SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
INTERSOLV, INC.
(Name of Issuer)
Common Stock, $.01 par value per share
(Title of Class of Securities)
46070J-10-6
(CUSIP Number)
Brian P. Friedman, Furman Selz SBIC, L.P.
230 Park Avenue, New York, New York 10169
(212) 309-8200
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
October 23, 1995
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box [ ].
Check the following box if a fee is being paid with the statement [ ]. (A
fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent
of the class of securities described in Item 1; and (2) has filed no
amendment subsequent thereto reporting beneficial ownership of five percent
or less of such class.) (See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are
to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that
section of the Act but shall be subject to all other provisions of the Act
(however, see the Notes).
Page 1 of 7 Pages
<PAGE>
SCHEDULE 13D
CUSIP No. 46070J-10-6 Page 2 of 7 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Furman Selz SBIC, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a)
(b)
3 SEC USE ONLY
4 SOURCE OF FUNDS*
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF 7 SOLE VOTING POWER 1,062,379
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER 1,062,379
REPORTING
PERSON WITH 10 SHARED DISPOSITIVE POWER
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,062,379
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.2%
14 TYPE OF REPORTING PERSON*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION
<PAGE>
Item 1. Security and Issuer
Common Stock, par value $.01 per share ("Common Stock")
Intersolv, Inc. (the "Company")
9240 Key West Boulevard
Rockville, Maryland 20850
Item 2. Identity and Background
FURMAN SELZ SBIC, L.P., a Delaware limited partnership
Address: 230 Park Avenue
New York, New York 10169
Principal business: private equity investment fund
Address of principal business: same as above
(d) No such convictions
(e) No such judgments
FURMAN SELZ SBIC INVESTMENTS, INC., a Delaware corporation
Address: 230 Park Avenue
New York, New York 10169
Principal business: general partner of Furman Selz SBIC,
L.P.
Address of principal business: same as above
(d) No such convictions
(e) No such judgments
FURMAN SELZ INVESTMENTS, INC., a Delaware corporation
(owns 100% of Furman Selz SBIC Investments, Inc.)
Address: 230 Park Avenue
New York, New York 10169
Principal business: general partner of investment funds
Address of principal business: same as above
(d) No such convictions
(e) No such judgments
FURMAN SELZ HOLDING CORP., a Delaware corporation
(owns 100% of Furman Selz Investments, Inc.)
Address: 1105 North Market Street, P.O. Box 8985
Wilmington, Delaware 19899
Principal business: diversified financial services holding
company
Address of principal business: same as above
(d) No such convictions
(e) No such judgments
The directors and executive officers of Furman Selz Holding
Corp. are the following:
Directors: Steven D. Blecher
Roy L. Furman
Edmund A. Hajim
Bernard T. Selz
Stuart B. Ross
Officers: Edmund A. Hajim Chairman, CEO
Roy L. Furman President
Bernard T. Selz Vice President
Steven D. Blecher Vice President/
Treasurer/Secretary
Elizabeth Q.
Solazzo Assistant Secretary
Thalia M. Cody Assistant Secretary
Robert J. Miller Assistant Treasurer
As a result of the Merger (as defined below) and
independently of Furman Selz SBIC, L.P. or any of the other
entities named above, Edmund A. Hajim and Terence Quinn,
Chairman of the Board and Managing Director, respectively, of
Furman Selz Incorporated, a wholly-owned subsidiary of Furman
Selz Holding Corp., each own less than 5% of the Company's
Common Stock.
Item 3. Source and Amount of Funds or Other Considerations
Furman Selz SBIC, L.P. ("Furman Selz") was a holder of
securities of TechGnosis International Inc., a Delaware
corporation ("TechGnosis"), which securities were, or were
convertible into, the common stock of TechGnosis. On October
23, 1995, a wholly-owned subsidiary of the Company was merged
with and into TechGnosis, whereupon TechGnosis became a wholly-
owned subsidiary of the Company (the "Merger"). Pursuant to the
terms of the Merger, Furman Selz has received 86,520 shares of
the securities of the Company reported herein in exchange for
the cancellation of common stock of TechGnosis held by Furman
Selz prior to the Merger at the rate of 2.06 shares of the
Company's Common Stock for each share of TechGnosis common
stock, and Furman Selz became entitled to receive 975,859 shares
of such securities (based on the same ratio), in the event of
the conversion of securities convertible into TechGnosis common
stock held prior to the Merger.
Item 4. Purpose of Transaction
Furman Selz has acquired the securities reported herein for
investment purposes.
