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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): June 18, 1999
ACTUATE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 0-24607 94-3193197
- ------------------------------ ------- ----------
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
999 Baker Way, Suite 270 San Mateo, California 94404
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (650) 425-2300
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Item 2. Acquisition or Disposition of Assets
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Actuate Corporation ("Actuate"), a Delaware corporation, acquired
Actuate Holdings, B.V. ("Actuate BV"), a Netherlands corporation, in exchange
for cash (the "Exchange"). The Exchange was accomplished pursuant to the terms
of a Stock Purchase Agreement (attached as Exhibit 2.1 hereto), dated June 4,
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1999 (the "Stock Purchase Agreement"), by and among Actuate, Actuate BV and all
the stockholders of Actuate BV (collectively, the "Stockholders") and was
consummated after trading closed on June 18, 1999. The terms of the Stock
Purchase Agreement reflected the arm's-length negotiations among the parties.
Pursuant to the terms of the Stock Purchase Agreement, all shares of
issued and outstanding par value stock of Actuate BV were exchanged for an
aggregate of $5,163,885. Under the terms of the Stock Purchase Agreement,
approximately ten percent (10%) of the cash consideration to be received by the
Stockholders were placed in an escrow account with Greater Bay Trust Company as
security for the agreement of the Stockholders to indemnify Actuate for certain
contingencies including the repayment of loans to certain Stockholders.
Item 7. Financial Statements and Exhibits.
(a) The Registrant is required to file the financial statements of
Actuate Holding B.V. Such financial statements will be filed by amendment not
later than 60 days after the date this report on Form 8-K must be filed.
(b) The Registrant is required to file pro forma financial
information in connection with the acquisition. Such pro forma financial
information will be filed by amendment not later than 60 days after the date
this report on Form 8-K must be filed.
(c) Exhibits:
Exhibit Description
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2.1 Form of Stock Purchase Agreement dated June 4, 1999,
among Actuate Corporation, Actuate Holding B.V. and
the stockholders of Actuate Holding B.V.
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SIGNATURES
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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.
Actuate Corporation
Date: June 29, 1999 /s/ William P. Garvey
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William P. Garvey
General Counsel
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EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
BY AND AMONG
ACTUATE CORPORATION,
ACTUATE HOLDING B.V.
AND
SHAREHOLDERS OF ACTUATE HOLDING B.V.
June 4, 1999
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SCHEDULES
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Article II Disclosure Letter
Article III Disclosure Letter
Schedule 2.4 - Financial Statements
EXHIBITS
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Exhibit A - Lists of Shareholders of Target and the Subsidiaries
Exhibit B - Outstanding Loans and Letters of Cancellation
Exhibit C - Escrow Agreement
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (the "Agreement") is made and entered into as
of June 4, 1999 by and among Actuate Corporation, a Delaware corporation
("Actuate" or "Acquiror"), Actuate Holding B.V., a Netherlands corporation
("Actuate B.V." or "Target"), and the Shareholders of Actuate B.V. as listed on
Exhibit A (each, a "Target Shareholder" and collectively, the "Target
Shareholders").
RECITALS
A. The Target Shareholders own 38,251 shares of the issued and outstanding
capital stock of Target.
B. Acquiror desires to purchase from the Target Shareholders, and the
Target Shareholders desire to sell to Acquiror, 38,251 shares of the issued and
outstanding capital stock of Target (the "Target Shares") in exchange for the
cash consideration as set forth below.
NOW, THEREFORE, in consideration of the covenants and representations set
forth herein, and for other good and valuable consideration, the parties agree
as follows:
ARTICLE I
THE ACQUISITION
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1.1 The Acquisition. Subject to the terms and conditions of this
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Agreement, at the Closing (as defined in Section 1.3) Acquiror agrees to
purchase from each of the Target Shareholders, and each of the Target
Shareholders hereby agrees to sell to Acquiror and to convey, transfer and
deliver to Acquiror via a notarial deed of transfer of shares executed by a
Dutch notary, all of his or its Target Shares, in exchange for the Purchase
Price (as defined in Section 1.2).
1.2 Purchase Price. Subject to the provisions of an escrow as provided in
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Article IX hereof, Acquiror agrees to deliver to the Target Shareholders at the
Closing, five million one hundred sixty-three thousand eight hundred eighty-five
dollars ($5,163,885) in the amounts set forth on Exhibit A1 hereof and subject
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to adjustment as provided below (the "Cash Consideration"). The Cash
Consideration shall be reduced dollar for dollar for any payments made by
Actuate B.V. from September 30, 1998, to the date of this Agreement to the
Target Shareholders (the "Loan Payments") for the
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purpose of paying down any loans made by Target Shareholders to Actuate B.V.
(the "Outstanding Loans"). The Outstanding Loans are set forth on Exhibit B
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attached hereto.
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1.3 Closing
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(a) The closing of the Acquisition (the "Closing") shall take place as
soon as practicable after the satisfaction or waiver of each of the conditions
set forth in Article VII hereof or at such other time as the parties hereto
agree (the date on which the Closing shall occur, the "Closing Date"). The
Closing shall take place as agreed by the parties hereto.
(b) At the Closing, (i) Acquiror shall cause to be paid to the trust
account of the Dutch notary the Cash Consideration for onward transfer to the
Target Shareholders less amounts due for legal, accounting and notarial fees in
relation to this Acquisition; and (ii) the Dutch notary shall deliver to
Acquiror a statement confirming execution of the Dutch notarial deeds
transferring all the Target Shares to Acquiror and a copy of the share register
of Target showing Acquiror entered as the shareholder of the Target Shares.
ARTICLE II
REPRESENTATIONS AND WARRANTIES REGARDING TARGET AND ITS SUBSIDIARIES
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Target represents and warrants to Acquiror that the statements contained in
this Article II pertain to the period starting from 10 June 1996 (the date on
which the shareholders acquired Target) and are true and correct as of 30 April
1999, except as set forth in the disclosure letter delivered by Target to
Acquiror prior to the execution and delivery of this Agreement (the "Article II
Disclosure Letter"). The Article II Disclosure Letter shall be arranged in
paragraphs corresponding to the numbered and lettered paragraphs in this Article
II and the disclosure in any paragraph shall also qualify other paragraphs in
this Article II to which such disclosure applies. For purposes of this Article
II, "Target" will be deemed to include (and each representation and warranty
will apply separately and collectively to) Actuate B.V. and each of its
respective subsidiaries (the "Subsidiaries"), unless the context otherwise
requires. Any reference to a "Material Adverse Effect" with respect to any
entity or group of entities means any event, change or effect that is materially
adverse to the condition (financial or otherwise), properties, assets (including
intangible assets), liabilities, business, operations or results of operations
of such entity and its subsidiaries, taken as a whole.
2.1 Organization and Power. Target is a corporation duly organized and
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validly existing under the laws of its jurisdiction of organization. Target has
the corporate power to own its properties and to carry on its business as now
being conducted and is duly qualified to do business in each jurisdiction in
which the failure
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to be so qualified would have a Material Adverse Effect on Target. Target has
delivered to Acquiror a true and correct copy of the Articles of Incorporation
or Bylaws of Target, each amended to date, except for required modifications of
the bylaws of Actuate France related to designation of a new director to replace
Pierre Braude, to change the registered office, and to increase the capital and
to issue shares to employees. Target is not in violation of any of the
provisions of its Articles of Incorporation or Bylaws except that Actuate France
is required to designate a director to replace Pierre Braude. Except as
indicated on Exhibit A1 hereof, Target is the owner of all outstanding shares of
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capital stock of each of its Subsidiaries and all such shares are duly
authorized, validly issued, and fully paid. The outstanding shares of capital
stock of each such Subsidiary which are owned by Target are free and clear of
any liens, charges, claims or encumbrances or rights of others. There are no
outstanding subscriptions, options, warrants, puts, calls, rights, exchangeable
or convertible securities or other commitments or agreements of any character
relating to the issued or unissued convertible securities or other commitments
or agreements of any character relating to the issued or unissued capital stock
or other securities of any such subsidiary, or otherwise obligating Target or
any such subsidiary to issue, transfer, sell, purchase, redeem or otherwise
acquire any such securities. Except for shares held in the Subsidiaries, Target
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.
2.2 Capital Structure. The authorized capital stock of Target consists of
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33,000 class A shares and 7,000 class B shares, each with a nominal value of NLG
1.00, all of which were issued, outstanding and fully paid as of the date of
this Agreement. The issued, outstanding and paid up shares of Target are owned
by the persons and in the amounts set forth on Exhibit A1 hereof. At the
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Closing the authorized capital of the Subsidiaries will consist of 50,000
shares, 555,500 shares and and 50,000 DM stated capital for Actuate UK, Actuate
France and Actuate Germany, respectively, all of which will be issued and
outstanding as of the date of the Closing. The issued and outstanding shares of
the Subsidiaries at the Closing will be owned by the persons and in the amounts
set forth on Exhibit A2 hereof. There are no other outstanding shares of
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capital stock or voting securities of Target and no outstanding commitments to
issue any shares of capital stock or voting securities after the date of the
Closing. All outstanding shares of Target capital stock are duly authorized,
validly issued, and fully paid and are free of any liens or encumbrances other
than any liens or encumbrances created by or imposed upon the holders hereof,
and are not subject to preemptive rights, rights of first refusal, rights of
first offer or similar rights created by statute, the Articles of Incorporation
or Bylaws of Target or any agreement to which Target is a party or by which it
is bound except as otherwise provided in the bylaws of Actuate BV, Actuate UK
and Actuate Germany, and more specifically, except for the approval of the
shareholders of Target. Except for the rights created pursuant to this
Agreement, there are no other options,
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warrants, calls, rights, commitments or agreements of any character to which
Target is a party or by which it is bound obligating Target to issue, deliver,
sell, repurchase or redeem, or cause to be issued, delivered, sold, repurchased
or redeemed, any shares of Target capital stock, except for the issuance of
shares of Actuate France to employees before the Closing, or obligating Target
to grant, extend, accelerate the vesting of, change the price of, or otherwise
amend or enter into any such option, warrant, call, right, commitment or
agreement. All outstanding shares of Target capital stock were issued in
compliance with applicable law. It is agreed that at the Closing the employees
of the Subsidiaries shall sell their shares held in the Subsidiaries to Acquiror
or receive bonuses as indicated in Exhibit A3 (the "Employee Transactions").
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2.3 Authority
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(a) Target has all requisite corporate power and authority to enter
into this Agreement, the Escrow Agreement to be entered into among Acquiror,
Target, Target Shareholders, a representative of the Target Shareholders (the
"Target Shareholders' Agent"), and an escrow agent, in substantially the form
attached hereto as Exhibit C (the "Escrow Agreement"), and the other documents
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related to this Acquisition (collectively, the "Transaction Documents") to which
it will be a party and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement has been, and the other
Transaction Documents and the consummation of the transactions contemplated
hereby and thereby will be, duly authorized by all necessary corporate action on
the part of Target. This Agreement and other Transaction Documents when duly
executed and delivered by Target will constitute the valid and binding
obligations of Target enforceable against Target in accordance with their terms.
(b) Upon approval by the shareholders of Target, the execution and
delivery of this Agreement and the other Transaction Documents by Target will
not, and the consummation of the transactions contemplated hereby and thereby
will not, conflict with, or result in any violation of, or default under (with
or without notice or lapse in time, or both), or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of any
benefit under (i) any provision of the Articles of Incorporation or Bylaws of
Target, as amended, or (ii) any Material Contract (as defined in Section 2.21),
permit, concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Target 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 ("Government Entity") is
required by or with respect to Target in connection with the execution and
delivery of this Agreement and the other Transaction Documents or the
consummation of the transactions contemplated hereby or thereby.
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2.4 Financial Statements. Target has delivered to Acquiror unaudited
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financial statements for the Subsidiaries (balance sheet and profit and loss
statement) as of and for the fiscal year ended December 31, 1998 and for the
quarter ended March 31, 1999 attached as Schedule 2.4 (collectively, the
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"Financial Statements"). Neither Target nor the Target Shareholders shall have
any responsibility or liability for any changes or modifications of the
Financial Statements made by Acquiror, nor for the consequences of any breach of
a representation or warranty which results from or relates to such changes or
modifications made by Acquiror. The Financial Statements have been presented in
accordance with US generally accepted accounting principles ("USGAAP") and
Actuate's revenue recognition policies (except that the Financial Statements do
not have notes thereto) applied on a consistent basis throughout the periods
indicated and with each other. The Financial Statements fairly present the
financial condition and operating results of Target as of the dates, and for the
periods, indicated therein, subject to normal year-end audit adjustments which
are, not material in the aggregate.
2.5 Absence of Certain Changes. From March 31, 1999 (the "Target Balance
--------------------------------
Sheet Date") until 30 April 1999, Target has conducted its business in the
ordinary course consistent with past practice and there has not occurred: (i)
any change, event or condition (whether or not covered by insurance) that has
resulted in, or might reasonably be expected to result in, a Material Adverse
Effect on Target; (ii) any acquisition, sale or transfer of any material asset
of Target; (iii) any change in accounting methods or practices (including any
change in depreciation or amortization policies or rates, or revenue recognition
practices) by Target or any revaluation by Target of any of its assets; (iv)
any declaration, setting aside, or payment of a dividend or the distribution
with respect to the shares of Target, or any direct or indirect redemption,
purchase or other acquisition by Target of any of its shares in capital stock;
(v) any Material Contract entered into by Target, other than as provided to
Acquiror, or any material amendment or termination of, or default under, any
Material Contract to which Target is a party or by which it is bound; (vi) any
amendment or change to the Articles of Incorporation or Bylaws of Target; (vii)
any increase in or modification of the compensation or benefits payable or to
become payable by Target to any of its directors, employees or consultants
except in connection with the Employee Transactions; (viii) capital expenditures
or capital commitments by Target exceeding $2,000 individually or $10,000 in the
aggregate; (ix) destruction of, damage to or loss of any material assets,
business or customer of Target (whether or not covered by insurance); (x) labor
trouble or claim of wrongful discharge or other unlawful labor practice or
action except in connection with the dismissal of H. Philipp; (xi) any
negotiation or agreement by Target to do any of the things described in the
preceding clauses (i) through (x) (other than negotiations with Acquiror and its
representatives regarding the transactions contemplated by this Agreement and
discussions related to the Employee Transactions); or (xii) any payment made by
Target to Target Shareholders for the purpose of paying down loans made by
Target Shareholders.
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2.6 Absence of Undisclosed Liabilities. Target has no material liability,
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indebtedness, obligation, expense, claim, deficiency, guaranty or endorsement of
any type, individually or in the aggregate, whether accrued, absolute,
contingent, matured, unmatured or other (whether or not required to be set forth
in the Target Balance Sheet under USGAAP) which individually or in the aggregate
(i) has not been reflected in the Target Balance Sheet (as defined in Section
2.12 hereof) or (ii) has not arisen in the ordinary course of business since the
Target Balance Sheet Date and before 30 April 1999, in amounts consistent with
prior periods.
2.7. Accounts Receivable. The accounts receivable shown on the Target
--------------------------
Balance Sheet arose in the ordinary course of business and have been collected
or are collectible in the book amounts thereof, less the allowance for doubtful
accounts and returns provided for in such balance sheet. Allowances for
doubtful accounts and returns are adequate and have been prepared in accordance
with the past practices of Target. The accounts receivable of Target arising
after the Target Balance Sheet Date and prior to 30 April 1999 arose in the
ordinary course of business and have been collected or are collectible in the
book amounts thereof, less allowances for doubtful accounts and returns
determined in accordance with the past practices of Target. None of the
accounts receivable are subject to any material claim of offset or recoupment,
or counterclaim and Target has no knowledge of any specific facts that would be
reasonably likely to give rise to any such claim. No material amount of
accounts receivable are contingent upon the performance by Target of any
obligation. No agreement for deduction or discount has been made with respect
to any accounts receivable.
