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): January 11, 2000
PIVOTAL CORPORATION
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(Exact Name of Registrant as Specified in Charter)
British Columbia, Canada
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(State or Other Jurisdiction of Incorporation)
000-26867 Not Applicable
- ------------------------ ---------------------------------
(Commission File Number) (IRS Employer Identification No.)
300 - 224 West Esplanade
North Vancouver, B.C., Canada V7M 3M6
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(Address of Principal Executive Offices and Zip Code)
Registrant's telephone number, including area code (604) 988-9982
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
Page 1 of 4 Pages
Exhibit Index on Page 4
<PAGE>
Item 2. Acquisition or Disposition of Assets
Pursuant to a Share Purchase Agreement (the "Share Purchase Agreement") by
and between Pivotal Corporation ("Pivotal") and Pierre Marcel, Marc Bahda and
Bernard Wach (the "Principal Sellers") and Other Shareholders of Transitif S.A.
(together with the Principal Sellers, the "Sellers"), dated December 3, 1999,
Pivotal acquired all of the issued shares (the "Shares") of Transitif S.A., a
French corporation that distributes ebusiness relationship management solutions
("Transitif"). Transitif has deployed, and after the acquisition will continue
to deploy, Pivotal solutions through its network of systems integrators across
France.
The purchase price for the acquisition consists of (i) a payment to the
Sellers by Pivotal of 7,300,000 French Francs (approximately U.S.$1,111,100),
which was paid in two equal parts on December 8, 1999 and January 5, 2000, and
(ii) future earn-out payments to the Principal Sellers by Pivotal based on the
net after-tax earnings of Transitif and license revenues received by Transitif
from the sale of licenses for Pivotal products during the period between
November 1, 1999 and June 30, 2002, as described in more detail in the Share
Purchase Agreement. The source of funds for the payment of 7,300,000 French
Francs was existing cash and equivalents. All earn-out payments are payable
one-half in cash and one-half by the transfer or issuance of Pivotal common
shares. Pivotal may elect to pay all or any portion of any earn-out payment in
cash.
Item 7. Financial Statements and Exhibits
(c) Exhibits
2.1 Share Purchase Agreement by and between Pivotal Corporation and Pierre
Marcel, Marc Bahda, Bernard Wach and Other Shareholders of Transitif
S.A., dated December 3, 1999
Page 2 of 4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PIVOTAL CORPORATION
Date: January 24, 2000 By /s/ VINCENT D. MIFSUD
-----------------------------------
Vincent D. Mifsud
Chief Financial Officer and
Vice President, Operations
Page 3 of 4
<PAGE>
Exhibit Index
Exhibit
Number Exhibit Page
- ------ ------- ----
2.1 Share Purchase Agreement by and between Pivotal
Corporation and Pierre Marcel, Marc Bahda,
Bernard Wach and Other Shareholders of
Transitif S.A., dated December 3, 1999
Page 4 of 4
EXHIBIT 2.1
SHARE PURCHASE AGREEMENT
by and between
PIVOTAL CORPORATION
("Buyer")
and
PIERRE MARCEL,
MARC BAHDA
and
BERNARD WACH
("Principal Sellers")
and
Other Shareholders of Transitif S.A.
December 3, 1999
[Initials]
<PAGE>
SHARE PURCHASE AGREEMENT
This SHARE PURCHASE AGREEMENT (this "Agreement"), dated as of 3rd December,
1999, is made and entered into by and between:
Pivotal Corporation, a company organized under the laws of British Columbia,
Canada with registered address at 300 - 224 West Esplanade, North Vancouver,
British Columbia V7M 3M6 Canada ("Buyer"), herein represented by Vincent Mifsud,
its Vice President,Oerations and Chief Financial Officer;
and
Pierre Marcel, a French national residing at 10 rue Camille Corot 92500 Rueil
Malmaison, France
Marc Bahda, a French national residing at 49, rue de la Federation, 75015 Paris,
France and
Bernard Wach, a French national residing at 12 rue Mouton Duvernet 75014 Paris,
France
(hereafter referred to as the "Principal Sellers")
Romain Marcel, Agathe Marcel, Bastien Marcel, and Anais Marcel
and together with the Principal Sellers are collectively referred to herein as
"Sellers").
Recitals:
1. Sellers own all of the issued shares of Transitif S.A., a corporation
(societe anonyme) organized under the laws of France and registered with the
Register of Commerce and Companies of Nanterre, France under registration number
RCS B 950 564 872 and having its registered address at 15 rue Trebois, 92300
Levallois-Perret, France (the "Company"), and
2. The registered share capital of the Company consists of 3000 shares,
each having a nominal value of 100 FF (the "Shares"); and
3. Sellers desire to sell, and Buyer desires to purchase, the Shares on the
terms and subject to the conditions set forth in this Agreement.
4. The parties hereto therefore hereby agree as follows:
ARTICLE I
SALE OF SHARES, PURCHASE PRICE AND CLOSING DATES
1.01 Purchase and Sale on First Closing Date. Subject to the terms and
conditions set forth in this Agreement, Sellers agree to sell to Buyer or to an
affiliate of Buyer, and Buyer agrees
December 3, 1999 2
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<PAGE>
to purchase or to cause an affiliate of Buyer to purchase from Sellers on the
date hereof (the"First Closing Date") all of the right, title and interest of
Sellers free and clear of any liens or encumbrances in and to the following
Shares, which shares shall constitute fifty-one percent (51%) of the issued
share capital of the Company:
Pierre Marcel 176 shares representing 5. 87 % of the issued share capital of the
Company and 11.50 % of Shares Transferred at First Closing and beneficial
ownership ("usufruit") to 700 shares of the Company;
Marc Bahda 516 shares, representing 17.2 % of the issued share capital of the
Company and 33.73 % of Shares Transferred at First Closing;
Bernard Wach.138 shares representing 4.60 % of the issued share capital of the
Company and 9,02 % of Shares Transferred at First Closing;
Romain Marcel legal ownership ("nue-propriete") to 175 shares of the Company
representing 5.83% of the issued share capital of the Company and 11.44 % of
Shares Transferred at First Closing;
Bastien Marcel legal ownership ("nue-propriete") to 175 shares of the Company
representing 5.83% of the issued share capital of the Company and 11.44 % of
Shares Transferred at First Closing;
Agathe Marcel legal ownership ("nue-propriete") to 175 shares of the Company
representing 5.83% of the issued share capital of the Company and 11.44 % of
Shares Transferred at First Closing;
Anais Marcel legal ownership ("nue-propriete") to 175 shares of the Company
representing 5.83% of the issued share capital of the Company and 11.44 % of
Shares Transferred at First Closing;
1.02 Purchase Price for Shares Transferred on First Closing Date. The purchase
price for the Shares transferred by Sellers to Buyer on the First Closing Date
shall be an amount equal to 7,300,000 FF, of which 3,650,000 FF shall be paid to
Sellers within five [5] business days after the First Closing Date in cash by
wire transfer of funds and 3,650,000 FF shall be paid in cash by wire transfer
of funds no later than January 6, 2000, it being understood that Sellers shall
have the right to rescind the sale of the Shares sold to Buyer on the First
Closing Date in the event full payment for such Shares has not been received by
January 31, 2000, upon providing notice to Buyer on behalf of all Sellers and
simultaneously repaying to Buyer all portions of the purchase price for the
Shares received by Sellers.
All amounts payable to each individual Seller shall be in proportion to the
percentage interest in the Shares transferred on the First Closing Date as set
forth in section 1.01 above, unless the Sellers collectively agree otherwise and
notify Buyer in writing of a different allocation of the Purchase Price among
the Sellers prior to the Closing Date.
December 3, 1999 3
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<PAGE>
1.03 Purchase and Sale of Remaining Shares on the Second Closing Date
If the terms and conditions precedent of this Agreement, including in
particular section 5.01 (a) below, have been met and provided that the full
purchase price for the Shares transferred at the First Closing has been received
by the Sellers, the Principal Sellers agree to sell to Buyer or to an affiliate
of Buyer, and Buyer agrees to purchase or to cause an affiliate of Buyer to
purchase from the Principal Sellers no later than January 6, 2000 or such other
date as Buyer and said Sellers shall agree (hereafter the "Second Closing Date")
all of the Principal Sellers' right, title and interest, free and clear of any
liens and encumbrances, in and to the following Shares, which shares constitute
the remaining 49% of the issued share capital of the Company as of the date
hereof (hereafter the "Remaining Shares"):
Pierre Marcel 843 shares, representing 28.10% of the issued share capital of the
Company and 57.35% of the Shares Transferred at the Second Closing;
Marc Bahda 495 shares, representing 16.50% of the issued share capital of the
Company and 33.67% of the Shares Transferred at the Second Closing; and
Bernard Wach 132 shares, representing 4.40% of the issued share capital of the
Company and 8.98% of the Shares.
1.04 Payment for Remaining Shares Transferred on Second Closing Date.
(a) As the purchase price for the Remaining Shares purchased from the
Principal Sellers on the Second Closing Date, provided that the conditions
set forth in section 1.04 (i) have been met, Buyer shall pay the Principal
Sellers Earn-Out Payments which shall be based on Net Earnings of the
Company and License Revenues received by the Company from the sale of
licenses for Pivotal software products during the period between November
1, 1999 and June 30, 2002, as certified by an audit conducted by Deloitte &
Touche. Subject to section 1.04 (h), all Earn-Out Payments shall be payable
one-half (1/2) in cash in French francs and one-half (1/2) by the transfer
or issuance of shares of Pivotal Corporation ( the "Pivotal Shares") whose
value shall be determined by the weighted average closing price on Nasdaq
(or if not then traded on Nasdaq, on the principal market on which Pivotal
Shares are then quoted or traded) for the Pivotal Shares during the twenty
trading days immediately preceding the end of the applicable Earn-Out
period to which the payment relates. For purposes of calculating the French
Franc value of the Pivotal Shares, the exchange rate used shall be the
average noon rate for U.S. dollar/French Francs as published in the Wall
Street Journal for the twenty trading days immediately preceding the end of
the applicable Earn-Out Period. The portion of the Earn-Out Payment to be
paid in cash will be payable within 30 days after the completion of the
aforementioned audit of the Company's financial statements for the period
ended as of the end of each Earn-Out period as indicated below. Buyer shall
cause the aforementioned auditors to conduct an audit of the Company's
financial statements within thirty days of the end of each Earn-Out period
and shall immediately provide to the Principal Sellers a copy of the
auditors report upon receipt thereof.
December 3, 1999 4
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<PAGE>
(b) The Principal Sellers shall be deemed to have accepted the audited
financial statements of the Company within 30 days after the date of
receipt thereof, unless prior thereto the Principal Sellers give written
notice (the "Objection Notice") to Buyer of objection to any item thereon,
which notice shall specify in reasonable detail the basis for such
objection. If the Principal Sellers give an Objection Notice, Buyer and the
Principal Sellers shall attempt in good faith to resolve the dispute as
promptly as possible.
If the Buyer and the Sellers have not been able to agree upon a resolution
of the dispute within 30 days after the date of the Objection Notice (which
day period may be extended by written agreement of the parties), such
dispute shall be resolved fully, finally and exclusively through use of
Arthur Andersen ("Independent Accounting Firm").
The determination of the Independent Accounting Firm with respect to any
Earn-Out Payment shall be final and binding on the parties. The costs of
the Independent Accounting Firm shall be apportioned between the Buyer and
Principal Sellers as determined by such Firm in such manner as it deems
reasonable taking into account the circumstances of the case, the conduct
of the parties during the proceeding, and the result of the determination.
Any proceeding of the Independent Accounting Firm shall be concluded in a
maximum of 60 days from the date of the Objection Notice. The Parties will
provide the Independent Accounting Firm with access to all papers and
documents used by them in relation to the preparation, audit and/or review,
as the case may be, of the audited financial statement. The Independent
Accounting Firm shall limit its review to the items set out in the
Objection Notice and shall not conduct a further audit of the financial
statement.
(d) Interest shall be due and payable by Buyer on any Earn-Out Payments
required to be paid to Principal Sellers (other than an amounts validly
withheld by Buyer pursuant to section 8.04 (c) of this Agreement) if such
amount is not received by the Principal Sellers within 60 days of the end
of any Earn-Out Period. Such interest shall accrue as from the end of such
Earn-Out Period until the date of payment at the rate then applicable to 90
day U.S. Treasury Bills as published in the Wall Street Journal plus two
percentage points.
(d) The Earn-Out Payments and corresponding Earn-Out Periods shall be calculated
as follows:
[This space left intentionally blank].
December 3, 1999 5
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<PAGE>
<TABLE>
Earn-Out Period Net Earnings(after tax) Percent of License Revenues
- --------------- ----------------------- ---------------------------
Payable to Sellers Payable to Sellers
------------------ ------------------
<S> <C> <C>
First Earn-Out Period:
November 1, 1999 to June 30, 2000 60% 15% of the first 5 million FF
of License Revenues and 30% of
License Revenues in excess of 5
million FF
Second Earn-Out Period:
July 1, 2000 to June 30, 2001 60% 0% for the first 9 million FF of
License Revenues; 12% of License
Revenues between 9 million FF and
12 million FF; 25% of License Revenues
in excess of 12 million FF
Third Earn-Out Period:
July 1, 2001 to June 30, 2002 60% 0 % for the first 12 million FF;
10% of License Revenues between
12 million FF and 24 million FF;
20% of License Revenues in excess
of 24 million FF
</TABLE>
(e) For purposes of the calculation of the Earn-Out Payments, "Net
Earnings" shall mean for each Earn-Out Period the income of the Company
after taxes, determined in accordance with US GAAP consistently applied, it
being agreed that in calculating Net Earnings, (i) only those direct
expenses relating to the operation of the Company will be included (for
example, salaries, occupation expenses, communications and advertising in
France), (ii) any indirect corporate or cost allocations which are
exceptional in relation to the past practices of the Company will be
excluded, (iii) the cost for Pivotal licenses paid by the Company will be
calculated on the basis of the gross margin levels currently in effect on
the date hereof under the Reseller Agreement between the Company and
Pivotal Corporation, which agreement shall continue in effect during the
duration of the Earn-Out Periods, (iv) only income and expenses for
operations in France and the French speaking part of Switzerland shall not
be taken into account, unless the territory of the Company has changed by
mutual agreement of Buyer and the Principal Sellers, and (v) no deduction
shall be taken for losses of the Company for which the Buyer has been fully
indemnified pursuant to Article VIII hereof.
For purposes of the calculation of the Earn-Out Payments, the term "License
Revenues" shall mean the gross licensee fees received by the Company during
the
December 3, 1999 6
[Initials]
<PAGE>
applicable Earn-Out Period from the sale of licenses for Pivotal software
products sold to licensees in France and the French speaking part of
Switzerland (unless the territory of the Company has changed by mutual
agreement of Buyer and the Principal Sellers), and first-year maintenance
charges received by the Company for such Pivotal software, less any taxes
or credits given to licensees, determined in accordance with US GAAP. After
the First Closing Date, the Company shall operate as a business unit of
Buyer, focusing on sales in France and the French part of Switzerland. The
Company will adhere to policies established by Buyer with respect to
expenses, types of license agreements offered, approval processes for
expenditures and hiring decisions, required approval for resale of products
other than Pivotal products and other matters, provided such policies are
not in violation of any applicable French law.
(f) For purposes of the First Earn-Out Period, the balance sheet of the
Company as at October 31, 1999 attached hereto in Exhibit A shall be used
as the opening balance sheet.
(g) If subsequent to the First Closing Date the Company shall merge or be
merged into another entity, or the Company shall acquire the business or
shares of another company, and such event has a potentially material impact
on the operations of the Company, the Buyer shall elect one of the
following actions with respect to Earn-Out Payments owed to the Principal
Sellers after the occurrence of such event:
(i) to the extent possible, the operations conducted by the Company
on the effective date of merger or acquisition shall be
identified separately and only the Net Earnings and License
Revenues from such operations shall be taken into account for
purposes of calculating the Earn-Out Payments; or
(ii) the Buyer shall pay to the Principal Sellers within 90 days of
such event a lump sum equal to the projected Earn-Out Payments
for the remaining Earn-Out Periods based on the assumption that
the growth in Net Earnings and License Revenues of the Company
for the last twelve month period preceding the occurrence of any
of the aforementioned events will continue at the same rate after
such event, based on an audit of such twelve month period to be
conducted by Buyer; or
(iii) Buyer shall pay to the Principal Sellers within 90 days of such
event an amount equal to 30 million FF, less the total amount of
purchase price paid to all Sellers with respect to the Shares
transferred on the First Closing Date and the Second Closing Date
prior to occurrence of such event.
(h) At its sole discretion upon providing prior notice to Sellers, Buyer
may elect to pay Sellers in cash all or a portion of the Earn-Out Payments
which would otherwise be payable to Sellers by the issuance or transfer of
Pivotal Shares.
(i) The right to receive Earn-Out Payments pursuant to this section 1.04 is
personal to each of the Principal Sellers and non-assignable. Such right is
further subject to the
December 3, 1999 7
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<PAGE>
condition that at the end of any Earn-Out Period an individual Principal
Seller shall hold the position of an employee, director or a legal
representative of the Company, provided, however, that such condition shall
not be applicable if such Seller's position with the Company has on or
prior to such date been terminated by the Company without Cause or in the
event of death or permanent disability of the Seller. For purposes of this
Agreement, notwithstanding anything to the contrary under French law with
respect to termination of employees or legal representatives of a French
company, "Cause" for termination shall include, in particular, but not be
limited to
(i) after the First Earn-Out Period, the failure of the Company in
any fiscal year to achieve growth in License Revenues compared to
the previous fiscal year, except as a result of an unforeseen
event beyond the control of the Principal Sellers;
(ii) after the First Earn-Out Period, the failure of the Company
substantially to achieve the Net Earnings targets established by
mutual agreement of the Buyer and the Principal Sellers for any
fiscal year except as a result of an unforeseen event beyond the
control of the Principal Sellers;
(iii) refusal or failure to perform job duties (other than failure due
to disability); (iv) misconduct materially injurious to the
Company
(v) dishonesty, fraud, or conviction or confession of a crime
(vi) theft or destruction of the Company's property, or
(vii) willful misconduct or gross negligence
(j) Earn-Out Payments payable to the Principal Sellers shall be in
proportion to the following percentages, unless the Principal Sellers
collectively notify Buyer in writing of a different allocation of the
Earn-Out Payments prior to the Second Closing Date:
Pierre Marcel 57.3 %
Marc Bahda 33.7 %
Bernard Wach 9.0%
1.05 Holding Period. Buyer shall hold all Pivotal Shares issued or transferred
to the Principal Shareholders pursuant to this Agreement for the account of
the Principal Sellers, and provided Buyer does not exercise its rights
under Section 8.04 of this Agreement, Buyer shall release the Pivotal
Shares to Principal Sellers as follows:
<TABLE>
Number of Months after Percentage of Pivotal Shares
Pivotal Shares are Issued Released
or Transferred
--------------
<S> <C> <C>
Pivotal Shares issued or transferred 6 months 25%
after First Earn-Out Period 12 months 25%
18 months 25%
24 months 25%
Pivotal Shares issued or transferred after 6 months 50%
Second Earn-Out Period 12 months 25%
18 months 25%
Pivotal Shares issued or transferred after 0 months 50%,
Third Earn-Out Period 6 months 50%
</TABLE>
December 3, 1999 8
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1.06 The First Closing. The closing of the purchase of the Shares transferred on
Date hereof (the "First Closing") has taken place simultaneously with the
signature of this Agreement at the offices of Alexen Avocats, counsel for
Sellers, 47 rue de Monceau, 75008 Paris, France. The First Closing is effective
as of the close of business on the First Closing Date. Subject to the conditions
set forth in this Agreement on the First Closing Date:
(a) Sellers have assigned and transfered to Buyer good and valid title in
and to the Shares being purchased pursuant to Section 1.01, free and clear
of all liens, encumbrances or security interests by delivering to Buyer
duly executed share transfer orders ("Ordres de mouvements") for such
Shares, and
(c) the Sellers have delivered to the Buyer the documents required to be
delivered pursuant to Section 5.02 hereof.
1.07 The Second Closing. Subsequent to the conditions precedent in section 5.01,
the closing of the purchase of the Shares transferred on the Second Closing Date
(the "Second Closing") will take place at the offices of Alexen Avocats, counsel
for Principal Sellers, 47 rue de Monceau, 75008 Paris, France or at such other
place as is mutually agreeable to Buyer and the Principal Sellers. The Second
Closing will be effective as of the close of business on the Second Closing
Date. Subject to the conditions set forth in this Agreement on the Second
Closing Date:
(a) the Principal Sellers will assign and transfer to Buyer good and valid
title in and to the Shares being purchased pursuant to Section 1.03, free
and clear of all liens, encumbrances or security interests by delivering to
Buyer Ordres de mouvements for such Shares, and
(b) the Principal Sellers shall deliver to the Buyer the documents required
to be delivered pursuant to Section 5.03 hereof.
1.08 Post-Closing Formalities
(a) Within thirty days of the First Closing Date Sellers shall cause one
original signed copy of this Agreement (and a certified translation if
required under applicable regulations) to be registered with the competent
French tax authorities. Buyer shall pay for half the registration taxes and
translation fees incurred in connection with the transfer of Shares and
Sellers shall pay for the remaining half of such taxes and translation
fees.
(b) Buyer shall immediately following the First Closing notify the French
Ministry of Economy, Finance and Industry, Treasury Department, of its
purchase of the Shares.
December 3, 1999 9
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<PAGE>
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLERS
Each of the Sellers hereby jointly and severally represents and warrants to
Buyer that, except as set forth in the Disclosure Schedule delivered by Sellers
to Buyer on the date hereof (the "Disclosure Schedule" Exhibit C attached
hereto) (which Disclosure Schedule sets forth the exceptions to the
representations and warranties contained in this Article II under captions
referencing the Sections to which such exceptions apply):
2.01 Incorporation and Corporate Power. The Company is a corporation duly
incorporated and validly existing under the laws of France, is registered with
the Register of Commerce and Companies of Nanterre, France under no. RCS B 950
564 872 (89B04578) and has the corporate power and authority and all
authorizations, licenses, permits and certifications necessary to own and
operate its properties and to carry on its business as now conducted. The copies
of the Company's Articles of Association (Statuts) which have been furnished by
the Company to Buyer prior to the date hereof reflect all amendments made
thereto and are correct and complete as of the date hereof. The Company is
registered to do business in every country or jurisdiction in which the nature
of its business or its ownership or leasing of property requires it to be so
registered.
2.02 Valid and Binding Agreements. The execution, delivery and performance of
this Agreement by Sellers and the consummation of the transactions contemplated
hereby have been duly and validly authorized by all requisite actions by each
Seller and all requisite corporate action of the Company, and no other
proceedings are necessary to authorize the execution, delivery and performance
of this Agreement. This Agreement has been duly executed and delivered by
Sellers and constitutes the valid and binding obligation of each of the Sellers,
enforceable in accordance with its terms.
2.03 No Breach. The execution, delivery and performance of this Agreement by
Sellers do not
(i) conflict with or result in any breach of any of the provisions
of,
(ii) constitute a default under,
(iii) result in a violation of,
(iv) result in the creation of a right of termination or acceleration
or any lien, security interest, charge or encumbrance upon any of
the Shares or any assets of Sellers or the Company, or
(v) require any authorization, consent, approval, exemption or other
action by or notice to any court or other governmental body,
under the provisions of the Company's Statuts or any indenture, mortgage, lease,
loan agreement or other agreement or instrument by which Sellers or the Company
are bound or affected, or any law, statute, rule or regulation or order,
judgment or decree to which Sellers or the Company are subject.
December 3, 1999 10
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<PAGE>
2.04 Governmental Authorities; Consents. No consent, approval or authorization
of any governmental or regulatory authority or any other party or person is
required to be obtained by Sellers or by the Company in connection with the its
execution, delivery and performance of this Agreement. Neither Sellers nor the
Company is required to submit any notice, report or other filing with any
governmental authority in connection with execution or delivery by it of this
Agreement.
2.05 Ownership of Shares. Sellers own all right, title and interest in and to
the Shares free and clear of any security interests, claims, liens, pledges,
options, encumbrances, charges, agreements, voting trusts, proxies or other
arrangements, restrictions or limitations of any kind and, on the First Closing
Dates, the delivery by Sellers of the share transfer orders as provided in
Section 1.06 hereof, and on the Second Closing Date the delivery by the
Principal Sellers of the share transfer orders as provided in Section 1.07
hereof, will transfer good and valid title to the Shares being transferred on
such dates to Buyer and its designated nominees, free and clear of any security
interests, claims, liens, pledges, options, encumbrances, charges, agreements,
voting trusts, proxies or other arrangements, restrictions or other limitations
of any kind.
2.06 Subsidiaries. The Company does not own any shares, partnership interest,
joint venture interest or any other security or ownership interest issued by any
other corporation, company, organization or entity.
2.07 Capitalization and Ownership. The authorized and issued share capital of
the Company consists of 3000 shares, nominal value FF100 per share, all of
which, are owned by the Sellers in the proportion set forth in Section 1.01
above, free and clear of any security interests, claims, liens, pledges,
options, encumbrances, charges, agreements, or other arrangements, restrictions
or limitations of any kind. All of the Shares have been duly authorized and are
validly issued, fully paid and nonassessable. The Company has no other equity
securities or securities containing any equity features authorized, issued or
outstanding. There are no agreements or other rights or arrangements existing
which provide for the sale or issuance of shares by the Company and there are no
rights, subscriptions, warrants, options, conversion rights or agreements of any
kind outstanding to purchase or otherwise acquire from the Company any shares or
other securities of the Company of any kind. There are no agreements or other
obligations (contingent or otherwise) which may require the Company to
repurchase or otherwise acquire any of its shares.
2.08 Financial Statements.
(a) Attached as Exhibit B hereto are the audited financial statements of
the Company as of December 31, 1998 (the "Annual Financial Statements") which
have been certified without reserve by the statutory auditors of the Company,
and the unaudited balance sheet as of October 31, 1999 (the "Latest Balance
Sheet").
(b) The Annual Financial Statements and the Latest Balance Sheet are based
upon the information contained in the books and records of the Company and
fairly present the financial condition of the Company as of the dates thereof
and results of operations for the periods referred to therein. The Annual
Financial Statements have been prepared in accordance with French generally
accepted accounting principles, consistently applied
December 3, 1999 11
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throughout the periods indicated. The Latest Balance Sheet has been prepared in
accordance with French generally accepted accounting principles applicable to
unaudited interim financial statements consistently with the Annual Financial
Statements and reflect all adjustments necessary to a fair statement of the
results for the interim period(s) presented.
(c) The Annual Financial Statements and the Latest Balance Sheet show the
true assets, the true financial situation and the true revenues and results of
operations of the Company as of the dates thereof.
2.09 Absence of Undisclosed Liabilities. Except as reflected in the Latest
Balance Sheet or as otherwise set forth in the Disclosure Schedule, the Company
has no liabilities (whether accrued, absolute, contingent, unliquidated or
otherwise, whether due or to become due, whether known or unknown, and
regardless of when asserted) arising out of transactions or events heretofore
entered into, or any action or inaction, or any state of facts existing, with
respect to or based upon transactions or events heretofore occurring, except
liabilities which have arisen after the date of the Latest Balance Sheet in the
ordinary course of business (none of which is a material uninsured liability).
2.10 No Material Adverse Changes. Since October 31, 1999 (the "Balance Sheet
Date"), there has been no material adverse change in the assets, financial
condition, operating results, customer, employee or supplier relations, business
condition or prospects of the Company.
2.11 Absence of Certain Developments. Since the Balance Sheet Date, the Company
has not:
(a) borrowed any amount or incurred or become subject to any liability in
excess of FF 50,000, except (i) current liabilities incurred in the ordinary
course of business and (ii) liabilities under contracts entered into in the
ordinary course of business;
(b) mortgaged, pledged or subjected to any lien, charge or any other
encumbrance, any of its assets with a fair market value in excess of FF 50,000;
(c) discharged or satisfied any lien or encumbrance or paid any liability,
in each case with a value in excess of FF 50,000, other than current liabilities
paid in the ordinary course of business;
(d) sold, assigned or transferred (including, without limitation, transfers
to any employees, affiliates or shareholders) any tangible assets with a fair
market value in excess of FF 50,000, or canceled any debts or claims, in each
case, except in the ordinary course of business;
(e) sold, assigned or transferred (including, without limitation, transfers
to any employees, affiliates or shareholders) any patents, trademarks, domain
names, source code, trade names, copyrights, trade secrets or other intangible
assets;
(f) disclosed, to any person other than Buyer and authorized
representatives of Buyer, any proprietary confidential information, other than
pursuant to a confidentiality agreement
December 3, 1999 12
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prohibiting the use or further disclosure of such information, which agreement
is identified in the Disclosure Schedule and is in full force and effect on the
date hereof;
(g) waived any rights of material value or suffered any extraordinary
losses or adverse changes in collection loss experience, whether or not in the
ordinary course of business or consistent with past practice;
(h) declared or paid any dividends or other distributions with respect to
any shares of the Company or redeemed or purchased, directly or indirectly, any
shares of the Company or any options;
(i) issued, sold or transferred any of its equity securities, securities
convertible into or exchangeable for its equity securities or warrants, options
or other rights to acquire its equity securities, or any bonds or debt
securities;
(j) taken any other action or entered into any other transaction other than
in the ordinary course of business and in accordance with past custom and
practice, or entered into any transaction with any "insider" (as defined in
Section 2.23 hereof) other than employment arrangements otherwise disclosed in
this Agreement or the Disclosure Schedule;
(k) suffered any material theft, damage, destruction or loss of or to any
property or properties owned or used by it, whether or not covered by insurance;
(l) made or granted any bonus or any wage, salary or compensation increase
to any director, officer, employee or consultant, or made or granted any
increase in any employee benefit plan or arrangement, or amended or terminated
any existing employee benefit plan or arrangement, or adopted any new employee
benefit plan or arrangement or made any commitment or incurred any liability to
any employees;
(m) made any single capital expenditure or commitment therefor in excess of
FF 50,000;
(n) made any loans or advances to, or guarantees for the benefit of, any
persons such that the aggregate amount of such loans, advances or guarantees at
any time outstanding is in excess of FF 50,000;
(o) made any change in accounting principles or practices from those
utilized in the preparation of the Annual Financial Statements.
2.12 Title to Properties.
(a) The Company does not own any real property. The real property described
by the office leases (the "Leases") for its office premises at Levallois Perret,
France, constitutes all of the real property used or occupied by the Company
(the "Real Property").
(b) The Leases are in full force and effect, and the Company holds a valid
and existing leasehold interest under each of the Leases for the term set forth
therein. The Company has delivered to Buyer complete and accurate copies of each
of the Leases, and
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none of the Leases has been modified in any respect, except to the extent that
such modifications are disclosed by the copies delivered to Buyer. The Company
is not in default, and no circumstances exist which, if unremedied, would,
either with or without notice or the passage of time or both, result in such
default under any of the Leases; nor, to the best knowledge of the Company, is
any other party to any of the Leases in default.
(c) The Company owns good and marketable title to each of the tangible
properties and tangible assets reflected on the Annual Financial Statements or
acquired since the date thereof, free and clear of all liens and encumbrances,
except for (i) liens set forth in the Disclosure Schedule, (ii) the properties
subject to the Leases and, (iii) assets disposed of since the date of the Annual
Financial Statements in the ordinary course of business.
(d) All of the equipment and other tangible assets necessary for the
conduct of the Company's business are in good condition and repair, ordinary
wear and tear excepted, and are usable in the ordinary course of business. There
are no defects in such assets or other conditions relating thereto which, in the
aggregate, materially adversely affect the operation or value of such assets.
The Company owns, or leases under valid leases, all equipment and other tangible
assets necessary for the conduct of its business.
2.13 Accounts Receivable. Except to the extent of the bad debt reserve reflected
on the Latest Balance Sheet, the accounts receivable reflected on the Latest
Balance Sheet are valid receivables, are not subject to valid counterclaims or
setoffs, and are collectible in accordance with their terms.
2.14 Social Security.
(a) The Company has duly filed, in timely fashion, all reports and returns
required to be filed by it and has duly paid or provided for all contributions
and other charges due or claimed to be due from it by any Social Security
authorities; the Social Security filings of the Company have not been audited by
a Social Security authority; the reserved for Social Security contributions
carried on the books of the Company are adequate to cover its Social Security
liabilities; since December 31, 1998 the Company has not incurred any Social
Security liabilities other than in the ordinary course of business; and there
are no pending questions or investigations by a Social Security authority or
notice of an anticipated Social Security authority audit relating to, or claims
asserted for, contributions by or assessments against the Company.
The Company has fully paid or has made adequate provisions in its book of
account for all Social Security contributions, accrued paid vacation and other
costs arising in connection with its employees and all Social Security
contributions of any nature whatsoever for which the Company could become liable
in respect of its operations up to and including the date of the Latest Balance
Sheet. In particular, and without limiting the above, in the event of a Social
Security audit in respect of a period covered by the Financial Statements, the
Sellers shall be responsible for the payment of any adjustment.
As used herein, the term "Social Security" shall mean any health and
welfare system including, without limitation, the social security system
(without limitation, health,
December 3, 1999 14
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incapacity, pregnancy and childbirth, death, old age, work related illness and
accidents, family benefits); mandatory and optional retirement schemes; and
unemployment insurance.
2.15 Tax Matters.
(a) The Company is not a member of any affiliated, combined or unitary
group for the filing or payment of Taxes. The Company has: (i) timely filed (or
has had timely filed on its behalf) all returns, declarations, reports,
estimates, information returns, and statements ("Returns") required to be filed
or sent by it in respect of any "Taxes" (as defined in subsection (p) below) or
required to be filed or sent by it by any taxing authority having jurisdiction;
(ii) timely and properly paid (or has had paid on its behalf) all Taxes shown to
be due and payable on such Returns; (iii) established on its Latest Balance
Sheet, in accordance with generally accepted accounting principles, reserves
that are adequate for the payment of any Taxes not yet due and payable; (iv)
complied with all applicable laws, rules, and regulations relating to the
withholding of Taxes and the payment thereof and timely and properly withheld
from individual employee wages and paid over to the proper governmental
authorities all amounts required to be so withheld and paid over under all
applicable laws.
(b) There are no liens for Taxes upon any assets of the Company except for
a security interest in the goodwill of the Company as disclosed in the
Disclosure Schedule.
(c) No deficiency for any Taxes has been proposed, asserted or assessed
against the Company that has not been resolved and paid in full. No waiver,
extension or comparable consent given by the Company regarding the application
of the statute of limitations with respect to any Taxes or Returns is
outstanding, nor is any request for any such waiver or consent pending. There
has been no Tax audit or other administrative proceeding or court proceeding
with regard to any Taxes or Returns, nor is any such Tax audit or other
proceeding pending, nor has there been any notice to the Company by any Taxing
authority regarding any such Tax, audit or other proceeding, or, to the best
knowledge of the Company, is any such Tax audit or other proceeding threatened
with regard to any Taxes or Returns. The Company does not expect the assessment
of any additional Taxes of the Company and is not aware of any unresolved
questions, claims or disputes concerning the liability for Taxes of the Company
which would exceed the estimated reserves established on its books and records.
(d) The Company has not requested any extension of time within which to
file any Return, which Return has not since been filed.
(e) All transactions that could give rise to an understatement of income or
an underpayment of tax were reported in a manner for which there is substantial
authority or were adequately disclosed (or, with respect to Returns filed before
the Closing Date, will be reported in such a manner or adequately disclosed) on
the Returns required in accordance with the Code.
(f) The Company has evidence of payment for all taxes, charges, fees,
levies, or other assessments of a foreign country paid or accrued from the date
of its formation.
December 3, 1999 15
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(g) All deductions claimed or reported on all Returns of the Company on
account of royalties or similar fees payable with respect to any intellectual
property of the Company or any other party are allowable in full.
(h) For purposes of this Agreement, the term "Taxes" means all taxes,
charges, surcharges, fees, levies, or other assessments, including, without
limitation, all net income, gross income, gross receipts, sales, use, value
added, transfer, profits, license, withholding, payroll, employment, social
security, unemployment, excise, estimated, severance, stamp, occupation,
property, or other taxes, customs duties, fees, assessments, or charges of any
kind whatsoever, including, without limitation, all interest and penalties
thereon, and additions to tax or additional amounts imposed by any taxing
authority, in France or elsewhere, upon the Company.
2.16 Contracts and Commitments.
(a) The Disclosure Schedule lists the following agreements, whether oral or
written, to which the Company is a party, which are currently in effect, and
which relate to the operation of the Company's business: (i) national collective
bargaining agreement (ii) bonus, pension, profit sharing, retirement or other
form of deferred compensation plan other than mandatory French state plans (iii)
hospitalization insurance or other welfare benefit plan or practice, whether
formal or informal other than mandatory French state plans; (iv) share purchase
or share option plan; (v) contract for the employment of any individual employee
or other person on a full-time or consulting basis or relating to severance pay
for any such person; (vi) confidentiality agreement; (vii) contract, agreement
or understanding relating to the voting of the Company's ordinary shares or the
election of directors of the Company; (viii) agreement relating to the borrowing
of money or to mortgaging, pledging or otherwise placing a lien on any of the
assets of the Company; (ix) guaranty of any obligation for borrowed money or
otherwise; (x) lease or agreement under which it is lessee of, or holds or
operates any property, real or personal, owned by any other party, for which the
annual rental exceeds FF 50,000; (xi) lease or agreement under which it is
lessor of, or permits any third party to hold or operate, any property, real or
personal, for which the annual rental exceeds FF 50,000; (xii) contract or group
of related contracts with the same party for the purchase of products or
services under which the undelivered balance of such products or services is in
excess of FF 50,000; (xiii) contract or group of related contracts with the same
party (other than any contract or group of related contracts for the purchase or
sale of products or services) continuing over a period of more than six months
from the date or dates thereof, not terminable by it on 30 days' or less notice
without penalty and involving more than FF 50,000; (xiv) contract which
prohibits the Company from freely engaging in business anywhere in the world;
(xv) contract for the distribution of the Company's products; (xvi) license
agreement or agreement providing for the payment or receipt of royalties or
other compensation by the Company; (xii) contract or commitment for capital
expenditures in excess of FF 50,000; (xiii) agreement for the sale of any
capital asset; or (xix) other agreement which is either material to the
Company's business or was not entered into in the ordinary course of business.
(b) The Company has performed all obligations required to be performed by
it in connection with the contracts or commitments required to be disclosed in
the Disclosure Schedule and is not in receipt of any claim of default under any
contract or commitment
December 3, 1999 16
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required to be disclosed under such caption; the Company has no present
expectation or intention of not fully performing any material obligation
pursuant to any contract or commitment required to be disclosed under such
caption; and the Company has no knowledge of any breach or anticipated breach by
any other party to any contract or commitment required to be disclosed under
such caption.
(c) Prior to the date of this Agreement, Buyer has been supplied with a
true and correct copy of each written contract or commitment, and a written
description of each oral contract or commitment, referred to in the Disclosure
Schedule, together with all amendments, waivers or other changes thereto.
2.17 Intellectual Property Rights. The Company owns, or is licensed to use, all
trademarks, Internet domain names, service marks, trade names, corporate names,
copyrights, proprietary rights and processes (the "Intellectual Property")
necessary for the Company's business as now conducted. The Company owns no
patents and has no pending patent applications. Except as set forth in the
Disclosure Schedule, the Company is not obligated to make any material payments
by way of royalties, fees or otherwise to any owner or licensor of any patent,
trademark, trade name, copyright or other intangible asset, with respect to the
use thereof or in connection with the conduct of its business, or otherwise. The
Company has not granted any third party any option, license or other right of
any kind to the Intellectual Property. The Company owns or has the unrestricted
right to use all trade secrets, including know-how, customer lists, inventions,
designs, processes, computer programs and technical data necessary to the
development, operation and sale of all products and services sold by it, free
and clear of any rights, liens or claims of others. The Company has not received
any notice of, nor are there any facts known to the Company which indicate a
likelihood of, any infringement or misappropriation by, or conflict from, any
third party with respect to the Company's rights in the Intellectual Property.
The Company has not received any communications alleging that the Company has
violated any of the patents, trademarks, service marks, trade names, Internet
domain names, copyrights or trade secrets or other proprietary rights of any
other person or entity, nor is the Company aware of any basis for such
violation. The Company is not aware that any of its employees, officers,
consultants, or contractors are obligated under any contract (including
licenses, covenants or commitments of any nature) or other agreement, or subject
to any judgment, decree or order of any court or administrative agency, that
would conflict with the Company's business as conducted or as proposed to be
conducted. Neither the execution nor delivery of this Agreement nor the carrying
on of the Company's business by the employees of the Company, nor the conduct of
the Company's business as proposed, will conflict with or result in a breach of
the terms, conditions or provisions of, or constitute an default under, any
contract, covenant or instrument under which any of such employees, officers,
consultants or contractors is, to the best of the Company's knowledge, now
obligated. The Company has taken and will take reasonable security measures to
protect the Intellectual Property.
2.18 Litigation. There are no actions, suits, proceedings, orders or
investigations pending or, to the best knowledge of the Sellers and the Company,
threatened against the Company, or before or by any governmental entity or
authority, domestic or foreign.
2.19 Complaints. Except as set forth in the Disclosure Schedule, the Company has
not received any material customer complaints concerning its products and/or
services, nor has it
December 3, 1999 17
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had to make any material refund to any purchaser thereof, other than for minor,
nonrecurring service problems.
2.20 Employees. (a) To the best knowledge of Sellers and the Company, no
employee of the Company has any plans to terminate his or its employment; (b)
the Company has complied with all laws relating to the employment of labor,
including provisions thereof relating to wages, hours and the payment and
withholding of social security and other taxes, and the provisions of any
applicable national collective bargaining agreement; (c) the Company has no
material labor relations problem pending; (d) to the best knowledge of the
Sellers and the Company, no employee of the Company is subject to any secrecy or
noncompetition agreement or any other agreement or restriction of any kind that
would impede in any way the ability of such employee to carry out fully all
activities of such employee in furtherance of the business of the Company; and
(e) no employee or former employee of the Company has any claim with respect to
any Intellectual Property of the Company. The Disclosure Schedule, lists, as of
the date set forth in the Disclosure Schedule, each part-time and full-time
employee of the Company and the position, title, remuneration (including any
scheduled salary or remuneration increases), commencement date of employment
(including any predecessor if tenure has been carried out) and date of birth of
each such employee, together with employees on fixed term internship contracts.
2.21 Employee Benefit Plans.
There are no severance or other similar contracts and no pension or
retirement benefits, bonus, profit sharing, share purchase or share option
plans, Company savings plans or similar benefit plans or arrangements of the
Company which provide for any individual or collective terms or benefits to any
of its employees beyond the mandatory statutory or regulatory obligations
imposed by French law or the applicable national collective bargaining
agreement.
2.22 Insurance. The Disclosure Schedule lists and briefly describes each
insurance policy maintained by the Company with respect to the Company's
properties, assets and operations and sets forth the date of expiration of each
such insurance policy. All of such insurance policies are in full force and
effect and are issued by insurers of recognized responsibility. The Company is
not in default with respect to its obligations under any of such insurance
policies.
2.23 Affiliate Transactions. Except as disclosed in the Disclosure Schedule, no
shareholder, officer, director or employee of the Company or any member of the
immediate family of any such officer, director or employee, or any entity in
which any of such persons owns any beneficial interest (other than in any
publicly-held corporation whose shares are publicly traded and less than one
percent of the shares of which is beneficially owned by any of such persons)
(collectively "insiders"), has any agreement with the Company (other than normal
employment arrangements) or any interest in any property, real, personal or
mixed, tangible or intangible, used in or pertaining to the business of the
Company (other than ownership of shares of the Company). None of the insiders
has any direct or indirect interest in any competitor, supplier or customer of
the Company or in any person, firm or entity from whom or to whom the Company
leases any property, or in any other person, firm or entity with whom the
Company transacts business of any nature. For purposes of this Section 2.23,
December 3, 1999 18
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the members of the immediate family of an officer, director or employee shall
consist of the spouse, parents, children, siblings, mothers- and fathers-in-law,
sons- and daughters-in-law, and brothers- and sisters-in-law of such officer,
director or employee.
2.24 Customers. The Disclosure Schedule lists the customers of the Company for
the fiscal year ended 1998 and for the ten-month period ended October 31, 1999
and sets forth opposite the name of each such customer, the approximate
percentage of gross sales or purchases by the Company attributable to such
customer for each such period.
2.25 Compliance with Laws; Permits.
(a) The Company and its officers, directors, agents and employees have
complied in all material respects with all applicable laws, regulations and
other requirements, including all data privacy laws and regulations, which
materially affect the business of the Company or the Real Property and to which
the Company may be subject, and no claims have been filed
against the Company alleging a violation of any such laws, regulations or other
requirements. The Company is not relying on any exemption from or deferral of
any such applicable law, regulation or other requirement that would not be
available to Buyer after it acquires the Company's properties, assets and
business.
(b) The Company has, in full force and effect, all licenses, permits and
certificates, from governmental (domestic or foreign) authorities (including,
without limitation, governmental agencies regulating data privacy necessary to
conduct its business and own and operate its properties (collectively, the
"Permits"). A true, correct and complete list of all the Permits is set forth in
the Disclosure Schedule. The Company has conducted its business in compliance
with all material terms and conditions of the Permits.
2.26. Environmental and Safety Matters. The Company is not in material violation
of any applicable statute, law or regulation relating to the environment or
occupational health and safety and no material expenditures are or will be
required in order to comply with any such existing statute, law or regulation.
2.27 Year 2000 Compliance. The Company has adopted and initiated a Year 2000
compliance plan for all software and hardware used by the Company. All software
and systems delivered by the Company to customers prior to the date hereof is
Y2K Compliant, all software and systems currently being marketed by the Company
is Y2K Compliant and the Company's internal systems (both information technology
systems and others) are Y2K Compliant. As used herein, "Year 2000 Compliant"
shall mean the ability of such software and hardware to (i) consistently handle
date information before, during and after January 1, 2000, including but not
limited to accepting date input, providing date output, and performing
calculations on dates or portions of dates; (ii) function accurately in
accordance with all documentation without interruption before, during and after
January 1, 2000, without any change of operations associated with the advent of
the new century; (iii) respond to two digit date input in a way that resolves
any ambiguity as to century in a disclosed, defined and predetermined manner;
and (iv) store and provide output of date information in ways that are
unambiguous as to century.
December 3, 1999 19
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2.28 Brokerage. No third party shall be entitled to receive any brokerage
commissions, finder's fees, fees for financial advisory services or similar
compensation in connection with the transactions contemplated by this Agreement
based on any arrangement or agreement made by or on behalf of Sellers or the
Company.
1.29 Disclosure This agreement and any written information delivered to Buyer by
Sellers or the Company do not contain any misstatement of material fact, or omit
to state any fact required to be stated or necessary to make the statements
herein or therein not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Sellers that:
3.01 Incorporation and Corporate Power. Buyer is a company duly organized and
validly existing and in good standing under the laws of British Columbia,
Canada, with the requisite corporate power and authority to enter into this
Agreement and perform its obligations hereunder.
3.02 Execution, Delivery; Valid and Binding Agreement. The execution, delivery
and performance of this Agreement by Buyer and the consummation of the
transactions contemplated hereby have been duly and validly authorized by all
requisite corporate action, and no other corporate proceedings on its part are
necessary to authorize the execution, delivery or performance of this Agreement.
This Agreement has been duly executed and delivered by Buyer and constitutes the
valid and binding obligation of Buyer, enforceable in accordance with its terms.
3.03 No Breach. The execution, delivery and performance of this Agreement by
Buyer and the consummation by Buyer of the transactions contemplated hereby do
not conflict with or result in any breach of any of the provisions of,
constitute a default under, result in a violation of, result in the creation of
a right of termination or acceleration or any lien, security interest, charge or
encumbrance upon any assets of Buyer, or require any authorization, consent,
approval, exemption or other action by or notice to any court or other
governmental body, under the provisions of the Articles of Association of Buyer
or any indenture, mortgage, lease, loan agreement or other agreement or
instrument by which Buyer is bound or affected, or any law, statute, rule or
regulation or order, judgment or decree to which Buyer is subject.
3.04 Governmental Authorities; Consents. Buyer is not required to submit any
notice, report or other filing with any governmental authority in connection
with the execution or delivery by it of this Agreement or the consummation of
the transactions contemplated hereby except for a declaration of direct foreign
investment to be filed with the French Ministry of Economy, Finance and
Industry, Treasury Department. No consent, approval or authorization of any
governmental or regulatory authority or any other party or person is required to
be obtained by Buyer in connection with its execution, delivery and performance
of this Agreement or the transactions contemplated hereby.
December 3, 1999 20
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3.05 Brokerage. No third party shall be entitled to receive any brokerage
commissions, finder's fees, fees for financial advisory services or similar
compensation in connection with the transactions contemplated by this Agreement
based on any arrangement or agreement made by or on behalf of Buyer.
ARTICLE IV
COVENANTS OF PRINCIPAL SELLERS
4.01 Non-competition. For so long as he shall remain an employee, director or
legal representative of the Company and for a period of two years following the
expiration of the last Earn-Out Period during which he was an employee, director
or legal representative of the Company, provided such Principal Seller's
position with the Company has not been terminated without Cause as defined in
section 1.04(i) above, each Principal Seller agrees not to undertake any
activity that is competitive with the Business (as defined below) which is
conducted or planned to be conducted by the Company at the expiration of such
Earn-Out Period. While serving as an employee, officer or director of the
Company each Principal Seller shall not, directly or indirectly, engage or
invest in, own, manage, operate, finance, control, or participate in the
ownership, management, operation, financing, or control of, be employed by,
associated with, or in any manner connected with, lend such Seller's name or any
similar name to, lend such Seller's credit to, in whole or in part with a
company or entity which competes with the Business of the Company or its
affiliates, anywhere within France or the French speaking part of Switzerland;
provided, however, that each Principal Seller may purchase or otherwise acquire
up to 2% of any class of securities of any enterprise for investment purposes
(but without otherwise participating in the activities of such enterprise) if
such securities are listed on any national or regional securities exchange.
"Business" shall mean the development, marketing, sale, service or licensing of
software designed for the Customer Relationship Management or Electronic
Commerce markets. Each Principal Seller agrees that this covenant is reasonable
with respect to its duration, geographical area, and scope. If the duration,
geographical extent or activities covered by this section 4.01 are held to be in
excess of what is valid and enforceable under applicable law, then such
provision shall be construed to cover only that duration, geographical extent or
activities which are valid and enforceable.
4.02 Non-solicitation. For a period of five years following the termination of a
Principal Seller's position as an employee, director or legal representative of
the Company, said Seller shall not solicit to employ or obtain the services of
any of the directors, officers or employees of the Company so long as they are
employed by, or serving as an officer, director or legal representative of the
Company, without obtaining the prior consent of the Company.
4.03 Remedies for Breach of Restrictive Covenants. Any violation of the
restrictive covenants in sections 4.01 and 4.02 above shall result in the
forfeit by the breaching Seller of any portion (if any) of the Purchase Price
for the Shares not yet received by such Seller, including any Earn-Out Payments,
without need for Buyer to send a form cease and desist demand to such Seller.
Such remedy is non-exclusive and shall not prevent Buyer from taking any legal
action against such Seller in breach of its obligation hereunder to recover
December 3, 1999 21
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damages and/or notwithstanding section 10.11 to enjoin any breach of the said
covenants in any competent court having jurisdiction over the Principal Seller.
ARTICLE V
CLOSING MATTERS
5.01 Conditions Precedent to Buyer's Obligation to Purchase and Principal
Sellers' Obligation to Sell the Remaining Shares. The obligation of Buyer and
Principal Sellers to consummate the purchase and sale of the Remaining Shares
pursuant to section 1.03 of this Agreement on the Second Closing Date is subject
to the satisfaction of the following conditions on or before the Second Closing
Date:
(a) Between the First Closing Date and the Second Closing Date the software used
by the Company (with the exception of Pivotal software) and the Company's
internal systems shall not have experienced any problems relating to Y2K
Compliance (as defined in section 2.27 above) which is materially adverse to the
Company or to the value of the Shares.
(b) The Principal Sellers shall have performed in all material respects all of
the covenants and agreements required to be performed and complied with by it
under this Agreement prior to the Second Closing Date.
5.02 Documents to be Delivered on the First Closing Date
On the First Closing Date, Sellers shall deliver to Buyer all of the
following:
(a) the letters of resignation of Messrs. Pierre Marcel, Philippe Marcel
and Alain Ferembach from the board of directors of the Company, such
resignations to take place as of the First Closing Date;
(b) a certified copy of the minutes of the board of directors of the
Company approving the Buyer and its nominees as new shareholders of the
Company;
(c) the Company's minute books and share transfer register, duly reflecting
the transfer of Shares to Buyer and its designated nominees;
(d) duly executed share transfer forms in relation to the Shares to be
transferred on the First Closing Date in favor of Buyer and such of Buyer's
nominees as indicated to Sellers by Buyer prior to the First Closing Date;
(e) an Agreement in the form set forth in Exhibit B hereto executed by each
Seller, with respect to offers and sales of Pivotal Shares within 180 days
after Pivotal's Initial Public Offering.
(f) Wire transfer instructions for the payment of the purchase price for
the Shares to Sellers.
December 3, 1999 22
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<PAGE>
5.03 Documents to be Delivered on the Second Closing Date.
On the Second Closing Date the following documents shall be delivered:
(a) a certificate signed by the Buyer and the Principal Sellers confirming
that the conditions precedent set forth in section 5.02(a) through (b) have
been met; and
(b) duly executed share transfer forms signed by the Principal Sellers in
relation to the Shares to be transferred on the Second Closing Date in
favor of Buyer or such of Buyer's nominees as indicated to the Principal
Sellers prior to the Second Closing Date.
ARTICLE VI
COMPLIANCE WITH SECURITIES REGULATIONS
6.01 French Securities Regulations. Each of the Principal Sellers understands
and acknowledges that all of the Pivotal Shares issued to the Principal Sellers
pursuant to this Agreement will be issued without any notification, Visa or
authorization of the French Commission des Operations de Bourse in reliance upon
each of following representations and warranties of Principal Sellers:
(a) No offer in respect of the Pivotal Shares was made to the Principal Sellers
by Pivotal or any person acting on Pivotal by means of solicitation or
advertising or via banking and securities houses or financial stock brokers.
(b) The Pivotal Shares to be acquired by each Principal Seller in connection
with this Agreement are being acquired for his own account for investment
purposes and not with a view to or in connection with any sale or other
distribution thereof, within the meaning and conditions fixed by the French
Decree 98-880 dated October 1, 1998 enforcing the provisions of Article 6 of the
Ordinance 67-833 of September 28, 1967.
(c) None of the Principal Sellers will make any transfer or assignment of the
Pivotal Shares except in compliance with the French Ordinance 67-833 of
September 28, 1967 and any other applicable securities law.
(d) Each of the Principal Sellers acknowledges and understands that each
certificate representing Pivotal Shares issued to him pursuant to this Agreement
shall be endorsed with the following legend, unless Pivotal determines otherwise
in compliance with applicable law:
"NEITHER THE SECURITIES REFERRED TO IN THIS CERTIFICATE NOR ANY INTEREST
HEREIN MAY BE OFFERED IN FRANCE OR OTHERWISE TRANSFERRED EXCEPT ON
CONDITIONS COMPLYING WITH THE ARTICLES 6 AND 7 OF THE ORDINANCE AND IN
ACCORDANCE WITH ALL APPLICABLE SECURITIES LAW OF THE REPUBLIC IN FRANCE."
December 3, 1999 23
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<PAGE>
6.02 U. S. and Canadian Securities Law Compliance
(a) No Principal Seller (i) is a citizen or resident of the United States or
Canada, (ii) was offered securities of Pivotal in connection with this Agreement
in the United States or Canada, or (iii) executed or delivered this Agreement in
the United States or Canada.
(b) Each Principal Seller is acquiring the Pivotal Shares or any other
securities of Pivotal to be issued pursuant to this Agreement solely for his own
account and for the purpose of investment, and without a view to resale or
distribution thereof, and each Seller further understands that the Pivotal
Shares and any other securities of Pivotal issued pursuant to this Agreement
have not been registered under the U. S. Securities Act of 1933 (the "U.S.
Securities Act"), nor has any prospectus been received with respect thereto
under the securities laws of any province of Canada, and, accordingly that such
securities may not be offered, sold or otherwise transferred without an
exemption from registration under the U.S. Securities Act and an exemption from
the prospectus requirements of any applicable Canadian provincial securities
laws.
(c) Each Principal Seller understands that the certificate representing any
Pivotal Shares to be delivered pursuant hereto shall bear the following
legend[s].
(i) "THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO A HOLD PERIOD
AND MAY NOT BE TRADED IN BRITISH COLUMBIA UNTIL THE EXPIRY OF THE
HOLD PERIOD ON O, 2000: INSERT DATE WHICH IS 12 MONTHS AFTER
CLOSING DATE], EXCEPT AS PERMITTED BY THE SECURITIES ACT (BRITISH
COLUMBIA) AND THE RULES PROMULGATED THEREUNDER";
(ii) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION
STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT
OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144
OF SUCH ACT."
(d) A certificate containing the legend described in section 6.02(c)(i) above
may be exchanged for a certificate without such a legend by delivering such
certificate to Pivotal's transfer agent, along with written confirmation from
the registered holder thereof that:
(i) neither the registered holder, nor any beneficial holder of the
securities represented by such certificate, is a resident of the
Province of British Columbia,
December 3, 1999 24
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<PAGE>
(ii) the shares represented by such certificate are being sold outside
the Province of British Columbia; and
(iii) the identity of the purchaser of such shares is not known to
either the registered or beneficial holder of the shares
represented by such certificate or, if the identity of such
purchaser is known, such purchaser is not a resident of the
Province of British Columbia, Canada.
(e) Each of the Principal Sellers represents and warrants to Pivotal that he or
she is not a resident of the Province of British Columbia, Canada.
(f) Each of the Principal Sellers acknowledges that:
(i) no securities commission or similar regulatory authority has
reviewed or passed on the merits of the Pivotal Shares being
issued to the Principal Sellers hereunder;
(ii) there is no government or other insurance covering such Pivotal
Shares;
(iii) there are risks associated with the acquisition of such Pivotal
Shares;
(iv) there are restrictions on the Seller's ability to resell the
Pivotal Shares and it is the responsibility of the Seller to find
out what those restrictions are and to comply with them before
selling the Pivotal Shares; and
(v) Pivotal has advised the Sellers that it is relying on an
exemption from the requirements to provide the Sellers with a
prospectus in connection with the issuance of the Pivotal Shares
and to sell such Pivotal Shares through a person registered to
sell securities under the Securities Act (British Columbia) and,
as a consequence of acquiring the Pivotal Shares pursuant to such
exemption, certain protections, rights and remedies provided by
the Securities Act (British Columbia), including statutory rights
of rescission or damages, will not be available to the purchaser.
(vi) Each of the Principal Sellers acknowledge that the Pivotal Shares
will bear the following legends:
"THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO A HOLD PERIOD
AND MAY NOT BE TRADED IN BRITISH COLUMBIA UNTIL THE EXPIRY OF THE
HOLD PERIOD ON O, 2000 : [INSERT DATE WHICH IS 12 MONTHS AFTER
CLOSING DATE], EXCEPT AS PERMITTED BY THE SECURITIES ACT (BRITISH
COLUMBIA) AND THE RULES PROMULGATED THEREUNDER"
December 3, 1999 25
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<PAGE>
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION
STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT
OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144
OF SUCH ACT."
ARTICLE VII
TERMINATION
7.01 Termination. This Agreement may be terminated at any time prior to the
Second Closing Date:
(a) by the mutual consent of Buyer and Principal Sellers;
(b) by either Buyer or Principal Sellers if there has been a material
misrepresentation, breach of warranty or breach of covenant on the part of the
other in the representations, warranties and covenants set forth in this
Agreement.
7.02 Effect of Termination. In the event of termination of this Agreement by
either Buyer or the Principal Sellers as provided in Section 7.01, this
Agreement shall become void and there shall be no liability on the part of
either Buyer or Principal Sellers, except that Sections 9.01, 9.02 and 9.09
hereof shall survive indefinitely, and except with respect to willful breaches
of this Agreement prior to the time of such termination.
ARTICLE VIII
SURVIVAL; INDEMNIFICATION
8.01 Survival of Representations and Warranties. Notwithstanding any
investigation made by or on behalf of any of the parties hereto or the results
of any such investigation and notwithstanding the participation of such party in
the First or Second Closing, the representations and warranties contained in
Article II and Article III hereof which relate to (i) events, conditions,
actions, inactions or facts which have their origin at or prior to the First
Closing Date and actions or (ii) commitments of the Sellers expressly set forth
in this agreement to be fulfilled after the First Closing Date, shall survive
the First Closing Date for a period of three (3) years following the First
Closing Date. The foregoing period of
December 3, 1999 26
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<PAGE>
limitation shall, to the extent necessary, extend indefinitely to provisions
with respect to Capitalization and Ownership, Tax, Social Security and Employee
Benefit Plans as described in Sections 2.07, 2.14, 2.15 and 2.21, respectively.
8.02 Indemnification by Sellers.
(a) Subject to the limitations of Section 8.02(b), the Principal Sellers
agree to indemnify in full Buyer (and, as the case may be, its officers,
directors)(collectively, the "Buyer Indemnified Parties") and hold them harmless
against any loss, liability, deficiency, damage, expense or cost (including
reasonable legal expenses), whether or not actually incurred or paid prior to
the third anniversary of the First Closing Date (collectively, "Losses"), which
Buyer Indemnified Parties may suffer, sustain or become subject to, as a result
of (i) any misrepresentation in any of the representations and warranties of
Sellers contained in this Agreement or in any exhibits, schedules, certificates
or other documents delivered or to be delivered by or on behalf of Sellers
pursuant to the terms of this Agreement or otherwise referenced or incorporated
in this Agreement (collectively, the "Related Documents"), (ii) any breach of,
or failure to perform, any agreement of Seller contained in this Agreement or
any of the Related Documents, (iii) any "Claims" (as defined in Section 8.04(a)
hereof) or threatened Claims against Buyer or the Company arising out of the
actions or inactions of Seller or the Company with respect to the Company's
business or the Real Property (collectively, "Buyer Losses"), or (iv) any
"Claims" (as defined in Section 8.04(a) hereof) or threatened Claims against
Buyer or the Company arising out of the actions or inactions of Sellers or the
Company with respect to the provisions identified in Section 8.01 hereof.
(b) The Principal Sellers shall be liable to the Buyer Indemnified Parties
for any Buyer Losses only if Buyer or another Buyer Indemnified Party delivers
to Principal Sellers written notice, setting forth in reasonable detail the
identity, nature and amount of Buyer Losses related to such claim or claims
prior to the third anniversary of the First Closing Date.
8.03 Indemnification by Buyer.
(a) Subject to the limitations of Section 8.03(b), Buyer agrees to
indemnify in full each Principal Seller, (collectively, the "Seller Indemnified
Parties") and hold them harmless against any Losses which any of the Seller
Indemnified Parties may suffer, sustain or become subject to as a result of (i)
any misrepresentation in any of the representations and warranties of Buyer
contained in this Agreement or in any of the Related Documents, (ii) any breach
of, or failure to perform, any agreement of Buyer contained in this Agreement or
any of the Related Documents, or (iii) any Claims or threatened Claims against a
Principal Seller arising out of the actions or inactions of Buyer with respect
to the Company's business or the Real Property after the Closing (collectively,
"Seller Losses").
(b) Buyer shall be liable to the Seller Indemnified Parties for any Seller
Losses only if a Principal Seller or another Seller Indemnified Party delivers
to Buyer written notice, setting forth in reasonable detail the identity, nature
and amount of Seller Losses related to such claim or claims prior to the third
anniversary of the First Closing Date.
December 3, 1999 27
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<PAGE>
8.04 Method of Asserting Claims. As used herein, an "Indemnified Party" shall
refer to a "Buyer Indemnified Party" or "Seller Indemnified Party," as
applicable, the "Notifying Party" shall refer to the party hereto whose
Indemnified Parties are entitled to indemnification hereunder, and the
"Indemnifying Party" shall refer to the party hereto obligated to indemnify such
Notifying Party's Indemnified Parties.
(a) In the event that any of the Indemnified Parties is made a defendant in
or party to any action or proceeding, judicial or administrative, instituted by
any third party for the liability or the costs or expenses of which are Losses
(any such third party action or proceeding being referred to as a "Claim"), the
Notifying Party shall give the Indemnifying Party prompt notice thereof. In the
event of any action or proceeding brought or asserted against the Company of
which the Principal Sellers have actual knowledge, the Principal Sellers shall
promptly provide a notice thereof to Buyers. The failure of an Indemnified Party
to give notice to the Indemnifying Party shall not affect any Indemnified
Party's ability to seek reimbursement unless such failure has materially and
adversely affected the Indemnifying Party's ability to defend successfully a
Claim. The Indemnifying Party shall be entitled to contest and defend such
Claim; provided, that the Indemnifying Party (i) has a reasonable basis for
concluding that such defense may be successful and (ii) diligently contests and
defends such Claim. Notice of the intention so to contest and defend shall be
given by the Indemnifying Party to the Notifying Party within 30 business days
after the Notifying Party's notice of such Claim (but, in all events, at least
five business days prior to the date that an answer to such Claim is due to be
filed). Such contest and defense shall be conducted by reputable attorneys
employed by the Indemnifying Party. The Notifying Party shall be entitled at any
time, at its own cost and expense (which expense shall not constitute a Loss
unless the Notifying Party reasonably determines that the Indemnifying Party is
not adequately representing or, because of a conflict of interest, may not
adequately represent, any interests of the Indemnified Parties, and only to the
extent that such expenses are reasonable), to participate in such contest and
defense and to be represented by attorneys of its or their own choosing. If the
Notifying Party elects to participate in such defense, the Notifying Party will
cooperate with the Indemnifying Party in the conduct of such defense. Neither
the Notifying Party nor the Indemnifying Party may concede, settle or compromise
any Claim without the consent of the other party, which consents will not be
unreasonably withheld. Notwithstanding the foregoing, (i) if a Claim seeks
equitable relief or (ii) if the subject matter of a Claim relates to the ongoing
business of any of the Indemnified Parties, which Claim, if decided against any
of the Indemnified Parties, would materially adversely affect the ongoing
business or reputation of any of the Indemnified Parties, then, in each such
case, the Indemnified Parties alone shall be entitled to contest, defend and
settle such Claim in the first instance and, if the Indemnified Parties do not
contest, defend or settle such Claim, the Indemnifying Party shall then have the
right to contest and defend (but not settle) such Claim.
(b) In the event any Indemnified Party should have a claim against any
Indemnifying Party that does not involve a Claim, the Notifying Party shall
deliver a notice of such claim with reasonable promptness to the Indemnifying
Party. If the Indemnifying Party notifies the Notifying Party that it does not
dispute the claim described in such notice or fails to notify the Notifying
Party within 30 days after delivery of such notice by the Notifying Party
whether the Indemnifying Party disputes the claim described in such notice, the
Loss in the amount specified in the Notifying Party's notice will be
conclusively deemed a liability of the
December 3, 1999 28
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<PAGE>
Indemnifying Party and the Indemnifying Party shall pay the amount of such Loss
to the Indemnified Party on demand. If the Indemnifying Party has timely
disputed its Liability with respect to such claim, the Indemnifying Party and
the Notifying Party will proceed in good faith to negotiate a resolution of such
dispute, and if not resolved through such negotiations within 60 days after the
delivery of the Notifying Party's notice of such claim, such dispute shall be
resolved fully and finally in accordance with the arbitration provisions set
forth in section 9.11 hereof.
(c) If a Buyer Indemnified Party shall give a notice of a Claim under
Section 8.04(a) or claim pursuant to Section 8.04(b), such Buyer Indemnified
Party may direct Buyer to refrain from paying any portion of the Purchase Price
which shall not have been paid, prior to the date thereof, and to refrain from
delivering any Pivotal Shares being held pursuant to Section 1.04 hereof until
the resolution of the Claim or claim. Buyer (or such Buyer Indemnified Party)
shall have the right (but not the obligation) to set off any cash or Pivotal
Shares or other property being held pursuant to Section 1.04 or this Section
against any liability of Sellers pursuant to this Agreement or at law, with such
Pivotal Shares to be valued at the average closing price for Pivotal Shares on
Nasdaq (or if not then traded on Nasdaq, on the principal market on which
Pivotal Shares are then quoted or traded) for the 20 trading days prior to the
date of set off. Neither the exercise nor the failure to exercise this right of
set off shall constitute an election of remedies that a Buyer Indemnified Party
may have available to it. In the event that it is definitively determined that
no amount is due to the Buyer Indemnified Party as a result of any Claim or
claim against which Buyer or a Buyer Indemnified Party shall have set off any
cash or Pivotal Shares otherwise due or payable to the Principal Sellers, except
for breaches of the Principal Sellers' covenants set forth in Sections 4.01 and
4.02 above, Buyer shall pay the Principal Sellers interest on the cash or the
value of the Shares from the date when such cash would normally be paid or such
Pivotal Shares would have been issued or transferred until the date of actual
payment, issue or transfer at then current rate applicable to 90 day U.S.
Treasury Bills plus 2 percentage points.
(d) After the First Closing Date, the rights set forth in this Article VIII
shall be each party's sole and exclusive remedies against the other party hereto
for misrepresentations or breaches of covenants contained in this Agreement and
the Related Documents, except for breaches of the Principal Sellers' covenants
set forth in Sections 4.01 and 4.02 above. Notwithstanding the foregoing,
nothing herein shall prevent any of the Indemnified Parties from bringing an
action based upon allegations of fraud or other intentional breach of an
obligation of or with respect to either party in connection with this Agreement
and the Related Documents. In the event such action is brought, the prevailing
party's attorneys' fees and costs shall be paid by the non-prevailing party.
8.05 Limitations .
(a) The indemnification obligations of the Principal Sellers regarding a
claim for indemnification hereunder made by the Buyer Indemnified
Parties for inaccuracies, or breaches of any representation or
warranty in this Agreement, but not for breach of any covenant of
Sellers, shall become operative only after the aggregate amount of all
valid claims for such indemnification made by the Buyer Indemnified
Parties exceeds 300,000 FF (the "Indemnification Threshold");
provided, however, that upon reaching the Indemnification Threshold
the
December 3, 1999 29
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<PAGE>
Principal Sellers shall be liable to indemnify the Buyer Indemnified
Parties for all Indemnification claims above and below the
Indemnification Threshold.
(b) Only the Principal Sellers shall be liable to the Buyer Indemnified
Parties for Indemnification claims made pursuant to this Agreement,
but such Indemnification liability shall apply with respect to all of
the Shares sold by the Sellers to Buyer and not only those Shares sold
by the Principal Sellers. The maximum liability of the Sellers under
this Agreement for Indemnification claims made by the Buyer
Indemnified Parties shall not exceed the purchase price for the
Shares, including the Earn-Out Payments, except in the event of fraud
or willful misrepresentation, and each Principal Seller shall be
liable only to the extent of his respective percentage interest as set
forth in section 1.04 (j) above.
(c) Any amount due to the Buyer Indemnified Parties as a result of a claim
for indemnification hereunder shall be determined after deducting or
setting-off (i) any final and indisputable savings of taxes incurred
by the Buyer Indemnified Parties or the Company as a result of any
indemnified loss and (ii) any recovery from insurers actually received
by the Company or the Buyer Indemnified Parties with respect to any
indemnified loss.
ARTICLE IX
MISCELLANEOUS
9.01 Press Releases and Announcements. Prior to the Closing Date, neither party
hereto shall issue any press release (or make any other public announcement)
related to this Agreement or the transactions contemplated hereby or make any
announcement to the employees, customers or suppliers of Sellers without prior
written approval of the other party hereto, except as may be necessary, in the
opinion of counsel to the party seeking to make disclosure, to comply with the
requirements of this Agreement or applicable law. If any such press release or
public announcement is so required, the party making such disclosure shall
consult with the other party prior to making such disclosure, and the parties
shall use all reasonable efforts, acting in good faith, to agree upon a text for
such disclosure which is satisfactory to both parties.
9.02 Expenses. Except as otherwise expressly provided for herein, each of
Sellers and Buyer will pay all of their own expenses (including attorneys' and
accountants' fees (and, in the case of Sellers, the expenses of the Company
prior to the First Closing)) in connection with the negotiation of this
Agreement, the performance of their respective obligations hereunder and the
consummation of the transactions contemplated by this Agreement (whether
consummated or not).
9.03 Further Assurances. Sellers agree that, on and after the First Closing
Date, each of them shall take all appropriate action and execute any documents,
instruments or conveyances of any kind which may be reasonably necessary or
advisable to carry out any of the provisions hereof.
December 3, 1999 30
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<PAGE>
9.04 Amendment and Waiver. This Agreement may not be amended or waived except in
a writing executed by the party against which such amendment or waiver is sought
to be enforced. No course of dealing between or among any persons having any
interest in this Agreement will be deemed effective to modify or amend any part
of this Agreement or any rights or obligations of any person under or by reason
of this Agreement.
9.05 Notices. All notices, demands and other communications to be given or
delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when personally delivered or
mailed by first class mail, return receipt requested, or if sent by facsimile,
or other electronic transmission device, with a copy sent by registered mail
with acknowledgment of receipt. Notices, demands and communications to Buyer and
Sellers will, unless another address is specified in writing, be sent to the
address indicated below:
Notices to Buyer: with a copy to:
- ----------------- ---------------
Pivotal Corporation Dorsey & Whitney LLP
300 - 224 West Esplanade 35 square de Meeus
North Vancouver, 1000 Brussels
British Columbia V7M 3M6 Belgium
Canada
Attention: Vincent Mifsud Attention: Barry D. Glazer
Notices to Sellers: with a copy to:
- ------------------- ---------------
Pierre Marcel OJFI-ALEXEN Avocats
10 rue Camille Corot 47 rue de Monceau
92500 Rueil Malmaison 75008 Paris
France France
Attention: Patrick Gentil
Marc Bahda
49, rue de la Federation,
75015 Paris
France
Bernard Wach
12 rue Mouton Duvernet
75014 Paris
France
December 3, 1999 31
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<PAGE>
9.06 Assignment. This Agreement and all of the provisions hereof will be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, except that neither this Agreement nor any of
the rights, interests or obligations hereunder may be assigned by any party
hereto without the prior written consent of the other party hereto.
Notwithstanding the foregoing, Buyer shall have the right to assign its rights
and obligations under this Agreement prior to or subsequent to the Second
Closing Date to a wholly owned subsidiary upon providing notice to Principal
Sellers in writing, it being understood that subsequent to such assignment Buyer
shall guarantee the transfer or issuance of Pivotal Shares to the Principal
Sellers in accordance with the terms and conditions of this Agreement.
9.07 Severability. Whenever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited by or invalid
under applicable law, such provision will be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
9.08 Complete Agreement. This Agreement, the Disclosure Schedule and the other
documents referred to herein contain the complete agreement between the parties
and supersede any prior understandings, agreements or representations by or
between the parties, written or oral, which may have related to the subject
matter hereof in any way.
9.09 Counterparts. This Agreement may be executed in one or more counterparts,
any one of which need not contain the signatures of more than one party, but all
such counterparts taken together will constitute one and the same instrument.
9.10 Governing Law. The internal law of France, without regard to conflicts of
laws principles, will govern all questions concerning the construction, validity
and interpretation of this Agreement and the performance of the obligations
imposed by this Agreement.
9.11 Arbitration. The parties hereby agree to settle any controversy, claim or
dispute of whatever nature arising between them under this Agreement or in
connection with the transactions contemplated hereunder, including those arising
out of or relating to the breach, termination, enforceability, scope or validity
hereof, whether such claim existed prior to or arises on or after the First
Closing Date, as follows:
(a) As between the parties to this Agreement or any agent, employee,
parent, subsidiary, affiliate, successor or assign of the parties, any dispute,
claim or controversy directly or indirectly arising out of or related to this
Agreement any of the other documents referred to herein) or the breach,
termination or validity, shall be finally settled by arbitration conducted
expeditiously in accordance with the UNCITRAL Rules of Arbitration as adopted on
April 28 1976 as amended (the "Arbitration Rules"). Within ten (10) business
days of the receipt of a list of arbitrators from the International Chamber of
Commerce (the "Administrative Body"), the parties shall select a sole
independent and impartial arbitrator. If the parties are unable to agree upon an
arbitrator within such period, the Administrative Body shall appoint an
arbitrator. The arbitrator shall be fully fluent in both English and French. The
place of arbitration shall be Paris, and the arbitration shall be conducted in
English.
December 3, 1999 32
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<PAGE>
(b) (i) The arbitrator will issue findings of fact and conclusions of law
to support his or her opinion.
(ii) Except for damages arising out of or related to an intentional
breach of warranty or fraudulent representation the arbitrator shall only be
empowered to award actual and direct compensatory contract damages, and shall
not be empowered to award any special, consequential, incidental, indirect, or
punitive damages or any damages related to a tort claim (tort claims being
excluded from the present arbitration agreement).
(iii) Judgment upon the aware rendered by the arbitrator may be
entered by any court having jurisdiction thereof and enforced as any other
judgment. Any party required to resort to litigation in order to enforce an
arbitral award shall be entitled to all costs of suit including reasonable
attorneys fees and expenses, together with interest on the arbitral award
calculated at the statutory rate for judgments commencing ten (10) days later
from the date of the award.
(iv) The arbitrator's award shall be final and binding upon the
parties and appealable only upon a showing that is, on its face, arbitrary,
capricious, an abuse of discretion and/or clearly contrary to statutory or
settled case law. The party appealing any award shall, if unsuccessful, be
responsible for all costs of appeal including reasonable attorneys fees incurred
by the other party.
(v) The arbitrator shall have the power, but not the obligation, to
hire an accounting firm or other professional within the financial services
industry as an expert in order to assist the arbitrator in issuing findings of
fact.
(vi) The arbitration proceedings and all discovery shall be
confidential and neither party shall release any decision rendered by the
arbitrator to any third party.
(vii) The arbitration procedure shall be completed promptly and a
decision rendered within four (4) months of the appointment of the arbitrator
unless extended in accordance with the Arbitration Rules due to circumstances
beyond the control of the parties or the arbitrator or as necessary, to avoid
manifest injustice. Discovery shall be limited to that which is directly
relevant to the claim or controversy and to key documents and witnesses that are
substantive and reasonably necessary to establish a party's claim or defense.
Whenever reasonably possible and unless manifestly prejudicial or unfair,
affidavits will be substituted for direct testimony.
(c) Notwithstanding any of the foregoing, the parties recognize that
certain business relationships could give rise to the need for one or more of
the parties to seek emergency, provisional or summary injunctive relief.
Immediately following the issuance of any such relief, the parties agree to the
stay of any judicial proceedings pending arbitration of all underlying claims
between the parties.
9.12 Official Version. Only the English language of this Agreement shall be
considered the official agreement of the parties notwithstanding any translation
thereof made by any party to this Agreement. In the event of conflict between
this English language version of the Agreement and any translation, the English
language version shall control, it being
December 3, 1999 33
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<PAGE>
understood that the intention of the parties will be interpreted on the basis of
the English version.
Executed in Paris, France in six original copies as of the date first above
written.
By: BUYER: By: PRINCIPAL SELLERS:
PIVOTAL CORPORATION
/s/ Pierre Marcel
---------------------------
PIERRE MARCEL
By: /s/ Vincent Mifsud
--------------------------
Name: Vincent Mifsud
/s/ Marc Badha
---------------------------
MARC BADHA
Title: Vice President, Operations and
Chief Financial Officer
/s/ Bernard Wach
---------------------------
BERNARD WACH
OTHER SELLERS:
/s/ [Illegible]
-------------------------------
/s/ [Illegible]
-------------------------------
/s/ [Illegible]
-------------------------------
December 3, 1999 34