Item 5. Interest in Securities of the Issuer
(a) As a result of the Merger, Furman Selz owns (i) 86,520
shares of Common Stock and (ii) $3,695,004 principal
amount of the Convertible Subordinated Notes due
September 16, 1999 (the "Notes"), which Notes are
convertible into 975,859 shares of the Company's
Common Stock. Therefore, pursuant to Rule 13d-3,
Furman Selz is deemed to be the beneficial owner of
1,062,379 shares of the Company's Common Stock, which,
based upon information contained in the Company's
Quarterly Report on Form 10-Q for the quarter ended
July 31, 1995 and upon certain Merger-related
adjustments to the amount of the Company's Common
Stock, approximates 5.2% of such Common Stock.
TechGnosis and, as a result of the Merger, the Company
are joint obligors under the Notes.
(b) Furman Selz claims sole power to vote or direct the
vote and sole power to dispose or direct the disposal
of the Common Stock described above.
(c) None.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Agreements, Understandings or Relationships
with Respect to Securities of the Issuer
Furman Selz acquired the Notes pursuant to an agreement
dated October 23, 1995 by an among TechGnosis, the Company and
certain Purchasers named therein (the "Note Purchase
Agreement"). Pursuant to the terms of the Note Purchase
Agreement, the Notes, as a result of the Merger, have become
convertible, at the election of the holder thereof, into shares
of the Company's Common Stock at an initial conversion price of
$3.7864.
In addition, Furman Selz has entered into a registration
rights agreement dated as of October 23, 1995, by and among
Furman Selz, the Company and certain other parties named therein
(the "Registration Rights Agreement"), whereby the Company has
agreed to register under the Act the Company's Common Stock
received, or receivable upon conversion of the Notes, as a
result of the Merger, by the former security holders of
TechGnosis. Under the Registration Rights Agreement, the Company
is required to prepare and file a registration statement with
the Commission and use its reasonable best efforts to cause such
registration statement to become effective on or before March
19, 1995. The Company has also agreed to keep such registration
statement effective until the earlier of (i) the sale of all the
shares subject to the registration statement or (ii) October 23,
1998.
Item 7. Material to Be Filed as Exhibits
1. Note Purchase Agreement.
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of each person's
knowledge and belief, each of the undersigned certify that the
information set forth in this statement is true, complete and
correct.
Dated: November 1, 1995 FURMAN SELZ SBIC, L.P.
By: FURMAN SELZ SBIC
INVESTMENTS, INC.
(its General Partner)
By: /s/ Brian P. Friedman
Name: Brian P. Friedman
Title: President
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page No.
1 Note Purchase Agreement 9
Exhibit No. 1
Agreement dated October 23, 1995 by and among
TechGnosis International Inc., a Delaware corporation (the
"Company"), the Purchasers executing counterparts of this
Agreement (the "Purchasers") and Intersolv, Inc., a Delaware
corporation ("Intersolv").
R E C I T A L S:
A. The Company and the Purchasers entered into a note
purchase agreement dated as of September 16, 1994 (the "Note
Purchase Agreement") providing for the purchase by the
Purchasers from the Company of $4,000,000 aggregate principal
amount of the Company's 8.4% Convertible Subordinated Notes due
September 16, 1999 (the "Notes").
B. The Company, Intersolv, certain of the Purchasers,
et al., have entered into an agreement and plan of merger dated
as of October 22, 1995 (the "Merger Agreement") providing for
the merger (the "Merger") of a wholly-owned subsidiary of
Intersolv into the Company, as a result of which, among other
things, the outstanding shares of common stock of the Company
will be converted into shares of common stock (the "Intersolv
Common Stock") of Intersolv and the Notes will become
convertible into shares of Intersolv Common Stock in the same
ratio. Terms defined in the Note Purchase Agreement and the
Merger Agreement will have the same meaning when used in this
Agreement, except as otherwise defined herein.
C. The parties hereto wish to modify the Note
Purchase Agreement and the Notes in order to take into account
the effects of the Merger.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
AMENDMENT TO NOTE PURCHASE AGREEMENT AND NOTES
Effective at the Effective Time:
1.1. Co-Obligor. Intersolv shall be a co-obligor on
the Notes (as amended and restated by this Agreement), shall be
jointly and severally liable thereunder with the Company and
shall be a party to the Note Purchase Agreement (as amended and
restated by this Agreement).
1.2. Voting. The holders of the Notes waive and
surrender all rights provided in subsection D of Paragraph
Fourth of the Company's Certificate of Incorporation to vote on
any matter presented to the holders of Common Stock.
1.3. Amendment and Restatement. The Note Purchase
Agreement and the Notes are hereby amended and restated in their
entirety as set forth below in this Agreement.
