STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT (this "Agreement"), dated February 6, 2000, by
and between Corel Corporation, a corporation continued under the laws of
Canada ("Corel") and Inprise Corporation, a Delaware corporation
("Inprise").
WHEREAS, Corel, Inprise and Carleton Acquisition Co., a Delaware
corporation and a wholly-owned subsidiary of Corel ("Merger Sub") are
entering into a Merger Agreement of even date herewith (the "Merger
Agreement", terms defined therein and not otherwise defined herein having
the same meanings when used herein), which provides, among other things,
that upon the terms and subject to the conditions contained therein, Merger
Sub will be merged (the "Merger") with and into Inprise; and
WHEREAS, Corel has agreed, to induce Inprise to enter into the Merger
Agreement, to grant the Option (as hereinafter defined);
NOW THEREFORE, in consideration of the premises and the
representations, warranties, mutual covenants and agreements set forth
herein and in the Merger Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound hereby,
agree as follows:
1. Grant of Option. Corel hereby grants Inprise an irrevocable option
(the "Option") to purchase, subject to the terms and conditions set forth
herein, up to 13,000,000 shares (the "Corel Shares") of common stock of
Corel (the "Corel Common Stock"), together with the associated common share
purchase rights (the "Corel Rights") attached thereto issued pursuant to
the Shareholder Rights Plan Agreement, dated as of February 11, 1999, as
amended and restated as of March 31, 1999 between Corel and Montreal Trust
Company of Canada, as Rights Agent (the "Corel Rights Agreement") in the
manner set forth below at a price of $20.00 per share (the "Exercise
Price"); provided, however, that in no event shall the number of shares of
Corel Common Stock for which the Option is exercisable exceed 19.9% of
Corel's issued and outstanding shares of Corel Common Stock. References
herein to Corel Shares shall also be deemed to include the associated Corel
Rights.
2. Exercise of Option. The Option may be exercised by Inprise, in whole
or in part, at any time or from time to time after the Merger Agreement
becomes terminable by Inprise under circumstances which could entitle
Inprise to payment of the Specified Amount under Article VIII of the Merger
Agreement; provided that if the Specified Amount is not payable at the time
that the Merger Agreement is terminated, the Option shall not be
exercisable until such time as the Specified Amount becomes payable
pursuant to the Merger Agreement. In the event Inprise wishes to exercise
the Option, Inprise shall deliver to Corel a written notice (an "Exercise
Notice") specifying the total number of the Corel Shares it wishes to
purchase and a date and time for the closing of such purchase (a
"Closing"), which date shall not be less than two nor more than 30 days
after the later of (i) the date such Exercise Notice is given, and (ii) the
expiration or termination of any applicable waiting period under the HSR
Act. The Option shall terminate upon the earlier of: (i) the Effective
Time; (ii) the termination of the Merger Agreement pursuant to Section 8.01
thereof (other than a termination in connection with which Inprise is or
may be entitled to the payment specified in Section 8.02 thereof); and
(iii) 5:00 p.m., Ottawa time, on the date that is the one year anniversary
of the termination of the Merger Agreement in connection with which Inprise
is or may be entitled to the payment specified in Section 8.02 thereof (or
if, at the expiration of such one year period, the Option cannot be
exercised by reason of any applicable judgment, decree, order, law or
regulation, ten business days after such impediment to exercise shall have
been removed or shall have become final and not subject to appeal.
3. Conditions to Closing. The obligation of Corel to issue the Corel
Shares to Inprise hereunder is subject to the conditions that (i) all
waiting periods, if any, under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended, and the rules and regulations promulgated
thereunder ("HSR Act") and the Competition Act (Canada) applicable to the
issuance of the Corel Shares hereunder shall have expired or have been
terminated; (ii) all consents, approvals, orders or authorizations of, or
registrations, declarations or filings with, any United States, Canadian,
provincial, state or local administrative agency or commission or other
United States, Canadian, provincial, state or local governmental authority
or instrumentality or securities exchange, if any, required in connection
with the issuance of the Corel Shares hereunder shall have been obtained or
made, as the case may be; and (iii) no statute, rule or regulation shall be
in effect, and no order, decree or injunction entered by any court of
competent jurisdiction or governmental entity in the United States or
Canada shall be in effect, that prohibits or restrains the exercise of the
Option or the acquisition or issuance of Inprise Shares pursuant to the
terms of this Agreement.
4. Closing. At any Closing, (a) upon receipt of the payment provided for
by this Section 4, Corel will deliver to Inprise a single certificate in
definitive form representing the number of the Corel Shares designated by
Inprise in its Exercise Notice, such certificate to be registered in the
name of Inprise and to bear the legend set forth in Section 11 of this
Agreement, and (b) Inprise will deliver to Corel the aggregate price for
the Corel Shares so designated and being purchased by wire transfer of
immediately available funds. At any Closing at which Inprise is exercising
the Option in part, Inprise shall present and surrender this Agreement to
Corel, and Corel shall deliver to Inprise an executed new agreement with
the same terms as this Agreement evidencing the right to purchase the
balance of the shares of the Corel Common Stock purchasable hereunder.
5. Representations and Warranties of Corel. Corel represents and
warrants to Inprise that (a) Corel is a corporation duly continued, validly
existing and in good standing under the laws of Canada and has the
corporate power and authority to enter into this Agreement and to carry out
its obligations hereunder, (b) the execution and delivery of this Agreement
by Corel and the consummation by Corel of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the
part of Corel and no other corporate proceedings on the part of Corel are
necessary to authorize this Agreement or any of the transactions
contemplated hereby, (c) this Agreement has been duly executed and
delivered by Corel, constitutes a valid and binding obligation of Corel
and, assuming this Agreement constitutes a valid and binding obligation of
Inprise, is enforceable against Corel in accordance with its terms, except
as enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors'
rights generally, the availability of injunctive relief and other equitable
remedies, and limitations imposed by law on indemnification for liability
under securities laws, (d) Corel has taken all necessary corporate action
to authorize and reserve for issuance and to permit it to issue, upon
exercise of the Option, and at all times from the date hereof through the
expiration of the Option will have reserved, 13,000,000 unissued Corel
Shares and such other shares of the Corel Common Stock or other securities
which may be issued pursuant to Section 10 of this Agreement, all of which,
upon their issuance, payment and delivery in accordance with the terms of
this Agreement, will be validly issued, fully paid and nonassessable, and
free and clear of all claims, liens, charges, encumbrances and security
interests of any nature whatsoever (other than those (i) created by or
through Inprise, or any of its affiliates, (ii) which arise under this
Agreement, or (iii) which arise under the Securities Act of 1933, as
amended (the "Securities Act"), the Securities Act (Ontario) (the "Ontario
Act") or any applicable state securities laws), (e) the execution and
delivery of this Agreement by Corel does not, and the performance of this
Agreement by Corel will not, materially conflict with, or result in any
material violation of, or material default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or the loss of a material
benefit under, or the creation of a lien, pledge, security interest or
other encumbrance on assets pursuant to (any such conflict, violation,
default, right of termination, cancellation or acceleration, loss or
creation, a "Violation"), (A) any provision of the Certificate and Articles
of Amalgamation or By-laws of Corel or (B) any provisions of any loan or
credit agreement, note, mortgage, indenture, lease, benefit plan or other
agreement, obligation, instrument, permit, concession, franchise, license
of or applicable to Corel, or (C) any judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to Corel or its properties or
assets, which Violation, in the case of each of clauses (B) and (C),
individually or in the aggregate would prevent or materially delay the
exercise by Inprise of the Option or any other right of Inprise under this
Agreement, or (f) result in a "Separation Time" or "Flip-In Event" under
the Corel Rights Plan, and (g) except as described in Section 4.04 of the
Merger Agreement or this Agreement, and other than the HSR Act and the
Competition Act (Canada) and, with respect to Section 9 hereof, compliance
with the provisions of the Securities Act, the Ontario Act and any
applicable state securities laws, the execution and delivery of this
Agreement by Corel does not, and the performance of this Agreement by Corel
will not, require any consent, approval, authorization or permit of, or
filing with or notification to, any governmental or regulatory authority.
6. Representations and Warranties of Inprise. Inprise represents and
warrants to Corel that (a) Inprise is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and
has the corporate power and authority to enter into this Agreement and to
carry out its obligations hereunder, (b) the execution and delivery of this
Agreement by Inprise and the consummation by Inprise of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action on the part of Inprise and no other corporate proceedings on the
part of Inprise are necessary to authorize this Agreement or any of the
transactions contemplated hereby, (c) this Agreement has been duly executed
and delivered by Inprise and constitutes a valid and binding obligation of
Inprise, and, assuming this Agreement constitutes a valid and binding
obligation of Corel, is enforceable against Inprise in accordance with its
terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement
of creditors' rights generally and the availability of injunctive relief
and other equitable remedies and limitations imposed by law on
indemnification for liability under applicable securities laws, (d) the
execution and delivery of this Agreement by Inprise does not, and the
performance of this Agreement by Inprise will not, result in any Violation
pursuant to, (A) any provision of the charter documents of Inprise, (B) any
provisions of any loan or credit agreement, note, mortgage, indenture,
lease, or other agreement, obligation, instrument, permit, concession,
franchise, license of or applicable to it or (C) any judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to Inprise
or its properties or assets, which Violation, in the case of each of
clauses (B) and (C), would, individually or in the aggregate have a
material adverse effect on Inprise's ability to consummate the transactions
contemplated by this Agreement, (e) except as described in Section 3.04 of
the Merger Agreement, the execution and delivery of this Agreement by
Inprise does not, and the performance of this Agreement by Inprise will
not, require any consent, approval, authorization or permit of, or filing
with or notification to, any governmental or regulatory authority and (f)
any Corel Shares acquired upon exercise of the Option will not be, and the
Option is not being, acquired by Inprise with a view to public distribution
or resale in any manner which would be in violation of Canadian, United
States, provincial or state securities laws.
