ASSET PURCHASE AGREEMENT
BY AND AMONG
PEREGRINE SYSTEMS, INC.
INTERNATIONAL SOFTWARE SOLUTIONS LIMITED PARTNERSHIP
INTERNATIONAL SOFTWARE SOLUTIONS USA, LC
INTERNATIONAL SOFTWARE SOLUTIONS, INC.
INTERNATIONAL SOFTWARE SOLUTIONS UK LTD.
INTERNATIONAL SOFTWARE SOLUTIONS GMBH
INTERNATIONAL SOFTWARE SOLUTIONS FRANCE DIFFUSION SARL
INTERNATIONAL SOFTWARE SOLUTIONS PRODUCTION SARL
FIRTREE OVERSEAS LTD.
XXXXXX XXXXXX
AND
XXXXXXX XX XXXXX
SEPTEMBER 23, 1998
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 "Acquired Assets" . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 "Acquired Commercial Software Rights" . . . . . . . . . . . . . 1
1.3 "Affiliate" . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 "Agreement" . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 "Assumed Leases". . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 "Assumed Liabilities" . . . . . . . . . . . . . . . . . . . . . 2
1.7 "Best Knowledge of the Partners". . . . . . . . . . . . . . . . 2
1.8 "Best Knowledge of the Sellers" . . . . . . . . . . . . . . . . 2
1.9 "Buyer" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.10 "Buyer Financial Statements". . . . . . . . . . . . . . . . . . 2
1.11 "Buyer Shares". . . . . . . . . . . . . . . . . . . . . . . . . 2
1.12 "Chemical Substance". . . . . . . . . . . . . . . . . . . . . . 2
1.13 "Code". . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.14 "Commercial Software Rights". . . . . . . . . . . . . . . . . . 2
1.15 "Contract". . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.16 "Conflict". . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.17 "ERISA" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.18 "Employment Escrow Fund". . . . . . . . . . . . . . . . . . . . 3
1.19 "Environment" . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.20 "Environmental Laws". . . . . . . . . . . . . . . . . . . . . . 3
1.21 "Environmental Liabilities and Costs" . . . . . . . . . . . . . 3
1.22 "Environmental Permit". . . . . . . . . . . . . . . . . . . . . 3
1.23 "Equipment" . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.24 "Escrow Agreement". . . . . . . . . . . . . . . . . . . . . . . 3
1.25 "Escrow Funds". . . . . . . . . . . . . . . . . . . . . . . . . 3
1.26 "European Assignments". . . . . . . . . . . . . . . . . . . . . 4
1.27 "European Companies". . . . . . . . . . . . . . . . . . . . . . 4
1.28 "Exchange Act". . . . . . . . . . . . . . . . . . . . . . . . . 4
1.29 "Extremely Hazardous Substance" . . . . . . . . . . . . . . . . 4
1.30 "GAAP". . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.31 "General Escrow Fund" . . . . . . . . . . . . . . . . . . . . . 4
1.32 "General Losses". . . . . . . . . . . . . . . . . . . . . . . . 4
1.33 "Governmental Entity" . . . . . . . . . . . . . . . . . . . . . 4
1.34 "Intellectual Property" . . . . . . . . . . . . . . . . . . . . 4
1.35 "Liability" . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.36 "Lien". . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.37 "Loss" or "Losses". . . . . . . . . . . . . . . . . . . . . . . 5
1.38 "Ordinary Course of Business" . . . . . . . . . . . . . . . . . 5
1.39 "Patent Rights" . . . . . . . . . . . . . . . . . . . . . . . . 5
1.40 "Peregrine" . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.41 "Peregrine Material Adverse Effect" . . . . . . . . . . . . . . 5
1.42 "Registered Intellectual Property". . . . . . . . . . . . . . . 5
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TABLE OF CONTENTS
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1.43 "Related Technology". . . . . . . . . . . . . . . . . . . . . . 5
1.44 "Release" . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.45 "Remote Control Management" . . . . . . . . . . . . . . . . . . 6
1.46 "Restriction Period". . . . . . . . . . . . . . . . . . . . . . 6
1.47 "Safety Laws" . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.48 "SEC" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.49 "SEC Documents" . . . . . . . . . . . . . . . . . . . . . . . . 6
1.50 "Securities Act". . . . . . . . . . . . . . . . . . . . . . . . 6
1.51 "Sellers" . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.52 "Seller Balance Sheet". . . . . . . . . . . . . . . . . . . . . 6
1.53 "Seller Financial Statements" . . . . . . . . . . . . . . . . . 6
1.54 "Seller Intellectual Property". . . . . . . . . . . . . . . . . 6
1.55 "Seller Material Adverse Effect". . . . . . . . . . . . . . . . 6
1.56 "Seller Collective Material Adverse Effect" . . . . . . . . . . 6
1.57 "Seller Schedules". . . . . . . . . . . . . . . . . . . . . . . 6
1.58 "Software". . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.59 "Tax" or "Taxes". . . . . . . . . . . . . . . . . . . . . . . . 7
1.60 "Tax Return". . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.61 "Tax Warranty". . . . . . . . . . . . . . . . . . . . . . . . . 7
1.62 "Trademarks". . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.63 "Transfer Regulations". . . . . . . . . . . . . . . . . . . . . 7
1.64 "TULRCA". . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.65 "UK". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.66 "UK Acquired Assets". . . . . . . . . . . . . . . . . . . . . . 7
1.67 "UK Business" . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.68 "UK Business Information" . . . . . . . . . . . . . . . . . . . 7
1.69 "UK Excluded Employees" . . . . . . . . . . . . . . . . . . . . 7
1.70 "U.S." or "United States" . . . . . . . . . . . . . . . . . . . 7
1.71 "VAT" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.72 "VATA". . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.73 "Voting Interests". . . . . . . . . . . . . . . . . . . . . . . 8
1.74 "Year 2000 Capabilities". . . . . . . . . . . . . . . . . . . . 8
ARTICLE II SALE AND PURCHASE OF ASSETS . . . . . . . . . . . . . . . . . . 8
2.1 Sale and Purchase of Assets . . . . . . . . . . . . . . . . . . 8
2.2 Assets Transferred. . . . . . . . . . . . . . . . . . . . . . . 8
2.3 Assets Not Acquired . . . . . . . . . . . . . . . . . . . . . . 9
2.4 Assumption of Liabilities . . . . . . . . . . . . . . . . . . . 9
2.5 Liabilities Not Assumed . . . . . . . . . . . . . . . . . . . . 10
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TABLE OF CONTENTS
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ARTICLE III PURCHASE PRICE . . . . . . . . . . . . . . . . . . . . . . . . 12
3.1 Payment of Purchase Price . . . . . . . . . . . . . . . . . . . 12
3.2 Allocation of Purchase Price. . . . . . . . . . . . . . . . . . 12
3.3 Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SELLERS AND THE PARTNERS. 12
4.1 Organization of the Sellers . . . . . . . . . . . . . . . . . . 12
4.2 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . 13
4.3 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.4 Seller Financial Statements . . . . . . . . . . . . . . . . . . 14
4.5 Affiliated Persons and Entities . . . . . . . . . . . . . . . . 14
4.6 Indebtedness; Guaranties. . . . . . . . . . . . . . . . . . . . 14
4.7 Absence of Changes. . . . . . . . . . . . . . . . . . . . . . . 14
4.8 Absence of Undisclosed Liabilities. . . . . . . . . . . . . . . 17
4.9 Legal and Other Compliance. . . . . . . . . . . . . . . . . . . 17
4.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.11 U.K. Tax and Stamp Duty . . . . . . . . . . . . . . . . . . . . 17
4.12 Restrictions on Business Activities . . . . . . . . . . . . . . 18
4.13 Title to Properties, Absence of Liens, Condition of Equipment . 18
4.14 Intellectual Property . . . . . . . . . . . . . . . . . . . . . 19
4.15 Agreements, Contracts and Commitments . . . . . . . . . . . . . 22
4.16 Powers of Attorney. . . . . . . . . . . . . . . . . . . . . . . 24
4.17 Interested Party Transactions . . . . . . . . . . . . . . . . . 24
4.18 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.19 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.20 Environmental Matters . . . . . . . . . . . . . . . . . . . . . 25
4.21 Brokers' and Finders' Fees. . . . . . . . . . . . . . . . . . . 25
4.22 Employee Benefit Plans and Compensation . . . . . . . . . . . . 26
4.23 ISSUK Employment Matters. . . . . . . . . . . . . . . . . . . . 29
4.24 Insolvency. . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.25 Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.26 Books and Records . . . . . . . . . . . . . . . . . . . . . . . 31
4.27 Business Practices. . . . . . . . . . . . . . . . . . . . . . . 31
4.28 Year 2000 Compliance. . . . . . . . . . . . . . . . . . . . . . 31
4.29 Product Warranties; Defects; Liabilities. . . . . . . . . . . . 31
4.30 Limited Warranties. . . . . . . . . . . . . . . . . . . . . . . 32
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TABLE OF CONTENTS
(CONTINUED)
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ARTICLE V REPRESENTATIONS AND WARRANTIES OF PEREGRINE. . . . . . . . . . . 32
5.1 Organization of Buyer . . . . . . . . . . . . . . . . . . . . . 32
5.2 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.3 Buyer Shares; Option Reserve. . . . . . . . . . . . . . . . . . 33
5.4 SEC Documents; Buyer Financial Statements . . . . . . . . . . . 33
5.5 No Material Adverse Change. . . . . . . . . . . . . . . . . . . 34
5.6 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.7 Legal Compliance. . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE VI SECURITIES ACT COMPLIANCE; REGISTRATION . . . . . . . . . . . . 34
6.1 Securities Act Exemption. . . . . . . . . . . . . . . . . . . . 34
6.2 Stock Restrictions. . . . . . . . . . . . . . . . . . . . . . . 34
6.3 Representations Regarding Securities Law Matters. . . . . . . . 35
6.4 Registration Rights . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE VII ADDITIONAL AGREEMENTS. . . . . . . . . . . . . . . . . . . . . 35
7.1 Possession; Additional Required Transfers . . . . . . . . . . . 35
7.2 Access to Records After Closing . . . . . . . . . . . . . . . . 35
7.3 Public Disclosure . . . . . . . . . . . . . . . . . . . . . . . 36
7.4 Contractual Consents. . . . . . . . . . . . . . . . . . . . . . 36
7.5 Legal Requirements. . . . . . . . . . . . . . . . . . . . . . . 36
7.6 Additional Documents and Further Assurances . . . . . . . . . . 36
7.7 Notification of Certain Matters . . . . . . . . . . . . . . . . 36
7.8 Nasdaq National Market Listing. . . . . . . . . . . . . . . . . 36
7.9 Sellers Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.10 Transfer Taxes. . . . . . . . . . . . . . . . . . . . . . . . . 37
7.11 U.K. Value Added Tax. . . . . . . . . . . . . . . . . . . . . . 37
7.12 Payment of Trade and Other Creditors. . . . . . . . . . . . . . 37
7.13 Collection of Accounts Receivable . . . . . . . . . . . . . . . 37
7.14 Employee Consultation . . . . . . . . . . . . . . . . . . . . . 38
7.15 U.K. Employee and Pension Matters; European Employment
Liability Indemnification. . . . . . . . . . . . . . . . . . . 38
7.16 Employee Equity Incentives. . . . . . . . . . . . . . . . . . . 40
ARTICLE VIII DELIVERIES BY THE PARTIES . . . . . . . . . . . . . . . . . . 40
8.1 Deliveries By Buyer . . . . . . . . . . . . . . . . . . . . . . 40
8.2 Deliveries by Sellers and Partners. . . . . . . . . . . . . . . 40
8.3 Other Deliveries. . . . . . . . . . . . . . . . . . . . . . . . 41
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ARTICLE IX NONCOMPETITION AGREEMENTS . . . . . . . . . . . . . . . . . . . 41
9.1 Agreement of Sellers. . . . . . . . . . . . . . . . . . . . . . 41
9.2 Agreement of Partners . . . . . . . . . . . . . . . . . . . . . 41
9.3 Nonsolicitation . . . . . . . . . . . . . . . . . . . . . . . . 42
9.4 Restriction Period. . . . . . . . . . . . . . . . . . . . . . . 42
9.5 Permitted Investments . . . . . . . . . . . . . . . . . . . . . 42
9.6 Remedies for Breach . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE X SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION. . . 43
10.1 Survival of Representations and Warranties. . . . . . . . . . . 43
10.2 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE XI AMENDMENT AND WAIVER. . . . . . . . . . . . . . . . . . . . . . 46
11.1 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
11.2 Extension; Waiver . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE XII GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . 47
12.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
12.2 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
12.3 Interpretation. . . . . . . . . . . . . . . . . . . . . . . . . 48
12.4 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . 48
12.5 Entire Agreement; Assignment. . . . . . . . . . . . . . . . . . 48
12.6 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . 49
12.7 Other Remedies. . . . . . . . . . . . . . . . . . . . . . . . . 49
12.8 Governing Law; Arbitration. . . . . . . . . . . . . . . . . . . 49
12.9 Currency. . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
12.10 Rules of Construction . . . . . . . . . . . . . . . . . . . . . 50
12.11 No Third Party Beneficiaries. . . . . . . . . . . . . . . . . . 50
12.12 Specific Performance. . . . . . . . . . . . . . . . . . . . . . 50
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INDEX OF EXHIBITS
EXHIBIT DESCRIPTION
Exhibit A Form of Escrow Agreement
Exhibit B Purchase Price Allocation
Exhibit C Investment Representation Statement
Exhibit D Declaration of Registration Rights
Exhibit E Opinion of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
Exhibit F Opinion of Irell & Xxxxxxx LLP
Exhibit G Opinion of Sellers' U.K. Counsel
Exhibit H Opinion of Sellers' German Counsel
Exhibit I Registration of Buyer Shares
Exhibit J Assignment and Assumption Agreement
Exhibit K Xxxx of Sale and Conveyance
Exhibit L Assignment of Trademarks
Exhibit M Assignment of Copyrights
INDEX OF SCHEDULES
SCHEDULE DESCRIPTION
1.23 Equipment
1.69 UK Excluded Employees
2.2(a) Software Acquired
2.2(b) Customer Licenses and Marketing Agreements
2.2(c) Intellectual Property In-Licenses
2.2(d) Assumed Leases
2.2(e) Other Assumed Contracts
2.2(f) Equipment, Tangible Assets, and Commercial Software Rights
4.4(c) Seller Financial Statements
4.14(a) Seller Registered Intellectual Property
4.14(b) Title Exceptions: Seller Registered Intellectual Property
4.14(c) Trademark/Copyright Exceptions
4.14(d) Seller Intellectual Property Licenses
4.14(e) Intellectual Property In-Licenses
4.14(f) Intellectual Property Infringement
4.14(i) Seller Intellectual Property Disputes
4.14(j) Infringement Claims (Seller Intellectual Property)
4.14(k) Intellectual Property Decrees, Orders, Etc.
4.15 Agreements, Contracts, and Commitments
4.22(b)(i) Employee Plans
4.22(b)(ii) Employees of Sellers
4.22(e) Retirement and Pension Plans
4.22(i) Employment Matters
4.22(n) Job Titles/Base Salaries of Employees of European Companies
4.25 Consents
4.29 Terms of Sale; License
7.13 Accounts Receivable
7.16 Employee Equity Incentives
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the "AGREEMENT") is made and entered into
as of September 23, 1998 by and among Peregrine Systems, Inc., a Delaware
corporation ("PEREGRINE"); International Software Solutions Limited
Partnership, a Nevada limited partnership ("ISSLP"); International Software
Solutions UK Ltd., a company registered in England and Wales with company
number 03029797 whose registered office is situated at 0 Xxx Xxxxxxxxxx
Xxxxxx, Xxxxxx XXX 0XX ("ISSUK"); International Software Solutions GmbH, a
limited liability corporation organized under the laws of Germany ("ISSGR");
International Software Solutions France Diffusion SARL, a corporation
organized under the laws of France ("ISSFD"); International Software
Solutions Production SARL, a corporation organized under the laws of France
("ISSP"); International Software Solutions USA, L.C., a Florida limited
liability company ("ISSUS"); International Software Solutions, Inc., a
Delaware corporation and the general partner of ISSLP ("ISSI"); and each of
Firtree Overseas Ltd., a British Virgin Islands corporation ("FIRTREE"),
Xxxxxx Xxxxxx, and Xxxxxxx Xx Xxxxx (individually, a "PARTNER" and
collectively, the "PARTNERS").
RECITALS
A. The Sellers (as defined herein) are a group of affiliated entities
engaged in the business of developing and marketing Remote Control Management
(as defined herein) software.
B. Each of the Sellers is controlled, directly or indirectly, by the
Partners.
C. Pursuant to this Agreement and the European Assignments (as defined
herein), each of the Buyers (as defined herein) wishes to purchase from the
Sellers, and the Sellers wish to sell (and each of the Partners wishes to
cause the Sellers to sell) to the Buyers, all the Acquired Assets (as defined
herein) applicable to such Seller or Buyer; and the Sellers wish to assign,
and each of the Buyers wish to assume, all the Assumed Liabilities (as
defined herein) applicable to such Seller or Buyer.
NOW, THEREFORE, in consideration of the covenants, promises, and
representations set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 "ACQUIRED ASSETS" shall have the meaning set forth in Section 2.2.
1.2 "ACQUIRED COMMERCIAL SOFTWARE RIGHTS" shall have the meaning set
forth in Section 4.14(o).
1
1.3 "AFFILIATE" shall have the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Exchange Act.
1.4 "AGREEMENT" shall have the meaning set forth in the preamble above.
1.5 "ASSUMED LEASES" shall have the meaning set forth in Section 2.2(d).
1.6 "ASSUMED LIABILITIES" shall have the meaning set forth in Section
2.4.
1.7 "BEST KNOWLEDGE OF THE PARTNERS" shall mean the actual or
constructive knowledge of either of the Partners.
1.8 "BEST KNOWLEDGE OF THE SELLERS" shall mean the actual or
constructive knowledge, with respect to ISSUK, of Xxxxx Xxxx-Xxxxxx Xxxx;
with respect to ISSGR, of Xxxxx Xxxxxx; with respect to ISSUS, of Xx Xxxxxx;
and with respect to ISSI, ISSLP, ISSFD, and ISSP, of either of the Partners;
PROVIDED, HOWEVER, that neither of Xxxxx Xxxx-Xxxxxx Xxxx, Xxxxx Xxxxxx, or
Xx Xxxxxx shall be required to make any inquiry of any employee of ISSUK,
ISSGR, or ISSUS expressly for purposes of confirming the accuracy of any
representation or warranty set forth herein.
1.9 "BUYER" shall mean Peregrine and/or any wholly owned subsidiary
designated by Peregrine to which Peregrine may have assigned any right or
delegated any duty hereunder (collectively, "BUYERS"); PROVIDED, HOWEVER,
that notwithstanding any contrary provision of this Agreement, Peregrine
shall guarantee and be primarily liable as a co-obligor for the performance
of any obligation or duty delegated to such a subsidiary.
1.10 "BUYER FINANCIAL STATEMENTS" shall have the meaning set forth in
Section 5.4.
1.11 "BUYER SHARES" shall have the meaning set forth in Section 3.1.
1.12 "CHEMICAL SUBSTANCE" means any chemical substance which is
identified or regulated under any Environmental Law or Safety Law as defined
below, including but not limited to any: (i) pollutant, contaminant,
irritant, chemical, raw material, intermediate, product, by-product, slag,
construction debris; (ii) industrial, solid, liquid or gaseous toxic or
hazardous substance, material or waste; (iii) petroleum or any fraction
thereof; (iv) asbestos or asbestos-containing material; (v) polychlorinated
biphenyl; (vi) chlorofluorocarbons; and (vii) any other similarly regulated
substance, material or waste.
1.13 "CODE" means the United States Internal Revenue Code of 1986, as
amended.
1.14 "COMMERCIAL SOFTWARE RIGHTS" shall mean packaged commercially
available software programs available to the public through retail dealers in
computer software which have been licensed to any Seller pursuant to an
end-user license and which is used in the business of such Seller but are in
no way a component of the Sellers' products and related Seller Intellectual
Property; provided that Commercial Software Rights shall not be deemed a
"component" of any product or Seller Intellectual Property solely by virtue
of their use (in the manner for which they were validly licensed to a Seller
or Partner for use) in the development of any product or Seller Intellectual
Property.
2
1.15 "CONTRACT" shall have the meaning set forth in Section 4.15.
1.16 "CONFLICT" shall have the meaning set forth in Section 4.3.
1.17 "ERISA" shall mean the United States Employee Retirement Income
Security Act of 1974, as amended.
1.18 "EMPLOYMENT ESCROW FUND" shall have the meaning set forth in the
Escrow Agreement.
1.19 "ENVIRONMENT" means real property and any improvements thereon, and
also includes, but is not limited to, ambient air, surface water, drinking
water, groundwater, land surface, subsurface strata and water body sediments.
1.20 "ENVIRONMENTAL LAWS" mean any applicable law, regulation or legal
requirement relating to pollution, or protection or cleanup of the
Environment, including, without limitation, (i) all laws, regulations, codes
of practice and other similar controls issued by any Governmental Entity;
(ii) all laws, regulations, and directives made by the legislative organs of
the European Economic Community, the European Community, and the European
Union; and (iii) any other law or legal requirement, as now in effect,
relating to (a) the Release, containment, removal, remediation, response,
cleanup or abatement of any sort of any Chemical Substance; (b) the
manufacture, generation, formulation, processing, labeling, distribution,
introduction into commerce, use, treatment, handling, storage, recycling,
disposal or transportation of any Chemical Substance; (c) exposure of
persons, including employees, to any Chemical Substance; or (d) the physical
structure, use or condition of a building, facility, fixture or other
structure, including, without limitation, those relating to the management,
use, storage, disposal, cleanup or removal of asbestos, asbestos-containing
materials, polychlorinated biphenyls or any other Chemical Substance.
1.21 "ENVIRONMENTAL LIABILITIES AND COSTS" means all losses incurred:
(i) that are required by a governmental agency or third party in order to
comply with any Environmental Law or Environmental Permit; (ii) that are
required by a governmental agency or third party as a result of a Release of
any Chemical Substance; or (iii) that are required by a governmental agency
or third party as a result of any environmental conditions present at,
created by or arising out of the past or present operations of the European
Companies through the date hereof.
1.22 "ENVIRONMENTAL PERMIT" means any Permit or authorization from any
governmental authority required under, issued pursuant to, or authorized by
any Environmental Law.
1.23 "EQUIPMENT" shall mean the items of equipment listed on Schedule
1.23 (identified by the Seller owning such Equipment).
1.24 "ESCROW AGREEMENT" shall mean the Escrow Agreement of even date
herewith among the Sellers, the Partners, Peregrine, and Xxxxx Xxxxxx
Shareholder Services, LLC in the form attached hereto as EXHIBIT A.
1.25 "ESCROW FUNDS" shall have the meaning set forth in the Escrow
Agreement.
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1.26 "EUROPEAN ASSIGNMENTS" shall mean such assignment and assumption
agreements, bills of sale, or other instruments of sale, transfer,
conveyance, and assignment as Peregrine and its local counsel may reasonably
request to effect the proper transfer of any Acquired Asset owned or
otherwise held by a European Company to Peregrine or another Buyer.
1.27 "EUROPEAN COMPANIES" shall mean ISSUK, ISSGR, ISSFD, and ISSP.
1.28 "EXCHANGE ACT" shall mean the United States Securities Exchange Act
of 1934, as amended.
1.29 "EXTREMELY HAZARDOUS SUBSTANCE" has the meaning set forth in
Section 302 of the United States Emergency Planning and Community
Right-to-Know Act of 1986, as amended.
1.30 "GAAP" shall mean generally accepted accounting principles.
1.31 "GENERAL ESCROW FUND" shall have the meaning set forth in the
Escrow Agreement.
1.32 "GENERAL LOSSES" shall have the meaning set forth in Section
10.2(b).
1.33 "GOVERNMENTAL ENTITY" shall have the meaning set forth in Section
4.3.
1.34 "INTELLECTUAL PROPERTY" means any or all of the following and all
rights in, arising out of, or associated therewith anywhere in the world:
(i) Patent Rights; (ii) trade secrets and other proprietary information;
(iii) copyrights, mask work rights, copyright registrations and applications
therefor; (iv) all Web addresses, sites and domain names; (v) all industrial
designs and any registrations and applications therefor throughout the world;
(vi) all Trademarks; and (vii) any similar, corresponding or equivalent
rights to any of the foregoing.
1.35 "LIABILITY" shall mean any liability or obligation (whether known
or unknown, whether asserted or unasserted, whether absolute or contingent,
whether accrued or unaccrued, whether liquidated or unliquidated, whether
incurred or consequential and whether due or to become due), including any
liability for Taxes.
1.36 "LIEN" means any mortgage, pledge, lien, security interest, charge,
claim, equity, encumbrance, restriction on transfer, conditional sale, or
other title retention device or arrangement (including, without limitation, a
capital lease), transfer for the purpose of subjection to the payment of any
Indebtedness, or restriction on the creation of any of the foregoing, whether
relating to any property or right or the income or profits therefrom;
PROVIDED, HOWEVER, that the term "LIEN" shall not include (i) statutory liens
for Taxes to the extent that the payment thereof is not in arrears or
otherwise due, (ii) statutory or common law liens to secure landlords,
lessors, or renters under leases or rental agreements confined to the
premises rented to the extent that no payment or performance under any such
lease or rental agreement is in arrears or is otherwise due, (iii) deposits
or pledges made in connection with, or to secure payment of, worker's
compensation, unemployment insurance, old age pension programs mandated under
applicable laws or other social security regulations, and (iv) statutory or
common law liens in favor of carriers, landlords, warehousemen, processors,
mechanics and materialmen, statutory or common law liens to secure claims for
labor, materials or
4
supplies and other like liens, which secure obligations to the extent that
payment thereof is not in arrears or otherwise due, and (v) purchase money
liens.
1.37 "LOSS" or "LOSSES" shall have the meaning set forth in Section
10.2(a).
1.38 "ORDINARY COURSE OF BUSINESS" shall mean the ordinary course of
business, consistent with past practice (including with respect to quantity
and frequency).
1.39 "PATENT RIGHTS" means (i) all patents and patent applications and
any inventions disclosed in any of the foregoing patents and patent
applications; (ii) any and all counterpart U.S., international and foreign
patents, applications and certificates of invention based upon or covering
any portion of the foregoing patents, applications and inventions; (iii) all
divisions, continuations, continuations-in-part, and substitutions of any of
the preceding patents and patent applications; (iv) all foreign or
international applications corresponding to any of the preceding applications
or patents; (v) all divisions, continuations, continuations-in-part, and
substitutions of any of such foreign or international applications described
in (v); and all U.S., international and foreign patents issuing on any of the
preceding applications, including extensions, reissues and re-examinations.
1.40 "PEREGRINE" shall mean Peregrine Systems, Inc., a Delaware
corporation.
1.41 "PEREGRINE MATERIAL ADVERSE EFFECT" shall mean a material adverse
effect on the business, results of operations, or financial condition of
Peregrine and its subsidiaries, taken as a whole.
1.42 "REGISTERED INTELLECTUAL PROPERTY" shall mean all United States,
international and foreign (i) patents and patent applications (including
provisional applications); (ii) registered trademarks, applications to
register trademarks, intent-to-use applications, or other registrations or
applications related to trademarks; (iii) registered copyrights and
applications for copyright registration; (iv) any mask work registrations and
applications to register mask works; and (v) any other Seller Intellectual
Property that is the subject of an application, certificate, filing,
registration or other document issued by, filed with, or recorded by, any
state, government or other public legal authority.
1.43 "RELATED TECHNOLOGY" means any or all of the following and all
rights in, arising out of, or associated therewith anywhere in the world: (i)
all inventions (whether patentable or not), invention disclosures,
improvements, know how, technology, technical data; (ii) all schematics,
drawings, net lists, notes and notebooks, specifications, bills of material,
and tooling; (iii) all computer software, including all source code, object
code, firmware, development tools, flow charts, annotations, files, records
and data, and all media on which any of the foregoing is recorded; (iv) all
customer lists; (v) all databases and data collections and all rights therein
throughout the world; (vii) all documentation relating to any of the
foregoing; and (viii) any Intellectual Property in, arising out of, or
associated with any of the foregoing throughout the world.
1.44 "RELEASE" means any actual or alleged spilling, leaking, pumping,
pouring, emitting, dispersing, emptying, discharging, injecting, escaping,
leaching, dumping or disposing of any Chemical Substance or Extremely
Hazardous Substance into the Environment that would cause an
5
Environmental Liability and Cost (including the abandonment or discarding of
barrels, containers, tanks or other receptacles containing or previously
containing any Chemical Substance).
