers and the names of all registered owners, together with a list
of all software products currently marketed by the Company and the Subsidiaries
and an indication as to which, if any, of such software products have been
registered for copyright protection with the United States Copyright Office and
any foreign offices and by whom such items have been registered.
(c) Schedule 2.10(c) sets forth a complete list of (i) any requests
the Company or any Subsidiary has received to make any such registration,
including the identity of the requestor and the item requested to be so
registered and the jurisdiction for which such request has been made and (ii)
all licenses, sublicenses, and other agreements to which the Company or any
Subsidiary is a party and pursuant to which the Company, any Subsidiary, or any
other person is authorized to use any Company Intellectual Property Right or
trade secret material to the Company or any Subsidiary, and includes the
identity of all parties thereto, a description of the nature and subject matter
thereof, the applicable royalty, and the term thereof (other than standard
customer, distributor, and reseller software license agreements entered into by
the Company or any Subsidiary in the ordinary course of business). The
execution and delivery of this Agreement by the Company, and the consummation of
the transactions contemplated hereby, will cause neither the Company nor any
Subsidiary to be in violation or default under any such license, sublicense or
agreement, nor entitle any other party to any such license, sublicense or
agreement to terminate or modify such license, sublicense or agreement.
(d) The Company or a Subsidiary is the sole and exclusive owner or
licensee of, with all right, title and interest in and to (free and clear of any
liens or encumbrances), the Company Intellectual Property Rights, and has sole
and exclusive rights (and is not contractually obligated to
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pay any compensation to any third party in respect thereof) to the use
thereof or the material covered thereby in connection with the services or
products in respect of which the Company Intellectual Property Rights are
being used. No claims with respect to the Company Intellectual Property
Rights have been asserted or, to the Company's knowledge, are threatened by
any person, nor to the Company's knowledge are there any valid grounds for
any bona fide claims (i) to the effect that the manufacture, sale, licensing
or use of any of the products of the Company and the Subsidiaries infringes
on any copyright, patent, trademark, service xxxx, trade secret or other
proprietary right, (ii) against the use by the Company or any Subsidiary of
any trademarks, service marks, trade names, trade secrets, copyrights,
maskworks, patents, technology, know-how or computer software programs and
applications used in the business of the Company and the Subsidiaries as
currently conducted or as proposed to be conducted, or (iii) challenging the
ownership by the Company or any Subsidiary, validity or effectiveness of any
of the Company Intellectual Property Rights. All registered trademarks,
service marks and copyrights held by the Company and the Subsidiaries are
valid and subsisting. The business of the Company and the Subsidiaries as
currently conducted or as proposed to be conducted has not and does not
infringe on any proprietary right of any third party. To the Company's
knowledge, there is no unauthorized use, infringement or misappropriation of
any of the Company Intellectual Property Rights by any third party, including
any employee or former employee of the Company or any Subsidiary.
(e) Neither the Company nor any Subsidiary has been sued or charged
as a defendant in any claim, suit, action, or proceeding which involves a claim
of infringement of any patents, trademarks, service marks, copyrights, or
violation of any trade secret or other proprietary right of any third party and
which has not been finally terminated prior to the date hereof nor does the
Company have any knowledge of any such charge or claim, and there is not any
infringement liability with respect to, or infringement or violation by, the
Company or any Subsidiary of any patent, trademark, service xxxx, copyright,
trade secret, or other proprietary right of another. No Company Intellectual
Property Right or product of the Company or any of Subsidiary is subject to any
outstanding decree, order, judgment, or stipulation restricting in any manner
the licensing of products by the Company and the Subsidiaries. Each current and
former employee of and consultant to the Company and the Subsidiaries has
executed a proprietary information and inventions agreement substantially in the
Company's standard form as delivered to Parent.
(f) "Commercial Software Rights" means packaged commercially
available software programs generally available to the public through retail
dealers in computer software which have been licensed to the Company or a
Subsidiary pursuant to end-user licenses and which are used in the business of
the Company and the Subsidiaries but are in no way a component of or
incorporated in any of their products and related trademarks, technology, and
know-how. To the Company's knowledge, neither the Company nor any Subsidiary
has breached or violated the terms of its license, sublicense, or other
agreement relating to any Commercial Software
-21-
Rights, and the Company and the Subsidiaries have a valid right to use such
Commercial Software Rights under such licenses and agreements. Neither the
Company nor any Subsidiary is or will be as a result of the execution and
delivery of this Agreement or the performance of the Company's obligations
hereunder, in violation of any license, sublicense, or agreement relating to
Commercial Software Rights. No claims with respect to the Commercial
Software Rights have been asserted or, to the knowledge of the Company, are
threatened by any person against the Company or any Subsidiary, nor to the
knowledge of the Company is there any valid grounds for any bona fide claims
(i) to the effect that the use of any product as now used or proposed for use
by the Company and the Subsidiaries infringes on any copyright, patent, trade
xxxx, service xxxx, or trade secret, (ii) against the use by the Company or
any Subsidiary of any trademarks, trade names, trade secrets, copyrights,
patents, technology, know-how, or computer software programs and applications
used in the Company's business as currently conducted or as proposed to be
conducted, or (iii) challenging the validity or effectiveness of any of the
rights of the Company and the Subsidiaries to use Commercial Software Rights.
To the knowledge of the Company, there is no material unauthorized use,
infringement, or misappropriation of any of the Commercial Software Rights by
the Company or any Subsidiary or any employee or former employee of the
Company or any Subsidiary. To the knowledge of the Company, no Commercial
Software Right is subject to any outstanding order, judgment, decree,
stipulation, or agreement restricting in any manner the use thereof by the
Company or any Subsidiary.
2.11 AGREEMENTS, CONTRACTS AND COMMITMENTS. Except as required by
applicable law, contemplated by this Agreement, or as set forth on
Schedule 2.11, neither the Company nor any Subsidiary currently has, is a party
to, or is bound by:
(i) any collective bargaining agreements;
(ii) any agreements or arrangements that contain any severance
pay or post-employment liabilities or obligations;
(iii) any bonus, deferred compensation, pension, profit sharing
or retirement plans, or any other employee benefit plans or arrangements;
(iv) any employment or consulting agreement with an employee
or individual consultant or salesperson or consulting or sales agreement,
under which a firm or other organization provides services to the Company or
a Subsidiary not terminable by the Company or a Subsidiary on thirty days
notice without liability;
(v) except as provided in Section 1.6(e), any agreement or
plan, including, without limitation, any stock option plan, stock
appreciation rights plan or stock purchase plan, any of the benefits of which
will be increased, or the vesting of benefits of which will be accelerated,
by the occurrence of any of the transactions contemplated by this Agreement
or the value of any of the benefits of which will be calculated on the basis
of any of the transactions contemplated by this Agreement;
(vi) any fidelity or surety bond or completion bond;
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(vii) any lease of personal property having a value
individually in excess of $15,000;
(viii) any agreement of indemnification or guaranty (other
than as set forth in standard customer, distributor, and reseller software
license agreements entered into by the Company or any Subsidiary in the
ordinary course of business);
(ix) any agreement containing any covenant limiting the
freedom of the Company or any Subsidiary to engage in any line of business or
to compete with any person or entity;
(x) any agreement relating to capital expenditures and
involving future payments in excess of $15,000;
(xi) any agreement relating to the disposition or
acquisition of assets or any interest in any business enterprise outside the
ordinary course of the Company's business since June 30, 1997;
(xii) any mortgages, indentures, loans or credit agreements,
security agreements or other agreements or instruments relating to the
borrowing of money by the Company or extension of credit to the Company,
involving obligations in excess of $15,000;
(xiii) any purchase order or contract for the purchase of
materials (excluding capital expenditures) involving $30,000 or more;
(xiv) any construction contracts,
(xv) any distribution, joint marketing or development
agreement (other than standard customer, distributor, and reseller software
license agreements entered into by the Company or any Subsidiary in the
ordinary course of business);
(xvi) any agreement pursuant to which the Company or any
Subsidiary has granted or may grant in the future, to any party a source-code
license or option or other right to use or acquire source-code; or
(xvii) to the extent not reported on the Company Balance
Sheet, any other agreement that involves payment by the Company or any
Subsidiary of $30,000 or more or which is not cancellable without penalty
within thirty (30) days.
Except for such alleged material breaches, violations, and defaults, and
events that would constitute a material breach, violation or default with the
lapse of time, giving of notice, or both, as are all noted in Schedule 2.11,
neither the Company nor any Subsidiary has breached, violated, or defaulted
under, or received notice that it has breached, violated or defaulted under,
any of the terms
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or conditions of any agreement, contract or commitment required to be set
forth on Schedule 2.10(b), Schedule 2.10(c), or Schedule 2.11 (any such
agreement, contract or commitment, a "CONTRACT"). Each Contract is in full
force and effect and, except as otherwise disclosed in Schedule 2.11, is not
subject to any default thereunder of which the Company has knowledge by any
party obligated to the Company or any Subsidiary pursuant thereto.
2.12 INTERESTED PARTY TRANSACTIONS. Except as set forth in Schedule 2.12,
no officer, director, or Stockholder of the Company or any Subsidiary (nor
any ancestor, sibling, descendant or spouse of any of such persons, or any
trust, partnership or corporation in which any of such persons has an
economic interest), has, directly or indirectly, (i) an economic interest in
any entity which furnishes or sells, services or products that the Company or
any Subsidiary furnishes or sells, or proposes to furnish or sell, (ii) an
economic interest in any entity that purchases from or sells or furnishes to
the Company or any Subsidiary any goods or services, or (iii) a beneficial
interest in any contract or agreement set forth in Schedule 2.10(b), Schedule
2.10(c), or Schedule 2.11; PROVIDED, HOWEVER, that no officer, director, or
Affiliate Stockholder or the Company or any Subsidiary shall be deemed to
have such an interest solely by virtue of holding less than one percent (1%)
of the outstanding voting stock of a corporation whose equity securities are
traded on a recognized stock exchange in the United States or Europe or
quoted on The Nasdaq Stock Market.
2.13 COMPLIANCE WITH LAWS; GOVERNMENTAL AUTHORIZATION. The Company and
each Subsidiary has complied with, is not in violation of, and has not
received any notices of violation with respect to, any foreign, federal,
state or local statute, law or regulation, except where any such
non-compliance or violation would not have a Material Adverse Effect on the
Company or such Subsidiary. Schedule 2.13 lists each material federal, state,
county, local, or foreign governmental consent, license, permit, grant, or
other authorization issued to the Company or any Subsidiary (i) pursuant to
which the Company or such Subsidiary currently operates or holds any interest
in any of its properties or (ii) which is required for the operation of its
business or the holding of any such interest (collectively, the "Company
Authorizations"), which Company Authorizations are in full force and effect
and constitute all the Company Authorizations required to permit the Company
and the Subsidiaries to operate or conduct their businesses or to holder any
interest in their properties. Neither the Company nor any Subsidiary is
subject to the provisions of Section 2115 of the California Corporations Code.
2.14 LITIGATION. Except as disclosed in Schedule 2.14, there is no
action, suit, proceeding, claim, arbitration, or investigation pending before
any court or administrative agency against the Company or any Subsidiary (or
any officer of director of the Company or any Subsidiary in their capacity as
such). To the Company's knowledge, no such action, proceeding, claim,
arbitration, or investigation has been threatened, and the Company is not
aware of any basis for any such action, suit, proceeding, claim, arbitration,
or investigation. No Governmental Entity has at any time challenged or
questioned the legal right of the Company or any Subsidiary to manufacture,
offer, or sell any of its products in the present manner or style thereof.
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2.15 INSURANCE. Schedule 2.15 lists all material insurance policies and
fidelity bonds covering the assets, business, equipment, properties,
operations, software errors and omissions, employees, officers, and directors
of the Company and the Subsidiaries as well as all claims made under any
insurance policy by the Company or any Subsidiary in the prior three years.
There is no claim by the Company or any Subsidiary pending under any of such
policies or bonds as to which coverage has been questioned, denied, or
disputed by the underwriters of such policies or bonds. All premiums payable
under all such policies and bonds have been paid, and the Company or a
Subsidiary, as the case may be, is otherwise in compliance with the terms of
such policies and bonds. Such policies of insurance and bonds are of the
type and in amounts customarily carried by persons conducting businesses
similar to those of the Company and the Subsidiaries in the jurisdictions in
which the Company and the Subsidiaries operate. The Company has no knowledge
of any threatened termination of, or premium increase with respect to, any of
such policies. Neither the Company nor any Subsidiary has never been denied
insurance coverage nor has any insurance policy of the Company or a
Subsidiary ever been cancelled for any reason.
2.16 MINUTE BOOKS. The minute books of the Company and the Subsidiaries
made available to counsel for Parent are the only minute books of the Company
and the Subsidiaries and contain true and correct copies of all resolutions
adopted by the Boards of Directors (or committees thereof) and stockholders
since incorporation of the Company or the Subsidiary, as the case may be.
2.17 BANK ACCOUNTS. Schedule 2.17 constitutes a full and complete list
of all the bank accounts and safe deposit boxes of the Company and the
Subsidiaries, the number of each such account or box, and the names of the
persons authorized to draw on such accounts or to access such boxes. All
cash in such accounts is held in demand deposits and is not subject to any
restriction or limitation as to withdrawal.
2.18 ENVIRONMENTAL MATTERS.
(a) HAZARDOUS MATERIAL. Neither the Company nor any Subsidiary
has (i) operated any underground storage tanks at any property that the
Company or such Subsidiary has at any time owned, operated, occupied or
leased or (ii) illegally released any substance that has been designated by
any Governmental Entity or by applicable federal, state, local, or foreign
law to be radioactive, toxic, hazardous or otherwise a danger to health or
the environment, including, without limitation, PCBs, asbestos, petroleum,
urea-formaldehyde and all substances listed as hazardous substances pursuant
to the Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, as amended, or defined as a hazardous waste pursuant to the United
States Resource Conservation and Recovery Act of 1976, as amended, and the
regulations promulgated pursuant to said laws, (a "Hazardous Material"). No
Hazardous Materials are present, as a result of the deliberate actions of the
Company or any Subsidiary, or, to the Company's knowledge, as a result of any
actions of any third party or otherwise, in, on or under any property,
including the land and the improvements, ground water and surface water
thereof, that the Company or any Subsidiary has at any time owned, operated,
occupied or leased.
-25-
(b) HAZARDOUS MATERIALS ACTIVITIES. Neither the Company nor any
Subsidiary has transported, stored, used, manufactured, disposed of,
released or exposed their employees or others to Hazardous Materials in
violation of any law, nor has the Company or any Subsidiary disposed of,
transported, sold, or manufactured any product containing a Hazardous
Material (any or all of the foregoing being collectively referred to as
"HAZARDOUS MATERIALS ACTIVITIES") in violation of any rule, regulation,
treaty or statute promulgated by any Governmental Entity to prohibit,
regulate, or control Hazardous Materials or any Hazardous Material Activity.
(c) PERMITS. The Company and the Subsidiaries currently hold all
environmental approvals, permits, licenses, clearances, and consents (the
"ENVIRONMENTAL PERMITS") necessary for the conduct of the Company's Hazardous
Material Activities and other businesses of the Company and the Subsidiaries
as such activities and businesses are currently being conducted.
(d) ENVIRONMENTAL LIABILITIES. No action, proceeding, revocation
proceeding, amendment procedure, writ, injunction or claim is pending, or to
the Company's knowledge, threatened concerning any Environmental Permit,
Hazardous Material or any Hazardous Materials Activity of the Company or any
Subsidiary. The Company is not aware of any fact or circumstance which could
involve the Company or a Subsidiary in any environmental litigation or impose
upon the Company or any Subsidiary any environmental liability.
2.19 BROKERS' AND FINDERS' FEES. The Company has not incurred, nor will
it incur, directly or indirectly, any liability for brokerage or finders'
fees or agents' commissions or any similar charges in connection with this
Agreement or any transaction contemplated hereby.
2.20 EMPLOYEE MATTERS AND BENEFIT PLANS.
(a) DEFINITIONS. With the exception of the definition of
"Affiliate" set forth in Section 2.20(a)(i) below (which definition shall
only apply to this Section 2.20), for purposes of this Agreement, the
following terms shall have the meanings set forth below:
(i) "AFFILIATE" shall mean any person or entity under common
control with the Company within the meaning of Section 414(b), (c), (m) or
(o) of the Code and the regulations thereunder;
(ii) "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended;
(iii) "COMPANY EMPLOYEE PLAN" shall refer to any plan,
program, policy, practice, contract, agreement or other arrangement excluding
those required by applicable law, providing for bonuses, compensation,
severance, termination pay, deferred compensation, pensions, profit sharing,
performance awards, stock or stock-related awards, fringe benefits or other
employee benefits or remuneration of any kind, whether formal or informal,
written or otherwise, funded or unfunded, including without limitation, each
"employee benefit plan," and in the case of the
-26-
Company and any Subsidiary domiciled or operating in the United States,
within the meaning of Section 3(3) of ERISA which is or has been maintained,
contributed to, or required to be contributed to, by the Company or any
Affiliate for the benefit of any "Employee" (as defined below), and pursuant
to which the Company or any Affiliate has or may have any material liability
contingent or otherwise;
(iv) "EMPLOYEE" shall mean any current, former, or retired
employee, officer, or director of the Company or any Affiliate;
(v) "EMPLOYEE AGREEMENT" shall refer to each management,
employment, severance, consulting, relocation, repatriation, expatriation,
visa, work permit or similar agreement or contract or any of their
amendments, whether written or unwritten and whether or not legally binding,
between the Company or any Affiliate and any Employee or consultant;
(vi) "IRS" shall mean the Internal Revenue Service;
(vii) "MULTIEMPLOYER PLAN" shall mean any "Pension Plan" (as
defined below) which is a "multiemployer plan", as defined in Section 3(37)
of ERISA; and
(viii) "PENSION PLAN" shall refer to each Company Employee
Plan which is an "employee pension benefit plan", within the meaning of
Section 3(2) of ERISA and/or legal supplementary or complementary pension
benefits under French law.
(b) SCHEDULE. Schedule 2.20(b) contains an accurate and complete
list of each Company Employee Plan and each Employee Agreement, together with
a schedule of all liabilities, whether or not accrued, under each such
Company Employee Plan or Employee Agreement. The Company does not have any
stated plan or commitment, whether legally binding or not, to establish any
new Company Employee Plan or Employee Agreement, to modify any Company
Employee Plan or Employee Agreement (except to the extent required by law or
to conform any such Company Employee Plan or Employee Agreement to the
requirements of any applicable law, in each case as previously disclosed to
Parent in writing, or as required by this Agreement), or to enter into any
Company Employee Plan or Employee Agreement nor does it have any intention or
commitment to do any of the foregoing.
(c) DOCUMENTS. The Company has made available to Parent (i)
correct and complete copies of all documents embodying or relating to each
Company Employee Plan and each Employee Agreement including all amendments
thereto, copies of all forms of agreement and enrollment used therewith, and
written interpretations thereof; (ii) the most recent annual actuarial
valuations, if any, prepared for each Company Employee Plan; (iii) all taxing
or other governmental authority opinion, notification, or determination
letters and rulings relating to Company Employee Plans and copies of all
applications and correspondence to or from any taxing or other governmental
authority with respect to any Company Employee Plan, including the three most
recent annual reports (Series 5500 and all schedules thereto), if any,
required under ERISA or the Code in
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connection with each Company Employee Plan or related trust; (iv) if the
Company Employee Plan is funded, the most recent annual and periodic
accounting of Company Employee Plan assets; (v) all material agreements and
contracts relating to each Company Employee Plan, including but not limited
to, administrative service agreements, group annuity contracts and group
insurance contracts; (vi) the most recent summary plan description together
with the most recent summary of material modifications, if any, required
under ERISA with respect to each Company Employee Plan; (vii) all IRS
determination letters and rulings relating to Company Employee Plans and
copies of all applications and correspondence to or from the IRS or the
Department of Labor ("DOL") with respect to any Company Employee Plan; (viii)
all communications material to any Employee or Employees relating to any
Company Employee Plan and any proposed Company Employee Plans, in each case,
relating to any amendments, terminations, establishments, increases or
decreases in benefits, acceleration of payments or vesting schedules or other
events which would result in any material liability to the Company; and (ix)
all registration statements and prospectuses prepared in connection with each
Company Employee Plan.
(d) EMPLOYEE PLAN COMPLIANCE. Except as set forth on Schedule
2.20(d), (i) the Company has performed all obligations required to be
performed by it under each Company Employee Plan, each Employee Agreement and
with respect to its workers' representative committee, and each Company
Employee Plan, each Employee Agreement, and each workers' representative
committee has been established and maintained in accordance with its terms
and in compliance with all applicable laws, statutes, orders, rules and
regulations, including but not limited to applicable French law, ERISA or the
Code; (ii) no "prohibited transaction," within the meaning of Section 4975 of
the Code or Section 406 of ERISA, has occurred with respect to any Company
Employee Plan; (iii) there are no actions, suits or claims pending, or, to
the knowledge of the Company, threatened or anticipated (other than routine
claims for benefits) against any Company Employee Plan or against the assets
of any Company Employee Plan or under any Employee Agreement or relating to
the workers' representative committee; and (iv) each Company Employee Plan
can be amended, terminated or otherwise discontinued after the Effective Time
in accordance with its terms, without liability to the Company, Parent or any
of its Affiliates (other than ordinary administration expenses typically
incurred in a termination event); (v) there are no inquiries or proceedings
pending or, to the knowledge of the Company or any Affiliates, threatened by
any governmental authority with respect to any Company Employee Plan, any
Employee Agreement, or the Company's workers' representative committee; (vi)
neither the Company nor any Affiliate is subject to any penalty or Tax with
respect to any Company Employee Plan, any Employee Agreement, or the
Company's workers' representative Committee.; and (vii) each Company Employee
Plan intended to qualify under Section 401(a) of the Code and each trust
intended to qualify under Section 501(a) of the Code has either received a
favorable determination letter with respect to each such Company Employee
Plan from the IRS or has remaining a period of time under applicable Treasury
regulations or IRS pronouncements in which to apply for such determination
letter and make any amendments necessary to obtain a favorable determination,
and nothing has occurred since the date of such letter that could reasonably
be expected to affected the qualified status of such Company Employee Plan.
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(e) PENSION PLANS. The Company does not now, nor has it ever,
maintained, established, sponsored, participated in, or contributed to, any
Pension Plan which is subject to Part 3 of Subtitle B of Title I of ERISA,
Title IV of ERISA or Section 412 of the Code. The Company has no retirement
or pension plans other than as set forth on Schedule 2.20(e).
(f) MULTIEMPLOYER PLANS. At no time has the Company or any
Subsidiary domiciled or operating in the United States contributed to or been
requested to contribute to any Multiemployer Plan.
(g) NO POST-EMPLOYMENT OBLIGATIONS. Except as set forth in
Schedule 2.20(g), no Company Employee Plan and no agreement with any employee
provides, or has any liability to provide, life insurance, medical or other
employee benefits to any Employee upon his or her retirement or termination
of employment for any reason, except as may be required by applicable law,
and the Company has never represented, promised or contracted (whether in
oral or written form) to any Employee (either individually or to Employees as
a group) that such Employee(s) would be provided with life insurance, medical
or other employee welfare benefits upon their retirement or termination of
employment, except to the extent required by applicable law. Except to the
extent (if any) to which provision or allowance has been made in the Company
Balance Sheet, no liability has been incurred by the Company to make any
redundancy payments or any protective awards or to pay damages or
compensation (for wrongful or unfair dismissal or for failure to comply with
any order for the reinstatement or re-engagement of any employee) and no
gratuitous payments have been made or promised by the Company in connection
the actual or proposed termination or suspension of employment or variation
of any contract of employment of any present or former director or employee.
(h) EFFECT OF TRANSACTION.
(i) Except as provided in Section 1.6 of this Agreement or
as set forth on Schedule 2.20(h)(i), the execution of this Agreement and the
consummation of the transactions contemplated hereby will not (either alone
or upon the occurrence of any additional or subsequent events) constitute an
event under any Company Employee Plan, Employee Agreement, trust or loan that
will or may result in any payment (whether of severance pay or otherwise),
acceleration, forgiveness of indebtedness, vesting, distribution, increase in
benefits or obligation to fund benefits with respect to any Employee.
(ii) Except as set forth on Schedule 2.20(h)(ii), no payment
or benefit which will or may be made by the Company or Parent or any of their
respective affiliates with respect to any Employee will be characterized as
an "excess parachute payment," within the meaning of Section 280G(b)(1) of
the Code.
(i) NO VIOLATIONS. Neither the Company nor any Affiliate has,
prior to the Effective Time and in any material respect, violated any of the
health care continuation requirements
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of Section 4980B(f) of the Code (and Sections 600-608 of ERISA) or any
similar provisions of United States federal or state, French, German, or
English law applicable to its Employees.
(j) EMPLOYMENT MATTERS. Schedule 2.20(i) lists all current
officers, directors, and employees of the Company and each Subsidiary. The
Company and each Subsidiary is in compliance with all applicable foreign,
federal, state and local and French laws, rules and regulations respecting
health and safety, employment, employment practices, employment
discrimination, immigration or other laws governing the employment of foreign
nationals, terms and conditions of employment and wages and hours, in each
case, with respect to Employees. Neither the Company nor any Subsidiary has
received any notice from any Governmental Entity, and to the knowledge of the
Company, there has not been asserted before any Governmental Entity, any
claim, action, or proceeding to which the Company or any Subsidiary is a
party or involving the Company or any Subsidiary, and there is neither
pending nor, to the knowledge of the Company, threatened any investigation or
hearing concerning the Company or any Subsidiary arising out of or based upon
any such laws, regulations, or practices. The Company and each Subsidiary
has withheld all amounts required by law or by agreement to be withheld from
the wages, salaries and other payments to Employees or other persons who by
virtue of their activities performed on behalf of the Company or Affiliate
may be deemed employees within the meaning of applicable law. Neither the
Company nor any Subsidiary is liable for any arrears of wages or any taxes or
any penalty for failure to comply with any of the foregoing or liable for any
payment to any trust or other fund or to any governmental or administrative
authority, with respect to unemployment compensation benefits, social
security or other benefits or obligations for Employees (other than routine
payments to be made in the normal course of business and consistent with past
practice). Each Subsidiary domiciled or operating in France has paid all
amounts due to its workers representative committee, and there is not any
outstanding claim for payment or reimbursement of expenses from the workers'
representative committee.
(k) LABOR. No work stoppage or labor strike against the Company
or any Subsidiary is pending or threatened. Neither the Company nor any
Subsidiary is involved in or threatened with, any labor dispute, grievance,
or litigation relating to labor, safety or discrimination matters involving
any Employee, including, without limitation, charges of unfair labor
practices or discrimination complaints, which, if adversely determined,
would, individually or in the aggregate, result in liability to the Company
or any Subsidiary. The Company has not engaged in any unfair labor practices
which would, individually or in the aggregate, directly or indirectly result
in a liability to the Company. Neither the Company nor any Subsidiary is
presently, nor has the Company or any Subsidiary been in the past, a party
to, or bound by, any agreement negotiated with its Employees other than the
following collective bargaining agreements between certain Subsidiaries
domiciled or operating in France and their respective Employees: Bureaux
d'Etude Techniques, Cabinets d'Ingenieurs Conseils, Societes de Conseils for
Apsylog, Apsynet, and Netform and Metallurgie for AGDS. No collective
bargaining agreement is being negotiated by the Company or any Subsidiary.
2.21 CERTAIN ADVANCES. There are no receivables of the Company or any
Subsidiary owing by any director, officer, employee, consultant, or
stockholder of the Company or any Subsidiary or
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owing by any affiliated person or entity of any director, officer, employee,
consultant, or stockholder of the Company or any Subsidiary, other than
advances in the ordinary and usual course of business for reimbursable
business expenses.
2.22 REPRESENTATIONS COMPLETE. None of the representations or
warranties made by the Company or any Affiliate Stockholder (as modified by
the Company Schedules), nor any statement made in any schedule or certificate
furnished by the Company or any Affiliate Stockholder pursuant to this
Agreement, or furnished in or in connection with documents mailed or
delivered to the Company Stockholders in connection with soliciting their
consent to this Agreement and the Merger, contains or will contain at the
Effective Time, any untrue statement of a material fact, or omits or will
omit at the Effective Time to state any material fact necessary in order to
make the statements contained herein or therein, in the light of the
circumstances under which made, not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company as follows:
3.1 ORGANIZATION OF PARENT AND MERGER SUB. Parent is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Delaware. Merger Sub is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware. Each
of Parent and Merger Sub has the corporate power to own its properties and to
carry on its business as now being conducted and is duly qualified to do
business and is in good standing in each jurisdiction in which the failure to
be so qualified would have a material adverse effect on the ability of Parent
and Merger Sub to consummate the transactions contemplated hereby.
3.2 AUTHORITY. Parent and Merger Sub have all requisite corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of Parent
and Merger Sub. This Agreement has been duly executed and delivered by
Parent and Merger Sub and constitutes the valid and binding obligation of
Parent and Merger Sub, enforceable in accordance with its terms. The
execution and delivery of this Agreement does not, and the consummation of
the transactions contemplated hereby and thereby will not, conflict with, or
result in any violation of, or default (with or without notice or lapse of
time, or both), or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a benefit under any provision of
the Certificate of Incorporation or Bylaws of Parent or Merger Sub or (ii)
any mortgage, indenture, lease, contract or other agreement or instrument,
permit, concession, franchise, license, judgment, order, decree, statute,
law, ordinance, rule or representation applicable to Parent or on which
Parent's business, financial condition, operations or prospects is
substantially dependent, the breach, violation, default, termination or
forfeiture of which would result in a material adverse effect upon the
ability of Parent
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or Merger Sub to consummate the Merger, or a Material Adverse Effect on
Parent or Merger Sub. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity, is
required by or with respect to Parent or Merger Sub in connection with the
execution and delivery of this Agreement by Parent and Merger Sub or the
consummation by Parent and Merger Sub of the transactions contemplated hereby
except for (i) the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware or (ii) such consents, approvals, order,
authorizations, registrations, declarations and filings as may be required
under applicable state and federal securities laws.
3.3 PARENT COMMON STOCK. The shares of Parent Common Stock to be
issued pursuant to the Merger will, when issued and delivered in accordance
with this Agreement, be duly authorized, validly issued, fully paid, and
non-assessable; PROVIDED, HOWEVER, that the Parent Common Stock to be issued
hereunder will be subject to restrictions on transfer under applicable
federal and state securities laws.
3.4 SEC DOCUMENTS; PARENT FINANCIAL STATEMENTS. Parent has filed all
forms, reports, and documents required to be filed by Parent with the United
States Securities and Exchange Commission (the "SEC") and has furnished or
made available to the Company true and complete copies of its Annual Report
on Form 10-K for the fiscal year ended March 31, 1997 and its Quarterly
Report on Form 10-Q for the quarter ended June 30, 1997 (collectively, the
"SEC DOCUMENTS"), which Parent filed with the SEC under the United States
Securities Exchange Act of 0000 (xxx "XXXXXXXX XXX"). As of their respective
filing dates, the SEC Documents complied in all material respects with the
requirements of the Exchange Act, and none of the SEC Documents contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements made
therein, in light of the circumstances in which they were made, not
misleading, except to the extent corrected by a document subsequently filed
with the SEC. The consolidated financial statements of Parent, including the
notes thereto, included in the SEC Documents (the "PARENT FINANCIAL
STATEMENTS") comply as to form in all material respects with applicable
accounting requirements and with the published rules and regulations of the
SEC with respect thereto, have been prepared in accordance with United States
GAAP consistently applied (except as may be indicated in the notes thereto
or, in the case of unaudited statements, as permitted by Form 10-Q of the
SEC), and fairly present the consolidated financial position of Parent and
the results of its operations and cash flows as of the respective dates and
for the periods indicated therein (subject, in the case of unaudited
statements, to normal audit adjustments). There has been no change in
Parent's accounting policies except as described in the notes to the Parent
Financial Statements.
3.5 NO MATERIAL ADVERSE CHANGE. Since June 30, 1997, Parent has
conducted its business in the ordinary course and there has not occurred:
(a) any material adverse change in the financial condition, results of
operations, liabilities, assets (including intangible assets), business, or
prospects of Parent and its subsidiaries, taken as a whole; (b) any amendment
or change in the Certificate of Incorporation or Bylaws of Parent; or (c) any
damage to, destruction or loss of any assets of the
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Parent (whether or not covered by insurance) that materially and adversely
affects the financial condition or business of Parent and its subsidiaries,
taken as a whole.
3.6 LITIGATION. There is no action, suit or proceeding of any nature
pending or to Parent's knowledge threatened against Parent, nor, to the
knowledge of Parent, is there any reasonable basis therefor which could
reasonably be expected to result in a Material Adverse Effect on Parent.
3.7 BROKERS' AND FINDERS' FEES. Parent has not incurred, nor will it
incur, directly or indirectly, any liability for brokerage or finders' fees
or agents' commissions or any similar charges in connection with this
Agreement or any transaction contemplated hereby.
3.8 SECURITIES ACT EXEMPTION. Subject to the accuracy of
representations provided by the Company Stockholders, the Parent Common Stock
to be issued pursuant to this Agreement and the Merger Agreement will be
exempt from the registration requirements of the Securities Act and will
comply with all state and foreign securities laws.
ARTICLE IV
SECURITIES ACT COMPLIANCE; REGISTRATION
4.1 SECURITIES ACT EXEMPTION. The Parent Common Stock to be issued
pursuant to this Agreement initially will not be registered under the
Securities Act in reliance on the exemptions from the registration
requirements of Section 5 of the Securities Act set forth in Section 4(2)
thereof and/or Regulation S promulgated thereunder. Prior to the Closing
Date, each of the Company's stockholders shall have provided Parent such
representations, warranties, certifications, and additional information as
Parent may reasonably request to ensure the availability of an exemption from
the registration requirements of the Securities Act.
4.2 STOCK RESTRICTIONS. In addition to any legend imposed by
applicable state securities laws or by any contract which continues in effect
after the Effective Time, the certificates representing the shares of Parent
Common Stock issued pursuant to this Agreement shall bear a restrictive
legend (and stop transfer orders shall be placed against the transfer thereof
with Parent=s transfer agent), stating substantially as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"). THEY MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED, OR HYPOTHECATED EXCEPT IN COMPLIANCE WITH RULE 144
OR RULE 145, AS APPLICABLE, IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO, OR AN OPINION OF
COUNSEL, SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION
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IS NOT REQUIRED UNDER THE ACT, OR A NO-ACTION LETTER FROM
THE SECURITIES AND EXCHANGE COMMISSION.
Alternatively, certificates representing shares of Parent Common Stock
issued in reliance on Regulation S shall bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED
IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS
OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED,
PURSUANT TO REGULATION S THEREUNDER AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED, OR HYPOTHECATED ABSENT REGISTRATION
EXCEPT IN COMPLIANCE WITH REGULATION S, RULE 144, OR AN
OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY, THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE ACT, OR A NO-ACTION
LETTER FROM THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION.
4.3 STOCKHOLDERS' REPRESENTATIONS REGARDING SECURITIES LAW MATTERS. Each
stockholder of the Company, by virtue of the Merger and the conversion into
Parent Common Stock of the Company Capital Stock held by such stockholder,
shall be bound by the following provisions:
(a) Such stockholder will not offer, sell, or otherwise dispose of
any shares of Parent Common Stock except in compliance with the Securities
Act and the rules and regulations thereunder.
(b) Such stockholder will not sell, transfer or otherwise dispose
of any shares of Parent Common Stock unless (i) such sale, transfer or other
disposition is within the limitations of and in compliance with Rule 144 or
Rule 145, as applicable, promulgated by the SEC under the Securities Act and
the Stockholder furnishes Parent with reasonable proof of compliance with
such Rule, (ii) in the opinion of counsel, reasonably satisfactory to Parent
and its counsel, some other exemption from registration under the Securities
Act is available with respect to any such proposed sale, transfer, or other
disposition of Parent Common Stock, or (iii) the offer and sale of Parent
Common Stock is registered under the Securities Act.
4.4 REGISTRATION RIGHTS.
(a) Parent agrees that the stockholders of the Company receiving
Parent Common Stock in the Merger shall be entitled to the registration
rights set forth in the Declaration of Registration Rights of even date
herewith in the form attached hereto as EXHIBIT B.
(b) On or before the 45th day after the Effective Time, Parent will
determine whether to proceed with an Underwritten Sale (as defined in
Section 3 of the Declaration of Registration Rights), or to permit the
holders of the Registrable Securities (as defined in the Declaration of
Registration Rights) to include Registrable Securities in a registration in
accordance
41
with Section 2 of the Declaration of Registration Rights, and will
communicate such determination to the Company. In connection with the
solicitation of stockholder approval of the Merger in accordance with Section
6.1 of this Agreement, the Company will request, and the stockholders will be
required to state in writing the number of shares of Registrable Securities
which they request Parent to cause to be registered in accordance with the
provisions of the Declaration of Registration Rights. The failure of any
Company stockholder to make such request shall be deemed to be a statement of
no intent by such stockholder to include any Registrable Securities in such
registration.
ARTICLE V
CONDUCT PRIOR TO THE EFFECTIVE TIME
5.1 CONDUCT OF BUSINESS OF THE COMPANY. During the period from the date
of this Agreement and continuing until the earlier of the termination of this
Agreement or the Effective Time, the Company agrees (except to the extent
that Parent shall otherwise consent in writing) to carry on its business and
to cause the Subsidiaries to carry on their businesses in the usual, regular
and ordinary course in substantially the same manner as heretofore conducted,
to pay their debts and Taxes when due, to pay or perform other obligations
when due, and, to the extent consistent with such businesses, to use all
reasonable efforts consistent with past practice and policies to preserve
intact their present business organizations, keep available the services of
their present officers and key employees and preserve their relationships
with customers, suppliers, distributors, licensors, licensees, and others
having business dealings with them, all with the goal of preserving
unimpaired the goodwill and ongoing businesses of the Company and the
Subsidiaries at the Effective Time. The Company shall promptly notify Parent
of any event which materially adversely effects the Company, any Subsidiary,
or their businesses. Except as expressly contemplated by this Agreement or
disclosed in Schedule 5.1, neither the Company nor any Subsidiary shall,
without the prior written consent of Parent:
(a) Accelerate, amend, or change the period of exercisability of
any outstanding Company Options or Company Common Stock subject to vesting or
authorize cash payments in exchange for any such outstanding options;
(b) Enter into any commitment or transaction not in the ordinary
course of business;
(c) Transfer to any person or entity any rights to the Company
Intellectual Property Rights (other than end-user licenses granted to
customers of the Company and the Subsidiaries in the ordinary course of
business);
(d) Enter into or amend any agreements pursuant to which any other
party is granted marketing, distribution, or similar rights of any type or
scope with respect to any products of the Company and the Subsidiaries;
42
(e) Amend or otherwise modify (or agree to do so), except in the
ordinary course of business, or violate the terms of, any of the agreements
set forth or described in the Company Schedules;
(f) Commence any litigation except to enforce its rights under or
to interpret this Agreement or any other agreement, obligation or arrangement
contemplated hereby or entered into a established in connection herewith;
(g) Declare, set aside, or pay any dividends on or make any other
distributions (whether in cash, stock, or property) in respect of any of its
capital stock, or split, combine or reclassify any of its capital stock or
issue or authorize the issuance of any other securities in respect of, in
lieu of or in substitution for shares of capital stock, or repurchase, redeem
or otherwise acquire, directly or indirectly, any shares of its capital stock
(or options, warrants or other rights exercisable therefor), except upon
termination of employment at cost;
(h) Except for the issuance of shares of Company Capital Stock upon
exercise or conversion of presently outstanding Company Options or Company
Preferred Stock, or in connection with the exercise of the call options or
put options required under Section 6.15(a) below, issue, grant, deliver or
sell or authorize or propose the issuance, grant, delivery or sale of, or
purchase or propose the purchase of, any shares of Company Capital Stock or
securities convertible into, or subscriptions, rights, warrants or options to
acquire, or other agreements or commitments of any character obligating it to
issue any such shares or other convertible securities, without the prior
written consent of Parent;
(i) Cause or permit any amendments to its Certificate of
Incorporation or Bylaws or similar governing documents, except as
contemplated herein;
(j) Acquire or agree to acquire by merging or consolidating with,
or by purchasing any assets or equity securities of, or by any other manner,
any business or any corporation, partnership, association or other business
organization or division thereof, or otherwise acquire or agree to acquire
any assets in an amount in excess of $15,000 in the case of a single
transaction or in excess of $30,000 in the aggregate in any 30-day period;
(k) Sell, lease, license, or otherwise dispose of any of its
properties or assets, except in the ordinary course of business, or except as
provided in Section 6.15(b) below ;
(l) Incur any indebtedness for borrowed money or guarantee any such
indebtedness or issue or sell any debt securities of the Company or such
Subsidiary or guarantee any debt securities of others;
43
(m) Grant any severance or termination pay (i) to any director or
officer or (ii) to any other employee except payments made pursuant to
standard written agreements outstanding on the date hereof or payments
required by law;
(n) Adopt or amend any employee benefit plan, or enter into any
employment contract, extend employment offers, pay or agree to pay any
special bonus or special remuneration to any director or employee, or
increase the salaries or wage rates of its employees, other than regularly
scheduled increases for employees other than officers in the ordinary course
of business without the prior written consent of Parent;
(o) Effect or agree to effect, including by way of hiring or
involuntary termination, any change in its directors, officers, or key
employees;
(p) Revalue any of its assets, including without limitation writing
down the value of inventory or writing off notes or accounts receivable other
than in the ordinary course of business;
(q) Pay, discharge or satisfy, in an amount in excess of $15,000
(in any one case) or $30,000 (in the aggregate), any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business of liabilities reflected or reserved against in the
Company Financial Statements (or the notes thereto) or that arose in the
ordinary course of business subsequent to June 30, 1997 or expenses
consistent with the provisions of this Agreement incurred in connection with
any transaction contemplated hereby;
(r) Make or change any material election in respect of Taxes, adopt
or change any accounting method in respect of Taxes, enter into any closing
agreement, settle any claim or assessment in respect of Taxes, or consent to
any extension or waiver of the limitation period applicable to any claim or
assessment in respect of Taxes, provided that Parent shall not unreasonably
withhold its consent to any of the foregoing;
(s) Enter into any strategic alliance, joint development or joint
marketing agreement; or
(t) Take, or agree in writing or otherwise to take, any of the
actions described in Sections 5.1(a) through (s) above, or any other action
that would prevent the Company from performing or cause the Company not to
perform its covenants hereunder.
44
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 STOCKHOLDER APPROVAL; CONVERSION OF PREFERRED STOCK.
(a) The Company shall promptly after the date hereof take all
action necessary in accordance with Delaware Law and the Company's Amended
and Restated Certificate of Incorporation and Bylaws to obtain the approval
by the Company's stockholders of the Merger, this Agreement, and the
transactions contemplated hereby. The Company agrees to use its best efforts
and to take all action necessary or advisable to secure the necessary votes
or written consents required by Delaware Law to effect the Merger. Parent
shall cooperate with the Company to the best of Parent's ability in the
preparation of an information statement for use in connection with the
solicitation of a written consent from the stockholders of the Company with
respect to approval of the Merger.
(b) The Company shall use its best efforts to secure the approval
of the holders of not less than a majority of outstanding shares of Company
Preferred Stock to the automatic conversion of the Company Preferred Stock
immediately prior to the Effective Time, in accordance with Article III,
Section 3(aa)(ii)(b) of the Company's Amended and Restated Certificate of
Incorporation.
6.2 ACCESS TO INFORMATION. The Company shall afford Parent and its
accountants, legal counsel, and other representatives reasonable access
during normal business hours during the period prior to the Effective Time to
(i) all of the properties, books, contracts, commitments, and records of the
Company and the Subsidiaries and (ii) all other information concerning the
business, properties, and personnel of the Company and the Subsidiaries as
Parent may reasonably request. The Company agrees to provide Parent and its
accountants, legal counsel, and other representatives copies of internal
financial statements promptly upon request. No information or knowledge
obtained in any investigation pursuant to this Section 6.2 shall affect or be
deemed to modify any representation or warranty contained herein or the
conditions to the obligations of the parties to consummate the Merger.
6.3 CONFIDENTIALITY. From the date hereof to and including the
Effective Time, the parties hereto shall maintain, and cause their directors,
employees, agents, and advisors to maintain, in confidence and not disclose
or use for any purpose, except for the evaluation of the transactions
contemplated hereby and the accuracy of the respective representations and
warranties of the parties contained herein, information concerning the other
parties hereto and obtained directly or indirectly from such parties, or
their directors, employees, agents, or advisors, except such information as
is or becomes (i) available to the non-disclosing party from third parties
not subject to an undertaking of confidentiality; (ii) generally available to
the public other than as a result of a breach by the non-disclosing party
hereunder; or (iii) required to be disclosed under applicable law; and except
such information as was in the possession of such party prior to obtaining
such information from such
45
other party as to which the fact of prior possession such possessing party
shall have the burden of proof. In the event that the transactions
contemplated hereby shall not be consummated, all such information which
shall be in writing shall be returned to the party furnishing the same,
including to the extent reasonably practicable, copies or reproductions
thereof which may have been prepared.
6.4 PUBLIC DISCLOSURE. Unless otherwise required by law (including,
without limitation, applicable securities laws) or, as to Parent, by the
rules and regulations of the Nasdaq National Market, prior to the Effective
Time, no disclosure (whether or not in response to an inquiry) of the subject
matter of this Agreement shall be made by any party hereto unless approved by
Parent and the Company prior to release, provided that such approval shall
not be unreasonably withheld.
6.5 CONSENTS. Each of Parent and the Company shall promptly apply for
or otherwise seek and use its best efforts to obtain, all consents and
approvals required to be obtained by it or any Subsidiary for the
consummation of the Merger, and the Company shall use its best efforts to
obtain all consents, waivers, or approvals under any of the agreements,
contracts, licenses, or leases of the Company and the Subsidiaries in order
to preserve the benefits thereunder for the Surviving Corporation and
otherwise in connection with the Merger. All of such consents and approvals
are set forth in Schedule 6.5.
6.6
AGREEMENTS. Schedule 6.6 sets forth those persons who, in the
Company's reasonable judgment, are "affiliates" of the Company within the
meaning of Rule 145 (each such person an "Affiliate") promulgated under the
Securities Act ("Rule 145"). The Company shall provide Parent such
information and documents as Parent shall reasonably request for purposes of
reviewing such list. The Company has delivered to Parent, concurrently with
the execution of this Agreement, an executed Affiliate Agreement from each of
the Affiliates in the form attached hereto as EXHIBIT C. Parent and Merger
Sub shall be entitled to place appropriate legends on the certificates
evidencing any Parent Common Stock to be received by the s pursuant to the
terms of this Agreement and to issue appropriate stop transfer instructions
to the transfer agent for Parent Common Stock, consistent with the terms of
such Affiliate Agreements.
6.7 LEGAL CONDITIONS TO THE MERGER. Each of Parent, Merger Sub, the
Stockholders, and the Company will take (and the Company will cause the
Subsidiaries to take) all reasonable actions necessary to comply promptly
with all legal requirements which may be imposed on such party with respect
to the Merger and will promptly cooperate with and furnish information to any
other party hereto in connection with any such requirements imposed upon such
other party in connection with the Merger. Each party will take all
reasonable actions to obtain (and will cooperate with the other parties in
obtaining) any consent, authorization, order or approval of, or any
registration, declaration, or filing with, or an exemption by, any
Governmental Entity, or other third party, required to be obtained or made by
such party or its subsidiaries in connection with the Merger or the taking of
any action contemplated thereby or by this Agreement.
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6.8 BLUE SKY LAWS. Parent shall take such steps as may be necessary to
comply with the securities and blue sky laws of all jurisdictions which are
applicable to the issuance of Parent Common Stock pursuant hereto. The
Company shall use its best efforts to assist Parent as may be necessary to
comply with the securities and blue sky laws of all applicable jurisdictions
in connection with the issuance of Parent Common Stock pursuant hereto.
6.9 BEST EFFORTS; ADDITIONAL DOCUMENTS AND FURTHER ASSURANCES. Each of
the parties to this Agreement shall use its best efforts to effectuate the
transactions contemplated hereby and to fulfill and cause to be fulfilled the
conditions to closing under this Agreement. Each party hereto, at the
request of another party hereto, shall execute and deliver such other
instruments and do and perform such other acts and things as may be
reasonably necessary or desirable for effecting completely the consummation
of this Agreement, and the transactions contemplated hereby. Parent will use
its best efforts to file all reports required to be filed under Section 13 or
15(d) of the Exchange Act for the two years subsequent to the Effective Time.
6.10 NOTIFICATION OF CERTAIN MATTERS. The Company and the Affiliate
Stockholders shall give prompt notice to Parent, and Parent shall give prompt
notice to the Company and the Affiliate Stockholders, of (i) the occurrence
or non-occurrence of any event, the occurrence or non-occurrence of which is
likely to cause any representation or warranty of the Company or the
Affiliate Stockholders and Parent or Merger Sub, respectively, contained in
this Agreement to be untrue or inaccurate in any material respect at or prior
to the Effective Time except as contemplated by this Agreement (including the
Company Schedules) and (ii) any failure of the Company, the Affiliate
Stockholders, or Parent, as the case may be, to comply with or satisfy in any
material respect any covenant, condition or agreement to be complied with or
satisfied by it hereunder; PROVIDED, HOWEVER, that the delivery of any notice
pursuant to this Section 6.11 shall not limit or otherwise affect any
remedies available to the party receiving such notice.
6.11 FORM S-8/S-3. Parent shall file a Registration Statement on Form
S-8/S-3 with the SEC covering (i) the shares of Parent Common Stock issuable
with respect to assumed Company Options and (ii) such shares of Parent Common
Stock issued in connection with the Merger for which registration on such
form may be available no later than fifteen (15) business days after the
Closing Date; PROVIDED, HOWEVER, that Parent shall not be required to file
such a Registration Statement prior to the earlier to occur of (i) the date
Parent files its Registration Statement on Form S-8/S-3 covering Parent's
existing stock incentive plans or (ii) October 31, 1997.
6.12 NASDAQ NATIONAL MARKET LISTING. Parent shall authorize for listing
on the Nasdaq National Market the shares of Parent Common Stock issuable in
connection with the Merger, upon official notice of issuance.
6.13 VOTING AGREEMENTS. Each Affiliate Stockholder has delivered to
Parent, concurrently with the execution of this Agreement, an executed Voting
Agreement in the form attached hereto as EXHIBIT D (the "VOTING AGREEMENTS"),
agreeing, among other things, to vote in favor of the Merger and against any
competing proposals.
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6.14 NON-COMPETITION AGREEMENTS. The Company will deliver to Parent on or
prior to the Closing a Non-Competition Agreement between the Company and each of
Gilles Queru, Xxxx Armengeau, Xxxxxx Boudalier, Xxxxxxxx Xxxxxxxx, Xxx Xxxxxxxx,
Stephane Dehoche, and Xxxxxx Xxxxxx in substantially the form attached hereto as
EXHIBIT E (the "Non-Competition Agreements").
6.15 COMPANY CAPITAL STRUCTURE; SUBSIDIARIES.
(a) The Company shall (i) use its best efforts to cause holders
of the outstanding call option set forth in the Option Purchase Agreement
dated April 16, 1997 between the Company and certain shareholders of Apsylog
SA, a corporation organized under the laws of the Republic of France
("Apsylog"), to exercise such option or (ii) exercise the put option held by
the Company as set forth in the Put Agreement dated April 16, 1997 between
the Company and such purchasers, in either case such that immediately after
such exercises and prior to the Closing, (A) the Company will hold all the
outstanding share capital of Apsylog (other than director's qualifying shares
and 68,000 shares held of record by Philippe Haustete (the "Apsylog Minority
Holder")) and (B) no further right to acquire or obligation to issue shares
of Company Capital Stock shall be outstanding (other than the Company Options
and the conversion rights of the Company Preferred Stock).
(b) On or before thirty (30) days following the Effective Time,
Parent and the Participating Stockholders (as defined herein) shall enter
into an agreement or agreements as necessary to provide for the sale (the
"Stock Sale") by Parent to the Participating Stockholders of all of the
outstanding shares held by Apsylog SA, a French corporation ("Apsylog"), in
each of APSYNet, a French corporation ("A-Net"), and Netform, a French
corporation ("Net", and collectively with A-Net, the "Subs"). Such agreement
or agreements shall provide for the Stock Sale on substantially the following
terms:
(i) The Securityholder Agent (as defined in Article VIII)
shall, promptly following the Effective Time, notify in writing each holder
of record of the Certificates (as defined in Section 1.8(c) above) of the
principal terms set forth in this Section 6.15(b) of the opportunity to
participate in the Stock Sale, pro rata in the proportion of the shares of
Company Common Stock represented by the Certificates held by such holder
bears to the total shares of all of the outstanding Company Common Stock
outstanding immediately prior to the Effective Time (including any shares in
Apsylog which may have then been held by the Apsylog Minority Stockholder)
AND which elect to participate in the Stock Sale. The Participating
Stockholders shall at a minimum include those stockholders identified in
Schedule 6.15 attached hereto, each of whom shall be required to agree to the
terms of this Section 6.15(b) concurrently with the execution of this
Agreement as an inducement to Parent to enter into this Agreement.
(ii) Each such holder who elects to participate in the Stock Sale
(the "Participating Stockholders") shall, jointly with all Participating
Stockholders, purchase all of the outstanding shares of the Subs held by Apsylog
for aggregate consideration equal to $500,000, payable either by cash or through
promissory notes duly executed and delivered by the Participating Stockholders
(the "Notes"). The Notes may be prepaid at any time, and shall bear minimal
interest
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(as necessary to avoid the imputation of interest), mature as to principal
and interest 180 days following their issue date, and be secured by Parent
Common Stock issued in connection with the Merger (but not included as part
of the Escrow Fund) having a fair market value equal to not less 120% of the
principal amount of the Notes on the issue date. The shares of Parent Common
Stock securing the Notes shall be held in an escrow (independent of the
Escrow Fund) by Parent. Upon the sale of any shares of Parent Common Stock
held by a Participating Stockholder (whether or not such shares may
constitute collateral for a Note), the Participating Stockholder will be
obligated to remit to Parent the proceeds of such sale as necessary to repay
all principal and interest under the Note, with any excess proceeds to be
retained by the Participating Stockholder. Any sales or transfer taxes
resulting from the Stock Sale shall be paid by the Participating Stockholders.
(iii) Parent agrees that pending the completion of the
Stock Sale, Parent will (except to the extent that the Securityholder Agent
otherwise agrees in writing) conduct the business of the Subs in the usual,
regular and ordinary course in substantially the same manner as heretofore
conducted. Subject to the foregoing, Parent shall have no responsibility or
obligation to any Participating Stockholder or any other holder of Company
Common Stock outstanding immediately prior to the Effective Time for any
adverse event, condition or circumstance that may occur in connection with
the conduct of the business of the Subs or the condition of the business or
operations of the Subs, and Parent shall not be obligated to provide any
representation or warranty to the Participating Stockholders concerning such
conduct in connection with the Stock Sale. Upon completion of the Stock
Sale, none of Parent, the Company nor any Subsidiary shall have any liability
or obligation to the Subs or to any stockholder, purchaser, creditor,
employee, vendor or customer of either Sub or of Parent, the Company or any
Subsidiary, and the Participating Stockholders will agree to indemnify Parent
and its affiliates against any claims alleging such liability or obligation.
(c) The Company and Parent shall use their best efforts to cause the
Apsylog Minority Holder, prior to the Closing, to convert his equity interest in
Apsylog into shares of Company Capital Stock on the same terms and conditions as
set forth in the Series A and Series B Preferred Stock Purchase Agreement dated
April 16, 1997 among the Company and certain prior holders of Apsylog's capital
stock.
6.16 TERMINATION OF UNITED KINGDOM DISTRIBUTORSHIP. Prior to the Closing,
the Company shall provide written notice to Apsylog (UK) Ltd., a corporation
organized under the laws of England (the "Distributor"), advising of the
Company's intent to terminate the exclusivity provisions of its International
Master Reseller Agreement with the Distributor dated as of July 19, 1996 (the
"Distribution Agreement"), and following the Effective Time, the Company and
Gilles Queru on behalf of the Company Stockholders (as defined in Article VIII)
shall use their best and lawful efforts (which shall not be construed to require
any monetary payment to Distributor) to terminate such exclusivity provisions
(which may be accomplished by terminating the Distribution Agreement in its
entirety) in consultation with, and in a manner reasonably acceptable to,
Parent. Neither of the Company, Gilles Queru, or any Company Stockholder shall
have any liability to Parent under the provisions of Article VIII in the event
that the Distributor cures any default under the Distribution
49
Agreement in accordance with its terms, or in the event that the
Securityholder Agent is unable to lawfully terminate the exclusivity
provisions of the Distribution Agreement.
6.17 COMPLETION OF AUDIT. The Company shall use its best efforts to assist
Coopers & Xxxxxxx LLP to complete its audit of the Company Financial Statements
prior to the Closing.
6.18 FILING OF TAX RETURNS; PAYMENT OF TAXES. Prior to the Closing, the
Company shall accurately complete its United States federal and California state
tax returns for the fiscal year ended December 31, 1996 and pay any amounts
indicated thereon as being due.
6.19 EMPLOYMENT AGREEMENTS. Prior to the Closing, Parent (or a Subsidiary,
as appropriate) and each of Gilles Queru, Xxxxxxxx Xxxxxxxx, and Stephane
Dehoche shall enter into amendments to their respective employment agreements
with Apsylog, and Xxxxxx Xxxxxxxx and the Company shall have entered into an
agreement terminating the offer letter dated March 22, 1996 between Apsylog, a
California corporation, and Xx. Xxxxxxxx (collectively, the "EMPLOYMENT
AGREEMENTS").
6.20 NO SOLICITATION. From and after the date of this Agreement until
the earlier to occur of the Effective Time or termination of this Agreement
pursuant to its terms, neither the Company, any Subsidiary, or any Affiliate
Stockholder will, and the Company, the Subsidiaries, and the Affiliate
Stockholders will instruct their respective directors, officers, employees,
representatives, investment bankers, agents, and affiliates not to, directly
or indirectly (i) solicit or encourage submission of any Acquisition Proposal
(as defined herein) by any person, entity, or group (other than Parent and
its affiliates, agents, and representatives) or (ii) participate in any
discussions or negotiations with, or disclose any non-public information
concerning the Company or any Subsidiary to, or afford access to the
properties, books, or records of the Company or any Subsidiary to, or
otherwise assist or facilitate, or enter into any agreement or understanding
with, any person, entity, or group (other than Parent and its affiliates,
agents, and representatives) in connection with any Acquisition Proposal with
respect to the Company or any Subsidiary. For purposes of this Agreement, an
"Acquisition Proposal" means any proposal or offer relating to (i) any
merger, consolidation, sale or license of substantial assets or similar
transactions involving the Company or any Subsidiary (other than sales or
licenses of assets or inventory in the ordinary course of business or as
permitted by this Agreement) or (ii) sales by the Company or any Subsidiary
of any shares of its capital stock (including, without limitation, by way of
a tender offer or an exchange offer and except as contemplated pursuant to
Section 6.15 and upon exercise of Company Options). The Company, the
Subsidiaries, and the Affiliate Stockholders will immediately cease any and
all existing activities, discussion, or negotiations with any parties
conducted heretofore with respect to any of the foregoing. The Company and
the Affiliate Stockholders will promptly (i) notify Parent if it receives any
proposal or written inquiry or written request for information in connection
with an Acquisition Proposal or potential Acquisition Proposal and (ii)
notify Parent of the significant terms and conditions of any such Acquisition
Proposal. In addition, from and after the date of this Agreement, until the
earlier to occur of the Effective Time or termination of this Agreement
pursuant to its terms, the Company, the Subsidiaries, and the Affiliate
Stockholders will not, and will instruct their
50
respective directors, officers, employees, representatives, investment
bankers, agents, and affiliates not to, directly or indirectly, make or
authorize any public statement, recommendation, or solicitation in support of
any Acquisition Proposal made by any person, entity, or group (other than
Parent).
6.21 AFFILIATE STOCKHOLDER INDEMNIFICATION. Each Affiliate Stockholder
has delivered to Parent, concurrently with the execution of this Agreement,
an executed Indemnity Agreement in the form attached hereto as EXHIBIT F (the
"INDEMNITY AGREEMENTS").
6.22 BENEFIT ARRANGEMENTS. Parent covenants and agrees that to the
extent permitted by applicable law and to the extent the existing benefit
plans and arrangements provided by Company and any Subsidiary to its
employees are terminated on or after the Effective Time, such employees shall
be entitled to comparable benefits which are available or subsequently become
available to Parent's employees in the country of employment. For purposes
of satisfying the terms and conditions of such plans, Parent shall give full
credit for eligibility, vesting or benefit accrual for each participant's
period of service at the Company or any Subsidiary prior to the Effective
Time.
6.23 REORGANIZATION. No party to the Agreement shall take any action,
either prior to or subsequent to the Closing, that would cause the Merger to
fail to qualify as a "reorganization" under Section 368(a) of the code, and
each party agrees to file all Returns consistent with such treatment.
ARTICLE VII
CONDITIONS TO THE MERGER
7.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER. The
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction at or prior to the Closing of the
following conditions:
(a) STOCKHOLDER APPROVAL. This Agreement and the Merger and other
transactions contemplated hereby shall have been approved and adopted by the
Company's stockholders by the requisite vote under applicable law and the
Company's Amended and Restated Certificate of Incorporation.
(b) PREFERRED STOCK CONVERSION. Holders of a majority of the
outstanding Company Preferred Stock shall have delivered written notice to
the Company, which shall have provided copies thereof to Parent, of their
election to require the conversion of all Company Preferred Stock into
Company Common Stock effective immediately prior to the Closing.
(c) GOVERNMENT APPROVALS. All authorizations, consents, orders, or
approvals of, or declarations or filings with, or expiration of waiting
periods imposed by, any Governmental Entity necessary for the consummation of
the transactions contemplated by this Agreement, including the issuances of
the Parent Common Stock in the Merger, shall have been obtained.
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(d) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No temporary
restraining order, preliminary or permanent injunction or other order issued
by any court of competent jurisdiction or other legal or regulatory restraint
or prohibition preventing the consummation of the Merger shall be in effect.
(e) NASDAQ LISTING. The shares of Parent Common Stock issuable
pursuant to this Agreement and such other shares required to be reserved for
issuance in connection with the Merger shall have been authorized for listing
on the Nasdaq National Market upon official notice of issuance.
(f) TAX OPINIONS. The Company shall have received from Venture Law
Group, and Parent shall have received from Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx,
P.C., written opinions to the effect that the Merger will constitute a
reorganization within the meaning of Section 368 of the Code. In rendering
such opinions, counsel may rely on (and to the extent reasonably required,
the parties shall make) reasonable representations related thereto.
7.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE COMPANY. The
obligations of the Company to consummate the Merger and the transactions
contemplated by this Agreement shall be subject to the satisfaction at or
prior to the Closing of each of the following conditions, any of which may be
waived, in writing, exclusively by the Company:
(a) REPRESENTATIONS, WARRANTIES, AND COVENANTS. The
representations and warranties of Parent and Merger Sub contained in this
Agreement shall be true and correct in all material respects on and as of the
Closing Date, except for changes contemplated by this Agreement and except
for those representations and warranties which address matters only as of a
particular date (which shall remain true and correct as of such date), with
the same force and effect as if made on and as of the Closing Date, and
Parent and Merger Sub shall have performed and complied in all material
respects with all covenants, obligations, and conditions of this Agreement
required to be performed and complied with by them as of the Closing Date.
(b) CERTIFICATE OF PARENT. The Company shall have been provided
with a certificate executed on behalf of Parent by its President and its
Chief Financial Officer to the effect that as of the Closing Date:
(i) all representations and warranties made by Parent and
Merger Sub under this Agreement are true and complete in all material
respects; and
(ii) all covenants, obligations, and conditions of this
Agreement to be performed by Parent and Merger Sub on or before such date
have been so performed in all material respects.
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(c) SATISFACTORY FORM OF LEGAL AND ACCOUNTING MATTERS. The form,
scope, and substance of all legal matters and accounting matters contemplated
hereby and all closing documents and other papers delivered hereunder shall
be reasonably acceptable to counsel to the Company.
(d) LEGAL OPINION. The Company shall have received a legal opinion
from Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, P.C., counsel to Parent, substantially
in the form of EXHIBIT G attached hereto.
(e) NO MATERIAL ADVERSE CHANGE. There shall not have occurred any
event, fact, or condition that had or reasonably could be expected to have a
Material Adverse Effect on Parent and its subsidiaries, taken as a whole (it
being understood that a decline in Parent's stock price or a deterioration of
general economic conditions or conditions affecting Parent's industry
generally shall not, in and of itself, constitute an event, fact, or
condition having a Material Adverse Effect for purposes of this Section 7.2).
(f) DECLARATION OF REGISTRATION RIGHTS. Parent shall have executed
and delivered the Declaration of Registration Rights.
(g) EMPLOYMENT AGREEMENTS. Each of the Employment Agreements shall
have been executed and delivered by the respective parties thereto.
7.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF PARENT AND MERGER SUB.
The obligations of Parent and Merger Sub to consummate the Merger and the
transactions contemplated by this Agreement shall be subject to the
satisfaction at or prior to the Closing of each of the following conditions,
any of which may be waived, in writing, exclusively by Parent:
(a) REPRESENTATIONS, WARRANTIES, AND COVENANTS. The representations
and warranties of the Company and the Affiliate Stockholders contained in
this Agreement shall be true and correct in all material respects on and as
of the Closing Date, except for changes contemplated by this Agreement and
except for those representations and warranties which address matters only as
of a particular date (which shall remain true and correct as of such date),
with the same force and effect as if made on and as of the Closing Date, and
the Company shall have performed and complied in all material respects with
all covenants, obligations, and conditions of this Agreement required to be
performed and complied with by them as of the Closing Date.
(b) CERTIFICATE OF COMPANY. Parent shall have been provided with a
certificate executed on behalf of the Company by its President and its Chief
Financial Officer to the effect that as of the Closing Date:
(i) all representations and warranties made by the Company
under this Agreement are true and complete in all material respects; and
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(ii) all covenants, obligations, and conditions of this
Agreement to be performed by the Company on or before such date have been so
performed in all material respects.
(c) CERTIFICATE OF AFFILIATE STOCKHOLDERS. Parent shall have been
provided with a certificate executed on behalf of each of the Affiliate
Stockholders to the effect that as of the Closing Date:
(i) all representations and warranties made by such Affiliate
Stockholder are true and complete in all material respects; and
(ii) all covenants, obligations, and conditions of this
Agreement to be performed by such Affiliate Stockholder on or before such
date have been so performed in all material respects.
(d) THIRD PARTY CONSENTS. Any and all consents, waivers, and
approvals required from third parties relating to the contracts, licenses,
leases, and other agreements and instruments of the Company and the
Subsidiaries so that the Merger and other transactions contemplated hereby do
not adversely affect the rights of, and benefits to, the Company thereunder
shall have been obtained.
(e) CORPORATE STRUCTURE. On or prior to the Closing Date, the
Company shall have provided evidence satisfactory to Parent and its legal
counsel that as of the Closing Date:
(i) the Subsidiaries will consist only of the Subsidiaries;
(ii) the Company has divested its entire interest in each of
the Divested Companies, and such divestitures meet the requirements of
Section 6.15(b);
(iii) the Company's distributor arrangements in the United
Kingdom have been terminated on terms and subject to conditions satisfactory
to Parent; and
(iv) the Company owns all the outstanding shares of Apsylog
(other than directors qualifying shares and 68,000 shares which may be held
by the Minority Holder) and each of the other Subsidiaries.
(f) AUDIT REPORT. Coopers & Xxxxxxx LLP shall have completed its
audit of the Company Financial Statements and delivered its unqualified audit
reports thereon.
(g) SATISFACTORY FORM OF LEGAL AND ACCOUNTING MATTERS. The form,
scope, and substance of all legal and accounting matters contemplated hereby
and all closing documents and other papers delivered hereunder shall be
reasonably acceptable to counsel for Parent.
(h) AFFILIATE AGREEMENT. Parent shall have received from each
Affiliate an executed Affiliate Agreement, which shall be in full force and
effect.
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(i) OTHER AGREEMENTS. The Non-Competition Agreements, the
Employment Agreements, and the Indemnity Agreements shall have been executed
by the parties thereto, shall have been delivered to Parent, and shall be in
full force and effect.
(j) U.S. LEGAL OPINION. Parent shall have received a legal opinion
from Venture Law Group, United States counsel to the Company, in
substantially the form of EXHIBIT H attached hereto.
(k) FRENCH LEGAL OPINION. Parent shall have received a legal
opinion from Stibbe, Simond, Monahan, Duhot & Xxxxxx, French counsel to the
Company and the Subsidiaries, in substantially the form of EXHIBIT I attached
hereto.
(l) NO MATERIAL ADVERSE CHANGE. There shall not have occurred any
event, fact, or condition which has had or reasonably would be expected to
have a Material Adverse Effect on the Company or any Subsidiary (it being
understood that a deterioration of general economic conditions or conditions
affecting the Company's business generally shall not, in and of itself,
constitute an event, fact, or condition having a Material Adverse Effect for
purposes of this Section 7.3).
(m) APPRAISAL RIGHTS. Holders of not more than 5% of the
outstanding Company Capital Stock shall have exercised, nor shall they have
any continued right to exercise, appraisal rights under applicable law with
respect to the transactions contemplated by this Agreement.
(n) PARTICIPATING STOCKHOLDERS. Each of the Participating
Stockholders identified on EXHIBIT J shall have executed and delivered to
Parent a written agreement in form satisfactory to Parent to the effect that
such Participating Stockholder acknowledges and agrees to its obligations
pursuant to Section 6.15(b).
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ESCROW
8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties by the Company and the Affiliate Stockholders
in this Agreement or in any instrument delivered at the Closing pursuant to
this Agreement (each as modified by the Company Schedules) and all the
representations and warranties by Parent and Merger Sub in this Agreement or
in any instrument delivered at the Closing pursuant to this Agreement shall
survive the Merger and shall continue for the periods following the Closing
Date set forth in Section 8.2(a). No other representations or warranties
shall survive the Merger.
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8.2 ESCROW ARRANGEMENTS.
(a) ESCROW FUND. At the Effective Time, each stockholder of the
Company (individually, a "Company Stockholder" and, collectively, the
"Company Stockholders") will be deemed to have received and deposited with
the Escrow Agent (as defined below) the Escrow Amount (plus any additional
shares as may be issued upon any stock split, stock dividend, or
recapitalization effected by Parent after the Effective Time with respect to
shares constituting the Escrow Amount) without any act of any Company
Stockholder. As soon as practicable after the Effective Time, the Escrow
Amount, without any act of any Company Stockholder, will be deposited with
ChaseMellon Shareholder Services LLC, or other institution acceptable to
Parent and the Securityholder Agent (as defined in Section 8.2(g) below)) as
Escrow Agent (the "ESCROW AGENT"), such deposit to constitute an escrow fund
(the "ESCROW FUND") to be governed by the terms set forth herein and at
Parent's cost and expense. The portion of the Escrow Amount contributed on
behalf of each Company Stockholder shall be in proportion to the aggregate
Parent Common Stock which such holder would otherwise be entitled under
Section 1.6(b) and shall be in the respective amounts listed opposite each
Company Stockholder's name listed in EXHIBIT K attached hereto. Except as
provided in Section 1.6(d)(iv) any shares of Parent Common Stock contributed
to the Escrow Fund shall not be unvested or subject to any right of
repurchase, risk of forfeiture or other condition in favor of the Surviving
Corporation. The Escrow Fund shall be available to compensate the Parent and
its affiliates (including the Surviving Corporation) for any claims, losses,
liabilities, damages, deficiencies, costs and expenses, including reasonable
attorneys= fees and expenses and expenses of investigation and defense
incurred by Parent, its officers, directors or affiliates (including the
Surviving Corporation) (i) directly or indirectly as a result of any
inaccuracy or breach of a representation or warranty of the Company or of any
Affiliate Stockholder contained herein, or in any certificate, instrument,
schedule or document delivered by the Company or any Affiliate Stockholder at
the Closing in connection with this Agreement or the Merger, or any failure
by the Company or any Affiliate Stockholder prior to the Closing to perform
or comply with any covenant contained herein or (ii) in the event the Company
prior to the Closing, or the Securityholder Agent after the Closing, agrees
to any cash settlement with the Distributor for the purposes of terminating
the exclusivity provisions of the Distribution Agreement as provided in
Section 6.16 above (hereinafter individually a ALOSS@ and collectively
"LOSSES"), provided that claims arising out of an inaccuracy or breach of any
representations and warranties and any covenant of the Company or the
Affiliate Stockholders contained in this Agreement and in any certificate,
instrument, schedule or document delivered by the Company or the Affiliate
Stockholders at the Closing in connection with this Agreement or the Merger
must be asserted on or before 5:00 p.m. (California Time) on the date that is
one year following the Closing Date and provided further, that a Loss for
purposes of clause (ii) above shall be deemed to include only the amount of
such cash settlement, exclusive of any expenses or costs incurred in
attorneys' fees or other expenses or costs incidental to such cash
settlement. No portion of the Escrow Amount shall be contributed in respect
of any Company Options. Except as provided in Section 11.2 relating to Third
Party Expenses (as defined therein) exceeding $150,000, which excess shall be
payable from the Escrow Fund, Parent may not receive any shares from the
Escrow Fund unless and until Officer=s Certificates (as defined in paragraph
(d) below) identifying Losses, the aggregate amount of which exceed $75,000
(of which no individual
49
Loss shall be less than $5,000), have been delivered to the Escrow Agent as
provided in paragraph (d) and either there is no objection thereto or any
objection has been resolved in accordance with the provisions of this Article
VIII; in such case, Parent may recover from the Escrow Fund all Losses
(including any Losses within the $75,000 threshold and any individual Losses
that may be less than $5,000) for which there is no objection or any
objection had been resolved in accordance with the provisions of this Article
VIII in accordance with the provisions of this Section 8.2.
(b) ESCROW PERIOD; DISTRIBUTION UPON TERMINATION OF ESCROW PERIOD.
Subject to the following requirements, the Escrow Fund shall be in existence
immediately following the Effective Time and shall terminate at 5:00 p.m.
(California Time) on the date that is one year following the Closing Date,
both such dates to be certified to the Escrow Agent in an Officer's
Certificate (the "ESCROW PERIOD"). Such amount (or some portion thereof)
that is necessary in the reasonable judgment of Parent, subject to the
objection of the Securityholder Agent and the subsequent arbitration of the
matter in the manner provided in Section 8.2(f) hereof, to satisfy any
unsatisfied claims concerning facts and circumstances existing prior to the
termination of such Escrow Period as are specified in any Officer's
Certificate delivered to the Escrow Agent prior to termination of such Escrow
Period, may be retained in the Escrow Fund after termination of the Escrow
Period. As soon as any or all such claims have been resolved as evidenced by
the written memorandum of the Securityholder Agent and Parent, the Escrow
Agent shall deliver to the Company Stockholders the remaining portion of the
Escrow Fund that is not required to satisfy such claims. If no Officer's
Certificate pertaining to unsatisfied claims is delivered to the Escrow Agent
prior to the termination of the Escrow Period, upon termination of the Escrow
Period, the Escrow Agent, without further authorization or instruction, shall
distribute the remainder of the Escrow Fund to the Company Stockholders in
accordance with the provisions of this Section 8.2(b). Deliveries of Escrow
Amounts to the Company Stockholders pursuant to this Section 8.2(b) shall be
made in proportion to their respective original contributions to the Escrow
Fund (as set forth on EXHIBIT K attached hereto).
(c) PROTECTION OF ESCROW FUND.
(i) The Escrow Agent shall hold and safeguard the Escrow Fund
during the Escrow Period, shall treat such fund as a trust fund in accordance
with the terms of this Agreement and not as the property of Parent and shall
hold and dispose of the Escrow Fund only in accordance with the terms hereof.
(ii) Any shares of Parent Common Stock or other equity
securities issued or distributed by Parent (including shares issued upon a
stock dividend or split) ("NEW SHARES") in respect of Parent Common Stock in
the Escrow Fund which have not been released from the Escrow Fund shall be
deposited with the Escrow Agent and added to the Escrow Fund and become a
part thereof. New Shares issued in respect of shares of Parent Common Stock
which have been released from the Escrow Fund shall not be added to the
Escrow Fund but shall be distributed to the recordholders thereof. Cash
dividends on Parent Common Stock held in the Escrow Fund shall not be added
to the Escrow Fund but shall be distributed to the recordholders thereof.
50
(iii) Each Company Stockholder shall have voting rights
with respect to the shares of Parent Common Stock contributed to the Escrow
Fund by such Company Stockholder (and on any voting securities and other
dividends added to the Escrow Fund in respect of such shares of Parent Common
Stock).
(d) CLAIMS UPON ESCROW FUND.
(i) Upon receipt by the Escrow Agent at any time on or before
the last day of the Escrow Period of a certificate signed by any officer of
Parent (an "OFFICER'S CERTIFICATE"): (A) stating that Parent has paid or
properly accrued or reasonably anticipates that it will have to pay or accrue
Losses, and (B) specifying in reasonable detail the individual items of
Losses included in the amount so stated, the date each such item was paid or
properly accrued, or the basis for such anticipated liability, and the nature
of the misrepresentation, breach of warranty or covenant to which such item
is related, the Escrow Agent shall, subject to the provisions of Section
8.2(e) hereof, deliver to Parent out of the Escrow Fund, as promptly as
practicable, shares of Parent Common Stock held in the Escrow Fund in an
amount equal to such Losses.
(ii) For the purposes of determining the number of shares of
Parent Common Stock to be delivered to Parent out of the Escrow Fund pursuant
to Section 8.2(d)(i) hereof, the shares of Parent Common Stock shall be
valued at a price of $15.25 per share (the "Parent Price Per Share").
(e) OBJECTIONS TO CLAIMS. At the time of delivery of any Officer's
Certificate to the Escrow Agent, a duplicate copy of such certificate shall
be delivered to the Securityholder Agent and for a period of thirty (30) days
after receipt of such Officer's Certificate, the Escrow Agent shall make no
delivery to Parent of any Escrow Amounts pursuant to Section 8.2(d) hereof
unless the Escrow Agent shall have received written authorization from the
Securityholder Agent to make such delivery. After the expiration of such
thirty (30) day period, the Escrow Agent shall make delivery of shares of
Parent Common Stock from the Escrow Fund in accordance with Section 8.2(d)
hereof, provided that no such payment or delivery may be made if the
Securityholder Agent shall object in a written statement to the claim made in
the Officer's Certificate, and such statement shall have been delivered to
the Escrow Agent prior to the expiration of such thirty (30) day period.
(f) RESOLUTION OF CONFLICTS; ARBITRATION.
(i) In case the Securityholder Agent shall so object in
writing to any claim or claims made in any Officer's Certificate, the
Securityholder Agent and Parent shall attempt in good faith to agree upon the
rights of the respective parties with respect to each of such claims. If the
Securityholder Agent and Parent should so agree, a memorandum setting forth
such agreement shall be prepared and signed by both parties and shall be
furnished to the Escrow Agent. The Escrow Agent shall be entitled to rely on
any such memorandum and distribute shares of Parent Common Stock from the
Escrow Fund in accordance with the terms thereof.
51
(ii) If no such agreement can be reached after good faith
negotiation, either Parent or the Securityholder Agent may demand arbitration
of the matter unless the amount of the damage or loss is at issue in pending
litigation with a third party, in which event arbitration shall not be
commenced until such amount is ascertained or both parties agree to
arbitration; and in either such event the matter shall be settled by
arbitration conducted by three arbitrators. Parent and the Securityholder
Agent shall each select one arbitrator, and the two arbitrators so selected
shall select a third arbitrator, each of which arbitrators shall be
independent and have at least ten years relevant experience. The arbitrators
shall set a limited time period and establish procedures designed to reduce
the cost and time for discovery while allowing the parties an opportunity,
adequate in the sole judgment of the arbitrators, to discover relevant
information from the opposing parties about the subject matter of the
dispute. The arbitrators shall rule upon motions to compel or limit
discovery and shall have the authority to impose sanctions, including
attorneys fees and costs, to the same extent as a court of competent law or
equity, should the arbitrators determine that discovery was sought without
substantial justification or that discovery was refused or objected to
without substantial justification. The decision of a majority of the three
arbitrators as to the validity and amount of any claim in such Officer's
Certificate shall be binding and conclusive upon the parties to this
Agreement, and notwithstanding anything in Section 8.2(e) hereof, the Escrow
Agent shall be entitled to act in accordance with such decision and make or
withhold payments out of the Escrow Fund in accordance therewith. Such
decision shall be written and shall be supported by written findings of fact
and conclusions which shall set forth the award, judgment, decree or order
awarded by the arbitrators.
(iii) Any such arbitration shall be held in San Diego
County, California and shall be conducted by, and under the rules then in
effect, of the Judicial Arbitration and Mediation Services, Inc. For
purposes of this Section 8.2(f), in any arbitration hereunder in which any
claim or the amount is at issue, Parent shall be deemed to be the
Non-Prevailing Party in the event that the arbitrators award Parent less than
the sum of one-half (1/2) of the disputed amount plus any amounts not in
dispute; otherwise, the Company Stockholders as represented by the
Securityholder Agent shall be deemed to be the Non-Prevailing Party. The
Non-Prevailing Party to an arbitration shall pay its own expenses, the fees
of each arbitrator, the administrative costs of the arbitration, and the
expenses, including without limitation, reasonable attorneys' fees and costs,
incurred by the other party to the arbitration. Judgment upon any award
rendered by the arbitrators may be entered in any court having jurisdiction.
The Securityholder Agent may pay such amounts contemplated under this Section
8.2(f)(iii) and Section 8.2(i)(ii) or other amounts contemplated in this
Section 8.2 (including without limitation unreimbursed expenses of counsel
for the Company Stockholders and Parent, arbitrator fees and administrative
costs) by distributing shares of Parent Common Stock from the Escrow Fund
with respect to which Parent has not made a claim; PROVIDED, HOWEVER, that no
shares of Parent Common Stock may be distributed from the Escrow Fund prior
to the termination of the Escrow Period and such shares may be distributed
only to the extent that such shares are not required to satisfy any claim for
Losses.
52
(g) SECURITYHOLDER AGENT OF THE COMPANY STOCKHOLDERS; POWER OF
ATTORNEY.
(i) In the event that the Merger is approved, effective upon
such vote, and without further act of any Company Stockholder, Xxxxxxx Worms
shall be appointed as agent and attorney-in-fact (the "SECURITYHOLDER AGENT")
for each Company Stockholder (except such Company Stockholders, if any, as
shall have perfected their appraisal rights under Delaware Law), for and on
behalf of Company Stockholders, to give and receive notices and
communications, to authorize delivery to Parent of shares of Parent Common
Stock from the Escrow Fund in satisfaction of claims by Parent, to object to
such deliveries, to agree to, negotiate, enter into settlements and
compromises of, and demand arbitration and comply with orders of courts and
awards of arbitrators with respect to such claims, and to take all actions
necessary or appropriate in the judgment of Securityholder Agent for the
accomplishment of the foregoing. Such agency may be changed by the Company
Stockholders from time to time upon not less than thirty (30) days prior
written notice to Parent and Escrow Agent; provided that the Securityholder
Agent may not be removed unless holders of a two-thirds interest of the
Escrow Fund agree to such removal and to the identity of the substituted
agent. Any vacancy in the position of Securityholder Agent may be filled by
approval of the holders of a majority in interest of the Escrow Fund. No bond
shall be required of the Securityholder Agent, and the Securityholder Agent
shall not receive compensation for his or her services. Notices or
communications to or from the Securityholder Agent shall constitute notice to
or from each of the Company Stockholders.
(ii) The Securityholder Agent shall not be liable for any act
done or omitted hereunder as Securityholder Agent while acting in good faith
and in a manner that is not grossly negligent.
(h) ACTIONS OF THE SECURITYHOLDER AGENT. A decision, act, consent
or instruction of the Securityholder Agent shall constitute a decision of all
the Company Stockholders for whom a portion of the Escrow Amount otherwise
issuable to them is deposited in the Escrow Fund and shall be final, binding
and conclusive upon each of such Company Stockholders, and the Escrow Agent
and Parent may rely upon any such decision, act, consent or instruction of
the Securityholder Agent as being the decision, act, consent or instruction
of each and every such Company Stockholder of the Company. The Escrow Agent
and Parent are hereby relieved from any liability to any person for any acts
done by them in accordance with such decision, act, consent or instruction of
the Securityholder Agent. The Company Stockholders agree jointly and
severally to indemnify and hold the Securityholder Agent harmless against any
and all losses, claims, damages, liabilities, and expenses, including
reasonable costs of investigation, counsel fees, and disbursements that may
be imposed on Securityholder Agent or incurred by him on behalf of the
Company Stockholders in the connection with his actions taken under this
Agreement, including without limitation expenses incurred as contemplated by
Sections 8.2(f)(iii) and 8.2(i)(ii).
(i) THIRD-PARTY CLAIMS. (i) If any third party shall notify Parent
or its affiliates hereto with respect to any matter (hereinafter referred to
as a "Third Party Claim"), which may give rise to a claim by Parent against
the Escrow Fund, then Parent shall give notice to the Securityholder
53
Agent within 30 days of Parent becoming aware of any such Third Party Claim
or of facts upon which any such Third Party Claim will be based setting forth
such material information with respect to the Third party Claim as is
reasonably available to Parent; PROVIDED, HOWEVER, that no delay or failure
on the part of Parent in notifying the Securityholder Agent shall relieve the
Securityholder Agent and the Company Stockholders from any obligation
hereunder unless the Securityholder Agent and the Company Stockholders are
thereby materially prejudiced (and then solely to the extent of such
prejudice). The Securityholder Agent and the Company Stockholders shall not
be liable for any attorneys fees and expenses incurred by Parent prior to
Parent's giving notice to the Securityholder Agent of a Third Party Claim.
The notice from Parent to the Securityholder Agent shall set forth such
material information with respect to the Third Party Claim as is then
reasonably available to Parent.
(ii) In case any Third Party Claim is asserted against Parent
or its affiliates, and Parent notifies the Securityholder Agent thereof
pursuant to Section 8.2(i)(a) hereinabove, the Securityholder Agent and the
Company Stockholders will be entitled, if the Securityholder Agent so elects
by written notice delivered to Parent within 30 days after receiving Parent's
notice, to assume the defense thereof, at the expense of the Company
Stockholders independent of the Escrow Fund, with counsel reasonably
satisfactory to Parent so long as:
a) Parent has reasonably determined that Losses which
may be incurred as a result of the Third Party Claim do not exceed either
individually, or when aggregated with all other Third Party Claims, the total
dollar value of the Escrow Fund determined in accordance with Section
8.2(d)(ii) hereof;
b) the Third Party Claim involves only money damages and
does not seek an injunction or other equitable relief;
c) settlement of, or an adverse judgment with respect
to, the Third Party Claim is not, in the good faith judgment of Parent,
likely to establish a precedential custom or practice adverse to the
continuing business interests of Parent which could have a material adverse
effect on the business or operations of Parent; and
d) counsel selected by the Securityholder Agent is
reasonably acceptable to Parent.
If the Securityholder Agent and the Company Stockholders so assume any
such defense, the Securityholder Agent and the Company Stockholders shall
conduct the defense of the Third Party Claim actively and diligently. The
Securityholder Agent and the Company Stockholders shall not compromise or
settle such Third Party Claim or consent to entry of any judgment in respect
thereof without the prior written consent of Parent and/or its affiliates, as
applicable.
(iii) In the event that the Securityholder Agent assumes
the defense of the Third Party Claim in accordance with Section 8.2(i)(ii)
above, Parent or its affiliates may retain
54
separate counsel and participate in the defense of the Third Party Claim, but
the fees and expenses of such counsel shall be at the expense of Parent
unless Parent or its affiliates shall reasonably determine that there is a
material conflict of interest between or among Parent or its affiliates and
the Securityholder Agent and the Company Stockholders with respect to such
Third Party Claim, in which case the reasonable fees and expenses of such
counsel will be borne by the Securityholder Agent and the Company
Stockholders out of the Escrow Fund. Parent or its affiliates will not
consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of the
Securityholder Agent. Parent will cooperate in the defense of the Third
Party Claim and will provide full access to documents, assets, properties,
books and records reasonably requested by Securityholder Agent and material
to the claim and will make available all officers, directors and employees
reasonably requested by Securityholder Agent for investigation, depositions
and trial.
(iv) In the event that the Securityholder Agent fails or elects not
to assume the defense of Parent or its affiliates against such Third Party
Claim, which Securityholder Agent had the right to assume under Section
8.2(i)(ii) above, a) Parent or its affiliates shall have the right to
undertake the defense and b) Parent shall not compromise or settle such Third
Party Claim or consent to entry of any judgment in respect thereof without
the prior written consent of Securityholder Agent. In the event that the
Securityholder Agent is not entitled to assume the defense of Parent or its
affiliates against such Third Party Claim pursuant to Section 8.2(i)(ii)
above, Parent or its affiliates shall have the right to undertake the
defense, consent to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim in any manner it may deem appropriate
(and Parent or its affiliates need not consult with, or obtain any consent
from, the Securityholder Agent or the Company Stockholders in connection
therewith); provided, however, that except with the written consent of the
Securityholder Agent, no settlement of any such claim or consent to the entry
of any judgment with respect to such Third Party Claim shall alone be
determinative of the validity of the claim against the Escrow Fund. In each
case, Parent or its affiliates shall conduct the defense of the Third Party
Claim actively and diligently, and the Securityholder Agent and the Company
Stockholders will cooperate with Parent or its affiliates in the defense of
that claim and will provide full access to documents, assets, properties,
books and records reasonably requested by Parent and material to the claim
and will make available all individuals reasonably requested by Parent for
investigation, depositions and trial.
(j) ESCROW AGENT'S DUTIES.
(i) The Escrow Agent shall be obligated only for the performance
of such duties as are specifically set forth in this Article VIII, and as set
forth in any additional written escrow instructions which the Escrow Agent
may receive after the date of this Agreement which are signed by an officer
of Parent and the Securityholder Agent and approved by the Escrow Agent, and
may rely and shall be protected in relying or refraining from acting on any
Officer's Certificate, memorandum, instruction or other instrument reasonably
believed to be genuine and to have been signed or presented by the proper
party or parties. The Escrow Agent shall not be liable for any act done or
omitted hereunder as Escrow Agent while acting in good faith and in the
exercise of
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reasonable judgment, and any act done or omitted pursuant to the advice of
counsel shall be conclusive evidence of such good faith.
(ii) The Escrow Agent is hereby expressly authorized to disregard
any and all warnings given by any of the parties hereto or by any other
person, excepting only orders or process of courts of law, and is hereby
expressly authorized to comply with and obey orders, judgments or decrees of
any court. In case the Escrow Agent obeys or complies with any such order,
judgment or decree of any court, the Escrow Agent shall not be liable to any
of the parties hereto or to any other person by reason of such compliance,
notwithstanding any such order, judgment or decree being subsequently
reversed, modified, annulled, set aside, vacated or found to have been
entered without jurisdiction.
(iii) The Escrow Agent shall not be liable in any respect on
account of the identity, authority or rights of the parties executing or
delivering or purporting to execute or deliver this Agreement or any
documents or papers deposited or called for hereunder.
(iv) The Escrow Agent shall not be liable for the expiration of
any rights under any statute of limitations with respect to this Agreement or
any documents deposited with the Escrow Agent.
(v) In performing any duties under the Agreement, the Escrow
Agent shall not be liable to any party for damages, losses, or expenses,
except for gross negligence or willful misconduct on the part of the Escrow
Agent. The Escrow Agent shall not incur any such liability for (A) any act
or failure to act made or omitted in good faith, or (B) any action taken or
omitted in reliance upon any instrument, including any written statement or
affidavit provided for in this Agreement that the Escrow Agent shall in good
faith believe to be genuine, nor will the Escrow Agent be liable or
responsible for forgeries, fraud, impersonations, or determining the scope of
any representative authority. In addition, the Escrow Agent may consult with
legal counsel in connection with Escrow Agent's duties under this Agreement
and shall be fully protected in any act taken, suffered, or permitted by
him/her in good faith in accordance with the advice of counsel. The Escrow
Agent is not responsible for determining and verifying the authority of any
person acting or purporting to act on behalf of any party to this Agreement.
(vi) If any controversy arises between the parties to this
Agreement, or with any other party, concerning the subject matter of this
Agreement, its terms or conditions, the Escrow Agent will not be required to
determine the controversy or to take any action regarding it. The Escrow
Agent may hold all documents and shares of Parent Common Stock and may wait
for settlement of any such controversy by final appropriate legal proceedings
or other means as, in the Escrow Agent's discretion, may be required, despite
what may be set forth elsewhere in this Agreement. In such event, the Escrow
Agent will not be liable for damage.
Furthermore, the Escrow Agent may at its option, file an action of
interpleader requiring the parties to answer and litigate any claims and
rights among themselves. The Escrow Agent is
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authorized to deposit with the clerk of the court all documents and shares of
Parent Common Stock held in escrow, except all costs, expenses, charges and
reasonable attorney fees incurred by the Escrow Agent due to the
interpleader. The parties jointly and severally agree to immediately pay the
Escrow Agent, to the extent not previously reimbursed, such amounts so
incurred by the Escrow Agent upon the Escrow Agent's demand therefor, which
demand may be made at any time before or after completion of such action of
interpleader. Upon initiating such action, the Escrow Agent shall be fully
released and discharged of and from all obligations and liability imposed by
the terms of this Agreement.
(vii) Parent and the Surviving Corporation agree jointly and
severally to indemnify and hold the Escrow Agent harmless against any and all
losses, claims, damages, liabilities, and expenses, including reasonable
costs of investigation, counsel fees, and disbursements that may be imposed
on Escrow Agent or incurred by Escrow Agent in connection with the
performance of his/her duties under this Agreement, including but not limited
to any litigation arising from this Agreement or involving its subject
matter; provided, however, that in the event the Escrow Agent shall be the
Non-Prevailing Party in connection with any claim or action initiated by a
Company Stockholder or Company Stockholders, then such Company Stockholder or
Company Stockholders shall be responsible for the indemnification of the
Escrow Agent to the full extent provided by this paragraph.
(viii) The Escrow Agent may resign at any time upon giving at least
thirty (30) days written notice to Parent and the Securityholder Agent;
provided, however, that no such resignation shall become effective until the
appointment of a successor escrow agent which shall be accomplished as
follows: Parent and the Securityholder Agent shall use their best efforts to
mutually agree on a successor escrow agent within thirty (30) days after
receiving such notice. If Parent and the Securityholder Agent fail to agree
upon a successor escrow agent within such time, the Escrow Agent shall have
the right to appoint a successor escrow agent authorized to do business in
the state of California. The successor escrow agent shall execute and deliver
an instrument accepting such appointment and it shall, without further acts,
be vested with all the estates, properties, rights, powers, and duties of the
predecessor escrow agent as if originally named as escrow agent. Thereafter,
the predecessor escrow agent shall be discharged from any further duties and
liability under this Agreement.
(k) FEES. All fees of the Escrow Agent for performance of its duties
hereunder shall be paid by Parent. It is understood that the fees and usual
charges agreed upon for services of the Escrow Agent shall be considered
compensation for ordinary services as contemplated by this Agreement. In the
event that the conditions of this Agreement are not promptly fulfilled, or if
the Escrow Agent renders any service not provided for in this Agreement, or if
the parties request a substantial modification of its terms, or if any
controversy arises, or if the Escrow Agent is made a party to, or intervenes in,
any litigation pertaining to this escrow or its subject matter, the Escrow Agent
shall be reasonably compensated for such extraordinary services and reimbursed
for all costs, attorney's fees, and expenses occasioned thereby. Parent
promises to pay these sums upon demand.
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(l) CONSEQUENTIAL DAMAGES. In no event shall the Escrow Agent be
liable for special, indirect or consequential loss or damage of any kind
whatsoever (including but not limited to lost profits), even if the Escrow
Agent has been advised of the likelihood of such loss or damage and
regardless of the form of action.
ARTICLE IX
LIMITATION OF LIABILITY
9.1 LIMITATION. The maximum liability of the Company Stockholders for
Losses incurred by Parent and/or the Surviving Corporation shall be limited
to the Escrow Fund (the "Maximum Liability for Losses") and resort to the
Escrow Fund shall be the exclusive right and remedy of Parent and/or the
Surviving Corporation for Losses; PROVIDED, HOWEVER, that notwithstanding any
provision of this Article IX, the maximum liability of the Affiliate
Stockholders for Losses shall be determined pursuant to the Indemnity
Agreements. Any claim by Parent or the Surviving Corporation against any or
all of the Company Stockholders must be made on or before the first
anniversary of the Closing and may only be made pursuant to the procedures
set forth in Article VIII. The maximum liability of each Company Stockholder
for any Losses incurred by Parent and/or the Surviving Corporation shall be
an amount equal to the product obtained by multiplying (x) the lesser of the
Maximum Liability for Losses or the amount of such Losses actually incurred
by Parent or the Surviving Corporation by (y) the ratio of (a) the total
number of shares of Parent Common Stock received by such person at the
Closing to (b) the aggregate number of shares of Parent Common Stock issued
at the Effective Time and shall only be payable out of the Escrow Fund in
shares. Parent agrees to present any claims for Losses solely against the
Escrow Fund established under Article VIII, except as may be otherwise
permitted under the Indemnity Agreements.
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
10.1 TERMINATION. Except as provided in Section 10.2 below, this
Agreement may be terminated and the Merger abandoned at any time prior to the
Effective Time:
(a) by mutual consent of the Company and Parent;
(b) by Parent or the Company if: (i) the Effective Time has not
occurred by October 31, 1997 (provided that the right to terminate this
Agreement under this clause 10.1(b)(i) shall not be available to any party
whose willful failure to fulfill any obligation hereunder has been the cause
of, or resulted in, the failure of the Effective Time to occur on or before
such date); (ii) there shall be a final nonappealable order of a federal or
state court in effect preventing consummation of the Merger; or (iii) there
shall be any statute, rule, regulation or order enacted,
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promulgated or issued or deemed applicable to the Merger by any Governmental
Entity that would make consummation of the Merger illegal;
(c) by Parent if there shall be any action taken, or any statute,
rule, regulation or order enacted, promulgated or issued or deemed applicable
to the Merger, by any Governmental Entity, which would: (i) prohibit
Parent's or the Company's ownership or operation of any portion of the
business of the Company or (ii) compel Parent or the Company to dispose of or
hold separate, as a result of the Merger, any portion of the business or
assets of the Company or Parent; in either case, the unavailability of which
assets or business would have a Material Adverse Effect on Parent or would
reasonably be expected to have a Material Adverse Effect on Parent's ability
to realize the benefits expected from the Merger.
(d) by Parent if it is not in material breach of its obligations
under this Agreement and there has been a breach of any representation,
warranty, covenant or agreement contained in this Agreement on the part of
the Company or any Affiliate Stockholder and as a result of such breach the
conditions set forth in Section 7.3(a), 7.3(b), 7.3(c), or 7.3(e), as the
case may be, would not then be satisfied; PROVIDED, HOWEVER, that if such
breach is curable by the Company within thirty (30) days through the exercise
of its reasonable best efforts, then for so long as the Company continues to
exercise such reasonable best efforts Parent may not terminate this Agreement
under this Section 10.1(d) unless such breach is not cured within thirty (30)
days (but no cure period shall be required for a breach which by its nature
cannot be cured);
(e) by the Company if it is not in material breach of its
obligations under this Agreement and there has been a breach of any
representation, warranty, covenant or agreement contained in this Agreement
on the part of Parent or Merger Sub and as a result of such breach the
conditions set forth in Section 7.2(a) or 7.2(b), as the case may be, would
not then be satisfied; PROVIDED, HOWEVER, that if such breach is curable by
Parent or Merger Sub within thirty (30) days through the exercise of its
reasonable best efforts, then for so long as Parent or Merger Sub continues
to exercise such reasonable best efforts the Company may not terminate this
Agreement under this Section 10.1(e) unless such breach is not cured within
thirty (30) days (but no cure period shall be required for a breach which by
its nature cannot be cured);
(f) by Parent upon the occurrence of a Material Adverse Effect on
the Company or any Subsidiary (it being understood that a deterioration of
general economic conditions or conditions affecting the Company's business
generally shall not, in and of itself, constitute an event, fact, or
condition having a Material Adverse Effect for purposes of this Section
10.1(f)); or
(g) by the Company upon the occurrence of a Material Adverse
Effect on Parent (it being understood that a decline in Parent's stock price
or a deterioration of general economic conditions or conditions affecting
Parent's industry generally shall not, in and of itself, constitute an event,
fact, or condition having a Material Adverse Effect for purposes of this
Section 10.1(g)).
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Where action is taken to terminate this Agreement pursuant to Section
10.1, it shall be sufficient for such action to be authorized by the Board of
Directors (as applicable) of the party taking such action.
10.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement as provided in Section 10.1, this Agreement shall forthwith become
void and, there shall be no liability or obligation on the part of Parent,
Merger Sub or the Company, or their respective officers, directors or
stockholders, provided that (i) the provisions of Section 6.3
(Confidentiality) and this Article X shall remain in full force and effect
and survive any termination of this Agreement, and (ii) the termination of
this Agreement shall not relieve any party from any liability for any willful
and knowing breach of this Agreement.
10.3 AMENDMENT. Except as is otherwise required by applicable law,
prior to the Closing, this Agreement may be amended by the parties hereto at
any time by execution of an instrument in writing signed by Parent, the
Company, and, in respect of matters under this Agreement that expressly
relate to the Affiliate Stockholders, Affiliate Stockholders holding a
majority of the outstanding Company Capital Stock held by the Affiliate
Stockholders. Except as is otherwise required by applicable law, after the
Closing, this Agreement may be amended by the parties hereto at any time by
execution of an instrument in writing signed by Parent and by Company
Stockholders who receive more than 50% of the Parent Common Stock issued or
to be issued pursuant to Section 1.6, or by all of the Company Stockholders
in the case of an amendment to Articles VIII or IX.
10.4 EXTENSION; WAIVER. At any time prior to the Effective Time, Parent
and Merger Sub, on the one hand, and the Company, on the other, may, to the
extent legally allowed, (i) extend the time for the performance of any of the
obligations of the other party hereto, (ii) waive any inaccuracies in the
representations and warranties made to such party contained herein or in any
document delivered pursuant hereto, and (iii) waive compliance with any of
the agreements or conditions for the benefit of such party contained herein.
Any agreement on the part of a party hereto to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on behalf
of such party.
ARTICLE XI
GENERAL PROVISIONS
11.1 NOTICES. Any request, communication, or other notice required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if sent by facsimile or delivered by recognized overnight or
international courier service or personal delivery (as the situation may
require) at the respective address or facsimile number of the party receiving
notice as set forth below. Any party hereto may by notice so given change
its address or facsimile number for future notice hereunder. All such
notices and other communications hereunder shall be deemed
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given (i) upon confirmation of delivery, if sent by facsimile and (ii) upon
delivery, if sent by recognized overnight or international courier service or
personal delivery.
(a) if to Parent or Merger Sub, to:
Peregrine Systems, Inc.
00000 Xxxx Xxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000 X.X.X.
ATTN: Xxxxxxx X. Xxxxxx, General Counsel
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
with a copy (which shall not constitute notice) to:
Wilson, Sonsini, Xxxxxxxx & Xxxxxx, P.C.
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000-0000 U.S.A.
ATTN: Xxxxxxx X. Xxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
(b) if to the Company, to:
United Software, Inc.
c/o Apsylog S.A.
Tour Franklin, 24 Etage, La Defense 8
92042 Paris La Defense
Cedex France
ATTN: Gilles Queru
Telephone No.: 011-33-1-47-73-11-11
Facsimile No.: 011-33-1-47-73-11-12
with a copy (which shall not constitute notice) to:
Venture Law Group
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
ATTN: Xxxx Xxxxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
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(c) if to the Securityholder Agent:
Xxxxxxx Worms
00 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Telephone No.: (415) __________
Facsimile No.: (415) __________
(d) if to the Escrow Agent:
ChaseMellon Shareholder Services, LLC
000 Xxxxx Xxxx Xxxxxx, Xxxxxx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000 U.S.A.
ATTN: Xxx Xxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
11.2 EXPENSES. In the event the Merger is not consummated, all fees and
expenses incurred in connection with the Merger including, without
limitation, all legal, accounting, financial advisory, consulting and all
other fees and expenses of third parties ("THIRD PARTY EXPENSES") incurred by
a party in connection with the negotiation and effectuation of the terms and
conditions of this Agreement and the transactions contemplated hereby, shall
be the obligation of the respective party incurring such fees and expenses.
In the event the Merger is consummated, the Surviving Corporation shall be
responsible for the payment of all Third Party Expenses, including Third
Party Expenses incurred by the Company and its subsidiaries; PROVIDED,
HOWEVER, that to the extent Third Party Expenses incurred by the Company and
its subsidiaries exceed $150,000, such excess shall be deemed a "Loss" for
purposes of Article VIII and shall be reimbursable to Parent in accordance
with Article VIII (without regard to the $75,000 minimum threshold for Losses
set forth in Section 8.2(a)). For purposes of this Agreement, the phrase
"Third Party Expenses incurred by the Company and its subsidiaries" shall
include all legal, accounting, financial advisory, consulting and all other
fees and expenses of third parties incurred by the Company or any subsidiary
of the Company in connection with the transactions contemplated by Section
6.15(b).
11.3 INTERPRETATION. 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 "agreement" when used herein shall be deemed
in each case to mean any contract, commitment or other agreement, whether
oral or written, that is legally binding. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement.
11.4 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more
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counterparts have been signed by each of the parties and delivered to the
other party, it being understood that all parties need not sign the same
counterpart.
11.5 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement, the schedules and
exhibits hereto, and the documents and instruments and other agreements among
the parties hereto referenced herein: (a) constitute the entire agreement
among the parties with respect to the subject matter hereof and supersede all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof, including without limitation the
Letter of Intent dated August 29, 1997 between the Company and Parent; (b)
are not intended to confer upon any other person any rights or remedies
hereunder; and (c) shall not be assigned by operation of law or otherwise
except as otherwise specifically provided.
11.6 SEVERABILITY. In the event that any provision of this Agreement or
the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further
agree to replace such void or unenforceable provision of this Agreement with
a valid and enforceable provision that will achieve, to the extent possible,
the economic, business and other purposes of such void or unenforceable
provision.
11.7 OTHER REMEDIES. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed cumulative
with and not exclusive of any other remedy conferred hereby, or by law or
equity upon such party, and the exercise by a party of any one remedy will
not preclude the exercise of any other remedy.
11.8 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California, regardless of the
laws that might otherwise govern under applicable principles of conflicts of
laws thereof. Each of the parties hereto agrees that process may be served
upon them in any manner authorized by the laws of the State of California for
such persons and waives and covenants not to assert or plead any objection
which they might otherwise have to such jurisdiction and such process.
11.9 CURRENCY. All references to "$" or "dollars" in this Agreement
refer to the lawful currency of the United States of America.
11.10 RULES OF CONSTRUCTION. The Company and Parent hereto agree
that they have been represented by counsel during the negotiation and
execution of this Agreement and, therefore, waive the application of any law,
regulation, holding or rule of construction providing that ambiguities in an
agreement or other document will be construed against the party drafting such
agreement or document.
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11.11 SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage will occur in the event that any of the provisions of this
Agreement are not performed in accordance with their specific terms or are
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 hereof in any
court of the United States or any state having jurisdiction, this being in
addition to any other remedy to which they are entitled at law or in equity.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, Parent, Merger Sub, the Company, the Securityholder
Agent, the Escrow Agent, and the Affiliate Stockholders have caused this
Agreement to be signed as of the date first written above.
PEREGRINE SYSTEMS, INC. UNITED SOFTWARE, INC.
a Delaware Corporation a Delaware Corporation
By /s/ Xxxx X. XXXX By /s/ Gilles QUERU
-------------------------- -------------------------------
Xxxx X. XXXX Xxxxxx QUERU
President and Chief President and Chief Executive
Executive Officer Officer
SECURITYHOLDER AGENT: FRENCH ACQUISITION CORPORATION
(as to the provisions of a Delaware Corporation
Article VIII only)
By /s/ Xxxxxxx WORMS By /s/ Xxxx X. XXXX
-------------------------- -------------------------------
Xxxxxxx WORMS Xxxx X. XXXX
President and Chief Executive Officer
ESCROW AGENT
(as to the provisions of Article VIII only)
CHASEMELLON SHAREHOLDER SERVICES, LLC
By /s/ Xxxxxxx Xxxxxx
--------------------------------
Name: Xxxxxxx Xxxxxx
-----------------------------
Title: Assistant Vice President
----------------------------
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF REORGANIZATION]
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/s/ Xxx XXXXXXXXX
"AFFILIATE STOCKHOLDERS" -----------------------------
(as to the provisions of Xxx XXXXXXXXX
Sections 2.1(b), 2.2, 2.3(b),
6.10 and 6.20 only)
/s/ Xxxxxx XXXXXXX
-----------------------------
Xxxxxx XXXXXXX
/s/ Xxxxxxx BAMAS
-----------------------------
Xxxxxxx BAMAS
/s/ Xxxxx Xxxxxx
-----------------------------
COPARIS
By: Xxxxx Xxxxxx
--------------------------
/s/ Xxxxxx XXXXXXXX
----------------------------
Xxxxxx XXXXXXXX
/s/ Stephane DEHOCHE
----------------------------
Stephane DEHOCHE
/s/ Xxxxxxx Bamas
----------------------------
FINOVELEC
By: Xxxxxxx Bamas
-------------------------
/s/ Xxxxxxx XXXXXX
----------------------------
INNOVACOM II
By: Xxxxxxx XXXXXX
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF REORGANIZATION]
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/s/ Michel LERENDU
"AFFILIATE STOCKHOLDERS" ----------------------------
(cont'd) Michel LERENDU
/s/ Xxxxxxx WORMS
----------------------------
MULTINVEST LIMITED C.V.
By: Xxxxxxx WORMS
/s/ Xxxxxxx WORMS
----------------------------
PARVEST EUROPE INVESTMENT II
C.V.
By: Xxxxxxx WORMS
/s/ Xxxxxxx WORMS
----------------------------
PARVEST US PARTNERS II C.V.
By: Xxxxxxx WORMS
/s/ Xxxxx XXXXXX
----------------------------
Xxxxx XXXXXX
/s/ Gilles QUERU
----------------------------
Gilles QUERU
/s/ Xxxxxxx WORMS
----------------------------
TRADEINVEST LIMITED
By: Xxxxxxx WORMS
/s/ Xxxxxxx WORMS
----------------------------
PAR XX XX LLC
By: Xxxxxxx WORMS
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF REORGANIZATION]
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/s/ Xxxx XXXXXXXXX
"AFFILIATE STOCKHOLDERS" ----------------------------
(cont'd) Xxxx XXXXXXXXX
/s/ Xxxxxx BOUDALIER
----------------------------
Xxxxxx BOUDALIER
/s/ Xxxxxx XXXXXX
----------------------------
Xxxxxx XXXXXX
/s/ Laurent PONTEGNIER
----------------------------
Laurent PONTEGNIER
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF REORGANIZATION]
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EXHIBIT A
AFFILIATE STOCKHOLDERS
AFFILIATE STOCKHOLDERS
Xxx Xxxxxxxxx
Xxxxxxx Bamas
Xxxxxx Xxxxxxx
Coparis
Xxxxxx Xxxxxxxx
Stephane Dehoche
Finovelec
Innovacom II
Michel Lerendu
Multinvest Limited
Parvest Europe Investment II C.V.
Parvest US Partners II X.X.
Xxxxx Xxxxxx
Xxxxxx Queru
Tradeinvest Limited
Xxxx Xxxxxxxxx
Xxxxxx Boudalier
Xxxxxx Xxxxxx
Laurent Pontegnier
PAR XX XX LLC (Xxxxxxx Worms)
EXHIBIT B
DECLARATION OF REGISTRATION RIGHTS
PEREGRINE SYSTEMS, INC.
DECLARATION OF REGISTRATION RIGHTS
This Declaration of Registration Rights ("Declaration") is made as of
September 19, 1997, by Peregrine Systems, Inc., a Delaware corporation
("Parent"), for the benefit of stockholders of United Software, Inc., a Delaware
corporation (the "Company"), acquiring shares of Parent Common Stock pursuant to
that Agreement and Plan of Reorganization dated effective as of August 29, 1997
(the "Reorganization Agreement"), among Parent, Company and French Acquisition
Corporation, a Delaware corporation and wholly-owned subsidiary of Parent
("Merger Sub"), and pursuant to the related Agreement of Merger (the "Agreement
of Merger") between the Company and Merger Sub and in consideration of such
stockholders' approving the Reorganization Agreement and the transactions
contemplated thereby.
12. DEFINITIONS. As used in this Declaration:
(a) "Effective Time" means the time of acceptance by the Delaware
Secretary of State of the Agreement of Merger.
(b) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(c) "Form S-3" means such form under the Securities Act as is in
effect on the date hereof or any registration form under the Securities Act
subsequently adopted by the SEC which similarly permits inclusion or
incorporation of substantial information by reference to other documents filed
by Parent with the SEC.
(d) "Holder" means: (i) a stockholder of the Company to whom shares
of Common Stock of Parent are issued pursuant to the Reorganization Agreement
and the Agreement of Merger, or (ii) the Escrow Agent (as defined in the
Reorganization Agreement), or (iii) a transferee to whom registration rights
granted under this Declaration are assigned pursuant to Section 9 of this
Declaration.
(e) "Registrable Securities" means for each Holder the number of
shares of Parent Common Stock issued to such Holder pursuant to the
Reorganization Agreement, in each case rounded to the nearest integral amount,
and for all Holders the sum of the Registrable Securities held by them;
PROVIDED, HOWEVER, that such shares of Parent Common Stock shall cease to be
Registrable Securities at such time as (i) they have been registered for resale
pursuant to a prospectus included in a Registration Statement on Form S-8/S-3
under the Securities Act or (ii) they are otherwise available for resale under
Rule 144 of the Securities Act.
(f) "Securities Act" means the Securities Act of 1933, as amended.
(g) "SEC" means the United States Securities and Exchange Commission.
Terms not otherwise defined herein have the meanings given to them in the
Reorganization Agreement.
13. HOLDER REGISTRATION.
(a) Parent shall use its best efforts to cause the Registrable
Securities held by each Holder to be registered under the Securities Act so as
to permit the sale thereof, and in connection therewith shall prepare and file
with the SEC within forty-five (45) days following the Effective Time a
registration statement in such form as is then available under the Securities
Act covering that number of Registrable Securities as may be requested in
writing by the Holders at the Effective Time and in accordance with
Section 4.4(b) of the Reorganization Agreement; PROVIDED, HOWEVER, that each
Holder shall provide all such information and materials and take all such action
as may be required in order to permit Parent to comply with all applicable
requirements of the Securities Act, the Exchange Act, and of the SEC, and to
obtain any desired acceleration of the effective date of such registration
statement, such provision of information and materials to be a condition
precedent to the obligations of Parent pursuant to this Declaration to register
the Registrable Securities held by each such Holder. The offerings made
pursuant to such registration shall not be underwritten.
(b) Parent shall (i) prepare and file with the SEC the registration
statement in accordance with Section 2 hereof with respect to the Registrable
Securities and shall use its best efforts to cause such registration statement
to become effective as promptly as practicable after filing and to keep such
registration statement effective until the sooner to occur of (A) the date on
which all Registrable Securities included within such registration statement
have been sold or (B) the expiration of ninety (90) days after the day on which
such registration statement has been declared effective; (ii) prepare and file
with the SEC such amendments to such registration statement and amendments or
supplements to the prospectus used in connection therewith as may be necessary
to comply with the provisions of the Securities Act with respect to the sale or
other disposition of all securities registered by such registration statement;
(iii) furnish to each Holder such number of copies of any prospectus (including
any preliminary prospectus and any amended or supplemented prospectus) in
conformity with the requirements of the Securities Act, and such other
documents, as each Holder may reasonably request in order to effect the offering
and sale of the Registrable Securities to be offered and sold, but only while
Parent shall be required under the provisions hereof to cause the registration
statement to remain effective; (iv) use its best efforts to register or qualify
the Registrable Securities covered by such registration statement under the
securities or blue sky laws of such jurisdictions as each Holder shall
reasonably request (provided that Parent shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such jurisdiction where it has not
been qualified), and do any and all other acts or things which may be necessary
or advisable to enable each Holder to consummate the public sale or other
disposition of such Registrable Securities in such jurisdictions; and (v) notify
each Holder, promptly after it shall receive notice thereof, of the date and
time the registration statement and each post-effective amendment thereto has
become effective or a supplement to any prospectus forming a part of such
registration statement has been filed;
-2-
3. UNDERWRITTEN SALE.
(a) On or before the 45th day after the Effective Time, Parent may
determine to provide for the firmly underwritten sale of Parent Common Stock for
its own account and/or the account of other stockholders, and in connection with
such determination, shall file on or before the 45th day after the Effective
Date with the SEC a registration statement to register such Common Stock (an
"Underwritten Sale"). In the event of such determination, Parent will promptly
give to each Holder written notice thereof, and will include in the Underwritten
Sale (and any related qualification under blue sky laws or other related
compliance) all the Registrable Securities specified by the Holders in their
notice to Parent in accordance with Section 4.4(b) of the Reorganization
Agreement, subject, however, to the marketing limitation set forth in this
Section 3. An Underwritten Sale, including the form of underwriting agreement
to be entered into by Parent, the underwriter(s) and any selling stockholders,
shall be on customary terms. The underwriter(s) for an Underwritten Sale shall
be selected by Parent in its sole discretion.
(b) The right of any Holder to registration pursuant to this Section
3 shall be conditioned upon such Holder's participation in the Underwritten Sale
and the inclusion of Registrable Securities in the Underwritten Sale to the
extent provided herein. All Holders shall (together with Parent and the other
holders distributing their securities through the Underwritten Sale) enter into
an underwriting agreement in customary form with the managing underwriter.
Notwithstanding any other provision of this Section 3, if the managing
underwriter determines that marketing factors require a limitation of the number
of shares to be underwritten, the managing underwriter may limit the Registrable
Securities to be included in such registration to a minimum of 30% of the total
shares to be included in the Underwritten Sale, allocated among the Holders in
proportion, as nearly as practicable, to the respective amounts of Registrable
Securities requested to be included by such Holders in accordance with
Section 4.4(b) of the Reorganization Agreement. To facilitate the allocation of
shares in accordance with the above provision, Parent or the underwriters may
round the number of shares allocated to any Holder to the nearest 100 shares.
If any Holder disapproves of the terms of the Underwritten Sale, he or she may
elect to withdraw therefrom by written notice to Parent and the managing
underwriter.
(c) The completion by Parent of an Underwritten Sale in accordance
with the provisions of this Section 3 shall be in lieu of the registration
requirements under Section 2 above and shall relieve Parent of its obligation
under Section 2, provided that the registration statement for the Underwritten
Sale has been filed on or before the 45th day after the Effective Time and that
such Underwritten Sale has been completed on or before the 75th day after the
Effective Time. In addition, any withdrawal from or failure to participate in
the Underwritten Sale by a Holder or Holders shall also relieve Parent of its
obligations under Section 2. In the event of a determination by Parent to
proceed with an Underwritten Sale and such Underwritten Sale for any reason
shall not be completed on or before the 75th day after the Effective Time, the
obligations of Parent to the Holders under Section 2 above shall be unaffected,
with the exception that Parent shall have an additional ten days to complete the
preparation and filing of the registration statement required thereby.
-3-
4. REGISTRATION ON FORM S-3.
(a) A Holder or Holders may request in writing that Parent file, at
any time after April 9, 1998 but before July 31, 1998, a registration statement
on Form S-3 (or any successor form to Form S-3) for a public offering of the
Registrable Securities, the reasonably anticipated aggregate price to the public
of which would exceed $3,000,000 (or any lesser amount if the aggregate number
of Registrable Securities to be included in such registration is not less than
200,000 shares). Parent shall use its best efforts to cause such Registrable
Securities to be registered for the offering on such form. Parent will
(i) promptly give written notice of the proposed registration to all other
Holders, and (ii) as soon as practicable, use its best efforts to effect such
registration as may be so requested and as would permit or facilitate the sale
and distribution of all or such portion of such Registrable Securities as are
specified in such request, together with all or such portion of the Registrable
Securities of any Holder or Holders joining in such request as are specified in
a written request received by Parent within fifteen (15) days after receipt of
such written notice from Parent. The substantive provisions of Section 2(b)
shall be applicable to the registration initiated under this Section 4(a), with
the exception that Parent shall have no obligation to maintain the effectiveness
of such registration beyond the first anniversary of the Effective Time.
(b) Notwithstanding the foregoing, Parent shall not be obligated to
take any action pursuant to this Section 4: (i) in any particular jurisdiction
in which Parent would be required to execute a general consent to service of
process in effecting such registration, qualification or compliance unless
Parent is already subject to service in such jurisdiction and except as may be
required by the Securities Act; (ii) if Parent shall furnish to the Holders a
certificate signed by the President of Parent stating that, in the good faith
judgment of the Board of Directors, it would be seriously detrimental to Parent
or its stockholders for registration statements to be filed in the near future,
then Parent's obligation to use its best efforts to file a registration
statement shall be deferred for a single period not to exceed forty-five (45)
days from the receipt of the request to file such registration by a Holder or
Holders; or (iii) in the event that Parent notifies the Holders that it has
determined, in consultation with legal counsel, that restrictions on transfer
are no longer applicable under United States securities laws and such
Registrable Securities are then freely tradeable.
5. SUSPENSION OF PROSPECTUS. Under any registration statement filed
pursuant to Section 2 or Section 4 hereof, Parent may restrict disposition of
Registrable Securities, and a Holder will not be able to dispose of such
Registrable Securities, if Parent shall have delivered a notice in writing to
such Holder stating that a delay in the disposition of such Registrable
Securities is necessary because Parent, in its reasonable judgment, has
determined that such sales would require public disclosure by Parent of material
nonpublic information that is not included in such registration statement. In
the event of the delivery of the notice described above by Parent, Parent shall
use its best efforts to amend such registration statement and/or amend or
supplement the related prospectus if necessary and to take all other actions
necessary to allow the proposed sale to take place as promptly as possible,
subject, however, to the right of Parent to delay further sales of Registrable
Securities until the conditions or circumstances referred to in the notice have
ceased to exist or have been disclosed. Such right to delay sales of
Registrable Securities shall not exceed thirty (30) days, and may not be
exercised by Parent more
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than once for each registration under Section 2 and Section 4. Any such
delay shall result in a corresponding extension of the period of time that
Parent is required to maintain the effectiveness of the registration
statement under Section 2 and Section 4.
6. EXPENSES. All of the out-of-pocket expenses incurred in connection
with any registration of Registrable Securities pursuant to this Declaration,
including, without limitation, all SEC, Nasdaq National Market and blue sky
registration and filing fees, printing expenses, transfer agents' and
registrars' fees, and the reasonable fees and disbursements of Parent's outside
counsel and independent accountants and a single counsel for all of the Holders,
shall be paid: (i) in respect of a registration under Section 2, one-half by
Parent and one-half by the Holders in the proportion of the Registrable
Securities included in such registration; (ii) in respect of an Underwritten
Sale under Section 3, by Parent; and (iii) in respect of a registration under
Section 4, by the Holders in the proportion of the Registrable Securities
included in such registration. Underwriting discounts and commissions shall be
paid by the Holders.
7. INDEMNIFICATION. In the event of any offering registered pursuant to
this Declaration:
(a) Parent will indemnify each Holder, each of its officers,
directors and partners and such Holder's legal counsel and independent
accountants, and each person controlling such Holder within the meaning of
Section 15 of the Securities Act, with respect to which registration,
qualification or compliance has been effected pursuant to this Declaration, and
each underwriter, if any, and each person who controls any underwriter within
the meaning of Section 15 of the Securities Act, against all expenses, claims,
losses, damages and liabilities (or actions in respect thereof), including any
of the foregoing incurred in settlement of any litigation, commenced or
threatened, arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any registration statement,
prospectus, offering circular or other document, or any amendment or supplement
thereto, incident to any such registration, qualification or compliance, or
based on any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they are made, not misleading, or any
violation by Parent of any rule or regulation promulgated under the Securities
Act, or state securities laws, or common law, applicable to Parent in connection
with any such registration, qualification or compliance, and will reimburse each
such Holder, each of its officers, directors and partners and such Holder's
legal counsel and independent accountants, and each person controlling such
Holder, each such underwriter and each person who controls any such underwriter,
for any legal and any other expenses reasonably incurred in connection with
investigating, preparing or defending any such claim, loss, damage, liability or
action, provided that Parent will not be liable in any such case to the extent
that any such claim, loss, damage, liability or expense arises out of or is
based in any untrue statement or omission or alleged untrue statement or
omission, made in reliance upon and in conformity with written information
furnished to Parent in an instrument duly executed by such Holder or underwriter
and stated to be specifically for use therein.
(b) Each Holder will, if Registrable Securities held by such Holder
are included in the securities as to which such registration, qualification or
compliance is being effected, indemnify
-5-
Parent, each of its directors and officers and its legal counsel and
independent accountants, each underwriter, if any, of Parent's securities
covered by such a registration statement, each person who controls Parent or
such underwriter within the meaning of Section 15 of the Securities Act, and
each other such Holder, each of its officers and directors and each person
controlling such Holder within the meaning of Section 15 of the Securities
Act, against all claims, losses, damages and liabilities (or actions in
respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any omission
(or alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse Parent, such Holders, such directors, officers, legal counsel,
independent accountants, underwriters or control persons for any legal or any
other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action, in each case to
the extent, but only to the extent, that such untrue statement (or alleged
untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information furnished to Parent
by an instrument duly executed by such Holder and stated to be specifically
for use therein; provided, however, that the obligations of such Holders
hereunder shall be limited to an amount equal to the gross proceeds before
expenses and commissions to each such Holder of Registrable Securities sold
as contemplated herein.
(c) Each party entitled to indemnification under this Section 7 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has written notice of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld), and the Indemnified Party may participate in such defense at such
party's expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations under this Declaration, except to the extent, but only to the
extent, that the Indemnifying Party's ability to defend against such claim or
litigation is impaired as a result of such failure to give notice. No
Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to the Indemnified Party of a
release from all liability in respect to such claim or litigation.
(d) The obligations of Parent and each Holder under this Section 7
shall survive the completion of any offering of Registrable Securities in a
registration statement under this Declaration and otherwise.
(e) Notwithstanding the foregoing, to the extent the provisions of
this Section 7 are inconsistent with or conflict with the terms of any
underwriting, indemnification, selling or similar agreement entered into by a
Holder in connection with the offer and sale of Registrable Securities
-6-
pursuant to a registration effected pursuant to this Declaration, the terms
of such agreement shall govern and shall supersede the provisions of this
Declaration.
8. REPORTS UNDER EXCHANGE ACT. Parent agrees to:
(a) use its commercially reasonable efforts to file with the SEC in a
timely manner all reports and other documents required of Parent under the
Securities Act and the Exchange Act; and
(b) furnish to each Holder, forthwith upon request (i) a written
statement by Parent that it has complied with the reporting requirements of the
Securities Act and the Exchange Act, or that it qualifies as a registrant whose
securities may be resold pursuant to Form S-3 (at any time after it so
qualifies), and (ii) a copy of the most recent annual or quarterly report of
Parent.
9. ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause Parent to
register Registrable Securities pursuant to this Declaration may be assigned by
a Holder to a transferee of Registrable Securities only if: (a) Parent is, prior
to such transfer, furnished with written notice of the name and address of such
transferee and the Registrable Securities with respect to which such
registration rights are being assigned and a copy of a duly executed written
instrument in form reasonably satisfactory to Parent by which such transferee
assumes all of the obligations and liabilities of its transferor hereunder and
agrees itself to be bound hereby; (b) immediately following such transfer the
disposition of such Registrable Securities by the transferee is restricted under
the Securities Act; and (c) such assignment includes all of the Registrable
Securities originally issued to the transferee, or such lesser amount if not
less than 10,000 shares of Registrable Securities; PROVIDED, HOWEVER, that such
10,000 share limitation shall not apply to transfers by a Holder to
shareholders, partners, retired partners of the Holder (including spouses and
ancestors, lineal descendants, and siblings of such partners or spouses who
acquire Registrable Securities by right, will, or intestate succession) if all
such transferees or assignees agree in writing to appoint a single
representative as their attorney-in-fact for the purpose of receiving any
notices and exercising their rights under this Declaration..
10. ESCROW SHARES. Shares of Parent Common Stock which are subject to the
Escrow in accordance with Article VIII of the Reorganization Agreement are
eligible for inclusion as registrable Securities hereunder, but only to the
extent that (i) the Holder agrees to remit all proceeds resulting from the sale
of such shares to the Escrow Agent as substitute collateral and (ii) the per
share amount of such proceeds is not less than the Parent Price Per Share.
11. AMENDMENT OF REGISTRATION RIGHTS. Holders of a majority of the
Registrable Securities from time to time outstanding may, with the consent of
Parent, amend the registration rights granted hereunder.
-7-
12. THIRD PARTY BENEFICIARIES. It is intended that the stockholders of
the Company shall be third party beneficiaries to this Declaration.
PEREGRINE SYSTEMS, INC.
By: /s/ Xxxx X. Xxxx
-------------------------------------
Xxxx X. Xxxx
President and Chief Executive Officer
-8-
EXHIBIT C
AFFILIATES AGREEMENT
AFFILIATE AGREEMENT
This Affiliate Agreement ("Agreement") is made and entered into as of
September ___, 1997, between Peregrine Systems, Inc., a Delaware corporation
("Parent"), and the undersigned stockholder ("Stockholder") of United Software,
Inc., a Delaware corporation (the "Company").
A. Parent and the Company propose to enter into an Agreement and Plan of
Reorganization (the "Reorganization Agreement") pursuant to which a
subsidiary of Parent will merge with and into the Company (the "Merger"), and
the Company will become a subsidiary of Parent (capitalized terms not
otherwise defined herein shall have the meanings ascribed to them in the
Reorganization Agreement);
B. Pursuant to the Merger, at the Effective Time outstanding shares of
Company Capital Stock, including shares owned by Stockholder, will be
converted into the right to receive shares of Parent Common Stock;
C. The execution and delivery of this Agreement by Stockholder is a
material inducement to Parent to enter into the Reorganization Agreement; and
D. Stockholder has been advised that Stockholder may be deemed to be an
"affiliate" of the Company, as the term "affiliate" is used for purposes of
paragraphs (c) and (d) of Rule 145 of the Rules and Regulations (the "Rules
and Regulations") of the Securities and Exchange Commission (the "SEC") under
the Securities Act of 1933, as amended (the "Securities Act"), although
nothing contained herein shall be construed as an admission by Stockholder
that Stockholder is in fact an affiliate of the Company.
NOW, THEREFORE, intending to be legally bound, the parties hereby agree as
follows:
1. ACKNOWLEDGMENT BY STOCKHOLDER. Stockholder acknowledges and
understands that the representations, warranties and covenants by Stockholder
set forth herein will be relied upon by Parent and the Company.
2. COMPLIANCE WITH RULE 145 AND THE SECURITIES ACT.
(a) Stockholder has been advised that (i) the issuance of shares of
Parent Common Stock in connection with the Merger initially will not be
registered under the Securities Act, (ii) Parent will use its best efforts to
prepare and file a registration statement covering certain of the shares of
Parent Common Stock issued in connection with the Merger within forty-five
(45) days after the Effective Time, all in accordance with the Declaration of
Registration Rights delivered by the Company pursuant to the Reorganization
Agreement, (iii) Stockholder may be deemed to be an affiliate of the Company,
and (iv) no sale, transfer or other disposition by Stockholder of Parent
Common Stock will be registered under the Securities Act (except in
accordance with the Declaration of Registration Rights). Accordingly,
Stockholder agrees not to sell, transfer or otherwise dispose of Parent
Common Stock issued to Stockholder in the Merger (except pursuant to a
registration) unless (i) such sale, transfer or other disposition is made in
conformity with the requirements of Rule 145(d) promulgated under the
Securities Act, or (ii) Stockholder delivers to Parent a written opinion of
counsel, reasonably acceptable to Parent in form and substance, that such
sale, transfer or other disposition is otherwise exempt from registration
under the Securities Act.
(b) (i) Parent will give stop transfer instructions to its transfer
agent with respect to the Parent Common Stock received by Stockholder pursuant
to the Merger and there will be placed on the certificates representing such
Common Stock, or any substitutions therefor, a legend stating in substance:
"The shares represented by this certificate were issued in a
transaction to which Rule 145 applies and may only be transferred
in conformity with Rule 145(d) or in accordance with a written
opinion of counsel, reasonably acceptable to the issuer in form
and substance, that such transfer is exempt from registration
under the Securities Act of 1933."
(ii) In addition to the foregoing legend, shares of Parent Common
Stock issued in reliance on the exemption from the registration requirements of
the Securities Act set forth in Regulation S thereof will bear the following
legend:
"The shares represented by this certificate have been issued
in a transaction exempt from the registration requirements
of the United States Securities Act of 1933, as amended,
pursuant to Regulation S thereunder and may not be sold,
transferred, assigned, or hypothecated absent registration
except in compliance with Regulation S, Rule 144, or an
opinion counsel, satisfactory to the Company, that such
registration is not required under the Act, or a no-action
letter from the United States Securities and Exchange
Commission.
(iii) The foregoing legends shall be removed (by delivery of
a substitute certificate without such legend) if Stockholder delivers to Parent
(i) satisfactory written evidence that the shares have been sold in compliance
with Regulation S or Rule 145 (in which case, the substitute certificate will be
issued in the name of the transferee), or (ii) an opinion of counsel, in form
and substance reasonably satisfactory to Parent, to the effect that public sale
of the shares by the holder thereof is no longer subject to Rule 145.
3. MARKET STAND-OFF AGREEMENT The Stockholder agrees, in connection with
any Underwritten Sale (as defined in the Declaration of Registration Rights),
regardless of whether the Stockholder elects to exercise its right to
participate therein pursuant to the Declaration of Registration Rights, that he,
she, or it will not sell, make any short sale of, loan, grant any option for the
purchase of, or otherwise dispose of any securities of Parent (other than those
included in the Underwritten Sale) without the prior written consent of the
Company and the underwriters of the Underwritten Sale, for such period of time
(not to exceed 180 days and in no event to extend beyond April 8, 1998) from the
effective date of such registration as the Company and the underwriters may
specify. The Stockholder
-2-
agrees that the Company may instruct its transfer agent to place
stop-transfer notations in its records to enforce the provisions of this
section.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS RELATED TO TAX EFFECTS OF
THE MERGER.
(a) Stockholder is the beneficial owner of the number of shares of
Company Capital Stock set forth in Appendix A hereto (the "Company Securities").
(b) Except as otherwise set forth in Appendix A hereto, Stockholder
has not engaged in a Sale (as defined below) of any shares of Company Capital
Stock (including the Company Securities) (i) at any time since January 1, 1997
or (ii) in contemplation of the Merger.
(c) Stockholder has no plan or intention (a "Plan") and is not aware
that any of its partners has any Plan to engage in a sale, exchange, transfer,
distribution, redemption or reduction in any way of Stockholder's or its
partner's risk of ownership by short sale or otherwise, or other disposition,
directly or indirectly (such actions being collectively referred to herein as a
"Sale") of any shares of Parent Common Stock to be received by Stockholder or
its partners in the Merger such that the aggregate fair market value, as of the
Effective Time, of the shares subject to such Sale would exceed 40% of the
aggregate fair market value of all shares of outstanding Company Common Stock,
immediately prior to the Merger held by Stockholder or its partners, as
applicable. For purposes of the preceding sentence, shares of Company Capital
Stock (or the portion thereof) (i) with respect to which Stockholder will
receive consideration in the Merger other than Parent Common Stock (including,
without limitation, cash to be received in lieu of fractional shares of Parent
Common Stock) and/or (ii) with respect to which a Sale (A) occurred after
January 1, 1997 or otherwise in contemplation of the Merger or (B) will occur
prior to the Merger, shall be considered shares of Company Capital Stock
exchanged for Parent Common Stock in the Merger and then disposed of pursuant to
a Plan;
(d) Stockholder will not exercise dissenters' rights in connection
with the Merger;
(e) Stockholder is not aware of, or participating in, and is not
aware of any participation by its partners in any Plan on the part of the
stockholders of the Company to engage in a Sale or Sales of the Parent Common
Stock to be received in the Merger such that the aggregate fair market value, as
of the Effective Time, of the shares subject to such Sales would exceed 40% of
the aggregate fair market value of all shares of outstanding Company Capital
Stock immediately prior to the Merger. For purposes of the preceding sentence,
shares of Company Capital Stock (or the portion thereof) (i) with respect to
which a Company stockholder receives consideration in the Merger other than
Parent Common Stock (including, without limitation, cash received pursuant to
the exercise of dissenters' rights or in lieu of fractional shares of Parent
Common Stock) or (ii) with respect to which a Sale occurs prior to and in
contemplation of the Merger, shall be considered shares of outstanding Company
Capital Stock exchanged for Parent Common Stock in the Merger and then disposed
of pursuant to a Plan.
-3-
(f) Except to the extent written notification to the contrary is
received by Parent from Stockholder prior to the Merger, the representations
contained herein shall be true and correct at all times from the date hereof
through the Effective Time.
(g) Stockholder understands that the Company, Parent and their
respective stockholders, as well as legal counsel to the Company and Parent (in
connection with rendering their opinions that the Merger will be a
"reorganization" within the meaning of Section 368(a) of the Code) will be
relying on (a) the truth and accuracy of the representations contained herein
and (b) Stockholder's performance of the obligations set forth herein.
(h) Except for the Company Capital Stock and options to purchase
Company Common Stock set forth in Appendix A hereto, Stockholder does not
beneficially own any shares of Company Capital Stock or any other equity
securities of the Company or any options, warrants or other rights to acquire
any equity securities of the Company.
5. MISCELLANEOUS.
(a) For the convenience of the parties hereto, this Agreement may be
executed in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same document.
(b) This Agreement shall be enforceable by, and shall inure to the
benefit of and be binding upon, the parties hereto and their respective
successors and assigns. As used herein, the term "successors and assigns" shall
mean, where the context so permits, heirs, executors, administrators, trustees
and successor trustees, and personal and other representatives.
(c) This Agreement shall be governed by and construed, interpreted
and enforced in accordance with the internal laws of the State of California.
(d) If a court of competent jurisdiction determines that any
provision of this Agreement is not enforceable or enforceable only if limited in
time and/or scope, this Agreement shall continue in full force and effect with
such provision stricken or so limited.
(e) Counsel to the parties to the Reorganization Agreement shall be
entitled to rely upon this Agreement as needed.
(f) This Agreement shall not be modified or amended, or any right
hereunder waived or any obligation excused, except by a written agreement signed
by both parties.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-4-
This AFFILIATES AGREEMENT is executed as of the date shown on the first
page hereof.
PEREGRINE SYSTEMS, INC.
By:
---------------------------------
Xxxx X. XXXX
President and Chief Executive Officer
STOCKHOLDER:
-------------------------- ---------------------------
Xxx XXXXXXXXX FINOVELEC
By:
------------------------
-------------------------- ---------------------------
Xxxxxx XXXXXXX INNOVACOM II
By: Xxxxxxx XXXXXX
-------------------------- ---------------------------
COPARIS Michel LERENDU
By:
-----------------------
-------------------------- ---------------------------
Xxxxxx XXXXXXXX MULTINVEST LIMITED C.V.
By: Xxxxxxx WORMS
-------------------------- ---------------------------
Stephane DEHOCHE PARVEST EUROPE
INVESTMENT II C.V.
By: Xxxxxxx WORMS
-5-
Affiliates Agreement (continued)
--------------------------- ---------------------------
PARVEST US PARTNERS II C.V. TRADEINVEST LIMITED
By: Xxxxxxx WORMS By: Xxxxxxx WORMS
--------------------------- ---------------------------
Xxxxx XXXXXX PAR XX XX, LLC
By: Xxxxxxx WORMS
--------------------------- ---------------------------
Gilles QUERU Xxxxxxx BAMAS
[SIGNATURE PAGE AFFILIATES AGREEMENT]
-6-
APPENDIX A
Stockholder:
-------------------------- ---------------------------
Total number of shares of Company Capital
Stock (and options to purchase Company
Common Stock) owned on the date hereof:
---------------------------
EXHIBIT D
VOTING AGREEMENT
VOTING AGREEMENT
This Voting Agreement ("Agreement") is made and entered into as of
September ___, 1997, between Peregrine Systems, Inc., a Delaware corporation
("Parent"), and the undersigned stockholder ("Stockholder") of United
Software, Inc., a Delaware corporation (the "Company").
RECITALS
A. Concurrently with the execution of this Agreement, Parent, the
Company and French Acquisition Corporation, a Delaware corporation and a
wholly owned subsidiary of Parent ("Merger Sub"), have entered into an
Agreement and Plan of Reorganization (the "Reorganization Agreement") which
provides for the merger (the "Merger") of Merger Sub with and into the
Company. Pursuant to the Merger, shares of capital stock of the Company will
be converted into Common Stock of Parent on the basis described in the
Reorganization Agreement.
B. Stockholder is the record holder and beneficial owner (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) of such number of shares of the outstanding Common Stock of
the Company as is indicated on the final page of this Agreement (the
"Shares").
C. Parent desires Stockholder to agree, and Stockholder is willing to
agree, not to transfer or otherwise dispose of any of the Shares, or any
other shares of capital stock of the Company acquired hereafter and prior to
the Expiration Date (as defined in Section 1.1 below, except as otherwise
permitted hereby), and to vote the Shares and any other such shares of
capital stock of the Company so as to facilitate consummation of the Merger.
NOW, THEREFORE, intending to be legally bound, the parties agree as
follows:
1. AGREEMENT TO RETAIN SHARES.
1.1 TRANSFER AND ENCUMBRANCE. Stockholder agrees not to transfer
(except as may be specifically required by court order or approved in writing
in advance by Parent), sell, exchange, pledge or otherwise dispose of or
encumber any of the Shares or any New Shares as defined in Section 1.2 below,
or to make any offer or agreement relating thereto, at any time prior to the
Expiration Date. As used herein, the term "Expiration Date" shall mean the
earlier to occur of (i) such date and time as the Merger shall become
effective in accordance with the terms and provisions of the Reorganization
Agreement, and (ii) such date and time as the Reorganization Agreement shall
be terminated pursuant to Article X thereof.
1.2 ADDITIONAL PURCHASES. Stockholder agrees that any shares of
capital stock of the Company that Stockholder purchases or with respect to
which Stockholder otherwise acquires beneficial
ownership after the execution
of this Agreement and prior to the Expiration Date ("New Shares") shall be
subject to the terms and conditions of this Agreement to the same extent as
if they constituted Shares.
2. AGREEMENT TO VOTE SHARES. At every meeting of the stockholders of
the Company called with respect to any of the following, and at every
adjournment thereof, and on every action or approval by written consent of
the stockholders of the Company with respect to any of the following,
Stockholder shall vote the Shares and any New Shares: (i) in favor of
approval of the Reorganization Agreement and the Merger and any matter that
could reasonably be expected to facilitate the Merger (including without
limitation the conversion of any shares of Preferred Stock of the Company
into Common Stock of the Company immediately prior to or at the effective
time of the Merger, consistent with the provisions of the Company's
Certificate of Incorporation) and (ii) against approval of any proposal made
in opposition to or in competition with consummation of the Merger and
against any merger, consolidation, sale of assets, reorganization or
recapitalization, with any party other than with Parent and its affiliates
and against any liquidation or winding up of the Company (each of the
foregoing is hereinafter referred to as an "Opposing Proposal"). Stockholder
agrees not to take any actions contrary to Stockholder's obligations under
this Agreement.
3. OTHER STOCKHOLDER AGREEMENTS. In connection with the Merger, the
Stockholder also agrees (i) to waive in writing any notice or other similar
provision necessary to effect the Merger or the transactions contemplated
thereby, including, without limitation, waiver of the notice provision in the
Put Agreement dated April 16, 1997 between the Purchaser and the Company,
(ii) to waive in writing any applicable rights set forth in the Stockholders'
Agreement dated April 16, 1997 or the undated Investors' Rights Agreement
among the Company and the stockholders identified therein and to agree to
terminate such agreements upon consummation of the Merger, and (iii) to
execute a written notice of elective conversion of all shares of Preferred
Stock of the Company held by such Stockholder immediately prior to the
closing of the Merger.
4. IRREVOCABLE PROXY. Concurrently with the execution of this
Agreement, Stockholder agrees to deliver to Parent a proxy in the form
attached hereto as Exhibit A (the "Proxy"), which shall be irrevocable, with
the total number of shares of capital stock of the Company beneficially owned
(as such term is defined in Rule 13d-3 under the Exchange Act) by Stockholder
set forth therein.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF STOCKHOLDER.
Stockholder hereby represents, warrants and covenants to Parent as follows:
5.1 OWNERSHIP OF SHARES. Stockholder (i) is the beneficial owner
of the Shares, which at the date hereof and at all times up until the
Expiration Date will be free and clear of any liens, claims, options, charges
or other encumbrances except for any rights of repurchase or rights of first
refusal granted to the Company; (ii) does not beneficially own any shares of
capital stock of the Company other than the Shares; and (iii) has full power
and authority to make, enter into and carry out the terms of this Agreement
and the Proxy.
2
5.2 NO PROXY SOLICITATIONS. Stockholder will not, and will not
permit any entity under Stockholder's control to: (i) solicit proxies or
become a "participant" in a "solicitation" (as such terms are defined in
Regulation 14A under the Exchange Act) with respect to an Opposing Proposal
or otherwise encourage or assist any party in taking or planning any action
that would compete with, restrain or otherwise serve to interfere with or
inhibit the timely consummation of the Merger in accordance with the terms of
the Reorganization Agreement; (ii) initiate a stockholders' vote or action by
consent of the Company stockholders with respect to an Opposing Proposal; or
(iii) become a member of a "group" (as such term is used in Section 13(d) of
the Exchange Act) with respect to any voting securities of the Company with
respect to an Opposing Proposal.
6. ADDITIONAL DOCUMENTS. Stockholder hereby covenants and agrees to
execute and deliver any additional documents necessary or desirable, in the
reasonable opinion of Parent, to carry out the intent of this Agreement.
7. CONSENT AND WAIVER. Stockholder hereby gives any consents or waivers
that are reasonably required for the consummation of the Merger under the
terms of any agreements to which Stockholder is a party or pursuant to any
rights Stockholder may have.
8. TERMINATION. This Agreement and the Proxy delivered in connection
herewith shall terminate and shall have no further force or effect as of the
Expiration Date.
9. MISCELLANEOUS.
9.1 SEVERABILITY. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, then the remainder of the terms, provisions, covenants
and restrictions of this Agreement shall remain in full force and effect and
shall in no way be affected, impaired or invalidated.
9.2 BINDING EFFECT AND ASSIGNMENT. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns, but,
except as otherwise specifically provided herein, neither this Agreement nor
any of the rights, interests or obligations of the parties hereto may be
assigned by either of the parties without prior written consent of the other.
9.3 AMENDMENTS AND MODIFICATION. This Agreement may not be
modified, amended, altered or supplemented except upon the execution and
delivery of a written agreement executed by the parties hereto.
9.4 SPECIFIC PERFORMANCE; INJUNCTIVE RELIEF. The parties hereto
acknowledge that Parent will be irreparably harmed and that there will be no
adequate remedy at law for a violation of any of the covenants or agreement
of Stockholder set forth herein. Therefore, it is agreed that, in addition
to any other remedies that may be available to Parent upon any such
violation, Parent shall have the right
3
to enforce such covenants and agreements by specific performance, injunctive
relief or by any other means available to Parent at law or in equity.
9.5 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and sufficient if delivered in
person, by cable, telegram or telex, or sent by mail (registered or certified
mail, postage prepaid, return receipt requested) or overnight courier
(prepaid) to the respective parties as follows:
If to Parent: Peregrine Systems, Inc.
00000 Xxxx Xxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx
General Counsel
Tel: (000) 000-0000
Fax: (000) 000-0000
With a copy to: Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, P.C.
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000-0000
Attn: Xxxxxxx X. Xxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
If to the Stockholder: To the address for notice set forth on the
last page hereof.
With a copy to: Venture Law Group
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attn: Xxxx Xxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
or to such other address as any party may have furnished to the other in
writing in accordance herewith, except that notices of change of address
shall only be effective upon receipt.
9.6 GOVERNING LAW. This Agreement shall be governed by, and construed
and enforced in accordance with, the internal laws of the State of California.
9.7 ENTIRE AGREEMENT. This Agreement contains the entire understanding
of the parties in respect of the subject matter hereof, and supersedes all
prior negotiations and understandings between the parties with respect to
such subject matter.
4
9.8 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
9.9 EFFECT OF HEADINGS. The section headings herein are for convenience
only and shall not affect the construction of interpretation of this
Agreement.
IN WITNESS WHEREOF, the parties have caused this Voting Agreement to be
duly executed on the date and year first above written.
PEREGRINE SYSTEMS, INC.
By:
-------------------------------------
Xxxx X. Xxxx
President and Chief Executive Officer
Stockholder:
By:
-------------------------------------
Stockholder's Address for Notice:
------------------------------------------
------------------------------------------
------------------------------------------
Shares beneficially owned:
---------------- shares of Common Stock
---------------- shares of Series A Preferred Stock
---------------- shares of Series B Preferred Stock
***VOTING AGREEMENT***
5
EXHIBIT A
IRREVOCABLE PROXY
The undersigned Stockholder of United Software, Inc., a Delaware
corporation ("Company"), hereby irrevocably appoints the directors on the
Board of Directors of Peregrine Systems, Inc., a Delaware corporation
("Parent"), and each of them, as the sole and exclusive attorneys and proxies
of the undersigned, with full power of substitution and resubstitution, to
the full extent of the undersigned's rights with respect to the shares of
capital stock of the Company beneficially owned by the undersigned, which
shares are listed on the final page of this Proxy, and any and all other
shares or securities issued or issuable in respect thereof on or after the
date hereof (the "Shares"), until such time as that certain Agreement and
Plan of Reorganization dated effective as of August 29, 1997 (the
"Reorganization Agreement"), among Parent, French Acquisition Corporation, a
Delaware corporation and a wholly-owned subsidiary of Parent ("Merger Sub"),
and Company, shall be terminated in accordance with its terms or the Merger
(as defined in the Reorganization Agreement) is effective. Upon the execution
hereof, all prior proxies given by the undersigned with respect to the Shares
and any and all other shares or securities issued or issuable in respect
thereof on or after the date hereof are hereby revoked and no subsequent
proxies will be given.
This proxy is irrevocable, is granted pursuant to the Voting Agreement
dated as of September __, 1997 between Parent and the undersigned stockholder
(the "Voting Agreement"), and is granted in consideration of Parent entering
into the Reorganization Agreement. The attorneys and proxies named above
will be empowered at any time prior to termination of the Reorganization
Agreement to exercise all voting and other rights (including, without
limitation, the power to execute and deliver written consents with respect to
the Shares) of the undersigned with respect to shares of capital stock of the
Company beneficially owned by the undersigned at every annual, special or
adjourned meeting of Company stockholders, and in every written consent in
lieu of such a meeting, or otherwise, in favor of approval of the Merger and
the Reorganization Agreement and any matter that could reasonably be expected
to facilitate the Merger (including without limitation the conversion of any
shares of Preferred Stock of the Company into Common Stock of the Company
immediately prior to or at the effective time of the Merger, consistent with
the provisions of the Company's Certificate of Incorporation), and against
any proposal made in opposition to or competition with the consummation of
the Merger and against any merger, consolidation, sale of assets,
reorganization or recapitalization of the Company with any party other than
Parent and its affiliates and against any liquidation or winding up of the
Company.
The attorneys and proxies named above may only exercise this proxy to
vote the Shares subject hereto at any time prior to termination of the
Reorganization Agreement at every annual, special or adjourned meeting of the
stockholders of Company and in every written consent in lieu of such meeting,
in favor of approval of the Merger and the Reorganization Agreement and any
matter that could reasonably be expected to facilitate the Merger (including
without limitation the conversion of any shares of Preferred Stock of the
Company into Common Stock of the Company immediately prior to or at the
effective time of the Merger, consistent with the provisions of the Company's
Certificate of
6
Incorporation), and against any merger, consolidation, sale of assets,
reorganization or recapitalization of Company with any party other than
Parent and its affiliates, and against any liquidation or winding up of the
Company, and may not exercise this proxy on any other matter. The
undersigned Stockholder may vote the Shares on all other matters.
7
Any obligation of the undersigned hereunder shall be binding upon the
successors and assigns of the undersigned.
This proxy is irrevocable.
Dated: September ___, 1997
Signature of Stockholder:
---------------------------------------
Print Name of Stockholder:
---------------------------------------
Shares beneficially owned:
shares of Common Stock
-----------------------------------
shares of Series A Preferred Stock
-----------------------------------
shares of Series B Preferred Stock
-----------------------------------
***PROXY***
8
EXHIBIT E
NON-COMPETITION AGREEMENT
NON-COMPETITION AGREEMENT
This Agreement is entered into by and between Peregrine Systems, Inc.
("Parent"), United Software, Inc., a Delaware corporation (the "Company") and
__________________ ("Stockholder") as of September __, 1997.
RECITALS
A. Pursuant to that certain Agreement and Plan of Reorganization (the
"Reorganization Agreement") dated as of September __, 1997 by and between
Parent, French Acquisition Corporation ("Merger Sub") and the Company, Merger
Sub will merge with and into the Company (the "Merger") and any shares of
Company capital stock owned by Stockholder will be exchanged for Parent
Common Stock and any options and stock purchase rights to acquire Company
Common Stock will be assumed by Parent and become options or stock purchase
rights to acquire Parent Common Stock;
B. Stockholder owns an equity interest in the Company (whether through
outstanding capital stock or options to purchase capital stock), has served as
its __________________________________ and has gained substantial knowledge and
expertise in connection with the Company's products, organization and customers;
C. Parent and Stockholder acknowledge that it would be detrimental to
Parent if Stockholder would compete with Parent following the Merger;
D. The Company is engaged in the design, development, marketing,
distribution and licensing of management application software that automates
information infrastructures.
E. It is a covenant of the Company pursuant to the Reorganization
Agreement that certain key Stockholders of the Company, including Stockholder,
enter into this Agreement;
F. As inducement to Parent to consummate the Merger, and in consideration
of the amounts paid to shareholders of the Company under the Merger Agreement,
Stockholder desires to agree with Parent as further provided herein;
NOW, THEREFORE, intending to be legally bound hereby, the parties hereto
agree as follows:
1. ACKNOWLEDGMENTS BY STOCKHOLDER. Stockholder acknowledges that the
promises and restrictive covenants that Stockholder is providing in this
Agreement are reasonable and necessary to the protection of Parent's business
and Parent's legitimate interests in its acquisition of the Company (including
the Company's goodwill) pursuant to the Reorganization Agreement.
2. NON-COMPETITION.
(a) The parties understand and agree that this Agreement is entered
into in connection with the Merger. The parties further understand and agree
that Stockholder is a key and significant member of the Company, owns a
significant number of shares (or rights to acquire a significant number of
shares) of the Company and that the Merger is contingent upon Stockholder
entering into this Agreement, including this non-competition provision. In
addition, the parties understand that prior to the Merger, the Company was
engaged in or intends to engage in business in each of the fifty states of the
United States, Europe, ____________ and ________________. The parties further
understand that Parent is currently engaged in business in each of the fifty
states of the United States, and elsewhere on a worldwide basis (with resources
currently deployed in Europe, Latin America, and the Pacific Rim). (The United
States and the regions set forth above in the preceding two sentences shall
hereafter be referred to as the "Geographic Scope of the Business".)
Stockholder further acknowledges that the Company and Parent following the
Merger will continue conducting such business in all parts of the Geographic
Scope of the Business.
(b) During the period commencing on the closing date of the Merger
and ending eighteen (18) months thereafter (the "Restriction Period"), without
the prior written consent of the Chief Executive Officer of Parent, Stockholder
shall not either as an individual or as an Stockholder, agent, consultant,
advisor, independent contractor, general partner, officer, director, shareholder
or investor of any person, firm, corporation, partnership or other entity:
(i) participate or engage in an enterprise whose business is
the design, development, marketing, distribution and/or licensing of asset
management or consolidated service desk application software ("Competitive
Activity"). Enterprise shall refer to the subsidiary, division, company or
other entity at which Stockholder is employed.
(ii) induce or attempt to induce any person who at the time of
such inducement is an Stockholder of the Company or Parent to perform work or
services for any other person or entity other than the Company or Parent; or
Notwithstanding the foregoing, Stockholder may purchase, directly or
indirectly, up to 2% of any class of "publicly traded securities" of any person
or entity which owns a Business engaged in a Competitive Activity or be employed
by or act as a consultant to a subsidiary or division of a corporation engaged
in a Competitive Activity so long as such subsidiary or division is not engaged
in a Competitive Activity and such employment or consulting is not with respect
to a Competitive Activity. For the purposes of this Section 1.1, the term
"publicly traded securities" shall mean securities that are traded on a national
securities exchange in the United States or listed on the Nasdaq National
Market.
-2-
If any restriction set forth in this Section 2 above is held to be
unreasonable or unenforceable, then Stockholder agrees, and hereby submits, to
the reduction and limitation of such prohibition to such area or period as shall
be deemed reasonable.
3. NONSOLICITATION. Stockholder further agrees that, during the
Restriction Period, Stockholder will not:
(a) personally or through others, encourage, induce, attempt to
induce, solicit or attempt to solicit (on Stockholder's own behalf or on behalf
of any other person or entity) any employee of the Company, Parent or any of
Parent's subsidiaries to leave his or her employment with the Company, Parent or
any of Parent's subsidiaries;
(b) employ, or permit any entity over which Stockholder exercises
voting control to employ, any person who shall have terminated his or her
employment with the Company, Parent or any of Parent's subsidiaries during the
Restriction Period; or
(c) personally or through others, interfere or attempt to interfere
with the relationship or prospective relationship of the Company, Parent or any
of Parent's subsidiaries with any person or entity that is, was or is expected
to become a customer or client of the Company, Parent or any of Parent's
subsidiaries.
4. INDEPENDENCE OF OBLIGATIONS. The covenants and obligations of
Stockholder set forth in this Agreement shall be construed as independent of any
other agreement or arrangement between Stockholder, on the one hand, and the
Company or Parent, on the other.
5. SPECIFIC PERFORMANCE. Stockholder agrees that in the event of any
breach by Stockholder of any covenant, obligation or other provision contained
in this Agreement, Parent and the Company shall be entitled (in addition to any
other remedy that may be available to them) to the extent permitted by
applicable law (a) a decree or order of specific performance to enforce the
observance and performance of such covenant, obligation or other provision, and
(b) an injunction restraining such breach or threatened breach.
6. NON-EXCLUSIVITY. The rights and remedies of Parent and the Company
hereunder are not exclusive of or limited by any other rights or remedies which
Parent or the Company may have, whether at law, in equity, by contract or
otherwise, all of which shall be cumulative (and not alternative). Without
limiting the generality of the foregoing, the rights and remedies of Parent and
the Company hereunder, and the obligations and liabilities of Stockholder
hereunder, are in addition to their respective rights, remedies, obligations and
liabilities under the law of unfair competition, misappropriation of trade
secrets and the like.
7. SUCCESSORS, ASSIGNS, MERGER. This Agreement shall be binding upon and
shall inure to the benefit of Parent, the Company and their respective
successors and assigns. This Agreement shall
-3-
be binding upon Stockholder and shall inure to his benefit and to the benefit
of his heirs, executors, administrators and legal representatives, but shall
not be assignable by Stockholder.
8. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between Parent and Stockholder relating to the matters herein provided for.
This Agreement supersedes and replaces any prior verbal or written agreements
between the parties. This Agreement may be amended or altered only in a writing
signed by the Chief Executive Officer of Parent and Stockholder.
9. APPLICABLE LAW; SEVERABILITY. This Agreement shall be construed and
interpreted in accordance with the laws of the State of California without
regard to conflicts of laws and principles. Each provision of this Agreement is
severable from the others, and if any provision hereof shall be to any extent
unenforceable it and the other provisions hereof shall continue to be
enforceable to the full extent allowable, as if such offending provision had not
been a part of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the date first written above.
UNITED SOFTWARE, INC. PEREGRINE SYSTEMS, INC.
By: By:
------------------------------- -------------------------------
------------------ Xxxx X. Xxxx
President President and Chief Executive Officer
STOCKHOLDER
-------------------------------
Name:
*** NON-COMPETITION AGREEMENT***
-4-
EXHIBIT F
AFFILIATE STOCKHOLDER INDEMNITY AGREEMENT
INDEMNITY AGREEMENT
This Indemnity Agreement (the "Indemnity Agreement") is entered into as of
September __, 1997, by and among Peregrine Systems, Inc., a Delaware corporation
("Parent"), and each of the stockholders of United Software, Inc., a Delaware
corporation (the "Company"), identified on SCHEDULE A attached hereto
(collectively, the "Selling Stockholders" and individually a "Selling
Stockholder").
RECITALS
A. Each of the Selling Stockholders is a stockholder of the Company;
B. Parent, French Acquisition Corporation, a Delaware corporation and a
wholly-owned subsidiary of Parent ("Merger Sub"), and the Company have entered
into an Agreement and Plan of Reorganization, effective as of August 29, 1997
(the "Reorganization Agreement"), providing for the merger of Merger Sub into
the Company (the "Merger"). The Reorganization Agreement contemplates that,
upon consummation of the Merger, (i) holders of shares of the capital stock of
the Company will receive shares of common stock of Parent ("Parent Common
Stock") in exchange for their shares of capital stock of the Company and (ii)
the Company will become a wholly owned subsidiary of Parent. It is accordingly
contemplated that the Selling Stockholders will receive shares of Parent Common
Stock in the Merger;
C. As a condition precedent to Parent's execution of the Reorganization
Agreement and related agreements, Parent has required that each of the Selling
Stockholders enter into this Indemnity Agreement; and
D. Each of the Selling Stockholders has agreed to enter into this
Indemnity Agreement in order to induce Parent to consummate the Merger.
NOW, THEREFORE, the parties to this Indemnity Agreement, intending to be
legally bound, agree as follows:
1. DEFINED TERMS.
Capitalized terms used and not otherwise defined in this Indemnity
Agreement shall have the meanings assigned to them in the Reorganization
Agreement.
2. REPRESENTATIONS AND WARRANTIES. Each of the Selling Stockholders
severally represents and warrants, to the best of his, her, or its knowledge, to
and for the benefit of the Indemnitees (as defined in Section 4.2), as of the
date of this Indemnity Agreement as follows:
2.1 Schedule 2.1(b) of the Reorganization Agreement identifies for
each Subsidiary the authorized capital stock, the identity and address of
each holder of capital stock of such Subsidiary, and the number of shares of
capital stock of each Subsidiary held by such holder (as updated prior to the
Closing to reflect the transactions contemplated by Section 6.15 of the
Reorganization Agreement). Except as set forth in Schedule 2.1(b), all of
the outstanding shares of the capital stock of each Subsidiary have been duly
authorized and validly issued, are fully paid and nonassessable, and are
wholly owned by the Company, directly or indirectly through a Subsidiary,
free and clear of any lien, adverse claim, security interest, equity or other
encumbrance. Except as described in Schedule 2.1(b), there are no options,
warrants, calls, rights, commitments or agreements of any character, written
or oral, to which any Subsidiary is a party or by which any Subsidiary is
bound, obligating such Subsidiary to issue, deliver, sell, repurchase or
redeem, or cause to be issued, delivered, sold, repurchased or redeemed, any
shares of such Subsidiary's capital stock.
2.2 The authorized Company Capital Stock consists of 15,000,000
shares of authorized Common Stock, par value $0.001 per share, of which
1,563,708 shares are issued and outstanding, and 10,000,000 shares of
authorized Preferred Stock, par value $0.001 per share. Of the authorized
Preferred Stock, 3,898,084 shares have been designated as Series A Preferred
Stock, of which 819,101 shares are issued and outstanding, and 2,009,530
shares have been designated as Series B Preferred Stock, all of which shares
are issued and outstanding. The Company Capital Stock is held of record by
the persons with the addresses of record and in the amounts identified on
Schedule 2.2(a) of the Reorganization Agreement. Immediately after giving
effect to the transactions contemplated by Section 6.15 of the Reorganization
Agreement, the Company will have issued and outstanding 1,563,708 shares of
Common Stock, 3,898,084 shares of Series A Preferred Stock, and 2,009,530
shares of Series B Preferred Stock. All outstanding shares of Company Capital
Stock are (and any shares issued pursuant to the transactions contemplated by
Section 6.15 of the Reorganization Agreement will be) duly authorized,
validly issued, fully paid, and non-assessable and not subject to preemptive
rights created by statute, the Certificate of Incorporation or Bylaws of the
Company or any agreement or document to which the Company is a party or by
which it is bound. Each outstanding share of Company Preferred Stock is
presently convertible into one share of Company Common Stock. Except as
described in Schedule 2.2(b) or Schedule 2.2(c) of the Reorganization
Agreement, there are no options, warrants, calls, rights, commitments or
agreements of any character, written or oral, to which the Company is a party
or by which it is bound obligating the Company to issue, deliver, sell,
repurchase or redeem, or cause to be issued, delivered, sold, repurchased or
redeemed, any shares of Company Capital Stock.
2.3 Of the 1,563,708 shares of Company Common Stock outstanding, all
shares were issued pursuant to restricted stock purchase agreements granting
repurchase options in favor of the Company in the event of a termination of
employment ("Restricted Stock"). Schedule 2.2(b) of the Reorganization
Agreement identifies each employee of the Company or any Subsidiary who holds
Restricted Stock and specifies the vesting schedule for such Restricted Stock,
the extent to which such shares of Restricted Stock are vested to date, and
whether the vesting of such Restricted Stock will accelerate as a result of the
transactions contemplated by this Agreement.
2.4 The Company has reserved 1,000,000 shares of Common Stock for
issuance to employees and consultants pursuant to the Option Plan, of which
511,858 shares are subject to outstanding, unexercised options and 488,142
shares remain available for future grant. Schedule 2.2(c) of the Reorganization
Agreement sets forth for each outstanding Company Option the name of the holder
of such option, the address of such holder, the number of shares of Common Stock
subject to such
-2-
option, the exercise price and the vesting schedule of such option, including
the extent vested to date, and whether the exercisability of such option will
be accelerated and become exercisable by the transactions contemplated by
this Agreement. Except as described in Schedule 2.2(c), there are no
options, warrants, calls, rights, commitments or agreements of any character,
written or oral, to which the Company is a party or by which it is bound
obligating the Company to grant, extend, accelerate the vesting of, change
the price of, otherwise amend or enter into any such option, warrant, call,
right, commitment, or agreement. The holders of Company Options or any other
options or rights set forth in Schedule 2.2(c) have been or will be given, or
shall have properly waived, any required notice prior to the Merger.
2.5 As a result of the Merger, Parent will be the record and sole
beneficial owner of all outstanding Company Capital Stock and all rights to
acquire or receive Company Capital Stock. At or before the Effective Time,
any rights of any holder or prospective holder of the Company's securities to
cause such securities to be registered under the United States Securities Act
of 1933, as amended (the "Securities Act"), and any information rights,
voting rights, rights of co-sale, rights to maintain equity percentage,
rights of first refusal and the like that may exist for the benefit of any
such holder or prospective holder shall have been terminated, except as
expressly contemplated by this Agreement.
3. CLOSING CERTIFICATE. The Selling Stockholders shall deliver to
Parent on the Closing Date a certificate (the "Closing Certificate") setting
forth each Selling Stockholder's representations and warranties that each of the
representations and warranties set forth in Section 2 is accurate in all
respects as of Closing Date as if made on the Closing Date.
4. INDEMNIFICATION BY THE SELLING STOCKHOLDERS.
4.1 Each Selling Stockholder, severally in proportion to the amount
of Parent Common Stock set forth opposite his, her, or its name on SCHEDULE A
hereto, but not jointly, shall hold harmless and indemnify each of the
Indemnitees from and against, and shall compensate and reimburse each of the
Indemnitees for, any Losses (as defined in Section 4.3) which are suffered or
incurred by any of the Indemnitees or to which any of the Indemnitees may
otherwise become subject at any time only to the extent (i) such Losses
relate to a third-party claim and (ii) arise from or as a result of, or are
connected with any fraudulent knowing or intentional breach of or inaccuracy
in, or any knowing or intentional misrepresentation made with respect to, any
of the representations and warranties made by such Selling Stockholder in
Section 2 of this Agreement or in the Closing Certificate (each such breach a
"Specified Breach"). A Selling Stockholder required to indemnify an
Indemnitee under this Section 4.1 shall be referred to as an "Indemnifying
Selling Stockholder."
4.2 The term "Indemnitees" shall mean: (a) Parent; (b) each direct
and indirect subsidiary of Parent (including the Company); (c) the respective
officers and directors of each of the entities referred to in clauses "(a)" and
"(b)" of this Section 4.2; and (d) the respective successors and assigns of each
of the entities and persons referred to in clauses "(a)" through "(c)" of this
Section 4.2; PROVIDED, HOWEVER, that (i) no Indemnitee shall be entitled to
exercise any rights as an Indemnitee prior to the Effective Time and (ii)
neither of the Selling Stockholders nor any other officers or directors of the
Company prior to the Effective Time shall be deemed to be "Indemnitees."
-3-
4.3 The term "Losses" shall include any loss, damage, injury,
liability, claim, demand, settlement, judgment , award, fine, penalty, Tax, fee
(including any legal fee, expert fee, accounting fee or advisory fee), charge,
cost (including any cost of investigation) or expense of any nature.
4.4 The Selling Stockholders acknowledge and agree that, if there is
a Specified Breach and an Indemnitee shall recover any Losses pursuant to this
Indemnity Agreement resulting therefrom, then Parent itself shall be deemed, by
virtue of its ownership of common stock of the Company, to have incurred Losses
as a result of such Specified Breach.
4.5 Each Indemnifying Selling Stockholder waives, and acknowledges
and agrees that such Indemnifying Selling Stockholder shall not have and shall
not exercise or assert or attempt to exercise or assert, any right of
contribution or right of indemnity or any other right or remedy against the
Company or any other Selling Stockholder in connection with any indemnification
obligation or any other liability to which such Indemnifying Selling Stockholder
may become subject under this Indemnity Agreement.
4.6 In the event of the assertion or commencement by any Person of
any claim or Legal Proceeding (whether against the Company, against any other
Indemnitee or against any other Person) with respect to which any of the Selling
Stockholders may become obligated to indemnify, hold harmless, compensate or
reimburse any Indemnitee pursuant to this Section 4, Parent shall be entitled to
defend such claim or Legal Proceeding. In connection with the defense of such
claim:
(a) the Selling Stockholders shall make available to Parent any
documents and materials in the possession or control of any of the Selling
Stockholders that may be necessary to the defense of such claim or Legal
Proceeding;
(b) Parent shall keep the Selling Stockholders informed of all
material developments and events relating to such claim or Legal Proceeding
and shall permit the Selling Stockholders, at their own expense, to
participate in the defense thereof; and
(c) Parent shall have the right to settle, adjust or compromise such
claim or Legal Proceeding; PROVIDED, HOWEVER, that any such settlement,
adjustment or compromise, if entered into without the consent of the
Selling Stockholders (which consent shall not be unreasonably withheld),
shall not be deemed to be conclusive of any Specified Breach or amount of
Losses related thereto.
4.7 No Indemnitee (other than Parent or any successor thereto or
assign thereof) shall be permitted to assert any indemnification claim or
exercise any other remedy under this Indemnity Agreement unless Parent (or any
successor thereto or assign thereof) shall have consented to the assertion of
such indemnification claim or the exercise of such other remedy.
4.8 Parent (and any permitted Indemnitee in accordance with Section
4.7 above) shall have the right, at its election and in its sole discretion, to
seek recourse for any Losses hereunder either through the Escrow Fund or through
the provisions of this Indemnity Agreement, or both, and a claim
-4-
by Parent (and any permitted Indemnitee in accordance with Section 4.7 above)
initially through one avenue of recourse shall not preclude a later claim by
Parent (and any permitted Indemnitee in accordance with Section 4.7 above)
through the other, nor through any other avenue of legal or equitable relief
available to Parent, subject to the requirements of Section 4.9 below.
4.9 The scope and nature of the rights of the Indemnitees hereunder
shall be subject to the following:
(i) Any claim or Legal Proceeding hereunder must be asserted
on or before 5:00 p.m. (California Time) on the date that is one year
following the Closing Date.
(ii) No claim or Legal Proceeding hereunder may be asserted
unless and until Parent has identified Losses, the aggregate amount of which
exceed $75,000 (of which no individual Loss shall be less than $5,000),
whether pursuant to the Escrow Agent in accordance with the provisions of
Article VIII of the Reorganization Agreement or in writing to the Selling
Stockholders pursuant hereto, in which event Parent may thereupon recover all
Losses, without regard to the $75,000 limitation (or the $5,000 limitation in
respect of any individual Loss).
(iii) In the event Indemnitees seek recourse for Losses
through the provisions of this Indemnity Agreement, such recourse shall not
limit the liability of the Indemnifying Selling Stockholders under the
provisions of Article VIII of the Reorganization Agreement.
(iv) Any assertion of a claim for Losses through the delivery
to the Escrow Agent of an Officer's Certificate in accordance with the
provisions of Article VIII of the Reorganization Agreement shall be
sufficient for the assertion of a claim or Legal Proceeding under this
Indemnity Agreement.
(v) Any of the parties hereto may demand arbitration of any
claim or Legal Proceeding initiated hereunder unless the amount of the damage
or loss is at issue in pending litigation with a third party, in which event
arbitration shall not be commenced until such amount is ascertained or Parent
and Selling Stockholders holding a majority of the originally issued Parent
Common Stock agree to arbitration; and in either such event the matter shall
be settled by arbitration conducted in accordance with the provisions of
Section 8.2(f)(ii) and the first sentence of Section 8.2(f)(iii).
(vi) Any decision or award as a result of such arbitration
shall include the assessment of costs, expenses and reasonable attorneys'
fees payable to the prevailing party in any such arbitration.
(vii) Not withstanding anything to the contrary set forth in
this Agreement, the liability of each Indemnifying Selling Stockholder under
this Indemnity Agreement shall not exceed the number of shares of Peregrine
Common Stock to which the Indemnifying Selling Stockholder is entitled under
Section 1.6(b) of the Reorganization multiplied by $15.25.
-5-
5. GENERAL.
5.1 Except as specifically set forth herein, nothing in this
Indemnity Agreement is intended to limit any of Parent's or the Selling
Stockholders' rights, or any obligation of any Selling Stockholder, or of
Parent under the Reorganization Agreement (or any agreement entered into in
connection with the transactions contemplated by the Reorganization
Agreement).
5.2 This Indemnity Agreement shall be governed by and construed in
accordance with the laws of the State of California.
5.3 No party hereto may assign any of its rights or obligations
hereunder without the prior written consent of the other party hereto. This
Indemnity Agreement will be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
5.4 If any provision of this Indemnity Agreement, or the
application thereof, is for any reason and to any extent invalid or
unenforceable, the remainder of this Indemnity Agreement and application of
such provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further
agree to replace such void or unenforceable provision of this Indemnity
Agreement with a valid and enforceable provision that will achieve, to the
greatest extent possible, the economic, business and other purposes of the
void or unenforceable provision.
5.5 This Indemnity Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of
which shall constitute one and the same instrument. This Indemnity Agreement
will become binding when one or more counterparts thereof, individually or
taken together, bear the signatures of all the parties reflected hereon as
assignatories.
5.6 Any term or provision of this Indemnity Agreement may be amended,
and the observance of any term of this Indemnity Agreement may be waived (either
generally or in a particular instance and either retroactively or prospectively)
only by a writing signed by the party to be bound thereby. Notwithstanding any
rights that may be created in any third party under the terms of this Indemnity
Agreement, no such amendment or waiver will require the consent of such third
party to be effective. The waiver by a party of any breach hereof or default in
the performance hereof will not be deemed to constitute a waiver of any other
default or any succeeding breach or default.
5.7 Any request, communication, or other notice required or permitted
hereunder shall be in writing and shall be deemed to have been duly given if
sent by facsimile or delivered by recognized overnight or international courier
service or personal delivery (as the situation may require) at the respective
address or facsimile number of the party receiving notice as set forth below.
Any party hereto may by notice so given change its address or facsimile number
for future notice hereunder. All such notices and other communications
hereunder shall be deemed given (i) upon confirmation of delivery,
-6-
if sent by facsimile and (ii) upon delivery, if sent by recognized overnight
or international courier service or personal delivery.
If to Parent to: Peregrine Systems, Inc.
00000 Xxxx Xxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000 X.X.X.
Attention: Xxxxxxx X. Xxxxxx, General Counsel
Tel: (000) 000-0000
Fax: (000) 000-0000
With a copy to: Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, P.C.
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000-0000 U.S.A.
Attention: Xxxxxxx X. Xxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
If to the
Selling Stockholders: To the addresses specified opposite
their names on SCHEDULE A
attached hereto
With a copy to: Venture Law Group
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
5.8 This Indemnity Agreement has been negotiated by the respective
parties hereto and their attorneys and the language hereof will not be
construed for or against either party. The titles and headings herein are
for reference purposes only and will not in any manner limit the construction
of this Indemnity Agreement, which will be considered as a whole.
5.9 Each party agrees to cooperate fully with the other parties
and to execute such further instruments, documents and agreements and to give
such further written assurances as may be reasonably requested by any other
party to evidence and reflect the transactions described herein and
contemplated hereby and to carry into effect the intents and purposes of this
Indemnity Agreement.
5.10 No provisions of this Indemnity Agreement are intended, nor
will be interpreted, to provide or create any third party beneficiary rights
or any other rights of any kind in any client, customer, affiliate,
stockholder or partner of any party hereto or any other person or entity
unless specifically provided otherwise herein, and, except as so provided,
all provisions hereof will be personal solely between the parties of this
Indemnity Agreement.
-7-
5.11 This Indemnity Agreement and the Reorganization Agreement and
the exhibits hereto and thereto constitute the entire understanding and
agreement of the parties hereto with respect to the subject matter hereof and
supersede all prior and contemporaneous agreements or understandings,
inducements or conditions, express or implied, written or oral, between the
parties with respect hereto. The express terms hereof control and supersedes
any course of performance or usage of the trade inconsistent with any of the
terms hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-8-
IN WITNESS WHEREOF, the parties have executed this Indemnity Agreement as
of September , 1997.
----
"PARENT" PEREGRINE SYSTEMS, INC.
By:
-----------------------------------------
Xxxx X. XXXX
President and Chief
Executive Officer
"SELLING STOCKHOLDER"
------------------------------- -----------------------------------------
Xxx XXXXXXXXX FINOVELEC
By: Xxxxxxx BAMAS
------------------------------- -----------------------------------------
Xxxxxx XXXXXXX INNOVACOM II
By: Xxxxxxx XXXXXX
------------------------------- -----------------------------------------
COPARIS Michel LERENDU
By: Xxxxxxx BAMAS
------------------------------- -----------------------------------------
Xxxxxx XXXXXXXX MULTINVEST
By: Xxxxxxx WORMS
------------------------------- -----------------------------------------
Stephane DEHOCHE PARVEST EUROPE INVESTMENTS II C.V.
By: Xxxxxxx WORMS
-9-
INDEMNITY AGREEMENT: (Continued)
------------------------------- -----------------------------------------
PARVEST US PARTNERS II C.V. TRADEINVEST
By: Xxxxxxx WORMS By: Xxxxxxx WORMS
------------------------------- -----------------------------------------
Bruno XXXXXX Xxxxxxx WORMS
------------------------------- -----------------------------------------
Gilles QUERU Xxxxxxx BAMAS
------------------------------- -----------------------------------------
Xxxx XXXXXXXXX Xxxxxx BOUDALIER
------------------------------- -----------------------------------------
Xxxxxx XXXXXX Laurent PONTEGNIER
[SIGNATURE PAGE TO INDEMNITY AGREEMENT]
-10-
INDEMNITY AGREEMENT
SCHEDULE A
SHARES OF PARENT
SELLING STOCKHOLDER ADDRESS COMMON STOCK
------------------- ---------- ----------------
Xxx Xxxxxxxxx 0000 Xxxx. Xxxxxxxxxx
00000 Xxxxx
Xxxxxx Xxxxxxx 00000 Xxxxxxxx Xxxx,
Xxxxxxxx, XX 00000
Coparis 0 xxx Xxxxxxx,
00000 Xxxxxxx Xxx Xxxxx
Xxxxxx
Xxxxxx Xxxxxxxx Apsylog
0000 Xxxxxxxxx Xxxxxxx,
Xxxxx. 000
Xxx Xxxxx, XX 00000
Stephane Dehoche AGDS
0 xxx Xxxx
00000 Xxxxx Xx Xxxxx, Xxxxxx
Finovelec x/x Xxxxxxx
0 xxx Xxxxxxx
00000 Xxxxxxx Xxx Xxxxx
Xxxxxx
Innovacom II Xxxxxxx Xxxxxx
Innovacom
00 xxx Xxxxxx
00000 Xxxxx
Xxxxxx
SHARES OF PARENT
SELLING STOCKHOLDER ADDRESS COMMON STOCK
------------------- ---------- ----------------
Michel Lerendu Apsylos SA
Tour Franklin - La Defense 8
92042 Paris La Defense
France
Multinvest Limited c/o Partech International
00 Xxxxxxxxxx Xxxxxx, Xxxxx
0000
Xxx Xxxxxxxxx, XX 00000 XXX
Parvest Europe Investment II c/o Partech International
C.V. 00 Xxxxxxxxxx Xxxxxx, Xxxxx
0000
Xxx Xxxxxxxxx, XX 00000 XXX
Parvest US Partners II C.V. c/o Partech International
00 Xxxxxxxxxx Xxxxxx, Xxxxx
0000
Xxx Xxxxxxxxx, XX 00000 XXX
Xxxxx Xxxxxx AGDS
0 xxx Xxxx
00000 Xxxxx Xx Xxxxx, Xxxxxx
Gilles Queru Apsylos SA
Tour Franklin - La Defense 8
92042 Paris La Defense
France
Xxxx Xxxxxxxxx AGDS
0 xxx Xxxx
00000 Xxxxx Xx Xxxxx, Xxxxxx
Xxxxxx Xxxxxx AGDS
0 xxx Xxxx
00000 Xxxxx Xx Xxxxx, Xxxxxx
Tradeinvest Limited c/o Partech International
00 Xxxxxxxxxx Xxxxxx, Xxxxx
0000
Xxx Xxxxxxxxx, XX 00000 XXX
-2-
SHARES OF PARENT
SELLING STOCKHOLDER ADDRESS COMMON STOCK
------------------- ---------- ----------------
Xxxxxxx Worms Partech International
00 Xxxxxxxxxx Xxxxxx, Xxxxx
0000
Xxx Xxxxxxxxx, XX 00000 XXX
Xxxxxxx Bamas Coparis
0 xxx Xxxxxxx
00000 Xxxxxxx Xxx Xxxxx
Xxxxxx
Xxxxxx Baudalier AGDS
0 xxx Xxxx
00000 Xxxxx Xx Xxxxx, Xxxxxx
Laurent Pontegnier AGDS
0 xxx Xxxx
00000 Xxxxx Xx Xxxxx, Xxxxxx
-3-
EXHIBIT G
OPINION OF XXXXXX XXXXXXX XXXXXXXX & XXXXXX, P.C.
EXHIBIT G
FORM OF LEGAL OPINION OF XXXXXX XXXXXXX XXXXXXXX & XXXXXX, P.C.
1. Parent is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Delaware and is duly qualified
to do business as a foreign corporation in the State of California. Merger
Sub is a corporation duly organized, validly existing, and in good standing
under the laws of the State of Delaware. Each of Parent and Merger Sub has
the corporate power to own its properties and to carry on its business as now
being conducted.
2. Parent and Merger Sub have all requisite corporate power and
authority to enter into the Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of the Agreement and the
consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Parent and Merger
Sub. The Agreement has been duly executed and delivered by Parent and Merger
Sub and constitutes the valid and binding obligations of Parent and Merger
Sub, enforceable in accordance with its terms. The execution and delivery of
the Agreement, does not, and the consummation of the transactions
contemplated hereby and thereby will not result in any violation of, or
default (with or without notice or lapse of time, or both), or give rise to a
right of termination, cancellation or acceleration of any obligation or to
loss of a benefit under any provision of the Certificate of Incorporation or
Bylaws of Parent or Merger Sub or (ii) any contract or other agreement
included as an exhibit to the SEC Documents or, to our knowledge, any order,
decree, statute, law, ordinance, rule or representation applicable to Parent
or Merger Sub, the breach, violation, default, termination or forfeiture of
which would result in a material adverse effect upon the ability of Parent or
Merger Sub to consummate the Merger, or a Material Adverse Effect on Parent
or Merger Sub. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity, is
required by or with respect to Parent or Merger Sub in connection with the
execution and delivery of the Agreement by Parent and Merger Sub or the
consummation by Parent and Merger Sub of the transactions contemplated hereby
except for (i) the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware or (ii) such consents, approvals, order,
authorizations, registrations, declarations and filings as may be required
under applicable state and federal securities laws and the laws of any
foreign country.
3. The shares of Parent Common Stock to be issued pursuant to the
Merger will, when issued and delivered in accordance with the Agreement, be
duly authorized, validly issued, fully paid, and non-assessable.
4. There is no action, suit, proceeding, claim, arbitration or
investigation pending, or as to which Parent has received any notice of
assertion against Parent which in any manner challenges or seeks to prevent,
enjoin, alter, or materially delay any of the transactions contemplated by
the Agreement.
5. Subject to the accuracy of representations provided by the Company
Stockholders, the Parent Common Stock to be issued pursuant to the Agreement
and the Merger Agreement will be exempt from the registration requirements of
the Securities Act.
EXHIBIT H
OPINION OF VENTURE LAW GROUP
EXHIBIT H
FORM OF LEGAL OPINION OF THE VENTURE LAW GROUP
1. The Company is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Delaware, and Apsylog (the
"Subsidiary") is a corporation duly organized, validly existing, and in good
standing under the laws of the State of California. The Company and the
Subsidiary each has the corporate power and authority to own, lease, and
operate its assets and property and to carry on its business as now being
conducted and is duly qualified or licensed to do business and is in good
standing in each jurisdiction where the character of the properties owned,
leased, or operated by it or the nature of its activities makes such
qualification or licensing necessary, except where the failure to be so
qualified would not have a Material Adverse Effect on the Company or the
Subsidiary.
2. The authorized Company Capital Stock consists of 15,000,000 shares
of authorized Common Stock, par value $0.001 per share, of which
[_____________]shares are issued and outstanding, and 10,000,000 shares of
authorized Preferred Stock, par value $0.001 per share. Of the authorized
Preferred Stock, 3,898,084 shares have been designated as Series A Preferred
Stock, of which [___________]shares are issued and outstanding, and 2,009,530
shares have been designated as Series B Preferred Stock, of which
[____________] shares are issued and outstanding. All outstanding shares of
Company Capital Stock are duly authorized, validly issued, fully paid, and
non-assessable and not subject to preemptive rights created by statute, the
Certificate of Incorporation or Bylaws of the Company or any agreement or
document to which the Company is a party or by which it is bound. Each
outstanding share of Company Preferred Stock is presently convertible into
one share of Company Common Stock. Except as described in the Agreement, to
our knowledge, there are no options, warrants, calls, rights, commitments or
agreements of any character, written or oral, to which the Company is a party
or by which it is bound obligating the Company to issue, deliver, sell,
repurchase or redeem, or cause to be issued, delivered, sold, repurchased or
redeemed, any shares of Company Capital Stock. The Company has reserved
[_____________] shares of Common Stock for issuance to employees and
consultants pursuant to the Option Plan, of which [_____________] shares are
subject to outstanding, unexercised options and [_____________] shares remain
available for future grant.
3. All of the outstanding shares of the capital stock of each
Subsidiary have been duly authorized and validly issued, are fully paid and
nonassessable, and are wholly owned by Apsylog S.A. Except as described in
the Agreement, to our knowledge, there are no options, warrants, calls,
rights, commitments or agreements which the Subsidiary is a party or by which
the Subsidiary is bound, obligating the Subsidiary to issue, deliver, sell,
repurchase or redeem, or cause to be issued, delivered, sold, repurchased or
redeemed, any shares of such Subsidiary's capital stock.
4. At or before the Effective Time, to our knowledge, any rights of any
holder or prospective holder of the Company's securities to cause such
securities to be registered under the
Securities Act, and any information rights, voting rights, rights of co-sale,
rights to maintain equity percentage, rights of first refusal and the like
that may exist for the benefit of any such holder or prospective holder shall
have been terminated, except as expressly contemplated by the Agreement.
5. The Company has all requisite corporate power and authority to enter
into the Agreement and to consummate the transactions contemplated thereby.
The execution and delivery of the Agreement and the consummation of the
transactions contemplated thereby have been duly authorized by all necessary
corporate action on the part of the Company, its Board of Directors and its
stockholders. The vote required of the Company's stockholders to duly
approve the Merger is a majority of the outstanding shares of Company Common
Stock and a majority of the outstanding shares of Company Preferred Stock,
each voting as a separate class. The Agreement has been duly executed and
delivered by the Company and constitutes the valid and binding obligation of
the Company, enforceable in accordance with its terms. Except as set forth
in the Agreement, the execution and delivery of the Agreement by the Company
does not, and, as of the Effective Time, the consummation of the transactions
contemplated hereby will not result in any violation of, or default under
(with or without notice or lapse of time, or both), or give rise to a right
of termination, cancellation or acceleration of any obligation or loss of any
benefit under (any such event, a "CONFLICT") (i) any provision of the
Certificate of Incorporation or Bylaws of the Company or the Subsidiary or
(ii) any material contract or agreement listed in a schedule attached hereto
or to our knowledge, any judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to the Company, the Subsidiary or their
respective properties or assets. No consent, waiver, approval, order, or
authorization of, or registration, declaration or filing with, any court,
administrative agency or commission or other federal, state, county, local or
foreign governmental authority, instrumentality, agency or commission
("GOVERNMENTAL ENTITY") or any third party (so as not to trigger any
Conflict), is required by or with respect to the Company or the Subsidiary,
in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby, except for (i) the
filing of the Certificate of Merger with the Delaware Secretary of State,
(ii) such consents, waivers, approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable
federal and state securities laws and the laws of any foreign country, and
(iii) such other consents, waivers, authorizations, filings, approvals, and
registrations which if not obtained or made would not have a Material Adverse
Effect on the Company or the Subsidiary.
6. Except as disclosed in the Agreement, to our knowledge, there is no
action, suit, proceeding, claim, arbitration, or investigation pending before
any court or administrative agency against the Company or any Subsidiary.
-2-
EXHIBIT I
OPINION OF STIBBE, SIMOND, MONAHAN, DUHOT & XXXXXX
EXHIBIT I
OPINION OF STIBBE, SIMOND, MONAHAN, DUHOT & XXXXXX
Peregrine Systems Inc.
00000 Xxxx Xxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
XXX
____________, 1997
APSYLOG SA - AGDS
-----------------
Dear Sirs,
We have acted as French counsel to APSYLOG SA, a French
societe anonyme, located at Tour Franklin - La Xxxxxxx 0, 00000
Xxxxx la Defense Cedex, France, and Acquisition et Gestion de
Donnees et Signaux - AGDS, a French societe anonyme, located at 0
xxx Xxxx, 00000 Xxxxx xx Reine, a subsidiary of APSYLOG S.A.
(APSYLOG S.A. and AGDS being collectively hereafter referred to as
the "Companies"), in relation to French law in connection with the
execution of the Agreement and Plan of Reorganization dated
August 29, 1997 (the "Agreement") by and among Peregrine Systems,
Inc., a Delaware corporation (the "Parent"), French Acquisition
Corporation, a Delaware corporation and wholly-owned subsidiary of
Parent (the "Merger Sub"), United Software, Inc., a Delaware
corporation owning all of the 6,388,380 shares of APSYLOG S.A. ("US
Inc."), Gilles Queru as Securityholder Agent, ChaseMellon
Shareholder Services, LLC as Escrow Agent, and for purposes of
Sections 2.1(b), 2.2., and 2.3(b) of Article II of the Agreement
and Sections 6.10 and 6.20 of Article VI of the Agreement, certain
stockholders of United Software, Inc. listed on Exhibit A of the
Agreement (the "Affiliate Stockholders"). This opinion is being
furnished pursuant to Section 7.3(k) of the Agreement. All defined
terms not defined herein shall, unless the context otherwise
requires, have the meanings ascribed to them in the Agreement.
For the purposes of this opinion, we have examined the following documents:
1. a certified copy of the STATUTS of APSYLOG S.A. as at May 30, 1997 and an
extract (Form K-bis) of the REGISTRE DU COMMERCE ET DES SOCIETES of Nanterre
relating to APSYLOG S.A. dated September 15, 1997, and a certified copy of the
STATUTS of AGDS as at April 17, 1996 and an extract (Form K-bis) of the REGISTRE
DU COMMERCE ET DES SOCIETES of Nanterre relating to AGDS dated
September 19, 1997;
2. the CERTIFICATS DE NON-FAILLITE from the REGISTRE DU COMMERCE
DES SOCIETES of Nanterre relating to APSYLOG S.A. and AGDS dated
September 11, 1997;
3. copies of the corporate documents of the Companies relative to
issue of shares and other securities;
4. certified copies dated September 19, 1997 of the shareholders'
accounts (< < comptes d'actionnaires > >) of AGDS;
5. a letter dated September 18, 1997 from APSYLOG S.A. concerning
the pending litigation against APSYLOG S.A. and AGDS;
6. a copy of an agreement entitled < < Avenant au Protocole du
2 avril 1996>> (the < < Amendment > >) executed on September 18, 1997
between Messrs Stephane Dehoche, Xxxxxx Boudalier, Xxxxxx Xxxxxx
and Xxxx Xxxxxxxxx on the one hand and APSYLOG S.A. on the other
hand;
7. such further documents and matters of law as we have
considered necessary or appropriate for the purposes of rendering
this opinion.
In consideration of the above, we have assumed:
1. the genuineness of all signatures, stamps and seals, the
authenticity and completeness of all documents submitted to us as
originals, the completeness and conformity to the originals of all
documents supplied to us as certified or photostatic or faxed
copies, and the authenticity of the originals of such documents;
2. that the board of directors meetings and the shareholders
meetings of the Companies deciding upon the issue of shares and
other securities have been duly and validly convened and held and
that the resolutions passed on such meetings have been duly and
validly approved.
3. that the due authorization, execution and delivery of the
Agreement by each of the parties thereto and that performance
thereof is within the capacity and powers of each of the parties
thereto;
-2-
4. that the obligations of US Inc. and of the Affiliate
Stockholders contained or referred to in the Agreement and in the
Share Exchange Agreement entered into between US Inc., APSYLOG S.A.
and Xx Xxxxxxxx Xxxxxxxx (the < < Exchange Agreement > >) which are
expressed to be or are in fact governed by the laws of the State of
California or of the State of Delaware are legal, valid, binding
and enforceable obligations of US Inc. and of the Affiliate
Stockholders under the laws referred to above;
5. that the exchanges of shares of APSYLOG S.A. against
shares of US Inc. contemplated in the Agreement and the Exchange
Agreement have taken place as of September 19, 1997, are valid,
binding and enforceable and have been duly and validly registered
in APSYLOG S.A.'s shareholders accounts (< < COMPTES INDIVIDUELS
D'ACTIONNAIRES > >);
6. the absence of any decision made or arrangement entered
into by APSYLOG S.A. and/or AGDS or their respective
shareholders which would modify or supersede any of the documents
supplied to us and referred to above ;
7. the due authorisation, execution and delivery of the
< < Protocole du 2 avril 1996 > > which has been amended by the
Amendment by each of the parties thereto and that performance
thereof was within the capacity and powers of each of the parties
thereto;
8. the due authorisation, execution and delivery of the
Amendment by each of the parties thereto (except APSYLOG S.A.) and
that performance thereof was within the capacity and powers of each
of the parties thereto (except APSYLOG S.A.).
We are rendering the opinions expressed below solely on
the basis and upon matters of French law and regulations.
Based upon and subject to the foregoing, to any matter
not disclosed to us by the parties concerned, and to the
reservations and qualifications set forth below, and having regard
to such legal considerations as we deem relevant, we are of the
opinion that under the laws of the Republic of France as in effect
on the date hereof:
1. Each of the Companies is a corporation duly organized,
validly existing under the laws of France. Each of the Companies
has the corporate power and authority to own, lease, and operate
its assets and property.
2. Except as set forth in the Agreement, all of the issued
shares of the capital stock of each of the Companies have been duly
authorized and validly issued and are fully paid. To our
knowledge, none of the Companies has decided or authorized the
issue of options, warrants, convertible bonds or securities defined
in article 339-1 of the law no. 66-537 of July 24, 1966 on
commercial companies and none of the Companies has decided or
authorized the repurchase or the redemption of its own shares.
-3-
3. APSYLOG S.A. is, to our knowledge, the owner of 1,255
shares of AGDS out of the 2,500 shares of FF. 100 nominal value
each issued by AGDS.
4. Except as set forth in the Agreement, no consent,
approval, authorization, order, registration, designation,
declaration, filing, qualification, license or permit of any French
court or any French public, governmental, administrative or
regulatory agency or body is required for the consummation by the
US Inc. of the transactions contemplated by the Agreement.
5. Except as disclosed in the Agreement, and to our
knowledge, there is no action, suit, proceeding, claim or
arbitration pending before any court or administrative agency
against APSYLOG S.A. and AGDS.
6. The Amendment has been duly executed by or on behalf of
the parties thereto and constitutes a legal, valid and binding
obligation of the parties thereto and is enforceable against the
parties thereto in accordance with its terms subject as to
enforcement, bankruptcy, insolvency, fraudulent transfer,
reorganisation, moratorium and similar laws of general
applicability relating to or affecting creditors' rights.
7. Subject to full payment by APSYLOG S.A. of the price of
the 1,245 shares (the < < Shares > >) of AGDS to each one of the
selling party, subject to the remittance by each one of the selling
parties of the transfer forms as provided in the Amendment, and
subject to full compliance by the selling parties with the terms of
the Protocole du 2 avril 1996 and of the Amendment APSYLOG S.A.
will obtain good and valid title to the Shares.
The opinions expressed above are subject to the following
reservations:
(i) where any party to the Amendment is vested with
discretion, French law requires that such discretion
is not abused;
(ii) any enforcement against any party to the Amendment
may be limited by the provisions of French law
giving discretionary powers to the French courts
such as the discretion to limit or increase the
amount of payments due under any penalty or
indemnity clause which, taking into consideration
the respective positions of the parties, is
considered by such courts to be manifestly excessive
or nominal, and such as the discretion to grant a
grace period of up to two years or to reduce the
rate of interest applicable to deferred payments;
(iii) we express no opinion as to the availability under
French law or before a French court of the
enforcement of a performance obligation or any other
remedy other than those culminating in a judgement
for the payment of money; and
(iv) this opinion is subject to the application of any
applicable bankruptcy, liquidation, winding-up,
insolvency or similar laws affecting the rights of
creditors generally.
-4-
We express no opinion as to any agreement, instrument or
other document other than as specified in this letter.
We are qualified to practice law in the Republic of France.
We have made no independent investigations of the laws of any
jurisdiction other than the laws in effect in the Republic of
France as at the date hereof as a basis for the opinions expressed
herein. We do not express any opinion on the laws of any
jurisdiction other than the laws of the Republic of France.
This opinion is exclusively addressed to you, although
copies may be given to your legal advisers for information
purposes. Accordingly, only you may refer to the opinions
expressed herein; this opinion may not be used for any other
purposes nor may it be communicated to any third party.
Very truly yours,
------------------------ ----------------------------
Xxxxxx Xxxxxxx Xxxxxxx Xxxxxxxxxx
-5-
EXHIBIT J
PARTICIPATING STOCKHOLDERS
EXHIBIT J
PARTICIPATING STOCKHOLDERS
Xxxx Xxxxxxxxx
Xxxxxx Boudalier
Coparis
Stephane Dehoche
Xxxxxx Xxxxxx
Finovelec
Innovacom II
Multinvest Limited
Parvest Europe Investment II C.V.
Parvest US Partners II X.X.
Xxxxx Xxxxxx
Xxxxxxx Pontegnier
Gilles Queru
Tradeinvest Limited
EXHIBIT K
ESCROW FUND ALLOCATION
EXHIBIT K
DISTRIBUTED TOTAL TOTAL
BASE ESCROWED BASE INCREMENTAL DISTRIBUTED DISTRIBUTED OPTION
STOCK/OPTIONHOLDER NAME SHARES SHARES SHARES SHARES SHARES CASH SHARES
---------------------------------------------------------------------------------------------------------------------------------
XXXXX QUERU 433,428 43,343 390,085 5,878 395,963 $21.93 0
XXXXX XXXXXX 136,585 13,659 122,926 1,852 124,778 $15.05 0
LAURENT PONTEGNIER 45,528 4,553 40,975 617 41,592 $13.97 0
STEPHANE DEHOCHE 67,115 6,712 60,403 910 61,313 $ 9.02 0
XXXXXX XXXXXX 52,533 5,253 47,280 712 47,992 $20.59 0
XXXXXX BOUDALIER 52,533 5,253 47,280 712 47,992 $20.59 0
XXXX XXXXXXXXX 30,734 3,073 27,661 416 28,077 $15.77 0
PARVEST US INVESTMENT II 199,586 19,959 179,627 2,706 182,333 $16.73 0
INNOVACOM II 160,839 16,084 144,755 2,181 146,936 $19.26 0
FINOVELEC 130,194 13,019 117,175 1,765 118,940 $21.90 0
PARVEST EUROPE INVESTMENT II 99,598 9,960 89,638 1,350 90,988 $24.28 0
MULTINVEST LIMITED 6,451 645 5,806 87 5,893 $14.62 0
TRADEINVEST LIMITED 12,814 1,281 11,533 173 11,706 $18.09 0
PTI'S PROFIT SHARING XXXXXXXX 3,181 318 2,863 43 2,906 $ 9.36 0
COPARIS 159,265 15,927 143,338 2,160 145,498 $ 2.15 0
J. PATOUILLAUD 469 47 422 6 428 $15.68 0
U.S. EMPLOYEES
--------------
XXXXXX XXXXXXXX 82,039 8,204 73,835 1,112 74,947 $16.70 0
XXXXX XXXXXX 0 0 0 0 0 $ 0.00 4,999
XXXX XXXXXX 0 0 0 0 0 $ 0.00 7,379
XXXXX XXXXX 0 0 0 0 0 $ 0.00 2,000
XXXX XXXXXXXX 0 0 0 0 0 $ 0.00 2,000
XXXXX XXXXXXXXX 0 0 0 0 0 $ 0.00 2,000
XXXX XXXXXXX 0 0 0 0 0 $ 0.00 1,333
XXXXX XXXXX 0 0 0 0 0 $ 0.00 1,333
XXXXXXXXX XXXXXXXXX 0 0 0 0 0 $ 0.00 667
XXXXXXX HESSLOP 0 0 0 0 0 $ 0.00 667
XXX XXXXXX 0 0 0 0 0 $ 0.00 334
FRENCH EMPLOYEES
----------------
XXXXXXX XXXXXXXX 11,506 1,151 10,355 156 10,511 $10.46 0
XXXX-XXXXX XXXXX 8,219 822 7,397 111 7,508 $ 7.47 0
XXXX-XXXXXX XXXXXXXX 8,219 822 7,397 111 7,508 $ 7.47 0
XXXXXXX LERENDU 20,059 2,006 18,053 272 18,325 $ 2.38 0
XXXX XXXXX 4,931 493 4,438 66 4,504 $19.73 0
XXXX-XXXXX XXXXX 3,616 362 3,254 49 3,303 $ 6.34 0
XXXXXXX XXXXXXX 3,616 362 3,254 49 3,303 $ 6.34 0
XXXXXX XXXXXXX 3,616 362 3,254 49 3,303 $ 6.34 0
XXXX XXXXXXXXXXX 3,616 362 3,254 49 3,303 $ 6.34 0
XXXXXXX XXXXXXXXX 3,616 362 3,254 49 3,303 $ 6.34 0
XXXXXXX XXXXXXXX 1,972 197 1,775 26 1,801 $20.09 0
XXXX XXXXXX 1,972 197 1,775 26 1,801 $20.09 0
XXXX XXXXXX 1,972 197 1,775 26 1,801 $20.09 0
XXXXXXXXX XXXXX 1,972 197 1,775 26 1,801 $20.09 0
Page 1
EXHIBIT K
DISTRIBUTED TOTAL TOTAL
BASE ESCROWED BASE INCREMENTAL DISTRIBUTED DISTRIBUTED OPTION
STOCK/OPTIONHOLDER NAME SHARES SHARES SHARES SHARES SHARES CASH SHARES
---------------------------------------------------------------------------------------------------------------------------------
XXXXXX XXXXXX 1,972 197 1,775 26 1,801 $20.09 0
PHILLIPPE CAIRIC 1,972 197 1,775 26 1,801 $20.09 0
XXXXXXXXX XXXX 1,972 197 1,775 26 1,801 $20.09 0
XXXXXXXX XXXXXX 1,972 197 1,775 26 1,801 $20.09 0
XXXXXX XXXXXXX 1,972 197 1,775 26 1,801 $20.09 0
XXXXXX SANA 1,315 132 1,183 17 1,200 $13.40 0
XXXXXX XXXX 1,315 132 1,183 17 1,200 $13.40 0
XXXXXX XXXXXXX 1,315 132 1,183 17 1,200 $13.40 0
XXXXXXX SAUVEE 1,315 132 1,183 17 1,200 $13.40 0
XXXXX XXXXXXXX 1,315 132 1,183 17 1,200 $13.40 0
XXXXXX XXXXXXXX 1,315 132 1,183 17 1,200 $13.40 0
XXXXXXXXX XXXXXXXXX 1,315 132 1,183 17 1,200 $13.40 0
TIENNE PRAT 1,315 132 1,183 17 1,200 $13.40 0
XXXXXXX XXXXX 1,315 132 1,183 17 1,200 $13.40 0
XXXXXXXX XXXX 1,315 132 1,183 17 1,200 $13.40 0
XXXXXX XXXXXX 1,315 132 1,183 17 1,200 $13.40 0
XXXXXXXXX XXXXXX 986 99 887 13 900 $10.05 0
XXXXXX XXXXXX 986 99 887 13 900 $10.05 0
XXXXXXXXX XXXXXXX 986 99 887 13 900 $10.05 0
XXXXXX XXXXXX 986 99 887 13 900 $10.05 0
XXXX-XXXX XXXXXXX 986 99 887 13 900 $10.05 0
XXXXXXXX GIRBEAU 986 99 887 13 900 $10.05 0
XXXXXXXX DAVEIN 657 66 591 8 599 $21.95 0
SEBASTIEN MARCHADIER 657 66 591 8 599 $21.95 0
XXXX-XXXXXXXX XXXXXX 657 66 591 8 599 $21.95 0
XXXX XXXXXXXXXXX 986 99 887 13 900 $10.05 0
XXXXXXX XXXXXXX 328 33 295 4 299 $18.60 0
XXXXXXXXXX BAISSIN 328 33 295 4 299 $18.60 0
XXXXXX XXXX 328 33 295 4 299 $18.60 0
XXXXXX XXXXXXXXXXXX 328 33 295 4 299 $18.60 0
XXXXXXXX XXXXXXX 328 33 295 4 299 $18.60 0
SYLVIC SILVEIRO 164 16 148 2 150 $ 9.30 0
XXXXXXX XXXXXX 164 16 148 2 150 $ 9.30 0
CHARAREH PAKROUZ 164 16 148 2 150 $ 9.30 0
XXXXXXX XXXXXXXX 164 16 148 2 150 $ 9.30 0
XXX XXXXX 164 16 148 2 150 $ 9.30 0
XXXXXX XXXXX XXXXXXX 1,315 132 1,183 17 1,200 $13.40 0
OLIVIER CHARISSOUX 1,095 110 985 14 999 $27.62 0
XXXXX XXXXXX 164 16 148 2 150 $ 9.30 0
OTHER
-----
PAULET, BRUNO 1,615 162 1,453 21 1,474 $23.43 0
XXXXXXXXX, XXX 6,575 658 5,917 89 6,006 $ 5.98 0
BAMAS, XXXXXXX 10,329 1,033 9,296 140 9,436 $ 4.33 0
XXXXXXX, XXXXXX 0 0 0 0 0 $ 0.00 7,522
PAR XX XX, LLC 6,575 658 5,917 89 6,006 $ 5.98 0
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EXHIBIT K
DISTRIBUTED TOTAL TOTAL
BASE ESCROWED BASE INCREMENTAL DISTRIBUTED DISTRIBUTED OPTION
STOCK/OPTIONHOLDER NAME SHARES SHARES SHARES SHARES SHARES CASH SHARES
---------------------------------------------------------------------------------------------------------------------------------
VLG INVESTMENTS 1997 0 0 0 0 0 $ 0.00 1,429
XXXX X. XXXXXXXX 0 0 0 0 0 $ 0.00 358
LANLOIS-MEURINNE, CHRISTIAN 4,069 407 3,662 55 3,717 $15.56 0
MARMISSOLLE, FRANCOIS 2,388 239 2,149 32 2,181 $20.08 0
XXXXXX, XXXXXXX 2,388 239 2,149 32 2,181 $20.08 0
XXXXXXX, XXXX 3,753 375 3,378 50 3,428 $25.22 0
XXXXXXX, XXXXXXX 3,753 375 3,378 50 3,428 $28.85 0
DAUGERAS, XXXXXXX 3,753 375 3,378 50 3,428 $25.22 0
LACOSTE, ALAIN 636 64 572 8 580 $22.78 0
IDI 7,202 720 6,482 97 6,579 $24.45 0
HAUSTETE, PHILIPPE 15,968 1,597 14,371 216 14,587 $14.52 0
TOTAL 1,859,030 185,915 1,673,115 25,169 1,698,284 $1,245.52 32,021
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