7. Put Right.
(a) Exercise of Put. At any time during which the Option is
exercisable pursuant to Section 2 or would be exercisable but for the
circumstances referred to in the parenthetical in Section 2(iii) of this
Agreement (the "Repurchase Period"), upon demand by Inprise, Inprise shall
have the right to sell to Corel (or any successor entity thereof) and Corel
(or such successor entity) shall be obligated to repurchase from Inprise
(the "Put"), all or any portion of the Option, at the price set forth in
clause (i) below, or all or any portion of the Corel Shares purchased by
Inprise pursuant hereto, at a price set forth in clause (ii) below:
(ii) the difference between the "Market/Tender Offer Price" for
shares of Corel Common Stock as of the date (the "Notice Date")
notice of exercise of the Put is given to Corel (defined as the
higher of (A) the price per share offered as of the Notice Date
pursuant to any tender or exchange offer or other Alternative
Proposal which was made prior to the Notice Date and not
terminated or withdrawn as of the Notice Date (the "Tender
Price") and (B) the average of the closing prices of shares of
the Corel Common Stock on the Nasdaq Stock Market for the five
trading days immediately preceding the Notice Date (the "Market
Price"), and the Exercise Price, multiplied by the number of
Corel Shares purchasable pursuant to the Option (or portion
thereof with respect to which Inprise is exercising its rights
under this Section 7),
(ii) the Exercise Price paid by Inprise for the Corel Shares
acquired pursuant to the Option plus the difference between the
Market/Tender Offer Price and the Exercise Price, multiplied by
the number of Corel Shares so purchased. For purposes of this
clause (ii), the Tender Price shall be the highest price per
share offered pursuant to a tender or exchange offer or other
Alternative Proposal made during the Repurchase Period and not
withdrawn or terminated.
In determining the Market-Tender Offer Price, the value of
consideration other than cash or stock as provided above shall be
determined by a nationally recognized investment banking firm selected by
Inprise and reasonably acceptable to Corel acquired pursuant to this
Agreement.
(b) Payment and Redelivery of Option or Shares. In the event Inprise
exercises its rights under this Section 7, Corel shall, within ten business
days of the Notice Date, pay the required amount to Inprise by wire
transfer in immediately available funds to an account specified by Inprise
two business days prior to the date that payment is due and Inprise shall
surrender to Corel the Option or the certificates evidencing the Corel
Shares purchased by Inprise pursuant hereto, and Inprise shall warrant that
it owns such shares and that such shares are then free and clear of all
liens, claims, charges and encumbrances of any kind or nature whatsoever.
8. Restrictions on Certain Actions. Corel shall not adopt any Rights
Agreement or shareholder rights plan or any amendment thereto in any manner
which would cause Inprise, if Inprise has complied with its obligations
under this Agreement, to become an "Acquiring Person" under such Rights
Agreement or shareholder rights plan solely by reason of the beneficial
ownership of the Corel Shares acquired pursuant to this Agreement.
9. Registration Rights.
(a) Corel will, if requested in writing (a "Registration Notice") by
Inprise at any time and from time to time within two years of the exercise
of the Option, as expeditiously as possible prepare and file up to two
registration statements under the Securities Act or prospectuses under the
Ontario Act if such registration or the obtaining of a receipt for a
prospectus is necessary in order to permit the sale or other disposition of
any or all shares or other securities that have been acquired by or are
issuable to Inprise upon exercise of the Option ("Registrable Securities")
in accordance with the intended method of sale or other disposition stated
by Inprise. Any such Registration Notice must relate to a number of
Registrable Securities equal to at least twenty percent (20%) of Corel
Shares, unless the remaining number of Registrable Securities is less than
such amount, in which case Inprise shall be entitled to exercise its rights
hereunder but only for all of the remaining Registrable Securities (a
"Permitted Offering"). Inprise's rights hereunder shall terminate at such
time as Inprise shall be entitled to sell all of the remaining Registrable
Securities pursuant to Rule 144(k) under the Act . Corel will use its
reasonable best efforts to qualify such shares or other securities under
any applicable state or other provincial securities laws; provided,
however, that Corel shall not be required to qualify to do business,
consent to general service of process or submit to taxation in any
jurisdiction by reason of this provision. Corel will use reasonable
efforts to cause each such registration statement to become effective and
to obtain a (final) receipt for each such prospectus, to obtain all
consents or waivers of other parties which are required therefor, and to
keep such registration statement or prospectus effective for such period
not in excess of 120 calendar days from the day such registration statement
first becomes effective or the date of the (final) receipt for such
prospectus as may be reasonably necessary to effect such sale or other
disposition. The obligations of Corel hereunder to file a registration
statement or prospectus and to maintain its effectiveness may be suspended
for up to 90 calendar days in the aggregate if the Board of Directors of
Corel shall have determined that the filing of such registration statement
or prospectus or the maintenance of its effectiveness would require
premature disclosure of nonpublic information that would materially and
adversely affect Corel or otherwise interfere with or adversely affect any
pending or proposed offering of securities of Corel or any other material
transaction involving Corel, or Corel would be required under the
Securities Act to include audited financial statements for any period in
such registration statement or prospectus and such financial statements are
not yet available for inclusion in such registration statement or
prospectus. Subject to applicable law, the expenses associated with the
preparation and filing any registration statement or prospectus prepared
and filed under this Section 9, and any sale covered thereby ("Registration
Expenses"), will be paid by Corel except for underwriting discounts or
commissions, brokers' fees and the fees and disbursements of Inprise's
counsel related thereto; provided, however, that Corel will not be
required to pay for any Registration Expenses with respect to such
registration if the registration request is subsequently withdrawn at the
request of Inprise unless Inprise agrees to forfeit its right to request
one registration. In connection with any registration statement or
prospectus pursuant to this Section 9, Inprise shall furnish, or cause any
holder of the Option or Corel Shares (a "Holder") to furnish, Corel with
such information concerning itself and the proposed sale or distribution as
shall reasonably be required in order to ensure compliance with the
requirements of the Securities Act or the Ontario Act and to provide
representations and warranties customary for selling stockholders who are
unaffiliated with Corel. In addition, Inprise shall, and Inprise shall
cause each Holder to contractually agree to, indemnify and hold Corel, its
underwriters and each of their respective affiliates harmless against any
and all losses, claims, damages, liabilities and expenses (including,
without limitation, investigation expenses and fees and disbursement of
counsel and accountants), joint or several, to which Corel, its
underwriters and each of their respective affiliates may become subject
under the Securities Act or the Ontario Act or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in written information
furnished by any Holder to Corel expressly for use in such registration
statement. If, during the time periods referred to in the first sentence
of this Section 9, Corel effects a registration under the Securities Act
of, or qualifies a prospectus under the Ontario Act in respect of, the
Corel Common Stock for its own account or for any other stockholders of
Corel pursuant to a firm commitment underwriting (other than on Form S-4 or
Form S-8, or any successor form), it will allow Inprise the right to
participate in such registration or qualification as long as Inprise
participates in such underwriting on terms reasonably satisfactory to the
managing underwriters of such offering, and such participation will not
affect the obligation of Corel to effect demand registration statements or
prospectuses for Inprise under this Section 9; provided that, if the
managing underwriters of such offering advise Corel in writing that in
their opinion the number of shares of the Corel Common Stock requested to
be included in such registration or qualification exceeds the number that
it would be in the best interests of Corel to sell in such offering, Corel
will, after fully including therein all shares of Corel Common Stock to be
sold by Inprise, include the shares of Corel Common Stock requested to be
included therein by Inprise pro rata (based on the number of shares of
Corel Common Stock requested to be included therein) with the shares of
Corel Common Stock requested to be included therein by persons other than
Corel and persons to whom Corel owes a contractual obligation (other than
any director, officer or employee of Corel to the extent any such person is
not currently owed such contractual obligation). In connection with any
registration or qualification pursuant to this Section 9, Corel and Inprise
will provide each other and any underwriter of the offering with customary
representations, warranties, covenants, indemnification, and contribution
in connection with such registration or qualification. Corel shall provide
to any underwriters such documentation (including certificates, opinions of
counsel and "comfort" letters from auditors) as are customary in connection
with underwritten public offerings as such underwriters may reasonably
require.
(b) If Corel's securities of the same type as the Corel Common Stock
beneficially owned by Inprise are then authorized for quotation or trading
or listing on The Toronto Stock Exchange (the "TSE"), Nasdaq National
Market System, or any other securities exchange or automated quotations
system, Corel, upon the request of Inprise, shall promptly file an
application, if required, to authorize for quotation, trading or listing
such shares of the Corel Common Stock on such exchange or system and will
use its reasonable efforts to obtain approval, if required, of such
quotation, trading or listing as soon as practicable.
10. Adjustment Upon Changes in Capitalization.
(a) In the event of any change in the Corel Common Stock by reason of
stock dividends, split-ups, mergers, recapitalizations, combinations,
exchange of shares or the like, the type and number of shares or securities
subject to the Option, and the purchase price per share provided in Section
1 of this Agreement, shall be adjusted appropriately, and proper provision
shall be made in the agreements governing such transaction so that Inprise
shall receive, upon exercise of the Option, the number and class of shares
or other securities or property that Inprise would have received in respect
of the Corel Common Stock if the Option had been exercised immediately
prior to such event or the record date therefor, as applicable. In the
event that any additional shares of Corel Common Stock otherwise become
outstanding after the date of this Agreement (other than pursuant hereto),
the number of shares of Corel Common Stock subject to the Option shall be
increased to equal 19.9% of the number of shares of Corel Common Stock then
issued and outstanding.
(b) In the event that Corel shall enter in an agreement: (i) to
consolidate with or merge into any person, other than Inprise or another
direct or indirect wholly-owned subsidiary of Inprise, and shall not be the
continuing or surviving corporation of such consolidation or merger; (ii)
to permit any person, other than Inprise or another direct or indirect
wholly-owned subsidiary of Inprise, to merge into Corel and Corel shall be
the continuing or surviving corporation, but, in connection with such
merger, the then-outstanding shares of the Corel Common Stock shall be
changed into or exchanged for stock or other securities of Corel or any
other person or cash or any other property or the outstanding shares of the
Corel Common Stock immediately prior to such merger shall after such merger
represent less than 50% of the outstanding shares and share equivalents of
the merged company; or (iii) to sell or otherwise transfer all or
substantially all of its assets to any person, other than Inprise or
another direct or indirect wholly-owned subsidiary of Inprise, then, and in
each such case, Corel shall immediately so notify Inprise, and the
agreement governing such transaction shall make proper provisions so that
upon the consummation of any such transaction and upon the terms and
conditions set forth herein. Inprise shall, upon exercise of the Option,
receive for each Corel Share with respect to which the Option has not been
exercised an amount of consideration in the form of and equal to the per
share amount of consideration that would be received by the holder of one
share of the Corel Common Stock less the Exercise Price (and, in the event
of an election or similar arrangement with respect to the type of
consideration to be received by the holders of the Corel Common Stock,
subject to the foregoing, proper provision shall be made so that the holder
of the Option would have the same election or similar rights as would the
holder of the number of shares of the Corel Common Stock for which the
Option is then exercisable.
11. Profit Limitation.
(a) Notwithstanding any other provision of this Agreement, in no event
shall the Total Profit (as hereinafter defined) received by Inprise and its
affiliates exceed $45 million and, if it otherwise would exceed such
amount, Inprise, at its sole election, shall either (i) reduce the number
of shares of Corel Common Stock subject to the Option, (ii) deliver to
Inprise for cancellation Inprise Shares previously purchased by Inprise
(valued, for the purposes of this Section 11(a) at the average closing
sales price per share of Corel Common Stock (or if there is no sale on such
date then the average between the closing bid and ask prices on any such
date) as reported by the Nasdaq Stock Market for the twenty consecutive
trading days preceding the day on which the Total Profit exceeds $45
million, (iii) pay cash to Corel, or (iv) any combination thereof, so that
the actually realized Total Profit shall not exceed $45 million after
taking into account the foregoing actions.
(b) As used herein, the term "Total Profit" shall mean the amount (before
taxes) of the following: (a) the aggregate amount of (i)(x) the net cash
amounts received by Inprise and its affiliates pursuant to the sale of
Corel Shares (or any securities into which such Corel Shares are converted
or exchanged) to any unaffiliated party or to Corel pursuant to this
Agreement, less (y) Inprise's purchase price of such Corel Shares, (ii) any
amounts received by Inprise and its affiliates on the transfer of the
Option (or any portion thereof) to any unaffiliated party, if permitted
hereunder or to Corel pursuant to this Agreement, and (iii) the amount
received by Inprise pursuant to Section 8.02(b) of the Merger Agreement;
minus (b) the amount of cash theretofore paid to Corel pursuant to this
Section 11 plus the value of the Corel Shares theretofore delivered to
Corel for cancellation pursuant to this Section 11.
(c) Notwithstanding any other provision of this Agreement, nothing in this
Agreement shall affect the ability of Inprise to receive nor relieve
Corel's obligation to pay a fee pursuant to Section 8.02(b) of the Merger
Agreement; provided that if the Total Profit received by Inprise would
exceed $45 million following the receipt of such fee, Inprise shall be
obligated to comply with terms of Section 11(a) within 5 days of the later
of (i) the date of receipt of such fee and (ii) the date of receipt of the
net cash by Inprise pursuant to the sale of Corel Shares (or, any other
securities into which such Corel Shares are converted or exchanged) to any
unaffiliated party or to Corel pursuant to this Agreement.
(d) Notwithstanding any other provision of this Agreement, the Option may
not be exercised for a number of Corel Shares that would, as of the Notice
Date, result in a Notional Total Profit (as defined below) of more than $45
million. "Notional Total Profit" shall mean, with respect to any number of
Corel Shares as to which Inprise may propose to exercise the Option, the
Total Profit determined as of the Notice Date assuming that the Option was
exercised on such date for such number of Corel Shares and assuming such
Corel Shares, together with all other Corel Shares held by Inprise and its
affiliates as of such date, were sold for cash at the closing sales price
for Corel Common Stock as of the close of business on the preceding
trading day.
12. Restrictive Legends. Each certificate representing shares of the
Corel Common Stock issued to Inprise hereunder shall include a legend in
substantially the following form:
"THE TRANSFER OF THE SHARES REPRESENTED BY THIS
CERTIFICATE IS SUBJECT TO CERTAIN PROVISIONS OF AN
AGREEMENT BETWEEN THE REGISTERED HOLDER HEREOF
AND THE COMPANY AND TO RESALE RESTRICTIONS ARISING
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. A COPY
OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE
OF THE COMPANY AND WILL BE PROVIDED TO THE HOLDER
HEREOF WITHOUT CHARGE UPON RECEIPT BY THE COMPANY
OF A WRITTEN REQUEST THEREFOR; "
and any further legend as may be required by the TSE. Corel shall, upon
written request of the holder thereof, issue such holder a new certificate
evidencing such Corel Shares without such legend in the event (i) the sale
of such Corel Shares has been registered pursuant to the Securities Act, or
(ii) such holder shall have delivered to Corel an opinion of counsel, which
opinion shall, in Corel's reasonable judgment, be satisfactory in form and
substance to Corel, to the effect that subsequent transfers of such Corel
Shares may be effected without registration under the Securities Act.
13. Listing and HSR Filing. Corel, upon request of Inprise, shall as
promptly as practicable file an application to list Corel Shares to be
acquired upon exercise of the Option for listing or quotation on the TSE
and the Nasdaq Stock Market and shall use its reasonable efforts to obtain
approval for such quotation as promptly as practicable. Promptly after the
date hereof, each of the parties hereto shall promptly file all required
pre-merger notification and report forms and other documents and exhibits
required to be filed under the HSR Act or the Competition Act (Canada) to
permit the acquisition of Inprise Shares subject to the Option at the
earliest practicable date.
14. Binding Effect; No Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Except as expressly provided for in this
Agreement and except for any assignment by Inprise, in whole or in part, to
a wholly-owned, direct or indirect, subsidiary of Inprise (provided that
any such subsidiary agrees in writing to be bound by and liable for all of
the terms, conditions and provisions contained herein that would otherwise
be applicable to Inprise and provided further that Inprise shall remain
liable for all of its duties and obligations hereunder in the event such
subsidiary shall fail to perform hereunder), neither this Agreement nor the
rights or the obligations of either party hereto are assignable in whole or
in part (whether by operation of law or otherwise), without the written
consent of the other party and any attempt to do so in contravention of
this Section 14 will be void. Nothing contained in this Agreement, express
or implied, is intended to confer upon any person other than the parties
hereto and their respective permitted assigns any rights or remedies of any
nature whatsoever by reason of this Agreement.
15. Specific Performance. The parties recognize and agree that if for any
reason any of the provisions of this Agreement are not performed in
accordance with their specific terms or are otherwise breached, immediate
and irreparable harm or injury would be caused for which money damages
would not be an adequate remedy. Accordingly, each party agrees that, in
addition to other remedies, the other party shall be entitled to an
injunction or injunctions restraining any violation or threatened violation
of the provisions of this Agreement and to enforce specifically the terms
and provisions hereof in the Courts of the State of New York located in the
County of New York or the State of Delaware located in the County of New
Castle (or, if such court lacks subject matter jurisdiction, any
appropriate federal court in the State of New York or the State of Delaware
(collectively, the "Courts") any of the appeals courts thereof. In the
event that any action should be brought in equity to enforce the provisions
of this Agreement, neither party will allege, and each party hereby waives
the defense that there is adequate remedy at law.
16. Entire Agreement. This Agreement and the Merger Agreement (including
the Exhibits and Schedules thereto) constitute the entire agreement among
the parties with respect to the subject matter hereof and supersede all
other prior discussions, representations and warranties, agreements and
understandings, both written and oral, among the parties or any of them
with respect to the subject matter hereof. No prior drafts of this
Agreement and no words or phrases from any such prior drafts shall be
admissible into evidence in any action, suit or other proceeding involving
this Agreement.
17. Further Assurances. Subject to the terms and conditions hereof, if
Inprise exercises the Option, or any portion thereof, in accordance with
the terms of this Agreement, each party will execute and deliver all such
further documents and instruments and take all such further action
including obtaining necessary regulatory approvals and making necessary
filings (including, without limitation, filings under the HSR Act and the
Competition Act (Canada) and filings with the TSE) as may be necessary in
order to consummate the transactions contemplated hereby (including the
issuance, registration and listing of the Corel Shares). To the extent
that the Option becomes exercisable, Corel will not take any actions which
would frustrate the exercise of the Option.
18. Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of to this Agreement unless
otherwise indicated. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed
by the words "without limitation." The words "hereof," "herein" and
"herewith" and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement as a whole and not to any particular
provision of this Agreement. All terms defined in this Agreement shall
have the defined meaning contained herein when used in any certificate or
other document made or delivered pursuant hereto unless otherwise defined
therein. The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as
well as to the gender and neuter genders of such term. Any agreement or
instrument defined or referred to herein or in any agreement or instrument
that is referred to herein means such agreement or instrument as from time
to time amended, modified or supplemented and attachments thereto and
instruments incorporated therein. References to a person are also to its
permitted successors and assigns. The parties have participated jointly in
the negotiation and drafting of this Agreement. In the event an ambiguity
or question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the parties and no presumption or burden
of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any of the provisions of this Agreement. Any reference to
any federal, state, local or foreign statute or law shall be deemed to also
to refer to any amendments thereto and all rules and regulations
promulgated thereunder, unless the context requires otherwise.
19. Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of the other
provisions of this Agreement, which shall remain in full force and effect.
In the event any court or other competent authority holds any provision of
this Agreement to be null, void or unenforceable, under any present or
future law, public policy or order, and if the rights or obligations of any
party hereto under this Agreement or the Merger Agreement, and the economic
or legal substance of the transactions contemplated hereby and thereby,
will not be materially and adversely affected thereby, (i) such provision
will be fully severable and (ii) this Agreement will be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part hereof. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith the execution and delivery of an
amendment to this Agreement in order to the maximum extent possible to
effectuate, to the extent permitted by law, the intent of the parties
hereto with respect to such provision. Each party agrees that, should any
court or other competent authority hold any provision of this Agreement or
part hereof to be null, void or unenforceable, or order any party to take
any action inconsistent herewith, or not take any action required herein,
the other party shall not be entitled to specific performance of such
provision or part hereof or to any other remedy, including but not limited
to money damages, for breach hereof or of any other provision of this
Agreement or part hereof as the result of such holding or order.
20. Notices. Any notice, request, claim, demand or communication required
or permitted hereunder shall be in writing and either delivered personally,
telegraphed or telecopied or sent by certified or registered mail, postage
prepaid, and shall be deemed to be given, dated and received (a) on the
date of delivery if delivered personally, including by courier, (b) upon
receipt if delivered by registered or certified mail, return receipt
requested, postage prepaid or (c) upon receipt if sent by facsimile
transmission, provided that any notice received by telecopy or otherwise at
the addressee's location on any business day after 5:00 p.m. (addressee's
local time) shall be deemed to have been received at 9:00 a.m.
(addressee's local time) on the next business day. Any party to this
Agreement may notify any other party of any changes to the address or any
of the other details specified in this paragraph, provided that such
notification shall only be effective on the date specified in such notice
or five business days after the notice is given, whichever is later.
Rejection or other refusal to accept or the inability to deliver because of
changed address of which no notice was given shall be deemed to be receipt
of the notice as of the date of such rejection, refusal or inability to
deliver. All notices hereunder shall be delivered to the parties to the
addresses or facsimile numbers set forth below, or pursuant to such other
instructions as may be designated in writing by the party to receive such
notice:
If to Corel to:
Corel Corporation
0000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxx
X0X 0X0
Facsimile No.: (000) 000-0000
Attention: Corporate Secretary
with a copy to (which shall not constitute notice):
XxXxxxxx Xxxxxxxx
Suite 1400, 00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxx
X0X 0X0
Facsimile No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx
If to Inprise:
Inprise Corporation
000 Xxxxxxxxxx Xxx
Xxxxxx Xxxxxx, XX 00000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxx Xxxxxx
with copies to (which shall not constitute notice):
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Xxxxxxx X. Xxxxxxxx, Esq.
and
Skadden, Arps, Slate, Xxxxxxx & Xxxx, LLP
000 Xxxxxxxxxx Xxx.
Xxxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxx, Esq.
21. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts
executed and to be performed entirely within such State without giving
effect to the principles of conflicts or choice of law thereof or of any
other jurisdiction (except to the extent that mandatory provisions of
United States federal law applies to indemnification provisions).
22. Descriptive Headings. The descriptive headings herein are inserted
for convenience of reference only and are not intended to be part of or, in
any way, to affect the meaning or interpretation of this Agreement.
23. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of
which, taken together, shall constitute one and the same instrument and
shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
24. Expenses. Except as otherwise expressly provided herein or in the
Merger Agreement, all costs and expenses incurred by a party in connection
with the transactions contemplated by this Agreement, including fees and
expenses of its own financial consultants, investment bankers, accountants
and counsel, shall be paid by the party incurring such expenses.
25. Amendments; Waiver. This Agreement may be amended by the parties
hereto and the terms and conditions hereof may be waived only by an
instrument in writing signed on behalf of each of the parties hereto, or,
in the case of a waiver, by an instrument in writing signed on behalf of
the party waiving compliance.