2.8 Litigation. There is no private or governmental action, suit,
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proceeding, claim, arbitration or investigation pending before any agency, court
or tribunal, foreign or domestic, or, to the knowledge of Target, threatened
(including allegations that could form the basis for future action) against
Target or any of its properties or officers or directors (in their capacities as
such), nor is there any reasonable basis therefor. There is no judgment, decree
or order against Target, or, to the knowledge of Target, 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 Target. All litigation to which Target is a party (or, to the
knowledge of Target, threatened to become a party) is disclosed in the Article
II Disclosure Letter.
2.9 Restrictions on Business Activities. There is no agreement, judgment,
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injunction, order or decree binding upon Target that has or could reasonably be
expected to have the effect of prohibiting or impairing any current or future
business practice of Target, any acquisition of property by Target or the
conduct of business by Target as currently conducted by Target.
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2.10 Government Authorization. Target has obtained each federal, state,
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local or foreign governmental consent, license, permit, grant, or other
authorization of a Governmental Entity (i) pursuant to which Target currently
operates or holds any interest in any of its properties or (ii) that is required
for the operation of Target's business or the holding of any such interest ((i)
and (ii) herein collectively called "Target Authorizations"), and all of such
Target Authorizations are in full force and effect, except where the failure to
obtain or have any such Target Authorizations could not reasonably be expected
to have a Material Adverse Effect on Target.
2.11 Title to Property. Target has good and marketable title to all of
------------------------
its properties, interests in properties and assets, real and personal,
necessary for the conduct of its business as conducted as of 30 April 1999 or
which are reflected in the Target Balance Sheet or acquired after the Target
Balance Sheet Date but before 30 April 1999 (except properties, interests in
properties and assets sold or otherwise disposed of in the ordinary course of
business since the Target Balance Sheet Date), or with respect to leased
properties and assets, valid leasehold interests therein, in each case free and
clear of all mortgages, liens, pledges, charges or encumbrances of any kind or
character, except (i) the lien of current taxes not yet due and payable, (ii)
such imperfections of title, liens and easements as do not and will not
materially detract from or interfere with the use of the properties subject
thereto or affected thereby, or otherwise materially impair business operations
involving such properties and (iii) liens securing debt that are reflected on
the Target Balance Sheet. All properties used in the operations of Target are
reflected in the Target Balance Sheet to the extent generally accepted
accounting principles require the same to be reflected.
2.12 Taxes.
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(a) All Tax returns, statements, reports, declarations and other forms
and documents (including without limitation estimated Tax returns and reports
and material information statements, returns and reports) required to be filed
with any Tax authority by 30 April 1999, by or on behalf of the Subsidiaries
(collectively, "Tax Returns" and individually a "Tax Return"), have been
completed and filed when due (including any extensions of such due date) and all
amounts shown on such Tax Returns due on or before 30 April 1999 have been paid
on or before such date. The March 31, 1999 balance sheet included in the
Financial Statements (the "Target Balance Sheet") (i) fully accrues all actual
and contingent liabilities for Taxes with respect to all periods through March
31, 1999 and the Subsidiaries have not incurred any Tax liability in excess of
the amount reflected on such Target Balance Sheet with respect to such periods
(excluding any amount thereof that reflects timing differences between the
recognition of income for purposes of local GAAP and for Tax purposes), and (ii)
properly accrues in accordance with local GAAP all material liabilities for
Taxes payable after March 31, 1999 with respect to all transactions and events
occurring on or prior to such date. No
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material Tax liability for the period from March 31, 1999 to 30 April 1999 has
been incurred by Target other than in the ordinary course of business.
(b) Target has previously provided or made available to Acquiror true
and correct copies of all Tax Returns. Target has withheld and paid to the
applicable financial institution or Tax authority all amounts required to be
withheld. There has been no tax audit of Tax Returns filed with respect to
Taxable years of Target through the Taxable year ended 1998. Target (or any
member of any affiliated or combined group of which Target has been a member)
has not been granted any extension or waiver of the limitation period applicable
to any Tax Returns that is still in effect. There is no material claim, audit,
suit, proceeding, or (to the knowledge of Target) investigation now pending or
(to the knowledge of Target) threatened against or with respect to Target in
respect of any Tax or assessment. No notice of deficiency or similar document of
any Tax authority has been received by Target, and there are no liabilities for
Taxes (including liabilities for interest, additions to Tax and penalties
thereon and related expenses) with respect to the issues that have been raised
(and are currently pending) by any Tax authority that could, if determined
adversely to Target, materially and adversely affect the liability of Target for
Taxes. There are no liens for Taxes (other than for current Taxes not yet due
and payable) upon the assets of Target. Target has no Tax exemptions or other
Tax-sharing agreement or order of a foreign government applicable to it. For
purposes of this Agreement, the following terms have the following meanings:
"Tax" (and, with correlative meaning, "Taxes" and "Taxable") means any and all
taxes including, without limitation, (i) any net income, alternative or add-on
minimum tax, gross income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, value added, net worth, license, withholding, payroll,
employment, excise, severance, stamp, occupation, premium, property,
environmental or windfall profit tax, custom, duty or other tax governmental fee
or other like assessment or charge of any kind whatsoever, together with any
interest or any penalty, addition to tax or additional amount imposed by any
Governmental Entity (a "Tax authority") responsible for the imposition of any
such tax (domestic or foreign), (ii) any liability for the payment of any
amounts of the type described in (i) as a result of being a member of an
affiliated, consolidated, combined or unitary group for any Taxable period or as
the result of being a transferee or successor thereof and (iii) any liability
for the payment of any amounts of the type described in (i) or (ii) as a result
of any express or implied obligation to indemnify any other person. As used in
this Section 2.12, the term "Target" means Target and any entity included in, or
required under local GAAP to be included in, any of the Target Financial
Statements.
2.13 Employee Benefit Plans.
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(a) Target maintains and has administered all employee benefit plans
in compliance with the applicable laws and regulations of the country in which
Target and Target's Subsidiaries are located;
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(b) Target has not, since July 1, 1996, terminated, suspended,
discontinued contributions to or withdrawn from any employee benefit plan;
(c) Target has provided to Acquiror complete, accurate and current
copies of each of the following:
(i) The text (including amendments) of each of its employee
benefit plans, to the extent reduced to writing;
(ii) A summary of each of the employee benefit plans, to the
extent not previously reduced to writing;
(d) As of 30 April 1999 all contributions, premiums or other payments
due from Target to (or under) any employee benefit plan have been fully paid or
adequately provided for on the books and financial statements of Target. All
accruals (including, where appropriate, proportional accruals for partial
periods) have been made in accordance with prior practices.
2.14 Employees and Consultants.
--------------------------------
(a) Target has provided Acquiror with a true and complete list of all
individuals employed by the Target as of 30 April 1999 and the position and base
compensation payable to each such individual. The Article II Disclosure Letter
contains copies of any written employment agreements, consulting agreements or
termination or severance agreements to which Target is a party and a description
of any such oral agreements.
(b) Target is not a party to or subject to a labor union or a
collective bargaining agreement or arrangement, except for the "SYNTEC"
Collective Convention which applies obligatorily to Actuate France, and is not a
party to any labor or employment dispute, except for the negotiations with Mr.
Philipp, a former employee of Actuate Germany.
(c) Except for the Employee Transactions and the transactions
hereunder, the consummation of the transactions contemplated herein will not
result in (i) any amount becoming payable by Target to any employee, director or
independent contractor of Target, (ii) the acceleration of payment or vesting of
any benefit, option or right to which any employee, director or independent
contractor of Target may be entitled, (iii) the forgiveness of any indebtedness
of any employee, director or independent contractor of Target or (iv) any cost
becoming due or accruing to Target or the Acquiror with respect to any employee,
director or independent contractor of Target.
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(d) Target has not received or been notified of any complaint by any
employee, applicant, union or other party of any discrimination or other conduct
forbidden by law or contract, nor to the knowledge of Target, is there a basis
for any complaint, except such complaints as could not reasonably be expected to
have a Material Adverse Effect.
(e) Target's action in complying with the terms of this Agreement
will not violate any agreements with any of Target's employees.
(f) Target has filed all required reports and information with
respect to its employees that are due prior to 30 April 1999 and otherwise has
complied in its hiring, employment, promotion, termination and other labor
practices with all applicable laws and regulations. Target has filed any such
reports and information that are required to be filed prior to 30 April 1999.
(g) Target is not aware that any of its employees or contractors is
obligated under any agreement, commitments, judgment, decree, order or otherwise
(an "Employee Obligation") that could reasonably be expected to interfere with
the use of his or her best efforts to promote the interests of Target or that
could reasonably be expected to conflict with any of Target's business as
conducted or proposed to be conducted. Neither the execution nor delivery of
this Agreement nor the conduct of Target's business as conducted or proposed,
will, to Target's knowledge, conflict with or result in a breach of the terms,
conditions or provisions of, or constitute a default under, any Employee
Obligation.
2.15 Related-Party Transactions. Except for the Outstanding Loans, no
---------------------------------
employee, officer, or director of Target or member of his or her immediate
family is indebted to Target, nor is Target indebted (or committed to make loans
or extend or guarantee credit) to any of them. None of such persons has any
direct or indirect ownership interest in any firm or corporation with which
Target is affiliated or with which Target has a business relationship, or any
firm or corporation that competes with Target, except to the extent that
employees, officers, or directors of Target and members of their immediate
families own stock in publicly traded companies that are affiliated with, may
have a business relationship with, or may compete with the Company. No member
of the immediate family of any officer or director of Target is directly or
indirectly interested in any material contract with Target.
2.16 Insurance. There is no material claim pending under any insurance
----------------
policies of Target 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 Target is otherwise in compliance with the
terms of such policies.
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Target has no knowledge of any threatened termination of, or material premium
increase with respect to, any of such policies.
2.17 Compliance with Laws. Except for the requirement to designate a
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director of Actuate France to replace Pierre Braude, Target have complied with,
are not in violation of, and have not received any notices of violation with
respect to, any applicable law or regulation with respect to the conduct of its
business, or the ownership or operation of its business, except for such
violations or failures to comply as could not be reasonably expected to have a
Material Adverse Effect on Target.
2.18 Brokers' and Finders' Fees. Target has not incurred, nor will it
---------------------------------
incur, directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or investment bankers' fees or any similar charges in
connection with this Agreement or any transaction contemplated hereby.
2.19 Trade Relations. Target has not within the three-year period prior
----------------------
to 30 April 1999 terminated its relationship with or refused to ship products
to any dealer, distributor, OEM, third party marketing entity or customer which
had theretofore paid or been obligated to pay Target in excess of Twenty
Thousand Dollars ($20,000) over any consecutive twelve (12) month period. No
claims have been communicated or, to Target's knowledge, threatened against
Target with respect to wrongful termination of any dealer, distributor or any
other marketing entity, discriminatory pricing, price fixing, unfair
competition, false advertising, or any other material violation of any laws or
regulations relating to anti-competitive practices or unfair practices of any
kind, and, to Target's knowledge, no specific situation, set of facts, or
occurrence prior to 30 April 1999 provides any valid basis for any such claim.
2.20 Customers and Suppliers. As of 30 April 1999, no customer which
------------------------------
individually accounted for more than 1% of Target's gross revenues during the 12
month period preceding such date, and no supplier of Target, has canceled or
otherwise terminated, or made any threat to Target to cancel or otherwise
terminate its relationship with Target for any reason including, without
limitation the consummation of the transactions contemplated hereby, or has at
any time on or after December 31, 1998 but before 30 April 1999 decreased
materially its services or supplies to Target in the case of any such supplier,
or its usage of the services or products of Target in the case of such customer,
and to Target's knowledge as of 30 April 1999, no such supplier or customer
intended to cancel or otherwise terminate its relationship with Target or to
decrease materially its services or supplies to Target or its usage of the
services or products of Target, as the case may be. Target has not knowingly
breached, so as to provide a benefit to Target that was not intended by the
parties, any agreement with, or engaged in any fraudulent conduct with respect
to, any customer or supplier of Target.
12
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2.21 Material Contracts. Except for the material contracts described in
------------------------
the Article II Disclosure Letter (collectively, the "Material Contracts"), as of
30 April 1999 Target was not a party to or bound by any Material Contract,
including without limitation:
(a) any distributor, sales, agency or manufacturer's representative
contract which is not included on the booking list and which involves more than
$50,000 ;
(b) any contract for capital expenditures or any continuing contract
for the purchase of materials, supplies, equipment, advertising or services
involving in the case of any such contact more than $20,000 over the life of the
contract;
(c) any trust indenture, mortgage, promissory note, loan agreement of
other contract for the borrowing of money, any currency exchange, commodities or
other hedging arrangement or any leasing transaction of the type required to be
capitalized in accordance with USGAAP;
(d) any contract limiting the freedom of Target to engage in any line
of business or to compete with any other person or any confidentiality, secrecy
or non-disclosure contract outside of the ordinary course of business;
(e) any contract pursuant to which Target leases any real property;
(f) any contract pursuant to which Target leases any machinery,
equipment, motor vehicles, office furniture, fixtures or other personal property
with a value exceeding $20,000;
(g) any contract with any person with whom the Target does not deal
at arm's length; and
(h) any agreement of guarantee, support, indemnification, assumption
or endorsement of, or any similar commitment with respect to, the obligations,
liabilities (whether accrued, absolute, contingent or otherwise) or indebtedness
of any other person.
2.22 No Breach of Material Contracts. As of 30 April 1999 the Target has
-------------------------------------
performed all of the obligations required to be performed by it and was entitled
to all benefits under, and was not alleged to be in default in respect of, any
Material Contract. As of 30 April 1999 each of the Material Contracts was in
full force and effect, unamended, and there existed no default or event of
default or event, occurrence, condition or act, with respect to Target or to
Target's knowledge with respect to the other contracting party, or otherwise
that, with or without the giving of notice, the lapse
13
<PAGE>
of the time or the happening of any other event or conditions, could reasonable
by expected to (A) become a default or event of default under any Material
Contract, which default or event of default could reasonably be expected to have
a Material Adverse Effect on Target or (B) result in the loss or expiration of
any material right or option by Target (or the gain thereof by any third party)
under any Material Contract.
2.23 Minute Books. The minute books of Target made available to Acquiror
------------------
contain a complete and accurate summary of all meetings of directors and
shareholders or actions by written consent from 10 June 1996 through 30 April
1999 and reflect all transactions referred to in such minutes accurately in all
material respects, except that the books of Actuate France are not up-to-date.
2.24 Complete Copies of Materials. Target has delivered or made available
----------------------------------
true and complete copies of each document which has been requested by Acquiror
or its counsel in connection with their legal and accounting review of Target.
2.25 Representations Complete. None of the representations or warranties
------------------------------
made by Target herein or in any Schedule hereto, including the Article II
Disclosure Letter, or certificate furnished by Target pursuant to this
Agreement, when all such documents are read together in their entirety, contains
as of 30 April 1999 any untrue statement of a material fact, or omits as of 30
April 1999 to state any material fact necessary in order to make the statements
contained herein or therein, in the light of the circumstances under which made,
not misleading.
ARTICLE III
ADDITIONAL REPRESENTATIONS AND WARRANTIES OF THE TARGET
-------------------------------------------------------
AND TARGET SHAREHOLDERS
-----------------------
Each of Target and Target Shareholders individually (and not jointly and
severally) represents and warrants to Acquiror that the statements contained in
this Article III are true and correct, except as set forth in the Article III
Disclosure Letter. The Article III Disclosure Letter shall be arranged in
paragraphs corresponding to the numbered and lettered paragraphs contained in
this Article III, and the disclosure in any paragraph shall also qualify other
paragraphs in this Article III to which it applies. Nothing in the Article III
Disclosure Letter shall be deemed to adequately disclose an exception to a
representation or warranty made herein, however, unless the Article III
Disclosure Letter identifies the exception with reasonable particularity and
describes the relevant facts in reasonable detail. Without limiting the
generality of the foregoing, the mere listing (or inclusion of a copy) of a
document or other item shall not be deemed adequate to disclose an exception to
a representation or warranty made herein (unless
14
<PAGE>
the representation or warranty has to do with the existence of the document or
other item itself). Any reference in this Article III to an agreement being
"enforceable" shall be deemed to be qualified to the extent such enforceability
is subject to (i) laws of general application relating to bankruptcy,
insolvency, moratorium and the relief of debtors, and (ii) the availability of
specific performance, injunctive relief and other equitable remedies. For
purposes of this Article III, "Target Shareholders" will be deemed to include
(and each representation and warranty will apply individually to) each Target
Shareholder unless the context otherwise requires.
3.1 Title to Target Common Stock. The Target Shareholders own the Target
----------------------------
Shares in the amounts set forth on Exhibit A1 hereof, beneficially and of
----------
record, free and clear of any liens, claims, encumbrances, or proprietary
interests of any third party. There is not outstanding any subscription,
option, warrant, call, right or other agreement or commitment obligating such
Target Shareholder to issue, sell, deliver or transfer (including any right of
conversion or exchange under any outstanding security or other instruction) any
shares of capital stock of Target.
3.2 Authority.
--------------
(a) Each Target Shareholder which is a corporation or partnership has
all requisite power and authority to enter into this Agreement and the other
Transaction Documents to which it is a party and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary action on the part of each Target Shareholder,
subject to approval of the Target Shareholders, and the other Transaction
Documents to which it is a party and the consummation of the transactions
contemplated thereby, will be duly authorized by all necessary action on the
part of each Target Shareholder. This Agreement has been, and the other
Transaction Documents to which such Target Shareholder will be a party will be,
duly executed and delivered by such Target Shareholder, subject to approval of
the Target Shareholders, and constitute the valid and binding obligations of
such Target Shareholder enforceable against such Target Shareholder in
accordance with their terms.
(b) Each Target Shareholder which is an individual has the capacity
to enter into this Agreement and the other Transaction Documents to which he is
a party and to consummate the transactions contemplated hereby and thereby. All
actions on the part of such Target Shareholder necessary for the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly taken, subject to approval of the Target
Shareholders, and the other Transaction Documents to which such Target
Shareholder is a party, and the consummation of the transactions contemplated
thereby, will be duly taken before the Closing. This Agreement has been, and the
other Transaction Documents to which such Target Shareholder is a party will be,
duly executed and delivered by such Target
15
<PAGE>
Shareholder, subject to approval of the Target Shareholders, and constitute the
valid and binding obligations of such Target Stockholder enforceable against
such Target Shareholder in accordance with their terms.
(c) Subject to approval of the Target Shareholders, the execution and
delivery of this Agreement and the other Transaction Documents by Target
Shareholders do not, and the consummation of the transactions contemplated
hereby and thereby will not, conflict with, or result in any violation of, or
default under (with or without notice or lapse of time, or both), or give rise
to a right of termination, cancellation or acceleration of any obligation or
loss of any benefit under any provision of the Articles of Incorporation or
Bylaws of Target, as amended.
(d) No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required by or with
respect to Target Shareholders in connection with the execution and delivery of
this Agreement and the other Transaction Documents or the consummation of the
transactions contemplated hereby or thereby, except for such consents,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under applicable law.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
------------------------------------------
Acquiror represents and warrants to Target and Target Shareholders that the
statements contained in this Article IV are true and correct, except as set
forth in the disclosure schedule delivered by Acquiror to Target to prior to the
execution and delivery of this Agreement (the "Acquiror Disclosure Letter").
The Acquiror Disclosure Letter shall be arranged in paragraphs corresponding to
the numbered and lettered paragraphs contained in this Article IV, and the
disclosure in any paragraph shall qualify only the corresponding paragraph in
this Article IV. Nothing in the Acquiror Disclosure Letter shall be deemed
adequate to disclose an exception to representation or warranty made herein,
however, unless the Acquiror Disclosure Letter identifies the exception with
reasonable particularity and describes the relevant facts in reasonable detail.
Without limiting the generality of the foregoing, the mere listing (or inclusion
of a copy) of a document or other item shall not be deemed adequate to disclose
an exception to a representation or warranty made herein (unless the
representation or warranty has to do with the existence of the document or other
item itself). Any reference in this Article IV to an agreement being
"enforceable" shall be deemed to be qualified to the extent such enforceability
is subject to (i) laws of general application
16
<PAGE>
relating to bankruptcy, insolvency, moratorium and the relief of debtors, and
(ii) the availability of specific performance, injunctive relief and other
equitable remedies.
4.1 Organization, Standing and Power. Acquiror is a corporation duly
-------------------------------------
organized, validly existing and in good standing under the laws of its
jurisdiction of organization. Acquiror has the corporate power to own its
properties and to carry on its business as now being conducted and is duly
qualified to do business and is in good standing in each jurisdiction in which
the failure to be so qualified and in good standing would have a Material
Adverse Effect on Acquiror. Acquiror has delivered a true and correct copy of
the Certificate of Incorporation and Bylaws of Acquiror, each as amended to
date, to Target. Acquiror is not in violation of any of the provisions of its
Certificate of Incorporation or Bylaws.
4.2 Authority.
--------------
(a) Acquiror has all requisite corporate power and authority to enter
into this Agreement and the other Transaction Documents and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the other Transaction Documents and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of Acquiror. This Agreement and the other
Transaction Documents have been duly executed and delivered by Acquiror and
constitute the valid and binding obligations of Acquiror, enforceable against
Acquiror in accordance with their terms.
(b) The execution and delivery of this Agreement and the other
Transaction Documents do not, and the consummation of the transactions
contemplated hereby and thereby will not conflict with, or result in any
violation of, or default under (with or without notice or lapse of time, or
both), or give rise to a right of termination, cancellation of acceleration of
any obligation or loss of a benefit under, or require a consent to assignment or
a notation under (i) any provision of the Certificate of Incorporation or Bylaws
of Acquiror, or (ii) any contract, agreement, permit, concession, franchise,
license, judgment, order, decree, state, law, ordinance, rule or regulation
applicable to Acquiror, except in the case of clause (ii) as would not have a
Material Adverse Effect on Acquiror.
(c) No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity, is required by or with
respect to Acquiror in connection with the execution and delivery of this
Agreement or the other Transaction Documents by Acquiror or the consummation by
Acquiror of the transactions contemplated hereby or thereby, except for (i) the
filing of a Form 8-K with the SEC and National Association of Securities Dealers
("NASD") within 15 days after the Closing Date, (ii) any filings as may be
required under applicable state securities
17
<PAGE>
laws and the securities laws of any foreign country, or, (iii) such other
consents, authorizations; filings, approvals and registrations that, if not
obtained or made, would not have a Material Adverse Effect on Acquiror and would
not prevent, materially alter or delay the consummation of the Acquisition.
4.3 Litigation. There is no private or governmental action, suit,
---------------
proceeding, claim, arbitration or investigation pending before any agency, court
or tribunal, foreign or domestic, or, to the knowledge of Acquiror, threatened
against Acquiror or any of its respective properties or any of its officers or
directors (in their capacities as such) that, individually or in the aggregate,
could prevent, enjoin, or materially alter or delay any of the transactions
contemplated by this Agreement.
4.4 Compliance with Laws. Acquiror has complied with, is not in violation
-------------------------
of, and has not received any notices of violation with respect to, any federal,
state, local or foreign statute, law or regulation with respect to the conduct
of its business, or the ownership or operation of its business, except for such
violations or failures to comply as could not be reasonably expected to have a
Material Adverse Effect on Acquiror.
4.5 Representations Complete. None of the representations, warranties or
----------------------------
statements made by Acquiror herein, including the Acquiror Disclosure Letter, or
certificate furnished by Acquiror pursuant to this Agreement, when all such
documents are read together in their entirety, contains or will contain at the
Closing Date any untrue statement of a material fact, or omits or will omit at
the Closing Date to state any material fact necessary in order to make the
statements contained herein or therein, in the light of the circumstances under
which made, not misleading.
ARTICLE V
CONDUCT PRIOR TO THE CLOSING DATE
---------------------------------
5.1 Conduct of Business of Target. During the period from the date of
----------------------------------
this Agreement and continuing until the earlier of the termination of this
Agreement or the Closing Date, Target and Target Shareholders agree (except to
the extent expressly contemplated by this Agreement or as consented to in
writing by Acquiror), not to cause any of the following, or cause any of the
Subsidiaries to do, cause or permit any of the following, without the prior
written consent of Acquiror:
(a) Charter Documents. Cause any amendments to its Articles of
-----------------
Incorporation or Bylaws except for Actuate France;
18
<PAGE>
(b) Dividends; Changes in Capital Stock. 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.
(c) Material Contracts. Enter into any contract the value of which
------------------
is in excess of $100,000 or enter into any other material contract, agreement,
license or commitment, or violate, amend or otherwise modify or waive any of the
terms of any of its material contracts, agreements or licenses other than in the
ordinary course of business consistent with past practice;
(d) Exclusive Rights. Enter into or amend any agreements pursuant
----------------
to which any other party is granted exclusive marketing, manufacturing or other
exclusive rights of any type or scope with respect to any of its products or
technology;
(e) Dispositions. Sell, lease, license or otherwise dispose of or
------------
encumber any of its properties or assets which are material, individually or in
the aggregate, to its and its subsidiaries' business, taken as a whole, except
for dispositions in the ordinary course of business consistent with past
practice;
(f) Indebtedness. Incur any indebtedness for borrowed money or
------------
guarantee any such indebtedness or issue or sell any debt securities or
guarantee any debt securities of others, except in the ordinary course of
business (including invoice discounting and factoring).
(g) Leases. Enter into any operating lease requiring payments in
------
excess of $10,000 except for the relocation of Actuate France.
(h) Capital Expenditures. Incur or commit to incur any capital
--------------------
expenditures in excess of $10,000 in the aggregate, except as specifically
identified in the Article II Disclosure Letter;
(i) Insurance. Materially reduce the amount of any material
---------
insurance coverage provided by existing insurance policies;
(j) Termination or Waiver. Terminate or waive any right of
---------------------
substantial value, other than in the ordinary course of business;
(k) Employee Benefits; Severance. Except for the Employee
----------------------------
Transactions, take any of the following actions: (i) increase or agree to
increase the compensation payable or to become payable to its officers or
employees, except for increases in salary or wages of non-officer employees in
the ordinary course of business and in accordance with past practices, (ii)
grant any additional severance or termination pay to, or enter into any
employment or severance agreements with, any officer or
19
<PAGE>
employee except for the negotiations with Helmut Philipp, (iii) enter into any
collective bargaining agreement, or, (iv) 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 and employees;
(l) Lawsuits. Commence a lawsuit or arbitration proceeding other than
--------
(i) for the routine collection of bills, or (ii) for a breach of this Agreement;
(m) Acquisitions. Acquire or agree to acquire by merging or
------------
consolidating with, or by purchasing a substantial portion of the assets of, or
by any other manner, any business or any corporation, partnership, association
or other business organization or division thereof, or otherwise acquire or
agree to acquire any assets which are material, individually or in the
aggregate, to its and its subsidiaries' business, taken as a whole;
(n) Taxes. Make any material Tax election other than in the ordinary
-----
course of business and consistent with past practice, change any material Tax
election, adopt any Tax accounting method other than in the ordinary course of
business and consistent with past practice, change any Tax accounting method,
file any Tax return (other than any estimated tax returns, immaterial
information returns, payroll tax returns or value added tax returns) or any
amendment to a Tax return, enter into any closing agreement, settle any Tax
claim or assessment unless due or consent to any Tax claim or assessment
provided that Acquiror shall not unreasonably withhold or delay approval of any
of the foregoing actions;
(o) Revaluation. Revalue any of its assets, including without
-----------
limitation writing down the value of inventory or writing off notes or accounts
receivable other than in the ordinary course of business; or
(p) Other. Take or agree in writing or otherwise to take, any of the
-----
actions described in Sections 5.1 (a) through (o) above, or any action which
would make any of its representations or warranties contained in this Agreement
untrue or incorrect or prevent it from performing or cause it not to perform its
covenants hereunder.
5.2. Notices. Target shall give all notices and other information
-------------
required to be given to the employees of Target, pursuant to applicable law in
connection with the transactions provided for in this Agreement.
ARTICLE VI
20
<PAGE>
ADDITIONAL AGREEMENTS
---------------------
6.1 No Solicitation.
--- ---------------
(a) From and after the date of this Agreement until the Closing Date,
Target 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 an acquisition, consolidation, business combination,
sale of all or substantially all of the assets, sale of shares of capital stock
(including without limitation by way of a tender offer) or similar transactions
involving Target, or transactions inconsistent with the Acquisition, other than
the transactions contemplated by this Agreement (any of the foregoing inquiries
or proposals being referred to in this Agreement as a "Takeover Proposal"), (ii)
engage in negotiations or discussions concerning, or provide any non-public
information to any person or entity relating to, any Takeover Proposal, or (iii)
agree to, approve or recommend any Takeover Proposal.
(b) Target shall notify Acquiror immediately (and no later than 24
hours) after receipt by Target (or its advisors or agents) of any Takeover
Proposal or any request for information in connection with a Takeover Proposal
or for access to the properties, books or records of Target by any person or
entity that informs Target that it is considering making, or has made, a
Takeover 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.
6.2 Access to Information.
--- ---------------------
(a) Target shall afford Acquiror and its accountants, counsel and
other representatives, reasonable access during normal business hours during the
period prior to the Closing Date to (i) all of Target's and its Subsidiaries'
properties, books, contracts, commitments and records, and (ii) all other
information concerning the business, properties and personnel of Target and its
Subsidiaries as Acquiror may reasonably request. Target agrees to provide to
Acquiror and its accountants, counsel and other representatives copies of
internal financial statements promptly upon request.
(b) Subject to compliance with applicable law, from the date hereof
until the Closing Date, each of Acquiror and Target 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.
(c) No information or knowledge obtained in any investigation pursuant
to this Section 6.2 shall affect or be deemed to modify any representation or
21
<PAGE>
warranty contained herein or the conditions to the obligations of the parties to
consummate the Acquisition.
6.3 Public Disclosure. Unless otherwise required by law, from the date
--- -----------------
hereof to the Closing Date, no disclosure (whether or not in response to an
inquiry) shall be made by any party hereto regarding the subject matter of this
Agreement unless approved by Acquiror prior to release except in connection with
the Employee Transactions or in connection with the shares of Target held by the
Estate of Pierre Braude. Any public announcement by Acquiror regarding the
subject matter of this Agreement shall be delivered to Target prior to release.
6.4 Consents; Cooperation.
--- ---------------------
(a) Each of Acquiror and Target shall promptly apply for or otherwise
seek, and use all reasonable efforts to obtain, all consents and approvals
required to be obtained by it for the consummation of the Acquisition. The
parties hereto will consult and cooperate with one another, and consider in good
faith the views of one another, in connection with any analyses, appearances,
presentations, memoranda, briefs, arguments, opinions and proposals made or
submitted by or on behalf of any party hereto in connection with proceedings
under or relating to any federal, state or foreign antitrust or fair trade law.