ARTICLE II
THE NOTES AND WARRANTS
The Notes shall be substantially in the form attached
hereto as Exhibit A. Interest on the Notes is payable at the
rate of 8.4% per annum and any portion of the principal amount
outstanding under the Notes may be converted from time to time
by a Purchaser into Intersolv Common Stock at an initial
conversion price per share of $3.7864. In the event that any
Notes are prepaid or redeemed pursuant to Article V of this
Agreement, Intersolv shall issue to the holders of such Notes
Warrants (as such term is defined in Article V) to purchase
shares of Intersolv Common Stock. For purposes of this
Agreement the term "Shares" shall mean the shares of Intersolv
Common Stock which may be issued upon conversion of all or a
portion of the aggregate principal amount of the Notes or upon
exercise of all or a portion of the Warrants.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF INTERSOLV AND THE COMPANY
The Company and Intersolv represent and warrant to the
Purchasers as follows:
3.1. Authorization; Binding Obligations.
(a) Each of the Company and Intersolv has full power
and authority to execute and deliver this Agreement, the Notes
and the Warrants and such other documents furnished or to be
furnished by the Company or Intersolv hereunder. This Agreement
has been duly authorized, executed and delivered by the Company
and Intersolv, constitutes its valid and binding agreement and
is enforceable against each of them in accordance with its
terms, subject to bankruptcy, insolvency, reorganization and
other laws of general applicability relating to or affecting
creditors' rights and to general principles of equity. The
issuance, offering and sale of the Notes pursuant to this
Agreement, the issuance of the Shares issuable upon conversion
of the Notes or exercise of the Warrants, the compliance by the
Company and Intersolv with the provisions of this Agreement, the
Notes and the Warrants, if issued, and the consummation of the
other transactions herein contemplated will not result in the
creation or imposition of any lien, charge or encumbrance upon
any of the assets of the Company and Intersolv or any of their
respective subsidiaries pursuant to the terms or provisions of,
or result in a breach or violation of or conflict with any of
the terms or provisions of, or constitute a default under, or
give any other party a right to terminate any of its obligations
under, or result in the acceleration of any obligation under,
(i) the organizational and governing documents of any of them,
or (ii) except as set forth on the Intersolv Disclosure
Schedule, any contract or other agreement to which any of them
is a party or by which any of them or any of their respective
properties is bound or affected, or any judgment, ruling,
decree, order, statute, rule or regulation of any court or other
governmental agency or body, domestic or foreign, applicable to
the business or properties of any of them.
(b) The Notes have been duly authorized and the
Shares issuable upon conversion of the Notes have been duly
authorized and reserved for issuance, and (i) the Notes
constitute valid and legally binding obligations of the Company
and Intersolv enforceable against the Company and Intersolv in
accordance with their terms, subject to bankruptcy, insolvency,
reorganization and other laws of general applicability relating
to or affecting creditors' rights and to general principles of
equity, (ii) the principal amount outstanding under the Notes
will be convertible into Shares in accordance with their terms,
and (iii) the Shares initially issuable upon such conversion
have been duly reserved for issuance, and when issued and
delivered in accordance with the provisions of the Notes, will
be validly issued, fully paid and nonassessable.
(c) The Warrants have been duly authorized and the
Shares issuable upon exercise of the Warrants have been duly
authorized and reserved for issuance, and when the Warrants have
been duly executed and delivered by Intersolv (i) the Warrants
will constitute valid and legally binding obligations of
Intersolv enforceable against Intersolv in accordance with their
terms, subject to bankruptcy, insolvency, reorganization and
other laws of general applicability relating to or affecting
creditors' rights and to general principals of equity, (ii) the
Warrants will be exercisable for Shares in accordance with their
terms, and (iii) the Shares initially issuable upon such
exercise, when issued and delivered in accordance with the
provisions of the Warrants, will be validly issued, fully paid
and nonassessable.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each of the Purchasers severally represents and
warrants to the Company and Intersolv that (i) it is an
"accredited investor" as that term is defined in Rule 501(a)
promulgated under the Securities Act, (ii) it has the requisite
knowledge and experience in financial and business matters to be
capable of evaluating the merits and risks of an investment in
the Company and in Intersolv, (iii) it has had an opportunity to
discuss the Company's and Intersolv's business, management and
financial affairs with the Company's and Intersolv's management,
and (iv) it understands that none of the Notes has been
registered under the Securities Act of 1933 (the "Securities
Act") and it will not offer, sell, transfer, pledge, hypothecate
or otherwise dispose of any "Securities" (as defined below)
except pursuant to an exemption from, or otherwise in a
transaction not subject to, the registration requirements of the
Securities Act or pursuant to an effective registration
statement under the Securities Act, and, in each case, in
accordance with any applicable state securities or "blue sky"
laws. Each Purchaser acknowledges receipt of, and the
opportunity to review, the information that it believes
necessary to enter into this Agreement. The term "Securities"
means the Notes, the Warrants and the Intersolv Common Stock
issuable upon the conversion or exercise thereof.
