<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) July 30, 1998
PUMA TECHNOLOGY, INC.
----------------------------------------------------
(Exact name of registrant as specified in charter)
Delaware 0-21709 77-0349154
- -------------------------------- --------------- ------------------------
(State or other jurisdiction of (Commission (IRS Employer
incorporation File Number) Identification No.)
PUMA TECHNOLOGY, INC., 2550 North First Street, #500, San Jose, CA 95131
- -----------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (408) 321-7650
Not applicable.
----------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On July 30, 1998, and effective on that date, Puma Technology, Inc., a
Delaware corporation (the "Company"), completed an acquisition (the "Merger")
of SoftMagic Corp., a privately-held Florida corporation ("SoftMagic"),
pursuant to an Agreement and Plan of Reorganization, dated July 27, 1998, by
and among the Company, PacificTech Acquisition Corporation, a Delaware
corporation and wholly-owned subsidiary of the Company ("PacificTech"), and
SoftMagic. Upon consummation of the Merger, SoftMagic merged with and into
PacificTech.
Under the terms of the Merger, SoftMagic's securityholders will receive
One Million Dollars ($1,000,000) and approximately 341,742 shares of the
Company's Common Stock in exchange for all outstanding shares of SoftMagic
capital stock. The transaction will be accounted for as a purchase and the
Company expects the total consideration of the purchase to be approximately
Three Million Dollars ($3,000,000). In conjunction with the acquisition, the
Company expects a significant one-time in-process research and development
charge in its fourth fiscal quarter for SoftMagic products which have not yet
reached technological feasibility.
The amount of the Merger consideration was determined through
arms-length negotiation. There were no material relationships between the
SoftMagic shareholders and the Company or any of its affiliates, any director
or officer of the Company, or any associate of any such director or officer
prior to the Merger. The Company is obligated to prepare and file with the
Securities and Exchange Commission a registration statement on Form S-3 with
respect to the shares of the Company's Common Stock issued in the Merger.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of business acquired.
It is impracticable to provide the audited financial statements of
SoftMagic for the periods required at the date of this report. The
Company intends to file such financial statements as are required
to be filed as soon as they become available and in any event not
later than October 13, 1998.
(b) Pro forma financial information.
It is impracticable to provide the pro forma financial information
required pursuant to Article 11 of Regulation S-X at the date of
this report. The Company intends to file such pro forma financial
information as are required to be filed as soon as they become
available and in any event not later than October 13, 1998.
-2-
<PAGE>
(c) The following exhibits are attached and filed herewith:
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
2.1 Agreement and Plan of Reorganization
dated as of July 27, 1998, by and
among Puma Technology, Inc., a
Delaware corporation, PacificTech
Acquisition Corporation, a Delaware
corporation and wholly-owned
subsidiary of Puma, and SoftMagic
Corp., a Florida corporation.
The above agreement contains a list
identifying all exhibits and schedules
thereto not filed as a part of Exhibit
2.1. The Company agrees to furnish
supplementally a copy of any omitted
exhibits or schedules to the
Securities and Exchange Commission
upon request.
</TABLE>
-3-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PUMA TECHNOLOGY, INC.
Date: August 13, 1998 By: /s/ M. Bruce Nakao
---------------------------
M. Bruce Nakao
Chief Financial Officer
-4-
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Exhibit No. Description Numbered Page
- ----------- ----------- -------------
<S> <C> <C>
2.1 Agreement and Plan of Reorganization 6
dated as of July 27, 1998, by and among
Puma Technology, Inc., a Delaware
corporation, PacificTech Acquisition
Corporation, a Delaware corporation and
wholly-owned subsidiary of Puma, and
SoftMagic Corp., a Florida corporation.
</TABLE>
-5-
<PAGE>
- -----------------------------------------------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION
by and among
PUMA TECHNOLOGY, INC.
a Delaware corporation
("Puma")
PACIFICTECH ACQUISITION CORPORATION,
a Delaware corporation and wholly-owned
subsidiary of Puma,
and
SOFTMAGIC CORP.,
a Florida corporation
Dated July 27, 1998
- ------------------------------------------------------------------------------
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made and
entered into as of July 27, 1998, by and among Puma Technology, Inc., a Delaware
corporation ("Puma"), PacificTech Acquisition Corporation, a Delaware
corporation and wholly-owned subsidiary of Puma ("Sub") and SoftMagic Corp., a
Florida corporation ("SoftMagic").
RECITALS
WHEREAS, the Boards of Directors of Puma, Sub and SoftMagic deem it
advisable and in the best interests of each corporation and its respective
stockholders that Puma and SoftMagic combine in order to advance the long-term
business interests of Puma and SoftMagic;
WHEREAS, the combination of Puma and SoftMagic shall be effected by the
terms of this Agreement through a transaction (the "Merger") in which SoftMagic
will merge with and into Sub, SoftMagic will become a wholly-owned subsidiary of
Puma and the shareholders of SoftMagic will become stockholders of Puma;
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, for accounting purposes, it is intended that the Merger shall be
accounted for as a purchase.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth below, the
parties agree as follows:
ARTICLE I
THE MERGER
Section 1.1 EFFECTIVE TIME OF THE MERGER. Subject to the provisions
of this Agreement and the applicable provisions of the laws of the state of
Delaware and the state of Florida, a Certificate of Merger (the "Certificate
of Merger") in such form as is required by the relevant provisions of the
Delaware General Corporation Law (the "GCL") shall be duly prepared and
executed and shall be delivered to the Secretary of State of the State of
Delaware for filing as soon as practicable on or after the Closing Date (as
defined in Section 1.2) and Articles of Merger in such form as is required by
the relevant provisions of the Florida Business Corporation Act (the "FBCA")
shall be duly prepared and executed and shall be delivered to the Secretary of
1
<PAGE>
State of the State of Florida for filing as soon as practicable on or after
the Closing Date. The Merger shall become effective upon the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware
(the "Effective Time").
Section 1.2 CLOSING. The closing of the Merger (the "Closing") will take
place at 10:00 a.m., Puma Time, no later than July 31, 1998, or, if all of the
conditions to the obligations of Puma and SoftMagic to consummate the Merger
have not been satisfied or waived by such date or such consummation is
administratively infeasible on such date, on such later date mutually agreeable
to Puma and SoftMagic as soon as practical after the satisfaction or waiver as
provided in Article VII of all conditions to the obligations of Puma and
SoftMagic to consummate the Merger or as such consummation becomes
administratively feasible (the "Closing Date"), at the offices of Gray Cary
Ware & Freidenrich LLP, 400 Hamilton Avenue, Palo Alto, CA 94301 unless another
date or place is agreed to in writing by Puma and SoftMagic.
Section 1.3 EFFECTS OF THE MERGER.
(a) At the Effective Time (i) the separate existence of
SoftMagic shall cease, and SoftMagic shall be merged with and into Sub (the
"Surviving Corporation"), (ii) the Certificate of Incorporation of Sub shall be
the Certificate of Incorporation of the Surviving Corporation, and (iii) the
Bylaws of Sub as in effect immediately prior to the Effective Time shall be the
Bylaws of the Surviving Corporation. (Sub and SoftMagic are sometimes referred
to herein as the "Constituent Corporations.")
(b) At and after the Effective Time, the Surviving
Corporation shall possess all the rights, privileges, powers and franchises of a
public as well as of a private nature, and be subject to all the restrictions,
disabilities and duties of each of the Constituent Corporations; and all and
singular rights, privileges, powers and franchises of each of the Constituent
Corporations, and property, real, personal and mixed, and all debts due to
either of the Constituent Corporations on whatever account, as well as for stock
subscriptions and all other things in action or belonging to each of the
Constituent Corporations, shall be vested in the Surviving Corporation, and all
property, rights, privileges, powers and franchises, and all and every other
interest shall be thereafter as effectually the property of the Surviving
Corporation as they were of the Constituent Corporations, and the title to any
real estate vested by deed or otherwise, in either of the Constituent
Corporations, shall not revert or be in any way impaired but all rights of
creditors and all liens upon any property of either of the Constituent
Corporations shall be preserved unimpaired, and all debts, liabilities and
duties of the Constituent Corporations shall thereafter attach to the Surviving
Corporation, and may be enforced against it to the same extent as if such debts
and liabilities had been incurred by it.
Section 1.4 DIRECTORS AND OFFICERS. The directors and officers of Sub
immediately prior to the Effective Time shall be the initial directors and
officers of the Surviving Corporation, each of whom will hold office in
accordance with the Certificate of Incorporation and Bylaws of the Surviving
Corporation, in each case until their respective successors are duly elected or
appointed.
2
<PAGE>
ARTICLE II
MERGER CONSIDERATIONS
Section 2.1 CONVERSION OF CAPITAL STOCK. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of capital stock of SoftMagic or capital stock of Sub:
(a) CAPITAL STOCK OF SUB. Each issued and outstanding share
of the capital stock of Sub shall be converted into and become one (1) fully
paid and nonassessable share of Common Stock, $.01 par value, of the Surviving
Corporation.
(b) EXCHANGE RATIO FOR SOFTMAGIC COMMON STOCK. Subject to
Section 2.2, each issued and outstanding share of Common Stock, $.01 par value,
of SoftMagic ("SoftMagic Common Stock"), other than Dissenting Shares (as
defined in Section 2.5), shall be converted into the right to receive 2.342 (the
"Exchange Ratio") fully paid and nonassessable shares of Common Stock, $.001 par
value, of Puma ("Puma Common Stock"), which amounts shall be subject to
adjustment pursuant to Section 2.1(c) below and to reflect any stock split or
stock dividend effected between the date of this Agreement and the Effective
Time. All such shares of SoftMagic Common Stock when so converted, shall no
longer be outstanding and shall automatically be canceled and retired and shall
cease to exist, and each holder of a certificate representing any such shares
shall cease to have any rights with respect thereto, except the right to receive
the shares of Puma Common Stock and any cash in lieu of fractional shares of
Puma Common Stock to be issued or paid in consideration therefor upon the
surrender of such certificate in accordance with this Article II.
(c) ADJUSTMENT OF EXCHANGE RATIO. On the Closing Date, if
the Fair Market Value (as defined below) of Puma Common Stock (i) is equal to or
greater than seven dollars ($7.00) per share, the Exchange Ratio shall be
adjusted to equal 2.221; or (ii) is equal to or less than four dollars and
eighty cents ($4.80) per share, the Exchange Ratio shall be adjusted to equal
2.688. The term "Fair Market Value" as used herein shall mean the average of
the closing prices of Puma Common Stock for the ten (10) trading days preceding
the Closing Date as reported on the Nasdaq National Market ("NNM").
Section 2.2 EXCHANGE OF CERTIFICATES. The procedures for exchanging
outstanding shares of SoftMagic Common Stock for Puma Common Stock pursuant to
the Merger are as follows:
(a) EXCHANGE AGENT. Promptly after the Effective Time, Puma
shall deposit with an exchange agent designated by Puma (the "Exchange Agent"),
for the benefit of the holders of shares of SoftMagic Common Stock, for exchange
in accordance with this Section 2.2 through the Exchange Agent, certificates
representing the shares of Puma Common Stock issuable pursuant to Section 2.1
less the Escrow Shares, as defined in Section 2.4 (such shares of Puma Common
Stock deposited with the Exchange Agent, together with any dividends or
distributions with respect thereto, being hereinafter referred to as the
"Exchange Fund"), in exchange for outstanding shares of SoftMagic Common Stock.
3
<PAGE>
(b) EXCHANGE PROCEDURES. As soon as reasonably practicable
after the Effective Time, the Exchange Agent shall mail to each holder of record
of a certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of SoftMagic Common Stock (each a "Certificate,"
and collectively, the "Certificates") whose shares were converted pursuant to
Section 2.1 into the right to receive shares of Puma Common Stock (i) a letter
of transmittal, which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such other
provisions as Puma and SoftMagic may reasonably specify, and (ii) instructions
for use in effecting the surrender of the Certificates in exchange for
certificates representing shares of Puma Common Stock. Upon surrender of a
Certificate for cancellation to the Exchange Agent or to such other agent or
agents as may be appointed by Puma, together with a duly executed letter of
transmittal, the holder of such Certificate shall be entitled to receive in
exchange therefor a certificate representing that number of whole shares of Puma
Common Stock which such holder has the right to receive pursuant to the
provisions of Section 2.1(b) less such holder's pro rata portion of the Escrow
Shares, and the Certificate so surrendered shall immediately be canceled. In the
event of a transfer of ownership of SoftMagic Common Stock which is not
registered in the transfer records of SoftMagic, a certificate representing the
proper number of shares of Puma Common Stock may be issued to a transferee if
the Certificate representing such SoftMagic Common Stock is presented to the
Exchange Agent, accompanied by all documents required to evidence and effect
such transfer and by evidence that any applicable stock transfer taxes have been
paid. Until surrendered as contemplated by this Section 2.2, each Certificate
shall be deemed at any time after the Effective Time to represent only the right
to receive upon such surrender the certificate representing shares of Puma
Common Stock and cash in lieu of any fractional shares of Puma Common Stock as
contemplated by this Section 2.2.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No
dividends or other distributions declared or made after the Effective Time with
respect to Puma Common Stock with a record date after the Effective Time shall
be paid to the holder of any unsurrendered Certificate with respect to the
shares of Puma Common Stock represented thereby and no cash payment in lieu of
fractional shares shall be paid to any such holder pursuant to
subsection (e) below until the holder of record of such Certificate shall
surrender such Certificate. Subject to the effect of applicable laws, following
surrender of any such Certificate, there shall be paid to the record holder of
the certificates representing whole shares of Puma Common Stock issued in
exchange therefor, without interest, (i) at the time of such surrender, the
amount of any cash payable in lieu of a fractional share of Puma Common Stock to
which such holder is entitled pursuant to subsection (e) below and the amount of
dividends or other distributions with a record date after the Effective Time
previously paid with respect to such whole shares of Puma Common Stock, and
(ii) at the appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time but prior to surrender
and a payment date subsequent to surrender payable with respect to such whole
shares of Puma Common Stock.
(d) NO FURTHER OWNERSHIP RIGHTS IN SOFTMAGIC COMMON STOCK.
All shares of Puma Common Stock issued upon the surrender for exchange of shares
of SoftMagic Common
4
<PAGE>
Stock in accordance with the terms hereof (including any cash paid pursuant
to subsection (c) or (e) of this Section 2.2 and the Escrow Shares) shall be
deemed to have been issued in full satisfaction of all rights pertaining to
such shares of SoftMagic Common Stock, and there shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of SoftMagic Common Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for any reason, they
shall be canceled and exchanged as provided in this Section 2.2.
(e) NO FRACTIONAL SHARES. No certificate or scrip
representing fractional shares of Puma Common Stock shall be issued upon the
surrender for exchange of Certificates, and such fractional share interests will
not entitle the owner thereof to vote or to any rights of a stockholder of Puma.
Notwithstanding any other provision of this Agreement, each holder of shares of
SoftMagic Common Stock exchanged pursuant to the Merger who would otherwise have
been entitled to receive a fraction of a share of Puma Common Stock (after
taking into account all Certificates delivered by such holder) shall receive, in
lieu thereof, cash (without interest) in an amount equal to such fractional part
of a share of Puma Common Stock multiplied by the average of the last reported
sale prices of Puma Common Stock, as reported on NNM, on each of the ten (10)
trading days immediately preceding the date of this Agreement.
(f) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange
Fund which remains undistributed to the shareholders of SoftMagic for one (1)
year after the Effective Time shall be delivered to Puma, upon demand, and any
shareholders of SoftMagic who have not previously complied with this Section 2.2
shall thereafter look only to Puma for payment of their claim for Puma Common
Stock, any cash in lieu of fractional shares of Puma Common Stock, and any
dividends or distributions with respect to Puma Common Stock.
(g) NO LIABILITY. Neither Puma nor SoftMagic shall be liable
to any holder of shares of SoftMagic Common Stock or Puma Common Stock, as the
case may be, for such shares (or dividends or distributions with respect
thereto) delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.
(h) LOST CERTIFICATES. In the event any Certificate shall
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming such Certificate to be lost, stolen or destroyed,
Puma shall issue in exchange for such lost, stolen or destroyed Certificate the
shares of Puma Common Stock issuable in exchange therefor pursuant to the
provisions of Article II of this Agreement, together with cash, if any, in lieu
of fractional shares in accordance with Section 2.2(e) hereof. The Board of
Directors of Puma may in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
Certificate to provide to Puma an indemnity agreement against any claim that may
be made against Puma with respect to the Certificate alleged to have been lost,
stolen or destroyed.
Section 2.3 CASH CONSIDERATION. At the Effective Time, Puma shall to
deliver to the holders of SoftMagic Common Stock an aggregate of One Million
Dollars ($1,000,000) (the "Cash Consideration"), less the Cash Escrow, as
defined in Section 2.4, as set forth in
5
<PAGE>
SCHEDULE 2.3 hereto ("Cash Consideration Schedule"). The Cash Consideration
will be paid pro rata to the holders of SoftMagic Common Stock based on the
number of shares held.
Section 2.4 ESCROW. At the Closing, Puma will deduct from the Cash
Consideration deliverable to the shareholders of SoftMagic pursuant to
Section 2.3 and from the number of shares of Puma Common Stock deliverable to
the shareholders of SoftMagic pursuant to Section 2.1(b) and will deposit into
escrow (the "Escrow") (i) an amount of cash equal to ten percent (10%) of Cash
Consideration (the "Cash Escrow") to be delivered to the shareholders of
SoftMagic pursuant to Section 2.3 and (ii) certificates representing ten percent
(10%) of the shares of Puma Common Stock issuable to the shareholders of
SoftMagic pursuant to Section 2.1(b) in the Merger on a pro rata basis (the
"Escrow Shares"). The "Cash Escrow" and the "Escrow Shares" shall collectively
be referred to herein as the "Escrow Fund." The Escrow Fund shall be held by
U.S. Bank Trust National Association or such other party as Puma and SoftMagic
shall mutually determine (the "Escrow Agent") in accordance with and subject to
the provisions of an Escrow Agreement substantially in the form of EXHIBIT A
hereto (the "Escrow Agreement"). The Escrow Fund shall be held as collateral for
the indemnification obligations of the persons who were shareholders of
SoftMagic immediately prior to the Effective Time under Article IX of this
Agreement.
Section 2.5 APPRAISAL RIGHTS. Any shares of SoftMagic Common Stock held
by shareholders of SoftMagic who properly exercise and perfect the dissenters'
appraisal rights ("Dissenting Shares") set forth in Sections 607.1301, 607.1302
and 607.1320 of the FBCA shall not be converted pursuant to Section 2.1 but
shall instead be converted into the right to receive such consideration as may
be determined to be due with respect to such Dissenting Shares pursuant to the
provisions of the FBCA. SoftMagic shall give Puma prompt notice of any demand
received by SoftMagic for appraisal of SoftMagic Common Stock, and Puma shall
have the right to control all negotiations and proceedings with respect to such
demand. SoftMagic agrees that, except with the prior written consent of Puma or
as required under the FBCA, it will not voluntarily make any payment with
respect to, or settle or offer to settle, any such demand for appraisal. Each
holder of Dissenting Shares (a "Dissenting Shareholder") who, pursuant to the
provisions of the FBCA, becomes entitled to payment of the value of shares of
SoftMagic Common Stock shall receive payment therefor (but only after the value
therefor shall have been agreed upon or finally determined pursuant to the
provisions of the FBCA). In the event that any holder of shares of SoftMagic
Common Stock fails to make an effective demand for payment or otherwise loses
his or her status as a Dissenting Shareholder, Puma shall, as of the later of
the Effective Time or the occurrence of such event, issue and deliver, upon
surrender by such Dissenting Shareholder of its Certificate or Certificates, the
shares of Puma Common Stock and any cash payment in lieu of fractional shares,
in each case without interest thereon, to which such Dissenting Shareholder
would have been entitled under Section 2.1 (less such Dissenting Shareholder's
pro rata portion of the Escrow Shares) and the Cash Escrow.
6
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SOFTMAGIC
In this Agreement, any reference to a "Material Adverse Effect" with
respect to any entity or group of entities means a material adverse effect on
the business, assets (including intangible assets), financial condition,
prospects, or results of operations of such entity and its subsidiaries, taken
as a whole.
In this Agreement, any reference to a party's "knowledge" means such
party's actual knowledge after reasonable inquiry of its directors, officers,
and other management level employees reasonably believed to have knowledge of
such matters.
In this Agreement, any reference to the "prospects" of SoftMagic or its
business, or to SoftMagic's business "as proposed to be conducted," means
such prospects or business without taking into account the effects of the
Merger or any changes to SoftMagic's business that are initiated by Puma
thereafter.
As used in this Agreement, the word "Subsidiary" means, with respect to
any party, any corporation or other organization, whether incorporated or
unincorporated, of which (i) such party or any other Subsidiary of such party
is a general partner (excluding partnerships, the general partnership
interests of which held by such party or any Subsidiary of such party do not
have a majority of the voting interest in such partnership) or (ii) at least
a majority of the securities or other interests having by their terms
ordinary voting power to elect a majority of the Board of Directors or others
performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such party or
by any one or more of its Subsidiaries, or by such party and one or more of
its Subsidiaries.
Except as disclosed in the disclosure schedule provided to Puma on or
before the date of this Agreement (the "SoftMagic Disclosure Schedule"),
SoftMagic represents and warrants to Puma as follows:
Section 3.1 ORGANIZATION, STANDING AND POWER. Each of SoftMagic and its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, has all
requisite corporate power to own, lease and operate its properties and to carry
on its business as currently being conducted and as currently proposed to be
conducted, and is duly qualified to transact business and is in good standing in
each jurisdiction in which the nature of its operations requires such
qualification, except where the failure to so qualify has not and will not have
a Material Adverse Effect on SoftMagic. SoftMagic has delivered true and correct
copies of the Articles of Incorporation and Bylaws of SoftMagic and each of its
Subsidiaries, each as amended to date, to Puma. Neither SoftMagic nor any of its
Subsidiaries is in violation of any of the provisions of its Articles of
Incorporation, Bylaws or other charter documents. Except as set forth on the
SoftMagic Disclosure Schedule, SoftMagic does not directly or indirectly own any
equity or similar interest in, or any interest convertible or exchangeable or
exercisable for any equity or similar interest in, any corporation, partnership,
joint venture or other business association or entity.
7
<PAGE>
Section 3.2 SOFTMAGIC CAPITAL STRUCTURE.
(a) The authorized capital stock of SoftMagic consists of
200,000 shares of SoftMagic Common Stock and no shares of SoftMagic Preferred
Stock. As of the date hereof, 145,919 shares of SoftMagic Common Stock and no
shares of Preferred Stock are issued and outstanding and held of record by those
persons set forth in Section 3.2 of the SoftMagic Disclosure Schedule. All such
outstanding shares of SoftMagic Common Stock have been duly authorized, validly
issued, fully paid and are nonassessable, have been issued in compliance with
all applicable federal and state securities laws, and, except as set forth on
the SoftMagic Disclosure Schedule, are subject to no preemptive rights or rights
of first refusal created by statute, the charter documents of SoftMagic or any
agreement to which SoftMagic is a party or by which it is bound.
(b) Except as set forth in this Section 3.2 or the SoftMagic
Disclosure Schedule, there are (i) no equity securities of any class of
SoftMagic, or any securities exchangeable into or exercisable for such equity
securities, issued, reserved for issuance, or outstanding and (ii) no
outstanding subscriptions, options, warrants, puts, calls, rights, or other
commitments or agreements of any character to which SoftMagic is a party or by
which it is bound obligating SoftMagic to issue, deliver, sell, repurchase or
redeem, or cause to be issued, delivered, sold, repurchased or redeemed, any
equity securities of SoftMagic or obligating SoftMagic to grant, extend,
accelerate the vesting of, change the exercise price of, or otherwise amend or
enter into any such option, warrant, call, right, commitment or agreement.
Except as set forth on the SoftMagic Disclosure Schedule, there are no
contracts, commitments or agreements relating to voting, purchase or sale of
SoftMagic's capital stock (i) between or among SoftMagic and any of its
shareholders or (ii) to SoftMagic's knowledge, between or among any of
SoftMagic's shareholders.
Section 3.3 AUTHORITY; REQUIRED FILINGS AND CONSENTS.
(a) SoftMagic 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 SoftMagic, subject only to the approval of the
Merger by SoftMagic's shareholders under the FBCA. This Agreement and all other
documents expressly required to be executed and delivered by SoftMagic
hereunder, including the Certificate of Merger (collectively, the "Transaction
Documents"), have been or will be duly executed and delivered by SoftMagic and
constitute or will constitute the valid and binding obligations of SoftMagic,
enforceable against SoftMagic in accordance with their respective terms, except
as such enforceability may be limited by bankruptcy, insolvency, moratorium or
other similar laws affecting or relating to creditors' rights generally, and
general principles of equity.
(b) The execution and delivery by SoftMagic of this Agreement
and the other Transaction Documents to which it is or will be a party do not,
and the consummation of the transactions contemplated hereby and thereby will
not, (i) conflict with, or result in any violation
8
<PAGE>
or breach of any provision of, the Articles of Incorporation or Bylaws of
SoftMagic, (ii) result in any violation or breach of or constitute (with or
without notice or lapse of time, or both) a default under, or give rise to a
right of termination, cancellation or acceleration of any obligation or loss
of any benefit under, any note, mortgage, indenture, lease, contract or other
agreement or obligation to which SoftMagic is a party or by which SoftMagic
or any of its properties or assets may be bound, or (iii) conflict with or
violate any permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to SoftMagic or any of
its properties or assets.
(c) No consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality ("Governmental
Entity") is required by or with respect to SoftMagic in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby, except for (i) the filing of the Certificate of Merger with
the Delaware Secretary of State in accordance with the GCL and the filing of the
Articles of Merger with the Florida Secretary of State in accordance with the
FBCA, (ii) such consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable federal and state
securities laws, and (iii) such other consents, authorizations, filings,
approvals and registrations which, if not obtained or made, would not prevent or
materially alter or delay any of the transactions contemplated by this Agreement
or has or will have a Material Adverse Effect on SoftMagic.
Section 3.4 FINANCIAL STATEMENTS. SoftMagic has delivered to Puma (i)
its compiled balance sheets and statements of operations filed with
SoftMagic's federal and state tax returns for each of the years ended
December 31, 1995, 1996, and 1997, and (ii) its unaudited balance sheet, for
the six-month period ended June 30, 1998 (collectively, the "SoftMagic
Financial Statements"). The SoftMagic Financial Statements, and all other
financial statements of SoftMagic, whether or not submitted to Puma and
except as otherwise disclosed to Puma, are correct in all material respects.
The SoftMagic Financial Statements present fairly the financial position of
SoftMagic as of the respective dates and the results of its operations and
cash flows for the periods indicated.
Section 3.5 ABSENCE OF UNDISCLOSED LIABILITIES. SoftMagic does not have
any liabilities, either accrued or contingent (whether or not required to be
reflected in financial statements in accordance with GAAP), and whether due or
to become due, other than (i) liabilities reflected or provided for on the
balance sheet as of June 30, 1998 (the "SoftMagic Balance Sheet"),
(ii) liabilities specifically described in this Agreement or the SoftMagic
Disclosure Schedule, and (iii) normal or recurring liabilities incurred since
June 30, 1998 in the ordinary course of business consistent with past practices.
Section 3.6 ACCOUNTS RECEIVABLE. The accounts receivable shown on the
SoftMagic Balance Sheet arose in the ordinary course of business and have been
collected or are collectible in the book amounts thereof, less an amount not in
excess of the allowance for doubtful accounts and returns provided for in the
SoftMagic Balance Sheet. The accounts receivable of SoftMagic arising after the
date of the SoftMagic Balance Sheet and prior to the Closing Date arose, or will
9
<PAGE>
arise, in the ordinary course of business and have been collected or will be
collectible in the book amounts thereof, less allowances for doubtful accounts
and returns determined in accordance with the past practices of SoftMagic. None
of such accounts receivables is subject to any claim of offset or recoupment or
counterclaim, and SoftMagic has no knowledge of any specific facts that would be
likely to give rise to any such claim. No amount of such accounts receivable
are contingent upon the performance by SoftMagic of any obligation and no
agreement for deduction or discount has been made with respect to any such
accounts receivable. The amount carried for doubtful accounts and allowances
disclosed in the SoftMagic Balance Sheet is sufficient to provide for any losses
which may be sustained on revaluation of the accounts receivable.
Section 3.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
the SoftMagic Disclosure Schedule, since June 30, 1998, SoftMagic has conducted
its business in the ordinary course and in a manner consistent with past
practices and, since such date, SoftMagic has not:
(a) suffered any event or occurrence that has had a Material
Adverse Effect on SoftMagic;
(b) suffered any damage, destruction or loss, whether covered
by insurance or not, which in the aggregate has had a Material Adverse Effect on
SoftMagic;
(c) granted any material increase in the compensation payable
or to become payable by SoftMagic to its officers or employees;
(d) declared, set aside or paid any dividend or made any
other distribution on or in respect of the shares of its capital stock or
declared any direct or indirect redemption, retirement, purchase or other
acquisition of such shares;
(e) issued any shares of its capital stock or any warrants,
rights, or options for, or entered into any commitment relating to such capital
stock;
(f) made any change in the accounting methods or practices it
follows, whether for general financial or tax purposes, or any change in
depreciation or amortization policies or rates;
(g) sold, leased, abandoned or otherwise disposed of any real
property, machinery, equipment or other operating property other than in the
ordinary course of business;
(h) sold, assigned, transferred, licensed or otherwise
disposed of any patent, trademark, trade name, brand name, copyright (or pending
application for any patent, trademark or copyright), invention, work of
authorship, process, know-how, formula or trade secret (including any license or
disclosure of source code) or interest thereunder or other material intangible
asset except for end-user license transactions entered into in the ordinary
course of its business pursuant to SoftMagic's standard forms of license
agreement;
10
<PAGE>
(i) entered into any material commitment or transaction
(including without limitation any borrowing) other than commitments or
transactions entered into in the ordinary course of business that are not
reasonably likely to have a Material Adverse Effect on SoftMagic;
(j) permitted or allowed any of its property or assets to be
subjected to any mortgage, deed of trust, pledge, lien, security interest or
other encumbrance of any kind, except for liens for current taxes not yet due
and purchase money security interests incurred in the ordinary course of
business;
(k) made any capital expenditure or commitment for additions
to property, plant or equipment individually in excess of $10,000, or, in the
aggregate, in excess of $25,000;
(l) paid, loaned or advanced any amount to, or sold,
transferred or leased any properties or assets to, or entered into any agreement
or arrangement with, any of its officers, directors or shareholders or any
affiliate of any of the foregoing, other than employee compensation and benefits
and reimbursement of employment related business expenses incurred in the
ordinary course of business;
(m) agreed to take any action described in this Section 3.7
or which would constitute a breach of any of the representations or warranties
of SoftMagic contained in this Agreement; or
(n) except as disclosed in the SoftMagic Disclosure Schedule,
taken any other action that would have required the consent of Puma pursuant to
Section 5.1 of this Agreement (and which has not been obtained) had such action
occurred after the date of this Agreement.
Section 3.8 TAXES.
(a) For purposes of this Agreement, a "Tax" or, collectively,
"Taxes," means any and all material federal, state and local taxes of any
country, assessments and other governmental charges, duties, impositions and
liabilities, including taxes based upon or measured by gross receipts, income,
profits, sales, use and occupation, and value added, ad valorem, transfer,
franchise, withholding, payroll, recapture, employment, excise and property
taxes, together with all interest, penalties and additions imposed with respect
to such amounts and any obligations under any agreements or arrangements with
any other person with respect to such amounts and including any liability for
taxes of a predecessor entity.
(b) SoftMagic has accurately prepared and timely filed all
returns, estimates, information statements and reports required to be filed with
any taxing authority ("Returns") relating to any and all Taxes concerning or
attributable to SoftMagic or its operations and such Returns are true and
correct in all respects and have been completed in all respects in accordance
with applicable law.
(c) SoftMagic, as of the Closing Date, (i) will have paid all
Taxes it is required to pay prior to the Closing Date and (ii) will have
withheld with respect to its employees all Taxes required to be withheld.
11
<PAGE>
(d) There is no Tax deficiency outstanding or assessed or, to
the knowledge of SoftMagic, proposed against SoftMagic that is not reflected as
a liability on the SoftMagic Balance Sheet or set forth on the SoftMagic
Disclosure Schedule, nor has SoftMagic executed any agreements or waivers
extending any statute of limitations on or extending the period for the
assessment or collection of any Tax.
(e) SoftMagic has no liabilities for unpaid Taxes that have
not been accrued for or reserved on the SoftMagic Balance Sheet, whether
asserted or unasserted, contingent or otherwise.
(f) SoftMagic is not a party to any tax-sharing agreement or
similar arrangement with any other party, or any contractual obligation to pay
any Tax obligations of, or with respect to any transaction relating to, any
other person or to indemnify any other person with respect to any Tax.
Section 3.9 TANGIBLE ASSETS AND REAL PROPERTY.
(a) SoftMagic owns or leases all tangible assets and
properties which are necessary for the conduct of its business as currently
conducted or which are reflected on the SoftMagic Balance Sheet or acquired
since the date of the SoftMagic Balance Sheet (the "Material Tangible Assets").
The Material Tangible Assets are in good operating condition and repair.
SoftMagic has good and marketable title to all Material Tangible Assets that it
owns (except properties, interests in properties and assets sold or otherwise
disposed of since the date of the SoftMagic Balance Sheet in the ordinary course
of business), free and clear of all mortgages, liens, pledges, charges or
encumbrances of any kind or character, except as reflected in the SoftMagic
Financial Statements and except for liens for current taxes not yet due and
payable. Assuming the due execution and delivery thereof by the other parties
thereto, all leases of Material Tangible Assets to which SoftMagic is a party
are in full force and effect and valid, binding and enforceable in accordance
with their respective terms except as such enforceability may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting or relating
to creditors' rights generally, and general principles of equity. The SoftMagic
Disclosure Schedule sets forth a true and correct list of all such leases, and
true and correct copies of all such leases have been provided to Puma.
(b) SoftMagic owns no real property. The SoftMagic Disclosure
Schedule sets forth a true and complete list of all real property leased by
SoftMagic. Assuming the due execution and delivery thereof by the other parties
thereto, all such real property leases are in full force and effect and valid,
binding and enforceable in accordance with their respective terms, except as
such enforceability may be limited by bankruptcy, insolvency, moratorium or
other similar laws affecting or relating to creditors' rights generally, and
general principles of equity. True and correct copies all such of real property
leases have been provided to Puma.
Section 3.10 INTELLECTUAL PROPERTY.
(a) SoftMagic owns, or is licensed or otherwise possesses
legally enforceable rights to use, all patents, trademarks, trade names, service
marks and copyrights, and any
12
<PAGE>
applications for and registrations of such patents, trademarks, trade names,
service marks, and copyrights and all processes, formulas, methods,
schematics, technology, know-how, computer software programs or applications
and tangible or intangible proprietary information or material that are
necessary to conduct the business of SoftMagic as currently conducted, or as
currently proposed to be conducted, free and clear of all liens, claims or
encumbrances (all of which are referred to as the "SoftMagic Intellectual
Property Rights"). The foregoing representation as it relates to Licensed
Intellectual Property (as defined below) is limited to SoftMagic's interest
pursuant to licenses from third parties, each of which is in full force and
effect, is valid, binding and enforceable and grants SoftMagic such rights to
such intellectual property as are necessary to the business of SoftMagic as
currently conducted or currently proposed to be conducted.
(b) The SoftMagic Disclosure Schedule contains an accurate
and complete description of (i) all patents and patent applications and all
trademarks, trade names, service marks and registered copyrights included in the
SoftMagic Intellectual Property Rights, including the jurisdictions in which
each such SoftMagic Intellectual Property Right has been issued or registered or
in which any such application for such issuance and registration has been filed,
(ii) all licenses and sublicenses, distribution agreements and other agreements
to which SoftMagic is a party and pursuant to which any person is authorized to
use any SoftMagic Intellectual Property Rights or has the right to manufacture,
reproduce, market or exploit any product of SoftMagic (a "SoftMagic Product") or
any adaptation, translation or derivative work based on any SoftMagic Product or
any portion thereof, (iii) all licenses, sublicenses and other agreements to
which SoftMagic is a party and pursuant to which SoftMagic is authorized to use
any third party technology, trade secret, know-how, process, patent, trademark
or copyright, including software ("Licensed Intellectual Property"), which is
used in the manufacture of, incorporated in or forms a part of any SoftMagic
Product (other than licenses for off-the-shelf software used in the conduct of
SoftMagic's business), (iv) all joint development agreements to which SoftMagic
is a party, and (v) all agreements with Governmental Entities or other third
parties pursuant to which SoftMagic has obtained funding for research and
development activities.
(c) SoftMagic is not, nor will it be as a result of the
execution and delivery of this Agreement or the performance of its obligations
under this Agreement, in breach of any material license, sublicense or other
agreement relating to the SoftMagic Intellectual Property Rights or Licensed
Intellectual Property.
(d) All patents and registered trademarks, service marks and
copyrights claimed by or issued to SoftMagic which relate to any SoftMagic
Product are valid and subsisting. The manufacturing, marketing, licensing or
sale of any SoftMagic Product does not, to the knowledge of SoftMagic, infringe
any patent of any third party and does not infringe any trademark, service mark,
copyright, trade secret or other proprietary right of any third party. SoftMagic
(i) has not received notice that it has been sued in any suit, action or
proceeding which involves a claim of infringement of any patent, trademark,
service mark, copyright, trade secret or other proprietary right of any third
party and (ii) has no knowledge of any claim challenging or questioning the
validity or effectiveness of any license or agreement relating to any SoftMagic
Intellectual Property Rights or Licensed Intellectual Property.
13
<PAGE>
(e) All designs, drawings, specifications, source code,
object code, documentation, flow charts and diagrams incorporating, embodying or
reflecting any SoftMagic Product at any stage of its development (the "SoftMagic
Components") were written, developed and created solely and exclusively by
(i) employees of SoftMagic without the assistance of any third party or
(ii) third parties who assigned ownership of their rights with respect thereto
to SoftMagic by means of valid and enforceable agreements, which are listed and
described in the SoftMagic Disclosure Schedule and copies of which have been
provided to Puma. SoftMagic has at all times used commercially reasonable
efforts to protect its trade secrets and has not acted in such a manner as to
cause the loss of such trade secrets by their release into the public domain.
(f) Each person currently or formerly employed by SoftMagic
(including independent contractors, if any) that has or had access to
confidential information of SoftMagic has executed and delivered to SoftMagic a
confidentiality and non-disclosure agreement in one of the forms previously
provided to Puma. Neither the execution or delivery of any such agreement by any
such person, nor the carrying on of SoftMagic's business as currently conducted
and as currently proposed to be conducted, has or will conflict with or result
in a breach of the terms, conditions or provisions of, or constitute a material
default under, any contract, covenant or instrument under which any of such
persons is obligated.
Section 3.11 BANK ACCOUNTS. The SoftMagic Disclosure Schedule sets forth
the names and locations of all banks and other financial institutions at which
SoftMagic maintains accounts of any nature, the type of accounts maintained at
each such institution and the names of all persons authorized to draw thereon or
make withdrawals therefrom.
Section 3.12 CONTRACTS.
(a) Except as set forth in the SoftMagic Disclosure Schedule,
SoftMagic is not a party or subject to any agreement, obligation or commitment,
written or oral:
(i) that calls for any fixed or contingent payment or
expenditure or any related series of fixed or contingent payments or
expenditures by or to SoftMagic totaling more than $10,000 in any twelve (12)
month period;
(ii) with agents, advisors, salesmen, sales
representatives, independent contractors or consultants other than those that
are not cancelable by it on no more than thirty (30) days' notice and without
liability, penalty or premium;
(iii) that restricts SoftMagic from carrying on anywhere
in the world its business or any portion thereof as currently conducted;
(iv) to provide funds to or to make any investment in
any other person or entity (in the form of a loan, capital contribution or
otherwise);
(v) with respect to obligations as guarantor, surety,
co-signer, endorser, co-maker, indemnitor or otherwise in respect of the
obligation of any other person or entity;
14
<PAGE>
(vi) for any line of credit, standby financing,
revolving credit or other similar financing arrangement; or
(vii) with any distributor, original equipment
manufacturer, value added remarketer or other person for the distribution of any
of the SoftMagic Products.
(b) No party to any such contract, agreement or instrument
has expressed its intention to any officer of SoftMagic to cancel, withdraw,
modify or amend such contract, agreement or instrument, nor does SoftMagic
otherwise know of such an intention.
(c) SoftMagic is not in default under or in breach or
violation of, nor is there any valid basis for any claim of default by SoftMagic
under, or breach or violation by SoftMagic of, any material contract, commitment
or restriction to which SoftMagic is a party or by which SoftMagic or any of its
properties or assets is bound or affected. To SoftMagic's knowledge, no other
party is in default under or in breach or violation of, nor is there any valid
basis for any claim of default by any other party under, or any breach or
violation by any other party of, any material contract, commitment or
restriction to which SoftMagic is a party or by which SoftMagic or any of its
properties or assets is bound or affected. SoftMagic has no reason to believe
that it will not be able to comply with the terms or conditions of any material
contract to which it is a party without a material increase in its technical or
personnel resources allocated to such contract compared to the resources
budgeted by SoftMagic as of the date of this Agreement or any other material
increase in the cost of satisfying any covenants or conditions under such
contract compared to the costs budgeted by SoftMagic as of the date of this
Agreement.
Section 3.13 LABOR DIFFICULTIES. SoftMagic is not engaged in any unfair
labor practice or in violation of any applicable laws respecting employment,
employment practices or terms and conditions of employment. There is no unfair
labor practice complaint against SoftMagic pending or threatened before any
Governmental Entity. There is no strike, labor dispute, slowdown or stoppage
pending or threatened against SoftMagic. SoftMagic is not now and has never been
subject to any union organizing activities. SoftMagic has not experienced any
work stoppage or other labor difficulty. To SoftMagic's knowledge, (i) the
consummation of the transactions contemplated by this Agreement will not have a
Material Adverse Effect on its relations with SoftMagic employees and (ii) none
of the SoftMagic employees intend to leave their employment, whether as a result
of the transactions contemplated by this Agreement or otherwise.
Section 3.14 TRADE REGULATION. Except as set forth in the SoftMagic
Disclosure Schedule, SoftMagic has not terminated its relationship with or
refused to ship SoftMagic Products to any dealer, distributor, third party
marketing entity or customer which had theretofore paid or been obligated to pay
SoftMagic in excess of $10,000 over any consecutive twelve (12) month period.
All of the prices charged by SoftMagic in connection with the marketing or sale
of any of its products or services have been in compliance with all applicable
laws and regulations. No claims have been asserted or, to SoftMagic's knowledge,
threatened against SoftMagic with respect to the wrongful termination of any
dealer, distributor or any other marketing entity, discriminatory pricing, price
fixing, unfair competition, false advertising or any
15
<PAGE>
other material violation of any laws or regulations relating to
anti-competitive practices or unfair trade practices of any kind, and, to
SoftMagic's knowledge, no specific situation, set of facts, or occurrence
provides any basis for any such claim.
Section 3.15 ENVIRONMENTAL MATTERS.
(a) As of the date hereof, except as set forth in the
SoftMagic Disclosure Schedule, no material amount of any substance that has been
designated by applicable law or regulation to be radioactive, toxic, hazardous
or otherwise a danger to health or the environment, excluding office, janitorial
and similar substances (a "Hazardous Material"), is present as a result of the
actions of SoftMagic or, to SoftMagic's knowledge, as a result of any actions of
any third party or otherwise, in, on or under any property, including the land
and the improvements, ground water and surface water, that SoftMagic has at any
time owned, operated, occupied or leased. To the knowledge of SoftMagic, no
underground storage tanks are present under any property that SoftMagic has at
any time owned, operated, occupied or leased.
(b) At no time has SoftMagic transported, stored, used,
manufactured, disposed of, released or exposed its employees or others to
Hazardous Materials (collectively, "Hazardous Materials Activities") in
violation of any law, rule, regulation or treaty promulgated by any Governmental
Entity which has had or is likely to have a Material Adverse Effect on
SoftMagic.
(c) SoftMagic currently holds all environmental approvals,
permits, licenses, clearances and consents (the "Environmental Permits")
necessary for the conduct of its business as such businesses is currently being
conducted, the absence of which would have a Material Adverse Effect on
SoftMagic.
(d) No action, proceeding, writ, injunction or claim is
pending or, To the knowledge of SoftMagic, threatened concerning any
Environmental Permit or any Hazardous Materials Activity of SoftMagic. SoftMagic
is not aware of any fact or circumstance which could reasonably be expected to
involve SoftMagic in any environmental litigation or impose upon SoftMagic any
liability concerning Hazardous Materials Activities which would have a Material
Adverse Effect on SoftMagic.
Section 3.16 EMPLOYEE BENEFIT PLANS.
(a) SoftMagic has set forth in the SoftMagic Disclosure
Schedule (i) all employee benefit plans, (ii) all bonus, stock option, stock
purchase, incentive, deferred compensation, supplemental retirement, severance
and other similar employee benefit plans, and (iii) all unexpired severance
agreements, written or otherwise, for the benefit of, or relating to, any
current or former employee of SoftMagic (individually, a "SoftMagic Employee
Plan," and collectively, the "SoftMagic Employee Plans").
(b) With respect to each SoftMagic Employee Plan, SoftMagic
has made available to Puma a true and correct copy of (i) such SoftMagic
Employee Plan and (ii) each trust agreement and group annuity contract, if any,
relating to such SoftMagic Employee Plan.
16
<PAGE>
(c) With respect to the SoftMagic Employee Plans,
individually and in the aggregate, no event has occurred, and there exists no
condition or set of circumstances in connection with which SoftMagic could be
subject to any liability which would have a Material Adverse Effect on
SoftMagic.
(d) With respect to the SoftMagic Employee Plans,
individually and in the aggregate, there are no funded benefit obligations
for which contributions have not been made or properly accrued and there are
no unfunded benefit obligations which have not been accounted for by
reserves, or otherwise properly footnoted in accordance with GAAP, on the
financial statements or books of SoftMagic which would have a Material
Adverse Effect on SoftMagic .
(e) SoftMagic is not a party to any oral or written (i) union
or collective bargaining agreement, (ii) agreement with any officer or other key
employee of SoftMagic, the benefits of which are contingent, or the terms of
which are materially altered, upon the occurrence of a transaction involving
SoftMagic of the nature contemplated by this Agreement, (iii) agreement with any
officer of SoftMagic providing any term of employment or compensation guarantee
or for the payment of compensation in excess of $100,000 per annum, or
(iv) agreement or plan, including any stock option plan, stock appreciation
right plan, restricted stock plan or stock purchase plan, any of the benefits of
which will be increased, or the vesting of the benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be calculated on the
basis of any of the transactions contemplated by this Agreement.
Section 3.17 COMPLIANCE WITH LAWS. SoftMagic has complied with, is not in
violation of, and has not received any notices of violation with respect to, any
statute, law or regulation applicable to the ownership or operation of its
business.
Section 3.18 EMPLOYEES AND CONSULTANTS. The SoftMagic Disclosure
Schedule contains a list of the names of all employees and consultants of
SoftMagic as of the date of this Agreement and their salaries or wages, other
compensation, dates of employment and positions.
Section 3.19 LITIGATION. Except as set forth on the SoftMagic Disclosure
Schedule, there is no action, suit, proceeding, claim, arbitration or
investigation pending before any agency, court or tribunal or, to SoftMagic's
knowledge, threatened against SoftMagic or any of its properties or officers or
directors (in their capacities as such). There is no judgment, decree or order
against SoftMagic or, to its knowledge, any of its directors or officers (in
their capacities as such) that could prevent, enjoin or materially alter or
delay any of the transactions contemplated by this Agreement, or that could
reasonably be expected to have a Material Adverse Effect on SoftMagic. All
litigation to which SoftMagic is a party (or, to its knowledge, threatened to
become a party) is disclosed in the SoftMagic Disclosure Schedule.
Section 3.20 RESTRICTIONS ON BUSINESS ACTIVITIES. There is no agreement,
judgment, injunction, order or decree binding upon SoftMagic which has or could
reasonably be expected to have the effect of prohibiting or materially impairing
any current or future business practice of SoftMagic or the conduct of business
by SoftMagic as currently conducted or as currently proposed to be conducted.
17
<PAGE>
Section 3.21 GOVERNMENTAL AUTHORIZATION. SoftMagic has obtained each
governmental consent, license, permit, grant or other authorization of a
Governmental Entity that is required for the operation of the business of
SoftMagic (collectively, the "SoftMagic Authorizations"), and all of such
SoftMagic Authorizations are in full force and effect.
Section 3.22 INSURANCE. SoftMagic has insurance policies of the type and
in amounts customarily carried by persons conducting businesses or owning assets
similar to those of SoftMagic. The SoftMagic Disclosure Schedule contains a list
and description of all such policies. There is no material claim pending under
any of such policies as to which coverage has been questioned, denied or
disputed by the underwriters of such policies. All premiums due and payable
under all such policies have been paid, and SoftMagic is otherwise in compliance
with the terms of such policies. SoftMagic has no knowledge of any threatened
termination of, or material premium increase with respect to, any of such
policies.
Section 3.23 INTERESTED PARTY TRANSACTIONS.
(a) Except as set forth on the SoftMagic Disclosure Schedule,
no director, officer or shareholder of SoftMagic has any interest in (i) any
equipment or other material property or asset, real or personal, tangible or
intangible, including, without limitation, any of the SoftMagic Intellectual
Property Rights, used in connection with or pertaining to the business of
SoftMagic, (ii) any creditor, supplier, customer, manufacturer, agent,
representative, or distributor of any of the SoftMagic Products, (iii) any
entity that competes with SoftMagic, or with which SoftMagic is affiliated or
has a business relationship, or (iv) any agreement, obligation or commitment,
written or oral, to which SoftMagic is a party; PROVIDED, HOWEVER, that no such
person shall be deemed to have such an interest solely by virtue of ownership of
less than five percent (5%) of the outstanding stock or debt securities of any
company whose stock or debt securities are traded on a recognized stock exchange
or on the NNM.
(b) Except as contemplated by the Transaction Documents,
SoftMagic is not a party to any (i) agreement with any officer or other employee
of SoftMagic the benefits of which are contingent, or the terms of which are
materially altered, upon the occurrence of a transaction involving SoftMagic in
the nature of any of the transactions contemplated by this Agreement, or
(ii) agreement or plan, including, without limitation, any stock option plan,
stock appreciation right plan or stock purchase plan, any of the benefits of
which will be increased, or the vesting of benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be calculated on the
basis of any of the transactions contemplated by this Agreement.
Section 3.24 NO EXISTING DISCUSSIONS. As of the date hereof, SoftMagic is
not engaged, directly or indirectly, in any discussions or negotiations with any
party other than Puma with respect to an Acquisition Proposal (as defined in
Section 6.1).
Section 3.25 REAL PROPERTY HOLDING CORPORATION. SoftMagic is not a
"United States real property holding corporation" within the meaning of
Section 897(c)(2) of the Code.
18
<PAGE>
Section 3.26 CORPORATE DOCUMENTS. SoftMagic has furnished to Puma, or its
representatives, for its examination (i) its minute book containing all records
required to be set forth of all proceedings, consents, actions and meetings of
the shareholders, the Board of Directors and any committees thereof and (ii) all
permits, orders and consents issued by any Governmental Entity with respect to
SoftMagic. The corporate minute books and other corporate records of SoftMagic
are complete and accurate in all material respects, and the signatures appearing
on all documents contained therein are the true signatures of the persons
purporting to have signed the same. All actions reflected in such books and
records were duly and validly taken in compliance with the laws of the
applicable jurisdiction. SoftMagic has delivered to Puma or its representatives
true and complete copies of all documents which are referred to in this Article
III or in the SoftMagic Disclosure Schedule.
Section 3.27 INFORMATION STATEMENT. The information supplied by SoftMagic
for inclusion in the information statement to be sent to the shareholders of
SoftMagic in connection with their approval of the Merger (the "Information
Statement") shall not, on the date the Information Statement is first mailed to
SoftMagic shareholders, and at the Effective Time, contain any statement which
is false or misleading with respect to any material fact, or omit to state any
material fact necessary in order to make the statements made therein, in light
of the circumstances under which they are made, not false or misleading. If any
at time prior to the Effective Time any event of information should be
discovered by SoftMagic which should be set forth in an amendment to the
Information Statement, SoftMagic shall promptly inform Puma and Sub and shall
communicate such information to the SoftMagic shareholders in an appropriate
manner. Notwithstanding the foregoing, SoftMagic makes no representation,
warranty or covenant with respect to any information supplied by Puma which is
contained in any of the foregoing documents.
Section 3.28 NO MISREPRESENTATION. No representation or warranty by
SoftMagic in this Agreement, or any written statement, certificate or schedule
furnished or to be furnished by or on behalf of SoftMagic pursuant to this
Agreement, when taken together, contains or shall contain any untrue statement
of a material fact or omits or shall omit to state a material fact required to
be stated therein or necessary in order to make such statements, in light of the
circumstances under which they were made, not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PACIFIC AND SUB
Except as set forth in the disclosure schedule delivered by Puma to SoftMagic on
or before the date of this Agreement (the "Puma Disclosure Schedule"), Puma and
Sub represent and warrant to SoftMagic as follows:
Section 4.1 ORGANIZATION. Each of Puma, Sub and Pacific's Subsidiaries
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, has all requisite corporate power
to own, lease and operate its property and to carry on its business as now being
conducted and as proposed to be conducted, and is duly
19
<PAGE>
qualified to transact business and is in good standing as a foreign
corporation in each jurisdiction in which the failure to be so qualified
would have a Material Adverse Effect on Puma. Except as set forth in the Puma
SEC Reports (as defined in Section 4.4) or the Puma Disclosure Schedule,
neither Puma nor any of its Subsidiaries directly or indirectly owns any
equity or similar interest in, or any interest convertible into or
exchangeable or exercisable for, any corporation, partnership, joint venture
or other business association or entity.
Section 4.2 PUMA CAPITAL STRUCTURE.
(a) The authorized capital stock of Puma consists of
40,000,000 shares of Puma Common Stock and 2,000,000 shares of Preferred Stock,
$.01 par value ("Puma Preferred Stock"). As of June 30, 1998: (i) 12,130,560
shares of Puma Common Stock were issued and outstanding, all of which are
validly issued, fully paid and nonassessable; (ii) no shares of Puma Common
Stock were held in the treasury of Puma or by Subsidiaries of Puma;
(iii) 4,750,000 shares of Puma Common Stock were reserved for issuance pursuant
to stock options granted and outstanding under Pacific's stock option plans (the
"Puma Option Plans"), and rights outstanding under Pacific's Employee Stock
Purchase Plan (the "Puma Purchase Plan"). No material change in such
capitalization has occurred between June 30, 1998 and the date of this
Agreement. As of the date of this Agreement, none of the shares of Puma
Preferred Stock are issued and outstanding. All shares of Puma Common Stock
subject to issuance as specified above, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
will be duly authorized, validly issued, fully paid and nonassessable. All of
the outstanding shares of capital stock of Sub are duly authorized, validly
issued, fully paid and nonassessable, and all such shares are owned by Puma free
and clear of all security interests, liens, claims, pledges, agreements,
limitations on Pacific's voting rights, charges or other encumbrances of any
nature.
(b) Except as set forth in this Section 4.2 or as reserved
for future grants of options under the Puma Option Plans or the Puma Purchase
Plan (as more fully described in the Puma SEC Reports), there are (i) no equity
securities of any class of Puma, or any security exchangeable into or
exercisable for such equity securities, issued, reserved for issuance or
outstanding and (ii) no outstanding subscriptions, options, warrants, puts,
calls, rights or other commitments or agreements of any character to which Puma
is a party or by which it is bound obligating Puma to issue, deliver, sell,
repurchase or redeem or cause to be issued, delivered, sold, repurchased or
redeemed any equity securities of Puma or obligating Puma to grant, extend,
accelerate the vesting of, change the exercise price of or otherwise amend or
enter into any such option, warrant, call, right, commitment or agreement.
(c) The shares of Puma Common Stock to be issued pursuant to
the Merger, when issued in accordance with the terms of this Agreement, will be
duly authorized, validly issued, fully paid, and nonassessable.
Section 4.3 AUTHORITY; NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Puma and Sub have all requisite corporate power and
authority to enter into this Agreement and the other Transaction Documents to
which they are or will be parties and
20
<PAGE>
to consummate the transactions contemplated hereby and thereby. The execution
and delivery of this Agreement and the other Transaction Documents to which
Puma or Sub is or will be a party and the consummation of the transactions
contemplated hereby and thereby will, as of the Effective Time, have been
duly authorized by all necessary corporate action on the part of Puma and
Sub, respectively. This Agreement and the other Transaction Documents to
which Puma and/or Sub are parties have been or will be duly executed and
delivered by Puma and/or Sub and constitute or will constitute the valid and
binding obligations of Puma and/or Sub, enforceable in accordance with their
terms, except as such enforceability may be limited by bankruptcy laws and
other similar laws affecting creditors' rights generally and general
principles of equity.
(b) The execution and delivery by Puma and Sub of this
Agreement and the other Transaction Documents to which they are or will be
parties do not, and the consummation of the transactions contemplated hereby and
thereby will not, (i) conflict with, or result in any violation or breach of any
provision of the Certificate of Incorporation or Bylaws of Puma or Sub,
(ii) result in any violation or breach of, or constitute (with or without notice
or lapse of time, or both) a default under, or give rise to a right of
termination, cancellation or acceleration of any material obligation or loss of
any material benefit under, any note, mortgage, indenture, lease, contract or
other agreement, instrument or obligation to which Puma or Sub is a party or by
which either of them or any of their properties or assets may be bound, or
(iii) conflict with or violate any permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to Puma or Sub or any of its or their properties or assets, except in the case
of (ii) and (iii) for any such conflicts, violations, defaults, terminations,
cancellations or accelerations which would not be reasonably likely to have a
Material Adverse Effect on Puma.
(c) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required by
or with respect to Puma or any of its Subsidiaries in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby, except for (i) the filing of the Certificate of Merger with
the Delaware Secretary of State in accordance with the GCL and the filing of the
Articles of Merger with the Florida Secretary of State in accordance with the
FBCA, (ii) such consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable federal and state
securities laws and the laws of any foreign country and (iii) such other
consents, authorizations, filings, approvals and registrations which, if not be
reasonably likely to have a Material Adverse Effect on Puma.
Section 4.4 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Puma has timely filed and made available to SoftMagic all
forms, reports and documents required to be filed by Puma with the Securities
and Exchange Commission (the "SEC") since December 4, 1996 other than
registration statements on Form S-8 (collectively, the "Puma SEC Reports"). The
Puma SEC Reports (i) at the time filed, complied in all material respects with
the applicable requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as the case may be, and (ii) did not at the time they were
filed (or if amended or superseded by a
21
<PAGE>
filing prior to the date of this Agreement, then on the date of such filing)
contain any untrue statement of a material fact or omit to state a material
fact required to be stated in such Puma SEC Reports or necessary in order to
make the statements in such Puma SEC Reports, in the light of the
circumstances under which they were made, not misleading. None of Pacific's
Subsidiaries is required to file any forms, reports or other documents with
the SEC.
(b) Each of the consolidated financial statements (including,
in each case, any related notes) contained in the Puma SEC Reports, including
any Puma SEC Reports filed after the date of this Agreement until the Closing,
complied or will comply as to form in all material respects with the applicable
published rules and regulations of the SEC with respect thereto, was or will be
prepared in accordance with GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes to such financial
statements or, in the case of unaudited statements, as permitted by Form 10-Q
promulgated by the SEC) and presented fairly or will present fairly, in all
material respects, the consolidated financial position of Puma and its
Subsidiaries as at the respective dates and the consolidated results of its
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements were or are subject to normal and recurring
year-end adjustments which were not or are not expected to be material in
amount. The unaudited consolidated balance sheet of Puma as of April 30, 1998 is
referred to herein as the "Puma Balance Sheet."
Section 4.5 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since April 30, 1998,
there has been no material adverse change in the business, assets, financial
condition or results of operations of Puma, and Puma has conducted its business
in the ordinary course and in a manner consistent with past practices. Since
April 30, 1998, Puma has not agreed to take any action outside the ordinary
course of business or that would constitute a breach of any of the
representations or warranties of Puma contained in this Agreement.
Section 4.6 INTERIM OPERATIONS OF SUB. Sub was formed solely for the
purpose of engaging in the transactions contemplated by this Agreement, has
engaged in no other business activities and has conducted its operations only as
contemplated by this Agreement.
ARTICLE V
CONDUCT OF BUSINESS
Section 5.1 COVENANTS OF SOFTMAGIC. During the period from the date of
this Agreement and continuing until the earlier of the termination of this
Agreement or the Effective Time, SoftMagic agrees (except to the extent that
Puma shall otherwise consent in writing), to carry on its business in the usual,
regular and ordinary course in substantially the same manner as previously
conducted, to pay its debts and taxes when due, subject to good faith disputes
over such debts or taxes, to pay or perform its other obligations when due
(subject to good faith disputes with respect to such obligations), and, to the
extent consistent with such business, to use all commercially reasonable efforts
consistent with past practices and policies to (i) preserve intact its present
business organization, (ii) keep available the services of its present officers
and key employees (except in the case of pending terminations of officers or key
employees as to
22
<PAGE>
which Puma has been notified by SoftMagic as of the date hereof, or as to
which Puma has notified SoftMagic prior to the Closing Date as to its
intention to terminate such person) and (iii) preserve its relationships with
customers, suppliers, distributors, licensors, licensees and others having
business dealings with it. SoftMagic shall promptly notify Puma of any event
or occurrence not in the ordinary course of business of SoftMagic where such
event or occurrence would result in a breach of any covenant of SoftMagic set
forth in this Agreement or cause any representation or warranty of SoftMagic
set forth in this Agreement to be untrue as of the date of, or giving effect
to, such event or occurrence. Except as expressly contemplated by this
Agreement, SoftMagic shall not, without the prior written consent of Puma:
(a) Grant or accelerate, amend or change the period of
exercisability of options or restricted stock granted under any employee stock
plan of SoftMagic or authorize cash payments in exchange for any options granted
under any of such plans except as required by the terms of such plans or any
related agreements in effect as of the date of this Agreement;
(b) Transfer or license to any person or entity or otherwise
extend, amend or modify any rights to the SoftMagic Intellectual Property Rights
other than end-user license agreements entered into pursuant to SoftMagic's
standard form of end-user license agreement;
(c) Declare or pay any dividends on or make any other
distributions (whether in cash, stock or property) in respect of any of its
capital stock, or split, combine or reclassify any of its capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu of or
in substitution for shares of its capital stock, or purchase or otherwise
acquire, directly or indirectly, any shares of its capital stock except from
former employees, directors and consultants in accordance with agreements
providing for the repurchase of shares in connection with any termination of
service by such party;
(d) Issue, deliver or sell or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock or securities
convertible into shares of its capital stock, or subscriptions, rights, warrants
or options to acquire, or other agreements or commitments of any character
obligating it to issue any such shares or other convertible securities, other
than the issuance of shares of SoftMagic Common Stock to Jay Cohan pursuant to a
written agreement with SoftMagic that has been approved by Puma, which approval
shall not be unreasonably withheld;
(e) Acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial equity interest in or substantial portion
of the assets of, or by any other manner, any business or any corporation,
partnership or other business organization or division, or otherwise acquire or
agree to acquire any assets;
(f) Sell, lease, license or otherwise dispose of any of its
properties or assets which are material, individually or in the aggregate, to
the business of SoftMagic, except for transactions entered into in the ordinary
course of business;
(g) Take any action to (i) increase or agree to increase the
compensation payable or to become payable to its officers or employees,
(ii) grant any additional severance or
23
<PAGE>
termination pay to, or enter into any employment or severance agreements
with, officers, (iii) grant any severance or termination pay to, or enter
into any employment or severance agreement, with any non-officer employee,
except in accordance with past practices, (iv) enter into any collective
bargaining agreement, or (v) establish, adopt, enter into or amend in any
material respect any bonus, profit sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, trust, fund, policy or
arrangement for the benefit of any directors, officers or employees;
(h) Revalue any of its assets, including writing down the
value of inventory or writing off notes or accounts receivable, other than in
the ordinary course of business;
(i) Incur any indebtedness for borrowed money or guarantee
any such indebtedness or issue or sell any debt securities or warrants or rights
to acquire any debt securities or guarantee any debt securities of others, other
than indebtedness incurred under outstanding lines of credit consistent with
past practice;
(j) Amend or propose to amend its Certificate of
Incorporation or Bylaws, except as contemplated by this Agreement;
(k) Incur or commit to incur any individual capital
expenditure in excess of $10,000 or aggregate capital expenditures in excess of
$25,000, in addition to the existing commitments set forth in the SoftMagic
Disclosure Schedule;
(l) Enter into any agreements or amendments to existing
agreements pursuant to which any third party is granted exclusive marketing or
distribution rights with respect to any SoftMagic Product;
(m) Amend or terminate any contract, agreement or license to
which it is a party, except in the ordinary course of business;
(n) Waive or release any material right or claim, except in
the ordinary course of business;
(o) Initiate any litigation or arbitration proceeding; or
(p) Take or agree to take, in writing or otherwise, any of
the actions described in paragraphs (a) through (p) above, or any action which
is reasonably likely to make any of SoftMagic's representations or warranties
contained in this Agreement untrue or incorrect in any material respect on the
date made (to the extent so limited) or as of the Effective Time.
Section 5.2 COVENANTS OF PUMA. During the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
or the Effective Time, Puma agrees (except to the extent that SoftMagic shall
otherwise consent in writing), to carry on its business in the usual, regular
and ordinary course in substantially the same manner as previously conducted, to
pay its debts and Taxes when due, subject to good faith disputes over such debts
or Taxes, to pay or perform its other obligations when due, and, to the extent
consistent with such
24
<PAGE>
business, use all commercially reasonable efforts consistent with past
practices and policies to (i) preserve intact its present business
organization, (ii) keep available the services of its present officers and
key employees and (iii) preserve its relationships with customers, suppliers,
distributors, licensors, licensees and others having business dealings with
it. Puma shall promptly notify SoftMagic of any event or occurrence not in
the ordinary course of business of Puma where such event or occurrence would
result in a breach of any covenant of Puma set forth in this Agreement or
cause any representation or warranty of Puma set forth in this Agreement to
be untrue as of the date of, or giving effect to, such event or occurrence.
Section 5.3 COOPERATION. Subject to compliance with applicable law, from
the date hereof until the Effective Time, each of Puma and SoftMagic shall
confer on a regular and frequent basis with one or more representatives of the
other party to report operational matters of materiality and the general status
of ongoing operations and shall promptly provide the other party or its counsel
with copies of all filings made by such party with any Governmental Entity in
connection with this Agreement, the Merger and the transactions contemplated
hereby.
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.1 NO SOLICITATION.
(a) During the period from the date of this Agreement until
the earlier of the termination of this Agreement or the Effective Time,
SoftMagic shall not, directly or indirectly, through any officer, director,
employee, representative or agent, (i) solicit, initiate, or encourage any
inquiries or proposals that constitute, or could reasonably be expected to lead
to, a proposal or offer for a merger, consolidation, business combination, sale
of substantial assets, sale of shares of capital stock (including without
limitation by way of a tender offer) or similar transactions involving
SoftMagic, other than the transactions contemplated by this Agreement (any of
the foregoing inquiries or proposals being referred to in this Agreement as an
"Acquisition Proposal"), (ii) engage in negotiations or discussions concerning,
or provide any non-public information to any person or entity relating to, any
Acquisition Proposal, or (iii) agree to, approve or recommend any Acquisition
Proposal.
(b) SoftMagic shall notify Puma no later than twenty-four
(24) hours after receipt by an officer of SoftMagic (or by any of SoftMagic's
advisors) of any Acquisition Proposal or any request for nonpublic information
in connection with an Acquisition Proposal or for access to the properties,
books or records of SoftMagic by any person or entity that informs SoftMagic
that it is considering making, or has made, an Acquisition Proposal. Such notice
shall be made orally and in writing and shall indicate in reasonable detail the
identity of the offeror and the terms and conditions of such proposal, inquiry
or contact.
25
<PAGE>
Section 6.2 REGISTRATION RIGHTS.
(a) Puma shall use all reasonable efforts to cause the shares
of Puma Common Stock issued in the Merger, other than the Escrow Shares (the
"Registrable Securities"), to be registered under the Securities Act so as to
permit the resale thereof, and in connection therewith shall use all reasonable
efforts to prepare and file with the SEC within forty-five (45) days following
the Closing, and shall use all reasonable efforts to cause to become effective
no later than ninety (90) days after the Effective Time, a registration
statement (the "Registration Statement") on Form S-3 or on such other form as is
then available under the Securities Act covering the Registrable Securities;
PROVIDED, HOWEVER, that each holder of Registrable Securities ("Holder") shall
provide all such information and materials to Puma and take all such action as
may be required in order to permit Puma to comply with all applicable
requirements of the SEC and to obtain any desired acceleration of the effective
date of such Registration Statement. Such provision of information and materials
is a condition precedent to the obligations of Puma pursuant to this
Section 6.2. Puma shall not be required to effect more than one (1) registration
under this Section 6.2. The offering made pursuant to such registration shall
not be underwritten.
(b) Notwithstanding Section 6.2(a), Puma shall be entitled to
postpone the declaration of effectiveness of the Registration Statement prepared
and filed pursuant to Section 6.2(a) for a reasonable period of time up to
forty-five (45) calendar days after the deadline therefore set forth in
Section 6.2(a), if the Board of Directors of Puma, acting in good faith,
determines that there exists material nonpublic information about Puma which the
Board does not wish to disclose in a registration statement, which information
would otherwise be required by the Securities Act to be disclosed in the
Registration Statement to be filed pursuant to Section 6.2(a) above. Puma shall
have the right to extend such forty-five (45)-day postponement upon the written
consent of the Shareholder Representative (as defined in Section 9.6 hereof);
PROVIDED, HOWEVER, that Puma will use all reasonable efforts to limit the
extension to as short a period as possible. In each case, Puma shall furnish the
Shareholder Representative with a written notice summarizing in reasonable
detail the material nonpublic information upon which the postponement or
extension of such postponement is based, which information the Shareholder
Representative shall treat as confidential.
(c) Subject to the limitations of Section 6.2(b) above, Puma
shall (i) prepare and file with the SEC within forty-five (45) days after the
Effective Time the Registration Statement in accordance with Section 6.2(a)
hereof with respect to the shares of Registrable Securities and shall use all
reasonable efforts to cause the Registration Statement to become effective as
promptly as practicable after filing and to keep the Registration Statement
effective until one (1) year after the Effective Time; and (ii) prepare and file
with the SEC such amendments and supplements to the Registration Statement and
the prospectus used in connection therewith as may be necessary, and to comply
with the provisions of the Securities Act with respect to the sale or other
disposition of all securities proposed to be registered in the Registration
Statement until one (1) year after the Effective Time, (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
26
<PAGE>
and sale of the shares of the Registrable Securities to be offered and sold,
but only while Puma shall be required under the provisions hereof to cause
the Registration Statement to remain current.
(d) Notwithstanding any other provision of this Section 6.2
but subject to Section 6.2(e), Puma shall have the right at any time to require
that all Holders suspend further open market offers and sales of Registrable
Securities whenever, and for so long as, in the reasonable judgment of Puma in
good faith after consultation with counsel, there is or may be in existence
material undisclosed information or events with respect to Puma (the "Suspension
Right"). In the event Puma exercises the Suspension Right, such suspension will
continue for the period of time reasonably necessary for disclosure to occur at
a time that is not materially detrimental to Puma and its stockholders or until
such time as the information or event is no longer material, each as determined
in good faith by Puma after consultation with counsel. Puma will promptly give
the Shareholder Representative notice of any such suspension, summarizing in
reasonable detail the information or events on which such suspension is based,
PROVIDED that the Shareholder Representative shall maintain the confidentiality
of the contents of such summary. Puma will use all reasonable efforts to limit
the length of the suspension to thirty (30) calendar days or less. Puma agrees
to notify the Shareholder Representative promptly upon termination of the
suspension.
(e) If any Holder shall propose to sell any Registrable
Securities pursuant to the Registration Statement, it shall notify the Chief
Financial Officer of Puma of its intent to do so (including the proposed manner
and timing of all sales) at least two (2) full trading days prior to such sale,
and the provision of such notice to Puma shall conclusively be deemed to
reestablish and reconfirm an agreement by such Holder to comply with the
registration provisions set forth in this Agreement. Unless otherwise specified
in such notice, such notice shall be deemed to constitute a representation that
any information previously supplied by such Holder expressly for inclusion in
the Registration Statement (as such information may have been superseded by
information provided subsequently) is accurate as of the date of such notice. At
any time within such two-trading-day period, Puma may refuse to permit the
Holder to resell any Registrable Securities pursuant to the Registration
Statement; PROVIDED, HOWEVER, that in order to exercise this right, Puma must
deliver a certificate in writing to the Holder to the effect that a delay in
such sale is necessary because a sale pursuant to the Registration Statement in
its then current form without the addition of material, non-public information
about Puma could constitute a violation of the federal securities laws.
Notwithstanding the foregoing, Puma will ensure that in any event the Holders
shall have at least twenty (20) trading days (prorated for partial quarters)
available to sell Registrable Securities during each calendar quarter (or
portion thereof) after the effectiveness of the Registration Statement until the
first anniversary of the Effective Time. For any offer or sale of any of the
Registrable Securities by a Holder in a transaction that is not exempt under the
Securities Act, the Holder, in addition to complying with any other federal
securities laws, shall deliver a copy of the final prospectus (or amendment of
or supplement to such prospectus) of Puma covering the Registrable Securities in
the form furnished to the Holder by Puma to the purchaser of any of the
Registrable Securities on or before the settlement date for the purchase of such
Registrable Securities.
27
<PAGE>
(f) Puma will indemnify each Holder, each of its officers and
directors and partners, and each person controlling such Holder within the
meaning of Section 15 of the Securities Act against all expenses, claims,
losses, damages or 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, preliminary
prospectus, offering circular or other document, or any amendment or supplement
thereto, incident to any registration, qualification or compliance effected
pursuant to this Section 6.2, 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 were made,
not misleading, or any violation or any alleged violation by Puma of any rule or
regulation promulgated under the Securities Act or the Exchange Act in
connection with any such registration, qualification or compliance, and Puma
will reimburse each such Holder, each of its officers and directors, and each
person controlling such Holder, each such underwriter and each person who
controls any such underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating, preparing or defending any such
claim, loss, damage, liability or action, as such expenses are incurred,
provided that Puma will not be liable in any such case to the extent that any
such claim, loss, damage, liability or expense arises out of or is based on any
untrue statement or omission or alleged untrue statement or omission, made in
reliance upon and in conformity with written information furnished to Puma by
such Holder or controlling person and specifically for use therein.
(g) Each Holder will, if Registrable Securities held by such
Holder are included in the securities as to which such registration is being
effected, indemnify Puma, each of its directors and officers, each person who
controls Puma within the meaning of Section 15 of the Securities Act, and each
other such Holder, each of its officers and directors and each person
controlling such Holder within the meaning of Section 15 of the Securities Act,
against all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any such registration statement,
prospectus, offering circular or other document, or any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse
Puma, such other Holders, directors, officers, persons or control persons for
any legal or any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action, as
such expenses are incurred, 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 Puma by such Holder specifically for use therein.
(h) Each party entitled to indemnification under
Section 6.2(f) or 6.2(g) (the "Indemnified Party") shall give notice to the
party required to provide indemnification (the "Indemnifying Party") promptly
after such Indemnified Party has actual knowledge of any claim as to which
indemnity may be sought, and shall permit the Indemnifying Party to assume the
defense of any such claim or any litigation resulting therefrom, provided that
counsel for the
28
<PAGE>
Indemnifying Party, who shall conduct the defense of such claim or
litigation, shall be approved by the Indemnified Party (whose approval shall
not unreasonably be withheld), and the Indemnified Party may participate in
such defense at such party's expense; PROVIDED, HOWEVER, that an Indemnified
Party (together with all other Indemnified Parties which may be represented
without conflict by one counsel) shall have the right to retain one separate
counsel, with the fees and expenses to be paid by the Indemnifying Party, if
representation of such Indemnified Party by the counsel retained by the
Indemnifying Party would be inappropriate due to differing or potentially
differing interests between such Indemnified Party and any other party
represented by such counsel in such proceeding. The failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under Section 6.2(f) or 6.2(g) unless
the failure to give such notice is materially prejudicial to an Indemnifying
Party's ability to defend such action. 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 into any
settlement which does not include as an unconditional term thereof the giving
by the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation.
(i) Puma shall pay all of the out-of-pocket expenses, other
than underwriting discounts and commissions, if any, incurred in connection with
any registration of Registrable Securities pursuant to this Section 6.2,
including, without limitation, all registration and filing fees, printing
expenses, transfer agents' and registrars' fees, and the reasonable fees and
disbursements of Pacific's outside counsel and independent accountants.
Section 6.3 CONSENTS. Each of Puma and SoftMagic shall use all
reasonable efforts to obtain all necessary consents, waivers and approvals under
any of Pacific's or SoftMagic's material agreements, contracts, licenses or
leases as may be necessary or advisable to consummate the Merger and the other
transactions contemplated by this Agreement.
Section 6.4 ACCESS TO INFORMATION. Upon reasonable notice, SoftMagic
shall afford to the officers, employees, accountants, counsel and other
representatives of Puma, reasonable access, during normal business hours during
the period prior to the Effective Time, to all its properties, books, contracts,
commitments and records and, during such period, SoftMagic shall furnish
promptly to Puma or its representatives all other information concerning its
business, properties and personnel as such other party may reasonably request.
Unless otherwise required by law, the parties will treat any such information
which is nonpublic in confidence in accordance with the Confidentiality
Agreement dated March 16, 1998 (the "Confidentiality Agreement") between Puma
and SoftMagic, which Confidentiality Agreement shall continue in full force and
effect in accordance with its terms. No information or knowledge obtained in any
investigation pursuant to this Section 6.4 shall affect or be deemed to modify
any representation or warranty contained in this Agreement or the conditions to
the obligations of the parties to consummate the Merger.
Section 6.5 INFORMATION STATEMENT; OTHER FILINGS; BOARD RECOMMENDATIONS.
Promptly after the execution of this Agreement, SoftMagic and Puma will prepare
the Information Statement, and SoftMagic will use its best efforts to distribute
the Information Statement to the shareholders of SoftMagic within three (3)
business days after such execution. As promptly as
29
<PAGE>
practicable after the date of this Agreement, SoftMagic and Puma will prepare
and file any other filings required under the Exchange Act, the Securities
Act or any other federal, foreign or state securities or blue sky laws
relating to the Merger and the transactions contemplated by this Agreement
(the "Other Filings"). The Information Statement and the Other Filings will
comply in all material respects with all applicable requirements of law and
the rules and regulations promulgated thereunder, including Regulation D
promulgated under the Securities Act. Whenever any event occurs which is
required to be set forth in an amendment or supplement to the Information
Statement or any Other Filing, SoftMagic or Puma, as the case may be, will
promptly inform the other of such occurrence and cooperate in making any
appropriate amendment or supplement, and/or mailing to shareholders of
SoftMagic, such amendment or supplement. The material submitted to
SoftMagic's shareholders for purposes of soliciting such shareholders'
consents to the Merger shall be subject to review and approval by Puma and
include information regarding SoftMagic, the terms of the Merger and this
Agreement and the unanimous recommendation of the Board of Directors of
SoftMagic in favor of the Merger and this Agreement.
Section 6.6 LEGAL CONDITIONS TO MERGER. Each of Puma, Sub and SoftMagic
will take all reasonable actions necessary to comply promptly with all legal
requirements which may be imposed on itself with respect to the Merger (which
actions shall include, without limitation, furnishing all information in
connection with approvals of or filings with any Governmental Entity) and will
promptly cooperate with and furnish information to each other in connection with
any such requirements imposed upon either of them or any of their Subsidiaries
in connection with the Merger. Each of Puma and SoftMagic will take all
reasonable actions necessary to obtain (and will cooperate with each other in
obtaining) any consent, authorization, order or approval of, or any exemption
by, any Governmental Entity or other third party, required to be obtained or
made by SoftMagic, Puma or any of their Subsidiaries in connection with the
Merger or the taking of any action contemplated thereby or by this Agreement and
to enable the Closing to occur no later than July 31, 1998, but in any event as
promptly as practicable.
Section 6.7 PUBLIC DISCLOSURE. Puma and SoftMagic shall consult with
each other before issuing any press release or otherwise making any public
statement with respect to the Merger or this Agreement and shall not issue any
such press release or make any such public statement prior to such consultation,
except as may be required by law or by the rules of the NNM.
Section 6.8 TAX-FREE REORGANIZATION. Puma and SoftMagic shall each use
its best efforts to cause the Merger to be treated as a reorganization within
the meaning of Section 368(a) of the Code.
Section 6.9 IDENTIFICATION OF AFFILIATES. Concurrent with the execution
and delivery of this Agreement, Puma and SoftMagic will provide each other with
a list of those persons who are, in Pacific's or SoftMagic's respective
reasonable judgment, "affiliates" of Puma or SoftMagic, respectively, within the
meaning of Rule 145 promulgated under the Securities Act ("Rule 145"). (Each
such person who is an "affiliate" of Puma or SoftMagic within the meaning of
Rule 145 is referred to herein as an "Affiliate.") Puma and SoftMagic shall
provide each other such information and documents as SoftMagic or Puma shall
reasonably request for purposes of
31
<PAGE>
reviewing such list and shall notify the other party in writing regarding any
change in the identity of its Affiliates prior to the Closing Date.
Section 6.10 EMPLOYEE BENEFITS; STOCK OPTIONS. Puma agrees that it
will provide benefits to former SoftMagic employees hired by Puma following
the Effective Time that are substantially similar to the benefits currently
provided to similarly situated employees of Puma. From and after the
Effective Time, Puma shall also grant to such employees credit for all
service (to the same extent service with Puma is taken into account with
respect to similarly situated employees of Puma) with SoftMagic prior to the
Effective Time for purposes of vacation accrual after the Effective Time as
if such service with SoftMagic was service with Puma. Puma shall take all
corporate action necessary to issue incentive stock options (to the extent
such options qualify as such for tax purposes) to purchase an aggregate of
275,000 shares of Puma Common Stock under the Puma Amended and Restated 1993
Stock Option Plan (the "Options") according to the following schedule: (i)
55,000 shares to be granted to Jay Cohan; (ii) 198,000 shares to be granted
to Andre Sant'Anna; and (iii) 22,000 shares to be granted at the discretion
of Messrs. Cohan and Sant'Anna to SoftMagic employees retained by Puma
following the Effective Time, subject to the reasonable approval of the
President of Puma. The Options shall be granted on the first trading day of
the first month following the Effective Time (the "Grant Date") and shall
have an exercise price equal to the closing price of Puma Common Stock on the
Grant Date as reported on the Nasdaq National Market.
Section 6.11 BROKERS OR FINDERS. Each of Puma and SoftMagic represents,
as to itself, its Subsidiaries and its Affiliates, that no agent, broker,
investment banker, financial advisor or other firm or person is or will be
entitled to any broker's or finder's fee or any other commission or similar fee
in connection with any of the transactions contemplated by this Agreement.
Section 6.12 ADDITIONAL AGREEMENTS; REASONABLE EFFORTS. Subject to the
terms and conditions of this Agreement, each of the parties agrees to use all
reasonable efforts to take, or cause to be taken, all action and to do, or cause
to be done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement, including cooperating fully with the other party, including by
provision of information. In case at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement or to vest the Surviving Corporation with full title to all
properties, assets, rights, approvals, immunities and franchises of either of
the Constituent Corporations, the proper officers and directors of each party to
this Agreement shall take all such necessary action.
Section 6.13 EXPENSES. The parties shall each pay their own legal,
accounting and financial advisory fees and other out-of-pocket expenses related
to the negotiation, preparation and carrying out of this Agreement and the
transactions herein contemplated. In the event the Merger is consummated, legal,
accounting and financial advisory fees and expenses and other out-of-pocket
expenses incurred by SoftMagic relating to the negotiation, preparation and
carrying out of this Agreement and the transactions herein contemplated, shall
be borne by Puma.
31
<PAGE>
Section 6.14 VOTING AGREEMENTS. Concurrently with the execution and
delivery of this Agreement, SoftMagic will cause the persons and entities listed
on Schedule 6.14 to execute Voting Agreements in the form attached hereto as
EXHIBIT B agreeing, among other things, to vote in favor of the Merger.
Section 6.15 EMPLOYMENT AND NONCOMPETITION AGREEMENTS. SoftMagic shall
use reasonable efforts to assist Puma in causing Andre Sant'Anna and Jay Cohan
to enter into an Employment and Noncompetition Agreement (as defined in
Section 7.2(g)).
Section 6.16 SUBLEASE AGREEMENT. SoftMagic shall use its best efforts to
cause the Sublease Agreement bewteen SoftMagic and Purity Wholesale Grocers,
Inc. dated April 20, 1998 to be terminated or the obligations thereunder to be
assigned to a third party.
Section 6.17 UPDATING SCHEDULES. After execution of this Agreement and
prior to the Effective Time, each of SoftMagic and Puma will promptly supplement
or amend their respective Disclosure Schedules to reflect any matter that, if
existing, occurring or known on the date set forth or discussed in such
Disclosure Schedules, should have been so disclosed, or which is necessary to
correct any information in such Disclosure Schedules which was or has been
rendered inaccurate thereby; PROVIDED, HOWEVER, that for the purpose of
determining the rights and obligations of the parties under this Agreement, any
such supplemental or amended disclosure by either party shall not be deemed to
have been disclosed as of the date hereof or to constitute part of or an
amendment or supplement to such party's Disclosure Schedule or to cure any
breach or inaccuracy of a representation or warranty unless so agreed to in
writing by the other party, which agreement shall not be unreasonably withheld
if such supplemental or amended disclosure is not reasonably likely,
individually or in the aggregate, to result in a Material Adverse Effect on the
party making such disclosure.
ARTICLE VII
CONDITIONS TO MERGER
Section 7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction on or prior to the Closing Date of the
following conditions:
(a) This Agreement and the Merger shall have been approved
and adopted by the affirmative vote of the holders of the requisite number of
outstanding shares of SoftMagic Common Stock.
(b) All authorizations, consents, orders or approvals of, or
declarations or filings with, or expirations of waiting periods imposed by, any
Governmental Entity, the failure of which to obtain or comply with would be
reasonably likely to have a Material Adverse Effect on Puma or SoftMagic or a
Material Adverse Effect on the consummation of the transactions contemplated
hereby, shall have been filed, occurred or been obtained.
32
<PAGE>
(c) No temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or other
legal or regulatory restraint or prohibition preventing the consummation of the
Merger or limiting or restricting Pacific's conduct or operation of the business
of Puma or SoftMagic after the Merger shall have been issued, nor shall any
proceeding brought by a domestic administrative agency or commission or other
domestic Governmental Entity seeking any of the foregoing be pending; nor shall
there be any action taken, or any statute, rule, regulation or order enacted,
entered, enforced or deemed applicable to the Merger which makes the
consummation of the Merger illegal.
Section 7.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF PUMA AND SUB. The
obligations of Puma and Sub to effect the Merger are subject to the satisfaction
of each of the following conditions, any of which may be waived in writing
exclusively by Puma and Sub:
(a) The representations and warranties of SoftMagic set
forth in this Agreement shall be true and correct in all material respects as
of the date of this Agreement and as of the Closing Date as though made on
and as of the Closing Date, except (i) for changes contemplated by this
Agreement, (ii) that representations and warranties which specifically relate
to a particular date or period shall be true and correct as of such date and
for such period, and (iii) where the failure of any such representation or
warranty to be true and correct on and as of the Closing Date, individually
and in the aggregate, would not be reasonably likely to have a Material
Adverse Effect on SoftMagic, or a material adverse effect upon the
consummation of the transactions contemplated hereby; and Puma shall have
received a certificate to such effect signed on behalf of SoftMagic by the
chief executive officer of SoftMagic.
(b) SoftMagic shall have performed in all material respects
all obligations required to be performed by it under this Agreement at or prior
to the Closing Date, and Puma shall have received a certificate to such effect
signed on behalf of SoftMagic by the chief executive officer of SoftMagic.
(c) Puma shall have received from SoftMagic written evidence
that the execution, delivery and performance of SoftMagic's obligations under
this Agreement have been duly and validly approved and authorized by the Board
of Directors and the shareholders of SoftMagic.
(d) Puma shall have received all permits and other
authorizations required under applicable state blue sky laws for the issuance of
shares of Puma Common Stock pursuant to the Merger.
(e) Puma shall have been furnished with evidence satisfactory
to it of the consent or approval of those persons whose consent or approval
shall be required in connection with the Merger under the material contracts of
SoftMagic.
(f) Puma shall have received from each of the Affiliates of
SoftMagic an executed Affiliate Agreement.
33
<PAGE>
(g) Andre Sant'Anna and Jay Cohan shall have entered into
Employment and Noncompetition Agreements in the form of EXHIBIT C hereto
("Employment and Noncompetition Agreements").
(h) Jennifer Creek Sant'Anna shall have entered into a
Consulting Agreement in the form of EXHIBIT D hereto.
(i) Puma shall have received a legal opinion from Bowditch &
Dewey, LLP, Massachusetts counsel to SoftMagic, in form and substance reasonably
satisfactory to Puma.
(j) The Escrow Agreement shall have been executed and
delivered by the Shareholder Representative and the Escrow Agent.
(k) Puma shall have been furnished with evidence
satisfactory to it of the payment or forgiveness of any debt related to any
loans from each of Andre Sant'Anna and Jay Cohan to SoftMagic.
(l) Puma shall have received from Malcolm Keller Buyer III a
full release in form and substance satisfactory to Puma, regarding any and all
claims of Mr. Buyer to securities of SoftMagic.
(m) This Agreement and the Merger shall have been approved
and adopted by the Board of Directors of Puma and the Board of Directors of
SoftMagic.
(n) Puma shall have satisfactorily completed, in its
reasonable discretion, its business, financial and legal due diligence of
SoftMagic.
Section 7.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF SOFTMAGIC. The
obligation of SoftMagic to effect the Merger is subject to the satisfaction of
each of the following conditions, any of which may be waived, in writing,
exclusively by SoftMagic:
(a) The representations and warranties of Puma and Sub set
forth in this Agreement shall be true and correct in all material respects as of
the date of this Agreement and (except to the extent such representations speak
as of an earlier date) as of the Closing Date as though made on and as of the
Closing Date, except (i) changes contemplated by this Agreement and (ii) where
the failure to be true and correct would not be reasonably likely to have a
Material Adverse Effect on Puma and its Subsidiaries, taken as a whole, or a
Material Adverse Effect upon the consummation of the transactions contemplated
hereby; and SoftMagic shall have received a certificate to such effect signed on
behalf of Puma by the chief financial officer of Puma.
(b) Puma and Sub shall have performed in all material
respects all obligations required to be performed by them under this Agreement
at or prior to the Closing Date, and SoftMagic shall have received a certificate
to such effect signed on behalf of Puma by the chief financial officer of Puma.
34
<PAGE>
(c) SoftMagic shall have received from Puma and Sub written
evidence that the execution, delivery and performance of Pacific's and Sub's
obligations under this Agreement have been duly and validly approved and
authorized by the Boards of Directors of Puma and Sub.
(d) The Escrow Agreement shall have been executed and
delivered by Puma and the Escrow Agent.
(e) SoftMagic shall have received a written legal opinion
from Gary Cary Ware & Freidenrich LLP, counsel to Puma, in form and substance
reasonably satisfactory to SoftMagic.
(f) Puma shall have entered into the Employment and
Noncompetition Agreements with Andre Sant'Anna and Jay Cohan.
ARTICLE VIII
TERMINATION AND AMENDMENT
Section 8.1 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time (with respect to Sections 8.1(b) through 8.1(g), by
written notice by the terminating party to the other party):
(a) by the mutual written consent of Puma and SoftMagic;
(b) by either Puma or SoftMagic if the Merger shall not have
been consummated by July 31, 1998 (provided that the right to terminate this
Agreement under this Section 8.1(b) shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the cause of or
resulted in the failure of the Merger to occur on or before such date);
(c) by either Puma or SoftMagic if a court of competent
jurisdiction or other Governmental Entity shall have issued a nonappealable
final order, decree or ruling or taken any other action, in each case having the
effect of permanently restraining, enjoining or otherwise prohibiting the
Merger, except, if the party relying on such order, decree or ruling or other
action has not complied with its obligations under Section 6.6 of this
Agreement;
(d) by Puma if the Board of Directors of SoftMagic shall have
withdrawn or modified its recommendation of this Agreement or the Merger in a
manner adverse to Puma or shall have publicly announced or disclosed to any
third party its intention to do any of the foregoing;
(e) by Puma if the shareholders of SoftMagic shall fail to
approve this Agreement and the Merger;
35
<PAGE>
(f) by Puma or SoftMagic, if there has been a material breach
of any representation, warranty, covenant or agreement on the part of the other
party set forth in this Agreement, which breach (i) causes the conditions set
forth in Section 7.2(a) or (b) (in the case of termination by Puma) or 7.3(a) or
(b) (in the case of termination by SoftMagic) not to be satisfied and (ii) shall
not have been cured within ten (10) business days following receipt by the
breaching party of written notice of such breach from the other party.
Section 8.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement as provided in Section 8.1, there shall be no liability or obligation
on the part of Puma, SoftMagic, Sub or their respective officers, directors,
stockholders or Affiliates, except to the extent that such termination results
from the willful breach by a party of any of its representations, warranties or
covenants set forth in this Agreement; provided that the provisions of
Sections 6.7, 6.11 and 6.13 of this Agreement and the confidentiality provisions
set forth herein shall remain in full force and effect and survive any
termination of this Agreement.
Section 8.3 AMENDMENT. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of Directors,
at any time before or after approval of the matters presented in connection with
the Merger by the shareholders of SoftMagic, but, after any such approval, no
amendment shall be made which by law requires further approval by such
shareholders without such further approval. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
Section 8.4 EXTENSION; WAIVER. At any time prior to the Effective Time,
the parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto, and (iii) waive compliance
with any of the agreements or conditions 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 a written instrument signed on behalf of such party.
ARTICLE IX
ESCROW AND INDEMNIFICATION
Section 9.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. If the Merger
occurs, all of the representations and warranties contained in this Agreement
shall survive the Closing Date (except that representations and warranties that
specifically relate to a particular date or period shall be true and correct as
of such date and for such period) and shall continue in full force and effect
until the date of the first anniversary of the Closing Date (the "Termination
Date"), except as to representations and warranties of a nature such that a
breach should be discovered during the first audit of combined operations, which
representations and warranties will survive only until the release of the
audited results of such combined operations.
36
<PAGE>
Section 9.2 INDEMNIFICATION BY SOFTMAGIC SHAREHOLDERS.
(a) Subject to the terms and conditions contained herein,
each of the shareholders of SoftMagic shall indemnify, defend and hold harmless
Puma, its officers, directors, employees and attorneys, all Subsidiaries and
Affiliates of Puma, and the respective officers, directors, employees and
attorneys of such entities (all such persons and entities being collectively
referred to as the "Puma Group") from, against, for and in respect of any and
all losses, damages, costs and expenses (including reasonable legal fees and
expenses) which any member of the Puma Group may sustain or incur which are
caused by or arise out of (i) any inaccuracy in or breach of any of the
representations, warranties or covenants made by SoftMagic in this Agreement,
including the SoftMagic Disclosure Schedule, or (ii) any breach by the
shareholders of SoftMagic or the Shareholder Representative of this Article IX
or the Escrow Agreement (collectively, "Puma Losses"). References to
shareholders of SoftMagic, SoftMagic shareholders or words of similar import in
this Article IX shall be deemed to be references to the persons who were
shareholders of SoftMagic immediately prior to the Effective Time.
(b) No shareholder of SoftMagic shall be required to
indemnify any member of the Puma Group for any Puma Losses until and only to the
extent that the aggregate amount of all Puma Losses under all claims shall
exceed $25,000 (the "Floor"), and further, no shareholder of SoftMagic shall be
liable for any individual Puma Loss that is less than $5,000 (a "DE MINIMIS
Claim"). Except as specifically provided in Section 9.2(d), the maximum
aggregate liability of the shareholders of SoftMagic pursuant to Section 9.2(a)
shall in no event exceed the value of the Escrow Fund, as determined pursuant to
Section 2 of the Escrow Agreement.
(c) The obligation of the shareholders of SoftMagic to
indemnify members of the Puma Group for a Puma Loss under this Article IX is
subject to the condition that the Shareholder Representative shall have received
written notice of an Indemnification Claim (as defined in Section 9.3 hereof)
for such Puma Loss on or before the Termination Date.
(d) The provisions of Section 9.2(b) and (c) above and 9.6
below shall not limit, in any manner, any remedy at law or in equity to which
any member of the Puma Group shall be entitled against SoftMagic or any
shareholder of SoftMagic as a result of willful fraud or intentional
misrepresentation by SoftMagic, any shareholder of SoftMagic or any of their
respective representatives.
(e) Except as set forth in Section 9.2(d), each shareholder
of SoftMagic shall be liable for Puma Losses only to the extent of such
shareholder's Proportionate Interest (as defined in the Escrow Agreement) in the
aggregate Escrow Fund.
Section 9.3 PROCEDURES FOR INDEMNIFICATION.
(a) As used in this Article IX, the term "Indemnitee" means
the member or members of the Puma Group seeking indemnification hereunder.
(b) A claim for indemnification hereunder (an
"Indemnification Claim") shall be made by Indemnitee by delivery of a written
notice to the Shareholder Representative and the
37
<PAGE>
Escrow Agent requesting indemnification and specifying the basis on which
indemnification is sought in reasonable detail (and shall include relevant
documentation related to the Indemnification Claim), the amount of the
asserted Puma Losses and, in the case of a Third Party Claim (as defined in
Section 9.4), containing (by attachment or otherwise) such other information
as Indemnitee shall have concerning such Third Party Claim.
(c) If the Indemnification Claim involves a Third Party
Claim, the procedures set forth in Section 9.4 hereof shall be observed by
Indemnitee and the Shareholder Representative.
(d) The Escrow Agent will not release any Escrow Shares or
Cash Escrow held in the Escrow Account pursuant to an Indemnification until such
Indemnification Claim has been resolved in accordance with Section 9.6 below.
Section 9.4 DEFENSE OF THIRD PARTY CLAIMS. Should any claim be made or
suit or proceeding be instituted against an Indemnitee which, if prosecuted
successfully, would be a matter for which such Indemnitee is entitled to
indemnification under this Article IX (a "Third Party Claim"), the obligations
and liabilities of the parties hereunder with respect to such Third Party Claim
shall be subject to the following terms and conditions:
(a) Indemnitee shall give the Shareholder Representative
and the Escrow Agent written notice of any such Third Party Claim promptly
after receipt by Indemnitee of notice thereof, and the Shareholder
Representative may, subject to the prior written consent of Puma, undertake
control of the defense thereof by counsel of its own choosing reasonably
acceptable to Indemnitee. Indemnitee may participate in the defense through
its own counsel at its own expense. If, however, the Shareholder
Representative fails or refuses to undertake the defense of such Third Party
Claim within fifteen (15) days after written notice of such claim has been
delivered to the Shareholder Representative by Indemnitee, Indemnitee shall
have the right to undertake the defense, compromise and, subject to Section
9.5, settlement of such Third Party Claim with counsel of its own choosing.
In the circumstances described in the preceding sentence, Indemnitee shall,
promptly upon its assumption of the defense of such Third Party Claim, make
an Indemnification Claim as specified in Section 9.3(b), which shall be
deemed an Indemnification Claim that is not a Third Party Claim for the
purposes of the procedures set forth herein. Failure of Indemnitee to furnish
written notice to the Shareholder Representative or the Escrow Agent of a
Third Party Claim shall not release the shareholders of SoftMagic from their
obligations hereunder, except to the extent they are prejudiced by such
failure.
(b) Indemnitee and the Shareholder Representative shall
cooperate with each other in all reasonable respects in connection with the
defense of any Third Party Claim, including making available records relating to
such claim and furnishing employees of Indemnitee as may be reasonably necessary
for the preparation of the defense of any such Third Party Claim or for
testimony as witness in any proceeding relating to such claim.
(c) Unless the Shareholder Representative has failed to
fulfill its obligations under this Article IX, no settlement by Indemnitee of a
Third Party Claim shall be made without the prior written consent by or on
behalf of the Shareholder Representative, which consent shall
38
<PAGE>
not be unreasonably withheld or delayed. If the Shareholder Representative
has assumed the defense of a Third Party Claim as contemplated by this
Section 9.4, no settlement of such Third Party Claim may be made by the
Shareholder Representative without the prior written consent by or on behalf
of Indemnitee, which consent shall not be unreasonably withheld or delayed.
Section 9.5 MANNER OF INDEMNIFICATION.
(a) To provide a fund against which members of the Puma Group
may assert claims of indemnification under this Article IX, the Escrow Shares
and the Cash Escrow shall be withheld and deposited into Escrow pursuant to the
Escrow Agreement in accordance with the provisions of Section 2.3 hereof. The
Escrow Shares and the Cash Escrow so deposited shall be held and distributed in
accordance with the Escrow Agreement.
(b) Each claim for indemnification asserted against the
shareholders of SoftMagic pursuant to this Article IX shall be made only in
accordance with the Escrow Agreement, subject to the provisions of
Section 9.2(d) hereof.
Section 9.6 SHAREHOLDER REPRESENTATIVE. For purposes of this Agreement
the shareholders of SoftMagic, without any further action on the part of any
such shareholder, shall be deemed to have consented to the appointment of
Jennifer Creek Sant'Anna as the representative of such shareholders (the
"Shareholder Representative"), as the attorney-in-fact for and on behalf of each
such shareholder, and the taking by the Shareholder Representative of any and
all actions and the making of any decisions required or permitted to be taken by
him under this Agreement, including, without limitation, the exercise of the
power to (i) execute the Escrow Agreement, (ii) authorize delivery to Puma of
the Escrow Shares, or any portion thereof, in satisfaction of Indemnification
Claims, (iii) agree to, negotiate, enter into settlements and compromises of and
comply with orders of courts and awards of arbitrators with respect to such
Indemnification Claims, (iv) resolve any Indemnification Claims, and (v) take
all actions necessary in the judgment of the Shareholder Representative for the
accomplishment of the foregoing and all of the other terms, conditions and
limitations of this Agreement and the Escrow Agreement. Accordingly, the
Shareholder Representative has unlimited authority and power to act on behalf of
each shareholder of SoftMagic with respect to this Agreement and the Escrow
Agreement and the disposition, settlement or other handling of all
Indemnification Claims, rights or obligations arising from and taken pursuant to
this Agreement. The shareholders of SoftMagic will be bound by all actions taken
by the Shareholder Representative in connection with this Agreement, and Puma
shall be entitled to rely on any action or decision of the Shareholder
Representative. The Shareholder Representative will incur no liability with
respect to any action taken or suffered by him in reliance upon any notice,
direction, instruction, consent, statement or other document believed by him to
be genuine and to have been signed by the proper person (and shall have no
responsibility to determine the authenticity thereof), nor for any other action
or inaction, except his own willful misconduct, bad faith or gross negligence.
In all questions arising under this Agreement or the Escrow Agreement, the
Shareholder Representative may rely on the advice of counsel, and the
Shareholder Representative will not be liable to anyone for anything done,
omitted or suffered in good faith by the Shareholder Representative based on
such advice. The Shareholder Representative will not be required to take any
action involving any expense unless
39
<PAGE>
the payment of such expense is made or provided for in a manner satisfactory
to him. At any time during the term of the Escrow Agreement, holders of a
majority of the Escrow Shares can appoint a new Shareholder Representative by
written consent by sending notice and a copy of the written consent
appointing such new Shareholder Representative signed by holders of a
majority of the Escrow Shares to Puma and the Escrow Agent. Such appointment
will be effective upon the later of the date indicated in the consent or the
date such consent is received by Puma and the Escrow Agent.
ARTICLE X
GENERAL PROVISIONS
Section 10.1 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally or by
commercial delivery service, or within seventy-two (72) hours after being mailed
by registered or certified mail (return receipt requested) or sent via facsimile
(with confirmation of receipt) to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
(a) if to Puma, to:
Puma Technology, Inc.
2550 North First Street, Suite 500
San Jose, CA 95131
Attention: President
Fax: (408) 321-3886
Tel: (408) 321-7650
with a copy to:
Gray Cary Ware & Freidenrich LLP
400 Hamilton Avenue
Palo Alto, CA 94301
Attention: Eric J. Lapp, Esq.
Fax: (650) 327-3699
Tel: (650) 328-6561
40
<PAGE>
(b) if to SoftMagic, to
SoftMagic Corp.
6413 Congress Avenue, Suite 230
Boca Raton, FL 33487
Attention: President
Fax: (561) 995-8921
Tel: (561) 995-8920
with a copy to:
Bowditch & Dewey, LLP
311 Main Street
Worcester, MA 01608
Attention: Susan Rayne, Esq.
Fax: (508) 756-7636
Tel: (508) 791-3511
(c) if to the Shareholder Representative, to
Jennifer Creek Sant'Anna
SoftMagic Corp.
6413 Congress Avenue, Suite 230
Boca Raton, FL 33487
Fax: (561) 995-8921
Tel: (561) 995-8920
with a copy to:
Bowditch & Dewey, LLP
311 Main Street
Worcester, MA 01608
Attention: Susan Rayne, Esq.
Fax: (508) 756-7636
Tel: (508) 791-3511
Section 10.2 INTERPRETATION. When a reference is made in this Agreement
to an Article or Section, such reference shall be to an Article or Section of
this Agreement unless otherwise indicated. The words "include," "includes" and
"including" when used herein shall be deemed in each case to be followed by the
words "without limitation." The phrase "made available" in this Agreement shall
mean that the information referred to has been made available if requested by
the party to whom such information is to be made available. The phrases "the
date of this Agreement," "the date hereof," and terms of similar import, unless
the context otherwise requires, shall be deemed to refer to July 27, 1998. 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.
41
<PAGE>
Section 10.3 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original as against any party
whose signature appears on such counterpart and 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.
Section 10.4 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.
Section 10.5 ENTIRE AGREEMENT. This Agreement (including the schedules
and exhibits hereto and the other documents delivered pursuant hereto)
constitutes the entire agreement among the parties concerning the subject matter
hereof and supersedes all prior agreements and understandings, both written and
oral, among the parties with respect to the subject matter hereof, other than
the Confidentiality Agreement.
Section 10.6 GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of the State of California without regard
to any applicable conflicts of law principles.
Section 10.7 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns.
Section 10.8 THIRD PARTY BENEFICIARIES. Nothing contained in this
Agreement is intended to confer upon any person other than the parties hereto
and their respective successors and permitted assigns, any rights, remedies or
obligations under, or by reason of this Agreement, except that (i) the persons
who are shareholders of SoftMagic immediately prior to the Effective Time (and
their successors and assigns) are express intended third party beneficiaries of
Articles I and II, Section 6.9 and Article IX, (ii) the persons who hold
SoftMagic Options immediately prior to the Effective Time (and their lawful
successors and assigns) are express intended third party beneficiaries of
Section 6.12, (iii) each of the foregoing persons is an express intended third
party beneficiary of Section 6.11 and, to the extent relevant to any of the
foregoing, Article X and as such are entitled to rely on the provisions hereof
as if a party hereto.
42
<PAGE>
IN WITNESS WHEREOF, Puma, Sub and SoftMagic have caused this Agreement
to be signed by their respective officers thereunto duly authorized, and the
Shareholder Representative has signed this Agreement, as of the date first
written above.
PUMA TECHNOLOGY, INC. PACIFICTECH ACQUISITION CORPORATION
By: /s/ M. Bruce Nakao By: /s/ M. Bruce Nakao
------------------------- -------------------------------
Title: Sr. VP, CFO Title: President
SHAREHOLDER REPRESENTATIVE SOFTMAGIC CORP.
/s/ Jennifer Creek Sant'Anna By: /s/ Andre Sant'Anna
- ---------------------------- -------------------------------
Jennifer Creek Sant'Anna Title: President
43
<PAGE>
LIST OF SCHEDULES AND EXHIBITS TO AGREEMENT AND PLAN OF REORGANIZATION
<TABLE>
<S> <C>
SoftMagic Disclosure Schedule
Schedule 2.3 Cash Consideration Schedule
Schedule 6.14 SoftMagic Employees Executing Voting Agreement
Exhibit A Form of Escrow Agreement
Exhibit B Form of Voting Agreement
Exhibit C Form of Employment and Noncompetition Agreement
Exhibit D Form of Consulting Agreement
</TABLE>
44