26. Jurisdiction. Each of the parties hereto irrevocably agrees that any
action, suit, claim or other legal proceeding with respect to this
Agreement or in respect of the transactions contemplated hereby brought by
any other party hereto or its successors or assigns shall be brought and
determined in any federal court located in the County of New York in the
State of New York or the County of New Castle in the State of Delaware of
the courts of the State of New York located in the County of New York or of
the State of Delaware located in the County of New Castle (or any appeals
courts thereof). The foregoing New York courts are hereinafter referred to
as the "New York Courts" and the foregoing Delaware Courts are hereinafter
referred to as the "Delaware Courts". Each of the parties hereto
irrevocably submits with regard to any such proceeding for itself and in
respect to its property, generally and unconditionally, to the exclusive
jurisdiction of the aforesaid courts. Each of the parties hereto
irrevocably waives, and agrees not to assert, by way of motion, as a
defense, counterclaim or otherwise, in any action or proceeding with
respect to this Agreement, (a) any claim that it is not personally subject
to the jurisdiction of the above-named courts for any reason, (b) that it
or its property is exempt or immune from jurisdiction of any such court or
from any legal process commenced in such courts (whether through service of
notice, attachment before judgment, attachment in aid of execution of
judgment, execution of judgment or otherwise) and (c) to the fullest extent
permitted by applicable law, that (i) the proceeding in any such court is
brought in an inconvenient forum, (ii) the venue of such proceeding is
improper or (iii) this Agreement, or the subject matter hereof, may not be
enforced in or by such court. Notwithstanding the foregoing, each of the
parties hereto agrees that each of the other parties shall have the right
to bring any action or proceeding for enforcement of a judgment entered by
the aforesaid New York Courts or Delaware Courts in any other court or
jurisdiction.
27. Waiver of Trial by Jury. Each of the parties hereto acknowledges and
agrees that any controversy which may arise under this Agreement is likely
to involve complicated and difficult issues, and therefore each such party
hereby irrevocably and unconditionally waives, to the fullest extent
permitted by applicable law, any right such party may have to a trial by
jury in respect of any action, suit, claim or other proceeding directly or
indirectly arising out of or relating to this Agreement or the transactions
contemplated by this Agreement. Each party certifies and acknowledges that
(i) no representative of such party has been authorized by such party to
represent or, to the knowledge or such party, has represented, expressly or
otherwise, that such other Party would not, in the event of litigation,
seek to enforce the foregoing waiver, (ii) each such party understands and
has considered the implications of this waiver, (iii) each such party
makes this waiver voluntarily and (iv) each such party has been induced to
enter into this Agreement by, among other things, the mutual waivers and
certifications in this Section 27.
28. Service of Process.
(a) The parties agree that the delivery of process or other papers in
connection with any such action or proceeding in the manner provided in
Section 20 hereof, or in such other manner as may be permitted by law,
shall be valid and sufficient service thereof.
(b) Each of Inprise and Corel hereby designates each of the New York City,
N.Y. and the Wilmington, Delaware offices of CT Corporation as its
respective agent for service of process in the State of New York and the
State of Delaware, solely with respect to any dispute or controversy
arising out of this Agreement, and service upon Inprise or Corel for such
purposes shall be deemed to be effective upon service of CT Corporation, as
aforesaid or of its successor designated in accordance with the following
sentence in the appropriate State. Each party may designate another
corporate agent or law firm reasonably acceptable to the other party and
located in the State of New York or the State of Delaware, as applicable,
as successor agent for service of process upon 30 days' prior written
notice to such party. Each party further covenants and agrees to execute,
upon the request of the other party, such documents and agreements as are
reasonably necessary to confirm such designations.
29. Remedies Cumulative. Except as otherwise herein provided, the rights
and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by applicable law.
30. No Third Party Beneficiaries. The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto and
their respective successors or permitted assigns, and except as otherwise
expressly provided for herein, it is not the intention of the parties to
confer third-party beneficiary rights upon any other person.
31. Limitations on Warranties.
(a) Except for the representations and warranties contained in this
Agreement and the Merger Agreement, Corel make no other express or implied
representation or warranty to Inprise. Inprise acknowledges that, in
entering into this Agreement, it has not relied on any representations or
warranties of Corel or any other person other than the representations and
warranties of Corel set forth in this Agreement or the Merger Agreement.
(b) Except for the representations and warranties contained in this
Agreement and the Merger Agreement, Inprise makes no other express or
implied representation or warranty to Corel. Corel acknowledges that, in
entering into this Agreement, it has not relied on any representations or
warranties of Inprise or any other person other than the representations
and warranties of Inprise set forth in this Agreement and the Merger
Agreement.
32. Execution. This Agreement may be executed by facsimile signatures by
any party and such signature shall be deemed binding for all purposes
hereof, without delivery of an original signature being thereafter
required.
33. Currency. Unless otherwise specified, all references in this
Agreement to "dollars" or "$" shall mean United States dollars.
34. Date for Any Action. In the event that any date on which any action
is required to be taken hereunder by any of the parties hereto is not a
business day, such action shall be required to be taken on the next
succeeding day which is a business day.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective duly authorized officers as of the date
first above written.
COREL CORPORATION
By: /s/ Xxxx X. Xxxxx
---------------------------
Name: Xxxx X. Xxxxx
Title: Corporate Secretary
By: /s/ Xxxxxxx Xxxxxxxx
---------------------------
Name: Xxxxxxx Xxxxxxxx
Title: President and Chief Executive Officer
INPRISE CORPORATION
By: /s/ Xxxx Xxxx
---------------------------
Name: Xxxx Xxxx
Title: Chief Financial Officer