ARTICLE V
OPTIONAL PREPAYMENTS
5.1. Optional Prepayments. The Company or Intersolv may,
at its option, at any time prior to maturity, prepay the Notes,
in whole or in part without premium or penalty, at a price equal
to the principal amount thereof plus accrued interest thereon to
the date fixed for prepayment. Any prepayments made pursuant to
this Section 5.1 shall be applied first to the payment of
accrued but unpaid interest on the principal amount of the Notes
to be prepaid and thereafter to the principal amount to be
prepaid. Any prepayment of the Notes shall be made to the
holders thereof in proportion to the respective principal
amounts of Notes outstanding held by them.
5.2. Notice of Prepayments. The Company or Intersolv
shall give notice of prepayment, signed by its President and by
its Treasurer or an Assistant Treasurer, to the holders of the
Notes not less than thirty (30) days prior to the date upon
which the prepayment is to be made (the "Prepayment Notice"),
specifying (i) the accrued and unpaid interest on each Note (to
and including the date upon which the prepayment is to be made),
(ii) the aggregate principal amount of each Note to be prepaid
and (iii) the date of such prepayment. The Prepayment Notice
having been so given, the aggregate principal amount of the
Notes so specified in such Prepayment Notice, and all accrued
and unpaid interest thereon, shall become due and payable on the
specified prepayment date.
5.3. Exercise of Conversion Rights; Springing Warrant.
Upon receipt of a Prepayment Notice, each holder of a Note may
at any time prior to the specified prepayment date elect to
convert all or a portion of the outstanding principal amount of
the Note in accordance with the terms of the Note. In the event
that all or a portion of the principal amount of the Note is
prepaid instead of being converted, Intersolv shall promptly
issue to the holder of the Note (or the last holder of the Note
in case all of the principal of the Note is prepaid) warrants
(the "Warrants") to purchase that number of shares of Common
Stock determined by dividing the amount of principal prepaid by
the conversion price then in effect. The Warrants shall be
exercisable until the stated maturity of the Notes and shall be
substantially in the form set forth in Exhibit B attached
hereto.
ARTICLE VI
AFFIRMATIVE COVENANTS
6.1. The Company and Intersolv hereby covenant and
agree that, so long as any Notes remain outstanding:
(a) Maintenance of Existence; Properties and Leases;
Taxes; Insurance. The Company shall and shall cause each of its
subsidiaries to, maintain in full force and effect its
existence, rights and franchises and, to the best of its
ability, all material terms of licenses and other rights to use
the intellectual property owned or possessed by it and necessary
to the conduct of its business, except where the failure to do
so would not have a "Material Adverse Effect." The term
"Material Adverse Effect" shall mean, when used in connection
with Intersolv, the Company or their respective subsidiaries,
any development, change or effect that is materially adverse to
the business, properties, assets, net worth, condition
(financial or other), results of operations or prospects of
Intersolv and its subsidiaries taken as a whole.
(b) Financial Information. The Company shall furnish
to the holders of Notes the following information, reports and
certificates:
(i) within ninety (90) days after the end of
each fiscal year, consolidated statements of income and
retained earnings and cash flows of Intersolv and its
subsidiaries for the period from the beginning of each
fiscal year to the end of such fiscal year, and
consolidated balance sheets as at the end of such fiscal
year, setting forth in each case in comparative form
corresponding figures for the preceding fiscal year, which
statements will be prepared in accordance with US generally
accepted accounting principles consistently applied (except
as approved by the accounting firm examining such
statements and disclosed by Intersolv) and will be
accompanied by an unqualified report of one of the public
accounting firms currently known as the "Big Six" located
in the United States (an "Approved Accounting Firm"); for
purposes of this Section, a report disclosing a "going
concern" paragraph shall not be considered "unqualified";
and
(ii) within forty-five (45) days after the end
of each quarterly accounting period in each fiscal year, if
Intersolv or the Company is not in compliance (an "Event of
Noncompliance") with the terms of this Agreement, a
certificate of the Chief Financial Officer of Intersolv,
specifying the nature and period of noncompliance, and what
actions Intersolv or the Company has taken and/or proposes
to take with respect thereto. Notwithstanding the
foregoing, a certificate delivered at the end of a fiscal
year of Intersolv shall be delivered within ninety (90)
days after the end of the fiscal year; and
(iii) within ten (10) days after transmission
or receipt thereof, copies of all financial statements,
proxy statements, reports and other communications which
Intersolv sends to its stockholders, and copies of all
reports which it files with the Securities and Exchange
Commission (the "SEC").
(c) Notice of Adverse Change. The Company shall
promptly give notice to all holders of any Notes (but in any
event within seven (7) days) after becoming aware of the
existence of any condition or event which constitutes, or the
occurrence of, any of the following:
(i) any Event of Noncompliance; or
(ii) any Event of Default (as hereinafter
defined);
(d) Accounts and Records. Intersolv and the Company
shall keep in all material respects true records and books of
account in which entries will be made of all dealings or
transactions in relation to the business and affairs of
Intersolv, the Company and their respective subsidiaries in
accordance with generally accepted accounting principles applied
on a consistent basis.
(e) Maintenance of Office. The Company shall notify
the holders of the Notes in writing, at least thirty (30) days
prior thereto, of any change of location of its principal office
as set forth below.
6.2. Further Assurances. From time to time each of
Intersolv and the Company shall execute and deliver to the
holders of Securities such other instruments, certificates,
agreements and documents and take such other action and do all
other things as may be reasonably requested by such holders in
order to implement or effectuate the terms and provisions of
this Agreement and any of their Securities.
ARTICLE VII
EVENTS OF DEFAULT
7.1. Events of Default. An "Event of Default" occurs
if:
(a) Intersolv or the Company shall default in the
payment of (i) any part of the principal of any Note, when the
same shall become due and payable, whether at maturity or at a
date fixed for prepayment, acceleration or otherwise; or (ii)
the interest on any Note, when the same shall become due and
payable; or
(b) Intersolv or the Company shall default in the
performance of any of the covenants contained in this Agreement
and such default shall have continued for the period and after
the notice specified in the last paragraph of this Section 7.1
(the "Default Notice") without cure (the Company or Intersolv to
give forthwith to all other holders of the Notes at the time
outstanding written notice of the receipt of such Default
Notice, specifying the default referred to therein); or
(c) any representation or warranty made in this
Agreement or pursuant to any covenant or other obligation of
Intersolv or the Company pursuant to this Agreement shall prove
to have been incorrect in any material respect when made; or
(d) any default shall occur under any indenture,
mortgage, agreement, instrument or commitment evidencing or
under which there is at the time outstanding any indebtedness of
Intersolv, the Company or any of their respective subsidiaries,
in excess of $1,000,000 or which results in such indebtedness,
in an aggregate amount (with other defaulted indebtedness) in
excess of $1,000,000 becoming due and payable prior to its due
date and if such indenture, mortgage, agreement, instrument or
commitment so requires, the holder or holders thereof (or a
trustee on their behalf) shall have declared such indebtedness
due and payable; or
(e) a final judgment which, either alone or together
with other outstanding final judgments, against Intersolv, the
Company and their respective subsidiaries exceeds an aggregate
of $1,000,000 shall be rendered against Intersolv, the Company
or any of their respective subsidiaries and such judgment shall
have continued undischarged or unstayed for thirty (30) days
after entry thereof; or
(f) Intersolv or any of its material subsidiaries
shall make a general assignment for the benefit of creditors, or
shall admit in writing its inability to pay its debts; or any of
them shall suffer a receiver or trustee for it or substantially
all of its assets to be appointed; or any of them shall suffer
proceedings under any law relating to bankruptcy, insolvency or
the reorganization or relief of debtors to be instituted by or
against it, and, if contested by it, not to be dismissed or
stayed within ninety (90) days; or any of them shall suffer any
writ of attachment or execution or any similar process to be
issued or levied against it or any significant part of its
property which is not released, stayed, bonded or vacated within
ninety (90) days after its issue or levy; or any of them takes
corporate action in furtherance of any of the aforesaid purposes
or conditions.
A default under paragraph (b) of this Section 7.1 is
not a default unless the holders of a majority of the aggregate
principal amount then outstanding under the Notes notify
Intersolv and the Company of the default and the default is not
cured within ten (10) days after receipt of such notice. The
notice must specify the default and demand that it be remedied.
7.2. Remedies.
(a) Upon the occurrence of an Event of Default (other
than an Event of Default specified in paragraph (f) of Section
7.1), holders of a majority in aggregate principal amount of the
Notes at the time outstanding may at any time (unless all
defaults shall theretofore have been remedied) at their option,
by written notice or notices to Intersolv and the Company (i)
declare all the Notes to be due and payable, whereupon the same
shall forthwith mature and become due and payable, together with
interest accrued thereon, without presentment, demand, protest
or notice, all of which are hereby waived; and (ii) declare any
other amounts payable to such holders under this Agreement or as
contemplated hereby due and payable. If an Event of Default
specified in paragraph (f) of Section 7.1 occurs, all principal
of and interest on the Notes shall automatically become and be
immediately due and payable without any declaration or other
act.
(b) Notwithstanding anything contained in Section
7.2(a), in the event that at any time after the principal of the
Notes shall so become due and payable and prior to the date of
maturity stated in the Notes all arrears of principal of and
interest on the Notes (with interest at the rate specified in
the Notes on any overdue principal and, to the extent legally
enforceable, on any interest overdue) shall be paid by or for
the account of Intersolv and the Company, then holders of a
majority in aggregate principal amount of the Notes then
outstanding, by written notice or notices to Intersolv and the
Company, may (but shall not be obligated to) waive such Event of
Default and its consequences and rescind or annul such
declaration, but no such waiver shall extend to or affect any
subsequent Event of Default or impair any right resulting
therefrom. If any holders of Notes shall give any notice or take
any other action with respect to a claimed default, Intersolv or
the Company, forthwith upon receipt of such notice or obtaining
knowledge of such other action will give written notice thereof
to all other holders of the Notes then outstanding, describing
such notice or other action and the nature of the claimed
default.
7.3. Enforcement. In case any one or more Events of
Default shall occur and be continuing, the holder of a Note then
outstanding may, subject to Article IX hereof, proceed to
protect and enforce the rights of such holder by an action at
law, suit in equity or other appropriate proceeding, whether for
the specific performance of any agreement contained herein or in
such Note or for an injunction against a violation of any of the
terms hereof or thereof, or in aid of the exercise of any power
granted hereby or thereby or by law. Each holder agrees that it
will give written notice to the other holders prior to
instituting any such action. In case of a default in the
payment of any principal of or interest on any Note, Intersolv
and the Company will pay to the holder thereof such further
amount as shall be sufficient to cover the cost and expense of
collection, including, without limitation, reasonable attorneys'
fees, expenses and disbursements. No course of dealing and no
delay on the part of any holder of any Note in exercising any
rights shall operate as a waiver thereof or otherwise prejudice
such holder's rights. No right conferred hereby or by any Note
upon any holder thereof shall be exclusive of any other right
referred to herein or therein or now available at law, in
equity, by statute or otherwise.
ARTICLE VIII
AMENDMENT AND WAIVER
This Agreement may not be amended or modified (or any
provision hereof waived), except as follows:
(a) Intersolv and the Company and holders of at least
a majority in aggregate principal amount of the Notes then
outstanding may by written instrument amend or waive any term or
condition of this Agreement relating to the rights or
obligations of holders, except that no such amendment or waiver
shall (i) change the fixed maturity of the Notes, the rate or
the time or other terms of payment of interest thereon, the
principal amount thereof, the terms of conversion or
subordination, or the terms with respect to the issuance of the
Warrants or the exercise price thereof, without the consent of
the holders of all of the Notes then outstanding, (ii) change
the aforesaid percentage of Notes, the holders of which are
required to consent to any such amendment or waiver, without the
consent of the holders of all the Notes then outstanding or
(iii) change the percentage of the amount of the Notes, the
holders of which may declare the Notes to be due and payable
under Article VII.
Intersolv and the Company and each holder of a Note
then outstanding shall be bound by any amendment or waiver
effected in accordance with the provisions of this Article VIII,
whether or not such Note shall have been marked to indicate such
modification, but any Note issued thereafter shall bear a
notation as to any such modification. Promptly after obtaining
the written consent of the holders herein provided, Intersolv or
the Company shall transmit a copy of such modification to all of
the holders of the Notes then outstanding.
(b) Intersolv and the Company and Purchasers (and
assignees of Purchasers whose Shares are "restricted securities"
as defined in Rule 144 under the Securities Act) holding at
least a majority of the Shares (including any Shares issuable
upon conversion of Notes or exercise of Warrants), may by
written instrument amend or waive any term or condition of this
Agreement relating to the rights or obligations of such holders,
but in no event shall the obligation of any holder of Shares
hereunder be increased, except upon the written consent of each
such holder.
Intersolv, the Company and each holder of Shares
(including any Shares issuable upon conversion of Notes or
exercise of Warrants) shall be bound by any amendment or waiver
effected in accordance with the provisions of this Article VIII,
whether or not such Shares shall have been marked to indicate
such modification, but any Shares issued thereafter shall bear a
notation as to any such modification. Promptly after obtaining
the written consent of the holders herein provided, Intersolv
shall transmit a copy of such modification to all of the holders
of Shares (including any Shares issuable upon conversion of
Notes or exercise of Warrants).
ARTICLE IX
SUBORDINATION; SENIORITY
9.1. Senior Indebtedness. As used in this Article IX,
"Senior Indebtedness" shall mean the principal, premium, if any,
and unpaid interest (including interest accruing on or after the
filing of any petition in bankruptcy or for reorganization
relating to the Company or Intersolv whether or not a claim for
post-filing interest is allowed in such proceeding), fees,
charges, expenses, reimbursement and indemnification
obligations, and all other amounts payable under or in respect
of all indebtedness of the Company or Intersolv for money
borrowed, whether any such indebtedness exists as of the date of
this Agreement or shall hereafter be created, incurred, assumed
or guaranteed, unless it is expressly stated in the instrument
evidencing such indebtedness or in the agreement or indenture
pursuant to which it is outstanding that such indebtedness is
not Senior Indebtedness.
9.2. Securities Subordinated to Senior Indebtedness.
(a) Intersolv and the Company agree, and each holder
of Notes by his acceptance thereof likewise agrees, that the
payment of the principal of, premium, if any, and interest on
the Notes, (all of the foregoing, a "Payment or Distribution"),
is subordinated and junior in right of payment, to the extent
and in the manner provided in this Article IX to the prior
payment in full of all Senior Indebtedness whether outstanding
on the date hereof or hereafter created, incurred, assumed or
guaranteed. A Payment or Distribution shall include any asset
of any kind or character, and may consist of cash, securities or
other property, by set-off or otherwise, and shall include,
without limitation, any payment pursuant to a judgment rendered
against the Company or Intersolv on behalf of the holders of the
Notes, any purchase, redemption or other acquisition of the
Notes, or the making of any deposit of funds or securities
pursuant to this Agreement.
(b) The Senior Indebtedness shall continue to be
Senior Indebtedness and entitled to the benefit of these
subordination provisions irrespective of any amendment,
modification or waiver of any term of any instrument relating to
refinancing of the Senior Indebtedness.
(c) All the provisions of this Agreement and the
Notes shall be subject to the provisions of this Article IX so
far as they may be applicable thereto.
(d) No right of any holder of any Senior Indebtedness
to enforce subordination as herein provided shall at any time or
in any way be affected or impaired by any failure to act on the
part of Intersolv, the Company, the holders of the Notes or the
holders of the Senior Indebtedness, or by any noncompliance by
Intersolv, the Company or the holders of the Notes with any of
the terms, provisions and covenants of the Notes or this
Agreement, regardless of any knowledge thereof that any such
holder of Senior Indebtedness may have or be otherwise charged
with.
(e) In the event that the Notes are declared due and
payable before their expressed maturity because of the
occurrence of an Event of Default hereunder, Intersolv or the
Company will give prompt notice in writing of such happening to
the holders of Senior Indebtedness.
9.3. No Payments with Respect to Notes in Certain
Circumstances.
(a) No Payment or Distribution shall be made by
Intersolv or the Company on account of principal of (or premium,
if any) or interest on the Notes, whether upon stated maturity,
upon prepayment or acceleration, or otherwise, or on account of
the purchase or other acquisition of Notes, whether upon stated
maturity, prepayment, acceleration, or otherwise, if there shall
have occurred and be continuing a default with respect to any
Senior Indebtedness permitting the acceleration thereof or with
respect to the payment of any Senior Indebtedness and (i) such
default is the subject of a judicial proceeding or (ii) notice
of such default in writing or by telegram has been given to
Intersolv or the Company by any holder or holders of any Senior
Indebtedness, unless and until Intersolv or the Company shall
have received written notice from such holder or holders that
such default or event of default shall have been cured or waived
or shall have ceased to exist.
(b) Upon any payment by Intersolv or the Company or
distribution of assets of Intersolv or the Company of any kind
or character, whether in cash, property or securities, to
creditors upon any dissolution or winding up or liquidation or
reorganization of Intersolv or the Company, whether voluntary or
involuntary, or in bankruptcy, insolvency, receivership or other
proceedings, all amounts due or to become due upon all Senior
Indebtedness shall first be paid in full, or payment thereof
provided for to the satisfaction of the holders thereof, before
any Payment or Distribution is made on account of the redemption
price or principal of (and premium, if any) or interest on the
Notes; and (subject to the power of a court of competent
jurisdiction to make other equitable provision, which shall have
been determined by such court to give effect to the rights
conferred in this Article upon the Senior Indebtedness and the
holders thereof with respect to the Notes or the holders
thereof, by a lawful plan of reorganization or readjustment
under applicable law) upon any such dissolution or winding up or
liquidation or reorganization, any Payment or Distribution by
Intersolv or the Company or distribution of assets of Intersolv
or the Company of any kind or character, whether in cash,
property or securities, to which the holders of the Notes would
be entitled except for the provisions of this Article, shall be
paid by Intersolv or the Company or by any receiver, trustee in
bankruptcy, liquidating trustee, agent or other person making
such Payment or Distribution directly to the holders of Senior
Indebtedness of Intersolv or the Company or their representative
or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any
Senior Indebtedness may have been issued, as their respective
interests may appear, to the extent necessary to pay all Senior
Indebtedness in full, after giving effect to any concurrent
payment or distribution to or for the holders of Senior
Indebtedness, before any Payment or Distribution is made to the
Holders of the Notes.
(c) In the event that, notwithstanding the foregoing,
any Payment or Distribution by Intersolv or the Company of any
kind or character, whether in cash, property or securities,
prohibited by the foregoing, shall be received by the holders of
the Notes before all Senior Indebtedness is paid in full, or
provision is made for such payment to the satisfaction of the
holders thereof, and if such fact shall then have been or
thereafter be made known to such holders, then and in such event
such Payment or Distribution shall be paid over or delivered to
the holders of Senior Indebtedness or their representative or
representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any
Senior Indebtedness may have been issued, as their respective
interests may appear, for application to the payment of all
Senior Indebtedness remaining unpaid to the extent necessary to
pay all Senior Indebtedness in full, after giving effect to any
concurrent Payment or Distribution to or for the holders of such
Senior Indebtedness, and, until so delivered, the same shall be
held in trust by any holder of a Note as the property of the
holders of Senior Indebtedness.
(d) The holders of Senior Indebtedness may, at any
time and from time to time, without the consent of or notice to
the holders of the Notes, without incurring responsibility to
the holders of the Notes and without impairing or releasing the
obligations of the holders of the Notes hereunder to the holders
of Senior Indebtedness: (i) change the manner, place or terms of
payment or change or extend the time of payment of, or renew or
alter, Senior Indebtedness, or otherwise amend in any manner
Senior Indebtedness or any instrument evidencing the same or any
agreement under which Senior Indebtedness is outstanding; (ii)
sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing Senior Indebtedness;
(iii) release any person liable in any manner for the collection
of Senior Indebtedness; and/or (iv) exercise or refrain from
exercising any rights against the Company, Intersolv and any
other person.
9.4. Subrogation of Notes.
(a) Subject to the payment in full of all amounts
then due (whether by acceleration of the maturity thereof or
otherwise) on account of all Senior Indebtedness at the time
outstanding, the holders of the Notes shall be subrogated to the
rights of the holders of Senior Indebtedness to receive Payments
or Distributions of cash, property or securities of Intersolv or
the Company applicable to the Senior Indebtedness until the
principal of (and premium, if any) and interest on the Senior
Indebtedness shall be paid in full; and, for the purposes of
such subrogation, no Payments or Distributions to the holders of
Senior Indebtedness to which the holders of the Notes would be
entitled except for the provisions of this Article, and no
payments over pursuant to the provisions of this Article to the
holders of Senior Indebtedness by holders of the Notes, shall,
as between Intersolv or the Company, Intersolv's or the
Company's creditors other than holders of Senior Indebtedness,
and the holders of the Notes, be deemed to be a payment by
Intersolv or the Company to or on account of the Senior
Indebtedness. It is understood that the provisions of this
Article are and are intended solely for the purpose of defining
the relative rights of the holders of the Notes, on the one
hand, and the holders of Senior Indebtedness, on the other hand.
(b) Nothing contained in this Article or elsewhere in
this Agreement or in the Notes is intended to or shall impair,
as among Intersolv, the Company, their respective creditors
other than the holders of Senior Indebtedness, and the holders
of the Notes, the obligation of Intersolv and the Company, which
is absolute and unconditional, to pay to the holders of the
Notes the principal of (and premium, if any) and interest on the
Notes as and when the same shall become due and payable in
accordance with their terms, or is intended to or shall affect
the relative rights of the holders of the Notes and creditors of
Intersolv or the Company other than the holders of Senior
Indebtedness, nor shall anything herein or therein prevent the
holder of any Note from exercising all remedies otherwise
permitted by applicable law upon default under this Agreement,
subject to the rights, if any, under this Article of the holders
of Senior Indebtedness in respect of cash, property or
securities of Intersolv or the Company received upon the
exercise of any such remedy.
(c) Upon any payment or distribution of assets of
Intersolv or the Company referred to in this Article, the
holders of the Notes shall be entitled to rely upon any order or
decree made by any court of competent jurisdiction in which any
dissolution, winding up, liquidation or reorganization
proceedings are pending, or certificate of the receiver, trustee
in bankruptcy, liquidating trustee, agent or other person making
such payment or distribution, delivered to the holders of the
Notes, for the purpose of ascertaining the persons entitled to
participate in such distribution, the holders of Senior
Indebtedness and other indebtedness of Intersolv or the Company,
the amount thereof or payable thereon, the amount or amounts
paid or distributed thereon and all other facts pertinent
thereto or to this Article.
9.5. