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Exhibit 10.4
DISTRIBUTION AGREEMENT
This Distribution Agreement (the "Agreement") is made as of the __ day of
December 1998 between PeopleSoft, Inc., a Delaware corporation ("PeopleSoft"),
and Momentum Business Applications, Inc. a Delaware corporation ("Momentum").
B A C K G R O U N D
A. PeopleSoft is the holder of all of the issued and outstanding shares
of capital stock of Momentum. PeopleSoft intends to contribute $250 million to
Momentum, to license certain technology to Momentum, and to make other
arrangements in order to establish Momentum as a separate enterprise for the
purpose of developing certain software products and commercializing such
products, most likely through licensing to PeopleSoft.
B. PeopleSoft intends to distribute all of the Momentum Shares (as
defined below) to the holders of its Common Stock.
NOW, THEREFORE, the parties agree as follows:
1. Definitions. For purposes of this Agreement, the following terms shall
have the meanings set forth below:
1.1 "Action" shall mean any action, suit, arbitration, inquiry,
proceeding or investigation by or before any court, any governmental or other
regulatory or administrative agency or commission or any arbitration tribunal.
1.2 "Agent" shall mean Boston EquiServe, L.P., as distribution agent,
appointed by PeopleSoft to distribute certificates representing the Momentum
Shares pursuant to the Distribution.
1.3 "PeopleSoft/Momentum Agreements" shall mean this Agreement, the
Development Agreement, the Marketing Agreement, the Services Agreement and the
Purchase Option.
1.4 "PeopleSoft Common Stock" shall mean the Common Stock, par value
$0.01 per share, of PeopleSoft.
1.5 "Commission" shall mean the Securities and Exchange Commission.
1.6 "Momentum Shares" shall mean the Class A Common Stock, par value
$0.001 per share, of Momentum.
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1.7 "Development Agreement" shall mean the Development and License
Agreement dated as of the date hereof between PeopleSoft and Momentum.
1.8 "Distribution" shall mean the distribution of Momentum Shares to
holders of record on December __, 1998 of PeopleSoft Common Stock immediately
following completion of the transactions contemplated in Sections 2 and 3
hereof.
1.9 "Distribution Date" shall mean the proposed date of effecting the
Distribution, which is anticipated to occur on or about December __, 1998.
1.10 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
1.11 "Marketing Agreement" shall mean the Marketing and Distribution
Agreement dated as of the date hereof between PeopleSoft and Momentum.
1.12 "Momentum Registration Statement" shall mean the registration
statement on Form 10 registering the issuance of Momentum Shares pursuant to the
Distribution.
1.13 "Information Statement" shall mean the Information Statement to
be distributed to the holders of PeopleSoft Common Stock in connection with the
Distribution relating to the PeopleSoft Registration Statement and the Momentum
Registration Statement.
1.14 "Purchase Option" shall mean that certain option contained in
Momentum's Restated Certificate of Incorporation pursuant to which PeopleSoft
has the right to purchase all, but not less than all, of the outstanding
Momentum Shares.
1.15 "Record Date" shall mean the close of business on December __,
1998 or such other date as is determined by the PeopleSoft Board of Directors or
any committee thereof.
1.16 "Services Agreement" shall mean the Services Agreement dated as
of the date hereof between PeopleSoft and Momentum.
1.17 "Securities Act" shall mean the Securities Act of 1933, as
amended.
2. Preliminary Action.
2.1 Registration Statement and Information Statement. Momentum has
prepared and filed the Momentum Registration Statement with the Commission.
Subject to the conditions set forth herein, PeopleSoft and Momentum shall use
reasonable efforts to cause the Momentum registration statements to become
effective under the Exchange Act. Momentum and PeopleSoft have prepared, and
PeopleSoft shall cause to be mailed, the Information Statement to the record
holders on the Record Date of PeopleSoft Common Stock and PeopleSoft.