1.45 "REMOTE CONTROL MANAGEMENT" shall mean, without limitation, the
ability (i) to control a client server or other end-user workstation on a
networked computer system remotely from a separate location or workstation,
(ii) to complete file transfers, (iii) to customize security controls related
to accessing a computer network, and (iv) to provide graphical remote control
capabilities.
1.46 "RESTRICTION PERIOD" shall have the meaning set forth in Section
10.4.
1.47 "SAFETY LAWS" means any federal, state, local and foreign law,
regulation or legal requirement relating to health or safety, including the
United States Occupational Safety and Health Act, as amended, and all laws,
regulations, and directives made by the legislative organs of the European
Economic Community, the European Community, and the European Union, each as
now in effect, relating to (a) exposure of employees to any Chemical
Substance or (b) the physical structure, use or condition of a building,
facility, fixture or other structure, including, without limitation, those
relating to equipment or manufacturing processes, or the management, use,
storage, disposal, cleanup or removal of any Chemical Substance.
1.48 "SEC" shall mean the United States Securities and Exchange
Commission.
1.49 "SEC DOCUMENTS" shall have the meaning set forth in Section 5.4.
1.50 "SECURITIES ACT" shall mean the United States Securities Act of
1933, as amended.
1.51 "SELLERS" shall mean ISSLP, ISSUS, ISSUK, ISSGR, ISSFD, and ISSP.
1.52 "SELLER BALANCE SHEET" shall have the meaning set forth in Section
4.3(a).
1.53 "SELLER FINANCIAL STATEMENTS" shall have the meaning set forth in
Section 4.4(a).
1.54 "SELLER INTELLECTUAL PROPERTY" shall mean any Intellectual Property
or Related Technology that is owned by or exclusively licensed to any of the
Sellers.
1.55 "SELLER MATERIAL ADVERSE EFFECT" shall mean, with respect to each
Seller, a material adverse effect on (i) the business related to the Acquired
Assets, results of operations, or financial condition of such Seller or (ii)
the Acquired Assets being sold, assigned, or transferred to Buyer by such
Seller (all Acquired Assets deriving from such Seller being considered in the
aggregate).
1.56 "SELLER COLLECTIVE MATERIAL ADVERSE EFFECT" shall mean, with
respect to the Sellers as a group, a material adverse effect on (i) the
businesses related to the Acquired Assets, results of operations, or
financial condition of the Sellers (considered in the aggregate) or (ii) the
Acquired Assets being sold, assigned, or transferred to Buyer by the Sellers
(all Acquired Assets being considered in the aggregate).
1.57 "SELLER SCHEDULES" shall have the meaning set forth in the preamble
to Article IV.
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1.58 "SOFTWARE" shall have the meaning set forth in Section 2.2(a).
1.59 "TAX" or "TAXES" shall mean 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.
1.60 "TAX RETURN" shall mean any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
1.61 "TAX WARRANTY" shall have the meaning set forth in Section 11.1.
1.62 "TRADEMARKS" means any trademarks, tradenames, service marks, trade
dress, and logos, together with all translations, adaptations, derivations,
and combinations thereof and including all goodwill associated therewith.
1.63 "TRANSFER REGULATIONS" shall mean the Transfer of Undertakings
(Protection of Employment) Regulations 1981 (U.K.).
1.64 "TULRCA" shall mean the Trade Union and Labor Relations
(Consolidations) Xxx 0000 (U.K.).
1.65 "UK" shall mean the United Kingdom of Great Britain and Northern
Ireland.
1.66 "UK ACQUIRED ASSETS" shall mean those Acquired Assets which
exclusively relate to or which are exclusively used in the UK Business.
1.67 "UK BUSINESS" shall mean the business of the development,
marketing, consulting, sale, and maintenance of Remote Control Management
software as presently carried on by ISSUK.
1.68 "UK BUSINESS INFORMATION" shall mean all information and knowledge
(whether or not confidential and in whatever form and on whatever media)
relating to the UK Business and the UK Acquired Assets.
1.69 "UK EXCLUDED EMPLOYEES" shall mean the employees of ISSUK whose
names are set out in Schedule 1.69.
1.70 "U.S." or "UNITED STATES" shall mean the United States of America
and its territories and possessions.
1.71 "VAT" shall refer to value added taxes.
1.72 "VATA" shall have the meaning set forth in Section 7.11.
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1.73 "VOTING INTERESTS" shall have the meaning set forth in Section 4.2.
1.74 "YEAR 2000 CAPABILITIES" means that (i) the Acquired Assets will
manage, calculate, sequence, compare and manipulate data involving dates,
including single century formulas and multi-century formulas and including
leap years, and will not cause an abnormally ending scenario within the
application or generate incorrect values or invalid results involving such
dates; (ii) all date-related user interface functionalities and data fields
associated with the Acquired Assets include the indication of century; and
(iii) all date-related data interface functionalities associated with the
Acquired Assets include the indication of century.
ARTICLE II
SALE AND PURCHASE OF ASSETS
2.1 SALE AND PURCHASE OF ASSETS. Subject to the terms and conditions
contained in this Agreement, each of the Sellers hereby sells, assigns,
transfers, and delivers to the Buyer (in the case of the UK Acquired Assets,
notwithstanding any provision to the contrary in the Law of Property
(Miscellaneous Provisions) Xxx 0000, free of all Liens) all of such Seller's
right, title, and interest in and to (i) each of the assets described in
Section 2.2 below, (ii) all Related Technology, and (iii) all Intellectual
Property Rights in, arising out of, or associated with the assets described
in Section 2.2 below, and Buyer hereby purchases such assets, effective
immediately, pursuant to this Agreement and the various assignments, bills of
sale, and other instruments of transfer identified in Article VIII.
2.2 ASSETS TRANSFERRED. Effective immediately, the Sellers hereby
collectively sell and deliver to Peregrine, or any wholly-owned subsidiary of
Peregrine that Peregrine may have designated as a "Buyer" hereunder, as the
case may require, all of the following assets, properties, and business (the
"ACQUIRED ASSETS"):
(a) SOFTWARE. All of each Seller's software and software products
relating to Remote Control Management, including, without limitation, the
software identified in Schedule 2.2(a) attached hereto, and all of each
Seller's right, title, and interest in all Related Technology and Seller
Intellectual Property related to such software and the businesses related
thereto (collectively, the "SOFTWARE").
(b) CUSTOMER LICENSES AND MARKETING AGREEMENTS. All of each
Seller's rights under the licensing, marketing, and distribution agreements
of the Sellers identified on Schedule 2.2(b) by which any Seller has licensed
or otherwise made available the Software or any component of the Software to
any other party.
(c) INTELLECTUAL PROPERTY IN-LICENSES. All of each Seller's
rights under the agreements of the Sellers identified in Schedule 2.2(c)
pursuant to which any Seller has licensed any Intellectual Property from any
other party for use with or in connection with the Software or Related
Technology (excluding Commercial Software Rights used in the operation of a
Seller's business but not necessary to the operation, performance, or
functionality of the Software or Related Technology).
8
(d) ASSUMED LEASES. All of the Sellers' rights under the real
property lease agreements identified in Schedule 2.2(d) (the "ASSUMED
LEASES").
(e) OTHER ASSUMED CONTRACTS. All of Sellers' rights under any
equipment lease, contract, agreement, plan, or arrangement identified in
Schedule 2.2(e) and under any other lease, contract, agreement, plan, or
arrangement which may otherwise relate to the Software.
(f) EQUIPMENT; TANGIBLE ASSETS; COMMERCIAL SOFTWARE RIGHTS. All
Equipment and other tangible assets related to the development, manufacture,
testing, marketing, or sale of the Software, wherever located, and the
Equipment, Commercial Software Rights and tangible assets set forth on
Schedule 2.2(f), in each case relating to the conduct of Sellers' businesses
as presently conducted in France.
(g) BOOKS AND RECORDS. All transferable books and records related
to any Acquired Asset, including, without limitation, all financial records,
books, ledgers, supplier lists, customer and marketing lists or databases,
marketing plans, advertising materials, manuals, and other materials of the
Sellers.
2.3 ASSETS NOT ACQUIRED. Except as expressly set forth in this
Agreement or a European Assignment, the Sellers have not sold or agreed to
sell any other asset not specifically contemplated by Section 2.2.
2.4 ASSUMPTION OF LIABILITIES. On the terms and subject to the
conditions set forth herein, from and after the date hereof, the Buyers will
assume and satisfy or perform when due only the following Liabilities of the
Sellers (the "ASSUMED LIABILITIES"):
(a) Sellers' obligations under the assigned contracts and
agreements identified in Schedules 2.2(b), 2.2(c), 2.2(d), and 2.2(e) hereof;
and
(b) any and all Liabilities relating to the ownership, use, or
operation of the Acquired Assets arising after the date hereof;
PROVIDED, HOWEVER, no Buyer shall have any obligation pursuant to any
contract or agreement of Sellers identified in Schedules 2.2(b), 2.2(c),
2.2(d), or 2.2(e) hereof that by its terms or under applicable law requires,
prior to assignment, a consent to assignment unless a written consent thereto
has been obtained on or prior to the date hereof. With respect to each such
contract not assigned to a Buyer, which would have been acquired by a Buyer
pursuant to Section 2.2 but for the failure to obtain a required consent, the
relevant Seller(s) shall continue to deal with the other contracting
party(ies) to such contract as the prime contracting party, and the Buyers,
the Sellers, and the Partners shall use commercially reasonable efforts to
obtain the consent(s) of all required parties to the assignment of such
contract(s). Such contract(s) shall be promptly assigned by the relevant
Seller(s) to the relevant Buyer(s) designated by Peregrine after receipt of
such consent(s) after the date hereof and thereafter shall be deemed to be an
Assumed Liability hereunder as if such consent had been obtained
contemporaneously with or prior to the execution and delivery of this
Agreement. Notwithstanding the absence of any such consent, the Buyers shall
be entitled to the benefits of such contract(s) accruing after the date
hereof to the extent that the relevant Seller(s) may provide the
9
Buyers with such benefits without violating the terms of such contract, and
the Buyers agree to perform at their sole expense all of the obligations of
the Seller(s) to be performed under such contract(s) from the date hereof
until such time as Buyers reasonably determine that such consents cannot be
obtained, after which Buyers shall have no further obligation with respect to
the performance of such contract(s). In such event, Buyers agree to provide
Sellers reasonable access to their facilities, materials, and personnel and
an appropriate license to the Software so as to permit the Sellers to perform
their obligations under such contracts for the balance of their term (as
applicable on the date hereof). Sellers shall compensate Buyers for providing
such facilities, materials, personnel, and license on commercially reasonable
terms to be agreed between Buyers and Sellers.
2.5 LIABILITIES NOT ASSUMED. Except as expressly set forth in this
Agreement, no Buyer assumes or agrees to perform any Liabilities not
specifically contemplated by Section 2.3 hereof, nor any of the following
Liabilities (collectively the "EXCLUDED LIABILITIES"):
(a) Any Liability of any Seller or Partner, or any Affiliate of
any Seller or Partner, for Taxes for any taxable period of such person, and
any Liability for Taxes attributable to the Acquired Assets or operations of
the Sellers for any taxable period or portion of any period of such person;
PROVIDED, HOWEVER, that any Liability for Taxes, to the extent attributable
to ownership or use of the Acquired Assets or the carrying-on of the
businesses associated with the Acquired Assets after the date hereof, shall
be solely an obligation of Buyers;
(b) Any Liability of any Seller or Partner, or any Affiliate of
any Seller or Partner, to indemnify any person by reason of the fact that
such person was a director, officer, employee or agent of the Seller or
Partner, or any Affiliate of any Seller or Partner, or that such person was
serving at the request of such Seller or Partner, or any Affiliate of any
Seller or Partner, as a partner, trustee, director, officer, employee or
agent of another entity;
(c) Any Liability of any Seller or Partner, or any Affiliate of
any Seller or Partner, as a result of any legal or equitable action or
judicial or administrative proceeding initiated at any time caused by any
action that occurred or condition that existed on or prior to the date hereof
and in respect of anything done, suffered to be done, or omitted to be done
by any Seller, Partner, or any Affiliate of any Seller or Partner, or any of
their directors, officers, employees or agents;
(d) Any Liability of any Seller or Partner, or any Affiliate of
any Seller or Partner, for costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby;
(e) Any Liability of any Seller or Partner, or any Affiliate of
any Seller or Partner under this Agreement and incurred in connection with
the making or performance of this Agreement;
(f) Any Liability for products manufactured or sold or services
rendered on or prior to the date hereof, including for product returns or
credits taken, except only for those specific Liabilities for end user
product warranty repair and replacement as the Buyer has assumed pursuant to
Section 2.3 above;
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(g) Any Liability or obligation of any Seller or Partner, or any
Affiliate of any Seller, arising out of any employee benefit plan established
or maintained by such Seller, or any Affiliate of any Seller, for the benefit
of past or present employees of such Seller, or Affiliate of such Seller, or
to which such Seller, or Affiliate of such Seller, contributes, or any
Liability on the termination of any such plan;
(h) Any Liability of any Seller or Partner, or any Affiliate of
any Seller or Partner, for making payments or providing benefits of any kind
to their employees or former employees, (including, without limitation, (A)
as a result of the sale of the Acquired Assets or as a result of the
termination by any Seller, Partner, or any Affiliate of any Seller or
Partner, of any employees or decision by Buyer to hire or not to hire any
such employees or to terminate such employees within 180 days of the date
hereof in accordance with Section 7.15, (B) any obligation to provide former
employees (including individuals who become former employees by reason of the
consummation of the transactions contemplated by this Agreement) so-called
COBRA continuation coverage, (C) any Liability in respect of medical and
other benefits for existing and future retirees and for claims made after the
date hereof in respect of costs and expenses incurred on or prior to the date
hereof, (D) any Liability in respect of work-related employee injuries or
worker's compensation claims, and (E) any Liability in respect of employee
bonuses for work performed on behalf of the Sellers);
(i) Any Liability pertaining to any Seller or Partner, or any
Affiliate of any Seller or Partner, or their respective businesses and
arising out of or resulting from noncompliance on or prior to the date hereof
with any laws, statutes, ordinances, rules, regulations, orders,
determinations, judgments or directives, whether legislatively, judicially or
administratively promulgated (including, without limitation, any
Environmental Liabilities and Costs, whether or not arising out of or
resulting from noncompliance with Environmental Laws by any Seller, Partner,
or any Affiliate of any Seller or Partner);
(j) Any Liability of any Seller or Partner, or any Affiliate of
any Seller or Partner, under any licenses, leases, contracts or agreements
not listed on Schedule 2.2(b), Schedule 2.2(c), Schedule 2.2(d), or Schedule
2.2(e); and
(k) Other than obligations arising after the date hereof under the
Assumed Leases, any Liability owed by a Seller to another Seller or Partner,
including any Liability of any Seller to another Seller or Partner under any
licenses, leases, contracts, or agreements listed on Schedule 2.2(b),
Schedule 2.2(c), or Schedule 2.2(e);
(l) Any Liability of any Seller or Partner under the Software
Distribution Agreement between ISSLP and Software Corporation of America to
the extent such Liability relates to any action, failure to act, event,
occurrence or omission on or prior to the date hereof; and
(m) Any Liability in respect of accounts payable, or payable
obligations, incurred or otherwise related to the time period prior to the
date hereof.
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ARTICLE III
PURCHASE PRICE
3.1 PAYMENT OF PURCHASE PRICE. As consideration for the sale,
assignment, transfer, and delivery by the Sellers to the Buyer of the
Acquired Assets, Peregrine, on the terms and conditions set forth herein,
shall deliver to the Sellers concurrently herewith 392,082 shares of
Peregrine's Common Stock, par value $0.001 per share (the "BUYER SHARES").
3.2 ALLOCATION OF PURCHASE PRICE. The parties agree that the
preliminary allocation of the purchase price for the Acquired Assets shall be
as determined by the allocation set forth on EXHIBIT B attached hereto, which
shall be binding on all parties. Such allocation may be amended or modified
by Peregrine at any time within 60 days after the date hereof with the
consent of the Partners, which consent shall not be unreasonably withheld.
All parties shall use such final allocation in any Tax Return.
3.3 FRACTIONAL SHARES. No fraction of a Buyer Share will be issued,
but in lieu thereof, Sellers shall be entitled to receive from Buyer an
amount of cash (rounded to the nearest whole cent) equal to the product of
(i) such fraction and (ii) the average of the closing sales price of
Peregrine's Common Stock in trading on the Nasdaq National Market on the
fifty trading days immediately preceding the date hereof.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
THE SELLERS AND THE PARTNERS
The Sellers and each of the Partners hereby represent and warrant to
Buyers, jointly and severally, subject to the specific exceptions disclosed
in the disclosure letter and schedules thereto (each referencing or
cross-referencing the appropriate section numbers of this Article IV as to
which an exception exists) delivered by the Sellers and the Partners to
Buyers (the "SELLER SCHEDULES"), and dated as of the date hereof, as follows:
4.1 ORGANIZATION OF THE SELLERS.
(a) ISSLP is a limited partnership duly organized, validly
existing, and in good standing under the laws of the State of Nevada; ISSUS
is a limited liability company duly organized, validly existing, and in good
standing under the laws of the State of Florida; ISSI is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware; and each of the European Companies is a corporation duly
organized, validly existing, and in good standing under the laws of its
respective jurisdiction of incorporation. Each of the Sellers has the 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,
12
except where the failure to be so qualified or licensed would not have a
Seller Material Adverse Effect.
(b) Each of the Sellers has made available to Buyer a true and
correct copy of the constituent documents of such Seller, each as amended to
date, and each such instrument is in full force and effect.
4.2 CAPITALIZATION. With respect to each Seller, the Partners
collectively own, directly or indirectly, all outstanding shares of capital
stock, partnership interests, membership interests, or other ownership
interests (as the case may be) relating to such Seller (collectively, "VOTING
INTERESTS"). Each Partner owns all right, title, and interest in and to his
or its direct Voting Interests in each of the Sellers, free and clear of all
Liens. Other than another Seller or the Partners, no third party or entity
owns or controls any Voting Interests in any of the Sellers.
4.3 AUTHORITY. Each of the Sellers and each of the Partners 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 partnership, membership, or corporate
action, as the case may require, on the part of each of the Sellers and
Firtree. This Agreement and the transactions contemplated hereby have been
unanimously approved by the Boards of Directors of and the holders of all
outstanding Voting Interests in each of the Sellers and Firtree, and no such
holder has any rights to appraisal, dissent, or any similar rights with
respect to this Agreement or the transactions contemplated hereby. This
Agreement has been duly executed and delivered by each of the Sellers and
each of the Partners and constitutes the valid and binding obligation of each
such Seller or Partner, enforceable against such Seller or Partner in
accordance with its terms. The execution and delivery of this Agreement by
the Sellers and the Partners does not and 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 constituent documents of any Seller or
Firtree 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 any Seller,
any Partner, or any Affiliate of any Seller or Partner, or any 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
including, without limitation, any organ of the European Economic Community,
the European Community, or the European Union (any of the foregoing
authorities, instrumentalities, agencies, or commissions, a "GOVERNMENTAL
ENTITY") or any third party (so as not to trigger any Conflict), is required
by or with respect to any Seller, any Partner, or any Affiliate of any Seller
or any Partner, in connection with the execution and delivery of this
Agreement or any European Assignment, or the consummation of the transactions
contemplated hereby and thereby, including, in addition to the European
Assignments, any other assignment or instrument of transfer to be delivered
by any Seller or any Partner in connection with the execution and delivery of
this Agreement and the transactions contemplated hereby.
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4.4 SELLER FINANCIAL STATEMENTS.
(a) (i) The unaudited statements of income of each Seller for the
fiscal year ended December 31, 1997, (ii) the unaudited balance sheets of
each Seller at December 31, 1997, (iii) the unaudited consolidated statement
of income of the Sellers for the six months ended June 30, 1998, and (iv) the
unaudited consolidated balance sheet of the Sellers as of June 30, 1998 are
complete and correct in all material respects, have been prepared on a
consistent basis throughout the periods indicated, and fairly present the
financial position of each Seller or the Sellers, as the case may be, as of
the respective dates and for the respective periods indicated. Sellers'
unaudited consolidated balance sheet at June 30, 1998 is hereinafter referred
to as the "SELLER BALANCE SHEET," and all such financial statements are
hereinafter collectively referred to as the "SELLER FINANCIAL STATEMENTS."
(b) The Sellers have no Liability, indebtedness, obligation,
expense, claim, deficiency, guaranty or endorsement of any type, whether
accrued, absolute, contingent, matured, unmatured or other which (i) has not
been reflected in the Seller Balance Sheet or (ii) has not arisen in the
Ordinary Course of Business of the Sellers since June 30, 1998 consistent in
nature and amount with past practices and which does not exceed $20,000
individually or $50,000 in the aggregate.
(c) A true and correct copy of the Seller Financial Statements is
attached to the Seller Schedules as Schedule 4.4(c).
4.5 AFFILIATED PERSONS AND ENTITIES. Other than the Sellers, no
corporation, partnership, association, other business entity, or other third
party (including any Affiliate of any Seller or Partner) has any legal,
beneficial, or other interest in any Acquired Asset. Other than by or
through the Sellers, no Seller, Partner or Affiliate of a Seller or Partner
owns or controls, directly or indirectly, any equity, partnership,
membership, or similar interest in any corporation, partnership, association,
or other business entity that has any direct or indirect business or economic
interest (including as a competitor) in any Acquired Asset or the businesses
conducted by the Sellers.
4.6 INDEBTEDNESS; GUARANTIES. None of the Sellers has any indebtedness
for money borrowed or for the deferred purchase price of property or
services, capital lease obligations, conditional sale, or other title
retention agreements relating to any of the Acquired Assets. No Seller or
any Partner is a guarantor or otherwise liable for any Liability or
obligation of any other person or entity for any matter which relates to or
affects or will affect the Acquired Assets.
4.7 ABSENCE OF CHANGES. Since the date of the Seller Balance Sheet (or
such other date specifically set forth herein), each of the Sellers has
conducted its business only in the Ordinary Course of Business and, without
limiting the generality of the foregoing:
(a) There has not been any occurrence, event, incident, action,
failure to act or transaction that would reasonably be expected to have a
Seller Material Adverse Effect (other than with respect to ISSUK) or a Seller
Collective Material Adverse Effect (including ISSUK);
14
(b) None of the Sellers has declared, set aside for payment, or
paid any dividend or other distribution with respect to its outstanding
Voting Interests (other than cash dividends or cash distributions to the
Partners consistent with past practice, in any event which have not resulted
in any material impairment of the capital of the Seller making such
distribution), or directly or indirectly redeemed or repurchased any of such
Voting Interests;
(c) No Seller has sold, leased, licensed, or disposed of assets
with an aggregate fair market value in excess of $25,000 (other than end-user
licenses for Software entered in the Ordinary Course of Business), and no
Partner has entered any agreement relating to the sale, transfer or
disposition of any Voting Interest (whether by way of merger, purchase, or
otherwise);
(d) No Seller has sold or contracted to issue or sell any of its
Voting Interests to any person or entity;
(e) None of the Sellers has effected any amendment to its
constituent documents, Bylaws, partnership or membership agreements,
shareholder agreements, or similar organizational documents;
(f) None of the Sellers or the Partners has accelerated,
terminated, modified or cancelled any agreement, contract, lease, or license
(or series of related agreements, contracts, leases, and licenses) involving
the Acquired Assets;
(g) No Seller has delayed or postponed the payment of material
accounts payable and other Liabilities relating to the Acquired Assets beyond
their due date outside the Ordinary Course of Business, except with respect
to accounts or Liabilities that are subject to dispute in good faith by a
Seller;
(h) The Sellers have not individually or collectively cancelled,
compromised, waived, or released any right or claim (or series of related
rights and claims) relating to any Acquired Asset, in the case of payments
made or amounts owed to any other Seller, any Partner, or any Affiliate of
any Seller or Partner, involving more than $10,000 in the aggregate and, in
the case of payments made or amounts owed to any other person or entity,
involving more than $75,000 in the aggregate;
(i) No Partner has reason to believe that any vendors, licensors,
licensees, distributors, or customers for any Acquired Asset intends to
discontinue with the Buyer a business relationship on terms at least as
favorable as the relationship such vendors, licensors, licensees,
distributors, and customers currently have with the Sellers;
(j) No Acquired Asset has been materially damaged (whether or not
covered by insurance) in a manner or to an extent that would reasonably be
expected, with respect to any Seller, to have a Seller Material Adverse
Effect, and no customer or customers of any Seller have been lost that would
result, individually or in the aggregate, in a Seller Collective Material
Adverse Effect;
15
(k) No Seller or Partner has entered into any employment contract
or collective bargaining agreement, or modified the terms of any existing
employment contract or collective bargaining agreement, relating to the
Acquired Assets, except in the Ordinary Course of Business;
(l) No Seller or Partner has changed employment or compensation
terms for any employee with an annual base salary equal to or exceeding
$40,000;
(m) No Seller has experienced any labor strike, dispute, work
slowdown or stoppage, or claim of wrongful discharge or other unlawful labor
practice or action;
(n) No Seller or Partner has entered into any capital commitments
in relation to any of the Acquired Assets or the business associated
therewith;
(o) No Seller has accelerated, in an amount equal to or exceeding
$15,000, the collection or conversion of any account receivable or note
receivable relating to any Acquired Asset by offering any incentive for such
acceleration, including but not limited to prepayment discounts, allowances,
or enhancements, except in the Ordinary Course of Business;
(p) No Seller has made or changed any material election in respect
of Taxes, adopted or changed any accounting method in respect of Taxes,
entered into any closing agreement, settled any claim or assessment in
respect of Taxes, or consented to any extension or waiver of the limitation
period applicable to any claim or assessment in respect of Taxes;
(q) No litigation has been commenced or threatened, and to the
Best Knowledge of the Sellers and the Partners, no reasonable basis exists
for any litigation, proceeding, or investigation against any Seller, any
officer, "mandataire social," or director of any Seller (by reason of such
person's status as an officer, "mandataire social," or director of such
Seller) or their affairs related to any Acquired Asset;
(r) No Seller has received written notice and no Partner has
received any notice of any claim or potential claim of ownership by any
person, and to the Best Knowledge of the Sellers and the Partners, no basis
exists for any claim of ownership, by any person other than the Sellers,
related to any Seller Intellectual Property;
(s) No Seller has received written notice and no Partner has
received any notice of any claim or potential claim, and to the Best
Knowledge of the Sellers and the Partners, no basis exists for any claim or
potential claim that any Seller has infringed the Intellectual Property
rights of any person or entity;
(t) There has been no material change in the pricing or royalties
set or charged by any Seller to its customers or licensees, or any material
change in pricing or royalties set or charged to any Seller by any person or
entity who has licensed Intellectual Property or Related Technology to such
Seller;
16
(u) To the Best Knowledge of the Sellers and the Partners, no
Seller or Partner has done, committed to do, or omitted to do anything that
could reasonably be expected to have a Seller Collective Material Adverse
Effect; and
(v) No Seller or Partner has committed or agreed to do any of the
foregoing.
4.8 ABSENCE OF UNDISCLOSED LIABILITIES. There is no Liability and, to
the Best Knowledge of the Sellers and the Partners, no threatened action,
suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand, nor any reasonable basis therefor, which could give rise to any
Liability relating directly or indirectly to any Acquired Asset that would
reasonably be expected to have a Seller Collective Material Adverse Effect.
4.9 LEGAL AND OTHER COMPLIANCE. The Sellers and the Partners are each
in full compliance with all applicable laws (including rules, regulations,
codes, plans, injunctions, judgments, orders, decrees, rulings, and charges
thereunder) of federal, state, local, and foreign governments (and all
agencies thereof including, without limitation, the laws, regulations, and
directives of the European Economic Community, the European Community, and
the European Union), the violation of which would have a Seller Collective
Material Adverse Effect or adversely affect the ability of the Sellers or the
Partners to consummate the transactions contemplated by this Agreement. No
action, suit, proceeding, hearing, investigation, charge, complaint, claim,
demand, or notice has been filed or commenced or, to the Best Knowledge of
the Sellers and the Partners, threatened against any Seller or Partner
alleging any failure so to comply, nor, to the Best Knowledge of the Sellers
and the Partners, is there any reasonable basis therefor.
4.10 TAXES.
(a) To the extent a failure to do so would adversely affect any
Acquired Asset, or Buyer's use of any Acquired Asset (consistent with
Sellers' current practices), each of the Sellers has (i) timely filed within
the time period for filing or any extension granted with respect thereto all
Tax Returns which it is required to file relating to or pertaining to any and
all Taxes attributable or levied upon any Acquired Asset and (ii) paid any
and all Taxes it is required to pay in connection with the periods to which
such Tax Returns relate.
(b) ISSUK is a duly and properly registered taxable person for VAT
purposes in the UK. The Capital Goods Scheme in Part XV of the Value Added
Tax Regulations 1995 (SI 1995/2518) does not apply to any of the UK Acquired
Assets. Each of the European Companies (other than ISSUK) is a duly and
properly registered taxable person for purposes of VAT in any jurisdiction in
which such registration may be required.
4.11 U.K. TAX AND STAMP DUTY.
(a) All documents (other than those which have ceased to have any
legal effect) which ISSUK may wish to enforce or to which ISSUK is a party
and which are necessary to establish the title of ISSUK to any of the UK
Acquired Assets and which attract stamp duty in the UK or elsewhere have been
duly stamped or adjudicated not liable to stamp duty and no such documents
which are outside the UK would attract stamp duty if they were brought into
the UK.
17
(b) There is no capital transfer Tax or inheritance Tax which is a
charge on any of the UK Acquired Assets or which gives rise to a power to
sell, mortgage, or charge any of the UK Acquired Assets.
(c) There has been no transfer of value or deemed transfer of
value which (whether or not in conjunction with the death of any person
whenever occurring) is capable of giving rise to such a power to sell,
mortgage, or charge any of the UK Acquired Assets.
(d) In determining for the purposes of representations (b) and (c)
above whether a charge on or power to sell, mortgage, or charge any of the UK
Acquired Assets exists at any time, the fact that any Tax is not yet payable
or may be paid by installments shall be disregarded, and such Tax shall be
treated as becoming due and a charge or power to sell, mortgage, or charge
shall be treated as arising on the date of the transfer of value or other
date or event in or in respect of which it becomes payable or arises.
4.12 RESTRICTIONS ON BUSINESS ACTIVITIES. There is no agreement
(noncompetition, field of use, or otherwise), judgment, injunction, order or
decree to which any Seller or Partner (or any Affiliate of any Seller or
Partner) is a party or which is otherwise binding upon any Seller or any
Partner (or any Affiliate of any Seller or Partner) which has or reasonably
could be expected to have the effect of prohibiting or impairing (i) any
business practice of any Seller with respect to any Acquired Asset, (ii) any
acquisition of property (tangible or intangible) by any Seller, or (iii) the
conduct of business of any Seller. Without limiting the foregoing, no Seller
or Partner (or any Affiliate of any Seller or Partner) has entered into any
agreement which restricts the sale, license, or distribution of any product,
service, or technology to any class of customers, in any geographic area,
during any period of time or in any segment of the market.
4.13 TITLE TO PROPERTIES, ABSENCE OF LIENS, CONDITION OF EQUIPMENT.
(a) No Seller, Partner, or Affiliate of any Seller or Partner owns
any real property that is used in the Sellers' businesses conducted with any
Acquired Asset. The Sellers and/or the Partners have delivered to the Buyer
a true and correct copy of each Assumed Lease. The Assumed 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 Best Knowledge
of the Sellers and the Partners, the business operations conducted on the
real property subject to the Assumed Leases do not violate any applicable
law, building code, zoning requirement, or classification, or pollution
control ordinance or statute relating to the particular property or such
operations, and such non-violation is not dependent, in any instance, on
so-called non-conforming use exceptions. To the Best Knowledge of the Sellers
and the Partners, all approvals of governmental authorities (including
licenses and permits) required in connection with the operation of the
Sellers' businesses on such real property have been obtained, except for such
approvals the failure of which to obtain would not reasonably be expected to
have a Seller Material Adverse Effect with respect to any Seller conducting
business on the real property subject to any Assumed Lease.
(b) Each Seller has good and valid title to, or, in the case of
leased properties and assets, valid leasehold interests in, each Acquired
Asset being transferred to the Buyer by such
18
entity, free and clear of any Liens (including any Liens created as a result
of the consummation of the transactions contemplated hereby), except as
reflected in the Seller 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. To the Best Knowledge of the Sellers and the Partners, no
basis exists for the assertion of any claim which, if adversely determined,
would result in a Lien on any Acquired Asset or otherwise adversely affect
any Acquired Asset, or Buyer's use of any Acquired Asset (consistent with
Sellers' current practices). No Partner has any record or possessory
interest in any of the Acquired Assets.
(c) The Equipment (taken as a whole) is in good operating
condition, except for ordinary wear and tear, and is reasonably fit and
usable for the purposes for which it is presently being used.
(d) The Acquired Assets comprise all of the assets, properties,
and rights of every type and description, real, personal, tangible, and
intangible used by the Sellers and, to the Best Knowledge of the Sellers and
the Partners, necessary for the conduct of the businesses of the Sellers as
currently conducted and as currently proposed to be conducted by the Sellers
(other than the real property leases and any personal property, equipment, or
similar tangible property related to and used in the businesses of the
Sellers conducted in the U.K., U.S., and Germany, which are necessary to the
conduct of the Sellers' businesses in such jurisdictions and which Buyer
acknowledges it is not acquiring or assuming pursuant hereto).
(e) Each Seller is in custody and control of all the Acquired
Assets being sold and transferred by such Seller to the Buyer pursuant to
this Agreement, any European Assignment, or any assignments or other
instruments of transfer delivered or to be delivered to Buyer pursuant hereto
or thereto.
4.14 INTELLECTUAL PROPERTY.
(a) Schedule 4.14(a) lists all Registered Intellectual Property
owned by, or filed in the name of, any of the Sellers (the "SELLER REGISTERED
INTELLECTUAL PROPERTY") and lists any proceedings or actions before any
court, tribunal (including the United States Patent and Trademark Office (the
"PTO") or equivalent authority anywhere in the world) related to any of the
Seller Registered Intellectual Property.
(b) Except as set forth in Schedule 4.14(b), the Sellers (i) own
and have good and exclusive title to each item of Seller Intellectual
Property, including all Seller Registered Intellectual Property listed on
Schedule 4.14(a), free and clear of any Lien, (ii) have exclusive rights (and
are not contractually obligated to pay any compensation to any third party in
respect thereof under any license of rights, covenant not to xxx, settlement,
or other agreement) to the use thereof or the material covered thereby in
connection with the services or products in respect of which the Seller
Intellectual Property is being used, and (iii) no contracts, licenses, or
agreements exist (other than those set forth on Schedule 4.14(d)) to which a
Seller is party with respect to any of the Seller Intellectual Property.
19
(c) Except as set forth in Schedule 4.14(c), (i) each Seller is
the exclusive owner of all trademarks, service marks, and trade names used in
connection with the operation or conduct of its businesses as currently
conducted, including the sale of any products or technology or the provision
of any services by such Seller; (ii) each Seller is the exclusive owner of,
and has good title to, all copyrighted works that are such Seller's products
or other works of authorship which such Seller otherwise purports to own; and
(iii) to the extent that any work, invention, or material has been developed
or created by a third party for any Seller, such Seller has a written
agreement with such third party with respect thereto and such Seller thereby
has obtained ownership of, and is the exclusive owner of, all Intellectual
Property in such work, material or invention by operation of law or by valid
assignment.
(d) Except as set forth in Schedule 4.14(d), no Seller has
transferred ownership of or granted any license of or right to use or
authorized the retention of any rights to use any Intellectual Property that
is or was Seller Intellectual Property, to any other person. Schedule
4.14(d) sets forth a complete list of all licenses, sublicenses, and other
agreements pursuant to which any person is authorized to use any Seller
Intellectual Property or any material trade secret relating to the Acquired
Assets, and includes the identity of all parties thereto, a description of
the nature and subject matter thereof, the applicable royalty, and the term
thereof. The execution and delivery of this Agreement by the Sellers and the
Partners, and the consummation of the transactions contemplated hereby, will
not cause any Seller or Partner to be in violation or default under any such
license, sublicense, or agreement, nor entitle, by its terms, any other party
to any such license, sublicense, or agreement to terminate or modify such
license, sublicense, or agreement.
(e) Except as set forth in Schedule 4.14(e), the Seller
Intellectual Property constitutes all of the Intellectual Property and
Related Technology used in or, to the Best Knowledge of the Sellers and the
Partners, that is needed in order to conduct the businesses of the Sellers as
currently conducted by the Sellers, or as reasonably contemplated to be
conducted, including, without limitation, the design, development,
distribution, marketing, manufacture, use, import, license and sale of the
products, technology and services of the Sellers (including products,
technology or services currently under development) relating to the Acquired
Assets. Except as set forth in Schedule 4.14(e), no person who has licensed
Intellectual Property or Related Technology to any Seller has ownership
rights or license rights to improvements made by any Seller in such
Intellectual Property or Related Technology which has been licensed to such
Seller.
(f) Except as set forth in Schedule 4.14(f), the operation of the
businesses of the Sellers as they are currently conducted by the Sellers or
as reasonably contemplated to be conducted (including but not limited to the
design, development, distribution, marketing, use, import, manufacture,
license and sale of the products, technology or services (including products,
technology or services currently under development) of the Sellers), in each
case as related to the Acquired Assets, has not, does not and will not
infringe or misappropriate the Intellectual Property of any person, violate
the rights of any person (including rights to privacy or publicity), or
constitute unfair competition or trade practices under the laws of any
jurisdiction. No Seller or Partner has received notice nor have any claims
been asserted or threatened against any Seller or Partner or, to the Best
Knowledge of the Sellers and the Partners, any of their respective customers,
from any person claiming that such operation or any act, product, technology
or service (including products,
20
technology or services currently under development) of such Seller or Partner
infringes or misappropriates the Intellectual Property of any person or that
any Seller or Partner has engaged in unfair competition or trade practices
under the laws of any jurisdiction (nor to the Best Knowledge of the Sellers
and Partners is there any basis therefor).
(g) Each item of Seller Registered Intellectual Property is valid
and subsisting, all necessary registration, maintenance and renewal fees in
connection with such Seller Registered Intellectual Property have been paid
and all necessary documents and certificates in connection with Seller
Registered Intellectual Property have been filed with the relevant patent,
copyright, trademark or other authorities in the United States or foreign
jurisdictions, as the case may be, for the purposes of maintaining such
Registered Intellectual Property.
(h) Each Seller has taken all reasonable steps that are required
to protect such Seller's rights in confidential information and trade secrets
of such Seller or provided by any third party to such Seller, it being
understood that "reasonable steps" shall include, without limitation,
entering into written confidentiality agreements with consultants or other
third parties having access to Sellers' confidential information.
(i) Except as set forth in Schedule 4.14(i), there are no
contracts, licenses or agreements between any Seller and any other person
with respect to any Seller Intellectual Property under which there is any
dispute, to the Best Knowledge of any Seller or Partner, regarding the scope
of such agreement, or performance under such agreement including with respect
to any payments to be made or received by any Seller.
(j) Except as set forth in Schedule 4.14(j), no Seller or Partner
has any currently pending claim against any person for infringing or
misappropriating any Seller Intellectual Property.
(k) Except as set forth in Schedule 4.14(k), no Seller
Intellectual Property or product, technology or service of any Seller is
subject to any proceeding or outstanding decree, order, judgment, agreement
or stipulation that restricts in any manner the use, transfer or licensing
thereof by any Seller or Partner or may affect the validity, use or
enforceability of such Seller Intellectual Property.
(l) No (i) product, technology, service or publication of any
Seller or (ii) material published or distributed by any Seller is
defamatory, or constitutes false advertising, or with respect to other laws
or regulations otherwise violates such laws or regulations in a manner that
would have a Seller Collective Material Adverse Effect.
(m) Neither this Agreement nor any transactions contemplated by
this Agreement will, pursuant to the express terms of any contract or
agreement to which any Seller is a party, result in Buyer's granting any
rights or licenses with respect to the Intellectual Property of Buyer to any
third party.
(n) None of the Sellers' professional services agreements with its
end user customers, its agreements with outside consultants for the
performance of professional services on behalf of a Seller or customer of a
Seller, nor any agreement or license with any end user or reseller
21
of a Seller's products confers upon any party (other than a Seller) any
ownership right with respect to any Intellectual Property or Related
Technology developed in connection with such agreement of license.
(o) To the extent any Acquired Assets include Commercial Software
Rights (the "ACQUIRED COMMERCIAL SOFTWARE RIGHTS"), none of the Sellers or
Partners has breached or violated the terms of its license, sublicense, or
other agreement relating to any Acquired Commercial Software Rights, and the
Seller and/or Partner assigning such Acquired Commercial Software Rights to
the Buyer has a valid right to use such Acquired Commercial Software Rights
under such licenses and agreements. None of the Sellers or Partners or any
Affiliate thereof is or will be as a result of the execution and delivery of
this Agreement or the performance of the Sellers' and Partners' obligations
hereunder, in violation of any license, sublicense, or agreement relating to
the Acquired Commercial Software Rights. No claims with respect to the
Acquired Commercial Software Rights have been asserted or, to the Best
Knowledge of each Seller and each Partner, are threatened by any person
against any Seller or Partner in connection with any Acquired Commercial
Software Right. To the Best Knowledge of the Sellers and the Partners, there
is no material unauthorized use, infringement, or misappropriation of any
Acquired Commercial Software Right by any Seller or Partner or any Affiliate,
employee or former employee of any Seller or Partner. To the Best Knowledge
of the Sellers and the Partners, no Acquired Commercial Software Right is
subject to any outstanding order, judgment, decree, stipulation, or agreement
restricting in any matter the use thereof by any Seller or Partner, or any
Affiliate of any Seller or Partner.
4.15 AGREEMENTS, CONTRACTS AND COMMITMENTS. Except as contemplated by
this Agreement or as set forth on Schedule 4.15, none of the Sellers or
Partners currently has, is a party to, or is bound by with respect to any
Acquired Asset or any employee:
(i) any collective bargaining agreements;
(ii) any agreements or arrangements with any employee
that contain any severance pay or post-employment liabilities or obligations;
(iii) any stock option, stock purchase, stock
appreciation, bonus, deferred compensation, pension, severance, profit
sharing or retirement plans, or any other employee benefit plans or
arrangements;
(iv) any agreement, contract, or commitment relating to
the disposition or acquisition of assets or any interest in any business
enterprise;
(v) any employment or consulting agreement with an
employee or individual consultant or salesperson or consulting or sales
agreement;
(vi) any agreement (or group of related agreements) for
the lease of personal property to or from any person or entity (which, for
purposes of this Section 4.15(vi) shall not include any license of any
Commercial Software Right or any contract set forth in Schedule 4.14(f));
22
(vii) any agreement of indemnification or guaranty (other
than as set forth in standard end-user license agreements entered into by the
Sellers in the Ordinary Course of Business);
(viii) any agreement entered otherwise than in the Ordinary
Course of Business;
(ix) any agreement for which completion of performance by
the Seller party to such agreement (without giving effect to the transactions
contemplated hereby) under the terms of such agreement would be reasonably
likely to result in a Seller Material Adverse Effect;
(x) any agreement (or group of related agreements) that
could reasonably be expected to impair or encumber the Acquired Assets
(including, without limitation, any restrictions on the marketing, license,
and distribution of the Software);
(xi) any agreement (or group of related agreements)
relating to the purchase of materials or capital expenditures for use in
connection with the conduct of the Sellers' businesses in France and
involving future payments in excess of $15,000 in the aggregate;
(xii) any agreement (or group of related agreements) under
which payment has already been received by the Sellers (whether in whole or
in part) but which requires the performance of services after the date hereof
(including invoicing any customer on services not fully delivered and
performed at the date of such invoice);
(xiii) any agreement or obligation pursuant to which any
Seller is obligated to provide maintenance services for a period in excess of
one year from the date of such agreement or the date of any renewal thereof
effected in the Ordinary Course of Business;
(xiv) any agreement (including invoices) relating to the
provision of maintenance or services outside the Ordinary Course of Business;
(xv) any fidelity or surety bond or completion bond;
(xvi) any mortgages, indentures, loans or credit
agreements, security agreements or other agreements or instruments relating
to the borrowing of money by the Sellers or extension of credit to the
Sellers under which any Seller or Partner has imposed any Lien on any of the
Acquired Assets;
(xvii) any agreement concerning confidentiality;
(xviii) any agreement between a Partner and any Seller;
(xix) any construction contracts relating to the conduct
of the businesses of the Sellers in France;
(xx) any distribution, joint marketing, development, or
partnership or joint venture agreement;
23
(xxi) any agreement pursuant to which any Seller 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
(xxii) any other agreement, contract, lease, or license (or
series of related agreements, contracts, leases, and licenses) that involves
payment of $10,000 or more after the date hereof and relating to the conduct
of the businesses of the Sellers in France.
The Sellers or the Partners have delivered to the Buyer a correct and
complete copy of each written agreement listed in Schedule 4.15. None of the
Sellers has received written notice alleging that it has, and to the Best
Knowledge of the Sellers and the Partners, no Seller has, breached, violated,
or defaulted under any of the terms of or conditions of any agreement,
contract, or commitment required to be set forth on Schedule 4.14(d),
Schedule 4.14(e), Schedule 4.14(f), or Schedule 4.15 (any such agreement,
contract, or commitment, a "CONTRACT"). Each Contract is in full force and
effect and, to the Best Knowledge of the Sellers and the Partners or except
as otherwise disclosed in Schedule 4.15, is not subject to any default
thereunder by any party obligated to a Seller pursuant thereto.
4.16 POWERS OF ATTORNEY. There are no outstanding powers of attorney
executed on behalf of a Seller or a Partner in respect of any Acquired Asset.
4.17 INTERESTED PARTY TRANSACTIONS. No Partner (nor any Affiliate
(other than a Seller), ancestor, sibling, descendant or spouse of any
Partner, 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 any Seller furnishes or sells using the Acquired Assets; (ii)
an economic interest in any entity that purchases from or sells or furnishes
to any Seller any goods or services related to the Acquired Assets; or (iii)
a beneficial interest in any Contract; PROVIDED, HOWEVER, that no Partner (or
Affiliate (other than a Seller), ancestor, sibling, descendant or spouse of
any Partner, or any trust, partnership, or corporation in which any of such
persons has an economic interest) shall be deemed to have such an interest
solely by virtue of holding less than five percent (5%) 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.
4.18 LITIGATION. There is no action, suit, proceeding, claim,
arbitration, or, to the Best Knowledge of the Sellers and the Partners, any
investigation pending before any court or administrative agency against any
Seller or Partner (or any Affiliate of any Seller or Partner or any officer,
director, or partner of any Seller or any Affiliate of any Seller in their
capacity as such) that relates directly or indirectly to any Acquired Asset,
the adverse determination of which could result, with respect to any Seller,
in a Seller Material Adverse Effect, or that questions the validity of this
Agreement or of any action taken to or to be taken pursuant to or in
connection with this Agreement. To the Best Knowledge of the Sellers and the
Partners, no such action, proceeding, claim, arbitration, or investigation
has been threatened, and neither the Sellers nor the Partners are aware of
any reasonable basis for any such action, suit, proceeding, claim,
arbitration, or investigation. There are no judgments, orders, decrees,
citations, fines, or penalties heretofore assessed against any Seller or
Partner affecting the businesses relating to the Acquired Assets under any
federal, state, local, or
24
foreign law. No Governmental Entity has at any time challenged or questioned
in writing, or to the Best Knowledge of the Sellers and the Partners,
otherwise challenged or questioned, the legal right of any of the Sellers to
manufacture, offer, or sell any product related to the Acquired Assets in the
present manner or style thereof.
4.19 INSURANCE. There is no claim by any Seller pending under any
insurance policy or fidelity bond covering the Acquired Assets. All premiums
payable under all such policies and bonds have been paid, and the Sellers are
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 Sellers in
the jurisdictions in which the Sellers operate.
4.20 ENVIRONMENTAL MATTERS.
(a) To the Best Knowledge of the Sellers and the Partners, no
Chemical Substance or Extremely Hazardous Substance is present in, on or
under any property subject to any Assumed Lease and which has been used in
connection with any Acquired Asset in an amount that could reasonably be
expected to require remediation in an amount or concentration that would have
a Seller Material Adverse Effect with respect to the Seller operating on such
real property.
(b) To the Best Knowledge of the Sellers and the Partners, none of
ISSUK, ISSGR, ISSFD, and ISSP has transported, stored, used, manufactured,
Released or exposed its employees or any other person to any Chemical
Substance or Extremely Hazardous Substance in violation of any applicable
statute, rule, regulation, order or law such that a claim arising therefrom
is reasonably foreseeable.
(c) To the Best Knowledge of the Sellers and the Partners, each of
ISSUK, ISSGR, ISSFD, and ISSP is in compliance in all material respects with
all other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in the
Environmental Laws or contained in any regulation, code, plan, order, decree,
judgment, notice or demand letter issued, entered, promulgated or approved
thereunder and which relate to the Acquired Assets. No Seller has received
any written notice and, to the Best Knowledge of the Sellers and the
Partners, there is no past or present condition or practice of the businesses
conducted by such Seller which forms or could be reasonably expected to form
the basis of any material claim, action, suit, proceeding, hearing or
investigation against the Acquired Assets, arising out of the manufacture,
processing, distribution, use, treatment, storage, transport, or handling, or
the Release or threatened Release into the Environment, of any Chemical
Substance or Extremely Hazardous Substance by such Seller with respect to the
Acquired Assets.
4.21 BROKERS' AND FINDERS' FEES. No Seller or Partner has 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
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4.22 EMPLOYEE BENEFIT PLANS AND COMPENSATION.
(a) For purposes of this Section 4.22, the following terms shall
have the meanings set forth below:
(i) "AFFILIATE" shall mean any other person or entity
under common control with any Seller within the meaning of Section 414(b),
(c), (m) or (o) of the Code and the regulations thereunder.
(ii) "EMPLOYEE PLAN" shall refer to any plan, program,
policy, practice, contract, agreement or other arrangement providing for
bonuses, 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 and whether or not legally
binding, including without limitation, each plan which is or has been
maintained, contributed to, or required to be contributed to, by any European
Company for the benefit of any Employee, and pursuant to which any European
Company has or may have any material liability, contingent or otherwise.
(iii) "EMPLOYEE" shall mean any current, former, or
retired employee, consultant, officer, or director of any Seller or any
Affiliate.
(iv) "EMPLOYEE AGREEMENT" shall refer to each employment,
severance, consulting or similar agreement or contract and any amendments
thereto, whether written or oral and whether or not legally binding, between
any European Company and any Employee.
(b) SCHEDULES.
(i) Schedule 4.22(b)(i) contains an accurate and
complete list of each Employee Plan and each Employee Agreement, together
with a schedule of all Liabilities under each such Employee Plan. Except as
set forth in Schedule 4.22(b)(i), none of the European Companies has any plan
or commitment, whether legally binding or not, to establish any new Employee
Plan or Employee Agreement, to modify any Employee Plan or Employee Agreement
(except to the extent required by law or to conform any such Employee Plan or
Employee Agreement to the requirements of any applicable law, in each case as
previously disclosed to Buyer in writing, or as required by this Agreement),
or to enter into any Employee Plan or Employee Agreement, nor does it have
any intention or commitment to do any of the foregoing.
(ii) The names of all officers, employees, consultants
and agents of each European Company are set forth on Schedule 4.22(b)(ii).
(c) DOCUMENTS. The European Companies have provided to Buyer, (i)
correct and complete copies of all documents embodying each Employee Plan and
each Employee Agreement, including all amendments thereto and copies of all
forms of agreement and enrollment used therewith; (ii) the most recent annual
actuarial valuations, if any, prepared for each Employee Plan; (iii) all
taxing or other governmental authority opinion, notification or determination
letters and rulings relating to Employee Plans and copies of all applications
and correspondence to or from any
26
taxing or other governmental authority with respect to any Employee Plan;
(iv) if the Employee Plan is funded, the three (3) most recent years of
annual and periodic accounting of Employee Plan assets; (v) all material
agreements and contracts relating to each Employee Plan, including but not
limited to, administrative service agreements, group annuity contracts and
group insurance contracts; (vi) all communications material to any Employee
or Employees of the European Companies relating to any Employee Plan and any
proposed 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 Liability to any European Company; (vii) all correspondence
with the French labor inspector or other labor authorities; and (viii) all
documents relating to the functioning (including elections) of any workers'
representative committee.
(d) EMPLOYEE PLAN COMPLIANCE. (i) Each of the European Companies
has performed all obligations required to be performed by it under each
Employee Plan, each Employee Agreement and with respect to its workers'
representative committee, and each 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 applicable French law;
(ii) there are no actions, suits or claims pending, or, to the Best Knowledge
of any Seller or Partner, threatened or anticipated (other than routine
claims for benefits) against any Employee Plan or against the assets of any
Employee Plan or under any Employee Agreement or relating to the workers'
representative committee; (iii) each Employee Plan can be amended, terminated
or otherwise discontinued after the consummation of the transactions
contemplated hereby in accordance with its terms, without liability to any
European Company, Buyer, or their respective Affiliates (other than ordinary
administration expenses typically incurred in a termination event); (iv)
there are no inquiries or proceedings pending or, to the Best Knowledge of
any Seller or any Partner, threatened by any governmental authority with
respect to any Employee Plan, any Employee Agreement or such Seller's
workers' representative committee; (v) no Employee Plan has any unfunded
Liabilities that will not be offset by insurance or fully accrued; and (vi)
none of the European Companies is subject to any penalty or Tax with respect
to any Employee Plan, any Employee Agreement or such European Company's
workers' representative committee.
(e) PENSION PLANS. No Seller now has, 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. None of the Sellers has any
retirement or pension plans other than as set forth on Schedule 4.22(e).
(f) NO POST-EMPLOYMENT OBLIGATIONS. No Employee Plan provides, or
imposes any obligation to provide life insurance, health 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
none of the European Companies has 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, health 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 Seller Financial Statements or is otherwise required in connection
with the transactions contemplated
27
by this Agreement, no Liability has been incurred by any European Company to
make any redundancy payments or any protective awards or to pay damages or
compensation (or 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 has been made or promised by any European Company in
connection with the actual or proposed termination or suspension of
employment or variation or any contract of employment of any present or
former director or employee. Except as required by law, no condition exists
that would prevent Buyer from terminating or amending any Employee Plan.
(g) NO VIOLATIONS. None of the Sellers nor any Affiliate has,
prior to the Closing and in any material respect, violated any of the health
care continuation requirements of Section 4980B(f) of the Code (and Sections
600-608 of ERISA) or any similar provisions of U.S. state or French or other
substantially similar foreign law applicable to its Employees.
(h) EFFECT OF TRANSACTION. 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) under any
Employee Plan, Employee Agreement, trust or loan constitute an event 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.
(i) EMPLOYMENT MATTERS. Except as set forth on Schedule 4.22(i),
each European Company (i) is in material compliance with all applicable laws
respecting employment and employment practices, including without limitation,
those relating to discrimination in employment, terms and conditions of
employment, election of employee representatives (where applicable),
obligations to consult with and inform employee representatives, calculations
and accruals of vacations and of other accruals, seniority bonuses (if any),
and wages and hours; (ii) is in material compliance with all applicable
Safety Laws; (iii) 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 any
European Company may be deemed employees within the meaning of applicable
law; (iv) is not liable for any arrears of wages or any Taxes or any penalty
for failure to comply with any of the foregoing; and (v) is not 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 or other
persons who by virtue of their activities performed on behalf of any Seller
may be deemed employees within the meaning of applicable law (other than
routine payments to be made in the normal course of business and consistent
with past practice). Each European Company has paid all amounts due to its
workers' representative committee, and there is no outstanding claim for
payment or reimbursement of expenses from the workers' representative
committee.
(j) LABOR. No work stoppage or labor strike against any European
Company is pending, or to the Best Knowledge of any Seller or any Partner,
threatened. None of the European Companies is involved in or has been
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 any European Company or
28
Buyer. None of the European Companies has engaged in any unfair labor
practices which could, individually or in the aggregate, directly or
indirectly result in a Liability to any European Company, Buyer or any
Affiliate of any European Company or Buyer. None of the European Companies is
presently, nor has it in the past, been a party to, or bound by, any
agreement negotiated with its Employees other than the collective bargaining
agreements "National Collective Bargaining Agreement for Import-Export" and
"National Collective Bargaining Agreement for Technical Studies Offices"
between ISSFD and ISSP and their Employees, respectively, and no collective
bargaining agreement is being negotiated by any Seller.
(k) NO INTERFERENCE OR CONFLICT. To the Best Knowledge of each
Seller and each Partner, no shareholder, officer, employee or consultant of
any Seller is obligated under any contract or agreement subject to any
judgement, decree or order of any court or administrative agency, that would
interfere with such person's efforts to promote the interests of any Seller
or that would interfere with any Seller's business related to the Acquired
Assets. Neither the execution nor delivery of this Agreement, nor the
carrying on of the business related to the Acquired Assets nor any activity
of such officers, directors, employees or consultants in connection with the
carrying on of the business as presently conducted or proposed to be
conducted, will, to the Best Knowledge of any Seller or Partner, conflict
with or result in a breach of the terms, conditions or provisions of, or
constitute a default under, any contract or agreement under which any of such
officer's, directors, employees or consultants is now bound.
(l) FIXED TERM AGREEMENTS. There is no existing or previous
employee of either ISSFD or ISSP under a fixed term employment contract who
could make a valid claim that he or she has an agreement of indefinite
duration.
(m) NO LIABILITY. Buyer will not have any Liability for making
payments or providing benefits of any kind to any Employee or former Employee
of any Seller who does not become an Employee of Buyer (including, without
limitation, (A) as a result of the sale of the Acquired Assets or as a result
of the termination by the Sellers of any Employees or decision by the Buyer
not to hire any such Employee, (B) any obligation to provide former Employees
of the Sellers (including individuals who become former Employees by reason
of the consummation of the transactions contemplated by this Agreement)
so-called COBRA continuation coverage (with respect to U.S. Employees of
Sellers), (C) any Liability in respect of medical and other benefits for
existing and future retirees of the Sellers and for claims made after Closing
in respect of costs and expenses incurred prior to Closing, (D) any Liability
in respect of work-related employee injuries or worker's compensation claims
by employees or former employees of the Sellers, and (E) any Liability in
respect of employee bonuses payable to former employees of the Sellers.
(n) Schedule 4.22(n) sets forth the current job title and the
annual base salary of each employee of each European Company.
4.23 ISSUK EMPLOYMENT MATTERS.
(a) The UK Excluded Employees are employees of the UK Business and
are the only employees of the UK Business, and full and accurate details have
been disclosed to the Buyer of the UK Excluded Employees' ages, length of
service and terms and conditions of employment
29
(including any arrangements or expectation, whether or not having the force
of law, as to future variations) including rates of remuneration, benefits in
kind, bonuses and commissions, notice periods, pensions, health insurance and
life insurance.
(b) ISSUK has not offered a contract of employment or of services
to any person other than the UK Excluded Employees.
(c) There is no dispute between ISSUK and any UK Excluded Employee
or previous employee of the UK Business, any appropriate representative (as
that expression is used in the Transfer Regulations and Chapter II of
TULRCA), trade union, or staff association or works council representative
and, to the Best Knowledge of ISSUK and the Partners, there are no
circumstances likely to give rise to the same.
(d) ISSUK has not in the past 12 months given notice of any
redundancies to the relevant Secretary of State nor started consultations
with any trade unions or appropriate representatives under the provisions of
Chapter II or TULRCA nor failed to comply with any obligation under Chapter
II of TULRCA.
(e) There are no inquiries or investigations existing, pending or
threatened into ISSUK in relation to the UK Business by the Equal
Opportunities Commission or the Commission for Racial Equality or other
similar body.
(f) There is no person previously employed in the UK Business who
now has or will have a right to return to work (including for reasons
connected with maternity leave or absence by reason of illness or incapacity)
or a right to be reinstated or re-engaged in the UK Business or to any
compensation.
(g) None of the Sellers or the Partners is under any liability or
obligation to give or make, nor has it given or made any ex-gratia
arrangement or promise to pay, any pensions, gratuities, superannuation
allowances or the like to any of the UK Excluded Employees nor to any of its
past or present officers, employees, consultants or their dependents and
there are not now any retirement benefit, pension or death benefit or similar
schemes or arrangements in relation to or binding on ISSUK.
4.24 INSOLVENCY. No insolvency proceedings of any character, including
bankruptcy, receivership, reorganization, composition, "redressement
judiciaire," "liquidation judiciare," administration, winding up, or
arrangement with creditors, voluntary or involuntary, affecting any of the
Acquired Assets are pending or, to the Best Knowledge of the Sellers and the
Partners, are threatened, and no Seller has made any assignment for the
benefit of creditors, or taken any other action which would constitute the
basis for the institution of such insolvency proceedings nor has an interim
order under the Insolvency Xxx 0000 (U.K) been made in respect of either of
the Partners.
4.25 CONSENTS. Schedule 4.25 sets forth a true, correct, and complete
list of the identities of any person or entity (including a Governmental
Entity) whose consent or approval is required, and the matter, agreement, or
contract to which such consent relates, in connection with the transfer,
assignment or conveyance by any Seller of any Acquired Asset.
30
4.26 BOOKS AND RECORDS. The books and records of each of the Sellers
related to the businesses associated with the Acquired Assets (i) are
accurate in all material respects, (ii) have been materially maintained in
accordance with applicable laws and with generally accepted practices and
standards in the jurisdiction(s) in which such Seller operates, and (iii) are
in such Seller's possession or under its control. The Acquired Assets
include all rights (but, other than with respect to ISSFD or ISSP, not
equipment or material) necessary to maintain such records, and the Buyer will
not be dependant upon any other rights (but, other than with respect to ISSFD
or ISSP, not equipment or material) to enable it to continue to maintain the
same consistent with the current practices of the Sellers.
4.27 BUSINESS PRACTICES. To the Best Knowledge of the Sellers and the
Partners, no officer, agent, or employee of any of the Sellers has paid any
bribe or used any of the Acquired Assets unlawfully to obtain advantage for
any person or otherwise taken any action that would result in a violation of
the United States Foreign Corrupt Practices Act of 1977 or any similar law or
regulation applicable to any Seller or Partner or any employee, agent, or
Affiliate thereof. Without limiting the foregoing, to the Best Knowledge of
each Seller and each Partner, none of the Sellers or any of their officers,
employees, agents, or Affiliates has (i) directly or indirectly given or
agreed to give any illegal gift, contribution, payment, or similar benefit to
any supplier, customer, governmental official, or employee or other person
who was or is in a position to help or hinder the business of any Seller (or
assist in connection with any actual transaction) or made or agreed to make
any illegal contribution, or reimbursed any illegal political gift or
contribution made by any other person or entity, to any candidate for United
States federal, state, or local office or any public office in any
jurisdiction outside the United States, in any event (A) which may subject
any Seller to any damage or penalty in any civil, criminal, or governmental
litigation or proceeding or (B) the non-continuation of which has had or
could have, individually or in the aggregate, an adverse effect on the
business of any Seller. To the Best Knowledge of the Sellers and the
Partners, no Seller or any of their officers, employees, agents, or
Affiliates has established or maintained any unrecorded fund or asset or
intentionally made any materially false entries on any books or records for
any purpose.
4.28 YEAR 2000 COMPLIANCE. All Acquired Assets are designed to be used
prior to, during, and after the calendar year 2000 A.D. and that the Acquired
Assets will operate during each such time period without error relating to
date data, specifically including any error relating to, or the product of,
date data which represents or references different centuries or more than a
century. Without limiting the generality of the foregoing, each of the
Sellers and the Partners further represents and warrants that the Acquired
Assets (i) will not abnormally end or provide invalid or incorrect results as
a result of date data, specifically including date data which represents or
references different centuries or more than one century; (ii) has been
designed to ensure year 2000 compatibility, including, but not limited to,
date data century recognition, calculations which accommodate same century
and multi-century formulas and date values, and date data interface values
that reflect the century; and (iii) includes Year 2000 Capabilities. The
representation and warranties set forth in this Section 4.28 shall not apply
to the Acquired Commercial Software Rights.
4.29 PRODUCT WARRANTIES; DEFECTS; LIABILITIES. Each product
manufactured, sold, licensed, leased, or delivered by any of the Sellers has
been in conformity with all applicable contractual commitments and all
express and implied warranties except where the failure to be in such
31
conformity would not have a Seller Collective Material Adverse Effect. None
of the Sellers has any Liability (and to the Best Knowledge of each Seller
and each Partner, there is no current reasonable basis for any present or
future action, suit, proceeding, hearing, investigation, charge, complaint,
claim, or demand against any of them giving rise to any Liability) for
replacement or repair thereof or other damages in connection therewith. No
product manufactured, sold, licensed, leased, or delivered by any of the
Sellers is subject to any guaranty, warranty, or other indemnity beyond the
applicable standard terms and conditions of sale, license, or lease or beyond
that implied or imposed by applicable law. Schedule 4.29 includes a copy of
the standard terms and conditions of sale, license, or lease for each of the
Sellers.
4.30 LIMITED WARRANTIES. Except as set forth in this Agreement and the
Seller Schedules, no Seller or Partner shall be deemed to have made any other
representation or warranty in connection with the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PEREGRINE
Peregrine hereby represents and warrants to the Sellers and the Partners
as follows:
5.1 ORGANIZATION OF BUYER. Peregrine is a corporation duly organized,
validly existing, and in good standing under the laws of the State of
Delaware, and each wholly owned subsidiary of Peregrine which is designated
as a "Buyer" hereunder is a corporation duly organized, validly existing, and
in good standing under the laws of its jurisdiction of incorporation.
Peregrine (and each wholly owned subsidiary of Peregrine deemed a "Buyer"
hereunder) has the corporate power to own its properties and to carry on its
business as now being conducted. Peregrine (and each wholly owned subsidiary
of Peregrine deemed a "Buyer" hereunder) is duly qualified and 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 or licensed would not have a Peregrine Material
Adverse Effect.
5.2 AUTHORITY. Peregrine (and any wholly-owned subsidiary of Peregrine
designated as a "Buyer" pursuant to this Agreement) 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
Peregrine (and any wholly-owned subsidiary designated as a "Buyer" pursuant
to this Agreement). This Agreement has been duly executed and delivered by
Peregrine and constitutes the valid and binding obligation of Peregrine,
enforceable in accordance with its terms. The execution and delivery of this
Agreement does not, and the consummation of the transactions contemplated
hereby, will not result in a Conflict with (i) any provisions of the
Certificate of Incorporation or Bylaws of Peregrine or constituent documents
of any other Buyer, or (ii) any mortgage, indenture, lease, contract, or
other agreement or instrument, permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or
32
representation applicable to Peregrine or on which Peregrine's business (or
business of any Buyer other than Peregrine), financial condition, operations
or prospects is substantially dependent, the breach, violation, default,
termination, or forfeiture of which would result in a Peregrine Material
Adverse Effect or which would materially affect the ability of Peregrine (or
any wholly owned subsidiary of Peregrine designated as a "Buyer" hereunder)
to fulfill its obligations under this Agreement or the European Assignments.
No material consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity or third party, is
required by or with respect to Peregrine in connection with the execution and
delivery of this Agreement by Peregrine or the consummation by Peregrine (or
any wholly-owned subsidiary of Peregrine which is designated as a "Buyer"
hereunder) of the transactions contemplated hereby, except for such consents,
approvals, orders, authorizations, registrations, declarations, and filings
as may be required under applicable state and federal securities laws.
Peregrine shall cause each wholly-owned subsidiary of Peregrine designated as
a Buyer hereunder to be bound by and subject to this Agreement.
5.3 BUYER SHARES; OPTION RESERVE. The Buyer Shares to be issued
pursuant to this Agreement will, when issued and delivered in accordance with
this Agreement, be duly authorized, validly issued, fully paid, and
non-assessable and free from any preemptive right created by statute,
Peregrine's Certificate of Incorporation, Peregrine's By-laws, or any
agreement to which Peregrine is a party; PROVIDED, HOWEVER, that the Buyer
Shares to be issued hereunder will be subject to restrictions on transfer
under applicable federal and state securities laws in the United States.
Peregrine has sufficient authorized but unissued shares of its Common Stock
under its Certificate of Incorporation and sufficient reserved shares under
its 1994 Stock Option Plan (and 1995 French sub-plan thereto) to permit the
grant of options contemplated pursuant to Section 7.16 hereto and the
issuance of shares of Peregrine's Common Stock upon exercise thereof.
5.4 SEC DOCUMENTS; BUYER FINANCIAL STATEMENTS. Peregrine has filed all
forms, reports, and documents required to be filed by it with the SEC and has
furnished or made available to the Sellers and the Partners true and complete
copies of its Annual Report on Form 10-K for the fiscal year ended March 31,
1998 and its Quarterly Report on Form 10-Q for the quarter ended June 30,
1998 (collectively, the "SEC DOCUMENTS"), which Peregrine has filed with the
SEC under the Exchange Act. 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. The consolidated
financial statements of Peregrine, including the notes thereto, included in
the SEC Documents (the "BUYER 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 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 Buyer 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 Peregrine's accounting policies except as described in the
notes to the Buyer Financial Statements.
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5.5 NO MATERIAL ADVERSE CHANGE. Since June 30, 1998, Peregrine has
conducted its business in the Ordinary Course of Business, and there has not
occurred (i) any event, occurrence, condition, or Liability that would
result, individually or in the aggregate, in a Peregrine Material Adverse
Effect or (ii) any amendment to or change in Peregrine's Certificate of
Incorporation or By-laws (other than an amendment to its Certificate of
Incorporation approved by stockholders on September 9, 1998 increasing the
authorized number of shares of Common Stock to 200,000,000, which amendment
has not yet been filed with the Secretary of State of Delaware).
5.6 LITIGATION. There is no action, suit or proceeding of any nature
pending or, to the Best Knowledge of Peregrine, threatened that could
reasonably be expected to (i) interfere with the consummation of the
transactions contemplated by this Agreement or that questions the validity of
this Agreement or of any action taken or to be taken pursuant to or in
connection with the provisions of this Agreement or (ii) result in a
Peregrine Material Adverse Effect.
5.7 LEGAL COMPLIANCE. Peregrine and any wholly owned subsidiary of
Peregrine deemed a "Buyer" hereunder are each in material compliance with all
applicable laws (including rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings, and charges thereunder) of federal,
state, local, and foreign governments (and all agencies thereof, including,
without limitation and where applicable, the laws, regulations, and
directives of the European Economic Community, the European Community, and
the European Union), the violation of which would have a Peregrine Material
Adverse Effect or would otherwise adversely affect the ability of Peregrine
(or any wholly owned subsidiary of Peregrine deemed a "Buyer" hereunder) to
consummate the transactions contemplated by this Agreement.
ARTICLE VI
SECURITIES ACT COMPLIANCE; REGISTRATION
6.1 SECURITIES ACT EXEMPTION. The Buyer Shares to be issued pursuant
to this Agreement 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. Simultaneous with the execution and delivery of this
Agreement, each of the Sellers and the Partners has delivered to Peregrine an
investment representation statement in the form attached hereto as EXHIBIT C.
6.2 STOCK RESTRICTIONS. In addition to any legend imposed by
applicable state securities laws, the Certificates issued pursuant to this
Agreement shall bear a restrictive legend (and stop transfer orders shall be
placed against the transfer thereof with Peregrine'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 IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT RELATED
34
THERETO, OR AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO
THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE
ACT, OR A NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE
COMMISSION.
6.3 REPRESENTATIONS REGARDING SECURITIES LAW MATTERS. Each Partner and
Seller shall be bound by the following provisions:
(a) Such Partner or Seller will not offer, sell, or otherwise
dispose of any Buyer Shares except in compliance with the Securities Act and
the rules and regulations thereunder.
(b) Such Partner or Seller will not sell, transfer or otherwise
dispose of any Buyer Shares unless (i) such sale, transfer or other
disposition is within the limitations of and in compliance with Rule 144
promulgated by the SEC under the Securities Act and the Partner or Seller
furnishes Buyer with reasonable proof of compliance with such Rule, (ii) in
the opinion of counsel, reasonably satisfactory to Buyer 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
Buyer Shares, or (iii) the offer and sale of the Buyer Shares is registered
under the Securities Act.
6.4 REGISTRATION RIGHTS. Peregrine agrees that the recipients of the
Buyer Shares 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 D.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 POSSESSION; ADDITIONAL REQUIRED TRANSFERS. Effective with the
execution and delivery of this Agreement, each of the Sellers and the
Partners shall put Buyer into full possession and enjoyment of all the
Acquired Assets. At any time and from time to time after the date hereof,
each of the Sellers and/or the Partners, as the case may require, will
execute and deliver such further instruments of sale, transfer, conveyance,
assignment, and confirmation and take such actions as Buyer may reasonably
determine necessary to transfer, convey, and assign to the Buyer, and to
confirm Buyer's title to or interest in, the Acquired Assets and to put Buyer
in actual possession and operating control thereof.
7.2 ACCESS TO RECORDS AFTER CLOSING. For a period of three years after
the date hereof, the Sellers, the Partners, and their representatives, on the
one hand, and the Buyer and its representatives, on the other hand, shall
have reasonable access to any books, records, documents, files, and
correspondence to the extent that such access may reasonably be required in
connection with matters relating to or affected by the operation of the
businesses conducted with the Acquired Assets, in the case of the Sellers and
the Partners prior to the date hereof and, in the case of the Buyer, after
the Closing Date. Such access shall be afforded upon reasonable advance
written notice, during normal business hours and at the expense of the party
seeking access.
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7.3 PUBLIC DISCLOSURE. Unless otherwise required by law (including,
without limitation, applicable securities laws) or, as to Peregrine, by the
rules and regulations of the Nasdaq National Market, 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 Peregrine prior to
release, which approval will not be unreasonably withheld.
7.4 CONTRACTUAL CONSENTS. To the extent not obtained as of the date of
this Agreement, each of the Sellers and the Partners shall promptly apply for
or otherwise seek and use its best efforts to obtain, all consents and
approvals required to be obtained by it for the consummation of the
transactions contemplated hereby, and the Sellers and the Partners shall use
their best efforts to obtain all required consents, waivers, or approvals
under any of the agreements, contracts, licenses, or leases of the Sellers in
order to preserve for the Buyer the benefits of the businesses associated
with the Acquired Assets.
7.5 LEGAL REQUIREMENTS. Each of Buyer, the Sellers, and the Partners
will take (and the Partners will cause the Sellers to take) all reasonable
actions necessary to comply promptly with all legal requirements which may be
imposed on such party with respect to this Agreement and the transactions
contemplated hereby 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 herewith. 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 this Agreement and
consummating the transactions contemplated hereby or the taking of any action
contemplated thereby or by this Agreement.
7.6 ADDITIONAL DOCUMENTS AND FURTHER ASSURANCES. 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 the transactions contemplated by this Agreement.
7.7 NOTIFICATION OF CERTAIN MATTERS. The Sellers and the Partners
shall give prompt notice to Buyer, and Buyer shall give prompt notice to the
Sellers and the Partners, of any failure of the Sellers, the Partners, or
Buyer, as the case may be, to comply with or satisfy in any material respect
any covenant or agreement to be complied with or satisfied by it hereunder;
PROVIDED, HOWEVER, that the delivery of any notice pursuant to this Section
7.7 shall not limit or otherwise affect any remedies available to the party
receiving such notice.
7.8 NASDAQ NATIONAL MARKET LISTING. Buyer shall, in compliance with
the rules and regulations of the Nasdaq Stock Market, authorize for listing
on the Nasdaq National Market the Buyer Shares issuable in connection with
the transactions contemplated by this Agreement, upon official notice of
issuance.
7.9 SELLERS TAXES. The Sellers shall pay all Taxes required to be paid
by them in accordance with applicable law and this Agreement.
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7.10 TRANSFER TAXES. Except as otherwise provided herein, the Sellers
and/or the Partners shall be responsible for and shall pay and/or indemnify
Sellers for all sales, use (but excluding California use tax), excise, value
added (but excluding any VAT, if applicable, provided that the relevant
European Company issues a valid and proper VAT invoice) or other similar
transfer taxes ("TRANSFER TAXES") attributable to the transfer of the
Acquired Assets. Buyer shall cooperate with Sellers and take all reasonable
steps to reduce or eliminate any Transfer Taxes, including, where available,
electronic transmission and delivery of Acquired Assets.
7.11 U.K. VALUE ADDED TAX.
(a) The Buyer and ISSUK shall use their reasonable endeavours to
procure that section 49(1) of the Value Added Tax Xxx 0000 ("VATA"), and
Article 5 of the Value Added Tax (Special Provisions) Order 1995 (SI
1995/1268) shall apply to the sale by ISSUK pursuant to Article II of this
Agreement. For this purpose, the Buyer shall give reasonable assistance and
co-operation to ISSUK to enable ISSUK as soon as is practicable to prepare
and submit a written request for a determination from Customs to that effect.
(b) The Buyer and ISSUK shall co-operate in seeking that Customs
does not require ISSUK to account for VAT on the sale by it of any of the
Acquired Assets pursuant to Article II of this Agreement (the "UK ACQUIRED
ASSETS") prior to a determination being obtained in accordance with this
Section 7.11(b). If payment of VAT is required by Customs, the Buyer shall
pay such VAT upon provision by ISSUK of a valid and proper VAT invoice.
(c) ISSUK shall deliver to Buyer in connection with the execution
of this Agreement all records required to be kept in relation to the UK
Acquired Assets in relation to VAT and shall not make any request to Customs
pursuant to section 49(1)(b) of VATA for permission to retain such records.
7.12 PAYMENT OF TRADE AND OTHER CREDITORS. The Sellers shall comply
with their obligation to satisfy amounts due to trade and other creditors of
the Sellers through the date hereof. The Sellers shall continue to pay on a
current basis and shall be responsible for all obligations included in the
Assumed Liabilities through the date hereof.
7.13 COLLECTION OF ACCOUNTS RECEIVABLE. All accounts receivable accrued
on or prior to the date hereof shall remain the property of the Seller
accruing such receivable. Schedule 7.13 attached hereto lists all such
receivables accrued by each such Seller through the date indicated thereon
for such Seller, specifying the identity of the person or entity owing such
receivable, the product or services provided, the amount owing, and the date
of the most recent invoice relating to such receivable. Within ten days of
the date of this Agreement, Sellers shall deliver to Buyer a supplemental
schedule identifying and providing equivalent information with respect to all
accounts receivable accrued by each such Seller from the date immediately
following the date indicated as being applicable to such Seller on Schedule
7.13 through the date hereof. All accounts receivable accrued with respect
to any Acquired Asset after the date hereof shall be the property of the
Buyer. The parties agree that if either receives or collects accounts
receivable allocated to the other pursuant to this Agreement, such party
shall promptly remit such amounts received or collected to the other.
37
The parties shall use commercially reasonable efforts to assist in the
collection of trade accounts receivable allocated to the other pursuant to
this Agreement.
7.14 EMPLOYEE CONSULTATION. Buyer acknowledges and agrees that it
shall, prior to terminating the employment of any employee of ISSUK, ISSGR,
ISSP, or ISSFD at any time within 180 days of the date hereof, disclose its
intent to terminate such employee to Xxxxxx Xxxxxx and shall consult with Xx.
Xxxxxx concerning the rationale for such termination and the procedures for
effecting such termination.
7.15 U.K. EMPLOYEE AND PENSION MATTERS; EUROPEAN EMPLOYMENT LIABILITY
INDEMNIFICATION.
(a) ISSUK has complied and shall comply in all respects with
regulation 10 of the Transfer Regulations and sections 188 and 193 of TULRCA
and shall provide any information to the Buyer in relation to its compliance
or otherwise as the Buyer may reasonably request. The Buyer shall give any
information as ISSUK may reasonably request to enable ISSUK to comply with
regulation 10 of the Transfer Regulations and section 188 of TULRCA.
(b) The Sellers and each of the Partners shall indemnify and hold
harmless Peregrine, any wholly-owned subsidiary of Peregrine designated as a
"Buyer" hereunder (and at the Buyer's direction, any person to whom any of
the obligations and liabilities in respect of which the Buyer is indemnified
shall have been transferred under the Transfer Regulations), and each of
their respective officers, directors, agents, and Affiliates against all
Losses incurred by any of such persons or entities, or any person or entity
to whom any of the obligations and liabilities in respect of which any of
such persons or entities is indemnified shall have been transferred under the
Transfer Regulations, in each case, directly or indirectly, in connection
with or arising from any of the dismissals by ISSUK of the UK Excluded
Employees, the dismissal within 180 days of the date hereof by any Buyer of
any employee of ISSGR, ISSFD, or ISSP, or the dismissal by ISSLP, ISSUS, or
ISSI of any employee in accordance with Section 7.14 (each an "EMPLOYMENT
LOSS" and, collectively, the "EMPLOYMENT LOSSES").
(c) Without limiting the indemnification obligations set forth in
subsection (b) above, the Sellers and each of the Partners shall indemnify
Peregrine, any wholly-owned subsidiary of Peregrine designated as a "Buyer"
hereunder (and at the Buyer's direction, any person to whom any of the
obligations and liabilities in respect of which the Buyer is indemnified
shall have been transferred under the Transfer Regulations), and each of
their respective officers, directors, agents, and Affiliates, against all
Losses (which shall be included within the definition of "Employment Losses")
incurred by any of such persons or entities in each case, directly or
indirectly, in connection with or arising from:
(i) any claim by or right of any appropriate
representative (as that expression is used in the Transfer Regulations and in
Chapter II of TULRCA), trade union, or staff association, or works council
representative in respect of any person employed in the UK Business at any
time on or prior to the date hereof arising from or connected with any
failure or alleged failure of ISSUK to comply with its obligations to such
appropriate representatives (as that expression is used
38
in the Transfer Regulations and in Chapter II of TULRCA), trade unions, staff
associations, or employee representatives or works council representatives;
(ii) subject to paragraph (b) above, the employment or
termination of employment of any person employed in the UK Business at any
time prior to the date hereof whose employment is or rights in respect of
employment have been transferred to the Buyer (or such other person) under
the Transfer Regulations;
(iii) any act done (or alleged to have been done) or
omitted to be done (or alleged to have been omitted to be done) on or prior
to the date hereof (in relation to any person) and after the date hereof (in
relation to any person) employed in the UK Business at any time prior to the
date hereof whose employment is or rights in respect of employment are
transferred to the Buyer (or such other person) under the Transfer
Regulations which is deemed (or is alleged to be deemed) to be an act or
omission (or alleged act or omission) of the Buyer (or other such person); and
(iv) without prejudice to subparagraphs (i), (ii), and
(iii) above, any claim or demand or other legal recourse against the Buyer
(or such other person) by or on behalf of any person employed in the UK
Business at any time on or prior to the date hereof who claims (whether
correctly or not) that his employment is or rights in respect of employment
have been transferred to the Buyer (or such other person) under the Transfer
Regulations.
(d) If any contract of employment of a person employed in the UK
Business at any time on or prior to the date hereof has effect as if
originally made between the Buyer and such person as a result of the Transfer
Regulations, then:
(i) the Buyer may terminate such contract within 180
days of the date hereof, subject to compliance with Section 7.14; and
(ii) the Sellers and the Partners shall indemnify and
hold harmless Peregrine, any wholly-owned subsidiary of Peregrine designated
as a "Buyer" hereunder, and each of their respective officers, directors,
agents, and Affiliates against all Losses (which shall be included within the
definition of "Employment Losses") incurred by any of such persons or
entities (directly or indirectly) in connection with or arising from such
termination and against any sums payable to or in relation to such person
under his contract of employment from the date hereof to the date of such
termination.
(e) If any collective agreement between ISSUK and any trade union
has not been disclosed in writing by ISSUK to the Buyer prior to the date of
this Agreement and has effect as if originally made between the Buyer and the
trade union as a result of the Transfer Regulations, then:
(i) the Buyer may terminate such collective agreement;
and
(ii) the Sellers and the Partners shall indemnify and
hold harmless Peregrine, any wholly-owned subsidiary of Peregrine designated
as a "Buyer" hereunder, and each of their respective officers, directors,
agents, and Affiliates, against all Losses (which shall be included within
the definition of "Employment Losses") incurred by any of such persons or
entities (directly
39
or indirectly) in connection with or arising out of such termination and from
and against any sums payable in relation to such collective agreement from
the Closing Date to the date of such termination.
(f) Without prejudice to the other provisions of this Section
7.15, ISSUK shall, at ISSUK's cost, give the Buyer (and at the Buyer's
direction, any person to whom any of the obligations and liabilities in
respect of which the Buyer is indemnified in subsections (b) and (c) shall
have been transferred under the Transfer Regulations) any assistance which it
may reasonably request from time to time to contest any claim made by any
person employed in the UK Business at any time prior to Closing whose
employment is or rights in respect of employment have been transferred to the
Buyer (or such other person) under the Transfer Regulations.
7.16 EMPLOYEE EQUITY INCENTIVES. Peregrine agrees to grant options
under its 1994 Stock Option Plan (and 1995 French sub-plan thereto) to the
employees of Sellers listed on Schedule 7.16 attached hereto. With respect
to each such employee, such options shall be exercisable for the number of
shares of Peregrine's Common Stock set forth across from such employee's name
and shall be subject to vesting over four years, with 25% of the shares
subject to each option becoming exercisable on the first anniversary of the
date hereof and the remaining shares becoming exercisable at the rate of
6.25% of the shares subject to option at the end of each three-month period
thereafter. The exercise price for all such options shall equal the closing
sale price of Peregrine's Common Stock in trading on the Nasdaq National
Market on the last trading day prior to the execution and delivery of this
Agreement.
ARTICLE VIII
DELIVERIES BY THE PARTIES
8.1 DELIVERIES BY BUYER. Concurrently herewith, Peregrine shall
deliver to the Sellers and the Partners each of the following:
(a) REGISTRATION RIGHTS AGREEMENT. An executed copy of the
Declaration of Registration Rights.
(b) NASDAQ LISTING. A completed and executed Notification Form
for Listing of Additional Shares relating to the listing of the Buyer Shares
on the Nasdaq National Market.
(c) LEGAL OPINION. A legal opinion from Xxxxxx Xxxxxxx Xxxxxxxx &
Xxxxxx, Professional Corporation, in substantially the form of EXHIBIT E
attached hereto.
8.2 DELIVERIES BY SELLERS AND PARTNERS. Concurrently herewith, the
Seller and Partners shall deliver to the Buyer each of the following:
(a) 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 Sellers shall have been
obtained.
40
(b) U.S. LEGAL OPINION. A legal opinion from Irell & Xxxxxxx LLP,
United States counsel to the Company, in substantially the form of EXHIBIT F
attached hereto.
(c) U.K. LEGAL OPINION. A legal opinion from Xxxxxxxxx Xxxxx,
U.K. counsel to the Sellers, in substantially the form of EXHIBIT G attached
hereto.
(d) GERMAN LEGAL OPINION. A legal opinion from Bruckhaus Xxxxxxxx
Xxxxxx Xxxxx, German counsel to the Sellers, in substantially the form of
EXHIBIT H attached hereto.
8.3 OTHER DELIVERIES.
(a) CERTIFICATES. Buyer shall deliver certificates representing
the Buyer Shares registered in the names and denominations set forth on
EXHIBIT I attached hereto.
(b) TRANSFER DOCUMENTS. The Sellers and the Partners shall
deliver to the Buyer, (i) the European Assignments, (ii) the Assignment and
Assumption Agreement in the form attached hereto as EXHIBIT J; (iii) the Xxxx
of Sale and Conveyance in the form attached hereto as EXHIBIT K; (iv) the
Assignment of Trademarks in the form attached hereto as EXHIBIT L; and (v)
the Assignment of Copyrights in the form attached hereto as EXHIBIT M.
ARTICLE IX
NONCOMPETITION AGREEMENTS
9.1 AGREEMENT OF SELLERS. Each Seller agrees, for itself and its
successors and assigns that, in consideration of Buyer's purchase of the
Acquired Assets, it will not during the Restriction Period, directly or
indirectly through any entity which it controls:
(a) engage anywhere in the world in any capacity (whether as an
employee, agent, consultant, investor, advisor, independent contractor,
proprietor, partner, officer, director, or otherwise) in software development
in the market for infrastructure management software applications (including,
without limitation, related help desk, asset management, facilities
management, and Remote Control Management applications); or
(b) sell, license, market, distribute, or otherwise provide any
service, support, product or technology to any person or entity, or directly
or indirectly engage in, run, own, manage, operate, control or invest in any
business venture or activity, if such service, support, product, technology,
business, venture or activity involves or relates to the market for
infrastructure management software applications (including, without
limitation, related help desk, asset management, facilities management, and
Remote Control Management applications) anywhere in the world.
9.2 AGREEMENT OF PARTNERS. Each Partner agrees that, in consideration
of Buyer's purchase of the Acquired Assets, he or it will not during the
Restriction Period, directly or indirectly through any entity which he or it
controls:
41
(a) engage anywhere in the world in any capacity (whether as an
employee, agent, consultant, investor, advisor, independent contractor,
proprietor, partner, officer, director, or otherwise) in software development
in the market for infrastructure management software applications (including,
without limitation, related help desk, asset management, facilities
management, and Remote Control Management applications);
(b) be or become an officer, director, shareholder, owner,
Affiliate, salesperson, co-owner, partner, trustee, promoter, technician,
engineer, analyst, employee, agent, representative, supplier, consultant,
advisor or manager of or to, or otherwise acquire or hold any interest in,
any person or entity that competes in the market for infrastructure
management software applications (including, without limitation, related help
desk, asset management, facilities management, and Remote Control Management
applications) anywhere in the world; or
(c) provide any service (as an employee, consultant or otherwise),
support, product or technology to any person or entity, if such service,
support, product or technology involves or relates to software development in
the market for infrastructure management software applications (including,
without limitation, related help desk, asset management, facilities
management, and Remote Control Management applications) anywhere in the world.
9.3 NONSOLICITATION. Each Partner and each Seller further agree that
they will not during the Restriction Period:
(a) personally or through others, encourage, induce, attempt to
induce, solicit or attempt to solicit (on their own behalf or on behalf of
any other person or entity) any employee of Buyer or any of Buyer's
subsidiaries to leave his or her employment with Buyer or any of Buyer's
subsidiaries;
(b) employ, or permit any entity over which he or it exercises
voting control to employ any person who shall have terminated his or her
employment with Buyer or any of Buyer's subsidiaries; or
(c) personally or through others, interfere or attempt to
interfere with the relationship or prospective relationship of the Buyer or
any of Buyer's subsidiaries with any person or entity that is, was or is
expected to become a customer or client of the Buyer or any of Buyer's
subsidiaries.
9.4 RESTRICTION PERIOD. The "RESTRICTION PERIOD" shall mean the period
beginning on the date hereof and ending on the second anniversary of the date
hereof.
9.5 PERMITTED INVESTMENTS. Nothing in this Article X shall prevent the
Sellers, collectively, or the Partners, individually, from owning as a
passive investment less than five percent (5%) of the outstanding shares of
capital stock of a publicly held company if (i) such shares are actively
traded on an established national securities market in the United States or
Europe or on The Nasdaq Stock Market and (ii) the Sellers or the Partner, as
the case may be, are not otherwise associated directly or indirectly with
such corporation or any Affiliate of such corporation.
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9.6 REMEDIES FOR BREACH. Notwithstanding any other provision of this
Agreement, for purposes of this Article X, Buyer shall be entitled (in
addition to any other remedy that may be available to it, including but not
limited to, a claim for damages based on the stock consideration paid to the
Sellers and/or the Partners by Buyer) to the extent permitted by applicable
law to seek (a) a decree or order of specific performance to enforce the
observance and performance of the covenants, obligations, or other
provisions, and (b) an injunction restraining such breach or threatened
breach. The rights and remedies of Buyer hereunder are not exclusive of or
limited by any other rights or remedies which Buyer 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 Buyer hereunder, and the obligations and liabilities
of the Sellers and the Partners 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.
ARTICLE X
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
10.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of the Sellers, the Partners, and Peregrine contained in this
Agreement or in any instrument delivered pursuant to this Agreement shall
terminate on the second anniversary of the date hereof; PROVIDED, HOWEVER,
that the representations and warranties set forth in Sections 4.13 and 4.14
hereof (the "TITLE WARRANTIES") shall survive the Closing and continue in
perpetuity, and any representations, warranties, and covenants of the Sellers
and the Partners relating or pertaining to any Tax or Tax Returns related to
such Tax set forth in this Agreement (all such representations, warranties,
and covenants referred to collectively herein as the "TAX WARRANTY") shall
survive until the expiration of all applicable statutes of limitations, or
extensions thereof, governing each Tax or Tax Returns related to such Tax.
10.2 INDEMNIFICATION.
(a) INDEMNIFICATION BY THE SELLERS AND THE PARTNERS. The Sellers
and the Partners shall jointly and severally indemnify and hold Peregrine,
any wholly-owned subsidiary of Peregrine designated a "Buyer" hereunder, and
each of their respective officers, directors, agents, and Affiliates,
harmless against and in respect of all claims, losses, Liabilities, Liens,
damages, deficiencies, costs and expenses, including reasonable attorneys'
fees and expenses of investigation and defense (hereinafter individually, a
"LOSS" and collectively, "LOSSES") incurred by Peregrine, any wholly-owned
subsidiary of Peregrine deemed a "Buyer" hereunder, or any of their
respective officers, directors, agents, or Affiliates, directly or
indirectly, as a result of (i) any inaccuracy or breach of a representation
or warranty of the Sellers or the Partners contained in this Agreement or in
any instrument or certificate executed and delivered by the Sellers or the
Partners to the Buyer (or any Affiliate or subsidiary of the Buyer) in
connection with the transactions contemplated by this Agreement, (ii) any
failure by the Sellers or the Partners to perform or comply with any covenant
contained in this Agreement, (iii) any Liability resulting from, or any
failure of any Seller or Partner to pay, any Liability that is not an Assumed
Liability, or (iv) any claim or action brought directly or indirectly by
Philippe-Xxxxxxx Xxxx-Xxxxx against Peregrine, any wholly-owned subsidiary of
43
Peregrine designated as a "Buyer" hereunder, or any of their respective
officers, directors, agents and Affiliates relating directly or indirectly to
any Acquired Asset or as a result of this Agreement or the transactions
contemplated hereby ("XXXX CLAIMS"); PROVIDED, HOWEVER, that the obligations
of the Sellers and the Partners to indemnify for Employment Losses shall be
as set forth in Section 7.15.
(b) LIMITATION ON LIABILITY. Notwithstanding the foregoing, the
Sellers and the Partners shall not be obligated to indemnify Peregrine, any
wholly-owned subsidiary of Peregrine deemed a "Buyer" hereunder, or any of
their officers, directors, agents, and Affiliates, pursuant to this Section
10.2 unless and until the amount of all Losses (excluding Employment Losses)
incurred by Peregrine, any other Buyer, or their respective officers,
directors, agents, and Affiliates taken as a group, exceeds $100,000 in the
aggregate, in which event the Sellers and the Partners shall jointly and
severally indemnify, pursuant to this Section 10.2, Peregrine, any
wholly-owned subsidiary of Peregrine deemed a "Buyer" hereunder, and their
respective officers, directors, agents, and Affiliates, for all Losses
incurred by them in the aggregate from the first dollar of Losses. Except
for any willful or fraudulent breach of the representations, warranties or
covenants contained herein, the parties agree that the sole and exclusive
recourse of Peregrine, any other Buyer, or any of their respective officers,
directors, agents, or Affiliates against the Sellers and the Partners for any
loss or claim of loss arising out of or relating to this Agreement shall be
expressly limited to the indemnification provisions of this Article X;
PROVIDED, HOWEVER, that the parties acknowledge and agree that (i) Buyer's
recourse for Employment Losses shall be as set forth in Section 7.15; (ii)
claims against the Employment Escrow Fund shall be an exclusive remedy for
Employment Losses but only for so long as the Employment Escrow Fund is not
depleted, after which Buyer may make claims against the Partners and the
Sellers pursuant to Section 7.15; (iii) claims against the General Escrow
Fund shall be an exclusive remedy for General Losses (as defined herein); and
(iv) claims against the General Escrow Fund shall be an exclusive remedy for
Losses resulting from any inaccuracy or breach of the Title Warranties
("TITLE LOSSES"), Losses resulting from any inaccuracy or breach of the Tax
Warranties ("TAX LOSSES"), or Losses resulting from any Xxxx Claim ("XXXX
LOSSES") but, in each case, only for so long as the General Escrow Fund is
not depleted, after which Buyer may make claims against the Partners and the
Sellers pursuant to this Article X. For purposes of this Agreement, "GENERAL
LOSSES" shall include all Losses other than Tax Losses, Title Losses,
Employment Losses, and Xxxx Losses. The Sellers and the Partners shall not,
in any event, be required to indemnify Peregrine, any wholly-owned subsidiary
of Peregrine deemed a Buyer hereunder, or any of their respective officers,
directors, agents or Affiliates for any consequential or punitive damages,
including, but not limited to, loss of revenue or income, cost of capital, or
loss of business reputation or opportunity relating to the breach or alleged
breach of this Agreement. In no event shall the Sellers and Partners be
required to indemnify Peregrine, any wholly owned subsidiary of Peregrine
deemed a "Buyer" hereunder, or any of their respective officers, directors,
agents or Affiliates for cumulative Losses (including Losses previously
recovered) in excess of $13,000,000.
(c) INDEMNIFICATION PROCEDURE. Subject to Section 10.2(b), upon
receipt by the Partners of a certificate signed by any officer of the Buyer
(an "OFFICER'S CERTIFICATE") (i) stating that Peregrine or another Buyer has
paid or properly accrued or reasonably anticipates that it will have to pay
or accrue Losses and (ii) specifying in reasonable detail the individual
items of Losses included in the amount so stated, the date of each such item
was paid or properly accrued, or the basis for such anticipated Loss, and the
nature of the misrepresentation, breach of warranty or covenant to which
44
such item is related, the Partners shall have forty-five (45) days to object
in a written statement to the claim made in the Officer's Certificate, and
such statement shall have been delivered to the Buyer prior to the expiration
of such forty-five (45) day period.
(d) RESOLUTION OF CONFLICTS; ARBITRATION.
(i) In the event that the Partners shall object in
writing to any claim or claims made in any Officers' Certificate within
forty-five (45) days after delivery to the Partners of such Officer's
Certificate, the Buyer and the Partners shall attempt in good faith to agree
upon the rights of the respective parties with respect to each of such claims.
(ii) If no such agreement can be reached after good faith
negotiation, either the Buyer or the Partners may demand arbitration of the
matter and in either such event the matter shall be settled by arbitration in
accordance with Section 12.8.
(e) THIRD PARTY CLAIMS.
(i) If any third party shall notify Peregrine or another
Buyer or its Affiliates with respect to any matter (hereinafter referred to
as a "THIRD PARTY CLAIM"), which may result in Losses, then Peregrine or such
other Buyer shall give notice to the Partners as soon as reasonably
practicable, but in any event within thirty (30) days, of its 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 Peregrine or such other
Buyer; PROVIDED, HOWEVER, that no delay or failure on the part of Peregrine
or another Buyer in notifying the Partners shall relieve the Partners from
any obligation hereunder unless the Partners are thereby materially
prejudiced (and then solely to the extent of such prejudice). The Partners
shall not be liable for any attorneys' fees and expenses or other costs of
investigation or defense incurred by Peregrine or another Buyer prior to its
giving notice to the Partners of a Third Party Claim.
(ii) In case any Third Party Claim is asserted against
Peregrine, any other Buyer or their Affiliates, and Peregrine or such Buyer
notifies the Partners thereof pursuant to Section 11(e)(i) above, the
Partners will be entitled, if they so elect by written notice delivered to
Peregrine or such Buyer within thirty (30) days after receiving Buyer's
notice, to assume the defense thereof, at the expense of the Partners, so
long as:
(a) the Third Party Claim involves only money
damages and does not seek an injunction or other equitable relief that would
reasonably impair Peregrine's ability to conduct its business, including,
without limitation, its ability to market, sell, or distribute the Software
acquired pursuant to this Agreement;
(b) settlement of, or an adverse judgment with
respect to, the Third Party Claim is not, in the good faith judgment of
Buyer, likely to establish a precedential custom or practice adverse to the
continuing business interests of Buyer which could have a material adverse
effect on the business or operations of Buyer; and
45
(c) counsel selected by the Partners is reasonably
acceptable to Buyer.
If the Partners so assume any such defense, they shall conduct the
defense of the Third Party Claim actively and diligently. The Partners 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 Peregrine,
which consent shall not be reasonably withheld.
(iii) In the event that the Partners assume the defense of
the Third Party Claim in accordance with Section 10.2(e)(ii) above, Buyer or
its Affiliates may retain 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 Buyer unless Buyer or its Affiliates, based on the written
advice of outside counsel, shall reasonably determine that there is a
material conflict of interest between or among Buyer or its Affiliates and
the Partners with respect to such Third Party Claim, which would prohibit
joint representation under applicable standards of legal ethics, in which
case the reasonable fees and expenses of such counsel will be borne by the
Partners. Buyer 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 Partners, which consent shall not be
unreasonably withheld. Buyer 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 the Partners and material to the
claim and will make available, to the extent within their control, all
officers, directors and employees reasonably requested by the Partners for
investigation, depositions and trial.
(iv) In the event that (i) the Partners fail or elect not
to assume the defense of Buyer or its Affiliates against such Third Party
Claim, which the Partners had the right to assume under Section 10.2(e)(ii)
above, or (ii) the Partners are not entitled to assume the defense of Buyer
or its Affiliates against such Third Party Claim pursuant to Section
10.2(e)(ii) above, Buyer or its Affiliates shall have the right to undertake
the defense and, with the prior written consent of the Partners, which shall
not be unreasonably withheld, 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, which judgement or settlement effected pursuant to such
consent shall be determinative of the validity of any claim of Loss
hereunder. In each case, Buyer or its Affiliates shall conduct the defense
of the Third Party Claim actively and diligently, and the Partners will
cooperate with Buyer or its Affiliates in the defense of that claim and will
provide full access to documents, assets, properties, books and records
reasonably requested by Buyer and material to the claim and will make
available all individuals reasonably requested by Buyer for investigation,
depositions and trial.
ARTICLE XI
AMENDMENT AND WAIVER
11.1 AMENDMENT. Except as is otherwise required by applicable law, this
Agreement may be amended by the parties hereto at any time by execution of an
instrument in writing signed by Buyer and by holders of more than 50% of the
Buyer Shares issued or to be issued pursuant hereto
46
and held at any time by the Sellers and/or Partners, or by all of the Sellers
and the Partners in the case of an amendment to Article X.
11.2 EXTENSION; WAIVER. Buyer and the Sellers and the Partners 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 XII
GENERAL PROVISIONS
12.1 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 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 Buyer, 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
47
(b) if to a Seller or Partner, to:
Xxxxxx Xxxxxx
00xxx Xxxx xxx Xxxxxxxx
00000 Xxxxxx, Xxxxxx
Telephone No.: 00-0-000-0000-00
Facsimile No.: 33-0-476-5242-20
and to:
Xxxxxxx Xx Xxxxx
0 Xx Xxxx
00000 Xxxxxx, Xxxxxx
Telephone No.: 00-0-000-0000-00
Facsimile No.: 33-0-476-5242-20
with a copy (which shall not constitute notice) to:
Irell & Xxxxxxx, LLP
1800 Avenue of the Stars, Suite 900
Los Angeles, California 90067-4276 U.S.A.
ATTN: Xxxxxx Xxxxxx and Xxxxxx Xxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
12.2 EXPENSES. All fees and expenses incurred in connection with this
Agreement including, without limitation, all legal, accounting, financial
advisory, consulting and all other fees and expenses of third parties
incurred by a party hereto, 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.
12.3 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.
12.4 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 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.
12.5 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
48
respect to the subject matter hereof and (b) shall not be assigned by
operation of law or otherwise except as otherwise specifically provided.
12.6 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.
12.7 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.
12.8 GOVERNING LAW; ARBITRATION. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of
California, regardless of the laws that might otherwise govern under
applicable principles of conflicts of laws thereof. Any claim or dispute
arising out of or related to this Agreement, or the interpretation, making,
performance, breach or termination thereof, shall be finally settled by
binding arbitration in the City of London, England under the AAA
International Commercial Arbitration Rules and Supplemental Procedures for
Large Complex Disputes by a single arbitrator mutually agreeable to Peregrine
and the Partners. In the event that within forty-five (45) days after the
submission of any dispute to arbitration, Peregrine and the Partners cannot
mutually agree on a single arbitrator, Peregrine and the Partners shall each
select one arbitrator and the AAA shall select a third arbitrator, who shall
be fluent in both English and French and have at least ten years experience
in transactions of the type contemplated by this Agreement (including with
respect to intellectual property matters). 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
arbitrator(s) shall have the authority to grant any equitable and legal
remedies that would be available in any judicial proceeding instituted under
California substantive law to resolve a dispute. The decision of a majority
of the three arbitrators as to the validity and amount of any claim shall be
binding and conclusive upon the parties to this Agreement. 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. Judgment on the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof. The
parties hereto agree to the exclusion of the provisions of the Arbitration
Xxx 0000 (U.K). For purposes of this Section 12.8, in any arbitration
hereunder in which any claim or amount is at issue, Peregrine shall be deemed
to be the Non-Prevailing Party in the
49
event that the arbitrators award Peregrine less than the sum of one-half
(1/2) of the disputed amount plus any amounts not in dispute; otherwise, the
Partners 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, AAA
administrative fees, arbitrator fees, expert fees, travel expenses, and
out-of-pocket costs (including, without limitation, such expenses as copying,
telephone, facsimile, postage, and courier fees) incurred by the other party
to the arbitration. The parties to the arbitration may apply to any court of
competent jurisdiction for a temporary restraining order, preliminary
injunction or other interim or conservatory relief, as necessary, without
breach of this arbitration provision and without any abridgement of the
powers of the arbitrator(s). The parties agree that, any provision of
applicable law notwithstanding, they will not request, and the arbitrator(s)
shall have no authority to award any punitive or consequential damages,
including, but not limited to, loss of income, cost of capital, or loss of
business reputation or opportunity, against any party. The arbitration
proceedings and all pleadings and written evidence shall be in the English
language. Any written evidence originally in a language other than English
shall be submitted in English translation accompanied by the original or true
copy thereof.
12.9 CURRENCY. All references to "$" or "dollars" in this Agreement
refer to the lawful currency of the United States.
12.10 RULES OF CONSTRUCTION. The parties 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.
12.11 NO THIRD PARTY BENEFICIARIES. This Agreement shall not confer
any rights or remedies upon any person or entity other than the parties
hereto and their respective successors and permitted assigns; PROVIDED,
HOWEVER, that those individuals identified in Schedule 7.16 as receiving
options to acquire shares of Peregrine's Common Stock (i) shall be deemed
beneficiaries of Peregrine's covenants set forth therein and (ii) may rely on
Peregrine's representations set forth in the last sentence of Section 5.3
relating to its authorized share capital and available option reserves under
its 1994 Stock Option Plan (and 1995 French sub-plan thereto).
12.12 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]
50
IN WITNESS WHEREOF, Buyer, the Sellers and the Partners have caused this
Asset Purchase Agreement to be signed as of the date first written above.
PEREGRINE SYSTEMS, INC.
"BUYER" a Delaware Corporation
By: /s/ Xxxxx X. Xxxxxx
------------------------------------------
Xxxxx X. Xxxxxx
Vice President, Finance, and
Chief Financial Officer
"PARTNERS"
----------------------------------------------
Xxxxxx Xxxxxx
----------------------------------------------
Xxxxxxx Xx Xxxxx
"FIRTREE" FIRTREE OVERSEAS, LTD.
A British Virgin Islands corporation
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
"ISSLP" INTERNATIONAL SOFTWARE SOLUTIONS LIMITED
PARTNERSHIP
a Nevada limited partnership
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
[SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT ]
51
IN WITNESS WHEREOF, Buyer, the Sellers and the Partners have caused this
Asset Purchase Agreement to be signed as of the date first written above.
PEREGRINE SYSTEMS, INC.
"BUYER" a Delaware Corporation
By:
------------------------------------------
Xxxxxxx X. Xxxxxxx
President and Chief Executive Officer
"PARTNERS"
----------------------------------------------
Xxxxxx Xxxxxx
----------------------------------------------
Xxxxxxx Xx Xxxxx
"FIRTREE" FIRTREE OVERSEAS, LTD.
A British Virgin Islands corporation
By: /s/ Xxxx Xxxxxx Xxxxxx
-------------------------------------------
Name: Xxxx Xxxxxx Xxxxxx
-----------------------------------------
Title: Director, Xxxxx United, Sole Director
----------------------------------------
"ISSLP" INTERNATIONAL SOFTWARE SOLUTIONS LIMITED
PARTNERSHIP
a Nevada limited partnership
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
[SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT ]
51
IN WITNESS WHEREOF, Buyer, the Sellers and the Partners have caused this
Asset Purchase Agreement to be signed as of the date first written above.
PEREGRINE SYSTEMS, INC.
"BUYER" a Delaware Corporation
By:
------------------------------------------
Xxxxxxx X. Xxxxxxx
President and Chief Executive Officer
"PARTNERS" /s/ Xxxxxx Xxxxxx
----------------------------------------------
Xxxxxx Xxxxxx
/s/ Xxxxxxx Xx Xxxxx
----------------------------------------------
Xxxxxxx Xx Xxxxx
"FIRTREE" FIRTREE OVERSEAS, LTD.
A British Virgin Islands corporation
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
"ISSLP" INTERNATIONAL SOFTWARE SOLUTIONS LIMITED
PARTNERSHIP
a Nevada limited partnership
By: /s/ Xxxxxx Xxxxxx
-------------------------------------------
Name: Xxxxxx Xxxxxx
-----------------------------------------
Title: President
----------------------------------------
[SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT ]
51
"ISSUS" INTERNATIONAL SOFTWARE SOLUTIONS USA, L.C.
a Florida limited liability company
By: /s/ Xxxxxx Xxxxxx
-------------------------------------------
Name: /s/ Xxxxxx Xxxxxx
-----------------------------------------
Title: President
----------------------------------------
"ISSI" INTERNATIONAL SOFTWARE SOLUTIONS, INC.
a Delaware corporation
By: /s/ Xxxxxx Xxxxxx
-------------------------------------------
Name: /s/ Xxxxxx Xxxxxx
-----------------------------------------
Title: President
----------------------------------------
"ISSUK" INTERNATIONAL SOFTWARE SOLUTIONS UK LTD.
By: /s/ Xxxxxx Xxxxxx
-------------------------------------------
Name: /s/ Xxxxxx Xxxxxx
-----------------------------------------
Title: Managing Director
----------------------------------------
"ISSGR" INTERNATIONAL SOFTWARE SOLUTIONS GMBH
By: /s/ Xxxxxx Xxxxxx
-------------------------------------------
Name: /s/ Xxxxxx Xxxxxx
-----------------------------------------
Title: Geschaftsfuhrer
----------------------------------------
"ISSFD" INTERNATIONAL SOFTWARE SOLUTIONS FRANCE
DIFFUSION SARL
By: /s/ Xxxxxx Xxxxxx
-------------------------------------------
Name: /s/ Xxxxxx Xxxxxx
-----------------------------------------
Title: authorized signatory
----------------------------------------
[SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT - CONT'D]]
52
"ISSP" INTERNATIONAL SOFTWARE SOLUTIONS PRODUCTION SARL
By: /s/ Xxxxxx Xxxxxx
-------------------------------------------
Name: /s/ Xxxxxx Xxxxxx
-----------------------------------------
Title: authorized signatory
----------------------------------------
[SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT - CONT'D]]
53
EXHIBIT A
FORM OF ESCROW AGREEMENT
ESCROW AGREEMENT
This Escrow Agreement (the "AGREEMENT") is made and entered into this
23rd day of September 1998 by and among Peregrine Systems, Inc., a Delaware
corporation ("PEREGRINE"); each of International Software Solutions Limited
Partnership, a Nevada Limited Partnership, International Software Solutions
UK Ltd., a company registered in England and Wales with company number
03029797 whose registered office is situated at 0 Xxx Xxxxxxxxxx Xxxxxx,
Xxxxxx X0X 0X0, International Software Solutions GmbH, a limited liability
corporation organized under the laws of Germany, International Software
Solutions France Diffusion SARL, a corporation organized under the laws of
France, International Software Solutions Production SARL, a corporation
organized under the laws of France, International Software Solutions USA,
L.C., a Florida limited liability company, and International Software
Solutions, Inc., a Delaware corporation (individually, a "SELLER" and
collectively, the "SELLERS"); each of Firtree Overseas Ltd., a corporation
organized under the laws of the British Virgin Islands, Xxxxxx Xxxxxx, and
Xxxxxxx Xx Xxxxx (individually, a "PARTNER" and collectively, the
"PARTNERS"); Xxxxxx Xxxxxx, as the designated representative of the several
Sellers and the Partners (the "SELLER AGENT"); and ChaseMellon Shareholder
Services, LLC, as escrow agent (the "ESCROW AGENT"). Unless the context
otherwise requires, all capitalized terms not otherwise defined herein shall
have the meaning ascribed to them in the Purchase Agreement (as defined
herein). All terms not specifically defined herein or in the Purchase
Agreement, but which are defined in the Uniform Commercial Code as applicable
in the State of California on the date hereof, shall be defined and construed
in accordance with the definitions set forth therein.
RECITALS
A. Pursuant to the terms of the Asset Purchase Agreement of even date
herewith (the "PURCHASE AGREEMENT") by and among Peregrine, the Sellers, and the
Partners, Peregrine has issued the Buyer Shares to the Sellers as set forth on
EXHIBIT A attached hereto;
B. Except for the interests granted herein, each Seller is the direct
legal and beneficial owner of that number of Buyer Shares set forth across from
such Seller's name under the caption "Total Buyer Shares" on EXHIBIT A hereto.
C. Each Seller has agreed to secure the payment and performance of its
obligations for Employment Losses pursuant to Section 7.15 of the Purchase
Agreement that may be incurred by Peregrine, any wholly owned subsidiary of
Peregrine that may be deemed a "Buyer" under the Purchase Agreement, or their
respective officers, directors, or agents by (i) executing this Agreement and
delivering it to Peregrine and the Escrow Agent and (ii) depositing with the
Escrow Agent a cash payment of $500,000 on the terms set forth herein.
D. Each Seller has agreed to secure the payment and performance of each
of its obligations for all other Losses (including Tax Losses) pursuant to and
subject to the limitations set forth in Article X of the Purchase Agreement that
may be incurred by Peregrine, any wholly-owned subsidiary of Peregrine that may
be deemed a "Buyer" under the Purchase Agreement, or their respective officers,
directors, or agents by (i) executing this Agreement and delivering it to
Peregrine and the Escrow Agent
and (ii) permitting Peregrine to deliver the certificates representing the
Escrow Shares as defined herein to the Escrow Agent.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual premises and covenants
contained in the Purchase Agreement and herein, the parties hereby agree as
follows:
ARTICLE I
ESCROW AND ESCROW SHARES
1.1 ESCROW; GRANT OF SECURITY INTEREST.
(a) Each Seller is hereby deemed to have received and deposited
with the Escrow Agent the aggregate number of Buyer Shares set forth under
the caption "ESCROW SHARES" in column 3 of Exhibit A attached hereto. Each
Seller shall, not later than 5:00 p.m. (California Time), on the latter to
occur of (i) the fifth business day following the fifteenth calendar day
after Peregrine's registration statement covering the Buyer Shares has been
declared effective by the Securities and Exchange Commission (as contemplated
by Section 2 of Peregrine's Declaration of Registration Rights (the
"Declaration") of even date herewith and (ii) the date sixty (60) days after
the date hereof (or, if such date is a Saturday, Sunday, or bank holiday in
the State of California, the first business day thereafter), deposit with the
Escrow Agent the sum set forth across from such Seller's name under the
caption "EMPLOYMENT ESCROW AMOUNT" in column 4 of Exhibit A; PROVIDED,
HOWEVER, in the event Peregrine restricts the Sellers from selling Buyer
Shares pursuant to Section 4 of the Declaration, the required deposit date
shall be extended by one day for each day the Sellers are so restricted.
Notwithstanding the foregoing, in the event such registration statement has
not been declared effective on or before the date sixty (60) days after the
date hereof, each Seller shall deposit its respective Employment Escrow
Amount with the Exchange Agent on the earlier to occur of (i) such time as
Sellers have received aggregate gross proceeds (after deducting brokers' fees
and commissions) of $500,000 upon the sale of Buyer Shares and (ii) the fifth
business day following the fifteenth calendar day after Peregrine's
registration statement has been declared effective (subject to extension by
one day for each day Peregrine restricts the Sellers from selling Buyer
Shares pursuant to Section 4 of the Declaration). Each Seller shall be
jointly and severally liable for the payment of any Employment Escrow Amount
to the extent not paid by another Seller or Sellers on the terms set forth
herein. The funds created by the Escrow Shares and the Employment Escrow
Amount against which Losses may be recovered are sometimes referred to herein
as the "ESCROW FUNDS" (which shall be comprised of the "GENERAL ESCROW FUND"
(consisting of the aggregate Escrow Shares) and the "EMPLOYMENT ESCROW FUND"
(consisting of the aggregate Employment Escrow Amount)). As soon as
practicable after the date hereof, Peregrine shall cause the Escrow Shares to
be deposited with the Escrow Agent.
(b) As collateral security for the prompt and unconditional
payment when due of each and every Loss (as and solely to the extent set
forth in the Purchase Agreement), each of the Sellers hereby assigns,
pledges, mortgages, hypothecates and sets over to Peregrine (including any
wholly-
-2-
owned subsidiary of Peregrine deemed a Buyer hereunder), and hereby grants to
Peregrine (including any wholly-owned subsidiary of Peregrine deemed a Buyer
hereunder) a security interest and lien upon, (i) the Escrow Shares
applicable to such Seller and any New Shares (as defined below) subsequently
distributed with respect to the Escrow Shares and placed in the Escrow Funds
pursuant to Section 1.3(c)(ii) hereof and (ii) the Employment Escrow Amounts
deposited with the Escrow Agent and any interest accrued thereon.
1.2 AGREEMENT TO HOLD ESCROW SHARES. The Escrow Agent shall hold the
Escrow Shares and the Employment Escrow Amounts delivered to it pursuant to
Section 1.1 in escrow as collateral for Losses until the Escrow Agent is
required to release the Escrow Funds in accordance with the terms of this
Agreement. The Escrow Agent agrees to accept delivery of the Escrow Shares
and the Employment Escrow Amounts and to hold the Escrow Funds subject to the
terms and conditions of this Agreement. The Employment Escrow Amount shall be
deposited in an interest-bearing account with a commercial bank chartered in
the United States with total assets in excess of $100,000,000 selected by the
Escrow Agent and reasonably acceptable to Peregrine and the Seller Agent.
1.3 ESCROW ARRANGEMENTS.
(a) ESCROW PERIOD; DISTRIBUTION UPON TERMINATION OF ESCROW PERIOD.
Subject to the following requirements, the General Escrow Fund shall be in
existence immediately following the date hereof and shall terminate at 5:00
p.m. (California Time) on the date that is two years following the date
hereof (the "GENERAL ESCROW PERIOD"). The Employment Escrow Fund shall be in
existence upon deposit with the Escrow Agent of the Employment Escrow Amount
and shall terminate at 5:00 p.m. (California Time) on the date that is 180
days after the date hereof (the "EMPLOYMENT ESCROW PERIOD"). Such amount (or
some portion thereof) that is necessary in the reasonable judgment of
Peregrine, subject to the objection of the Seller Agent and the subsequent
arbitration of the matter in the manner provided in Section 1.3(f) hereof, to
satisfy any unsatisfied claims concerning facts and circumstances existing
prior to the termination of the applicable 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 applicable Escrow Fund after
termination of such Escrow Period. As soon as any or all such claims have
been resolved, as evidenced by a written memorandum of the Seller Agent and
Peregrine, the Escrow Agent shall deliver to the Sellers the remaining
portion of the applicable 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 applicable
Escrow Period, upon termination of such Escrow Period, the Escrow Agent,
without further authorization or instruction, shall distribute the remainder
of the applicable Escrow Fund to the Sellers in accordance with the
provisions of this Section 1.3(a).
(b) PROTECTION OF ESCROW FUND.
(i) The Escrow Agent shall hold and safeguard the Escrow
Funds during the Escrow Periods, shall treat such funds as a trust fund in
accordance with the terms of this Agreement and not as the property of either
Peregrine or the Sellers, and shall hold and dispose of the Escrow Funds only
in accordance with the terms hereof.
-3-
(ii) Any shares of Peregrine's Common Stock or other
securities issued or distributed by Peregrine (including shares issued upon a
stock dividend or split) ("NEW SHARES") in respect of Buyer Shares in the
General Escrow Fund which have not been released from the General Escrow Fund
shall be deposited with the Escrow Agent and added to the General Escrow Fund
and become a part thereof. New Shares issued in respect of shares of
Peregrine's Common Stock which have been released from the General Escrow
Fund shall not be added to the General Escrow Fund but shall be distributed
to the record holders thereof. Cash or property dividends on Buyer Shares
held in the General Escrow Fund shall not be added to the General Escrow Fund
but shall be distributed to the record holders thereof.
(iii) Each Seller shall have voting rights with respect to
the Escrow Shares contributed to the Escrow Funds by such Seller (and on any
voting securities and other dividends added to the General Escrow Fund in
respect of such Escrow Shares).
(iv) Any interest earned on the Employment Escrow Amounts
deposited in the Employment Escrow Fund shall be deposited with the Escrow
Agent and added to the Employment Escrow Fund and become a part thereof.
(c) CLAIMS UPON ESCROW FUNDS.
(i) Upon receipt by the Escrow Agent at any time on or before
the termination of the applicable Escrow Period of a certificate signed by
any officer of Peregrine (an "OFFICER'S CERTIFICATE") (A) stating that
Peregrine or a wholly-owned subsidiary of Peregrine deemed a "Buyer" under
the Purchase Agreement has paid or properly accrued or reasonably anticipates
that it will have to pay or accrue, in the case of the Employment Escrow
Fund, any Employment Losses or, in the case of the General Escrow Fund, any
other Losses (including Tax Losses); (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, and (C) stating that Peregrine is
entitled to be indemnified for such loss pursuant to Article X of the
Purchase Agreement, the Escrow Agent shall, subject to the provisions of
Sections 1.3(d) and 1.3(e) hereof, deliver to Peregrine out of the Escrow
Funds, as promptly as practicable, cash or Buyer Shares, as the case may
require, held in the applicable Escrow Fund in an amount equal to such Losses.
(ii) For the purposes of determining the number of Buyer
Shares to be delivered to Peregrine out of the applicable Escrow Fund
pursuant to Section 1.3(d)(i) hereof, each Escrow Share shall be valued at a
per share price equal to $33.1563 (as adjusted for any stock splits, stock
dividends, recapitalizations or like events effected after the date hereof).
(d) 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 Seller Agent, and for a period of
thirty (30) days after receipt of such Officer's Certificate, the Escrow
Agent shall make no delivery to Peregrine of any amounts pursuant to Section
1.3(c) hereof unless the Escrow Agent shall have received written
authorization from the Seller Agent to make such delivery. After the
expiration of such thirty (30) day period, the Escrow Agent shall make
delivery of cash or Buyer Shares, as the case may
-4-
require, from the applicable Escrow Fund in accordance with Section 1.3(d)
hereof, provided that no such payment or delivery may be made if the Seller
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.
(e) RESOLUTION OF CONFLICTS; ARBITRATION.
(i) In case the Seller Agent shall so object in writing to
any claim or claims made in any Officer's Certificate, the Seller Agent and
Peregrine shall attempt in good faith to agree upon the rights of the
respective parties with respect to each of such claims. If the Seller Agent
and Peregrine 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 Buyer Shares from the applicable Escrow Fund in
accordance with the terms thereof.
(ii) If no such agreement can be reached after good faith
negotiation, either Peregrine or the Seller 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. The terms and conditions of such arbitration shall be as set
forth in Section 12.8 of the Purchase Agreement, which section is hereby
incorporated by reference and deemed a part hereof (other than the governing
law provisions thereof). The Sellers, if liable, may pay such amounts
contemplated under this Section 1.3(e)(ii) or other amounts contemplated in
this Section 1.3 (including, without limitation, unreimbursed expenses of
counsel for the Sellers and Peregrine, arbitrator fees and administrative
costs) by distributing Buyer Shares from the General Escrow Fund with respect
to which Peregrine has not made a claim; PROVIDED, HOWEVER, that, subject to
Section 1.3(f) and except to the extent to satisfy any Loss for which the
Sellers or Partners have been deemed liable hereunder, no cash or Buyer
Shares may be distributed from the applicable Escrow Fund prior to the
termination of the applicable Escrow Period and such shares may be
distributed only to the extent that such shares are not required to satisfy
any claim for Losses attributable to such Escrow Fund.
(f) The Sellers and the Partners may satisfy in cash any claim
that would otherwise be satisfied by delivery of Escrow Shares to Peregrine
or a Buyer. Upon delivery to the Escrow Agent of evidence of payment of any
such claim in cash (including, but not limited to, a memorandum from the
Seller Agent and Peregrine, or evidence of deposit by wire transfer or
otherwise of the funds for such claim to a Peregrine bank account), the
Escrow Agent shall deliver to the Seller Agent the number of Escrow Shares
that it would otherwise have been required to deliver to Peregrine or a Buyer
pursuant to Section 1.3(c).
-5-
ARTICLE II
SELLER AGENT; POWER OF ATTORNEY
2.1 SELLER AGENT. Each of the Partners and the Sellers hereby appoints
Xxxxxx Xxxxxx as Seller Agent for and on behalf of the Sellers, subject to
the provisions of this Agreement, to give and receive notices and
communications, to authorize delivery to Peregrine of Buyer Shares from the
Escrow Funds in satisfaction of claims by Peregrine, 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 Seller Agent for the accomplishment of the
foregoing. Such agency may be changed by the Sellers from time to time upon
not less than ten (10) days' prior written notice to Peregrine and the Escrow
Agent; provided that the Seller Agent may not be removed unless holders of a
majority-in-interest of the Escrow Funds agree to such removal and to the
identity of the substituted agent. The Seller Agent may also resign at any
time upon thirty (30) days' prior written notice to Peregrine, the Escrow
Agent, the Sellers, and the Partners. Any vacancy in the position of the
Seller Agent may be filled by approval of the holders of a majority-in-interest
of the Escrow Funds. No bond shall be required of the Seller Agent, and the
Seller Agent shall not receive compensation for his services. Notices or
communications to or from the Seller Agent shall constitute notice to or from
each of the Sellers.
2.2 NO LIABILITY. The Seller Agent shall not be liable for any act
done or omitted hereunder as Seller Agent while acting in good faith and in a
manner that is not grossly negligent.
2.3 ACTIONS OF THE SELLER AGENT. Except as otherwise provided herein,
a decision, act, consent or instruction of the Seller Agent shall constitute
a decision of all the Sellers and Partners for whom the Escrow Shares
otherwise issuable to them are deposited in the Escrow Funds and shall be
final, binding and conclusive upon each of such Sellers, and the Escrow Agent
and Peregrine may rely upon any such decision, act, consent or instruction of
the Seller Agent as being the decision, act, consent or instruction of each
and every such Seller. The Escrow Agent and Peregrine 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 Seller Agent. The Sellers
and Partners agree jointly and severally to indemnify and hold the Seller
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 the Seller Agent or incurred by him on
behalf of the Sellers in the connection with his actions taken under this
Agreement, including without limitation expenses incurred as contemplated by
Section 1.3(e)(ii).
ARTICLE III
REGARDING THE ESCROW AGENT
3.1 ACTIONS OF ESCROW AGENT. The Escrow Agent is a depository only,
and shall not be responsible or liable for the sufficiency or correctness as
to form, manner of execution or validity of any instrument deposited with it.
The Escrow Agent may assume, in the absence of manifest evidence to the
contrary, that all signatures appearing on executed documents are genuine and
valid. The Escrow
-6-
Agent shall have no liability for actions taken by it in accordance with any
notice, certificate, request or instruction given to it in accordance with and
pursuant to this Agreement. In the event that conflicting claims or demands
with respect to the Escrow Fund are made, or if Peregrine or the Seller Agent
disputes any instruction given by the other, the Escrow Agent may, without
liability to any party and after giving notice of such conflicting demands to
Peregrine and the Seller Agent, withhold performance until such conflicting
claims have been resolved in accordance with this Agreement. If any controversy
arises between Peregrine and the Seller Agent, Peregrine and any Seller or
Partner, or Peregrine, the Sellers, and any third person, the Escrow Agent shall
not be required to determine the controversy or to take any action with respect
to the controversy, and the Escrow Agent in its discretion may suspend taking
any action until such controversy has been resolved in accordance with this
Agreement. The Escrow Agent shall have no liability to any party in the event
it suspends taking action due to a controversy.
3.2 FEES OF ESCROW AGENT. The Escrow Agent's fees shall be the
standard hourly fees and expenses charged by the Escrow Agent for the
services of its employees and others. The fees of the Escrow Agent shall be
paid by Peregrine.
3.3 INDEMNIFICATION. Peregrine, the Sellers and Partners shall jointly
and severally indemnify the Escrow Agent for, and hold it harmless against,
any loss, liability, claim or expense incurred by the Escrow Agent ("Agent
Loss") arising out of or in connection with its duties under this Agreement,
including the costs and expenses of defending itself against any Agent Loss,
unless such Agent Loss shall have been determined by a court of competent
jurisdiction to be a result of the Escrow Agent's gross negligence or
intentional misconduct. In no case will the Escrow Agent be liable for
special, indirect, incidental or consequential loss or damages of any kinds
whatsoever (including but not limited to lost profits), even if the Escrow
Agent has been advised of the possibility of such damages. Any liability of
the Escrow Agent will be limited to the amount of fees paid hereunder. The
foregoing provisions shall not be determinative, however, of any rights or
legal remedies among or between the Sellers and Partners, on the one hand,
and Peregrine, on the other hand.
ARTICLE IV
MISCELLANEOUS
4.1 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 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.
-7-
(a) If to Peregrine:
Peregrine Systems, Inc.
00000 Xxxx Xxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
ATTN: General Counsel
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000-0000
ATTN: Xxxxxxx X. Xxxxxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
(b) If to the Seller Agent:
Xxxxxx Xxxxxx
00xxx Xxxx xxx Xxxxxxxx
00000 Xxxxxx, Xxxxxx
Telephone No.: 00-0-000-00-00-00
Facsimile No.: 33-0-476-52-42-20
with a copy (which shall not constitute notice) to:
Irell & Xxxxxxx, LLP
1800 Avenue of the Stars, Suite 900
Los Angeles, California 90067-4276 U.S.A.
ATTN: Xxxxxx Xxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
(c) If to the Escrow Agent:
ChaseMellon Shareholder Services, LLC
000 Xxxxx Xxxx Xxxxxx, Xxxxxx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
ATTN: Xxx Xxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
-8-
4.2 TERMINATION. This Agreement shall terminate upon the mutual
written express agreement of Peregrine and the Seller Agent. In any event,
this Agreement shall terminate when all of the Escrow Funds have been
distributed according to its terms.
4.3 INTERPRETATION. The validity, construction, interpretation and
enforcement of this Agreement shall be determined and governed by the laws of
the State of California without giving effect to the conflicts of laws
principle thereof. The invalidity or unenforceability of any provision of
this Agreement or the invalidity or unenforceability of any provision as
applied to a particular occurrence or circumstance shall not affect the
validity or enforceability of any of the other provisions of this Purchase
Agreement or the applicability of such provision, as the case may be. All
provisions of the Agreement shall be incorporated herein by reference as if
set forth in their entirety herein. All rights of the parties contained
herein and in the Purchase Agreement shall be cumulative.
4.4 COUNTERPARTS. This Agreement may be signed in two or more
counterparts, each of which shall be deemed an original and all of which
shall constitute one agreement.
4.5 FRACTIONAL SHARES. In the event a Seller would be entitled to
receive upon termination of the General Escrow Fund, after recovery by
Peregrine of all Losses, a fractional share of Peregrine's Common Stock, then
in lieu of such fractional shares, such Seller shall receive an amount of
shares of Peregrine's Common Stock that is rounded down to the nearest whole
share.
4.6 TRANSFER OF INTERESTS. Subject to Section 1.3(f) hereof, no Seller
shall sell, transfer, pledge, hypothecate or otherwise dispose of any Escrow
Shares, or any interest therein (other than to another Seller or Partner),
prior to the distribution of such Escrow Shares in accordance with this
Agreement.
4.7 CURRENCY. All references to "$" or "dollars" herein shall refer to
the lawful currency of the United States of America.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
-9-
IN WITNESS WHEREOF, the parties have signed this Escrow Agreement on the
day and year first above written.
"PEREGRINE" PEREGRINE SYSTEMS, INC.
a Delaware corporation
By:
------------------------------------------
Xxxxx X. Xxxxxx
Vice President, Finance, and Chief
Financial Officer
"PARTNERS"
---------------------------------------------
Xxxxxx Xxxxxx
---------------------------------------------
Xxxxxxx Xx Xxxxx
FIRTREE OVERSEAS, LTD.
a British Virgin Islands corporation
By:
-----------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
"SELLERS" INTERNATIONAL SOFTWARE SOLUTIONS
LIMITED PARTNERSHIP
a Nevada limited partnership
By: International Software Solutions, Inc.,
its general partner
By:
-----------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
[SIGNATURE PAGE TO ESCROW AGREEMENT]
-10-
INTERNATIONAL SOFTWARE SOLUTIONS USA, L.C.
a Florida limited liability company
By:
-----------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
INTERNATIONAL SOFTWARE SOLUTIONS, INC.
a Delaware corporation
By:
-----------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
INTERNATIONAL SOFTWARE SOLUTIONS UK LTD.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
INTERNATIONAL SOFTWARE SOLUTIONS GMBH
By:
-----------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
[SIGNATURE PAGE TO ESCROW AGREEMENT]
-11-
INTERNATIONAL SOFTWARE SOLUTIONS FRANCE
DIFFUSION SARL
By:
-----------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
INTERNATIONAL SOFTWARE SOLUTIONS PRODUCTION
SARL
By:
-----------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
"SELLER AGENT"
---------------------------------------------
Xxxxxx Xxxxxx
"ESCROW AGENT" CHASEMELLON SHAREHOLDER SERVICES, LLC
By:
------------------------------------------
Xxxxxxx Xxxxxx, Assistant Vice President
[SIGNATURE PAGE TO ESCROW AGREEMENT]
-12-
EXHIBIT A
ESCROW ALLOCATION
------------------------------------------------------------------------------------------------
ESCROW ALLOCATION
------------------------------------------------------------------------------------------------
TOTAL BUYER EMPLOYMENT
SELLER SHARES ESCROW SHARES ESCROW AMOUNT
------------------------------------------------------------------------------------------------
International Software Solutions
Limited Partnership. 337,910 33,791 $ 430,920
------------------------------------------------------------------------------------------------
International Software Solutions GmbH 15,708 1,571 20,032
------------------------------------------------------------------------------------------------
International Software Solutions France
Diffusion SARL 18,253 1,826 23,277
------------------------------------------------------------------------------------------------
International Software Solutions
Production SARL 31 3 39
------------------------------------------------------------------------------------------------
International Software Solutions USA, L.C. 16,173 1,618 20,625
------------------------------------------------------------------------------------------------
International Software Solutions UK Ltd. 4,005 401 5,107
------------------------------------------------------------------------------------------------
TOTAL 392,080 39,210 $ 500,000
------------------------------------------------------------------------------------------------
EXHIBIT B
PURCHASE PRICE ALLOCATION
392,082
ISS LP 11,050,000
153,870
11,203,870 86.18% 337,910.42 337,910
ISS FD SARL 408,721
29,825
166,667
605,213 4.66% 18,253.32 18,253
ISS PROD 1,053 0.01% 31.76 31
ISS USA 536,246 4.12% 16,173.26 16,173
ISS Gmbh 520,827 4.01% 15,708.22 15,708
ISS UK 132,792 1.02% 4,005.03 4,005
13,000,001 100.00% 392,082.00 392,080.00
EXHIBIT C
INVESTMENT REPRESENTATION STATEMENT
PEREGRINE SYSTEMS, INC.
INVESTMENT REPRESENTATION STATEMENT
In connection with its acquisition of 337,910 shares of Common Stock (the
"Shares") of Peregrine Systems, Inc. (the "Company") pursuant to that certain
Asset Purchase Agreement dated September 23, 1998, International Software
Solutions Limited Partnership, a Nevada limited partnership (the
"Purchaser"), hereby represents and warrants to the Company as follows:
1. INVESTMENT INTENT; CAPACITY TO PROTECT INTERESTS. Purchaser is
purchasing the Shares for investment only and not with any present intention or
view toward selling or otherwise disposing of the Shares or any portion thereof
in any transaction other than a transaction exempt from registration under the
Securities Act of 1933, as amended (the "Securities Act") or pursuant to an
effective registration statement under the Securities Act. Purchaser also
represents that the entire legal and beneficial interest of the Shares is being
purchased and will be held for the Purchaser's account only and neither in whole
nor in part for any other person. Purchaser has such business and financial
experience as is required to give it the capacity to protect its own interests
in connection with the purchase of the Shares.
2. AUTHORIZATION. Purchaser's purchase of the Shares has been duly
authorized by all requisite corporate, partnership or membership action of
Purchaser, as the case may be.
3. INFORMATION CONCERNING COMPANY. Purchaser has received all
information Purchaser has deemed appropriate to enable the Purchaser to evaluate
the financial risk inherent in investing in the Shares; PROVIDED, HOWEVER, that
the foregoing shall not be deemed to limit or affect in any manner the
representations and warranties made by the Company in connection with
Purchaser's acquisition of the Shares. Purchaser either has a preexisting
business or personal relationship with the Company or any of its officers,
directors, or controlling persons or by reason of Purchaser's business or
financial experience or the business or financial experience of Purchaser's
professional advisors who are unaffiliated with and who are not compensated by
the Company, directly or indirectly, could be reasonably assumed to have the
capacity to evaluate the merits and risks of an investment in the Company and to
protect Purchaser's own interests in connection with this transaction.
4. RESTRICTED SECURITIES. The Purchaser acknowledges that the sale of
the Shares has not been registered under the Securities Act. The Shares must be
held indefinitely unless subsequently registered under the Securities Act or an
exemption from such registration is available, and the Company is under no
obligation to register the Shares except as set forth in the Declaration of
Registration Rights, which is to be entered into by the Company in connection
with the aforementioned Asset Purchase Agreement. Purchaser further
acknowledges that it is familiar with Rule 144 promulgated under the Securities
Act and understands the resale limitations imposed thereby and the limitations
imposed by the Securities Act. Purchaser understands that the certificate(s)
evidencing the Shares will be imprinted with a legend that prohibits the
transfer of the Shares unless
(i) they are registered under the Securities Act or such registration is not
required, and (ii) if the transfer if pursuant to an exemption from
registration, an opinion of counsel reasonably satisfactory to the Company
that the transaction is so exempt.
5. TAX REPRESENTATION. Purchaser has reviewed with its own tax advisors
the federal, state, local, and foreign tax consequences of this investment.
Purchaser is relying solely on such advisors and not on any statements or
representations of the Company or any of its agents. Purchaser understands that
it (and not the Company) will be responsible for its own tax liability that may
arise as a result of this investment or the transactions contemplated by this
agreement.
Executed effective September 23, 1998.
INTERNATIONAL SOFTWARE SOLUTIONS
LIMITED PARTNERSHIP
By: International Software Solutions, Inc.,
its general partner
By:
-----------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
EXHIBIT D
DECLARATION OF REGISTRATION RIGHTS
PEREGRINE SYSTEMS, INC.
DECLARATION OF REGISTRATION RIGHTS
This Declaration of Registration Rights ("DECLARATION") is made
September 23, 1998, by Peregrine Systems, Inc., a Delaware corporation (the
"COMPANY"), for the benefit of the Sellers and the Partners (as defined in
the Asset Purchase Agreement of even date herewith (the "ASSET PURCHASE
AGREEMENT") by and among the Company, the Sellers, and the Partners (as such
terms are defined in the Asset Purchase Agreement), and in consideration of
the Sellers' and the Partners' entering into the Asset Purchase Agreement and
the transactions contemplated thereby. Capitalized terms not otherwise
defined herein shall have the meanings ascribed to them in the Asset Purchase
Agreement.
1. DEFINITIONS. As used in this Declaration:
(a) "EFFECTIVE TIME" means the time of the purchase and sale of the
Acquired Assets.
(b) "EXCHANGE ACT" means the United States Securities Exchange Act of
1934, as amended.
(c) "HOLDER" means (i) a Seller to whom shares of Common Stock of
the Company are issued pursuant to the Asset Purchase Agreement or (ii) any
transferee (including a Partner) to whom registration rights granted under
this Declaration are assigned pursuant to Section 7 of this Declaration.
(d) "REGISTRABLE SECURITIES" means, for each Holder, the number of
shares of Common Stock of the Company issued to such Holder pursuant to the
Asset Purchase Agreement; PROVIDED, HOWEVER, that (i) any Common Stock of the
Company (other than Escrow Shares) that were Registrable Securities hereunder
shall cease to be Registrable Securities after the Company has satisfied its
obligations to register for resale and maintain the effectiveness of a
registration statement relating to such shares on the terms and conditions
set forth in Section 2(b) and (ii) any Escrow Shares shall cease to be
Registrable Securities hereunder at such time as they may be resold in
reliance on Rule 144 under the Securities Act.
(e) "SECURITIES ACT" means the United States Securities Act of 1933,
as amended.
(f) "SEC" means the United States Securities and Exchange Commission.
2. HOLDER REGISTRATION.
(a) The Company shall use its best efforts to cause the Registrable
Securities (other than the Escrow Shares) 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 not later than October 5,
1998, a registration statement covering all the Registrable Securities (other
than the Escrow Shares) on such form as is then available under the
Securities Act; PROVIDED, HOWEVER, that each Holder shall provide all such
information and materials regarding such Holder and take all such action as
may be required by a Holder under applicable laws and regulations in order to
permit the Company to comply with all applicable requirements of the
Securities Act, the Exchange Act, and 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 the Company pursuant to this Declaration to register the
Registrable Securities (other than the Escrow Shares) held by each such
Holder. Notwithstanding the foregoing, the Company shall not be required
(assuming no review by the SEC) to request acceleration of such registration
statement for any date prior to October 15, 1998. The offerings made
pursuant to such registration shall not be underwritten.
(b) The Company 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 (but shall not be required to request acceleration for any date prior
to October 15, 1998) and to keep such registration statement effective until
the first to occur of (A) the date on which all Registrable Securities
included within such registration statement have been sold or (B) the
expiration of fifteen (15) calendar 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 the Company 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 the Company 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 or is not otherwise subject to a general
consent for service of process), 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.
3. PIGGYBACK REGISTRATIONS. In the event the Escrow Shares are not, upon
release from the Escrow Funds, eligible for resale in reliance on Rule 144 under
the Securities Act, the Holders shall be entitled to piggy-back registration
rights as set forth in this Section 3. If (i) the Escrow Shares are not so
eligible and (ii) the Company shall determine to register any of its securities,
either for its own account or the account of another holder of the Company's
securities, the Company will promptly give
-2-
each Holder written notice thereof and include in such registration (and any
related qualification under blue sky laws or other compliance), and in any
underwriting involved therein, all the Escrow Shares that are then
Registrable Securities. In the event a Holder elects not to participate in
any registration hereunder (including as a result of such Holder's
disapproval of the terms of any underwriting), such Holder's rights under
this Section 3 shall terminate. Notwithstanding any other provision of this
Section 3, if the managing underwriter (in the case of an underwritten
offering by the Company) determines that marketing factors require a
limitation of the number of shares to be underwritten, the managing
underwriter may limit the number of Registrable Securities to be included in
the registration and underwriting (or exclude the Registrable Securities
altogether); PROVIDED, HOWEVER, that (i) in no event may the number of
Registrable Securities included in such registration statement be limited in
any manner if the securities of any other security holder of the Company are
included in such registration and (ii) any Registrable Securities so excluded
shall continue to be Registrable Securities, subject to the terms of this
Declaration. The Company shall have the right to terminate or withdraw any
registration initiated by it under this Section 3 prior to the effectiveness
of such registration, but any such termination shall not result in a
forfeiture by any Holder of any rights hereunder.
4. SUSPENSION OF PROSPECTUS. Under any registration statement filed
pursuant to this Declaration, the Company may restrict disposition of
Registrable Securities, and a Holder will not be able to dispose of such
Registrable Securities, if the Company shall have delivered a notice in
writing to such Holder stating that a delay in the disposition of such
Registrable Securities is necessary because the Company, in its reasonable
judgment, has determined that such sales would require public disclosure by
the Company of material non-public information that is not included in such
registration statement. In the event of the delivery of the notice described
above by the Company in the case of a registration statement filed pursuant
to Section 2, the Company shall amend such registration statement and/or
amend or supplement the related prospectus if necessary to take all other
actions necessary to allow the proposed sale to take place as promptly as
possible, subject, however, to the right of the Company 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. In the
case of the registration statement filed pursuant to Section 2, such right to
delay sales of Registrable Securities shall not exceed fifteen (15) days and
may not be exercised by the Company more than once. Any such delay shall
result in a corresponding extension of the period of time that the Company is
required to maintain the effectiveness of the registration statement under
Section 2.
5. 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 fees and disbursements of the Company's outside
counsel and independent accountants shall be paid by the Company. The
Company shall not be responsible to pay any legal fees for any Holder or any
selling expenses of any Holder (including, without limitation, any broker's
fees or commissions, including underwriter commissions).
6. INDEMNIFICATION. In the event of any offering registered pursuant to
this Declaration:
-3-
(a) The Company will indemnify each Holder and each of its
officers, directors, and partners and such Holder's legal counsel, and each
person controlling such Holder (each, a "Seller Indemnified Party"), with
respect to any registration, qualification or compliance effected pursuant to
this Declaration 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
the Company of any rule or regulation promulgated under the Securities Act,
or state securities laws, or common law, applicable to the Company in
connection with any such registration, qualification or compliance, and will
reimburse each Seller Indemnified Party 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 the Company
will not be liable in any such case to the extent (but solely to the extent)
that any such claim, loss, damage, liability or expense arises out of or is
based on any untrue statement or omission or alleged untrue statement or
omission, made in reliance upon and in conformity with written information
furnished to the Company in an instrument duly executed by such Seller
Indemnified Party 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 the Company, each of
its directors and officers and its legal counsel and independent accountants,
and each other such Holder (each, a "Company Indemnified Party"), 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 each Company
Indemnified Party 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 the Company 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 (after deducting reasonable expenses and commissions)
to each such Holder of Registrable Securities sold as contemplated herein.
(c) Each Company Indemnified Party or Seller Indemnified Party
entitled to indemnification under this Section 6 (each referred to herein as
an "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,
-4-
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) If the indemnification provided for in the preceding
paragraphs of this Section 6 is unavailable to an Indemnified Party in
respect of any expenses, claims, losses, damages or liabilities referred to
herein, or is insufficient to hold such Indemnified Party harmless, then,
except to the extent that contribution is not permitted under Section 11(f)
of the Securities Act, the Company and the Holders, as the case may require,
shall contribute to the amount paid or payable by such Indemnified Party as a
result of such expenses, claims, losses, damages or liabilities in such
proportion as is appropriate to reflect the relative fault of the Company,
such Holder, or such Indemnified Party, as the case may be, in connection
with the actions, statements or omissions that resulted in such expenses,
claims, losses, damages or liabilities. The relative fault of the Company,
such Holder, and such Indemnified Party, shall be determined by reference to,
among other things, whether any action in question, including any untrue
statement of a material fact or omission to state a material fact, has been
taken or made by, or relates to information supplied by, the Company, such
Holder, or such Indemnified Party, and the parties' relative intent,
knowledge, access to information concerning the matter with respect to which
the claim was asserted and opportunity to correct or prevent such action,
statement or omission, as well as any other relevant equitable considerations
appropriate under the circumstances. The parties hereto agree that it would
not be just and equitable if contribution pursuant to this paragraph (d) were
determined by PRO RATA allocation or by any other method of allocation that
does not take into account the equitable considerations referred to in the
immediately preceding sentence. Notwithstanding the provisions of this
paragraph (d), no Holder shall be required to contribute any amount in excess
of the amount by which the gross proceeds (after deducting reasonable
expenses and commissions) received by such Holder from the sale of
Registrable Securities exceeds the amount of any damages that such Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled
to contribution from any person who was not guilty of such fraudulent
misrepresentation.
(e) The obligations of the Company and each Holder under this
Section 6 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Declaration.
(f) Notwithstanding the foregoing, to the extent the provisions of
this Section 6 are inconsistent with or conflict with the terms of any
indemnification, selling or similar agreement entered
-5-
into by a Holder in connection with the offer and sale of Registrable
Securities pursuant to a registration effected pursuant to this Declaration,
the terms of such agreement shall govern and shall supersede the provisions
of this Declaration.
7. ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the Company
to register Registrable Securities pursuant to this Declaration may be
assigned by a Holder to a transferee of Registrable Securities only if: (a)
the Company 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 the
Company 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; PROVIDED, HOWEVER, that such share limitation shall not
apply to transfers by a Holder to shareholders, partners, or members of the
Holder (including spouses and ancestors, lineal descendants, and siblings (or
trusts for the benefit of any of the foregoing) of such shareholders,
partners, or members 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.
8. NO ADDITIONAL SECURITIES. The Company agrees it will not include
any additional securities of the Company (other than the Registrable
Securities), and will not permit any other person or entity to include any
additional securities, in the registration statement to be filed pursuant to
Section 2 hereof.
9. AMENDMENT OF REGISTRATION RIGHTS. Holders of a majority of the
Registrable Securities from time to time outstanding may, with the consent of
the Company, amend the registration rights granted hereunder.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-6-
PEREGRINE SYSTEMS, INC.
By:
-------------------------------------------
Xxxxx X. Xxxxxx
Vice President, Finance, and Chief Financial
Officer
[Signature Page to Declaration of Registration Rights]
-7-
EXHIBIT E
OPINION OF XXXXXX XXXXXXX XXXXXXXX & XXXXXX
[XXXXXX XXXXXXX XXXXXXXX & XXXXXX LETTERHEAD]
September 23, 1997
International Software Solutions Limited Partnership
International Software Solutions USA, L.C.
International Software Solutions, Inc.
International Software Solutions UK Ltd.
International Software Solutions GmbH
International Software Solutions France Diffusion SARL
International Software Solutions Production SARL
Firtree Overseas Ltd.
Xxxxxx Xxxxxx
Xxxxxxx Xx Xxxxx
Ladies and Gentlemen:
We have acted as counsel to Peregrine Systems, Inc., a Delaware corporation
("Peregrine"), in connection with the acquisition (the "Acquisition") by
Peregrine of certain of the assets and liabilities of International Software
Solutions Limited Partnership, International Software Solutions USA, LC,
International Software Solutions, Inc., International Software Solutions UK
Ltd., International Software Solutions GmbH, International Software Solutions
France Diffusion SARL, International Software Solutions Production SARL
(collectively, the "Sellers"), pursuant to the Asset Purchase Agreement dated
September 23, 1998 among Peregrine, the Sellers and the other parties named
therein (the "Purchase Agreement"). This opinion is furnished to you pursuant
to Section 8.1(c) of the Purchase Agreement. Unless otherwise defined herein,
the capitalized terms used in this opinion have the meanings given to them in
the Purchase Agreement.
We have acted as counsel for Peregrine in connection with the negotiation
of the Purchase Agreement and the consummation of the Acquisition, including the
negotiation of the Escrow Agreement and the Declaration of Registration Rights
(collectively, the "Ancillary Agreements"). The Ancillary Agreements and the
Purchase Agreement are referred to collectively herein as the Acquisition
Agreements. As such counsel, we have made such legal and factual examinations
and inquiries as we have deemed advisable or necessary for the purposes of
rendering this opinion. In addition, we have examined originals or copies of
documents, corporate records and other writings that we consider relevant for
the purposes of this opinion. In such examination, we have assumed the
genuineness of all signatures on original documents, the conformity to original
documents of all copies submitted to us and the due execution and delivery of
all documents by any party other than Peregrine where due execution and delivery
are a prerequisite to the effectiveness thereof.
XXXXXX XXXXXXX XXXXXXXX & XXXXXX
Interational Software Solutions
Limited Partnership, et al.
September 23, 1998
Page 2
As used in this opinion, the expression "to our knowledge" or "known to
us" or similar language with reference to matters of fact means that, after
an examination of documents made available to us by Peregrine, and after
inquiries of officers of Peregrine, but without any further independent
investigation, we find no reason to believe that the opinions expressed
herein are factually incorrect. Further, the expression "to our knowledge"
with reference to matters of fact refers to the current actual knowledge of
individual attorneys of this firm who devoted substantive attention to the
transactions contemplated by the Purchase Agreement. Except to the extent
expressly set forth herein or as we otherwise believe necessary to our
opinion, we have not undertaken any independent investigation to determine
the existence or absence of any fact, and no inference as to our knowledge of
the existence or absence of any fact should be drawn from our representation
of Peregrine or the rendering of the opinion set forth below.
For purposes of this opinion, we are assuming that each of the Sellers
and the Partners have all requisite power and authority, and have taken any
and all necessary company, partnership, membership and shareholder action, to
execute and deliver the Purchase Agreement and we assume that the
representations and warranties made by the Sellers and the Partners in the
Purchase Agreement and pursuant thereto are true and correct. We are also
assuming that the Sellers have purchased the shares of Buyers Shares for
value, in good faith and without notice of any adverse claims within the
meaning of California Uniform Commercial Code.
The opinions hereinafter expressed are subject to the following
qualifications and assumptions:
A. We express no opinion as to the effect of rules of law governing
specific performance, injunctive relief or other equitable remedies
(regardless of whether such remedy is considered in a proceeding at law or in
equity);
B. We express no opinion as to the effect of applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
rights of creditors generally;
C. We express no opinion as to compliance with the anti-fraud
provisions of state and federal laws, rules and regulations concerning the
issuance of securities;
D. Our opinion set forth in paragraph 2 below as it relates to the
indemnification provisions of the Declaration of Registration Rights is
subject to limitations of public policy and the effect of applicable statutes
and judicial decisions; and
XXXXXX XXXXXXX XXXXXXXX & XXXXXX
Interational Software Solutions
Limited Partnership, et al.
September 23, 1998
Page 3
E. We are members of the Bar of the State of California and we are not
expressing any opinion as to any matter relating to laws of any jurisdiction
other than the laws of the United States of America, the laws of the States of
California and Delaware General Corporation Law.
Based upon and subject to the foregoing, and except as set forth in the
Purchase Agreement, we are of the opinion that:
1. Peregrine is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and is duly qualified and
licensed to do business and is in good standing in the State of California.
Peregrine has the corporate power to own its properties and carry out its
business as now being conducted.
2. Peregrine has all requisite corporate power and authority to enter
into the Acquisition Agreements and to consummate the transactions contemplated
thereby. The execution and delivery of the Acquisition Agreements and the
consummation of the transactions contemplated thereby have been duly authorized
by all necessary corporate action on the part of Peregrine, and no further
corporate action is required on the part of Peregrine to authorize the
Acquisition Agreements and the transactions contemplated thereby. Each of the
Acquisition Agreements has been duly executed and delivered by Peregrine and
constitutes a valid and binding obligation of Peregrine, enforceable against
Peregrine in accordance with its terms. The execution and delivery of the
Purchase Agreement does not and the consummation of the transactions
contemplated thereby will not result in a Conflict with (i) any provision of the
Certificate of Incorporation or Bylaws of Peregrine 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 Peregrine, the breach, violation, default, termination or
forfeiture of which would have a Peregrine Material Adverse Effect or materially
affect the ability of Peregrine to fulfill its obligations under the Acquisition
Agreements.
3. No consent, approval, order or authorization of, or registration,
declaration, or filing with, any Governmental Entity is required by or with
respect to Peregrine in connection with the execution and delivery of the
Acquisition Agreements or the consummation by Peregrine of the transactions
contemplated thereby, except for such consents, approvals, orders,
authorizations, registrations, declarations, and filings as may be required
under state and federal securities laws and the laws of any foreign corporation.
4. The Buyer Shares are duly and validly issued, fully paid and
nonassessable and free of any preemptive right created by statute, Peregrine's
Certificate of Incorporation or Bylaws or, to our knowledge, any agreement to
which Peregrine is a party.
XXXXXX XXXXXXX XXXXXXXX & XXXXXX
Interational Software Solutions
Limited Partnership, et al.
September 23, 1998
Page 4
5. To our knowledge, there is no action, suit, proceeding, claim,
arbitration or investigation pending or as to which Peregrine has received any
notice of assertion against Peregrine, which in any manner challenges or seeks
to prevent, enjoin, alter or materially delay any of the transactions
contemplated by the Purchase Agreement.
6. Subject to the accuracy of the representations provided by the
Sellers, the offer and sale of Buyer Shares to the Sellers pursuant to the terms
of the Purchase Agreement are exempt from the registration requirements of
Section 5 of the Securities Act of 1933.
This opinion is solely for your benefit and is not to be made available to
or relied on by any other person without our express prior written consent. We
assume no obligation to inform you of any facts, circumstances, events or
changes in the law that may hereafter be brought to our attention that may
alter, affect or modify the opinions expressed herein.
Very truly yours,
XXXXXX XXXXXXX XXXXXXXX & XXXXXX
Professional Corporation
/s/ Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
EXHIBIT F
OPINION OF IRELL & XXXXXXX
[LETTERHEAD]
September 23, 1998
Peregrine Systems, Inc.
00000 Xxxx Xxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Re: Asset Purchase Agreement dated September 23, 1998
-------------------------------------------------
Ladies and Gentlemen:
We have acted as counsel to International Software Solutions Limited
Partnership, a Nevada limited partnership ("ISSLP"), International Software
Solutions USA, L.C., a Florida limited liability company ("ISSUS") and
International Software Solutions, Inc., a Delaware corporation and general
partner of ISSLP ("ISSI" and together with ISSLP and ISSUS, the "ISS
Entities"), Xxxxxx Xxxxxx and Xxxxxxx Xx Xxxxx (Messrs. Favier and Le Bihan
being referred to as the "Partners"), in connection with the acquisition (the
"Acquisition") of certain assets and liabilities of the ISS Entities (other
than ISSI) and affiliated entities by Peregrine Systems, Inc., a Delaware
corporation ("Peregrine"), and any wholly-owned subsidiary of Peregrine that
Peregrine may have designated as a "Buyer" (collectively, "Buyers"), pursuant
to the Asset Purchase Agreement dated September 23, 1998 (the "Purchase
Agreement") among Peregrine, the ISS Entities, the Partners and certain other
parties named therein. This opinion is furnished to you pursuant to Section
8.2(b) of the Purchase Agreement. Unless otherwise defined herein, the
capitalized terms used in this opinion have the meanings given to them in the
Purchase Agreement.
We have acted as counsel for the ISS Entities and the Partners in
connection with the negotiation of the Purchase Agreement and the
effectuation of the Acquisition. As such counsel, we have examined originals
or copies of the Purchase Agreement, as well as the records of the corporate
or similar proceedings of the ISSI Entities relating to the Purchase
Agreement and the transactions contemplated thereby, and such other matters
of fact and law and documents as we have deemed necessary or relevant as a
basis for this opinion. In our review, we have assumed, without
investigation, the legal capacity of all natural persons signing documents in
their respective individual capacities, the genuineness of all signatures
not witnessed by us, the authenticity of all documents submitted to us as
originals, the lack of any undisclosed modifications, waivers or amendments
to any agreements reviewed by us, the conformity to original documents of all
documents submitted to us as certified, photostatic or telecopied copies, and
the authenticity of the originals of such copies. In
Peregrine Systems, Inc.
September 23, 1998
Page 2
addition, we have obtained and relied upon such certificates and assurances
from public officials as we have deemed necessary. We have also assumed that
the execution, delivery and performance of any agreements or consents are
within the powers of each signatory (other than the ISS Entities) and have
been duly authorized and validly carried out by each such signatory.
Furthermore, we have examined, relied upon and assumed to be complete and
correct the representations and warranties contained in the Purchase
Agreement as to matters of fact (other than facts constituting conclusions of
law). In addition, we have been furnished with, and with your consent have
relied upon, a certificate of the Partners, on behalf of themselves and the
ISS Entities, with respect to certain factual matters.
For purposes of this opinion, we are assuming that Peregrine and each
Buyer have all requisite power and authority and have taken any and all
necessary corporate action, to execute and deliver the Purchase Agreement,
and we assume that the representations and warranties made by Peregrine and
each Buyer in the Purchase Agreement and pursuant thereto are true and
correct.
Based upon and subject to the foregoing, and subject to the
qualifications set forth below, we are of the opinion that:
1. ISSI is a corporation duly organized, validly existing and in good
standing under the laws of the state of Delaware. ISSLP is a limited
partnership duly organized, validly existing and in good standing under the
laws of the state of Nevada. ISSUS is a limited liability company duly
organized, validly existing and in good standing under the laws of the state
of Florida. Each of the ISS Entities is duly qualified or licensed to do
business and is in good standing in each jurisdiction listed for the
respective ISS Entities on SCHEDULE A attached hereto. Each of the ISS
Entities has all requisite partnership, limited liability company or
corporate, as the case may be, power and authority to own, lease and operate
its assets and property and to carry on its business as now being conducted.
2. With respect to each of the ISS Entities, the Partners collectively
own (in conjunction with Firtree), directly or indirectly, all outstanding
shares of capital stock, partnership interests, or other ownership interests,
as the case may be, relating to such ISS Entity.
3. Each of the ISS Entities and each Partner has all requisite power
and authority to enter into the Purchase Agreement and to consummate the
transactions contemplated thereby. The execution and delivery of the Purchase
Agreement and the consummation of the transactions contemplated thereby have
been duly authorized by all necessary corporate, partnership, membership or
manager action, as the case may require, on the part of each of the ISS
Entities and no further action is required on the part of any of the ISS
Entities to authorize the Purchase Agreement and the transactions
contemplated thereby. The Purchase Agreement has been duly executed and
delivered by each of the ISS Entities
Peregrine Systems, Inc.
September 23, 1998
Page 3
and each Partner and constitutes the valid and binding obligation of each of
the ISS Entities and each Partner, enforceable against each such ISS Entity
or Partner in accordance with its terms.
4. The execution and delivery of the Purchase Agreement and the
consummation of the transactions contemplated thereby will not Conflict with,
or result in any Conflict with, any provision of the charter or constituent
documents of any of the ISS Entities. To our knowledge, no consent, waiver,
approval, order or authorization of, or registration, declaration or filing
with, any Governmental Entity which, in our experience, is normally
applicable to transactions of the nature contemplated by the Purchase
Agreement is required on or prior to the date of this opinion by or with
respect to any ISS Entity or either Partner in connection with the execution
and delivery of the Purchase Agreement or the performance by any of the ISS
Entities or either Partner of its or his respective obligations thereunder or
the consummation by any of the ISS Entities or either Partner of the
transactions contemplated therein.
5. To our knowledge, there is no action, suit, proceeding, claim,
arbitration or investigation pending or as to which any of the ISS Entities
or either Partner has received any notice of assertion against any of them,
which in any manner challenges or seeks to prevent, enjoin, alter or
materially delay any of the transactions contemplated by the Purchase
Agreement.
The opinions expressed above are subject to and limited by the following
qualifications:
(a) The effect of bankruptcy, insolvency, reorganization, moratorium
and other similar laws and legal and equitable principles relating to,
limiting or affecting the enforcement of creditors' rights generally
including, but not limited to, preferences and fraudulent conveyances.
(b) The effect of general principles of equity including, but not
limited to, concepts of materiality, reasonableness, good faith and fair
dealing and the possible unavailability of specific performance or injunctive
relief regardless of whether considered in a proceeding in equity or at law.
In this regard, we note that a California court might not permit the exercise
of any right or remedy under the Purchase Agreement if, under the
circumstances then existing, such exercise is deemed to be inconsistent with
the covenant of good faith and fair dealing implied under California law to
exist in all agreements or if the party seeking to exercise the right or
remedy fails to act in a commercially reasonable manner or fails to fulfill
other duties imposed by statute or judicial decisions.
Peregrine Systems, Inc.
September 23, 1998
Page 4
(c) The discretion of any court or arbitrator of competent jurisdiction
in awarding equitable remedies, including, but not limited to, specific
performance or injunctive relief (regardless of whether any such remedy is
considered in a proceeding at law or in equity).
(d) The effect of Section 1670.5 of the California Civil Code, which
provides that if a court as a matter of law finds a contract or any clause of
a contract to have been "unconscionable" at the time it was made, the court
may refuse to enforce the contract or clause, as the case may be, or the
court may enforce the remainder of the contract without the "unconscionable"
clause so as to avoid an "unconscionable".
(e) The unenforceability under certain circumstances of provisions
waiving vaguely or broadly stated rights or unknown future rights and of
provisions stating that rights or remedies are not exclusive, that every
right or remedy is cumulative and may be exercised in addition to or with any
other right or remedy, or that the election of some particular remedy or
remedies does not preclude recourse to one or more others.
(f) The effect of (i) any federal or state securities or "blue sky"
laws, including, but not limited to, with respect to compliance with the
anti-fraud provisions of laws, rules and regulations concerning the issuance
of securities, or (ii) federal or state antitrust laws.
(g) The effect of Sections 1668 and 2773 of the California Civil Code,
and judicially created rules of public policy under federal and California
law, limiting the extent to which indemnity agreements and exculpatory
clauses will be enforced.
(h) We express no opinion as the enforceability of the covenants
not-to-compete contained in Article IX of the Purchase Agreement.
(i) We express no opinion as to the effect on rights to indemnification
and contribution to the extent such rights may be limited by federal or state
securities laws or public policy relating thereto.
(j) We express no opinion as to the enforceability of the venue
provisions set forth in the Purchase Agreement.
For the purposes of our opinions expressed in paragraph 1 above with
respect to valid existence and good standing, we are relying solely on
certificates of status issued, within the last 15 days, by the Secretary
of State or other appropriate authorities of the applicable jurisdiction
listed on EXHIBIT A hereto, and we express no opinion with respect to such
matters beyond the dates as of which such certificates and memoranda were
issued. In addition, our opinion expressed in paragraph 2 above is based
solely upon our review of the stock book, partnership agreement or limited
liability company agreement, as applicable, of the ISS Entities.
Peregrine Systems, Inc.
September 23, 1998
Page 5
Whenever our opinion herein with respect to the existence or
nonexistence of facts is qualified by the phrase "to our knowledge", or any
other similar phrase implying a limitation on the basis of knowledge, such
phrase means only that the individual attorneys in this firm who devoted
substantive attention to the transactions contemplated by the Purchase
Agreement do not have actual knowledge that the facts as stated herein are
untrue. Such persons have not undertaken any investigation to determine the
existence or nonexistence of such facts, and no inference as to the extent of
their knowledge should be drawn from the fact of their representation of the
ISS Entities and the Partners in this or any other instance.
For the purposes of our opinion expressed in paragraph 3 above, we have
assumed that any corporate party attempting to enforce an agreement has paid
all taxes, penalties and interest due under the California Revenue and
Taxation Code.
Our opinion is limited to the laws of the State of California and we
express no opinion as to the laws of any other jurisdiction except the
Delaware General Corporation Law and the laws of the United States of
America, in each case to the extent not specifically excluded herein and as
in effect on the date hereof, and we do not express herein any opinion as to
any other laws. In this regard, we note that two of the ISS Entities are
organized under the laws of the States of Nevada and Florida, respectively.
We have assumed, with your permission, that the applicable laws of those
states are in all material respects identical to the laws of the State of
California applicable to such types of entities. We express no opinion as to
whether the choice of law provision set forth in the Purchase Agreement would
be enforced.
This opinion is solely for your benefit pursuant to Section 8.2(b) of
the Purchase Agreement and is not to be made available to or relied upon by
any other person or entity or by you for any other purpose or in any other
context without our express prior written consent.
Very truly yours,
/s/ Irell & Xxxxxxx LLP/xx
Xxxxx & Xxxxxxx LLP
SCHEDULE A
TO
OPINION OF IRELL & XXXXXXX LLP
International Software Solutions Limited Partnership,
a Nevada limited partnership
International Software Solutions USA, L.C.,
a Florida limited liability company
International Software Solutions, Inc.,
a Delaware corporation qualified to do business in the State of Nevada
EXHIBIT G
OPINION OF SELLERS' UK COUNSEL
[LETTERHEAD]
Your Ref:
Our Ref:
Peregrine Systems, Inc.
24 September 1998
Dear Sirs
PEREGRINE/ISS PURCHASE AGREEMENT
A. INTRODUCTION
---------------
We have been asked to provide you with an opinion in the context of the
transaction contemplated by an asset purchase agreement dated 23 September
1998 relating to the purchase by Peregrine Systems Inc. of the assets of a
number of entities bearing the name International Software Solutions and
Firtree Overseas Limited and established or incorporated under the laws
inter alia of Nevada, Florida, France, Germany and England and Wales. Our
opinion is provided on the following basis.
B. SCOPE OF OUR OPINION
-----------------------
1. Our opinion is limited to the laws of England and Wales and we express
no opinion as to the laws of any other jurisdiction to the extent not
specifically excluded herein and as in effect at the date hereof. We do
not express any opinion as to any other laws. In this regard we note
that the Purchase Agreement is subject to the laws of the State of
California and that any dispute is to be resolved by arbitration in the
City of London under the AAA International Commercial Arbitration Rules
and Supplemental Procedures for large Complex disputes. We further
specifically do not express any opinion as to the effect of the
inter-relationship and/or conflict between Californian and UK law to the
extent that UK law may in any event prevail and/or apply to ISSUK, its
employees and its business.
2. We have been furnished with, and with your consent have relied upon a
letter signed by the Partners on behalf of themselves and ISSUK that
they know of no fact or reason whatsoever why any opinion expressed
herein is inaccurate or misleading.
3. For the purposes of this opinion we are assuming that Peregrine and the
Partners each have all requisite power and authority and have taken all
necessary corporate action to execute and deliver the Purchase Agreement
and related documentation. We assume that the
Peregrine Systems, Inc.
24 September 1998 [LOGO]
Page 2
representations and warranties provided to Peregrine by each Buyer in
the Purchase Agreement and pursuant thereto are true and accurate and
not misleading.
C. OPINION
----------
1. ISSUK is a company duly incorporated, validly existing and in good
standing under the laws of England and Wales as a private limited
liability company.
2. ISSUK is entitled to carry on its business and is in good standing under
the laws of England and Wales. ISSUK has pursuant to the provisions of
its Memorandum and Articles of Association the power and authority to
own, lease and to operate its assets and property and to carry on its
business as it is now being conducted.
3. ISSUK has all requisite power and authority to enter into the Purchase
Agreement and to consummate the transactions contemplated thereby. The
execution and delivery of the Purchase Agreement and the consummation of
the transactions contemplated thereby have been duly authorised by all
necessary corporate action as the case may require on the part of ISSUK
to authorise the Purchase Agreement and the transactions contemplated
thereby. The Purchase Agreement has been duly executed and delivered by
ISSUK and will constitute a valid and binding obligation on ISSUK,
enforceable against ISSUK in accordance with its terms.
4. The execution and delivery of the Purchase Agreement and the
consummation of the transactions contemplated thereby, by ISSUK, will
not Conflict with, or result in any Conflict with any provision of the
Memorandum and Articles of Association of ISSUK. To our knowledge, no
consent, waiver, approval, order or authorisation of, or registration,
declaration or filing with any Governmental Entity which, in our
experience, is normally applicable to transactions for the nature
contemplated by the Purchase Agreement is required on or prior to the
date of this opinion by or with respect to ISSUK in connection with the
execution and delivery of the Purchase Agreement or the performance by
ISSUK of its obligations thereunder or the consummation by ISSUK of the
transactions contemplated therein.
