SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
_______________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Date of Report: October 23, 1995
INTERSOLV, Inc.
(Exact name of registrant as specified in charter)
Delaware 0-15188 52-0990382
(State/other jurisdiction of incorporation)
(Commission File Number) (IRS Employer Identification No.)
9420 Key West Avenue, Rockville, Maryland 20850
(Address of principal executive offices)
(Zip Code)
Registrant's telephone no., including area code 301/838-5000
Item 2. Acquisition or Disposition of Assets
On October 23, 1995, INTERSOLV, Inc.
("INTERSOLV") acquired all of the outstanding common and
preferred stock of TechGnosis International Inc.
("TechGnosis") pursuant to an Agreement of Merger
("Merger Agreement") by and among INTERSOLV, TechGnosis,
INTERSOLV Perkins Corporation and certain stockholders of
TechGnosis. Under the Merger Agreement, INTERSOLV
Perkins Corporation was merged into TechGnosis, and
TechGnosis became a wholly-owned subsidiary of INTERSOLV.
Each share of TechGnosis common and preferred stock, was
converted into 2.06 shares of INTERSOLV common stock,
excluding approximately 8.8% of the TechGnosis shares,
for which INTERSOLV will pay approximately $7,200,000 in
cash. INTERSOLV also assumed $3,865,000 of TechGnosis'
obligations under its 8.4% Subordinated Convertible Notes
("Notes") due in 1999. The estimated maximum number of
INTERSOLV shares to be issued is 3,463,618, including
1,020,756 shares issuable upon conversion of the Notes.
In addition, TechGnosis stock options may become
exercisable for up to 396,447 shares of INTERSOLV shares,
subject to vesting and forfeiture provisions.
The acquisition was not registered under the
Securities Act of 1933, pursuant to Regulation S
providing for sales to foreign shareholders of TechGnosis
and Regulation D providing for private sales to domestic
shareholders of TechGnosis. The exchange ratio of
INTERSOLV shares for TechGnosis shares was determined by
arm's-length negotiations between INTERSOLV and
TechGnosis. INTERSOLV and TechGnosis also entered into a
Registration Rights agreement dated October 23, 1995
pursuant to which recipients of approximately 75% of the
estimated maximum INTERSOLV shares agreed not to sell any
of their shares of INTERSOLV common stock prior to March
19, 1996. INTERSOLV agreed to prepare and file a shelf
registration agreement under the 1933 Act with the
Securities and Exchange Commission for the resale of the
shares and use its reasonable best efforts to cause such
a registration statement to be effective on or before
March 19, 1996. INTERSOLV expects to account for the
TechGnosis acquisition using the pooling-of-interests
method.
TechGnosis, headquartered in Brussels, Belgium,
provides cross-platform data access technology for
client/server environments. TechGnosis' data access
technology, SequeLink, will expand INTERSOLV's family of
virtual data warehousing solutions. This acquisition
also enables INTERSOLV to expand its market presence in
Asia/Pacific, where TechGnosis derives a significant
portion of its revenues. Following completion of the
merger, INTERSOLV intends to continue and expand upon the
historical TechGnosis business, while integrating its
assets and operations with those of INTERSOLV.
Item 7. Financial Statements, Pro Forma, Financial
Information and Exhibits.
It is not practicable to provide the historical
and pro forma financial statements required to be filed
pursuant to this Item 7 with respect to the Merger
Agreement. They will be filed as soon as practicable,
but in any event not later than 60 days following the
date hereof.
A. Exhibits
Exhibit No. Exhibit
2 Agreement of Merger dated October 22,
1995 by and among INTERSOLV, TechGnosis International,
Inc., INTERSOLV Perkins Corporation and Certain
Stockholders of TechGnosis.
3 Registration Rights agreement dated
October 23, 1995.
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
thereunto duly authorized.
INTERSOLV, Inc.
Date: November 7, 1995 By /s/ Kevin J. Burns
Kevin J. Burns
Chairman and Chief Executive Officer
Date: November 7, 1995 By /s/ Kenneth A. Sexton_______
Kenneth A. Sexton
Vice President,
Finance & Administration/CFO
AGREEMENT OF MERGER
BY AND AMONG
INTERSOLV, INC., TECHGNOSIS INTERNATIONAL INC.,
INTERSOLV PERKINS CORPORATION
AND
CERTAIN STOCKHOLDERS NAMED HEREIN
DATED OCTOBER 22, 1995
TABLE OF CONTENTS
Page
ARTICLE I THE MERGER 2
1.01 Effective Time 2
1.02 The Surviving Corporation 2
1.03 Merger Consideration 3
1.04 Exchange of Certificates. 6
1.05 The Closing. 7
1.06 Deliveries at the Closing. 8
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE
COMPANY AND THE PRINCIPAL STOCKHOLDERS 8
2.01 Corporate Organization 8
2.02 Capital Stock 9
2.03 Authorization 10
2.04 Subsidiaries 10
2.05 No Violation 12
2.06 Financial Statements 12
2.07 No Undisclosed Liabilities 13
2.08 Absence of Certain Changes 14
2.09 Contracts and Insurance 15
2.10 Title to Property; Leases 16
2.11 Litigation 20
2.12 Tax Matters 20
2.13 Intellectual Property Rights 23
2.14 Employee Benefit Plans; Employees 24
2.15 Labor Matters 26
2.16 Compliance with Applicable Laws 27
2.17 Accounts Receivable 27
2.18 Access 27
2.19 Accounting Treatment 27
2.20 Governmental Authorities 28
2.21 Principal Stockholders 29
ARTICLE III REPRESENTATIONS AND WARRANTIES OF INTERSOLV 30
3.01 Corporate Organization 30
3.02 Authorization 31
3.03 No Violation 31
3.04 Governmental Authorities 32
3.05 SEC Documents; Financial Statements 32
3.06 No Undisclosed Liabilities 34
3.07 Absence of Certain Changes 34
3.08 Capital Stock 35
3.09 Litigation 35
3.10 Investment Company 36
3.11 Surviving Corporation 36
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SOLSUB
37
4.01 Corporate Organization 37
4.02 Authorization 37
4.03 No Violation 37
4.04 Governmental Authorities 38
4.05 No Activity 38
ARTICLE V CONDUCT OF THE COMPANY'S BUSINESS PENDING
THE CLOSING 39
5.01 General 39
5.02 Covenants 39
ARTICLE VI COVENANTS OF THE COMPANY, THE PRINCIPAL
STOCKHOLDERS AND INTERSOLV 40
6.01 Confidentiality 40
6.02 Best Efforts 40
6.03 Options 41
6.04 Notice Under DCL 228. 41
6.05 Press Release 42
ARTICLE VII CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF INTERSOLV AND SOLSUB 42
7.01 Representations and Warranties; Performance 42
7.02 Opinion of Counsel. 42
7.03 Resignation of Directors and Officers 43
7.04 Registration Rights Agreement 43
7.05 Securities Laws 43
7.06 Debentures 43
7.07 Appraisal Rights 44
ARTICLE VIII CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF THE COMPANY AND THE PRINCIPAL STOCKHOLDERS 44
8.01 Representations and Warranties; Performance 44
8.02 Opinion of Counsel 44
8.03 Valid Issuance of Intersolv Shares 45
8.04 Registration Rights 45
8.05 Debentures 45
ARTICLE IX INDEMNIFICATION 45
9.01 Indemnification by Principal Stockholders 45
9.02 Intersolv Indemnity. 47
9.03 Claims by Third Parties 48
9.04 Company Directors' and Officers' Indemnity 49
ARTICLE X MISCELLANEOUS PROVISIONS 49
10.01 Amendment and Modification 49
10.02 Waiver of Compliance; Consents 49
10.03 Investigations; Survival of Representations
and Warranties 50
10.04 Notices 50
10.05 Assignment 53
10.06 Counterparts 53
10.07 Headings 53
10.08 Governing Law 54
10.09 Time of Essence 54
10.10 Attorneys' Fees 54
10.11 Entire Agreement 54
10.12 Expenses 54
10.13 Severability 54
10.14 No Broker 55
Schedules
Schedule A: Distribution of Intersolv Common Stock
Schedule B: Persons entering into Registration Rights Agreement
Exhibits
Exhibit 1: Registration Rights Agreement
Exhibit 2: Company Disclosure Schedule
Exhibit 3: Company Financial Statements
Exhibit 4: Intersolv Disclosure Schedule
Exhibit 5: Opinion of Company and Principal
Stockholders' Counsel
Exhibit 6: Opinion of Intersolv's Counsel
Exhibit 7: Amendment to Note Purchase Agreement
AGREEMENT OF MERGER
THIS AGREEMENT OF MERGER ("Agreement"), is made as
of October 22, 1995, by and among (i) Intersolv, Inc., a
Delaware corporation ("Intersolv"), (ii) TechGnosis
International Inc., a Delaware corporation (the
"Company"), (iii) Intersolv Perkins Corporation, a
Delaware corporation ("Solsub") and (iv) Furman Selz
SBIC, L.P., Belgische Maatschapplj voor Internationale
Investering (BMI) NV, Sofinnova Capital II FCPR,
Sofinnova Ventures III L.P., Marc Van Rompaey, Jean-
Claude Deschamps, Karel De Gucht, Andre Van den Bogaert,
TEG Holding bv, GIMV bv, Parnib Deelnemingen bv and RIDIS
bv (Furman Selz SBIC, L.P., Belgische Maatschapplj voor
Internationale Investering (BMI) NV, Sofinnova Capital II
FCPR, Sofinnova Ventures III L.P., Marc Van Rompaey, Jean-
Claude Deschamps, Karel De Gucht, Andre Van den Bogaert,
TEG Holding bv, GIMV bv, Parnib Deelnemingen bv and RIDIS
bv are sometimes collectively referred to herein as the
"Principal Stockholders").
R E C I T A L S:
A. Intersolv, Solsub and the Company desire
Solsub to merge with and into the Company (the "Merger")
on the terms and conditions provided herein. Pursuant to
the Merger, shares of common stock of the Company (the
"Company Common Stock") and shares of preferred stock of
the Company (the "Company Preferred Stock") will be
converted into shares of the common stock of Intersolv
("Intersolv Common Stock") or cash.
B. The Parties hereto desire to enter into this
Agreement for the purpose of setting forth certain
representations, warranties and covenants made by each to
the other as the conditions precedent to the consummation
of the Merger.
C. The boards of directors of Intersolv, Solsub
and the Company, respectively, have approved and adopted
this Agreement as a plan of reorganization under the
provisions of Section 368(a) of the Internal Revenue Code
of 1986, as amended;
NOW THEREFORE, in consideration of the premises and
of the mutual provisions, agreements and covenants herein
contained, Intersolv, Solsub, the Company and the
Principal Stockholders agree as follows:
ARTICLE I
THE MERGER
1.01 Effective Time.
The Merger shall become effective when a properly
executed certificate of merger is duly filed with the
Secretary of State of the State of Delaware. Such filing
shall be made as soon as practicable after the Closing.
The date on which the Merger shall become effective is
referred to herein as the "Effective Time".
1.02 The Surviving Corporation.
(a) Subject to the terms and conditions
hereof, at the Effective Time, Solsub shall be merged
with and into the Company and the separate existence of
Solsub shall thereupon cease and from the Effective Time,
the Company (the "Surviving Corporation") shall be a
subsidiary of Intersolv. The Merger shall have the
effect set forth in the Delaware Corporation Law (the
"DCL").
(b) The certificate of incorporation of the
Company, as in effect at the Effective Time, shall be the
certificate of incorporation of the Surviving
Corporation. The bylaws of the Company, as in effect at
the Effective Time, shall be the bylaws of the Surviving
Corporation.
(c) The directors and officers of Solsub
shall be the initial directors and officers of the
Surviving Corporation. The directors and officers of the
Surviving Corporation shall hold office from the
Effective Time until their respective successors are duly
elected or appointed and qualify in the manner provided
in the certificate of incorporation and bylaws of the
Surviving Corporation, or as otherwise provided by law.
1.03 Merger Consideration.
(a) At the Effective Time, by virtue of the
Merger and without any action on the part of Intersolv,
the Company or Solsub:
(i) Each share of Company Common Stock
and Company Preferred Stock validly issued and
outstanding prior to the Effective Time (except shares
held by stockholders who perfect their dissenters' rights
as provided in Section 1.03(a)(ii) or 1.03(a)(iii)) shall
be changed and converted into the numbers of shares of
Intersolv Common Stock set forth on Schedule A. (The
total number of shares of Intersolv Common Stock issued
pursuant to this Section 1.03(a)(i) shall be referred to
herein as the "Merger Consideration").
(ii) Company Common Stock and/or
Company Preferred Stock validly issued and outstanding
prior to the Effective Time held by stockholders who have
not voted such shares in favor of or consented to the
Merger and who have delivered to the Surviving
Corporation a written demand for appraisal of such shares
in the manner provided in Section 262 of the DCL
("Dissenting Shares") shall not, by virtue of the Merger,
be converted into the right to receive Intersolv Common
Stock, but the holders thereof shall be entitled to
payment of the appraised value of such Dissenting Shares
in accordance with Section 262 of the DCL ("Section
262"); provided, however, that (i) if any holder of
Dissenting Shares subsequently delivers a written
withdrawal of his or her demand for appraisal of such
shares (with the written approval of the Surviving
Corporation, if such withdrawal is not tendered within 60
days after the Effective Time), (ii) if any holder fails
to establish his entitlement to appraisal rights as
provided in Section 262 or (iii) if neither any holder of
Dissenting Shares nor the Surviving Corporation has filed
a petition demanding a determination of the value of the
Dissenting Shares within the time provided in Section
262, such holder or holders shall be deemed to have
forfeited the right to appraisal of his or her shares and
such shares shall thereupon be deemed to have been
converted into, as of the Effective Time, the right to
receive Intersolv Common Stock as provided in Section
1.03 (a)(i).
(iii) The holders of Company Common
Stock listed on Schedule A have advised the Company of
their desire to dissent from the Merger and to receive
cash for their shares of Company Common Stock rather than
Intersolv Common Stock (the "Objecting Holders"). The
shares of Company Common Stock held by the Objecting
Holders shall not, by virtue of the Merger, be converted
into the right to receive Intersolv Common Stock, but the
Objecting Holders have agreed to accept $41.20 in cash
per share of Company Common Stock. If, however, holders
of Dissenting Shares perfect their appraisal rights and
receive cash with respect to the Dissenting Shares in
excess of $299,929.20, the Objecting Holders have agreed
to withdraw their objections to the Merger and to have
their Company Common Stock converted into, as of the
Effective Time, the right to receive Intersolv Common
Stock as provided in Section 1.03 (a)(i) in such amounts
that the aggregate cash paid by Intersolv with respect to
Dissenting Shares and shares held by Objecting Holders
does not exceed $7,500,000. If one or more Objecting
Holders are required to withdraw their objections to the
Merger as set forth in this Section 1.03 (a)(iii), any
such holder shall be deemed to withdraw his or her
objection in whole and not in part, and such objections
shall be deemed to be withdrawn in such order as the
Objecting Holders shall agree, or if they shall not
agree, by lot. In no event shall an Objecting Holder
receive a combination of Intersolv Common Stock and cash
for such Holder's Company Common Stock or Company
Preferred Stock, if any.
(iv) Each share of Company Common
Stock held in the treasury of the Company immediately
prior to the Effective Time shall, by virtue of the
Merger, be canceled and retired and cease to exist as of
the Effective Time and no consideration shall be paid
with respect thereto.
(v) Each share of Solsub Common Stock
issued and outstanding prior to the Effective Time shall
be changed and converted into one fully paid and
nonassessable share of Company Common Stock.
(b) Intersolv shall not issue fractional
shares of Intersolv Common Stock in connection with
payment of the Merger Consideration. All fractional
shares of Intersolv Common Stock to which a Company
stockholder immediately prior to the Effective Time would
otherwise be entitled at the Effective Time shall be
aggregated. If a fractional share of Intersolv Common
Stock remains after such aggregation, such Company
stockholder otherwise entitled to receive a fractional
share of Intersolv Common Stock pursuant to this
Agreement shall receive cash equal to the amount of such
fraction of a share multiplied by $41.20.
1.04 Exchange of Certificates.
(a) Exchange Agent. Prior to the Closing
Date, Intersolv shall appoint First National Bank of
Boston to act as the exchange agent with respect to the
Merger (the "Exchange Agent").
(b) Intersolv to Provide Common Stock and
Cash. Promptly after the Effective Time, but in no event
later than November 2, 1995, Intersolv shall make
available to the Exchange Agent for exchange, in
accordance with the terms of this Article I and the Plan,
through such reasonable procedures as Intersolv and the
Exchange Agent may adopt, the Intersolv Common Stock
issuable and the cash payable pursuant to the terms
hereof.
(c) Exchange Procedure for Shares. As soon
as practicable after the Effective Time, the Exchange
Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to
the Effective Time represented outstanding shares of the
Company Common Stock and Company Preferred Stock
("Certificates") instructions for use in effecting the
surrender of the Certificates in exchange for
certificates for the Intersolv Common Stock. Upon
surrender of Certificates to the Exchange Agent, the
holders of the Certificates shall be entitled to receive
in exchange therefor the respective number of shares of
Intersolv Common Stock to which they are entitled in
accordance with Schedule A. Each Certificate so
surrendered shall be canceled. Until surrendered as
contemplated by this Section 1.04(c), each Certificate
shall be deemed after the Effective Time to represent the
right to receive, upon such surrender, the number of
shares of Intersolv Common Stock as provided on Schedule
A.
(d) Exchange Procedure for Dissenters. As
soon as practicable after the Effective Time, the
Surviving Corporation shall advise the Exchange Agent of
the identity of the holders of Dissenting Shares and
subsequently shall advise the Exchange Agent of the
identity of each holder of Dissenting Shares who (i)
delivers a written withdrawal of his or her demand for
appraisal of such shares, (ii) fails to establish his or
her entitlement to appraisal rights as provided in
Section 262 or (iii) is otherwise deemed to have
forfeited the right to appraisal of his or her shares.
The Exchange Agent shall thereafter treat such holder as
specified in Section 1.04(c). The Surviving Corporation
shall proceed to dispose of all claims with respect to
Dissenting Shares, and the Exchange Agent shall apply the
cash provided pursuant to Section 1.04(b) to the payment
for Dissenting Shares as the Surviving Corporation shall
direct.
(e) Exchange Procedure for Objecting
Holders. Upon the settlement of all claims with respect
to Dissenting Shares, the Exchange Agent shall apply the
balance of the Intersolv Common Stock and cash provided
pursuant to Section 1.04(b) to the exchange of Company
Common Stock held by the Objecting Holders. To the
extent that the number of Dissenting Shares permits, the
Surviving Corporation shall direct the Exchange Agent to
begin the exchange of shares held by the Objecting
Holders prior to the disposition of all of the claims of
the holders of Dissenting Shares.
1.05 The Closing. Unless this Agreement shall
have been terminated and the transactions contemplated
hereby shall have been abandoned, the closing of the
transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Arent Fox
Kintner Plotkin & Kahn, 1050 Connecticut Avenue, NW,
Washington, D.C., at 8:30 a.m. on Monday, October 23,
1995, or at such other place or places and at such other
time as the parties may agree (the "Closing Date"). If
all of the terms and conditions of this Agreement have
been satisfied, or their satisfaction is waived in
accordance with the provisions of this Agreement, the
certificate of merger meeting the requirements of the DCL
shall be delivered to the Secretary of State of the State
of Delaware for filing on the Closing Date.
1.06 Deliveries at the Closing. In addition
to the other documents and instruments required to be
delivered by any party pursuant to this Agreement, at the
Closing, (i) each director and officer of the Company
will deliver to Intersolv a letter evidencing the
resignation as of the Closing of each such person from
each such position with the Company and (ii) Intersolv
will execute and deliver a Registration Rights Agreement
substantially in the form of Exhibit 1 hereto with each
of the persons listed on Schedule B (the "Registration
Rights Agreement").
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND
THE PRINCIPAL STOCKHOLDERS
The Company and each of the Principal Stockholders,
jointly and severally, hereby represent and warrant to
Intersolv and Solsub the following, except as stated in
the disclosure schedule attached hereto as Exhibit 2 (the
"Company Disclosure Schedule"). For purposes of this
Article II, "material adverse effect" means an adverse
effect with a value of $100,000 or more per occurrence;
provided, however, that any series of related or
connected events shall be deemed to be an "occurrence."
2.01 Corporate Organization. The Company is a
corporation duly organized, validly existing and in good
standing under the laws of Delaware and has full
corporate power and authority to carry on its business as
it is now being conducted and to own the properties and
assets it now owns; the Company is duly qualified or
licensed to do business as a foreign corporation in each
jurisdiction set forth on the Company Disclosure
Schedule, which are the only jurisdictions in which such
qualification or authorization is required by law and in
which failure so to qualify or be authorized could have a
material adverse effect on the business, properties,
condition (financial or otherwise), results of operations
or reasonably foreseeable prospects of the Company and
its Subsidiaries (as defined below) considered as a
whole; the Company Disclosure Schedule contains complete
and correct copies of the Company's certificate of
incorporation and bylaws, as amended to date and as now
in effect.
2.02 Capital Stock. As of the date hereof,
the Company's authorized capital stock consists of
3,500,000 shares, consisting of 3,000,000 shares of
Company Common Stock, $0.01 par value, of which 1,260,614
shares are issued and outstanding and 5,000 shares are
held in the Company's treasury, and of 500,000 shares of
Series A Company Preferred Stock, $0.01 par value, of
which 100,000 shares are issued and outstanding and no
shares are held in the Company's treasury. All issued
and outstanding Company Common Stock and Company
Preferred Stock is duly and validly issued, fully paid
and nonassessable. Except for such Company Common Stock
and Company Preferred Stock, there are no shares of
capital stock of the Company issued and/or outstanding.
Except for (i) options to purchase a total of 192,450
shares of Company Common Stock which have been granted
under the Company's 1993 Key Employee Incentive Stock
Option Plan and 1994 Key Employee Incentive Stock Option
Plan (the "Options"), (ii) conversion rights to acquire a
total of 495,513 shares of Company Common Stock under the
Company's 8.4% Convertible Subordinated Notes due 1999
(the "Debentures") and (iii) conversion rights to acquire
a total of 100,000 shares of Company Common Stock upon
the conversion of the Company Preferred Stock, there are
no outstanding options, warrants, rights, contracts,
commitments, understandings or arrangements by which the
Company is bound to issue any additional shares of its
capital stock or any security convertible thereunto or
exercisable or exchangeable therefor. The Company
Disclosure Schedule sets forth true and complete
information concerning (i) the identity of each holder of
any Options, Debentures or Company Preferred Stock; (ii)
the number of shares of Company Common Stock issuable
upon the exercise of each such Option and upon the
conversion of such Debentures and Company Preferred
Stock; and (iii) the dates on which such Options have
vested or will vest and became or will become
exercisable. Fifty or fewer persons residing in Belgium
hold Company Common Stock, Company Preferred Stock and/or
Debentures.
2.03 Authorization. The Company has full
corporate power and authority to enter into this
Agreement and to carry out the transactions contemplated
hereby. The Board of Directors of the Company (the
"Company Board") has duly authorized and approved the
execution and delivery of this Agreement and the
transactions contemplated hereby. Except for sending the
notice required by Section 228(d) of the DCL, the Company
has completed all other necessary actions to authorize
and approve this Agreement and the transactions
contemplated hereby, including all required approvals of
holders of the Company Common Stock, Company Preferred
Stock and Debentures. This Agreement is a legal, valid
and binding obligation of the Company, enforceable in
accordance with its terms.
2.04 Subsidiaries. Except for the
subsidiaries listed in the Company Disclosure Schedule
(individually, a "Subsidiary" and collectively, the
"Subsidiaries"), each of which is a duly organized and
validly existing corporation in good standing in the
jurisdiction of its incorporation, as set forth in the
Company Disclosure Schedule, the Company does not own,
directly or indirectly, any capital stock or other equity
securities of any corporation, partnership or other
entity or have any direct or indirect equity or ownership
interest in any business other than the business
conducted by the Company. With respect to each
Subsidiary: (a) except as set forth in the Company
Disclosure Schedule, the Company owns directly or
indirectly all of such Subsidiary's outstanding capital
stock; (b) all such outstanding capital stock is duly and
validly issued, fully paid and nonassessable; (c) there
are no outstanding options, warrants, rights, contracts,
commitments, understandings or arrangements by which the
Subsidiary is bound to issue any additional shares of its
capital stock or any security convertible thereunto or
exercisable or exchangeable therefor; (d) there are no
outstanding options, warrants, rights, contracts,
commitments, understandings or arrangements by which the
Company or another Subsidiary is bound to transfer any
shares of a Subsidiary's capital stock or any security
convertible thereunto or exercisable or exchangeable
therefor; (e) the Subsidiary is qualified or licensed to
do business as a foreign corporation in the jurisdictions
identified in the Company Disclosure Schedule, which are
all of the jurisdictions in which the character of its
properties or the nature of its business makes such
qualification or licensing necessary (except for such
jurisdictions in which the failure to so qualify or be
licensed would not have a material adverse effect on the
business, properties, condition (financial or otherwise),
results of operations or reasonably foreseeable prospects
of the Company and its Subsidiaries considered as a
whole); and (f) the Company Disclosure Schedule contains
complete and correct copies of each Subsidiary's charter
and bylaws, as amended to date and as now in effect.
2.05 No Violation. None of the Company, any
Subsidiary or any of their respective properties is
subject to or obligated under any law, rule or regulation
of any foreign, federal, state or local governmental
authority, or any order, writ, injunction or decree, or
any agreement, instrument, license, franchise or permit,
which would be breached or violated by the performance of
this Agreement and the consummation of the transactions
contemplated hereby. The performance of this Agreement
and the consummation of the transactions contemplated
hereby do not and will not conflict with, result in a
breach or violation of, or a default under (i) the
Company's or any Subsidiary's certificate of
incorporation or bylaws, (ii) any obligation under any
mortgage, lease, agreement or instrument applicable to
the Company, any Subsidiary or any of their respective
properties or (iii) any law, rule, regulation, judgment,
order or decree of any government or governmental or
regulatory authority or court having jurisdiction over
the Company, any Subsidiary or any of their respective
properties, except, in the case of clauses (ii) and (iii)
hereof, where such conflict, breach, violation or default
would not have a material adverse effect on the business,
properties, condition (financial or otherwise), results
of operations or reasonably foreseeable prospects of the
Company and its Subsidiaries considered as a consolidated
entity, and provided further that no representation or
warranty is given with respect to the possible
application of any law, rule or regulation pertaining to
the preservation of competition as a result of the
consummation of the transactions contemplated hereby.
The Company's share of the market in Belgium for software
for database connectivity does not exceed 15 percent.
2.06 Financial Statements. The Company has
made available to Intersolv and Solsub and has attached
hereto as Exhibit 3 true and complete copies of the
Company's financial statements for the years ended
December 31, 1992, 1993 and 1994, each of which has been
audited by KPMG Peat Marwick, independent public
accountants (the "Company Financial Statements"). The
Company Financial Statements have been prepared in
accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) and
fairly present in all material respects the consolidated
financial position of the Company and its Subsidiaries as
of their respective dates and the related consolidated
results of operations and cash flows for the periods then
ended. For purposes of this Agreement, the unaudited
consolidated balance sheet of the Company and its
Subsidiaries at August 31, 1995 is hereinafter referred
to as the "Company Balance Sheet." The Company has
provided to Intersolv and Solsub the unaudited
consolidated balance sheet and the related consolidated
statements of income, for the Company and its
Subsidiaries, for the eight months ended August 31, 1995
(collectively, the "August Financial Statements"). The
August Financial Statements have been prepared in all
material respects in accordance with generally accepted
accounting principles applied on a consistent basis
during the periods involved (except as may be indicated
in the notes thereto) and fairly present in all material
respects the consolidated financial position of the
Company and its Subsidiaries as of August 31, 1995 and
the related consolidated results of operations for the
periods then ended, except for any adjustment described
therein and the absence of complete footnotes thereto.
2.07 No Undisclosed Liabilities. Except for
(a) liabilities and obligations disclosed in the Company
Disclosure Schedule, (b) liabilities and obligations
incurred in the ordinary course of business since the
date of the Company Balance Sheet, (c) costs and expenses
incurred in connection with entering into and
consummating the transactions contemplated by this
Agreement and (d) the obligations expressly set forth in
this Agreement, none of the Company, any Subsidiary or
any of their respective properties is subject to any
material liability or obligation (absolute, accrued,
contingent or otherwise) which was not fully reflected or
reserved against in the Company Balance Sheet.
2.08 Absence of Certain Changes. Except as
disclosed in the Company Disclosure Schedule or as
contemplated or permitted by this Agreement, since the
date of the Company Balance Sheet there has not been:
(a) any material adverse change in the business,
properties, condition (financial or otherwise),
operations or reasonably foreseeable prospects of the
Company and its Subsidiaries considered as a consolidated
entity; (b) any damage, destruction or loss, whether
covered by insurance or not, materially and adversely
affecting the properties or business of the Company and
its Subsidiaries considered as a consolidated entity; (c)
any declaration, setting aside or payment of any dividend
(whether in cash, stock or property) in respect of the
capital stock of the Company, or any redemption or other
acquisition of such stock by the Company or any
Subsidiary; (d) any increase in the compensation payable
or to become payable by the Company or any Subsidiary to
their respective employees or any adoption of or increase
in any bonus, insurance, pension or other employee
benefit plan, payment or arrangement made to, for or with
any such employees, except increases occurring in the
ordinary course of business as set forth in the Company
Disclosure Schedule; (e) a loss of 15 or more employees
or the addition of 15 or more employees; (f) except for
the grant of licenses and the sale of inventory in the
ordinary course of business, any sale or transfer by the
Company or any Subsidiary affecting any tangible or
intangible asset (other than an asset no longer necessary
or useful in the business), any mortgage or pledge or
creation of any security interest, lien or encumbrance
affecting any such asset, any lease of property,
including equipment, or cancellation of any debt or
claim; (g) any material transaction by the Company or any
Subsidiary not in the ordinary course of business; (h)
any change by the Company or any Subsidiary in accounting
methods or principles; or (i) any understanding or
agreement, whether in writing or otherwise, to take any
action described in this Section 2.08.
2.09 Contracts and Insurance. Except as
disclosed in the Company Disclosure Schedule, there are
(a) no employment agreements, other personal service
agreements, non-competition agreements, confidentiality
agreements or agreements with respect to inventions to
which the Company or any Subsidiary is a party and (b) no
agreements (including license agreements, maintenance
agreements, support agreements, distribution agreements,
joint venture agreements, stockholder agreements, loan
agreements and lease agreements, if any, but excluding
employee benefit plans or arrangements listed pursuant to
Section 2.14) to which the Company or any Subsidiary is a
party, which is material to the Company and its
Subsidiaries considered as a consolidated entity, or
which by its terms involves the future payment by or to
the Company or a Subsidiary of $100,000 or more. None of
the Company, any Subsidiary or any other party to any
such agreement has breached or violated any provisions
of, is in default under the terms of, nor will compliance
with the terms of this Agreement result in a breach of or
default in, any such agreement, plan or arrangement, a
breach or violation of which or a default under which
would have a materially adverse effect upon the business,
properties, condition (financial or otherwise),
operations or reasonably foreseeable prospects of the
Company and its Subsidiaries considered as a consolidated
entity. The Company or one of its Subsidiaries may
terminate all of the distribution agreements entered into
by the Company or any of its Subsidiaries without penalty
upon prior unilateral notice given by the Company or such
Subsidiary on the expiration of their respective current
terms. The Company Disclosure Schedule includes a true
and correct schedule of all policies of insurance carried
by the Company and its Subsidiaries. Such policies are
in full force and effect, and no notice of cancellation
has been received for any of such policies.
2.10 Title to Property; Leases.
(a) The Company or one of its Subsidiaries,
as the case may be, has good and marketable title to all
real property and good and sufficient title to all
material property and assets which are not real property,
reflected in the Company Balance Sheet or acquired after
the date of the Company Balance Sheet (except (i)
properties and assets sold or otherwise disposed of since
the date of the Company Balance Sheet in the ordinary
course of business, (ii) assets no longer necessary or
useful in the business and (iii) properties and assets
that are leased, as to which it has valid and enforceable
leases), free and clear of all mortgages, liens, pledges,
charges or encumbrances of any kind or character, except
(i) statutory liens for real and personal property taxes
not yet delinquent or payable subsequent to the date of
this Agreement and statutory or common law liens securing
the payment or performance of any obligation of the
Company or a Subsidiary, the payment or performance of
which is not delinquent, or which are payable or
performable without interest or penalty subsequent to
such date, or the validity of which are being contested
in good faith by the Company or a Subsidiary; (ii) the
rights of customers of the Company with respect to
inventory or work in process under orders or contracts
entered into by the Company or a Subsidiary in the
ordinary course of business; (iii) such imperfections or
irregularities of title, liens, easements, charges or
encumbrances as do not materially detract from or
materially interfere with the use of the properties or
assets subject thereto, or affected thereby, or otherwise
materially impair business operations at such properties;
(iv) such imperfections or irregularities of title,
liens, easements, charges or encumbrances as would not
materially interfere with the sale of, or materially
detract from the aggregate value of, such properties and
assets; and (v) as expressly disclosed in the Company
Disclosure Schedule. The material buildings, machinery
and equipment of the Company and its Subsidiaries
reflected in the Company Balance Sheet are in
satisfactory operating condition and repair (excepting
normal wear and tear, defects the cost of repairing which
would not be material, any need for ordinary, routine
maintenance and repairs, such as have been sold or
otherwise disposed of since the date of the Company
Balance Sheet in the ordinary course of business or such
as are no longer necessary or useful in the business).
(b) For the purposes of this Agreement:
(i) "Product" means the computer
programs and components thereof known as SequeLink, all
as more fully described in the Company Disclosure
Schedule, including all options or programs marketed with
or as a part of or adjunct to the foregoing, and all
copyrights related thereto (including rights in the
structure, sequence and organization of the Product, all
screen layouts, command sequences and user interfaces).
The term "Product" shall include all present and
predecessor versions of the above programs, products and
components and related source and object code and all
rights to manufacture, use and sell the same. "Product"
shall also include all rights, claims and causes of
action arising out of any employment, non-competition,
confidentiality or other similar agreement, obligation or
understanding between, or arising out of, any existing or
former employees' employment relationship with the
Company or any Subsidiary, to the extent that such rights
relate to the software products described above.
(ii) "Documentation" means all
existing specifications and documents for the use and
maintenance of the Product, including but not limited to,
all user guides, installation guides, systems listings,
narrative descriptions, file layouts, logic flow
diagrams, source and load modules, output reports, test
or other data, test programs, and other necessary
information that is owned, used or held by the Company or
any Subsidiary.
(iii) "Intellectual Property" means
any and all right, title and interest of the Company or
any Subsidiary in and to: all patents, registered or
unregistered tradenames, trademarks and servicemarks and
registered or unregistered copyrights and applications
therefor ("Rights") owned by the Company or any
Subsidiary (collectively "Company Rights"); trade
secrets, customer lists, methodologies (to the extent
protectable), proprietary development and marketing
information and know-how, inventions, inventors' notes
(to the extent such notes exist), drawings, and designs
associated with any of the foregoing, relating to the
business of the Company or its Subsidiaries.
(iv) The Company or its
Subsidiaries, Techgnosis, Inc. or Gnosis N.V., have full
and exclusive right, title and interest in and to the
Product, Documentation and Intellectual Property, free
and clear of all claims, liens, encumbrances, licenses
and other interests, except for those specifically
disclosed on the Company Disclosure Schedule, and neither
the Company nor any of its Subsidiaries has any
obligation to any other person or entity with respect to
the Product, Documentation or Intellectual Property,
except as disclosed in the Company Disclosure Schedule.
The Company, Techgnosis, Inc. or Gnosis N.V. has the
right to bring actions for infringement of the Product,
the Documentation and the Intellectual Property, and none
of the Intellectual Property infringes the rights of any
other person, except as specifically disclosed in the
Company Disclosure Schedule. The Company, Techgnosis,
Inc. or Gnosis N.V. has taken all action reasonably
necessary to maintain as trade secrets the source codes
and all other proprietary portions of the Product
described in the Company Disclosure Schedule. Except as
set forth in the Company Disclosure Schedule, no source
or object code of any software included in the Product is
subject to escrow. Except as disclosed in the Company
Disclosure Schedule, the Company, Techgnosis, Inc. or
Gnosis N.V. has all rights to any existing versions of
the Product for use in various computer operating
environments and, to the knowledge of the Company and the
Principal Stockholders, is not prohibited from converting
the Product for use in all other computer operating
environments.
(c) Set forth in the Company Disclosure
Schedule is a true and correct list of each lease or
occupancy agreement with respect to which the Company or
any of its Subsidiaries is the tenant (collectively, the
"Company Leases" and individually, a "Company Lease"),
which list sets forth the date of each such Company Lease
and any amendment thereto. The information set forth in
the Company Disclosure Schedule with respect to each
Company Lease is true and correct in all material
respects. Each of the Company Leases is in full force
and effect and, except as expressly set forth in the
Company Disclosure Schedule, (i) no Company Lease has
been modified, amended, canceled or terminated; (ii) none
of the Company, any of its Subsidiaries or any other
party to any Company Lease is in material default of any
of its respective obligations thereunder; (iii) no notice
has been given or received by the lessee under any
Company Lease alleging a default by the recipient of such
notice or a claim or offset against the enforcement of
such recipient's rights under such Company Lease; and
(iv) no consent or approval of the lessor under any
Company Lease or of any other party is required to permit
the transactions contemplated by this Agreement, and such
transactions will not conflict with, or result in any
breach or violation of, or default under, any Company
Lease, entitle the lessor to cancel or terminate the same
or otherwise materially adversely affect the rights of
the lessee thereunder. The copies of the Company Leases
that have heretofore been delivered or made available to
Intersolv and Solsub are true, complete and correct
copies of the Company Leases and reflect and constitute
the entire agreement between the lessor and lessee
thereunder concerning the leasing of and/or occupancy of
the premises or property covered thereby.
2.11 Litigation. There is no suit, action,
proceeding, claim (including breach of warranty and
product liability claims) or, to the Company's or the
Principal Stockholders' knowledge, investigation
involving $100,000 or more (or of material significance
because of the nonmonetary relief sought), pending, or to
the Company's or such persons' knowledge, threatened or
contemplated against the Company or any Subsidiary or
materially affecting the business, properties, condition
(financial or otherwise), results of operations or
reasonably foreseeable prospects of the Company and its
Subsidiaries considered as a consolidated entity, nor is
there any such judgment, decree, injunction or order of
any court or governmental department, commission, agency
or instrumentality outstanding against the Company or any
Subsidiary. None of the Company, any Subsidiary or any
of their respective properties or assets is subject to
any other judgment, injunction or decree that materially
and adversely affects the business, properties (financial
or otherwise), results of operations or reasonably
foreseeable prospects of the Company and its Subsidiaries
considered as a consolidated entity.
2.12 Tax Matters.
(a) For purposes of this Agreement, (i)
"Taxes" shall mean all taxes, assessments, charges,
duties, fees, levies or other governmental charges
(including interest, penalties or additions associated
therewith) (including, without limitation, federal,
state, city, county, local, foreign, or other income,
franchise, capital, withholding, real or tangible
property, employment, unemployment compensation,
transfer, sales, use, valued added, excise and all other
taxes of any kind) imposed by the United States, any
foreign government or any state, city, county or other
subdivision or agency thereof, whether disputed or not,
(ii) "Tax Return" shall mean any return, declaration of
estimated tax, report or other information to be required
to be supplied to a taxing authority with respect to
Taxes and (iii) "Transaction" means any one or more
transactions, acts, events or omissions of whatever
nature.
(b) The Company and each of its
Subsidiaries have filed on a timely basis all Tax Returns
and have timely given all notices in respect of Taxes
required to be filed or given by any of them under
applicable law within the applicable statute of
limitations period. Except as contemplated in this
Section 2.12(b), such Tax Returns are complete and
accurate in all material respects. All Taxes shown on
such Tax Returns have been, and all Taxes subsequently
assessed with respect to the periods and or Transactions
to which such Tax Returns relate have been or will be,
timely, and fully paid except for amounts that the
Company or a Subsidiary is contesting in good faith, as
set forth in the Company Disclosure Schedule. Except as
set forth in the Company Disclosure Schedule, no
extensions of time to file such Tax Returns or waivers of
statutes of limitation have been granted. The provisions
in the August Financial Statements for Taxes currently
payable and for deferred Taxes are adequate in all
material respects to provide for such Taxes for which the
Company and its Subsidiaries taken as a whole may be
liable in respect of periods or Transactions through the
dates thereof. Such provisions do not assume the
availability of any loss carryforwards. Based on the
Company's federal income tax returns as filed (taking
into account any amendments) and based on estimates for
its current taxable year, except as indicated in the
Company Disclosure Schedule, the Company has no federal
net operating losses, capital losses or tax credits
available for carryforward. There have been, or prior to
the Effective Time, there will be, delivered to Intersolv
true and complete copies of all income Tax Returns filed
on behalf of the Company and its Subsidiaries for tax
periods ending on or after December 31, 1992. No Tax
Returns of the Company and its Subsidiaries are currently
under audit by the Internal Revenue Service (the "IRS")
or other taxing authority. No fact or condition exists
relating to any past or present Transaction, except as
set forth in the Company Disclosure Schedule, which if
known to any taxing authority having jurisdiction, would
in the Company's or Principal Stockholders' reasonable
judgment likely result in a successful challenge by such
authority of the treatment or omission of such factor or
condition on any tax return, report or notice of the
Company or its Subsidiaries, and no issue has arisen in
any examination of the Company or any Subsidiary by the
IRS or other taxing authority that, in either case, if
raised with respect to any other period not so examined
would result in a proposed material deficiency for any
other period not so examined, if upheld. The Company and
its Subsidiaries have made all payments of estimated
Taxes required to be made under Section 6655 of the
Internal Revenue Code of 1986, as amended (the "Code")
and any comparable provisions of state, local or foreign
law. All such amounts that are required to be remitted
to any taxing authority have been duly remitted, except
for such amounts as the Company or a Subsidiary is
contesting in good faith as set forth in the Company
Disclosure Schedule. Except as set forth in the Company
Disclosure Schedule, there is no pending, threatened or
contemplated action, audit, proceeding or investigation
for the assessment or collection of Taxes of the Company
or any of its Subsidiaries. Except as set forth in the
Company Disclosure Schedule, there are no requests for
rulings, outstanding subpoenas or requests for
information with respect to Taxes of the Company or any
of its Subsidiaries, proposed reassessments of any
property owned or leased by the Company or any of its
Subsidiaries, or similar matters pending with respect to
any taxing authority. Except as set forth in the Company
Disclosure Schedule, no power of attorney has been
granted by the Company or any of its Subsidiaries with
respect to any matter relating to Taxes which is
currently in force. Any adjustment of Taxes of the
Company or its Subsidiaries in any examination which is
required to be reported to the IRS or other appropriate
state, local or foreign taxing authorities has been
reported and any additional amount due with respect
thereto has been paid except for amounts that the Company
or Subsidiary is contesting in good faith, as set forth
in the Company Disclosure Schedule.
(c) The Company has provided to Intersolv
copies of all material revenue agent's reports and other
material written assertions of deficiencies or other
liabilities for Taxes, of the Company and its
Subsidiaries with respect to past periods for which the
limitations period has not expired.
2.13 Intellectual Property Rights. The Company
Disclosure Schedule accurately identifies all Product,
Company Rights and all Rights licensed to the Company or
its Subsidiaries by third parties, the ownership as well
as the registered or unregistered status of all the
foregoing being separately stated. The Product,
Documentation and Intellectual Property (including all
Company Rights), together with all Rights licensed to the
Company by third parties, are adequate for the conduct of
the business of the Company and its Subsidiaries
considered as a consolidated entity. Products
manufactured and/or sold and services provided by the
Company and its Subsidiaries do not infringe the Rights
owned by any other person or entity. Except by virtue of
their ownership of Company Common Stock, Company
Preferred Stock and Debentures, no Principal Stockholder,
and to the knowledge of the Company and the Principal
Stockholders, no director, officer or employee of the
Company or any Subsidiary, owns any interest in (a) any
Product, Documentation or Intellectual Property, or (b)
any Rights which infringe upon, conflict with, or relate
to any Product, Documentation or Intellectual Property
which may supplement, substitute for or compete with any
of the Product, Documentation or Intellectual Property or
Rights now used by the Company or any Subsidiary.
2.14 Employee Benefit Plans; Employees.
(a) All employee benefit plans or other
material arrangements under which or to which the Company
or any Subsidiary contributes to or for the benefit of
their respective employees are accurately identified in
the Company Disclosure Schedule. All such plans and
arrangements have been, and up to the Closing shall
continue to be, maintained in compliance in all material
respects with, where applicable, the Employee Retirement
Income Security Act, as amended ("ERISA"), the Code, all
federal and state securities laws, all other applicable
federal, state and foreign laws, and all regulations and
rulings issued by government agencies responsible for the
administration or enforcement of one or more such laws.
There is no current matter, including any matter
involving the administration and operation of such plans
or arrangements, which would either materially adversely
affect the likelihood of any of such plans or
arrangements being deemed to be in compliance with the
applicable provisions of any such laws, regulations or
rulings or impose any material liability upon the Company
and its Subsidiaries considered as a consolidated entity
with respect to such plans or arrangements. No such plan
or arrangement, nor any trust established thereunder,
shall be amended or terminated prior to the Closing,
except as may be adopted as a condition to the issuance
of a favorable determination letter by the IRS, or as
otherwise may be required to comply with the requirements
of applicable laws.
(b) None of the Company, any Subsidiary,
any of the employee benefit plans listed in the Company
Disclosure Schedule or any trustee or administrator of
any such plans has engaged in a transaction in connection
with which the Company or any of its Subsidiaries could
be subject to either a civil penalty assessed pursuant to
Section 502(i) of ERISA or a tax imposed by Section 4975
of the Code.
(c) The employee retirement plans listed in
the Company Disclosure Schedule as being tax-exempt
(collectively the "Pension Plans"), at all times have
qualified as tax-exempt plans under Section 401 of the
Code, and the trusts which are a part of such Pension
Plans (collectively, the "Trusts") at all times have
qualified as tax-exempt trusts under Section 501(a) of
the Code. All such Pension Plans and Trusts shall
continue to so qualify up to the Closing.
(d) No liability to the Pension Benefits
Guaranty Corporation ("PBGC") has been incurred, with
respect to any Pension Plan, by the Company or any of its
Subsidiaries. Neither the Company nor any of its
Subsidiaries has received notice of the institution of
proceedings by the PBGC to terminate any Pension Plan.
Included in the Company Disclosure Schedule is a true and
correct list of all notices of reportable events (within
the meaning of Section 4043(b) of ERISA) which the
Company or any of its Subsidiaries has filed with the
PBGC.
(e) The Company has not been a
participating employer in any "multi-employer" or
"multiple employer" plans (within the meaning of Sections
4063 and 4064 of ERISA).
(f) The Company Disclosure Schedule
contains a true and complete list identifying each
employee of the Company and its Subsidiaries, each such
employee's position with the Company and/or its
Subsidiaries and the salary and other compensation
currently payable to each such employee.
(g) Gnosis N.V. has no employees entitled
to the status of "protected workers" nor former employees
currently entitled to an early retirement pension, as
those benefits are provided for in applicable Belgian
law.
2.15 Labor Matters. The Company and each of
its Subsidiaries have complied in all material respects
with all applicable federal, state, local and foreign
laws and regulations relating to the employment of labor,
including, to the extent applicable, the Occupational
Safety and Health Act and any provisions of such laws and
regulations relating to wages, bonuses, collective
bargaining, equal opportunity, equal pay and the payment
of social security and similar payroll taxes. No
employees of the Company or any of its Subsidiaries are
on strike or have threatened to strike. Except as set
forth in the Company Disclosure Schedule, no unfair labor
practice charges are pending or are threatened or
contemplated against the Company or any Subsidiary.
Gnosis N.V. is not party to a collective bargaining
agreement, nor is it required to participate in a works
council or a health and safety committee, as such
arrangements are provided for in applicable Belgian law.
Gnosis N.V. has not been subject to a labor inspection.
2.16 Compliance with Applicable Laws. The
Company and each of its Subsidiaries are in compliance
with all foreign, federal, state and local laws,
statutes, ordinances, regulations, orders, decrees and
judgments applicable to them, the enforcement of which,
if any one were not in compliance, would have a
materially adverse effect on the business, properties,
condition (financial or otherwise), results of operations
or reasonably foreseeable prospects of the Company and
its Subsidiaries considered as a consolidated entity.
2.17 Accounts Receivable. Except as set forth
in the Company Disclosure Schedule, the accounts
receivable reflected on the Company Balance Sheet (or any
accounts receivable sold by the Company or any Subsidiary
on a recourse basis) arose and will arise from bona fide
transactions in the ordinary course of business (except
for amounts which are not, individually or in the
aggregate, material) and the Company has no reason to
believe that such receivable will not be collected in
full or be fully collectible at their face amounts (less
any applicable reserves reflected in the August Financial
Statements or thereafter established on a basis
consistent with the reserves reflected on the August
Financial Statements) within 90 days after the Closing.
2.18 Access. All persons who have had access to
any material portion of the Intellectual Property which
is proprietary and non-public have executed non-
disclosure agreements with the Company.
2.19 Accounting Treatment. All transactions
effected by the Company in the Company Common Stock,
Company Preferred Stock or Debentures within the two
years before the Merger was initiated or between the date
the Merger was initiated and the Closing are set forth in
the Company Disclosure Schedule. Except as specifically
set forth in the Company Disclosure Schedule, the Company
has not, either within the two years before the Merger
was initiated or between the date the Merger was
initiated and the Closing, (i) amended the terms of the
Company Common Stock, Company Preferred Stock or
Debentures so as to change the relative voting rights
thereof or (ii) amended the terms of outstanding options
to purchase Company Common Stock so as to change the
vesting or exercise rights thereof. The Company has
reacquired Company Common Stock, Company Preferred Stock
or Debentures only for purposes other than business
combinations and has not reacquired Company Common Stock,
Company Preferred Stock or Debentures between the date
the Merger was initiated and the Closing. All
reacquisitions of Company Common Stock, Company Preferred
Stock or Debentures were approved by the Company's board
of directors, such approvals are set forth in minutes of
meetings of the Company's directors or written consents
of the Company directors and such reacquisitions have
been listed in the Company Disclosure Schedule. For the
purposes of this representation, the conversion of
Company Preferred Stock into Company Common Stock and the
conversion of Debentures into Company Common Stock in
accordance with their respective existing terms shall not
be deemed to constitute a "reacquisition."
2.20 Governmental Authorities. No consent,
approval, order or authorization of, or registration,
declaration or filing with, any governmental entity is
required by or with respect to the Company or any
Subsidiary in connection with the execution and delivery
of this Agreement or the consummation of the transactions
contemplated hereby, except for (i) the filing of the
certificate of merger with the Delaware Secretary of
State, (ii) such consents as have been obtained in
connection with the transactions contemplated herein and
(iii) such other consents, authorizations, filings,
approvals and registrations which if not obtained or made
would have a material adverse effect on the Company's
ability to consummate the transactions hereunder.
2.21 Principal Stockholders.
(a) The Principal Stockholders have full
power and authority to enter into this Agreement and to
carry out their obligations contemplated hereby. This
Agreement has been duly executed and delivered by, and is
the legal, valid and binding obligation of, the Principal
Stockholders, enforceable against them in accordance with
its terms. The Principal Stockholders are not subject to
or obligated under any law, rule or regulation of any
governmental authority, or any judgment, order, writ,
injunction or decree, or any license, franchise or
permit, which would be breached or violated by the
Principal Stockholders' execution, delivery and
performance of this Agreement and the consummation of the
transactions contemplated hereby. The execution and
delivery of this Agreement by the Principal Stockholders
and the consummation of the transactions contemplated
hereby do not and will not conflict with or result in the
violation of any obligation under any mortgage, lease,
agreement or instrument applicable to any of them.
(b) Each of the Principal Stockholders,
individually, and not jointly, represents and warrants
that such Principal Stockholder is acquiring the
Intersolv Common Stock for such Principal Stockholder's
own account, for investment purposes and without any view
to resell or effect any distribution of such Intersolv
Common Stock, other than as contemplated in the
Registration Rights Agreement or as otherwise permitted
by applicable law. The Principal Stockholders have been
fully informed as to the circumstances under which they
are required to take and hold such Intersolv Common Stock
pursuant to the requirements of the Securities Act of
1933, as amended (the "Securities Act"), and any
applicable state securities laws. The Principal
Stockholders understand that the Intersolv Common Stock
has not been registered under the Securities Act or any
applicable state securities law and may not be offered or
sold in the United States or to a "U.S. Person" (as
defined under Regulation S of the Securities Act) unless
registered under the Securities Act and any applicable
state law or an exemption therefrom is available
(including, but not limited to, Rule 904 under Regulation
S). Each of Furman Selz SBIC, L.P. and Sofinnova
Ventures III L.P. is an "accredited investor" (as defined
under Regulation D of the Securities Act) and none of
BMI; Sofinnova Capital II FCPR; Marc Van Rompaey, Jean-
Claude Deschamps, Karel De Gucht, Andre Van den Bogaert,
TEG Holding bv, GIMV bv, Parnib Deelnemingen bv, or RIDIS
bv is a "U.S. Person" (as defined above).
(c) The 18 persons with United States
addresses listed on the Company's stockholder list dated
September 20, 1995 are the only record holders of the
Company's securities who are U.S. Persons. Neither the
Company nor the Principal Stockholders know of any other
U.S. Person who has a beneficial interest in the
Company's securities.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
INTERSOLV
Intersolv represents and warrants to the Company and
the Company's stockholders and Debenture holders that
except as stated in the disclosure schedule attached
hereto as Exhibit 4 (the "Intersolv Disclosure
Schedule"):
3.01 Corporate Organization. Intersolv is a
corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware.
Intersolv has full corporate power and authority to carry
on its business as it is now being conducted and to own
the properties and assets it now owns.
3.02 Authorization. Intersolv has full
corporate power and authority to enter into this
Agreement and to carry out the transactions contemplated
hereby. The Board of Directors of Intersolv (the
"Intersolv Board") has duly authorized and approved the
execution and delivery of this Agreement and the
transactions contemplated hereby, and no other corporate
proceedings on the part of Intersolv are necessary to
authorize and approve this Agreement and the transactions
contemplated hereby. This Agreement is a legal, valid
and binding obligation of Intersolv, enforceable against
Intersolv in accordance with its terms.
3.03 No Violation. Neither Intersolv nor any
of its subsidiaries (individually, an "Intersolv
Subsidiary" and collectively, the "Intersolv
Subsidiaries"), nor any of their respective properties is
subject to or obligated under any law, rule or regulation
of any governmental authority, or any order, writ,
injunction or decree, or any material agreement,
instrument, license, franchise or permit, which would be
materially breached or violated by the execution,
delivery and performance of this Agreement and
consummation by Intersolv of the transactions
contemplated hereby. The execution, delivery and
performance of this Agreement by Intersolv and the
consummation of the transactions contemplated hereby do
not and will not conflict with, result in a breach or
violation of, or a default under (i) Intersolv's
certificate of incorporation or bylaws, (ii) any
obligation under any mortgage, lease, agreement or
instrument applicable to Intersolv, any Intersolv
Subsidiary or any of their respective properties or (iii)
any law, rule, regulation, judgment, order or decree of
any government or governmental or regulatory authority or
court having jurisdiction over Intersolv, any Intersolv
Subsidiary or any of their respective properties, except
in the case of clauses (ii) and (iii) where such
conflict, breach, violation or default would not have a
material adverse effect on the business, properties,
condition (financial or otherwise), results of operations
or reasonably foreseeable prospects of Intersolv and the
Intersolv Subsidiaries considered as a consolidated
entity and provided further that no representation or
warranty is given with respect to the possible
application of any law, rule or regulation pertaining to
the preservation of competition as a result of the
consummation of the transactions contemplated hereby.
3.04 Governmental Authorities. No consent,
approval, order or authorization of, or registration,
declaration or filing with, any governmental entity is
required by or with respect to Intersolv or any Intersolv
Subsidiary in connection with the execution and delivery
of this Agreement or the consummation of the transactions
contemplated hereby, except for (i) the filing of the
certificate of merger with the Delaware Secretary of
State, (ii) such disclosures, filings, statements and
reports under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or otherwise as may be
required in connection with this Agreement and the
transactions contemplated hereby to be filed with the
Securities and Exchange Commission ("SEC") or NASDAQ
National Market, (iii) such consents as have been
obtained in connection with the transactions contemplated
herein and (iv) such other consents, authorizations,
filings, approvals and registrations which if not
obtained or made would have a material adverse effect on
Intersolv's ability to consummate the transactions
hereunder.
3.05 SEC Documents; Financial Statements.
Intersolv has made available to the Company and each of
the Principal Stockholders true and complete copies of
Intersolv's Annual Report on Form 10-K for its fiscal
year ended April 30, 1995, Intersolv's Annual Report to
Stockholders for its fiscal year ended April 30, 1995,
its proxy statement with respect to its annual meeting of
stockholders held in September 1995 and Intersolv's
Quarterly Report on Form 10-Q for its quarter ended July
31, 1995 (collectively, and including all exhibits and
schedules thereto and documents incorporated by reference
therein, the "Intersolv SEC Documents"), and will make
the Intersolv SEC Documents available to the Company's
other stockholders. As of their respective filing dates,
all Intersolv SEC Documents complied in all material
respects with the requirements of the Exchange Act or the
Securities Act, as applicable, and none of the Intersolv
SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact
required to be stated therein or necessary in order to
make the statements made therein, in light of the
circumstances under which they were made, not misleading.
No subsequent event has made any of the Intersolv SEC
Documents materially misleading, except to the extent
superseded or corrected by a subsequent Intersolv SEC
Document. The audited consolidated financial statements
and unaudited consolidated interim financial statements
of Intersolv and the Intersolv Subsidiaries included or
incorporated by reference in the Intersolv SEC Documents
(collectively, the "Intersolv Financial Statements") have
been prepared in accordance with generally accepted
accounting principles applied on a consistent basis
during the periods involved (except as may be indicated
in the notes thereto), and fairly present the
consolidated financial position of Intersolv and the
Intersolv Subsidiaries as of their respective dates and
the consolidated results of their operations and cash
flows for the periods then ended, subject, in the case of
any unaudited interim financial statements, to the
absence of complete footnotes thereto. For purposes of
this Agreement, the unaudited consolidated balance sheet
of Intersolv and the Intersolv Subsidiaries at July 31,
1995, including the notes thereto, is hereinafter
referred to as the "Intersolv Balance Sheet." Intersolv
has provided to the Company the unaudited consolidated
balance sheet, and related unaudited consolidated
statements of income and cash flows, for Intersolv, for
the fiscal quarter ended July 31, 1995 (collectively, the
"Intersolv July Financial Statements"). The Intersolv
July Financial Statements have been prepared in
accordance with generally accepted accounting principles
applied on a consistent basis for the periods involved
(except as may be indicated in the notes thereto), and
fairly present the consolidated financial position of
Intersolv and the Intersolv Subsidiaries as of its date
and the consolidated results of their operations and cash
flows for the periods then ended, subject to the absence
of complete footnotes thereto.
3.06 No Undisclosed Liabilities. Except for
(a) liabilities and obligations disclosed in the
Intersolv SEC Documents and the Intersolv Disclosure
Schedule and (b) liabilities and obligations incurred in
the ordinary course of business since the date of the
Intersolv Balance Sheet, liabilities and obligations
incurred in connection with the transactions contemplated
by this Agreement, and liabilities and obligations
contemplated or permitted by this Agreement, none of
Intersolv, any Intersolv Subsidiary or any of their
respective properties is subject to any material
liability or obligation (absolute, accrued, contingent or
otherwise) which was not fully reflected or reserved
against in the Intersolv Balance Sheet.
3.07 Absence of Certain Changes. Except as
contemplated or permitted by this Agreement, since the
date of the Intersolv Balance Sheet there has not been:
(a) any material adverse change in the business,
condition (financial or otherwise), operations or
reasonably foreseeable prospects of Intersolv and the
Intersolv Subsidiaries considered as a consolidated
entity; (b) any damage, destruction or loss, whether
covered by insurance or not, materially and adversely
affecting the properties or business of Intersolv and the
Intersolv Subsidiaries considered as a consolidated
entity; (c) any sale or transfer by Intersolv or any
Intersolv Subsidiary of any tangible or intangible
material asset, any mortgage or pledge or creation of any
security interest, lien or encumbrance of any such
material asset, any lease of material real property,
including equipment, or cancellation of any material debt
or claim, all except in the ordinary course of business;
(d) any transaction not in the ordinary course of
business; or (e) any change by Intersolv or any Intersolv
Subsidiary in accounting methods or principles whether or
not required to be disclosed in a filing under the
Exchange Act.
3.08 Capital Stock. As of the date hereof,
Intersolv's authorized capital stock consists of
53,000,000 shares, consisting of 50,000,000 shares of
Intersolv Common Stock, $0.01 par value, of which
16,915,558 shares are issued and outstanding and 124,187
shares are held in Intersolv's treasury, and of 3,000,000
shares of Preferred Stock, $0.10 par value, of which no
shares are issued and outstanding and no shares are held
in Intersolv's treasury. All issued and outstanding
Intersolv Common Stock is duly and validly issued, fully
paid and nonassessable. Except for such Intersolv Common
Stock, there are no shares of capital stock of Intersolv
issued and/or outstanding. Except for options to
purchase a total of 2,165,644 shares of Intersolv Common
Stock which have been granted under various employee
stock option plans, there are no outstanding options,
warrants, rights, contracts, commitments, understandings
or arrangements by which Intersolv is bound to issue any
additional shares of its capital stock or any security
convertible thereunto or exercisable or exchangeable
therefor.
3.09 Litigation. There is no suit, action,
proceeding, claim (including breach of warranty and
product liability claims) or, to Intersolv's knowledge,
investigation involving $100,000 or more (or of material
significance because of the nonmonetary relief sought),
pending or, to Intersolv's knowledge, threatened or
contemplated against Intersolv or any Intersolv
Subsidiary or materially affecting the business,
properties, condition (financial or otherwise), results
of operations or reasonably foreseeable prospects of
Intersolv and the Intersolv Subsidiaries considered as a
consolidated entity, nor is there any such judgment,
decree, injunction or order of any court or governmental
department, commission, agency or instrumentality
outstanding against Intersolv or any Intersolv
Subsidiary. None of Intersolv, any Intersolv Subsidiary
or any of their respective properties or assets is
subject to any other judgment, injunction or decree that
materially and adversely affects the business, properties
(financial or otherwise), results of operations or
reasonably foreseeable prospects of Intersolv and the
Intersolv Subsidiaries considered as a consolidated
entity.
3.10 Investment Company. Neither Intersolv nor
Solsub is an investment company as defined in Section
368(a)(2)(F)(iii) of the Code.
3.11 Surviving Corporation. Intersolv has no
plan or intention following the Merger to liquidate the
Surviving Corporation, to merge the Surviving Corporation
into another corporation, to sell or otherwise dispose of
any stock of the Surviving Corporation or to sell or
otherwise dispose of any of its assets except for
dispositions made in the ordinary course of business or
of assets which are no longer necessary or useful for the
conduct of the business. Following the Closing,
Intersolv intends that the Surviving Corporation will
continue in the business of developing and distributing
software.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SOLSUB
Intersolv and Solsub represent and warrant to the
Company and the Company's stockholders and Debenture
holders that:
4.01 Corporate Organization. Solsub is a
corporation duly organized and validly existing under the
laws of the State of Delaware. Solsub has full corporate
power and authority to carry on its business as it is now
being conducted and to own the properties and assets it
now owns. Intersolv owns all of the issued and
outstanding capital stock of Solsub and is in control of
Solsub within the meaning of Section 368(c) of the Code.
4.02 Authorization. Solsub has full corporate
power and authority to enter into this Agreement and to
carry out the transactions contemplated hereby. The
board of directors of Solsub has duly authorized and
approved the execution and delivery of this Agreement and
the transactions contemplated hereby. Solsub has
completed all other necessary actions to authorize and
approve this Agreement.
4.03 No Violation. Neither Solsub nor its
properties are subject to or obligated under any law,
rule or regulation of any governmental authority, or any
order, writ, injunction or decree, or any material
agreement, instrument, license, franchise or permit,
which would be materially breached or violated by the
execution, delivery and performance of this Agreement and
consummation by Solsub of the transactions contemplated
hereby. The execution, delivery and performance of this
Agreement by Solsub and the consummation of the
transactions contemplated hereby do not and will not
conflict with, result in a breach or violation of, or a
default under (i) Solsub's certificate of incorporation
or bylaws, (ii) any obligation under any mortgage, lease,
agreement or instrument applicable to Solsub or its
respective properties or (iii) any law, rule, regulation,
judgment, order or decree of any government or
governmental or regulatory authority or court having
jurisdiction over Solsub.
4.04 Governmental Authorities. No consent,
approval, order or authorization of, or registration,
declaration or filing with, any governmental entity is
required by or with respect to Solsub in connection with
the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby,
except for (i) the filing of the certificate of merger
with the Delaware Secretary of State, (ii) such
disclosures, filings, statements and reports under the
Exchange Act or otherwise, as may be required in
connection with this Agreement and the transactions
contemplated hereby to be filed with the Securities and
Exchange Commission ("SEC") or NASDAQ National Market,
(iii) such consents as have been obtained in connection
with the transactions contemplated herein and (iv) such
other consents, authorizations, filings, approvals and
registrations which if not obtained or made would have a
material adverse effect on Solsub's ability to consummate
the transactions hereunder.
4.05 No Activity. Solsub has been formed
solely for the purpose of affecting the Merger, has not
engaged in any business or operations since it was
incorporated, except in connection with the Merger and
the other transactions contemplated by this Agreement and
has no liabilities except those incurred in connection
with the Merger and the other transactions contemplated
by this Agreement.
ARTICLE V
CONDUCT OF THE COMPANY'S BUSINESS
PENDING THE CLOSING
5.01 General. Pending the Effective Time, in
order to maintain the current status quo, and except as
otherwise expressly consented to or approved in writing
by Intersolv, the Company and each Principal Stockholder,
on behalf of the Company and its Subsidiaries, covenants
and agrees with Intersolv as set forth in Section 5.02.
Any consent or approval requested by any party shall be
subject to the sole discretion of Intersolv.
5.02 Covenants.
(a) Neither the Company nor any of its
Subsidiaries shall: (i) amend its charter or bylaws; (ii)
effect any material change to its business, assets or
organization; (iii) enter into any agreement,
understanding, commitment, relationship or transaction
with any stockholder of the Company or any Subsidiary, or
otherwise enter into any agreement, understanding,
commitment, relationship or transaction except in the
ordinary course of business consistent with past
practices; (iv) amend, terminate or modify its charter,
bylaws or any agreement or instrument identified on the
Company Disclosure Schedule; (v) issue, sell, distribute,
redeem or otherwise reacquire any securities (including,
without limitation, any Company Common Stock, Company
Preferred Stock, Debentures or Options) except as
contemplated by this Agreement or the terms thereof; (vi)
declare or pay any dividend or other distribution on or
with respect to any shares of its capital stock; or (vii)
take any action which may accelerate the vesting of any
Options.
(b) The Company and each of its
Subsidiaries shall: (i) operate their respective
businesses diligently, in good faith and in the ordinary
course of business, consistent with past practices; and
(ii) use their reasonable efforts to preserve its
business, goodwill and business relationships.
ARTICLE VI
COVENANTS OF THE COMPANY, THE PRINCIPAL STOCKHOLDERS
AND INTERSOLV
6.01 Confidentiality. The Company and the
Principal Stockholders shall hold and shall cause their
attorneys, accountants or other agents or authorized
representatives to hold, in strict confidence, and not
disclose to any other party or use for any purpose other
than to consummate the transactions contemplated by this
Agreement without the express prior written consent of
Intersolv and Solsub, all information contained in the
Intersolv Disclosure Statement, except (i) that the
Company stockholders that are entities may summarize such
information for their partners or investors, (ii) as such
information shall become public without violation of this
Section 6.01, (iii) after April 30, 1997 or (iv) as may
be required by applicable law or as otherwise
contemplated herein. Without the express prior written
consent of Intersolv, neither the Company nor any of the
Principal Stockholders shall provide any person a copy of
this Agreement or communicate to any person the contents
of this Agreement, except to their attorneys, accountants
or other agents or authorized representatives on a need
to know basis (all of whom shall have agreed to comply
with the provisions of this Section 6.01) or as required
by applicable law.
6.02 Best Efforts. Prior to Closing, the
Company and Principal Stockholders shall use their
reasonable best efforts to prevent any of their
representations and warranties from becoming untrue. In
addition, prior to Closing the Company and Principal
Stockholders shall use their reasonable best efforts to
take, or cause to be taken, all action or do, or cause to
be done, all things necessary, proper or advisable under
this Agreement, applicable laws and regulations to
enable, consummate, make effective and evidence the
transactions contemplated hereby.
6.03 Options. The Company and the Principal
Stockholders acknowledge that Intersolv has not assumed
the obligations under the Company's 1993 Key Employee
Incentive Stock Option Plan or 1994 Key Employee
Incentive Stock Option Plan. In order to cause the
Company to meet its obligations thereunder, Intersolv
shall (i) contribute to the Company Intersolv Common
Stock purchased on the open market, (ii) contribute to
the Company cash in an amount sufficient for the Company
to purchase Intersolv Common Stock on the open market,
(iii) obtain Intersolv stockholder approval of the
issuance of Intersolv Common Stock to satisfy the
Company's obligations under such plans and/or (iv) enter
into other mutually satisfactory arrangements with each
of the option holders (the election among the foregoing
alternatives to be made by Intersolv in its sole
discretion), sufficient to satisfy the Company's
obligations under the Plan. Intersolv shall take action
under this Section 6.03 in a reasonably prompt manner;
provided, however that nothing in this Section 6.03 shall
obligate Intersolv to take such action earlier than
permitted by applicable law, rules and regulations.
6.04 Notice Under DCL 228. Within 10 days
after the Effective Time, Intersolv shall cause the
Surviving Corporation to mail the notice required under
DGL 228(d). The Principal Stockholders shall use their
reasonable best efforts to assist Intersolv and the
Surviving Corporation in providing such notice and
obtaining the acquiescence of the recipients of such
notice to the Merger.
6.05 Press Release. Intersolv shall prepare a
press release with respect to the transactions
contemplated herein and shall provide Brian Friedman a
reasonable opportunity to comment thereon prior to the
dissemination of such release in conjunction with the
Closing.
ARTICLE VII
CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF INTERSOLV AND SOLSUB
Each and every obligation of Intersolv and Solsub
under this Agreement to be performed at or before the
Closing shall be subject to the satisfaction, at or
before the Closing, of each of the following conditions,
except to the extent that Intersolv and Solsub shall have
waived such satisfaction:
7.01 Representations and Warranties;
Performance. Each of the representations and warranties
made by the Company and the Principal Stockholders herein
shall be true and correct in all material respects as of
the Closing with the same effect as though made at such
time; and the Company and each Principal Stockholder
shall have performed and complied in all material
respects with all agreements, covenants and conditions
required by this Agreement to be performed and complied
with by such party prior to the Closing.
7.02 Opinion of Counsel. Intersolv and Solsub
shall have received an opinion of counsel to the Company
and the Principal Stockholders, in form and substance
reasonably satisfactory to Intersolv and Solsub, dated as
of the date of the Closing (the "Closing Date") (which
opinion may be combined or separate), substantially to
the effect set forth in Exhibit 5 hereto.
7.03 Resignation of Directors and Officers.
Each director and officer of the Company shall have
resigned from each such position effective as of the
Closing.
7.04 Registration Rights Agreement. Intersolv
and the persons listed on Schedule B shall have executed
the Registration Rights Agreement substantially in the
form of Exhibit 1 hereto.
7.05 Securities Laws. Intersolv shall have
received such documents as it may reasonably require to
establish that the delivery of Intersolv Common Stock in
connection with the Closing complies generally with
applicable requirements of the securities laws of each
jurisdiction in which stockholders of the Company reside.
Such documents may include, but shall not be limited to,
duly executed stockholder questionnaires from certain of
the stockholders of the Company, in form and substance
reasonably satisfactory to Intersolv.
7.06 Debentures. All holders of the outstanding
Debentures shall have entered into an Amendment to the
Note Purchase Agreement substantially in the form of
Exhibit 7 hereto.
7.07 Appraisal Rights. Holders of Company
Common Stock, Company Preferred Stock and Debentures that
following conversion of all Company Preferred Stock and
Debentures would represent 63 percent of the outstanding
Company Common Stock shall have approved the Merger or
shall have otherwise waived any appraisal rights under
the DCL.
ARTICLE VIII
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF
THE COMPANY AND THE PRINCIPAL STOCKHOLDERS
Each and every obligation of the Company and the
Principal Stockholders under this Agreement to be
performed at or before the Closing (except for its
obligations with respect to confidentiality) shall be
subject to the satisfaction, at or before the Closing, of
each of the following conditions, except to the extent
that the Company and the Principal Stockholders shall
have waived such satisfaction with respect to its
obligations:
8.01 Representations and Warranties;
Performance. Each of the representations and warranties
made by Intersolv and Solsub herein shall be true and
correct in all material respects as of the Closing with
the same effect as though made on such date; and
Intersolv and Solsub shall have performed and complied in
all material respects with all agreements, covenants and
conditions required by this Agreement to be performed and
complied with by it prior to the Closing.
8.02 Opinion of Counsel. The Company shall have
received an opinion of counsel to Intersolv and Solsub,
dated the Closing Date, in form and substance reasonably
satisfactory to the Company, substantially to the effect
set forth in Exhibit 6 hereto.
8.03 Valid Issuance of Intersolv Shares. The
shares of Intersolv Common Stock to be issued to the
stockholders of the Company pursuant to this Agreement
when so issued will be duly and validly authorized and
issued, fully paid and nonassessable.
8.04 Registration Rights. Intersolv and the
persons listed on Schedule B shall have executed the
Registration Rights Agreement substantially in the form
of Exhibit 1 hereto.
8.05 Debentures. Intersolv shall have entered
into an Amendment to the Note Purchase Agreement
substantially in the form of Exhibit 7 hereto.
ARTICLE IX
INDEMNIFICATION
9.01 Indemnification by Principal Stockholders.
(a) Subject to the limitations set forth in
Section 9.01(b), the Principal Stockholders hereby
jointly and severally indemnify, defend and hold harmless
Intersolv and Solsub, and their permitted successors and
assigns, directors and officers (referred to in this
Section as an "Intersolv Indemnified Party" or "Intersolv
Indemnified Parties") from and against, and shall
reimburse each of the Intersolv Indemnified Parties for,
all demands, claims, actions or causes of action,
assessments, losses, damages, liabilities, costs and
expenses, including interest, penalties, court costs and
reasonable attorneys' fees and expenses, asserted
against, resulting to, imposed upon or incurred by any of
the Intersolv Indemnified Parties, directly or
indirectly, with respect to any breach by the Company or
any Principal Stockholder of any representation,
warranty, undertaking or covenant of the Company or the
Principal Stockholders contained herein provided that a
Principal Stockholder knew of such breach.
(b) The Intersolv Indemnified Parties shall
only be entitled to make indemnity claims under this
Article IX for claims which are $50,000 or more per
occurrence. For purposes of this Section 9.01(b), any
series of related or connected events shall be deemed to
be an "occurrence." The Principal Stockholders shall be
liable under Section 9.01 only to the extent that the
aggregate amount for which they would be liable whether
severally, or jointly and severally, exceeds $1,000,000.
Further, the Principal Stockholders shall be liable under
Section 9.01, whether severally, or jointly and
severally, up to an aggregate maximum amount of
$5,000,000, except to the extent that such liability is
based in part on in whole upon a breach of (i) the
representations and warranties set forth in Section
2.10(b) or Section 2.13, or (ii) the Company's product
warranties, such aggregate maximum amount shall be
$8,400,000. Notwithstanding the foregoing aggregate
indemnification limitation, no Principal Stockholder
shall be liable for indemnification individually in an
amount greater that such Principal Stockholder's pro rata
share of the final indemnification amount, such pro rata
share to be equal to the Principal Stockholder's pro rata
share of the total consideration received by all of the
Principal Stockholders in connection with the Merger.
Any claim for indemnification may be satisfied, at the
option of each Principal Stockholder, by the payment of
cash or delivery of shares of Intersolv Common Stock held
by such Principal Stockholder, such shares to be valued
for such purposes at $20 per share. The Principal
Stockholders shall be liable under Section 9.01 for
claims which accrue and for which notice is given by an
Intersolv Indemnified Party to the Principal Stockholders
on or before October 31, 1996.
9.02 Intersolv Indemnity. Intersolv will
indemnify and hold harmless the Principal Stockholders
and their respective directors, officers, employees and
agents, and any person who controls a Principal
Stockholder within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act
(referred to in this Section as a "Company Indemnified
Party" or "Company Indemnified Parties"), from and
against all claims, actions, suits, proceedings,
liabilities, losses or damages (or actions in respect
thereof) ("Claims") to which any such Company Indemnified
Party may become subject under the Securities Act or the
Exchange Act, insofar as such Claims arise out of or are
based upon (i) any untrue statement or alleged untrue
statement of any material fact contained in any offering
materials with respect to Intersolv Common Stock prepared
by Intersolv and delivered by Intersolv or the Surviving
Corporation to the Company's stockholders in connection
with the delivery of the notice required by Section 228
under the DCL or (ii) the omission or alleged omission to
state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading in light of the circumstances under which they
were made, and will reimburse each Company Indemnified
Party for any legal or other out-of-pocket expenses
reasonably incurred by such Company Indemnified Party in
connection with investigating or defending any such Claim
as such expenses are incurred; provided, however, that
Intersolv will not be liable in any such case to the
extent that any such Claim arises out of or is based upon
an untrue statement or alleged untrue statement, or
omission or alleged omission made in the offering
material, in reliance upon and in conformity with written
information furnished to Intersolv by the Company or the
Principal Stockholders expressly for use in the
preparation thereof.
9.03 Claims by Third Parties. A party entitled
to indemnification under Section 9.01 or 9.02 (the
"Indemnitee") shall give the indemnifying party notice of
any claim or the commencement of any action or proceeding
for which such Indemnitee seeks indemnification, and such
Indemnitee shall permit the indemnifying party to assume
the defense of any claim or any litigation resulting from
such claim with counsel reasonably satisfactory to the
Indemnitee. The failure by any Indemnitee to give an
indemnifying party timely notice shall not preclude any
Indemnitee from seeking indemnification from any
indemnifying party except to the extent that such failure
has materially prejudiced the indemnifying party's
ability to defend the claim or litigation. No
indemnifying party shall settle any claim for which any
Indemnitee seeks indemnification in respect of an
indemnifiable claim hereunder or consent to entry of any
judgment in litigation arising from such a claim without
obtaining (i) a release of each Indemnitee from all
liability in respect of such claim or litigation or (ii)
the consent of Intersolv, such consent not to be
unreasonably withheld. After notice from the
indemnifying party of its election to assume the defense
of any such claim or litigation, the indemnifying parties
will not be liable to the Indemnitee for legal fees and
expenses subsequently incurred by the Indemnitee in
connection with the defense thereof other than reasonable
costs of investigation; provided that the Indemnitee
shall have the right to employ separate counsel if, in
the reasonable judgment of the Indemnitee's counsel, the
Indemnitee has legal defenses available to in that are
different from and inconsistent or in conflict with those
available to the indemnifying party. In such event, the
Indemnitee shall have the right to retain counsel
reasonably satisfactory to the indemnifying party at the
indemnifying party's expense, provided that the
indemnifying party shall not be liable for the reasonable
fees and expenses of more than one counsel for all the
Indemnitees. If an indemnifying party shall not assume
the defense of any such claim or litigation resulting
therefrom, the Indemnitee may defend against or settle
such claim or litigation in such manner as it may deem
appropriate, and the indemnifying party shall promptly
reimburse each Indemnitee for the amount of all
reasonable out-of-pocket expenses, legal or otherwise,
incurred by such Indemnitee in connection with the
defense against or settlement of such claim or
litigation. If no settlement of the claim or litigation
is made, the indemnifying party shall promptly reimburse
each Indemnitee for the amount of any judgment rendered
with respect to such claim or in such litigation and of
all expenses, legal and otherwise, incurred by each
Indemnitee, in the defense against such claim or
litigation.
9.04 Company Directors' and Officers' Indemnity.
For three years following the Closing, Intersolv shall
cause the Surviving Corporation or its successor not to
rescind, or amend in a manner which reduces the
protection provided by, the provisions of its certificate
of incorporation or bylaws pertaining to the
indemnification of the Company's prior directors and
officers.
ARTICLE X
MISCELLANEOUS PROVISIONS
10.01 Amendment and Modification. This
Agreement may be amended, modified and supplemented only
by written agreement of, Intersolv, Solsub, the Company
and the Principal Stockholders.
10.02 Waiver of Compliance; Consents. Any
failure of the Intersolv, Solsub, the Company or any of
the Principal Stockholders to comply with any obligation,
covenant, agreement or condition herein may be waived in
writing by the other party or parties, but no waiver
shall be effective for any purpose unless it is expressed
and in writing, and any such waiver or failure to insist
upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other
failure. Whenever this Agreement requires or permits
consent by or on behalf of any party or parties hereto,
such consent shall be effective only if given in writing
in a manner consistent with the requirements for a waiver
of compliance as set forth in this Section 10.02.
10.03 Investigations; Survival of
Representations and Warranties. The respective
representations and warranties of the Company, the
Principal Stockholders, Intersolv and Solsub contained
herein or in any certificates or other documents
delivered prior to or at the Closing shall not be deemed
waived or otherwise affected by any investigation made by
any party or parties hereto. Each and every such
representation and warranty, together with the
indemnification contained in Article IX hereof, shall
survive the Closing through and until October 31, 1996.
10.04 Notices. All notices, requests, demands
and other communications required or permitted hereunder
shall be in writing and shall be deemed to have been duly
given when delivered by hand, when sent by facsimile
transmission or three business days after being mailed
first class with postage prepaid:
(a) If to the Company, to:
TechGnosis International Inc.
A. Stocletlaan 87
Duffel B-2570 Belgium
Attention: Marc Van Rompaey
with copies to:
Brian P. Friedman
Furman Selz Investments Inc.
230 Park Avenue
New York, New York 10169
Jean Claude Deschamps
c/o MGTP
Avenue de Tervueren 266
Brussels B-1150 Belgium
Belgische Maatschapplj voor
Internationale Investering (BMI) NV
Montoyerstraat 63
Brussels B-1040 Belgium
Andre Van den Bogaert
Buvingenstraat 3
Pepingen B-1067 Belgium
Melvin Epstein, Esq.
Stroock & Stroock & Lavan
7 Hanover Square
19th Floor
New York, New York 10004
or to such other person or address as the Company shall
furnish to Intersolv and Solsub in writing pursuant to
the above;
(b) if to the Principal Stockholders, to:
Marc Van Rompaey
TechGnosis International Inc.
A. Stocletlaan 87
Duffel B-2570 Belgium
Brian P. Friedman
Furman Selz Investments Inc.
230 Park Avenue
New York, New York 10169
Jean Claude Deschamps
c/o MGTP
Avenue de Tervueren 266
Brussels B-1150 Belgium
Belgische Maatschapplj voor
Internationale Investering (BMI) NV
Montoyerstraat 63
Brussels B-1040 Belgium
Andre Van den Bogaert
Buvingenstraat 3
Pepingen B-1067 Belgium
with a copy to:
Melvin Epstein, Esq.
Stroock & Stroock & Lavan
7 Hanover Square
19th Floor
New York, New York 10004
or to such other person or address as a Principal
Stockholder shall furnish to Intersolv and Solsub
pursuant to the above;
(c) If to Intersolv and/or Solsub, to:
Intersolv, Inc.
9420 Key West Avenue
Rockville, MD 20850
Attention: Kevin J. Burns
President
with copy to:
Arent Fox Kintner Plotkin & Kahn
1050 Connecticut Avenue, N.W.
Washington, D.C. 20036
Attention: Robert B. Hirsch
or to such other person or address as Intersolv shall
furnish to the Principal Stockholders in writing pursuant
to the above.
10.05 Assignment. This Agreement and all of the
provisions hereof shall be binding upon the parties
hereto and their respective successors and assigns and
inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither
this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the
parties hereto without the prior written consent of the
other parties.
10.06 Counterparts. This Agreement may be
executed in two or more fully or partially executed
counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the
same instrument.
10.07 Headings. The article and section
headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning
or interpretation of this Agreement.
10.08 Governing Law. The parties agree that
this Agreement shall be governed and construed by the
laws of the state of Delaware, and that no conflict-of-
laws provision shall be invoked to permit the laws of any
other state or jurisdiction to apply.
10.09 Time of Essence. Time is of the essence
with respect to each provision of this Agreement in which
time is an element.
10.10 Attorneys' Fees. In the event of any
action instituted by any party or parties hereto arising
under this Agreement, the prevailing party or parties
shall be entitled to recover from the losing party or
parties all of its costs and expenses, including
attorneys' fees, in addition to any other available
remedy.
10.11 Entire Agreement. This Agreement and the
attached Schedules and Exhibits embody the entire
agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There
are no restrictions, promises, representations,
warranties, covenants, or undertakings, other than those
expressly set forth or referred to herein. This
Agreement supersedes all prior negotiations, agreements
and understandings among the parties with respect to such
subject matter.
10.12 Expenses. All costs and expenses incurred
in connection with the Agreement and the transactions
contemplated hereby shall be paid by the party or parties
incurring such expenses; provided, however, that
Intersolv shall pay all costs and expenses incurred by
Solsub and the Company shall pay all costs and expenses
incurred by the Principal Stockholders.
10.13 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 or invalid under applicable law, such
provision will be ineffective only to the extent of such
prohibition or invalidity, without invalidating the
remainder of this Agreement.
10.14 No Broker. Intersolv and Solsub represent
and warrant to the Company and the Principal Stockholders
that they have not retained a finder or broker in
connection with the transactions contemplated by this
Agreement. The Company and the Principal Stockholders
represent and warrant to Intersolv and Solsub that they
have not retained a finder or broker in connection with
the transactions contemplated by this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed and delivered, all as
of the date first above written.
Intersolv: INTERSOLV, INC. (Corporate Seal)
By: ________________________________________
Kevin J. Burns, Chief Executive Officer
and Chairman of the Board
The Company: TECHGNOSIS INTERNATIONAL INC. (Corporate Seal)
By: _________________________________________
President
Solsub: INTERSOLV PERKINS CORPORATION (Corporate
Seal)
By: __________________________________________
Joseph T. Ruble
Vice President
The Principal Stockholders:
FURMAN SELZ SBIC, L.P.
By: __________________________________________
Belgische Maatschapplj voor
Internationale Investering (BMI) NV
By: ________________________________________
Sofinnova Capital II FCPR
By: ___________________________________________
Sofinnova Ventures III L.P.
By: ___________________________________________
_______________________________________________
Marc Van Rompaey
_______________________________________________
Jean-Claude Deschamps
_______________________________________________
Karel De Gucht
_______________________________________________
Andre Van den Bogaert
TEG Holding bv
By: __________________________________________
GIMV bv
By: __________________________________________
Parnib Deelnemingen bv
By: __________________________________________
RIDIS bv
By: __________________________________________
Schedule A
1.03(a)(i)
Each share of Company Common Stock and Company
Preferred Stock shall be exchanged for 2.06 shares of
Intersolv Common Stock.
1.03(a)(iii)
Holder Shares of Company Common Stock
GIMV bv 58,253
Parnib Deelnemingen bv 58,253
RIDIS bv 58,253
Schedule B
Furman Selz SBIC, L.P.
Belgische Maatschapplj voor Internationale Investering
(BMI) NV
TEG Holding B.V.
Sofinnova Capital II FCPR
Sofinnova Ventures III L.P.
Marc Van Rompaey
Jean-Claude Deschamps
Andre Van den Bogaert
Anne-Lore Resseler
Terrence Quinn
Edmund Hajim
GIMV bv
Parnib Deelnemingen bv
RIDIS bv
Exhibit 1
Registration Rights Agreement
Exhibit 2
Company Disclosure Schedule
Exhibit 3
Company Financial Statements
Exhibit 4
Intersolv Disclosure Schedule
Exhibit 5
Opinion of Company and Principal Stockholders' Counsel
Exhibit 6
Opinion of Intersolv's Counsel
Exhibit 7
Amendment to Note Purchase Agreement
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this
"Agreement") is made and entered into as of October 23,
1995 by and between Intersolv, Inc., a Delaware
corporation (the "Company") and the parties set forth in
Exhibit A attached hereto (the "Investors").
WHEREAS, the Investors concurrently with the
execution of this Agreement are acquiring shares of the
Company's common stock, par value $0.01 per share
("Common Stock"); and
WHEREAS, as a condition to such acquisition, the
parties are willing to enter into the agreements
contained herein.
NOW, THEREFORE, in consideration of the foregoing
and of the mutual covenants and agreements set forth
herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged,
and intending to be legally bound hereby, the parties
hereto agree as follows:
Section 1. Definitions.
"Affiliate" means, with respect to any Person,
any other Person which, directly or indirectly, controls,
is controlled by or is under common control with such
Person.
"Agreement" is defined in the Preamble to this
Agreement.
"Common Stock" is defined in the Recitals to
this Agreement.
"Company" is defined in the Preamble to this
Agreement.
"Holder" is defined in Section 3.1 hereof.
"Investors" is defined in the Preamble to this
Agreement.
"Lock-Up Period" is defined in Section 2.1
hereof.
"Notes" mean the 8.4% Convertible Subordinated
Notes due 1999, of which the Company and TechGnosis
International Inc. are co-makers and which are
convertible into Common Stock.
"Other Holders" is defined in Section 5.3
hereof.
"Permitted Transfer" is defined in Section 2.2
hereof.
"Person" means an individual, a partnership, a
joint venture, a corporation, a trust, an unincorporated
organization and government or any department or agency
thereof.
"Piggyback Notice" is defined in Section 5.1
hereof.
"Piggyback Registration" is defined in Section
5.1 hereof.
"Registrable Securities" means (i) the Common
Stock issued to the Investors pursuant to the Agreement
of Merger dated October 22, 1995 (the "Merger Agreement")
by and between the Company, TechGnosis International,
Inc., Intersolv Perkins Corporation and certain
stockholders named therein, (ii) any Common Stock issued
to the Investors pursuant to the conversion of the Notes,
(iii) any Common Stock issued to the Investors pursuant
to the exercises of the Warrants, (iv) any Common Stock
issued to other stockholders of TechGnonis International,
Inc. pursuant to the Merger Agreement, (v) any Common
Stock issued to the Investors' transferees pursuant to a
Permitted Transfer, and (vi) any Common Stock issued or
issuable with respect to the Common Stock referred to in
clauses (i), (ii), (iii), (iv) or (v) by way of
replacement, share dividend, share split or in connection
with a combination of shares, recapitalization, merger,
consolidation or other reorganization.
"Registration Expenses" is defined in Section
7.1 hereof.
"Registration Notice" is defined in Section 3.3
hereof.
"Restricted Securities" is defined in Section
2.1 hereof.
"SEC" means the Securities and Exchange
Commission.
"Securities Act" means the Securities Act of
1933, as amended, or any similar federal law then in
force.
"Shelf Period" is defined in Section 3.1
hereof.
"Shelf Registration Statement" is defined in
Section 3.1 hereof.
"Transfer" is defined in Section 2.1 hereof.
"Warrants" mean the Warrants issuable, in
certain circumstances, pursuant to the Notes, which would
be, upon issuance, exercisable for Common Stock.
Section 2. Restrictions on Transfer
2.1 Lock-Up Period. Without the express
prior written consent of the Company, each of the
Investors severally agrees that, except as set forth in
Section 2.2 below, he, she or it will not, directly or
indirectly, offer, sell, contract to sell or otherwise
dispose of (or announce any offer, sale, contract of sale
or other disposition of) ("Transfer") any Registrable
Securities, Notes or Warrants (collectively, "Restricted
Securities") prior to March 19, 1996 (the "Lock-Up
Period").
2.2 Permitted Transfers. The
restrictions contained in this Section 2 will not apply
with respect to any of the following transactions (each,
a "Permitted Transfer"):
2.2.1 an Investor who is a natural
person may Transfer Restricted Securities to his or her
spouse, siblings, parents or any natural or adopted
children or other descendants or to any personal trust in
which such family members or such Investor retains the
entire beneficial interest;
2.2.2 an Investor that is a
corporation, partnership or other business entity may (A)
Transfer Restricted Securities to one or more other
entities that are wholly owned and controlled, legally
and beneficially, by such Investor or by a Person or
Persons that directly or indirectly wholly owns and
controls such Investor or (B) Transfer Restricted
Securities by distributing such Restricted Securities in
a liquidation, winding up or otherwise without
consideration to the equity owners of such corporation,
partnership or business entity or to any other
corporation, partnership or business entity that is
wholly owned by such equity owners; or
2.2.3 an Investor may Transfer
Restricted Securities on his or her death or mental
incapacity to such Investor's estate, executor,
administrator or personal representative or to such
Investor's beneficiaries pursuant to a devise or bequest
or by the laws of descent and distribution.
If any Investor Transfers Restricted Securities as
described in this Section 2.2, such Restricted Securities
shall remain subject to this Agreement and, as a
condition of the validity of such Transfer, the
transferee shall be required to execute and deliver a
counterpart of this Agreement. Thereafter, such
transferee shall be deemed to be an Investor for purposes
of this Agreement.
2.3 Rights of Subsequent Holder. Subject
to the foregoing restrictions, the Company and the
Investors hereby agree that any subsequent holder of
Registrable Securities shall be entitled to all benefits
hereunder as a holder of such securities.
Section 3. Shelf Registration.
3.1 Shelf Period. Subject to the terms and
conditions set forth herein, the Company shall prepare
and file a shelf registration statement with the SEC and
shall use its reasonable best efforts to cause such
registration statement to become effective on or before
March 19, 1996, pursuant to Rule 415 of Regulation C
promulgated under the Securities Act (or any successor
rule) (the "Shelf Registration Statement") providing for
the sale by holders of Registrable Securities (each, a
"Holder") of all of the Registrable Securities in
accordance with the terms hereof. The Company agrees to
use its reasonable efforts to keep the Shelf Registration
Statement continuously effective for a period expiring on
the earlier of (i) the date on which all of the
Registrable Securities covered by the Shelf Registration
Statement have been sold pursuant thereto or (ii) until
the third anniversary of the date of this Agreement (the
"Shelf Period"). The Company further agrees to promptly
amend the Shelf Registration Statement if and as required
by the rules, regulations or instructions applicable to
the registration form used by the Company for such Shelf
Registration Statement or by the Securities Act or any
rules and regulations thereunder. The Company may, in
the exercise of its sole discretion, extend the Shelf
Registration Statement for a period beyond the Shelf
Period but shall in no event be required to do so.
3.2 Inclusion in Shelf Registration
Statement. Any Holder who does not provide the
information reasonably requested by the Company in
connection with the Shelf Registration Statement as
promptly as practicable after receipt of such request,
but in no event later than twenty (20) days thereafter,
shall not be entitled to have its Registrable Securities
included in the Shelf Registration Statement.
3.3 Registration Notice.
3.3.1 Any Holder intending to make
offers or sales of Registrable Securities pursuant to a
Shelf Registration Statement prepared in connection with
this Section 3 shall provide the Company with written
notice (the "Registration Notice") of such intent at
least one business day prior to commencing such offers or
sales. If the Distribution Notice reflects a method of
distribution different from that contemplated by the
Shelf Registration Statement or is from a Holder not
identified in the Shelf Registration Statement, such
Holder shall promptly provide the Company such
information as the Company reasonably requests in order
to identify such Holder and the method of distribution in
any necessary post-effective amendment to the Shelf
Registration Statement. Such Holder shall also notify
the Company in writing upon completion of such offer or
sale or at such time as such Holder no longer intends to
make offers or sales under the Shelf Registration
Statement.
3.3.2 Once a Holder has provided a
Registration Notice (the "Initiating Holder"), during the
following 60-day period specified in Section 3.4.2 any
additional Holder may provide a Registration Notice
concurrent with commencing offers or sales, provided that
(i) any such Holder providing such a subsequent
Registration Notice shall complete all offers and sales
under the Shelf Registration Statement within the 60-day
period commenced by the Registration Notice given by the
Initiating Holder and (ii) if the method of distribution
to be used by such additional Holder differs from that
set forth in the Shelf Registration Statement, such
additional Holder prior to commencing offers or sales
shall provide the Company with such information as the
Company reasonably requests with respect to such method
of distribution.
3.4 Conditions to Sale.
3.4.1 In connection with and as a
condition to the Company's obligations with respect to
any Shelf Registration Statement prepared pursuant to
this Section 3, each Holder covenants and agrees that (i)
it will not offer or sell any Registrable Securities
under the Shelf Registration Statement until it has
provided a Registration Notice, received copies of the
Prospectus as then amended or supplemented and received
notice from the Company that the Registration Statement
and any post-effective amendments thereto have become
effective; and (ii) upon receipt of any notice from the
Company as provided by Section 6.3 hereof, such Holder
shall not offer or sell any Registrable Securities
pursuant to the Shelf Registration Statement until such
Holder receives copies of the supplemented or amended
Prospectus and receives notice that any post-effective
amendment has become effective, and, if so directed by
the Company, such Holder will deliver to the Company (at
the expense of the Company) all copies in its possession,
other than permanent file copies then in such Holder's
possession, of the Prospectus as amended or supplemented
at the time of receipt of such notice.
3.4.2 All offers and sales under the
Shelf Registration Statement shall be completed within 60
days after the date on which offers or sales can be made
pursuant to Section 3.4.1 above, and upon expiration of
such 60 day period, the Holder will not offer or sell any
Registrable Securities under the Registration Statement
until it has again complied with the provisions of
Section 3.4.1 above.
Section 4. Demands for Registration.
4.1 Demand Period. From March 19, 1996,
until the date which is three years from the date hereof
(the "Demand Period"), subject to the terms and
conditions set forth herein, all Holders, will have two
opportunities, in addition to other rights enumerated in
this Agreement, to request registration under the
Securities Act of all or part of their Registrable
Securities (a "Demand Registration"); provided, however,
that (i) between the date hereof and the first
effectiveness of the Shelf Registration Statement,
provided that the Company is diligently pursuing the
effectiveness of such Shelf Registration Statement, and
(ii) for so long as the Company maintains an effective
Shelf Registration Statement covering all Registrable
Securities and otherwise complies with the terms of this
Agreement, Holders shall not be entitled to request a
Demand Registration.
4.2 Demand Procedure.
4.2.1 Subject to Sections 4.2.2 and
4.2.4 below, during the Demand Period any Holder or
combination of Holders (the "Demanding Shareholders") may
deliver to the Company a written request (a "Demand
Registration Request") that the Company register any or
all of such Demanding Shareholders' Registrable Shares.
4.2.2 Holders, in the aggregate, may
only make one Demand Registration Request in each nine-
month period during the Demand Period (the "Interim
Demand Periods"). The Company shall only be required to
file one registration statement (as distinguished from
supplements or pre-effective or post-effective amendments
thereto) in response to each Demand Registration Request.
4.2.3 A Demand Registration Request
from Demanding Shareholders shall (i) set forth the
number of Registrable Securities intended to be sold
pursuant to the Demand Registration Request (ii) disclose
whether all or any portion of a distribution pursuant to
such registration will be sought by means of an
underwriting, and (iii) identify any managing underwriter
or managing underwriters proposed for the underwritten
portion, if any, of such registration.
4.2.4 If during any Interim Demand
Period, the Company receives a Demand Registration
Request from Demanding Shareholders for the registration
of Registrable Securities having an aggregate market
value of $500,000 or greater, as determined according to
the closing price of the Common Stock on the NASDAQ
National Market on the date of such Demand Registration
Request, then the Company shall, subject to the
limitations in Section's 4.2.5 and 4.2.6 hereof, (i) use
its reasonable best efforts to prepare and file within 30
days of receipt of the Demand registration request with
the SEC a registration statement under the Securities Act
with respect to all the Registrable Securities that the
Demanding Shareholders requested to be registered in the
Demand Registration Request, (ii) use its reasonable best
efforts to cause such registration statement to become
effective within 75 days of receipt of the Demand
Registration Request, and (iii) if such registration can
be accomplished by means of a registration statement on
Form S-3, keep such registration statement effective
until the earlier of (x) such time as the Demanding
Shareholders shall have sold or otherwise disposed of all
of their Registrable Securities included in the
registration or (y) the end of the Shelf Period. If such
registration cannot be accomplished by means of a
registration statement on Form S-3, the Company shall use
its reasonable best efforts to keep such registration
statement effective for at least 90 days.
4.2.5 It is anticipated that the
registration contemplated under this Section 4 will be
accomplished by means of the filing of a Form S-3, and
that registration on such a form will allow for different
means of distribution, including sales by means of an
underwriting as well as sales into the open market. If
the Demanding Shareholders desire to distribute all or
part of the Registrable Securities covered by their
request by means of an underwriting, they shall so advise
the Company in writing in their initial Demand
Registration Request as described in Section 4.2.3 above.
A determination of whether all or part of the
distribution will be by means of an underwriting shall be
made by Demanding Shareholders holding a majority of the
Registrable Securities to be included in the
registration. If all or part of the distribution is to
be by means of an underwriting, all subsequent decisions
concerning the underwriting which are to be made by the
Demanding Shareholders pursuant to the terms of this
Agreement, which shall include the selection of the
underwriter or underwriters to be engaged and the
representative, if any, of the underwriters so engaged,
shall be made by the Demanding Shareholders who hold a
majority of the Registrable Securities to be included in
the underwriting, subject to approval by the Board of
Directors of the Company.
4.2.6 Upon the receipt by the Company
of a Demand Registration Request in accordance with
Section 4.2.4 hereof, the Company shall, within ten days
following receipt of such Demand Registration Request,
give written notice of such request to all Holders. The
Company shall include in such notice information
concerning whether all, part or none of the distribution
is expected to be made by means of an underwriting, and,
if more than one means of distribution is contemplated,
may require Holders to notify the Company of the means of
distribution of their Registrable Securities to be
included in the registration. If any Holder who is not a
Demanding Shareholder desires to sell any Registrable
Securities owned by such Holder, such Holder may elect to
have all or any portion of its Registrable Securities
included in the registration statement by notifying the
Company in writing (a "Supplemental Demand Registration
Request") within 20 days of receiving notice of the
Demand Registration Request from the Company. The right
of any Holder to include all or any portion of its
Registrable Securities in an underwriting shall be
conditioned upon the Company's having received a timely
written request for such inclusion by way of a Demand
Registration Request or Supplemental Demand Registration
Request (which right shall be further conditioned to the
extent provided in this Agreement). All Holders
proposing to distribute their Registrable Securities
through an underwriting shall enter into an underwriting
agreement in customary form with the underwriter or
underwriters selected for such underwriting.
4.2.7 Notwithstanding any other
provision of this Section 4, if an underwriter advises
the Company in writing that marketing factors require a
limitation on the number of shares to be underwritten,
then the number of shares of Registrable Securities that
may be included in the underwriting shall be allocated
among the Holders in proportion (as nearly as
practicable) to the respective amounts of Registrable
Securities each Holder owns (or in such other proportion
as they shall mutually agree). Registrable Securities
excluded or withdrawn from the underwriting in accordance
with this Section 4.2.7 shall be withdrawn from the
registration.
4.3 Priority on Request Registration. The
Company will not include in any Demand Registration any
securities which are not Registrable Securities without
the prior written consent of the Holders of a majority of
the shares of Registrable Securities included in such
registration. If a Demand Registration is an
underwritten offering and the managing underwriters
advise the Company in writing that in their opinion the
number of Registrable Securities and, if permitted
hereunder, other securities requested to be included in
such offering exceeds the number of securities that can
be sold in an orderly manner in such offering within a
price range acceptable to the Holders of a majority of
the shares of Registrable Securities initially requesting
registration, the Company will include in such
registration prior to the inclusion of any securities
which are not Registrable Securities the number of shares
of Registrable Securities requested to be included that
in the opinion of such underwriters can be sold in an
orderly manner within such acceptable price range, pro
rata among the respective Holders thereof on the basis of
the number of shares of Registrable Securities owned by
each such Holder.
Section 5. Piggyback Registrations.
5.1 Right to Piggyback. After the end of
the Lock Up Period, if the Company proposes to undertake
an offering of shares of Common Stock for its account or
for the account of Other Holders and the registration
form to be used for such offering may be used for the
registration of Registrable Securities (a "Piggyback
Registration"), each such time the Company will give
prompt written notice to all Holders of Registrable
Securities of its intention to effect such a registration
(each, a "Piggyback Notice") and, subject to Sections 5.3
and 5.4 hereof, the Company will use its best efforts to
cause to be included in such registration all Registrable
Securities with respect to which the Company has received
written requests for inclusion therein within 20 days
after the date of sending the Piggyback Notice.
5.2 Priority on Primary Registrations. If
a Piggyback Registration is an underwritten primary
registration on behalf of the Company, and the managing
underwriters advise the Company in writing that in their
opinion the number of securities requested to be included
in such registration exceeds the number that can be sold
in an orderly manner within a price range acceptable to
the Company, the Company will include in such
registration (a) first, the securities the Company
proposes to sell and (b) second, the Registrable
Securities requested to be included in such registration
and any other securities requested to be included in such
registration that are held by Persons other than the
Holders of Registrable Securities pursuant to
registration rights, pro rata among the holders of
Registrable Securities and the holders of such other
securities requesting such registration on the basis of
the number of shares of such securities owned by each
such holder.
5.3 Priority on Secondary Registrations. If
a Piggyback Registration is an underwritten secondary
registration on behalf of holders of the Company's
securities other than the Holders of Registrable
Securities (the "Other Holders"), and the managing
underwriters advise the Company in writing that in their
opinion the number of securities requested to be included
in such registration exceeds the number that can be sold
in an orderly manner in such offering within a price
range acceptable to the Other Holders requesting such
registration, the Company will include in such
registration (a) first, the securities requested to be
included therein by the Other Holders requesting such
registration and (b) second, the Registrable Securities
requested to be included in such registration hereunder,
pro rata among the Holders of Registrable Securities
requesting such registration on the basis of the number
of shares of such securities owned by each such Holder.
5.4 Selection of Underwriters. In the case
of an underwritten Piggyback Registration, the Company
will have the right to select the investment banker(s)
and manager(s) to administer the offering.
Section 6. Registration Procedures. Whenever the
Holders of Registrable Securities have requested that any
Registrable Securities be sold pursuant to this
Agreement, the Company will use its reasonable best
efforts to effect the registration and the sale of such
Registrable Securities in accordance with the intended
method of disposition thereof, and pursuant thereto the
Company will as expeditiously as possible:
6.1.1 Registration Statement. Prepare
and file with the SEC a registration statement with
respect to such Registrable Securities and use its
reasonable best efforts to cause such registration
statement to become effective.
6.1.2 Amendments and Supplements.
Promptly prepare and file with the SEC such amendments
and supplements to such registration statement and the
prospectus used in connection therewith as may be
necessary to keep such registration statement effective
for the period required by the intended method of
disposition and the terms of this Agreement or to
describe the terms of any offering made from an effective
Shelf Registration Statement, and comply with the
provisions of the Securities Act with respect to the
disposition of all securities covered by such
registration statement during such period in accordance
with the intended methods of disposition by the sellers
thereof set forth in such registration statement;
6.1.3 Provision of Copies. Promptly
furnish to each seller of Registrable Securities the
number of copies of such registration statement, each
amendment and supplement thereto, the prospectus included
in such registration statement (including each
preliminary prospectus) and such other documents as such
seller may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such
seller;
6.1.4 Blue Sky Laws. Use its
reasonable best efforts to register or qualify such
Registrable Securities under the securities or blue sky
laws of such jurisdictions as any seller reasonably
requests and do any and all other acts and things which
may be reasonably necessary or advisable to enable such
seller to consummate the disposition in such
jurisdictions of the Registrable Securities owned by such
seller, provided, that the Company will not be required
to (a) qualify generally to do business in any
jurisdiction where it would not otherwise be required to
qualify but for this Section 6.1.4, (b) subject itself to
taxation in any such jurisdiction or (c) consent to
general service of process in any such jurisdiction.
6.1.5 Anti-fraud Rules. Promptly
notify each seller of such Registrable Securities when a
prospectus relating thereto is required to be delivered
under the Securities Act, of the happening of any event
as a result of which the prospectus included in such
registration statement contains an untrue statement of a
material fact or omits any material fact necessary to
make the statements therein not misleading, and in such
event, at the request of any such seller, the Company
will promptly prepare a supplement or amendment to such
prospectus so that, as thereafter delivered to the
purchasers of such Registrable Securities, such
prospectus will not contain an untrue statement of a
material fact or omit to state any material fact
necessary to make the statements therein not misleading,
provided, that the Company will not take any action which
causes the prospectus included in such registration
statement to contain an untrue statement of material fact
or omit any material fact necessary to make the
statements therein not misleading, except as permitted by
Section 6.5;
6.1.6 Securities Exchange Listings.
Use its reasonable best efforts to cause all such
Registrable Securities to be listed on each securities
exchange on which securities of the same class issued by
the Company are then listed and use its reasonable best
efforts to qualify such Registrable Securities for
trading on each system on which securities of the same
class issued by the Company are then qualified;
6.1.7 Underwriting Agreements. Enter
into such customary agreements (including underwriting
agreements in customary form) and take all such other
actions as the holders of a majority of the shares of
Registrable Securities being sold or the underwriters, if
any, reasonably request in order to expedite or
facilitate the disposition of such Registrable
Securities;
6.1.8 Due Diligence. Make available
for inspection by any underwriter participating in any
disposition pursuant to such registration statement and
any attorney, accountant or other agent retained by any
such underwriter, all financial and other records,
pertinent corporate documents and properties of the
Company, and cause the Company's officers, directors,
employees and independent accountants to supply all
information reasonably requested by any such underwriter,
attorney, accountant or agent in connection with such
registration statement;
6.1.9 Earning Statement. Otherwise
use its best efforts to comply with all applicable rules
and regulations of the SEC, and make available to its
security holders, as soon as reasonably practicable, an
earning statement covering the period of at least twelve
months beginning with the first day of the Company's
first full calendar quarter after the effective date of
the registration statement, which earning statement shall
satisfy the provisions of Section 11(a) of the Securities
Act and Rule 158 thereunder;
6.1.10 Deemed Underwriters or
Controlling Persons. Permit any Holder of Registrable
Securities which Holder, in such Holder's reasonable
judgment, might be deemed to be an underwriter or a
controlling person of the Company, to participate in the
preparation of such registration or comparable statement
and to require the insertion therein of material in form
and substance satisfactory to such Holder and to the
Company and furnished to the Company in writing, which in
the reasonable judgment of such Holder and its counsel
should be included;
6.1.11 Management Availability. In
connection with underwritten offerings, make available
appropriate management personnel for participation in the
preparation and drafting of such registration or
comparable statement, for due diligence meetings and for
"road show" meetings;
6.1.12 Stop Orders. Promptly notify
Holders of the Registrable Securities of the threat of
issuance by the SEC of any stop order suspending the
effectiveness of the registration statement or the
initiation of any proceeding for that purpose, and make
every reasonable effort to prevent the entry of any order
suspending the effectiveness of the registration
statement. In the event of the issuance of any stop
order suspending the effectiveness of a registration
statement, or of any order suspending or preventing the
use of any related prospectus or suspending the
qualification of any Registrable Securities included in
such registration statement for sale in any jurisdiction,
the Company will use its reasonable best efforts promptly
to obtain the withdrawal of such order; and
6.1.13 Opinions. At each closing of
an underwritten offering, request opinions of counsel to
the Company and updates thereof (which opinions and
updates shall be reasonably satisfactory to the
underwriters of the Registrable Securities being sold)
addressed to the underwriters covering the matters
customarily covered in opinions requested in underwritten
offerings and such other matters as may be reasonably
requested by such Holders or their counsel.
6.1.14 Comfort Letter. Obtain a cold
comfort letter and related bring down letters from the
Company's independent public accountants addressed to the
selling Holders of Registrable Securities in customary
form and covering such matters of the type customarily
covered by cold comfort letters as the Holders of a
majority of the Registrable Securities being sold
reasonably request.
6.2 Further Information. The Company may
require each Holder of Registrable Securities to furnish
to the Company in writing such information regarding the
proposed distribution by such Holder of such Registrable
Securities as the Company may from time to time
reasonably request.
6.3 Notice to Suspend Offers and Sales. Each
Investor severally agrees that, upon receipt of any
notice from the Company of the happening of any event of
the kind described in Sections 6.1.5 or 6.1.12 hereof,
such Investor will forthwith discontinue disposition of
shares of Common Stock pursuant to a registration
hereunder until receipt of the copies of an appropriate
supplement or amendment to the prospectus under Section
6.1.5 or until the withdrawal of such order under Section
6.1.12.
6.4 Reference to Holders. If any such
registration or comparable statement refers to any Holder
by name or otherwise as the holder of any securities of
the Company and if, in the Holder's reasonable judgment,
such Holder is or might be deemed to be a controlling
person of the Company, such Holder shall have the right
to require (a) the insertion therein of language in form
and substance satisfactory to such Holder and the Company
and presented to the Company in writing, to the effect
that the holding by such Holder of such securities is not
to be construed as a recommendation by such Holder of the
investment quality of the Company's securities covered
thereby and that such holding does not imply that such
Holder will assist in meeting any future financial
requirements of the Company, or (b) in the event that
such reference to such Holder by name or otherwise is not
required by the Securities Act or any similar Federal
statute then in force, the deletion of the reference to
such Holder; provided that with respect to this clause
(b) such Holder shall furnish to the Company an opinion
of counsel to such effect, which opinion and counsel
shall be reasonably satisfactory to the Company.
6.5 Company's Ability to Postpone.
Notwithstanding anything to the contrary contained
herein, the Company shall have the right twice in any
twelve month period to postpone the filing of any
registration statement under Sections 3, 4 or 5 hereof or
any amendment or supplement thereto for a reasonable
period of time (all such postponements not exceeding 90
days in the aggregate in any twelve month period) if the
Company furnishes the Holders of Registrable Securities a
certificate signed by the Chairman of the Board of
Directors or the President of the Company stating that,
in its good faith judgment, the Company's Board of
Directors (or the executive committee thereof) has
determined that effecting the registration at such time
would materially and adversely affect a material
financing, acquisition, disposition of assets or stock,
merger or other comparable transaction, or would require
the Company to make public disclosure of information the
public disclosure of which would have a material adverse
effect upon the Company.
Section 7. Registration Expenses.
7.1 Expenses Borne by Company. Except as
specifically otherwise provided in Section 7.2 hereof,
the Company will be responsible for payment of all
expenses incident to any registration hereunder,
including, without limitation, all registration and
filing fees, fees and expenses of compliance with
securities or blue sky laws, printing expenses, messenger
and delivery expenses, road show expenses, advertising
expenses and fees and disbursements of counsel for the
Company and all independent certified public accountants
and other Persons retained by the Company in connection
with such registration (all such expenses borne by the
Company being herein called the "Registration Expenses").
7.2 Expenses Borne by Selling Securityholder.
The selling securityholders will be responsible for
payment of their own legal fees (if they retain legal
counsel separate from that of the Company), underwriting
fees and brokerage discounts, commissions and other sales
expenses incident to any registration hereunder, with any
such expenses which are common to the selling
securityholders divided among such securityholders
(including the Company and holders of the Company's
securities other than Registrable Securities, to the
extent that securities are being registered on behalf of
such Persons) pro rata on the basis of the number of
shares being registered on behalf of each such
securityholder, or as such securityholders may otherwise
agree.
Section 8. Indemnification.
8.1 Indemnification by Company. The Company
agrees to indemnify, to the fullest extent permitted by
law, each Holder of Registrable Securities and each
Person who controls (within the meaning of the Securities
Act) such Holder against all losses, claims, damages,
liabilities and expenses in connection with defending
against any such losses, claims, damages and liabilities
or in connection with any investigation or inquiry, in
each case caused by or based on any untrue or alleged
untrue statement of material fact contained in any
registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto
or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the
statements therein not misleading or arise out of any
violation by the Company of any rules or regulation
promulgated under the Securities Act applicable to the
Company and relating to action or inaction required of
the Company in connection with such registration, except
insofar as the same are (i) contained in any information
furnished in writing to the Company by such Holder
expressly for use therein, (ii) caused by such Holder's
failure to deliver a copy of the registration statement
or prospectus or any amendments or supplements thereto,
or (iii) caused by such Holder's failure to discontinue
disposition of shares after receiving notice from the
Company pursuant to Section 6.3 hereof. In connection
with an underwritten offering, the Company will indemnify
such underwriters, their officers and directors and each
Person who controls (within the meaning of the Securities
Act) such underwriters at least to the same extent as
provided above with respect to the indemnification of the
Holders of Registrable Securities.
8.2 Indemnification by Holder. In connection
with any registration statement in which a Holder of
Registrable Securities is participating, each such Holder
will furnish to the Company in writing such information
as the Company reasonably requests for use in connection
with any such registration statement or prospectus and,
to the extent permitted by law, will indemnify the
Company, its directors and officers and each Person who
controls (within the meaning of the Securities Act) the
Company against any losses, claims, damages, liabilities
and expenses resulting from any untrue or alleged untrue
statement of material fact contained in the registration
statement, prospectus or preliminary prospectus or any
amendment thereof or supplement thereto or any omission
or alleged omission of a material fact required to be
stated therein or necessary to make the statements
therein not misleading, but only to the extent that such
untrue statement or omission is contained in any
information so furnished in writing by such Holder
expressly for use in connection with such registration;
provided that the obligation to indemnify will be
individual to each Holder and will be limited to the net
amount of proceeds received by such Holder from the sale
of Registrable Securities pursuant to such registration
statement. In connection with an underwritten offering,
each such Holder will indemnify such underwriters, their
officers and directors and each Person who controls
(within the meaning of the Securities Act) such
underwriters at least to the same extent as provided
above with respect to the indemnification of the Company.
8.3 Assumption of Defense by Indemnifying
Party. Any Person entitled to indemnification hereunder
will (a) give prompt written notice to the indemnifying
party of any claim with respect to which it seeks
indemnification and (b) unless in such indemnified
party's reasonable judgment a conflict of interest
between such indemnified and indemnifying parties may
exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim
with counsel reasonably satisfactory to the indemnified
party. If such defense is assumed, the indemnifying party
will not be subject to any liability for any settlement
made by the indemnified party without its consent (but
such consent will not be unreasonably withheld). An
indemnifying party who is not entitled to, or elects not
to, assume the defense of a claim will not be obligated
to pay the fees and expenses of more than one counsel for
all parties indemnified by such indemnifying party with
respect to such claim, unless in the reasonable judgment
of any indemnified party a conflict of interest may exist
between such indemnified party and any other of such
indemnified parties with respect to such claim.
8.4 Binding Effect. The indemnification
provided for under this Agreement will remain in full
force and effect regardless of any investigation made by
or on behalf of the indemnified party or any officer,
director or controlling Person of such indemnified party
and will survive the transfer of securities. The Company
also agrees to make such provisions, as are reasonably
requested by any indemnified party, for contribution to
such party in the event the Company's indemnification is
unavailable for any reason. Each Holder of Registrable
Securities also agrees to make such provisions, as are
reasonably requested by any indemnified party, for
contribution to such party in the event such Holder's
indemnification is unavailable for any reason.
Section 9. Participation in Underwritten
Registrations. No Person may participate in any
registration hereunder which is underwritten unless such
Person (a) agrees to sell such Person's securities on the
basis provided in any underwriting arrangements approved
by the Person or Persons entitled hereunder to approve
such arrangements and (b) completes and executes all
questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required
under the terms of such underwriting arrangements.
Section 10. Miscellaneous.
10.1 No Inconsistent Agreements. The
Company will not hereafter enter into any agreement with
respect to its securities which violates the rights
granted to the Holders of Registrable Securities in this
Agreement.
10.2 Remedies. Any Person having rights
under any provision of this Agreement will be entitled to
enforce such rights specifically to recover damages
caused by reason of any breach of any provision of this
Agreement and to exercise all other rights granted by
law. The parties hereto agree and acknowledge that money
damages may not be an adequate remedy for any breach of
the provisions of this Agreement and that any party may
in its sole discretion apply to any court of law or
equity of competent jurisdiction (without posting any
bond or other security) for specific performance and for
other injunctive relief in order to enforce or prevent
violation of the provisions of this Agreement.
10.3 Term. Except for the provisions of
Section 8 or as specifically otherwise provided herein,
the provisions of this Agreement shall apply until such
time as all Registrable Securities have ceased to be
Registrable Securities hereunder but in no event later
than three years from the date of this Agreement.
10.4 Amendments and Waivers. Except as
otherwise specifically provided herein, this Agreement
may be amended or waived only upon the prior written
consent of the Company and of the Holders of a majority
of the then outstanding shares of Registrable Securities.
10.5 Successors and Assigns. Subject to
Section 2 hereof, all covenants and agreements in this
Agreement by or on behalf of any of the parties hereto
will bind and inure to the benefit of (i) the respective
successors and assigns of the parties hereto whether so
expressed or not and (ii) the persons referred to in
clause (iv) of the definition of Registrable Securities.
In addition, whether or not any express assignment has
been made but subject in any case to Section 2 hereof,
the provisions of this Agreement which are for the
benefit of the Investors or Holders of Registrable
Securities are also for the benefit of, and enforceable
by, any subsequent holder of such securities so long as
such securities continue to be restricted securities, as
that term is defined in Securities Act Rule 144.
10.6 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 this Agreement.
10.7 Counterparts. This Agreement may be
executed simultaneously in multiple 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 Agreement.
10.8 Descriptive Headings. The descriptive
headings of this Agreement are inserted for convenience
only and do not constitute a part of this Agreement.
10.9 Governing Law. All questions
concerning the construction, validity and interpretation
of this Agreement will be governed by and construed in
accordance with the domestic laws of the State of
Delaware, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State
of Delaware or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other
than the State of Delaware.
10.10 Entire Agreement. This Agreement is
intended by the parties as a final expression of their
agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the
parties hereto with respect of the subject matter
contained herein. This agreement supersedes all prior
agreements and understandings between the parties with
respect to such subject matter.
10.11 Notices. All notices, demands or
other communications to be given or delivered under or by
reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given when
delivered personally to the recipient, sent to the
recipient by facsimile transmission, sent to the
recipient by reputable express courier service (charges
prepaid) or three business days after being mailed to the
recipient by certified or registered mail, return receipt
requested and postage prepaid. Such notices, demands and
other communications will be sent to each Investor at the
address indicated on the records of the Company and to
the Company at the address indicated below:
(a) If to the Company:
Intersolv, Inc.
9420 Key West Avenue
Rockville, MD 20850
(301) 838-5000, facsimile (301) 838-5060
Attn: Joseph T. Ruble, Vice President and General Counsel
with a copy, which shall not constitute notice to:
Arent Fox Kintner Plotkin & Kahn
1050 Connecticut Avenue, N.W.
Washington, D.C. 20036
(202) 857-6000, facsimile (202) 857-6395
Attn: Robert B. Hirsch, Esquire
(b) If to the Investors:
To their respective addresses shown on the records of
the Company
or to such other address or to the attention of such
other person as the recipient party has specified by
prior written notice to the sending party.
10.12 Confidentiality. The Company shall hold
in strict confidence and shall not disclose information
with respect to sales of Common Stock by any Investor,
including the fact of such sales, the amount of such
sales and the timing of such sales, except as such
information shall become public without violation of this
Section 10.12, as may be required by applicable law,
rules or regulations or with the express written consent
of such Investor.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date first above written.
INTERSOLV, INC.
By:
Its:
THE INVESTORS WHOSE SIGNATURES
ARE ATTACHED HERETO
INVESTOR SIGNATURE PAGE
TO REGISTRATION RIGHTS AGREEMENT
The undersigned hereby joins and agrees to be bound
by the terms of the Registration Rights Agreement dated
as of October 23, 1995 between Intersolv, Inc. and the
persons set forth on Exhibit A attached thereto.
Signature
Name (Please print)
EXHIBIT A
Furman Selz SBIC, L.P.
Belgische Maatschapplj voor Internationale Investering
(BMI) NV
TEG Holding B.V.
Sofinnova Capital II FCPR
Sofinnova Ventures III L.P.
Marc Van Rompaey
Jean-Claude Deschamps
Andre Van den Bogaert
Anne-Lore Resseler
Terrence Quinn
Edmund Hajim
GIMV bv
Parnib Deelnemingen bv
RIDIS bv
EXHIBIT B
DATE: TIME:
TO: Joseph T. Ruble PHONE: (301) 838-5216
Kenneth Sexton PHONE: (301) 838-5210
FAX: (301) 838-5060
FROM: PHONE:
FAX:
Re: Notice of Intention to Sell Intersolv, Inc.
Common Stock
Dear Joe and Ken:
Please consider this notice of my intention to sell
_____ shares of Intersolv, Inc. Common Stock I acquired
as a result of Intersolv's acquisition of TechGnosis
International Inc. I understand that, unless confirmed
in writing to me to the contrary, I shall be prohibited
from executing this sale until one business day from this
date. I also understand that I shall immediately provide
notice to you of any sale of these shares, whether in
whole or in part.
I understand that, should Intersolv have purchased
shares within two days prior to any sale of my shares,
Intersolv shall not render the necessary opinion letter
to its transfer agent to consummate the sale.
I understand that this notice shall automatically
expire after 10 business days from its date and should I
not have sold all the shares stated above, I must give
INTERSOLV a new notice of my intention to sell.
Sincerely,
Signature
Print Name
Date