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2.2 Blue Sky. Momentum shall take all such action as may be necessary
or appropriate under the securities or blue sky laws of states or other
political subdivisions of the United States in connection with the Distribution
to permit the Momentum Shares to be distributed as described in the Information
Statement.
2.3 Listing. Momentum has prepared and filed an application to effect
the listing of the Momentum Shares on the Nasdaq National Market. Momentum shall
use reasonable efforts to cause the Momentum Shares to be so listed.
2.4 No Representations or Warranties; Consents. Each party hereto
understands and agrees that no party hereto is, in this Agreement or in any
other agreement or document contemplated by this Agreement or otherwise,
representing or warranting in any way that the obtaining of any consents or
approvals, the execution and delivery of any agreements or the making of any
filings or applications contemplated by this Agreement will satisfy the
provisions of any or all applicable laws. Notwithstanding the foregoing, the
parties shall use reasonable efforts to obtain all consents and approvals, to
enter into all agreements and to make all filings and applications which may be
required for the consummation of the transactions contemplated by this
Agreement, including, without limitation, all applicable regulatory filings or
consents under federal or state laws and all necessary consents, approvals,
agreements, filings and applications.
3. Issue and Sale of Momentum Shares.
3.1 Purchase of Momentum Class A Common Stock. Prior to the
Distribution Date, in consideration of, among other things, a $250 million
capital contribution to Momentum by PeopleSoft, Momentum will issue to
PeopleSoft that number of Momentum Shares such that PeopleSoft may distribute to
holders of PeopleSoft Common Stock one Momentum Share for every 50 shares of
PeopleSoft Common Stock held on the Record Date. PeopleSoft and Momentum
acknowledge that all of the Momentum Shares held by PeopleSoft will be
distributed by PeopleSoft to the holders of outstanding shares of PeopleSoft
Common Stock.
4. The Distribution.
4.1 The Distribution. Momentum shall take all steps required by
PeopleSoft or the Agent to effect the Distribution. Prior to the Distribution,
and upon receipt of the capital contribution described in Section 3 hereof,
Momentum shall cause to be issued to PeopleSoft a certificate or certificates
representing a sufficient number of Momentum Shares so that PeopleSoft may
distribute one Momentum Share for every 50 shares of PeopleSoft Common Stock
held on the Record Date.
4.2 Expenses of Distribution. All expenses related in any way to the
Distribution, including without limitation all legal, financial advisory and
accounting fees of PeopleSoft and Momentum, shall be borne by PeopleSoft.
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5. Additional Assurances: Indemnification.
5.1 Mutual Assurances. PeopleSoft and Momentum agree to cooperate
with respect to the implementation of the PeopleSoft/Momentum Agreements and to
execute such further documents and instruments as may be necessary to confirm
the transactions contemplated thereby.
5.2 Indemnification. If PeopleSoft exercises the Purchase Option,
from and after such exercise, PeopleSoft shall indemnify, defend and hold
harmless Momentum's officers and directors to the same extent as provided in
Momentum's Restated Certificate of Incorporation.
5.3 Notice. Any person entitled to indemnification pursuant to
Section 5.2 shall give PeopleSoft prompt notice in writing, in the manner set
forth in Section 7.7 below, of any claim or demand made against such person for
which such person may be entitled to indemnification under Section 5.2.
6. Conditions to Effectiveness of Distribution. The Distribution shall be
subject to the satisfaction or waiver by PeopleSoft of the following conditions
and the satisfaction or waiver by Momentum of the conditions in Sections 6.8 and
6.9:
6.1 Board Approval. The PeopleSoft/Momentum Agreements (including
exhibits and schedules) shall have been approved by the Board of Directors of
PeopleSoft and Momentum and shall have been executed and delivered by
appropriate officers of PeopleSoft and Momentum, and the PeopleSoft Board of
Directors (or a committee thereof) shall have declared a dividend of the
Momentum Shares as of the Record Date to the holders of record of the PeopleSoft
Common Stock.
6.2 Securities Law Compliance. The transactions contemplated hereby
shall be in compliance with applicable federal and state securities laws, and
the Momentum Registration Statement and PeopleSoft Registration Statement shall
have been declared effective and no stop orders shall have been instituted with
respect thereto under the Exchange Act.
6.3 Restated Certificate of Incorporation. The Restated Certificate
of Incorporation of Momentum shall have been adopted by the Board of Directors,
approved by PeopleSoft as sole stockholder of Momentum, and filed with the
Delaware Secretary of State.
6.4 Listing Application Approved. The Momentum Shares shall be
approved for quotation on the Nasdaq National Market.
6.5 Fairness Opinion. PeopleSoft shall have received an opinion of
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated, investment advisor to
PeopleSoft, in form and substance satisfactory to PeopleSoft, to the effect that
(i) from a financial point of view, the Distribution provides a reasonable
structure to pursue the financial objectives described in the Information
Statement of PeopleSoft and (ii) from a financial point of view, the
Distribution is fair to the stockholders of PeopleSoft.
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6.6 Permits and Licenses. Momentum shall have received such permits
and licenses as may be necessary for the purpose of commencing operations
contemplated by the PeopleSoft/Momentum Agreements.
6.7 Consents. Each of PeopleSoft and Momentum shall have received
such consents, and shall have received executed copies of such agreements or
amendments of agreements, as it shall deem necessary in connection with the
completion of the transaction contemplated by this Agreement.
6.8 Other Instruments. All actions and other documents and
instruments deemed necessary or advisable in connection with the transactions
contemplated hereby shall have been taken or executed, as the case may be, in
form and substance satisfactory to PeopleSoft and Momentum.
6.9 Legal Proceedings. No legal proceedings affecting or arising out
of the transactions contemplated hereby or which could otherwise affect
PeopleSoft or Momentum in a materially adverse manner shall have been commenced
or threatened against PeopleSoft, Momentum or the directors or officers of
either PeopleSoft or Momentum.
6.10 Material Changes. No material adverse change shall have occurred
with respect to PeopleSoft or Momentum, the securities markets (either generally
or with respect to PeopleSoft or Momentum) or general economic or financial
conditions which shall, in the reasonable judgment of PeopleSoft, make the
transactions contemplated by this Agreement inadvisable.
6.11 Other Conditions. Such other conditions as may be set by the
PeopleSoft Board of Directors or any committee thereof in the resolutions
authorizing the Distribution shall have been satisfied.
7. Miscellaneous.
7.1 Waiver, Remedies and Amendment. Any waiver by either party hereto
of a breach of any provisions of this Agreement shall not be implied and shall
not be valid unless such waiver is recited in writing and signed by such party.
Failure of any party to require, in one or more instances, performance by the
other party in strict accordance with the terms and conditions of this Agreement
shall not be deemed a waiver or relinquishment of the future performance of any
such terms or conditions or of any other terms and conditions of this Agreement.
A waiver by either party of any term or condition of this Agreement shall not be
deemed or construed to be a waiver of such term or condition for any other term.
All rights, remedies, undertakings, obligations and agreements contained in this
Agreement shall be cumulative and none of them shall be a limitation of any
other remedy, right, undertaking, obligation or agreement of either party. This
Agreement may not be amended except in a writing signed by both parties.
7.2 Assignment. Neither party may assign its rights and obligations
hereunder without the prior written consent of the other party, which consent
may not be unreasonably withheld; provided, however, that PeopleSoft may assign
such rights and obligations hereunder to an
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Affiliate of PeopleSoft or to an Affiliate of PeopleSoft or to any person or
entity with which PeopleSoft is merged or consolidated or which acquires all or
substantially all of the assets of PeopleSoft.
7.3 Arbitration.
(a) All disputes which may arise under, out of or in connection
with this Agreement shall be settled by arbitration conducted in the city of San
Francisco, state of California, in accordance with the then existing rules of
the American Arbitration Association, and judgment upon the award rendered by
the Arbitrators may be entered in any court having jurisdiction thereof. The
parties hereby agree that service of any notices in the course of such
arbitration at their respective addresses as provided for in Section 7.7 of this
Agreement shall be valid and sufficient.
(b) In any arbitration pursuant to this Section 7.3, the award
shall be rendered by a majority of the members of a board of arbitration
consisting of three members who shall be appointed by the parties jointly, or if
the parties cannot agree as to three arbitrators within 30 days after the
commencement of the arbitration proceeding, then one arbitrator shall be
appointed by PeopleSoft and one arbitrator shall be appointed by Momentum within
60 days after the commencement of the arbitration proceeding. The third
arbitrator shall be appointed by mutual agreement of such two arbitrators. In
the event of failure of the two arbitrators to agree within 75 days after
commencement of the arbitration proceeding upon the appointment of the third
arbitrator, the third arbitrator shall be appointed by the American Arbitration
Association in accordance with its then existing rules. Notwithstanding the
foregoing, in the event that any party shall fail to appoint an arbitrator it is
required to appoint within the specified time period, such arbitrator and the
third arbitrator shall be appointed by the American Arbitration Association in
accordance with its then existing rules. For purposes of this Section 7.3, the
"commencement of the arbitration proceeding" shall be deemed to be the date upon
which a written demand for arbitration is received by the American Arbitration
Association from one of the parties.
7.4 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and all of which when taken together shall constitute this Agreement.
7.5 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the state of California as applied to residents
of that state entering into contracts to be performed in that state.
7.6 Headings. The headings set forth at the beginning of the various
sections of this Agreement are for convenience and form no part of the Agreement
between the parties.
7.7 Notices. Notices required under this Agreement shall be in
writing and sent by registered or certified mail, postage prepaid.
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If to PeopleSoft: PeopleSoft, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
If to Momentum: Momentum Business Applications, Inc.
0000 Xxxxxx Xxx Xxxx.
Xxxxxxx, Xxxxxxxxxx 00000
Attention: President
All notices shall be deemed to be effective five days after the
date of mailing. Either party may change the address at which notice is to be
received by written notice pursuant to this Section 7.7.
7.8 Severability. If any provision of this Agreement is held by a
court of competent jurisdiction to be invalid or unenforceable, it shall be
modified, if possible, to the minimum extent necessary to make it valid and
enforceable or, if such modification is not possible, it shall be stricken and
the remaining provisions shall remain in full force and effect.
7.9 Relationship of the Parties. For all purposes of this Agreement,
Momentum and PeopleSoft shall be deemed to be independent contractors and
anything in this Agreement to the contrary notwithstanding, nothing herein shall
be deemed to constitute Momentum and PeopleSoft as partners, joint venturers,
co-owners, an association or any entity separate and apart from each party
itself, nor shall this Agreement constitute any party hereto an employee or
agent, legal or otherwise, of the other party for any purposes whatsoever.
Neither party hereto is authorized to make any statements or
representations on behalf of the other party or in any way to obligate the other
party, except as expressly authorized in writing by the other party. Anything in
this Agreement to the contrary notwithstanding, no party hereto shall assume nor
shall be liable for any liabilities or obligations of the other party, whether
past, present or future.
7.10 Survival. The provisions of Sections 1, 5, 7.1, 7.3, 7.5, 7.7,
7.8 and this Section 7.10 shall survive the termination for any reason of this
Agreement. Any payments due under this Agreement with respect to any period
prior to its termination shall be made notwithstanding the termination of this
Agreement. Neither party shall be liable to the other due to the termination of
this Agreement as provided herein, whether in loss of good will, anticipated
profits or otherwise.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
PEOPLESOFT, INC.
By:
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Title:
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MOMENTUM BUSINESS APPLICATIONS, INC.
By:
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Title:
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