(b) Each of Acquiror and Target shall use all commercially reasonable
efforts to resolve such objections, if any, as may be asserted by any
Governmental Entity with respect to the transactions contemplated by this
Agreement.
6.5 Update Disclosure; Breaches. From and after the date of this
--- ---------------------------
Agreement until the Closing Date, each party hereto shall promptly notify the
other party, by written update to its Disclosure Schedule, of (i) the occurrence
or non-occurrence of any event which would be likely to cause any condition to
the obligations of any party to effect the Acquisition and the other
transactions contemplated by this Agreement not to be satisfied, or (ii) the
failure of Target, Acquiror, or a Target Shareholder, as the case may be, to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it pursuant to this Agreement which would be likely to result in
any condition to the obligations of any party to effect the Acquisition and the
other transactions contemplated by this Agreement not to be satisfied. The
delivery of any notice pursuant to this Section 6.5 shall not cure any breach of
any representation or warranty requiring disclosure of such matter prior to the
date of this Agreement or otherwise limit or affect the remedies available
hereunder to the party receiving such notice.
6.6 Legal Requirements. Each of Acquiror, Target Shareholders and Target
--- ------------------
will, and Target will cause its Subsidiaries to, take all reasonable actions
necessary to
22
<PAGE>
comply promptly with all legal requirements which may be imposed on them with
respect to the consummation of the transactions contemplated by this Agreement
and will promptly cooperate with and furnish information to any party hereto
necessary in connection with any such requirements imposed upon such other party
in connection with the consummation of the transactions contemplated by this
Agreement and will take all reasonable actions necessary to obtain (and will
cooperate with the other parties hereto in obtaining) any consent, approval,
order or authorization of, or any registration, declaration or filing with, any
Governmental Entity or other person, required to be obtained or made in
connection with the taking of any action contemplated by this Agreement.
6.7 Escrow Agreement. On or before the Closing Date, the parties to the
--- ----------------
Escrow Agreement shall execute and deliver the Escrow Agreement.
6.8 Additional Agreements; Reasonable Efforts. 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 Closing Date any further action is necessary or desirable to carry out
the purposes of this Agreement or to vest Acquiror with full title to all
properties, assets, rights, approvals, immunities and franchises of Target, the
proper officers and directors of each party to this Agreement shall take all
such necessary action.
6.9 Relationship between Acquiror and LinkUS and others. Acquiror has not
--- ---------------------------------------------------
compensated and undertakes not to compensate LinkUS, its employees or
consultants or the Target Shareholders for services related to or in connection
with this transaction; provided, however, that Acquiror shall have the right to
receive future consulting and/or management services unrelated to this
transaction from LinkUS, its employees and consultants, and the Target
Shareholders and to compensate them for such services at market rates. In such
case Acquiror agrees to provide the Target Shareholders' Agent with written
notice of any such future agreement and services. The obligations of Acquiror
contained in this Section 6.9 shall survive the termination of this Agreement
and terminate eighteen (18) months after the Closing Date.
6.10 Payments to LinkUS. Acquiror agrees that within fifteen (15) days of
---- -------------------
the Closing Date, it shall pay or cause to be paid, all debts owed to LinkUS as
of the date hereof by the Subsidiaries.
ARTICLE VII
23
<PAGE>
CONDITIONS TO THE ACQUISITION
-----------------------------
7.1 Conditions to Obligations of Each Party to Effect the Acquisition.
--- -----------------------------------------------------------------
The respective obligations of each party to this Agreement to consummate and
effect this Agreement and the transactions contemplated hereby shall be subject
to the satisfaction at or prior to the Closing Date of each of the following
conditions, any of which may be waived, in writing, by agreement of all the
parties hereto:
(a) No Injunctions or Restraints; Illegality. No temporary
----------------------------------------
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal or regulatory restraint or
prohibition preventing the consummation of the Acquisition shall be in effect,
nor shall any proceeding brought by an administrative agency or commission or
other governmental authority or instrumentality, domestic or foreign, 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 Acquisition, which makes the consummation of the Acquisition
illegal or otherwise prohibits consummation of the transactions contemplated
hereby. In the event an injunction or other order shall have been issued, each
party agrees to use its reasonable diligent efforts to have such injunction or
other order lifted.
(b) Governmental Approval. Acquiror and Target and its Subsidiaries
---------------------
shall have timely obtained from each Governmental Entity all approvals, waivers
and consents, if any, necessary for consummation of or in connection with the
Acquisition.
7.2 Additional Conditions to Obligations of Target and Target
--- ---------------------------------------------------------
Shareholders. The obligations of Target and Target Shareholders to consummate
and effect this Agreement and the transactions contemplated hereby shall be
subject to the satisfaction at or prior to the Closing Date of each of the
following conditions, any of which may be waived, in writing, by Target and
Target Shareholders:
(a) Representations, Warranties and Covenants. Except as disclosed in
-----------------------------------------
the Acquiror Disclosure Letter, (i) the representations and warranties of
Acquiror in this Agreement shall be true and correct in all material respects
(except for such representations and warranties that are qualified by their
terms by a reference to materiality which representations and warranties as so
qualified shall be true in all respects) on and as of the Closing Date as though
such representations and warranties were made on and as of such time and (ii)
Acquiror shall have performed and complied in all material respects with all
covenants, obligations and conditions of this Agreement required to be performed
and complied with by it as of the Closing Date.
24
<PAGE>
(b) Certificate of Acquiror. Target shall have been provided with a
-----------------------
certificate executed on behalf of Acquiror by its President and its Chief
Financial Officer to the effect that, as of the Closing Date:
(i) all representations and warranties made by Acquiror under
this Agreement are true and complete in all material respects; and
(ii) all covenants, obligations and conditions of this Agreement
to be performed by Acquiror on or before such date have been so performed in all
material respects.
(c) No Material Adverse Changes. There shall not have occurred any
---------------------------
Material Adverse Effect with respect to Acquiror taken as a whole.
7.3 Additional Conditions to the Obligations of Acquiror. The obligations
--- ----------------------------------------------------
of Acquiror to consummate and effect this Agreement and the transactions
contemplated hereby shall be subject to the satisfaction at or prior to the
Closing Date of each of the following conditions, any of which may be waived, in
writing, by Acquiror:
(a) Representations, Warranties and Covenants. Except as disclosed in
-----------------------------------------
the Article II and Article III Disclosure Letters (i) the representations and
warranties of Target and Target Shareholders in Article III of this Agreement
shall be true and correct in all material respects (except for such
representations and warranties that are qualified by their terms by a reference
to materiality which representations and warranties as so qualified shall be
true in all respects) on and as of the Closing Date as though such
representations and warranties were made on and as of such time and (ii) Target
and Target Shareholders shall have performed and complied in all material
respects with all covenants, obligations and conditions of this Agreement
required to be performed and complied with by them as of the Closing Date.
(b) Certificate of Target. Acquiror shall have been provided with a
---------------------
certificate executed on behalf of Target and a certificate executed by Target
Shareholders to the effect that, as of the Closing Date;
(i) the representations and warranties made by Target and those
made by Target Shareholders in Article III of this Agreement are true and
complete in all material respects; and
(ii) all covenants, obligations and conditions of this Agreement
to be performed by Target and the Target Shareholders on or before such date
have been so performed in all material respects.
25
<PAGE>
(c) Resignation of Officers and Directors. The officers and directors
-------------------------------------
of Target in office immediately prior to the Closing Date shall have resigned as
officers and directors of Target effective as of the Closing Date.
(d) Transaction Documents. Target and each of the Target Shareholders
---------------------
shall have entered into the Transaction Documents to which they are a party and
the Escrow Agent and Target Shareholders' Agent shall have entered into the
Escrow Agreement.
(e) Outstanding Loans. All Outstanding Loans and accrued interest as
shown in Exhibit B shall have been canceled unless otherwise agreed.
(f) Royalties. Target shall have paid to Acquiror up to $300,000 for
---------
certain royalties owed to Acquiror.
(g) Financial Audit. Acquiror and Acquiror's auditor shall have
---------------
completed a financial audit of Target and the Subsidiaries.
(h) Employee Letters. The employees listed on Exhibit A3 shall have
----------------- ----------
executed and delivered letters in form and substance satisfactory to Acquiror in
relation to the Employee Transactions.
(i) Service Agreements. All service agreements between LinkUS and
------------------
Target and/or the Subsidiaries shall have been terminated.
ARTICLE VIII
TERMINATION, EXPENSES, AMENDMENT AND WAIVER
-------------------------------------------
8.1 Termination. At any time prior to the Closing Date, whether before or
--- -----------
after approval of the matters presented in connection with the Acquisition by
Acquiror of Target, this Agreement may be terminated:
(a) by mutual consent duly authorized by the Board of Directors of
Acquiror and Target;
(b) by either Acquiror or Target, if, without fault of the terminating
party, the Closing shall not have occurred on or before July 31, 1999; provided
that (i) a later date may be agreed upon in writing by the parties hereto and
(ii) the right to terminate this Agreement under this Section 8.1(b) shall not
be available to any party whose action or failure to act has been the cause or
resulted in the failure of the
26
<PAGE>
Acquisition to occur on or before such date and such action or failure to act
constitutes a breach of this Agreement;
(c) by Acquiror, if Target shall breach any representation, warranty,
obligation or agreement hereunder and such breach shall not have been cured
within ten (10) business days of receipt by Target of written notice of such
breach, provided that the right to terminate this Agreement by Acquiror under
this Section 8.1(c) shall not be available to Acquiror where Acquiror is at that
time in material breach of this Agreement;
(d) by Target, if Acquiror shall breach any representation, warranty,
obligation or agreement hereunder and such breach shall not have been cured
within ten (10) business days following receipt by Acquiror of written notice of
such breach, provided that the right to terminate this Agreement by Target under
this Section 8.1(d) shall not be available to Target where Target is at that
time in material breach of this Agreement;
8.2 Effect of Termination. In the event of termination of this Agreement
--- ---------------------
as provided in Section 8.1, this Agreement shall forthwith become void and there
shall be no liability or obligation on the part of Acquiror or Target or their
respective officers, directors, Target Shareholders and affiliates, except to
the extent that such termination results from the breach by a party hereto of
any of its representations, warranties or covenants set forth in this Agreement;
provided that, the provisions of Section 8.3 (Expenses and Termination Fees) and
this Section 8.2 shall remain in full force and effect and survive any
termination of this Agreement.
8.3 Expenses and Termination Fees. Whether or not the Acquisition is
--- -----------------------------
consummated, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby (including, without limitation, the
fees and expenses of its advisers, accountants and legal counsel) shall be paid
by the party incurring such expense.
8.4 Extension; Waiver. At any time prior to the Closing Date any party
--- ------------------
hereto 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 made to such
party contained herein or in any document delivered pursuant hereto and (iii)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
ARTICLE IX
27
<PAGE>
ESCROW AND INDEMNIFICATION
--------------------------
9.1 Survival of Representations, Warranties and Covenants.
--- -----------------------------------------------------
Notwithstanding any investigation conducted before or after the Closing Date,
and notwithstanding any actual or implied knowledge or notice of any facts or
circumstances which Acquiror, Target or Target Shareholders may have as a result
of such investigation or otherwise, Acquiror, Target and Target Shareholders
will be entitled to rely upon the other party's respective representations,
warranties and covenants set forth in this Agreement. The representations and
warranties of Acquiror will terminate upon the Closing. The obligations of
Target and Target Shareholders with respect to their respective representations,
warranties, agreements and covenants will survive the Closing and continue in
full force and effect until the expiration of the Escrow Period (as defined in
Sections 9.5) at which time, the representations, warranties, agreements and
covenants of Target and Target Shareholders and any liability with respect
thereto will terminate.
9.2 Indemnity. From and after the Closing Date, and subject to the
--- ---------
provisions of this Article IX, Acquiror shall be indemnified and held harmless
by Target Shareholders against, and reimbursed for, any actual liability,
damage, loss, obligation, demand, judgment, fine, penalty, cost or expense,
including reasonable attorneys' fees and expenses, and the costs of
investigation incurred in defending against or settling such liability, damage,
loss, cost or expense or claim therefor and any amounts paid in settlement
thereof, imposed on or reasonably incurred by Acquiror as a result of any breach
of any representation, warranty, agreement or covenant on the part of Target or
Target Shareholders under this Agreement with respect to facts and circumstances
existing before 30 April 1999 (collectively the "Damages"). "Damages" as used
herein is not limited to matters asserted by third parties (see Section 9.12),
but includes Damages incurred or sustained by Acquiror in the absence of claims
by a third party. If the Closing occurs, claims for Damages against the Escrow
Fund (as defined below) in accordance with this Article IX shall be the sole and
exclusive remedy of Acquiror for breaches of representations, warranties,
agreements or covenants by Target and Target Shareholders under this Agreement,
and Acquiror shall have no other claim or remedy against Target or its
directors, or any Target Shareholder.
9.3 Escrow Fund.
--- -----------
(a) As security for the indemnity provided for in Section 9.2 hereof,
ten percent (10%) of the Cash Consideration payable pursuant to Section 1.2
shall be deposited by Acquiror in an escrow account with Greater Bay Trust
Company (or other mutually acceptable institution) as Escrow Agent (the "Escrow
Agent"), as of the Closing Date, such deposit, together with any interest earned
thereon, to constitute an escrow fund (the "Escrow Fund") to be governed by the
terms set forth in this Agreement and
28
<PAGE>
the provisions of the Escrow Agreement to be executed and delivered pursuant to
Section 6.7. The provisions of the Escrow Agreement shall correspond and not
conflict with the terms of this Article IX. Subject to the provisions of this
Article IX, Acquiror shall be entitled to obtain indemnity from the Escrow Fund
for Damages covered by the indemnity provided for in Section 9.2 of this
Agreement.
The Escrow Fund shall be considered as conditional payment of part of the Cash
Consideration, to be paid to Target Shareholders in accordance with this Article
IX.
(b) The Escrow Fund shall be allocated among the Target Shareholders
in accordance with the allocation set forth on Exhibit A1 hereof. All fees and
----------
costs in connection with the Escrow Fund shall be paid by Acquiror.
9.4 Damage Threshold. Acquiror may not receive any payment from the Escrow
--- ----------------
Fund unless and until an Officer's Certificate (as defined in Section 9.6 below)
identifying Damages, which in the aggregate exceeds $50,000 (the "Damage
Threshold"), has been delivered to the Escrow Agent as provided in Section 9.6
below and such amount is determined pursuant to this Article IX to be payable,
in which case Acquiror shall receive cash equal to the amount of Damages in
excess of $ 50,000, except as otherwise provided in this Article IX. In
determining the amount of any Damages attributable to a breach, any materiality
or knowledge standard contained in a representation, warranty or covenant of
Acquiror shall be disregarded.
9.5 Escrow Period. The Escrow Fund and Escrow Agreement shall terminate
--- -------------
either (i) on the date six (6) months following the Closing Date (the
"Termination Date"), provided that on such date there remain no unsatisfied or
contested claims which have been specified in an Officer's Certificate delivered
to the Escrow Agent prior to the Termination Date, or (ii) if such unsatisfied
or contested claims exist on the Termination Date, then on the date that all
amounts in the Escrow Fund will have been finally and fully paid pursuant to the
terms of this Article IX.