5. To our knowledge there is no action, suit, proceedings, claim,
arbitration or investigation pending or as to which ISSUK has received
any notice of assertion against any of them, which in any manner
challenges or seeks to prevent, enjoin, alter or materially delay any of
the transactions contemplated by the Purchase Agreement.
Peregrine Systems, Inc.
24 September 1998 [LOGO]
Page 3
D. QUALIFICATIONS
-----------------
The opinions expressed in C. above are subject to and limited by the
following qualifications:
1. The effect of bankruptcy, insolvency, reorganisation, moratorium and any
similar laws and equitable principles relating to, limiting or affecting
the enforcement of creditors' rights generally including, but not
limited to, preferences and fraudulent conveyances.
2. The effect of general principles of equity including, but not limited to,
concepts of materiality reasonableness, good faith and fair dealing and
the possible unavailability of specific performance or injunctive relief
regardless of whether considered in a proceeding in equity or law. No
opinion is given as to the UK court's willingness to enforce any
provision of the Purchase Agreement to the extent sought by Peregrine.
3. The discretion of any court or arbitrator of competent jurisdiction in
awarding equitable remedies, including but not limited to, specific
performance or injunctive relief (regardless of whether any such remedy
is considered in a proceeding at law or in equity).
4. The non-enforceability of any provision of the Purchase Agreement as a
consequence of it being considered by any court or arbitrator to be
unduly restrictive, unfair or unreasonable.
5. The non-enforceability under certain circumstances of provisions
waiving vaguely or broadly stated rights or unknown future rights and
of provisions stating that rights or remedies are not exclusive, that
every right or remedy is cumulative and may be exercised in addition to
or with any other right or remedy, or that election of some particular
remedy or remedies does not preclude recourse to one or more others.
6. We express no opinion as to the enforceability of the forum provisions
set forth in the Purchase Agreement and associated documents.
7. Our opinion expressed in paragraph C.1 above as to the fact that ISSUK
is duly incorporated, validly existing and in good standing under the
laws of England and Wales as private limited liability company is based
solely on the certificate of good standing received from Companies House
dated 17 September 1998, a copy of which is attached to this opinion.
Peregrine Systems, Inc.
24 September 1998 [LOGO]
Page 4
8. Our opinion is based upon the draft documentation that we have been
forwarded which as regards the Purchase Agreement is reference
(RK1)C:\NRPORTBL\PALib2\fm1\609712-10.DOC 104248.043 dated 23 September
1998 and the drafts of the UK law agreements that we received from
Xxxxxxxxx Xxxxxx & Xxxxx and returned with our comments last week
comprising the UK assignment of Intellectual Property, the UK assignment
of Trade Xxxx Application, the UK assignment of Contracts and the UK
assignment of Goodwill.
Yours faithfully
/s/ Xxxxxxxxx Xxxxx
---------------------------------
XXXXXXXXX XXXXX
[SEAL]
THE COMPANIES XXX 0000
Company No. 3029797
The Registrar of Companies for England and Wales hereby certifies that
INTERNATIONAL SOFTWARE SOLUTIONS UK LIMITED WAS INCORPORATED UNDER THE
COMPANIES ACT 1985 AS A LIMITED COMPANY ON 1ST MARCH 1995.
ACCORDING TO THE DOCUMENTS ON THE FILE OF THE COMPANY IN THE CUSTODY OF THE
REGISTRAR OF COMPANIES, THE COMPANY HAS BEEN IN CONTINUOUS AND UNBROKEN
EXISTENCE SINCE THE DATE OF ITS INCORPORATION.
NO ACTION IS CURRENTLY BEING TAKEN BY THE REGISTRAR OF COMPANIES FOR STRIKING
THE COMPANY OFF THE REGISTER AND DISSOLVING IT AS DEFUNCT, AND AS FAR AS THE
REGISTRAR IS AWARE:
a) THE COMPANY IS NOT IN LIQUIDATION OR SUBJECT TO AN ADMINISTRATION ORDER,
AND
b) NO RECEIVER OR MANAGER OF THE COMPANY'S PROPERTY HAS BEEN APPOINTED.*****
Given at Companies House, Cardiff, the 17TH SEPTEMBER 1998
/s/ X. Xxxxxxxx
---------------------------------
X. XXXXXXXX
for the Registrar of Companies
Xxxxxxxxx Xxxxx
0 Xxx Xxxxxxxxxx Xxxxxx
Xxxxxx
X0X 0XX
Attention: Xxxxxxx Xxxxxxxxx
----------------------------
Dear Sirs:
We write in connection with the opinion letter that we have asked you to
provide in connection with the Asset Purchase Agreement dated 23rd September
1998 relating to the purchase by Peregrine Systems Inc of the assets of a
number of entities bearing the name "International Software Solutions" and
"Firtree Overseas Limited", established or incorporated under the laws inter
alia of Nevada, Florida, France, Germany and England and Wales, a copy of which
you have prepared and is attached to this letter.
As directors of International Software Solutions UK Limited, we hereby
confirm as follows:
1. We know no reason why any of the statements that you make in the
attached opinion are misleading or inaccurate.
2. We know of no reason why we are not able to enter into the Asset Purchase
Agreement or related documentation.
3. We have not instructed any firm of solicitors other than Xxxxxxxxx
Xxxxx in relation to any ISS UK Limited related matter.
Yours faithfully
/s/ Xxxxxx Xxxxxx
............................
Xxxxxx Xxxxxx
/s/ Xxxxxxx Xx Xxxxx
............................
Xxxxxxx Xx Xxxxx
EXHIBIT H
OPINION OF SELLERS' GERMAN COUNSEL
[LETTERHEAD]
Peregrine Systems, Inc.
00000 Xxxx Xxxxx Xxxxx
Xxx Xxxxx, XX 00000
U.S.A. September 23, 1998
ISS/PEREGRINE ASSET PURCHASE AGREEMENT
Ladies and Gentlemen:
We have acted as special German counsel to International Software Solutions
GmbH in Heidelberg/Germany ("ISSGR") in connection with the transactions
contemplated by the Asset Purchase Agreement (the "Purchase Agreement") dated
September 23, 1998 among yourselves, International Software Solutions Limited
Partnership and various other parties.
Terms defined in the Agreement and not otherwise defined in this opinion
shall have the same meaning in this opinion as therein defined. This opinion is
delivered to you pursuant to Section 8.2(d) of the Purchase Agreement.
-2-
1. DOCUMENTS
We have examined:
(a) a photocopy of the latest version of the Purchase Agreement
(without Exhibits and Schedules),
(b) a copy of the Statutes (GESELLSCHAFTSVERTRAG) of ISSGR in its
version dated September 18, 1995,
(c) copies of various documents relating to the incorporation and
subsequent corporate changes of ISSGR,
(d) a copy of the certified commercial register excerpt no. HRB 5036
relating to ISSGR dated September 23, 1998,
(the documents under lit. (b) - (d) collectively referred to as
the "Constitutional Documents");
all such documents hereinafter referred to as the "Documents".
2. ASSUMPTIONS
For the purposes of this opinion we have assumed:
(a) The Purchase Agreement will constitute the legal, valid and binding
obligations of the parties thereto under all relevant laws other
than the laws of Germany;
(b) The completeness and the conformity with original instruments of
all Documents;
(c) The authenticity, due execution and delivery of all seals,
signatures, stamps of markings, other than those authorized,
executed and/or delivered by or for and
-3-
on behalf of ISSGR, and the personal capacity of every person
executing the Purchase Agreement;
(d) The Purchase Agreement is within the capacity and powers of, and
has been validly authorized, executed and delivered by and is
binding on any party other than ISSGR.
3. OPINION
On the basis of the Documents, and subject to the limitations and
qualifications set out in item 4 below, in our opinion:
(a) ISS is a limited liability company duly organized and validly
existing under the laws of Germany. It has the power and authority
to conduct its business as stated in its Constitutional Documents,
to own, possess or lease its assets and property and to execute,
deliver and perform its obligations under the Purchase Agreement.
(b) The execution, delivery and performance of the Purchase Agreement
have been duly authorized by all necessary corporate and
shareholder action on the part of ISSGR and no further action is
required on the part of ISSGR to authorize the Purchase Agreement
and the transaction contemplated thereby.
(c) Neither the execution, delivery or performance by ISSGR of the
Purchase Agreement nor the consummation or performance by ISSGR of
the transactions contemplated thereby will result in any violation
of the Constitutional Documents of ISSGR.
(d) No consent, waiver, approval order or authorization of, or
registration, declaration of filing with, any German Governmental
Entity, is required by or with respect to ISSGR in connection with
the execution and delivery of the Purchase Agreement or the
performance by ISSGR of its obligations thereunder or the
consummation by ISSGR of the transactions contemplated therein.
-4-
(e) The Purchase Agreement has been duly executed by ISSGR and
constitutes the legal, valid and binding obligations of ISSGR,
enforceable against ISSGR in accordance with its terms.
4. LIMITATIONS AND QUALIFICATIONS
Our opinion is subject to the following limitations and qualifications:
(a) The enforceability of the Purchase Agreement may be limited by
bankruptcy, insolvency, liquidation, reorganization, limitation
and other similar laws of general application relating to or
affecting the rights of creditors generally.
(b) We have not been acting as German counsel as to the ongoing
business of ISSGR and therefore have no knowledge thereof. For the
purposes of this opinion we have not conducted any due diligence or
similar investigation as to factual circumstances. Our opinion thus
is limited to an analysis of the Documents under German law.
(c) We express no opinion on any laws other than the laws of Germany as
in force and interpreted as the date of this opinion.
(d) This opinion may not be relied upon by, or disclosed to, any person
other than the addressee and its legal counsel.
(g) This opinion is governed by German law; exclusive place of
jurisdiction is Berlin.
Yours faithfully,
Bruckhaus Xxxxxxxx Xxxxxx Xxxxx
By: /s/ Xxxx-Xxxxxxx Xxxxxx
-------------------------------
Xxxx-Xxxxxxx Xxxxxx
EXHIBIT I
REGISTRATION OF BUYER SHARES
------------------------------------------------------------------------------
SHARE ALLOCATION
------------------------------------------------------------------------------
SHARES NOT
SUBJECT TO SHARES SUBJECT TOTAL
SELLER ESCROW TO ESCROW* SHARES
------------------------------------------------------------------------------
International Software Solutions
Limited Partnership 304,119 33,791 337,910
------------------------------------------------------------------------------
International Software Solutions
GmbH 14,137 1,571 15,708
------------------------------------------------------------------------------
International Software Solutions
France Diffusion SARL 16,427 1,826 18,253
------------------------------------------------------------------------------
International Software Solutions
Production SARL 28 3 31
------------------------------------------------------------------------------
International Software Solutions
USA, L.C. 14,555 1,618 16,173
------------------------------------------------------------------------------
International Software Solutions
UK Ltd. 3,604 401 4,005
------------------------------------------------------------------------------
TOTAL 352,870 39,210 392,080
------------------------------------------------------------------------------
* To be held in escrow by the Escrow Agent pursuant to the terms of the
Escrow Agreement of even date herewith
------------------------------------------------------------------------------
EXHIBIT J
ASSIGNMENT AND ASSUMPTION AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT is entered into on September 23, 1998
(the "Effective Date"), by and among Peregrine Systems, Inc., a Delaware
corporation whose principal place of business is 00000 Xxxx Xxxxx Xxxxx, Xxx
Xxxxx, Xxxxxxxxxx, X.X.X. ("Buyer"), International Software Solutions Limited
Partnership, a Nevada limited Partnership ("ISSLP"), and International Software
Solutions USA, L.C., a Florida limited liability company ("ISSUS" and together
with ISSLP, the "U.S. Sellers").
WITNESSETH:
WHEREAS, the Buyer and the Sellers are parties, along with certain other
parties, to an Asset Purchase Agreement dated September 23, 1998 (the "Purchase
Agreement") pursuant to which the Sellers (such initially capitalized terms and,
except as otherwise defined herein, all other initially capitalized terms used
herein shall have the same meanings ascribed to them in the Purchase Agreement)
agreed to sell, and the Buyer (together with certain of its wholly-owned
subsidiaries) agreed to purchase, all of the properties and assets of the
Sellers described therein in Section 2.2 as the Acquired Assets;
WHEREAS, pursuant to the Purchase Agreement, the Buyer agreed to assume
all liabilities and obligations of the Sellers described as being Assumed
Liabilities in Section 2.3 of the Purchase Agreement.
WHEREAS, it is the intention of the Buyer and the U.S. Sellers to
reflect the transfer of the U.S. Sellers' title over the Acquired Assets
owned by them by the execution and delivery of the following documents at the
Effective Date (unless otherwise specified in the Purchase Agreement): (i)
this Assignment and Assumption Agreement between the Sellers and the Buyer;
(ii) the Xxxx of Sale and Conveyance by the U.S. Sellers to the Buyer; (iii)
the deeds, if any, relating to any of the Acquired Assets, properly endorsed;
(iv) assignments of the Assumed Leases, the Software and the agreements
described in Sections 2.2(a)-(e) of the Purchase Agreement (including
Intellectual Property transfer documents) and any third party consents
necessary, to such assignments described in (iv); (v) the Assignment of
Trademarks between the Sellers and Buyer; (vi) the Assignment of Copyrights
between Sellers and Buyer; (vii) the European Assignments; and (viii) such
other instruments of sale, transfer, conveyance, and assignment as the Buyer
and its counsel may reasonably request;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Buyer and the Sellers hereby agree as follows:
1. Effective from and after the Effective Date, the U.S. Sellers
hereby assign to Buyer all of their right, title and interest in, to and
under all contracts, agreements, leases, licenses,
-1-
undertakings, commitments, and other property and assets constituting the
Acquired Assets described in Section 2.2 of the Purchase Agreement.
2. Effective from and after the Effective Date, the Buyer hereby
assumes all liabilities and obligations of the Sellers described in Section
2.3 of the Purchase Agreement constituting the Assumed Liabilities.
3. In the event that any provision of this Assignment and Assumption
Agreement be construed to conflict with or be in addition to or in derogation
of a provision of the Purchase Agreement, the provision in the Purchase
Agreement shall be deemed controlling.
4. This Assignment and Assumption Agreement shall bind and shall inure
to the benefit of the respective parties and their assigns, transferees and
successors.
5. This Assignment and Assumption Agreement shall be construed and
enforced in accordance with the laws of the State of California, U.S.A.,
regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws thereof.
6. This Assignment and Assumption Agreement may be executed in
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
of the parties and delivered to the other parties, it being understood that
all parties need not sign the same counterpart.
7. The parties confirm the continuing application of the provisions of
Section 7.1 of the Purchase Agreement and the Sellers agree that they will
execute and deliver to the Buyer such assignments of specific Acquired Assets
as the Buyer may reasonably request notwithstanding that such assets are
covered by any of the documents referred to in the third recital above.
-2-
IN WITNESS WHEREOF, the undersigned have executed this instrument as of the
date first above written.
INTERNATIONAL SOFTWARE SOLUTIONS
LIMITED PARTNERSHIP
By: International Software Solutions,
Inc., its general partner
By:
------------------------------------
Name:
----------------------------------
Title:
----------------------------------
INTERNATIONAL SOFTWARE SOLUTIONS,
USA L.C.
By:
------------------------------------
Name:
----------------------------------
Title:
----------------------------------
PEREGRINE SYSTEMS, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
----------------------------------
[ASSIGNMENT AND ASSUMPTION AGREEMENT]
-3-
EXHIBIT K
ASSIGNMENT OF ASSETS
XXXX OF SALE AND CONVEYANCE
XXXX OF SALE AND CONVEYANCE, made, executed and delivered on September
23, 1998 (the "Effective Date"), by and among Peregrine Systems, Inc., a
Delaware corporation whose principal place of business is 00000 Xxxx Xxxxx
Xxxxx, Xxx Xxxxx, Xxxxxxxxxx, X.X.X. ("BUYER"), International Software
Solutions Limited Partnership, a Nevada limited partnership ("ISSLP") and
International Software Solutions USA, L.C., a Florida limited liability
company ("ISSUS" and together with ISSLP the "U.S. Sellers").
WITNESSETH:
WHEREAS, the Sellers and the Buyer are parties, along with certain other
parties, to an Asset Purchase Agreement dated September 23, 1998 (the
"Purchase Agreement"), providing, for, among other things, the transfer and
sale to the Buyer (together with certain of its wholly-owned subsidiaries)
all of the assets, properties, rights and business of the Sellers (such
initially capitalized term and, except as otherwise defined herein, all other
initially capitalized terms used herein, shall have the same meanings
ascribed to them in the Purchase Agreement) described therein in Section 2.2
as Acquired Assets for consideration of the Buyer Shares, and on the terms
and conditions provided in the Purchase Agreement;
WHEREAS, the Buyer and the U.S. Sellers now desire to carry out the
intent and purpose of the Purchase Agreement by the U.S. Sellers' execution
and delivery to the Buyer of this instrument evidencing the sale, conveyance,
assignment, transfer and delivery to the Buyer of the Acquired Assets owned
by them, subject to the Assumed Liabilities; PROVIDED, HOWEVER, that there
shall be excluded the Excluded Liabilities;
WHEREAS, it is the Buyer's and Sellers' intentions to reflect the
transfer of the U.S. Sellers' title over such Acquired Assets by the
execution and delivery of the following documents at the Effective Date
(unless otherwise specified in the Purchase Agreement): (i) this Xxxx of
Sale and Conveyance by the U.S. Sellers to the Buyer; (ii) the Assignment and
Assumption Agreement between the Sellers and the Buyer; (iii) the deeds
relating to any of the Acquired Assets, properly endorsed; (iv) assignments
of the Assumed Leases, the Software and the agreements described in Sections
2.2(a)-(e) of the Purchase Agreement (including Intellectual Property
transfer documents) and any third party consents necessary, to such
assignments described in (iv); (v) the Assignment of Trademarks between the
Sellers and Buyer; (vi) the Assignment of Copyrights between the Sellers and
the Buyer; (vii) the European Assignments; and (viii) such other instruments
of sale, transfer, conveyance, and assignment as the Buyer and its counsel
may reasonably request; and
NOW, THEREFORE, in consideration of the foregoing premises and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the U.S. Sellers do hereby, effective from and after the
Effective Date, sell, convey, transfer, assign and
-1-
deliver unto the Buyer and its successors and assigns, forever, all of their
right, title and interest in, to and under the Acquired Assets, subject to
the Assumed Liabilities.
TO HAVE AND TO HOLD the Acquired Assets unto the Buyer, its successors
and assigns, FOREVER.
The U.S. Sellers hereby constitute and appoint the Buyer and its
successors and assigns as their true and lawful attorneys-in-fact in
connection with the transactions contemplated by this instrument, with full
power of substitution, in the name and stead of the U.S. Sellers but on
behalf of and for the benefit of the Buyer and its successors and assigns, to
demand and receive any and all of the assets, properties, rights and business
hereby conveyed, assigned, and transferred or intended so to be, and to give
receipt and release for and in respect of the same and any part thereof, and
from time to time to institute and prosecute, in the name of the U.S. Sellers
or otherwise, for the benefit of the Buyer or its successors and assigns,
proceedings at law, in equity, or otherwise, which the Buyer or its
successors or assigns reasonably deem proper in order to collect or reduce to
possession or endorse any of the assets, properties, rights and business, and
to do all acts and things in relation to the Acquired Assets which the Buyer
or its successors or assigns reasonably deem desirable.
In the event that any provision of this Xxxx of Sale and Conveyance be
constructed to conflict with or be in addition to or in derogation of a
provision in the Purchase Agreement, the provision in the Purchase Agreement
shall be deemed to be controlling.
This instrument shall be binding upon and shall inure to the benefit of
the respective parties and their successors and assigns.
This Xxxx of Sale and Conveyance shall be construed and enforced in
accordance with the laws of the State of California, U.S.A., regardless of
the laws that might otherwise govern under applicable principles of conflicts
laws thereof.
This Xxxx of Sale and Conveyance may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
-2-
IN WITNESS WHEREOF, this Xxxx of Sale and Conveyance has been duly
executed and delivered by a duly authorized representative of the Sellers on
the date first above written.
INTERNATIONAL SOFTWARE SOLUTIONS
LIMITED PARTNERSHIP
By: International Software Solutions,
Inc., its general partner
By:
------------------------------------
Name:
----------------------------------
Title:
----------------------------------
INTERNATIONAL SOFTWARE SOLUTIONS
USA, L.C.
By:
------------------------------------
Name:
----------------------------------
Title:
----------------------------------
-3-
EXHIBIT L
ASSIGNMENT OF TRADEMARKS
ASSIGNMENT OF TRADEMARKS
WHEREAS, International Software Solutions Limited Partnership, a limited
partnership organized under the laws of Nevada, having a principal place of
business at 0000 Xxxx Xxxxxxxx Xxxx, Xxxxx 00, Xxx Xxxxx, Xxxxxx
(hereinafter "Assignor"), and Peregrine Systems, Inc., a Delaware corporation
having its principal place of business at 00000 Xxxx Xxxxx Xxxxx, Xxx Xxxxx,
Xxxxxxxxxx 00000 (hereinafter "Assignee"), are parties, along with certain
other parties, to that certain Asset Purchase Agreement dated September 23,
1998, pursuant to which Assignor sold, conveyed, transferred, assigned and
delivered to Assignee all of Assignor's right, title and interest in and to
certain intellectual property, including those trademarks listed on SCHEDULE
A attached hereto and other intellectual property rights therein together
with the business associated therewith; and
WHEREAS, Assignor has adopted, used and is using the trademarks listed
on SCHEDULE A attached hereto (the "Trademarks") in connection with the
design, development and marketing of certain intellectual property, and is
the owner of all right, title and interest in and to the Trademarks including
any and all common law rights therein, applications to register and
registrations therefor as also listed on SCHEDULE A; and
WHEREAS, Assignee desires to acquire all right, title and interest in
and to the Trademarks, including any and all common law rights therein,
applications to register and registrations therefor.
NOW THEREFORE, for good and valuable consideration, paid in hand, the
receipt and sufficiency of which are hereby acknowledged, Assignor does
hereby assign, grant, transfer and otherwise convey to Assignee, all of
Assignor's right, title and interest in and to the Trademarks, including all
of its common law rights therein, applications to register and registrations
therefor, together with the goodwill of the business symbolized by the
Trademarks.
Agreed and consented to this _____ day of September, 1998.
INTERNATIONAL SOFTWARE SOLUTIONS
LIMITED PARTNERSHIP
By: International Software Solutions,
Inc., its general partner
By:
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Name:
----------------------------------
Title:
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CERTIFICATION
STATE OF _______________ )
) ss.
COUNTY OF _____________ )
On this _____ day of September, 1998, before me, the undersigned, a Notary
Public in and for State and County aforesaid, personally appeared
________________, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person who executed the foregoing instrument
and acknowledged to me that he executed the same as his voluntary act on behalf
of such corporation with authority to do so for the purposes therein set forth.
------------------------------------
Notary Public
My Commission expires:
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-2-
SCHEDULE A
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FILING DATE/ SERIAL NO./ PROSECUTION
TRADEMARK COUNTRY/CLASS ISSUE DATE REGISTRATION NO. STATUS
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POLYPM/2 US 11/23/94 74/602,188 Registered
9 6/11/96 1,979,300
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POLYPM/2 Denmark 1/17/95 VA 00.395 1995 Abandoned
9 5/12/95 VR 02.929 1995
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REMOTE US 4/7/95 74/657,626 Registered
SERVICES 9 7/30/96 1,990,556
MANAGEMENT
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INTERNATIONAL US 1/4/96 75/040,165 Registered
SOFTWARE 9 6/16/98 2,166,201
SOLUTIONS
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INTERNATIONAL Canada 6/20/96 815,831 Registered
SOFTWARE 9 9/23/97 482,810
SOLUTIONS
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INTERNATIONAL France 7/4/96 96/632919 Registered
SOFTWARE 9 12/13/96 96 632 919
SOLUTIONS
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INTERNATIONAL Germany 6/20/96 39628354.3 Abandoned
SOFTWARE 9
SOLUTIONS
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INTERNATIONAL United 6/25/96 2,103,760 Abandoned
SOFTWARE Kingdom
SOLUTIONS 9
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-3-
EXHIBIT M
ASSIGNMENT OF COPYRIGHTS
COPYRIGHT ASSIGNMENT
THIS COPYRIGHT ASSIGNMENT ("Assignment") is made and entered into on this
23rd day of September 1998, (the "Effective Date"), by and between Peregrine
Systems, Inc., a Delaware corporation ("Assignee"), and International Software
Solutions Limited Partnership, a limited partnership organized under the laws of
Nevada ("Assignor").
RECITALS
WHEREAS, Assignor and Assignee are parties, along with certain other
parties, to that certain Asset Purchase Agreement dated September 23, 1998,
("Asset Purchase Agreement"), pursuant to which Assignor has agreed to sell and
Assignee has agreed to purchase all of Assignor's right, title and interest to
the assets, properties and rights set forth in the Asset Purchase Agreement;
WHEREAS, Assignor is the sole and exclusive owner of the entire right,
title and interest in, to and under the work embodied in the unregistered
copyrights, identified and set forth on SCHEDULE A (collectively, the
"Copyrights"); and
WHEREAS, Assignee wishes to acquire all right, title and interest in and to
the Copyrights;
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Assignor does hereby sell, assign,
transfer and set over to Assignee, its entire right, title and interest in and
to the Copyrights and derivative works thereof, for the United States and for
all foreign countries, including, but not limited to, any and all renewals and
extensions of such Copyrights and derivative works that may be secured under
laws of the United States and all foreign countries, now or hereafter in effect,
for Assignee's own use and enjoyment, and for the use and enjoyment of
Assignee's successors, assigns or other legal representatives, as fully and
entirely as the same would have been held and enjoyed by the Assignor if this
Assignment and sale had not been made, together with all income, royalties or
payments due or payable from and after the Effective Date, including, without
limitation, all claims for damages by reason of past, present or future
infringement or other unauthorized use of the Copyrights, with the right to xxx
for, and collect the same for Assignee's own use and enjoyment and for the use
and enjoyment of its successors, assigns or other legal representatives.
Assignor authorizes and requests the United States Registrar of Copyrights
to record Assignee as the assignee and owner thereof.
To the extent that the representations and warranties of Assignor contained
in the Asset Purchase Agreement relate to the Copyrights, such representations
and warranties are hereby incorporated herein by reference, together with
Assignor's indemnification obligations thereunder relating to such
representations and warranties.
Assignor shall use all reasonable efforts to provide Assignee, its
successors, assigns or other legal representatives, cooperation and assistance
at Assignee's reasonable request and expense (including the execution and
delivery of any and all affidavits, declarations, oaths, assignments, powers of
attorney or other documentation as may be reasonably required): (1) in the
preparation and prosecution of any applications for registration or any
applications for renewal of a registration covering the Copyrights; (2) in the
prosecution or defense of any Copyright Office proceedings, infringement, or
other proceedings that may arise in connection with any of the Copyrights,
including, but not limited to, testifying as to any facts relating to the
Copyrights or this Assignment; (3) in obtaining any additional copyright
protection that Assignee may deem appropriate which may be secured under the
laws now or hereafter in effect in the United States or any other country; and
(4) in the implementation or perfection of this Assignment.
IN TESTIMONY WHEREOF, the Assignor and Assignee have caused this Assignment
to be signed and executed by the undersigned officers thereunto duly authorized
this 23rd day of September 1998.
"ASSIGNOR" INTERNATIONAL SOFTWARE SOLUTIONS
LIMITED PARTNERSHIP
By: International Software Solutions,
Inc., its general partner
By:
-----------------------------------
Name:
---------------------------------
Title:
---------------------------------
"ASSIGNEE" PEREGRINE SYSTEMS, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
---------------------------------
[COPYRIGHT ASSIGNMENT SIGNATURE PAGES]
STATE OF ___________)
) SS.
COUNTY OF __________)
On this ___ day of September, 1998, there appeared before me ____________
___, personally known to me, who acknowledged that he signed the foregoing
Assignment as his voluntary act and deed on behalf and with full authority of
____________________________________.
--------------------------------
Notary Public
STATE OF ___________)
) SS.
COUNTY OF __________)
On this ___ day of September, 1998, there appeared before me ____________
___, personally known to me, who acknowledged that he signed the foregoing
Assignment as his voluntary act and deed on behalf and with full authority of
____________________________________.
--------------------------------
Notary Public
EXHIBIT A
Name: Remote Services Management (R.S.M.) (formerly PolyPM/2)
Edition: Advanced and Professional
Current version distributed--4.2 A2
Delivery on 1 CD-ROM
All documentation on-line
Description: Multi platform graphical remote control with file transfer
capabilities
Components:
Manager--Administers the remote workstations (Clients)
Client--Installed on each workstation to be controlled
Manager Gateway--Allow Managers and Clients to share network
communications devices
Client Gateway--Allow Managers and Clients to share network communications
devices