9.6. Claims; Objections to Claims.
---- -----------------------------
(a) No claim of Acquiror for Damages against the Escrow Fund will be
paid unless, on or before the Termination Date, the Escrow Agent has received a
certificate signed by the chief financial or chief executive officer of Acquiror
(an "Officer's Certificate") specifying:
(i) that Acquiror has incurred, paid or properly accrued (in
accordance with local GAAP) Damages or that a claim or dispute exists in respect
of facts or circumstances existing prior to 30 April 1999 that could, unless
successfully defended, entitle Acquiror to Damages, in a aggregate stated amount
with respect to
29
<PAGE>
which Acquiror is entitled to payment from the Escrow Fund pursuant to this
Agreement; and
(ii) in reasonable detail the individual items of Damages
included in the amount so stated, the date each such item was incurred, paid or
properly accrued (in accordance with local GAAP), or the basis for such
anticipated liability, and the specific nature of the breach of representation,
warranty or covenant under this Agreement to which such item is related.
(b) At the time of delivery of any Officer's Certificate to the Escrow
Agent pursuant to Section 9.6(a), a duplicate copy of such Officer's Certificate
shall be delivered to the Target Shareholders' Agent (along with a copy of any
supporting documents reasonably available to Acquiror that relate to the claims
set forth in the Officer's Certificate). For a period of forty-five (45) days
after such delivery to the Target Shareholders' Agent, the Escrow Agent shall
make no delivery of cash unless the Escrow Agent shall have received written
authorization form the Target Shareholders' Agent to make such delivery. After
the expiration of such forty-five (45) day period, the Escrow Agent shall make
delivery of the cash in the Escrow Fund in accordance with Section 9.7 hereof,
provided however that no such payment may be made if the Target Shareholders'
Agent shall object in a written statement to the claim made in the Officer's
Certificate, and such statement shall have been delivered to the Escrow Agent
and to Acquiror prior to the expiration of such forty-five (45) day period.
30
<PAGE>
9.7. Payment of Claims.
---- ------------------
(a) Upon receipt by the Escrow Agent on or before the Termination Date
of an Officer's Certificate for a claim for Damages against the Escrow Fund, the
Escrow Agent shall:
(i) If there are no objections presented by Target Shareholders'
Agent pursuant to Section 9.6(b) of this Agreement with respect to such claim
within the forty-five (45) day period, deliver to Acquiror cash in the Escrow
Fund in an amount necessary to indemnify Acquiror for the Damages claimed,
provided, however that no payment shall be made from the Escrow Fund until
Damages are actually incurred or paid.
(ii) If objections to the claim have been presented pursuant to
Section 9.6(b) hereof, then Escrow Agent shall make no payment in relation to
such claim until and unless (A) the Escrow Agent receives a copy of a joint
memorandum from Target Shareholders' Agent and Acquiror pursuant to Section
9.8(a), or an Award rendered by the arbitrator pursuant to the provisions of
Section 9.8 hereof, in which case the Escrow Agent shall make payment as
instructed in the joint memorandum or the Award; or (B) the Acquiror notifies
Escrow Agent that no Damages will be required to be incurred or paid or
otherwise withdraws its claims. If (B) occurs after the Termination Date, then
amounts held in Escrow in relation to such withdrawn claim shall be distributed
to Target Shareholders in accordance with Section 9.10 below.
(b) All claims against the Escrow Fund that are allowed pursuant to
this Article IX shall be charged to the account of each Target Shareholder in
accordance with the allocation set forth on Exhibit A1 hereof, as amended on or
----------
before the Closing. Each Shareholder is responsible only for its prorata share
of such payments from the Escrow Fund. The amount of Damages payable to Acquiror
may not exceed the amount in the Escrow Fund, and if there is at any time
insufficient cash in the Escrow Fund to pay Acquiror any Damages, Acquiror shall
have no right of recourse against any Target Shareholder, Target or its
directors.
9.8. Resolution of Conflicts; Arbitration
---- ------------------------------------
(a) In case the Target Shareholders' Agent shall object in writing
pursuant to Section 9.6(b) to any claim or claims by Acquiror made in any
Officer's Certificate delivered pursuant to Section 9.6(a), the Target
Shareholders' Agent and Acquiror shall attempt in good faith for a period of
sixty (60) days to agree upon the rights of the respective parties with respect
to each of such claims. If the Target Shareholders' Agent and Acquiror should so
agree, a memorandum setting forth such agreement shall be prepared and signed by
both parties and shall be furnished to the Escrow Agent. The Escrow Agent shall
be entitled to rely on any such memorandum
31
<PAGE>
and shall distribute the cash from the Escrow Fund in accordance with the terms
thereof.
(b) If the parties have not resolved the dispute during such sixty
(60) day period, then within an additional ten (10) day period the parties will
mutually agree on and appoint a single arbitrator who is familiar with the
computer software industry (or, in connection with a tax dispute, who has
expertise in tax matters). If the parties cannot agree upon a single arbitrator,
then such an arbitrator shall be selected by the London Court of International
Arbitration (LCIA)). Within ten (10) days of such appointment, the parties will
each deliver to the arbitrator and to each other a written proposal of that
party's final recommended resolution to the dispute (the "Proposal"), along with
all written arguments or documentation supporting such recommended resolution.
This will be the final proposal each party can make concerning the dispute
except as otherwise provided in paragraph (c) below. Within seventy-five (75)
days of the appointment of such arbitrator, the arbitrator shall issue a final
award (the "Award") taking into account the two Proposals. Any judgment upon the
Award rendered by the arbitrator may be entered in any court having jurisdiction
over the subject matter thereof.
(c) The arbitrator may request reasonable written clarification of the
documents previously provided for his review during the thirty (30) days after
such appointment. Any material provided to the arbitrator shall also be
simultaneously provided to the opposing party. The opposing party will be
entitled, during the five (5) days following delivery of such material, to
provide a written response or rebuttal to same to the arbitrator and the other
party.
(d) Any such arbitration shall be conducted in London and the language
of the arbitration shall be English. The single arbitrator shall be compensated
for his or her services at a rate to be determined by the parties or, failing
their agreement, by decision of the LCIA, based upon a reasonable hourly or
daily consulting rate for the arbitrator.
(e) The arbitrator may award either party its costs and attorneys
fees. Pending such award, however, the fees of the arbitrator will be shared
equally by the parties and each party will bear its own costs and attorneys
fees.
(f) The Award shall contain the arbitrator's findings of fact and
conclusions of law and a written opinion setting forth the basis and reasons for
any decision reached, and the arbitrator shall deliver to each party a signed
copy of the Award.
(g) A copy of the Award shall be furnished to the Escrow Agent, which
shall distribute funds from the Escrow Fund in accordance with its terms.
32
<PAGE>
9.9. Target Shareholders' Agent.
---- ---------------------------
(a) Schroder Ventures Holdings Limited shall be constituted and
appointed as the Target Shareholders' Agent for and on behalf of the Target
Shareholders to give and receive notices and communications, to authorize
delivery to Acquiror of the cash from the Escrow Fund in satisfaction of claims
by Acquiror, to object to such deliveries, to agree to, negotiate, enter into
settlements and compromises of, and demand arbitration and comply with orders of
courts and awards of arbitrators with respect to such claims, and to take all
actions necessary or appropriate in the judgments of the Target Shareholders'
Agent for the accomplishment of the foregoing. Such agency may be changed by the
holders of a majority in interest of the Escrow Fund from time to time upon not
less than ten (10) days' prior written notice to Acquiror. The Target
Shareholders' Agent may resign upon thirty (30) days' prior written notice to
Acquiror. No bond shall be required of the Target Shareholders' Agent, and the
Target Shareholders' Agent shall receive no compensation for his services.
Notices or communications to or from the Target Shareholders' Agent shall
constitute notice to or from each of the Target Shareholders. Upon the
resignation of Target Shareholders' Agent, a new Agent shall be designated by
the holders of a majority in interest of the Escrow Fund, within ten (10) days
of the effective date of such resignation.
(b) The Target Shareholders' Agent shall not be liable for any act
done or omitted hereunder as Target Shareholders' Agent while acting in good
faith and in the exercise of reasonable judgment, and any act done or omitted
pursuant to the advice of counsel shall be conclusive evidence of such good
faith. The Target Shareholders shall severally indemnify the Target
Shareholders' Agent and hold him harmless against any loss, liability or expense
incurred without gross negligence or bad faith on the part of the Target
Shareholders' Agent and arising out of or in connection with the acceptance or
administration of his duties hereunder.
(c) The Target Shareholders' Agent shall have reasonable access to
information about Target and the reasonable assistance of Target's officers and
employees for purposes of performing its duties and exercising its rights
hereunder, provided that the Target Shareholders' Agent shall treat
confidentially and not disclose any nonpublic information from or about Target
to anyone (except on a need to know basis to individuals who agree to treat such
information confidentially).
9.10 Distribution Upon Termination of Escrow Period.
---- -----------------------------------------------
(a) Within five (5) business days following the Termination Date, the
Escrow Agent shall deliver to the Target Shareholders all of the cash in the
Escrow Fund in excess of any amount of cash reasonably necessary to satisfy any
unsatisfied or contested claims for Damages specified in an Officer's
Certificate delivered to the
33
<PAGE>
Escrow Agent on or before the Termination Date with respect to facts and
circumstances existing prior to 30 April 1999. As soon thereafter as any such
individual unsatisfied or contested claim has been resolved, the Escrow Agent
shall make payment in accordance with Section 9.7 hereof and deliver to the
Target Shareholders all cash remaining in the Escrow Fund which is not required
to satisfy other unsatisfied or contested claims. As soon as all such
unsatisfied or contested claims have been resolved, the Escrow Agent shall
deliver to the Target Shareholders all cash remaining in the Escrow Fund.
(b) Deliveries of cash to the Target Shareholders pursuant to this
Article IX shall be made in proportion to the allocation set forth in Exhibit A.
---------
9.11 Actions of the Target Shareholders' Agent. A decision, act, consent
---- ------------------------------------------
or instruction of the Target Shareholders' Agent shall constitute a decision of
all Target Shareholders for whom cash otherwise issuable to them are deposited
in the Escrow Fund and shall be final, binding and conclusive upon each such
Target Shareholder, and the Escrow Agent and Acquiror may rely upon any
decision, act, consent or instruction of the Target Shareholders' Agent as being
the decision, act, consent or instruction of each and every such Target
Shareholder. The Escrow Agent and Acquiror are hereby relieved from any
liability to any person for any acts done by them in accordance with such
decision, act, consent of instruction of the Target Shareholders' Agent.
9.12. Third-Party Claims. In the event Acquiror becomes aware of a third-
----- -------------------
party claim which Acquiror believes may result in a claim for Damages against
the Escrow Fund before the Termination Date, Acquiror shall promptly notify the
Target Shareholders' Agent of such claim, and the Target Shareholders' Agent
shall be entitled, at his expense, to participate in any defense of such claim.
Acquiror shall have the right to settle any such claim; provided, however, that
Acquiror may not effect the settlement of any such claim without the consent of
the Target Shareholders' Agent, which consent shall not be unreasonably
withheld. In the event that the Target Shareholders' Agent has consented to any
such settlement, the Target Shareholders' Agent before the Termination Date
shall have no power or authority to object under Section 9.6 or any other
provision of this Article IX to the amount of any claim by Acquiror against the
Escrow Fund for indemnity with respect to such settlement.
ARTICLE X
GENERAL PROVISIONS
------------------
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 mailed by registered or certified mail (return receipt
requested) or sent via
34
<PAGE>
facsimile (with confirmation of receipt) to the parties at the following address
(or at such other address for a party as shall be specified by like notice):
(a) if to Acquiror, to:
Actuate Software Corporation
999 Baker Way, Suite 200
San Mateo, CA 94404
Attention: Chief Financial Officer
Facsimile No.: (650) 638-2020
with a copy to:
Gunderson Dettmer Stough Villeneuve
Franklin & Hachigian, LLP
155 Constitution Drive
Menlo Park, CA 94025
Attention: Jeffrey P. Higgins
Facsimile No.: (650) 321-2800
(b) if to Target, to:
Actuate Holding B.V.
Locatellikade 1
Parnassustoren
1076 AZ Amsterdam
Attention: Maria van der Sluijs-Plantz
Facsimile No.: 31 20 673 0016
(c) if to Target Shareholders, to:
Schroder Ventures French Enterprise Fund L.P.1
c/o Schroder Venture Managers Limited
22 Church Street
PO Box HM 1368
Hamilton HM FX
Bermuda
Facsimile No.: 1 441 292 24 37
Schroder Ventures French Enterprise Fund UKLP
c/o Schroder Ventures Holdings Limited
20 Southampton Street
London WC2E 7QG
35
<PAGE>
England
Facsimile No.: 44 171 240 5346
SUK VFIV Nominees Limited
P.O. Box 71
Arnold House
St. Julian's Avenue
St. Peter Port
Guernsey, Channel Islands, GY1 3QL
Facsimile No.: 01481 711656
Mr. Michael Berman
14, Caroline Terrace
London SW1 W8JS
United Kingdom
Facsimile No.: 44 171 259 9711
Mr. Patrick Chancerelle
34, rue du Professeur Guyon
78430 Louveciennes, France
Facsimile No.: 33 1 69 85 78 69
Mr. Andrew Ferrier
Ankoglstrasse 28
D-81825 Munchen
Germany
Facsimile No.: 49 89 43 088608
Mr. Gilles Vliegen
3, rue Ernest Hebert
75116 Paris, France
Facsimile No.: 33 1 45 03 53 09
(d) if to Target Shareholders' Agent
Schroder Ventures Holdings Limited
20 Southampton Street
London WC2E 7QG
England
Facsimile No.: 44 171 240 5346
36
<PAGE>
10.2. Interpretation. When a reference is made in this Agreement to
----- --------------
Exhibits, such reference shall be to an Exhibit to 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". In this Agreement, any reference to any event, change, condition or
effect being "material" with respect to any entity or group of entities means
any material event, change, condition or effect related to the condition
(financial or otherwise), properties, assets (including intangible assets),
liabilities, business, operations or results of operations of such entity or
group of entities. Any reference to a "Material Adverse Effect" with respect to
any entity or group of entities means any event, change or effect that is
materially adverse to the condition (financial or otherwise), properties, assets
(including intangible assets), liabilities, business, operations 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 due and diligent inquiry of officers and directors of such party
and its subsidiaries reasonably believed to have knowledge of such matters. 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 June 4, 1999. 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.
10.3. Counterparts. This Agreement may be executed in one or more
----- ------------
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
10.4. Entire Agreement, No Third Party Beneficiaries. This Agreement, the
----- -----------------------------------------------
Transaction Documents and the documents and instruments and other agreements
specifically referred to herein or delivered pursuant hereto, including the
Exhibits, including the Target Disclosure Letters and the Acquiror Disclosure
Letter constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof. This Agreement shall not confer upon any other person any rights or
remedies hereunder.
10.5. 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
37
<PAGE>
further agree to replace such a 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.
10.6. Remedies Cumulative. Any and all remedies herein expressly conferred
----- -------------------
upon a party will be deemed cumulative with and not exclusive of any other
remedy conferred hereby, or by law or equity upon such party, and the exercise
by a party of any one remedy will not preclude the exercise of any other remedy.
10.7. Governing Law; Arbitration. This Agreement shall be governed by and
----- ----------------------------
construed in accordance with the laws of the Netherlands without regard to
applicable principles of conflicts of law. Any dispute arising out of or in
connection with this Agreement shall be referred to and finally resolved by
arbitration under the LCIA Rules by a sole arbitrator, and such Rules are deemed
to be incorporated herein by reference; provided, however, that any dispute
arising exclusively under Article IX hereof shall also be subject to the special
procedures defined in Section 9.8. The place of arbitration shall be London,
and the language to be used in the arbitral proceedings shall be English.
10.8. 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 permitted assigns.
10.9. Rules of Construction. The parties hereto agree that they have been
----- ----------------------
represented by counsel during the negotiation, preparation and execution of this
Agreement and, therefore, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first written above.
ACTUATE CORPORATION
By: _____________________
Name: _____________________
Title: _____________________
38
<PAGE>
ACTUATE HOLDING B.V. MICHAEL BERMAN
By: _____________________ ____________________
Name: Peter Baines
Title: Director
By: _____________________
By: TMF Management B.V.
Name: _____________________
Title: _____________________
SCHRODER VENTURES FRENCH PATRICK CHANCERELLE
ENTERPRISE FUND L.P. 1
By: _____________________ _____________________
for and on behalf of Schroder
Venture Managers Inc. as
General Partner of Schroder
Ventures French Enterprise
Fund L.P.1
By: _____________________
for and on behalf of Schroder
Venture Managers Inc. As
General Partner of Schroder
Ventures French Enterprise
Fund L.P.1
SCHRODER VENTURES FRENCH GILLES VLIEGEN
ENTERPRISE FUND UKLP
By: _____________________ _____________________
for and on behalf of Schroder
Holdings Limited as General
Partner of Schroder Ventures
French Enterprise Fund UKLP
SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT
39
<PAGE>
SUK VFIV NOMINEES LIMITED ANDREW FERRIER
By: ______________________ _____________________
for and on behalf of SUK VF
IV Nominees Limited (A) as
the designated nominee for
Barings (Guernsey) Limited (i)
Trustee of Schroder UK Venture
Fund IV Trust, and (ii) Custodian
of Schroder Venture Fund IV
LPI and Schroder UK Venture
Fund LP2 and (B) as nominee for
Schroder Venture Managers
(Guernsey) Limited as manager
of the Schroder UK Venture
Fund IV Co-Investment Fund
By: ______________________
for and on behalf of SUK VF
IV Nominees Limited (A) as
the designated nominee for
Barings (Guernsey) Limited (i)
Trustee of Schroder UK Venture
Fund IV Trust, and (ii) Custodian
of Schroder Venture Fund IV
LPI and Schroder UK Venture
Fund LP2 and (B) as nominee for
Schroder Venture Managers
(Guernsey) Limited as manager
of the Schroder UK Venture
Fund IV Co-Investment Fund
40
<PAGE>
SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT
41
<PAGE>
Exhibit A1
List of Target Shareholders Actuate BV
<TABLE>
<CAPTION>
Number of Total Proceeds Paid at Closing Escrow Proceeds Escrow
Shares ($) ($) ($) Percentages
<S> <C> <C> <C> <C> <C>
Class A
SVFEF LPI 12,688 1,712,880 1,541,592 171,288 33.17%
SVFEF UKLP 7,112 960,120 864,108 96,012 18.59%
SUK VFIV Nominees Ltd. 13,200 1,782,000 1,603,800 178,200 34.51%
Class B
G. Vliegen 1,749 236,115 212,504 23,611 4.57%
M. Berman 1,749 236,115 212,504 23,611 4.57%
P. Chancerelle 1,749 236,115 212,504 23,611 4.57%
A. Ferrier 4 540 486 54 0.01%
Total 38,251 5,163,885 4,647,498 516,387 100.00%
</TABLE>
There is one additional shareholder of Actuate BV which is not a Target
Shareholder: the Estate of P. Braude which holds 1,749 shares of Target.
<PAGE>
Exhibit A2
Shareholders of the Subsidiaries
<TABLE>
<CAPTION>
<S> <C>
Number of Shares
Actuate France
- --------------
Actuate Holding B.V. 499,949
John Michael Berman 10
Pierre Braude 10
Patrick Chancerelle 10
Gilles Vliegen 10
Stephane Querel 10
Peter Baines 1
Lionel Vogel 11,100 *
Andrew Ferrier 11,100 *
Stephane Querel 33,300 *
Total Actuate France 555,500
Actuate UK
- ----------
Actuate Holding BV 45,000
Nicholas D. Whitehead 1,500
Alan Hamilton 1,500
Andrew Ferrier 1,000
Adrian J. Huxley 500
Alexandra J. McGrath 500
Total Actuate UK 50,000
Actuate Germany
- ---------------
Actuate Holding B.V. 50,000 DM capital
</TABLE>
* to be issued before Closing
<PAGE>
Exhibit A3
Employee Transactions
<TABLE>
<CAPTION>
(1) Sale of Shares Number of Percentage of
--------------
Shares Total Proceeds Total Proceeds ($)
<S> <C> <C> <C>
Actuate France
--------------
Stephane Querel 33,300 1.86% 111,600
Lionel Vogel 11,100 0.62% 37,200
Andrew Ferrier 11,100 0.62% 37,200
Actuate UK
----------
Nicholas D. Whitehead 1,500 1.65% 99,000
Alan Hamilton 1,500 1.65% 99,000
Andrew Ferrier 1,000 1.10% 66,000
Adrian J. Huxley 500 0.55% 33,000
Alexandra J. McGrath 500 0.55% 33,000
(2) Payment of Bonus
----------------
Actuate Germany
---------------
Helmut Philipp 0.84% 50,400
Udo Lothmann 0.14% 8,400
Marko Merkel 0.14% 8,400
Andrew Ferrier 0.28% 16,800
Total 10.00% 600,000
</TABLE>
<PAGE>
ACTUATE HOLDING B.V. EXHIBIT B
SHAREHOLDER LOANS AND ACCRUED INTEREST
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (FF) Interest (4/6/99)
- -------------------------------------------------------------------------------------
<S> <C> <C>
SUK VFIV Nominees Ltd. 7,498,200 1,031,666
- -------------------------------------------------------------------------------------
Schroder Ventures French Enterprise 7,206,739 987,510
Fund LP1
- -------------------------------------------------------------------------------------
Schroder Ventures French Enterprise 4,040,561 553,662
Fund UKLP
- -------------------------------------------------------------------------------------
M. Berman 349,124 47,428
- -------------------------------------------------------------------------------------
Estate of P. Braude 349,124 47,836
- -------------------------------------------------------------------------------------
P. Chancerelle 349,124 47,968
- -------------------------------------------------------------------------------------
G. Vliegen 157,063 29,585
- -------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Disclosures to Actuate Corp
Agreement
Chapter Disclosure
2.5 Loan of $455k made by Actuate Corp to Actuate GmbH in May 1999 for
the following purposes:
- repayment of Dresdner Bank due to cancellation of contract
- payment of overdue debts from the 3 opcos to LinkUS
2.5 Intercompany transfers of BV loans (FF4 million) to Germany in
1998, paperwork was completed in April 1999
2.5 Certain employees have purchased shares in the Opcos although not
during the month of April
2.5 With the recruitment of a replacement Country Manager in France
whilst the existing manager, Lionel Vogel, was still in place
there is a risk that he may institute a claim for constructive
dismissal
2.6 Dresdner Bank - DM 301k revenue reversed April
- cash to be repaid end May
2.6 H. Philipp termination costs - settlement - salary and benefits
through 30/9/99 plus Q1 commission earned plus compensation for
loss of opportunity to earn commissions through 1999 = $127k
(agreed 12/5 with D Gaudreau and O Gachot) payment - May and June
salary at end of relevant month, balance due 15/7/99
2.6 Although there is no liability as of 30/4/99 we may incur a legal
liability regarding the repositioning of two French employees,
Stephane Querel and Lionel Vogel
2.6 Interopco loans have been made as follows:
19/3/99 Pds 20.000 UK to Germany
13/4/99 Pds 20.000 UK to Germany
19/4/99 Pds 35.000 UK to Germany (paid direct to
LinkUS by UK on behalf of Germany)
23/4/99 Pds 57.144 UK to France
2.6 A list of payables for each opco has been made available with the
financial statements
2.6 Additional amounts will become due to accountants, lawyers etc. as
a result of the sale of the business
2.7 Note receivables in France
- Adecco - FFr61.085,60 due 27/5
- Rumeur Publique - FFr143.067,78 due 31/5
2.7 Account receivables
Start Holding, Germany - DM 127k consulting services in
process of being delivered Bayerisches
Landesvermessungsamt, Germany - balance of licences, DM 42k
to be delivered in June
Munich Re, Germany - account has been paid but subject to a
final test process being satisfactorily completed in May,
if not accepted, liability exists to repay Systems Union,
UK - receivable of Pds 123k will not be collected before
final contract is signed, anticipated 24/5 Bromley Group,
UK - phase payments may slip dependent on their sales to
customers in Ireland
2.8 Possibility of legal action from H. Philipp if settlement not
confirmed as per note above (2.6)
46
<PAGE>
2.8 Ivo Luers, former employee in Germany, one month salary, DM 10k
approx. To be paid in July 99 through required procedure
2.12 Risk that French car allowances could be assesed as compensation
and therefore incur social charges
2.12 There is a risk that the Royalty payments in all countries could
be assessed for withholding tax
2.12 Risk of French witholding tax and social charges for fees paid to
Kaz Lissowski
2.12 Risk of Social Charges liability in each country on value of
employee shares/cash bonus
UK $26k
France $67k
Germany $30k
2.12 UK VAT Pds.37k to be paid (due 30/4)
2.12 Social charges France FF 120k (due 15/4)
2.12 Risk that German Finanzamt will view the France and UK services
invoices as a way of transferring hidden profits - $800k at 30%
2.13 Non mandatory Employee Benefits:
UK:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Start Date Car Pension BUPA Permanent Life Assurance
- ---------------------------------------------------------------------------------------------------------------------------------
Allowance Contribution Private Health Health/Income Death in Service
- ---------------------------------------------------------------------------------------------------------------------------------
(5% x basic) Replacement 4 x basic salary)
- ---------------------------------------------------------------------------------------------------------------------------------
(per a(per)annum) (per annum) (per annum) (per annum) (per annum)
- ---------------------------------------------------------------------------------------------------------------------------------
Renewal Date: 1st April 1st April 1st December
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Alan Hamilton 01.01.99 (pound)8.000 (pound)3.250 (pound)520,80 (pound)230,70 (pound)247,00
- ---------------------------------------------------------------------------------------------------------------------------------
Alex Cable 06.10.97 (pound)8.000 (pound)1.855 (pound)894,36 (pound)230,70 (pound)140,98
- ---------------------------------------------------------------------------------------------------------------------------------
Adrian Huxley 17.03.97 (pound)8.000 (pound)1.500 (pound)357,00 (pound)168,91 (pound)114,00
- ---------------------------------------------------------------------------------------------------------------------------------
Russell Cooper 12.01.98 (pound)8.000 (pound)1.700 (pound)314,52 (pound)121,25 (pound)129,20
- ---------------------------------------------------------------------------------------------------------------------------------
Umesh Sangaralingam 08.02.99 (pound)6.000 (pound)1.900 (pound)314,52 (pound)114,66 (pound)144,40
- ---------------------------------------------------------------------------------------------------------------------------------
Chris Bradfield 02.11.98 (pound)0 (pound)1.250 (pound)314,52 (pound)121,20 (pound)95,00
- ---------------------------------------------------------------------------------------------------------------------------------
Kate Evans 01.12.98 (pound)0
- ---------------------------------------------------------------------------------------------------------------------------------
(7.5% x basic)
- ---------------------------------------------------------------------------------------------------------------------------------
John Riglar 07.07.97 (pound)5.268 (pound)3.047 (pound)357,00 (pound)240,18 (pound)154,38
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
None of the benefits are statutory other than minimum holiday entitlements.
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
All employees are entitled to 20 working days vacation in addition to public holidays.
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Germany:
47
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Car Pension Health
- ------------------------------------------------------------------------------------
Allowance Contribution Insurance
- ------------------------------------------------------------------------------------
(per annum) (per annum) (per annum)
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
Marko Merkel DM18.000 DM13.260 DM3.671
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
Udo Lothmann DM 14.400 DM13.260 DM3.211
- ------------------------------------------------------------------------------------
</TABLE>
France:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Car Food Health Permanent
- --------------------------------------------------------------------------------------------------------
Allowance Coupons Insurance Health/Income
- --------------------------------------------------------------------------------------------------------
(per annum) (per annum) (per annum) (per annum)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
Ferreol Perez FF84.000 FF11.000 FF4.800
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
Stephane Querel FF61.800 FF11.000 FF4.800
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
Lionel Vogel FF61.800 FF11.000 FF4.800
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
Vincent Costellazione FF55.200 FF11.000 FF4.800
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
Alain Darmon FF47.796 FF11.000 FF4.800
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
Serge Mignon FF47.796 FF11.000 FF4.800
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
Juliette Lambret Nil FF11.000 FF4.800
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
Car parking provided at employee request - currently 2spaces at FF11.400 pa each
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
Juliette Lambret receives 50% of monthly public transport ticket FF 1.632 pa
- --------------------------------------------------------------------------------------------------------
</TABLE>
2.13 Variable compensation plans for all employees have been made available
2.13 Plans have been suspended/terminated for employees who have left the
company
2.14 Kate Evans in UK is on temporary contract, moving to permanent with the
agreement of O. Gachot, Actuate Corp VP International
2.14 Michael Freimuth provides consulting services on a regular basis in
Germany, no contract signed
2.14 An off record declaration for personal covenance was given related to
relocation of Lionel Vogel in France
2.15 Loan to French employee, Stephane Querel, ( outstanding amount ?) due to
be repaid from his share of the sale proceeds
2.15 The CEO of Eurosales Finance (factoring company) is the cousin of Andrew
Ferrier
2.16 Copies of insurance policies in each country have been made available
2.20 Dresdner Bank cancellation at DM300k represents more than 1% of revenue
48
<PAGE>
2.20 There is a dispute over an unfulfilled marketing services contract in the
UK with Probe Marketing. They are claiming Pds.15.000 for services which
have not been provided
2.21 Contract for Customer Marketing Event in UK in October (Rugby World Cup
England vs. New Zealand) $11,000.00
2.21 Office leases - UK Pds 6735.00 pm Expiry 7/99
France FFr 35601,00 pm 4/00
Germany DM 9799,28 pm (Q2foc) 12/99
2.21 A list of all bookings from start of operations to 31/3/99 has been
provided for each country
2.21 A copy of the agreement with Eurosalesfinance has been made available
2.21 On going services contracts exist as follows:
UK LinkUS
ABS Training
Hill Murray Rogerson (PR)
Open Software Technology (Consulting DMG)
France LinkUS
Rumeur Publique (PR)
Audit et Finance (Accounting Services)
Germany LinkUS
Roland Ackermann (PR)
2.21 Ongoing informal contracts exist with accounting firms for the provision
of accounting services as follows:
UK John Whittingham
Germany Leinauer & Mueller
2.23 No minute books are required for Actuate GmbH
5.1 H. Philipp termination, severance agreed with Actuate Corp (see 2.6
above)
AF 31.5.99
49
<PAGE>
Exhibit C
ESCROW AGREEMENTThis ESCROW AGREEMENT (this "Agreement") is made and
entered into as of June__, 1999, by and among Actuate Corporation, a Delaware
corporation ("Actuate"), Actuate Holding B.V., a Netherlands corporation
("Actuate BV"), Schroder Ventures Holdings, Ltd., an English company, as the
representative ("Shareholders' Agent") of the shareholders of Actuate BV
(individually, a "Shareholder" and collectively the "Shareholders") and Greater
Bay Trust Company, a National Banking corporation ("Escrow Agent").
WITNESSETH:
WHEREAS, Actuate and Actuate B.V. and the Shareholders are parties to
that certain Stock Purchase Agreement dated as of June__, 1999 (collectively,
with all schedules, letters, exhibits and certificates referred to therein, the
"Purchase Agreement"), which provides that Actuate will purchase all of the
outstanding capital stock of Actuate BV held by the Shareholders (the
"Purchase");
WHEREAS, the Purchase Agreement provides that at the Closing (as
defined in the Purchase Agreement), certain of the cash proceeds delivered in
connection with the Purchase and otherwise payable to the Shareholders pursuant
thereto will be deposited in escrow (the "Escrow") pursuant to this Agreement to
be held by the Escrow Agent, to compensate Actuate for Damages (as defined in
the Purchase Agreement) that it may incur by reason of an inaccuracy, breach,
nonfulfillment or noncompliance of representations, warranties, covenants and
agreements of Actuate BV and the Shareholders;
WHEREAS, the Escrow Agent has been constituted agent to hold and
deliver the funds deposited with it in accordance with this Agreement; and
WHEREAS, the parties hereto desire to set forth further terms and
conditions in addition to those set forth in the Purchase Agreement relating to
the operation of the Escrow.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in the Purchase Agreement and herein, the parties agree as follows:
ARTICLE I
Escrow Fund
-----------
1.1 General. The Purchase Agreement, a copy of which is attached
--- -------
hereto as Exhibit A, by this reference is incorporated herein and made a part of
---------
this Agreement to the same extent as if its terms were fully set forth herein.
Capitalized terms used herein and defined in the Purchase Agreement shall have
the defined meanings set forth in the Purchase Agreement when used herein,
unless otherwise defined herein or unless the context otherwise requires.
<PAGE>
1.2 Appointment. Actuate and Shareholders' Agent hereby appoint
--- -----------
Escrow Agent as escrow agent to serve in such capacity in accordance with the
terms and conditions as set forth in this Agreement. Escrow Agent hereby
accepts such appointment.
1.3 Consent of Shareholders. Each Shareholder has agreed in writing
--- -----------------------
to (a) the deposit into Escrow of an amount of cash to form the Escrow Fund (as
defined below) to secure the indemnification obligations of the Shareholders
under Article IX of the Purchase Agreement in the manner set forth therein, (b)
the appointment of the Shareholders' Agent as his, her or its representative for
purposes of this Agreement and as attorney-in-fact and agent for and on behalf
of him, her or it with respect to the subject matter hereof, and the taking by
the Shareholders' Agent of any and all actions and the making of any decisions
required or permitted to be taken or made by them under this Agreement and (c)
all of the other terms, conditions and limitations set forth in this Agreement.
To the extent a Shareholder has not so agreed in writing, by virtue of such
Shareholders' receipt of the Cash Consideration, such Shareholder, without any
further act of the part of such Shareholder, is deemed to consent to all of the
foregoing.
1.4 Escrow Proceeds. At the Closing, Actuate shall deliver to the
--- ---------------
Escrow Agent to hold in escrow, as collateral for the indemnification
obligations of the Shareholders pursuant to the Purchase Agreement and the
provisions herein, the amount of five hundred forty thousand dollars ($540,000)
(the "Escrow Fund"). The portion of the Escrow Fund contributed on behalf of
each Shareholder shall be as set forth in the attached Exhibit B. The Escrow
---------
Fund shall be deposited with and held by the Escrow Agent in accordance with the
terms and conditions hereof. The amount of money held in the Escrow at any
time, including interest, accretion in principal and other income or gain
realized upon investment of cash in the Escrow Fund, is referred to herein as
the "Escrow Proceeds."
1.5 Investments.
--- -----------
(a) The Escrow Fund, together with all interest and other income
and gains accruing thereon, shall be invested by the Escrow Agent, without
distinction as to principal and income, upon the instruction of Actuate and the
Shareholders' Agent in one or more of the following investments: interest
bearing open-ended or time deposits of any domestic bank (including deposit in
the Escrow Agent's bank money market deposit accounts), including one or more
accounts maintained in the commercial banking department (if any) of the Escrow
Agent; provided, however, that any amount not invested in the Escrow Agent's
bank money market deposit accounts shall be invested, to the extent reasonably
possible, in accounts that are insured by the Federal Deposit Insurance
Corporation ("FDIC"), or short-term U.S. Department of Treasury bills, or any
short-term government obligation money market fund that includes similar
investments. The parties shall indemnify and hold the Escrow Agent harmless from
any and all liability for acting upon the investment instructions given in this
Section 1.5. The Escrow Agent shall not be liable for any loss resulting from
any investment made pursuant to this Agreement.
(b) For the purpose of investing funds held in escrow, the Escrow
Agent may accept and act upon the joint oral instructions of Actuate and the
Shareholders' Agent (the "Authorized Callers"). The Escrow Agent will confirm
all oral investment instructions to Actuate and the Shareholders' Agent in
writing within two (2) business days. If there is any discrepancy between any
oral instructions and a written confirmation of those instructions, the Escrow
Agent's records of oral investment instructions shall govern. The parties shall
indemnify and hold the Escrow Agent harmless from any and all liability for
acting on any oral investment instructions purported to be given by the
Authorized Callers. The Escrow Agent shall not be responsible for the
authenticity of any such instructions, whether or not the person giving the
instructions was, in fact, an Authorized Caller. In no event shall the Escrow
Agent be liable to
2
<PAGE>
parties hereunder for any consequential, special or exemplary damages, including
but not limited to lost profits, from any cause whatsoever arising out of, or in
any way connected with acting upon oral instructions believed by the Escrow
Agent in good faith to be genuine. The Escrow Agent will act upon investment
instructions the day such instructions are received, provided the requests are
communicated within a sufficient amount of time to allow the Escrow Agent to
make the specified investment. Instructions received after an applicable
investment cutoff deadline will be treated as being received by the Escrow Agent
on the next business day, and the Escrow Agent shall not be liable for any loss
arising directly or indirectly, in whole or in part, from the inability to
invest funds on the day the instructions are received. Escrow Agent shall not be
liable for loss incurred by the actions of third parties or by any loss arising
by error, failure or delay in making an investment that is caused by
circumstances beyond the Escrow Agent's reasonable control.
1.6 Shareholders' Agent.
--- -------------------
(a) The Shareholders' Agent shall be constituted and appointed as
agent for and on behalf of the Shareholders to give and receive notices and
communications, to authorize delivery to any indemnified party of amounts of the
Escrow Proceeds in satisfaction of claims, to object to such deliveries, to
agree to, negotiate, enter into settlements and compromises of, and demand
arbitration and comply with orders of courts and awards of arbitrators with
respect to, such claims, and more generally to act with respect to this
Agreement and the disposition or other handling of all claims, rights and
obligations arising hereunder and to take all actions necessary or appropriate
in his judgment for the accomplishment of the foregoing. The Shareholders shall
be bound by all actions taken by the Shareholders' Agent in connection with this
Agreement, and the Escrow Agent, Actuate BV and Actuate shall be entitled to
rely on any action or decision of the Shareholders' Agent in accordance
herewith.
(b) Such Shareholders' Agent may be changed by the holders of a
majority in interest of the Escrow Fund from time to time upon not less than ten
(10) days' prior written notice to Actuate and the Escrow Agent. If
Shareholders' Agent is for any reason unwilling or unable to serve as
Shareholders' Agent during the term of this Agreement, Shareholders' Agent may
resign as shareholders' agent by giving at least thirty (30) days' prior written
notice to each of Actuate and the Escrow Agent, such resignation to be effective
thirty (30) days following the date such notice is given. No bond shall be
required of the Shareholders' Agent, and the Shareholders' Agent shall receive
no compensation for his or her services, except for payment of the Shareholders'
Agent's expenses. The Shareholders' Agent's expenses in connection with its
duties hereunder may be satisfied from the Escrow Fund, but only to the extent
that Escrow Proceeds remain following the satisfaction of all claims and the
provision for any and all pending claims, and prior to distribution thereof.
Notices or communications to or from the Shareholders' Agent shall constitute
notice to or from each of the Shareholders.
(c) The Shareholders' Agent shall not be liable for any act done
or omitted hereunder as shareholders' agent while acting in good faith, and any
act done or omitted pursuant to the advice of counsel shall be conclusive
evidence of such good faith. The Shareholders shall severally indemnify the
Shareholders' Agent and hold the Shareholders' Agent harmless against any loss,
liability or expense incurred without bad faith on the part of the Shareholders'
Agent and arising out of or in connection with the acceptance or administration
of the Shareholders' Agent's duties hereunder.
(d) The Shareholders' Agent shall have reasonable access to
information about Actuate BV and its Subsidiaries, any claim, any damages and
the indemnified parties and the reasonable assistance of Actuate BV's and its
Subsidiaries' officers and employees for purposes of performing its duties and
exercising its rights hereunder, provided that the Shareholders' Agent shall
treat confidentially and not disclose any non-public information from or about
Actuate BV or its Subsidiaries to anyone other than Actuate and its officers,
3
<PAGE>
directors, employees and agents or the courts or arbitrators selected pursuant
to Section 3.5 herein (except on a need-to-know basis to individuals who agree
to treat such information confidentially).
(e) A decision, act, consent or instruction of the Shareholders'
Agent, taken in the manner set forth in this Agreement, shall constitute a
decision of all Shareholders and shall be final, binding and conclusive upon
each such Shareholder, and the Escrow Agent and Actuate may rely upon any
decision, act, consent or instruction of the Shareholders' Agent taken in such
manner as being the decision, act, consent or instruction of each and every such
Shareholder.
ARTICLE II
Release of Escrow Proceeds
--------------------------
2.1 Release of Escrow Proceeds. Except to the extent there is then
--- --------------------------
pending a claim for an Indemnifiable Amount (as defined in Article III below)
(an "Indemnifiable Claim") against the Shareholders, and subject to Section 2.2
below, the Escrow Proceeds shall be released from the Escrow Fund hereunder and
delivered to the Shareholders on the six-month anniversary of the Closing.
2.2 If there is a pending Indemnifiable Claim against the
Shareholders under the Purchase Agreement at the time of the scheduled escrow
release under Section 2.1, the Escrow Proceeds released to the Shareholders
shall be reduced by the amount of the pending Indemnifiable Claim until such
time as the Indemnifiable Claim is resolved, and Actuate is authorized to
instruct the Escrow Agent of such reduction pursuant to the procedures set forth
in Sections 3.3 and 3.4 of this Agreement.
2.3 Timing of Payments. If Escrow Proceeds are held in the Escrow
--- ------------------
Fund after the six-month anniversary of the Closing pursuant to Section 2.2
hereof, then the Escrow Agent shall pay the remainder of the Escrow Proceeds to
the Shareholders as soon as all pending Indemnifiable Claims have been resolved
and paid.
ARTICLE III
Indemnification
---------------
3.1 Shareholders' Liabilities. Subject to Article II, the Escrow
--- -------------------------
Fund shall serve as collateral for the indemnity obligations of the Shareholders
set forth in the Purchase Agreement for all amounts payable or owing to Actuate
under the provisions of Article IX of the Purchase Agreement (collectively,
"Indemnifiable Amounts"), for a period of six (6) months immediately following
the Closing Date (the "Escrow Period"). The Escrow Fund is the sole and
exclusive source for any and all amounts and indemnities due by the Shareholders
pursuant to the provisions of this Agreement.
3.2 Third Party Claims.
--- ------------------
(a) With respect to any claims or demands by third parties,
whenever Actuate shall have notice that such a claim or demand has been asserted
or threatened against Actuate BV or Actuate which would or could constitute a
basis for Indemnifiable Amounts hereunder, Actuate shall promptly send
concurrent written notice of their claim to the Shareholders' Agent and the
Escrow Agent pursuant to the procedures set forth in Section 3.3 of this
Agreement. In no case shall the Shareholders be liable under this Agreement or
the Purchase Agreement with respect to any claim or demand by a third party
unless the Shareholders' Agent is notified in writing by Actuate of such claim
or demand promptly after Actuate shall have
4
<PAGE>
notice of such claim or demand. The Shareholders' Agent shall then have the
right to contest, negotiate or settle any such claim or demand through counsel
of its own selection, reasonably satisfactory to Actuate, which claim or demand,
and any resulting legal fees, shall be paid from the Escrow Fund; provided,
--------
however, that the Shareholders' Agent shall not, without the prior written
- -------
consent of Actuate, which consent shall not be unreasonably withheld, settle,
compromise or offer to settle or compromise any such claim or demand (i) out of
an application of the Escrow Fund, (ii) in a manner which results in any
liability or loss of Actuate BV or Actuate or (iii) on a basis which would or
could result in the imposition of an order, judgment, injunction or decree which
would or could restrict the future activity or conduct of Actuate BV or Actuate.
In the event that (i) the Shareholders' Agent should fail to give written notice
to Actuate BV or Actuate of the intention of the Shareholders' Agent to contest
or settle any such claim or demand within fifteen (15) days after Actuate has
notified the Shareholders' Agent that any such claim or demand has been asserted
or threatened, or (ii) such notice is given but any such claim or demand is not
promptly settled or promptly and diligently contested by the Shareholders'
Agent, Actuate shall notify the Escrow Agent of the Shareholders' Agent's
failure to act or to promptly settle or contest such claim and shall have the
right upon fifteen (15) days prior written notice to the Shareholders' Agent to
satisfy and discharge the same by payment from the Escrow Fund, compromise or
otherwise, subject to the provisions of Sections 3.3 and 3.4 below; provided,
--------
however, that the Actuate may not effect the settlement or discharge of any such
- -------
claim without the consent of the Shareholders' Agent, which consent shall not be
unreasonably withheld. As an exception to the above procedures, Actuate may
also, if it so elects and entirely within its own discretion, defend any such
claim or demand in the event Actuate reasonably concludes that the potential
exposure to Actuate with respect to such third party claim exceeds or may exceed
the remaining balance of Escrow Fund at such time or reasonably concludes that
such third party claim may materially and adversely affect Actuate or another
affiliate of Actuate other than as a result of money damages or other money
payments, in which event Actuate must follow the procedures of Section 3.3 below
with respect to any claims for Indemnifiable Amounts.
(b) Actuate BV, its Subsidiaries and Actuate shall cooperate with
all reasonable requests of the Shareholders' Agent and make reasonably available
applicable records of Actuate BV, its Subsidiaries and their personnel with
knowledge of such matters, in connection with any matter or claim for
Indemnifiable Amounts under this Agreement.
3.3 Notice of Claims and Satisfaction Thereof.
--- -----------------------------------------
(a) If and whenever during the term of this Agreement Actuate
shall claim an Indemnifiable Amount, Actuate shall send concurrent written
notice of its claim signed by an officer of Actuate to the Shareholders' Agent
and the Escrow Agent. Such notice shall state in reasonable detail the basis for
each such claim, supported by any relevant information and documentation with
respect thereto known to Actuate, and the total Indemnifiable Amounts claimed.
(b) If the Shareholders' Agent shall object to any claim for an
Indemnifiable Amount pursuant to this Agreement, the Shareholders' Agent shall
give concurrent written notice of such objection to the Escrow Agent and Actuate
within forty-five (45) days after the date the notice of claim is given to the
Shareholders' Agent as determined in accordance with the provisions of Section
6.1 hereof (the "Notice Date"), and for a period of forty-five (45) days after
delivery of such notice to the Shareholders' Agent, the Escrow Agent shall not
make any delivery of any Escrow Proceeds to Actuate pursuant to any Section
hereof. If the Shareholders' Agent does not give notice of an objection within
the Notice Date, or shall have agreed in writing within such forty-five (45) day
period that such an Indemnifiable Amount should be paid, the Escrow Agent shall,
promptly after such period, cause to be transferred to Actuate that portion of
the Escrow Fund equal to the Indemnifiable Amount. Notwithstanding the
foregoing, Actuate may not receive any portion of the Escrow Fund unless and
until a notice
5
<PAGE>
or notices satisfying the requirements of subsection 3.3(a) above and
identifying Damages the aggregate amount of which exceeds fifty thousand dollars
($50,000) has or have been sent to the Shareholders' Agent and the Escrow Agent
as provided in subsection 3.3(a) above and such amount is determined pursuant to
this Agreement to be payable (the "Escrow Basket"). Once the Escrow Basket has
been satisfied, Actuate shall be eligible to receive Escrow Funds for
Indemnifiable Amounts in excess of the Escrow Basket, in accordance with the
provisions hereof.
3.4 Response to Objection. In case the Shareholders' Agent shall so
--- ---------------------
object in writing to any claim or claims by Actuate, Actuate and the
Shareholders' Agent shall attempt in good faith for sixty (60) days to agree
upon the rights of the respective parties with respect to each of such claims.
If the Shareholders' Agent and Actuate should so agree, a memorandum setting
forth such agreement shall be prepared and signed by both parties and shall be
furnished to the Escrow Agent. The Escrow Agent shall be entitled to rely on
any such memorandum and shall distribute the Escrow Proceeds from the Escrow in
accordance with the terms thereof. If no such agreement can be reached after
good faith negotiation, either Actuate or the Shareholders' Agent may, by
written notice to the other, demand arbitration of the matter unless the amount
of the damage or loss is at issue in pending litigation with a third party, in
which event arbitration shall not be commenced until such amount is ascertained
or both parties agree to arbitration; and in either such event the matter shall
be settled by arbitration as set forth in Section 9.8(b) of the Purchase
Agreement.
3.5 Dispute Resolution. Any dispute involving the Escrow Agent as a
--- ------------------
party and involving only the terms or application of this Agreement, but not the
terms or application of the Purchase Agreement, shall be settled by the courts
of California, and each of the parties hereby consents to the exclusive
jurisdiction of any court in California, with respect to such disputes. Any
other disputes arising under this Agreement, and also involving disputes under
the Purchase Agreement, shall be settled by arbitration as set forth in the
Purchase Agreement and shall be subject to the law of the Netherlands,
notwithstanding anything to the contrary in Section 6.5 hereof.
ARTICLE IV
Escrow Mechanics
----------------
4.1 Effect of Delivery. Any Escrow Proceeds delivered out of the
--- ------------------
Escrow Fund to satisfy the Indemnifiable Amounts in accordance with Sections
3.2, 3.3 and 3.4 will be transferred to Actuate and all rights, title and
interest of the Shareholders in and to such transferred Escrow Proceeds shall
immediately terminate.
4.2 Ownership of Escrow Proceeds. Except as contemplated hereunder,
--- -----------------------------
no Escrow Proceeds or any beneficial interest therein may be pledged, sold,
assigned or transferred or otherwise disposed of (including by operation of
law), by a Shareholder or be taken or reached by any legal or equitable process
in satisfaction of any debt or other liability of such Shareholder, prior to the
delivery to the Shareholder of the Escrow Proceeds by the Escrow Agent.
4.3 Escrow Fees. The fees of the Escrow Agent plus any out of pocket
--- -----------
expenses of the Escrow Agent shall be paid out of the Escrow Fund.
4.4 Interest and Other Earnings.
--- ---------------------------
(a) Except as provided below, all interest, accretion in
principal or other income or gain realized upon any investment of cash hereunder
shall be retained or deposited as Escrow Proceeds in the account(s) established
to hold the Escrow Fund hereunder. For tax reporting purposes, during the
pendency of the Escrow, the Escrow Agent shall report all
6
<PAGE>
interest, accretion in principal or other income or gain realized upon any
investment of the Escrow Proceeds to the Shareholders. The Shareholders shall
provide the Escrow Agent with their taxpayer identification numbers and related
documentation as may be necessary for such tax reporting and payment purposes.
All interest, accretion in principal or other income or gain realized upon any
investment of the Escrow Fund shall be deemed to constitute part of the Escrow
Fund for purposes of this Agreement and shall be distributed in accordance with
the terms of this Agreement.
(b) The parties acknowledge that upon the release of Escrow
Proceeds from the Escrow Fund to Shareholders, the Escrow Agent is authorized
and instructed to treat a portion thereof as interest income for federal, state
and other jurisdictional income tax purposes under applicable tax rules.
(c) The parties acknowledge that payment of the Escrow Proceeds
will be subject in whole or in part to backup withholding unless either a
properly completed Internal Revenue Service Form W-8 or W-9 certification is
submitted to the Escrow Agent.
4.5 Payment of Escrow Proceeds. The Escrow Agent shall release or
--- --------------------------
distribute Escrow Proceeds within two (2) business days after the Escrow Agent
has received the requisite notice or other documents to such effect, in good
form, or after the passage of the applicable claims period or release date, as
the case may be.
ARTICLE V
Authority and Indemnification
-----------------------------
5.1 Authority. Upon consummation of the Purchase and in
--- ---------
consideration of the mutual promises and covenants set forth in the Purchase
Agreement, the Shareholders and Actuate shall be deemed to have irrevocably
appointed the Escrow Agent to hold all of the Escrow Proceeds subject to this
Agreement until their release in accordance with this Agreement.
5.2 Responsibilities of Escrow Agent.
--- --------------------------------
(a) The Escrow Agent shall hold and safeguard the Escrow Proceeds
during the Escrow Period, shall treat such fund as a trust fund in accordance
with the terms of this Agreement (not as property of Actuate) and shall hold and
dispose of the Escrow Proceeds only in accordance with the terms hereof.
(b) With respect to this Agreement, the parties acknowledge and
agree that Escrow Agent is acting solely as an independent escrow agent pursuant
to this Agreement.
(c) Escrow Agent shall not be required to institute or defend any
action involving any matters referred to herein or which affects it or its
duties or liabilities hereunder unless it is required to do so by any party to
this Agreement and then only upon receiving indemnity in accordance with Section
5.3 hereto, against any and all claims, liabilities and expenses in relation
thereto. Except as otherwise contemplated by this Section 5.2(c), in the event
any action is instituted against Escrow Agent, Escrow Agent may interplead the
parties hereto and may deposit the subject matter of this escrow into court and
in such event Escrow Agent shall be relieved and/or discharged from any and all
obligations and liabilities under and pursuant hereto.
(d) Escrow Agent shall not be responsible or liable for any act
or omission on its part in the performance of its duties as Escrow Agent under
this Agreement except as such act or omission constitutes gross negligence or
fraud.
7
<PAGE>
5.3 Indemnity. Actuate, Actuate BV and each of the Shareholders (but
--- ---------
only to the extent of their proportional interest in the Escrow Fund) hereby
individually and severally agree to indemnify Escrow Agent and hold it harmless
against any claim which may be made against it in connection with its actions as
Escrow Agent hereunder, including any loss to the extent of the aggregate amount
paid in settlement of any litigation commenced or threatened, or for any claim
whatsoever as set forth herein, including any expense or loss incurred by it in
connection with such claim, if such settlement is effected with the written
consent of both
8
<PAGE>
Actuate and the Shareholders' Agent; provided that Escrow Agent shall not be
indemnified against any such loss, damage, expense, liability or claim arising
out of or based upon its failure to perform in accordance with this Agreement or
arising out of its bad faith, negligence, or willful failure to perform its
obligations; provided, further, that the Shareholders' indemnification
obligations shall be limited to the Escrow Proceeds not released pursuant to
Section 2.1 at the time the Escrow Agent makes a claim for indemnity hereunder.
In no case shall Shareholders be liable under this Agreement with respect to any
lawsuit filed against Escrow Agent unless the Shareholders are notified by
Escrow Agent, by letter or by telegram or telex confirmed by letter, of the
commencement of any such action within a reasonable time after such person shall
have been served with a summons or other first legal process giving information
as to the nature and basis of the lawsuit. Actuate and the Shareholders shall
each be entitled to participate at their own expense in the defense of any such
lawsuit, and if one of the parties so elects within a reasonable time after
receipt of such notice, upon receiving consent from the other party, such party
shall assume the defense of any lawsuit. In the event that a party assumes the
defense of any lawsuit, such defense shall be conducted by counsel chosen by
such party and satisfactory to Escrow Agent. If counsel is so retained, the
defendant or defendants in the lawsuit shall bear the fees and expenses of any
additional counsel thereafter retained by it or them.
5.4 Reliance. Escrow Agent shall not be responsible for the
--- --------
genuineness of any certificate or signature, and may rely conclusively upon and
shall be protected when acting upon any notice, affidavit, request, consent,
instruction or other instrument believed by it in good faith to be genuine or to
be signed or presented by the proper person, or duly authorized, or properly
made. Escrow Agent shall have no responsibility except for the performance of
its express duties hereunder and no additional duties shall be inferred or
implied by this Agreement.
5.5 Legal Compliance. Except for instructions and notices from the
--- ----------------
Shareholders' Agent and Actuate, the Escrow Agent is hereby authorized and
directed to disregard any and all notices and warnings that may be given by any
person, firm or corporation except (a) a final order, determination, or award of
an arbitrator pursuant to Section 3.5 hereof or (b) a final order, judgment or
decree of any court of competent jurisdiction made, filed, entered or issued, in
either case, from which no further appeal may be taken, and the Escrow Agent is
hereby authorized to comply with and obey any and all such final orders,
determinations, awards, judgments and decrees of any such arbitrator or court.
If the Escrow Agent shall comply with or obey any such order, determination,
award, judgment or decree of any such arbitrator or court, he or she shall not
be liable to any of the parties hereto, or to any other person, firm,
association or corporation, by reason of any such compliance or obedience even
if any such order, determination, award, judgment or decree may be subsequently
revised, modified, annulled, set aside or vacated.
5.6 Records. The Escrow Agent shall keep all evidence of investments
--- -------
of the Escrow Fund (including, but not limited to, savings account passbooks,
certificates, notes and other similar items) in a place of safekeeping at an
office of the Escrow Agent, or with a safe deposit company, including any such
safe deposit company owned in whole or in part by the Escrow Agent or an
affiliate of the Escrow Agent. The Escrow Agent shall keep accurate accounts of
all income and interest earned by the Escrow Proceeds in the Escrow Fund.
ARTICLE VI
Miscellaneous
-------------
6.1 Notices. Any notice or other communication required or permitted
--- -------
to be given to the parties hereto shall be deemed to have been given if
personally delivered (including personal delivery by facsimile) or delivered by
commercial courier service, or four days after mailing by certified or
registered mail, return receipt requested, first class postage prepaid,
9
<PAGE>
addressed as follows (or at such other address as the addressed party may have
substituted by notice pursuant to this Section 6.1):
(a) If to Actuate Corporation:
Actuate Corporation
999 Baker Way, Suite 200
San Mateo, California 94404
Attn.: William P. Garvey, Esq.
(b) with a copy (which shall not constitute notice) to:
Gunderson Dettmer Stough Villeneuve Franklin & Hachigian,
LLP
155 Constitution Drive
Menlo Park, California 94025
Attn.: Jeff Higgins, Esq.
(c) If to the Shareholders' Agent:
Schroder Ventures Holdings, Ltd.
120 Cheapside
London EC2 V6DS
U.K.
Attn:
(d) If to the Escrow Agent:
Greater Bay Trust Company
400 Emerson Street, Second Floor
Palo Alto, California 94301
Attn.: _____________
6.2 Amendment. This Agreement may be amended only by a writing
--- ---------
executed by all the parties hereto.
6.3 Successor to Escrow Agent. If Escrow Agent is for any reason
--- -------------------------
unwilling or unable to serve as escrow agent during the term of this Agreement,
Escrow Agent may resign as escrow agent by giving at least thirty (30) days'
prior written notice to each of Actuate and the Shareholders' Agent, such
resignation to be effective thirty (30) days following the date such notice is
given. In addition, Actuate and the Shareholders' Agent may jointly remove the
Escrow Agent as escrow agent at any time with or without cause, by an instrument
(which may be executed in counterparts) given to the Escrow Agent, which
instrument shall designate the effective date of such removal. In the event of
any such resignation or removal, a successor escrow agent who is not affiliated
with Actuate shall be appointed by Actuate with the approval of Shareholders'
Agent, which approval shall not be unreasonably withheld. Any such successor
escrow agent shall deliver to Actuate and the Shareholders' Agent a written
instrument accepting such appointment, and thereupon it shall succeed to all the
rights and duties of the escrow agent hereunder and shall be entitled to receive
the assets in the Escrow Fund upon five (5) days written notice to the parties.
6.4 Termination. This Agreement shall terminate upon the earlier of
--- -----------
(a) the mutual written express agreement of the parties hereto and (b) when all
of the Escrow Fund has been distributed according to the terms hereof.
6.5 Interpretation. The validity, construction, interpretation and
--- --------------
enforcement of this Agreement shall be determined and governed by the laws of
the State of California
10
<PAGE>
without giving effect to the conflicts of laws principles thereof. The
invalidity or unenforceability of any provision of this Agreement or the
invalidity or unenforceability of any provision as applied to a particular
occurrence or circumstance shall not affect the validity or enforceability of
any of the other provisions of this Agreement or the applicability of such
provision, as the case may be. All provisions of the Purchase Agreement shall be
incorporated herein by reference as if set forth in their entirety herein.
6.6 Attorneys' Fees; Remedies. If any arbitration is filed or
--- -------------------------
instituted or any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement or to protect the rights obtained
hereunder, the prevailing party shall be entitled to its reasonable attorneys'
fees, costs, and disbursements in addition to any other relief to which it may
be entitled. The rights and remedies of the parties under this Agreement and
the Purchase Agreement and all other letters, certificates or documents executed
in connection herewith and therewith are cumulative and not exclusive of any
rights, remedies, powers and privileges that may otherwise be available to the
parties hereto.
6.7 Counterparts. This Agreement may be signed in one or more
--- ------------
counterparts, each of which shall be deemed an original and all of which shall
constitute one agreement.
6.8 Nonassignability. No party may, without the prior express
--- ----------------
written consent of each other party, assign this Escrow Agreement in whole or in
part.
6.9 Successors and Assigns. This Agreement and all actions taken
--- ----------------------
hereunder in accordance with its terms shall be binding upon and inure to the
benefit of Actuate, its subsidiaries, and their respective successors, the
Escrow Agent and its successors, the Shareholders and their respective
successors, heirs, executors, administrators and legal representatives, and the
Shareholders' Agent and the Shareholders' Agent's successors.
6.10 Waiver. No waiver by any party hereto of any condition or of
---- ------
any breach of any provision of this Agreement shall be effective unless in
writing. No waiver by any party of any such condition of breach, in any one
instance, shall be deemed to be a further or continuing waiver of any such
condition or breach or a waiver of any other condition or breach of any other
provision contained herein.
11
<PAGE>
IN WITNESS WHEREOF, the parties have signed this Agreement as of the
date first above written.
ACTUATE CORPORATION,
a Delaware corporation
By:_______________________________
Nicolas C. Nierenberg
Chief Executive Officer
ACTUATE HOLDING B.V.,
a Netherlands corporation
By:_______________________________
Its:______________________________
SCHRODER VENTURES HOLDINGS, LTD.,
AS SHAREHOLDERS' AGENT OF THE SHAREHOLDERS OF
ACTUATE BV
__________________________________
GREATER BAY TRUST COMPANY,
a California Corporation
By:_______________________________
Name:_____________________________
Title:____________________________
SIGNATURE PAGE TO ESCROW AGREEMENT
<PAGE>
EXHIBIT A
---------
Stock Purchase Agreement
E-1
<PAGE>
EXHIBIT B
---------
Schedule of Escrow Proceeds
Delivered by Each Shareholder
E-2
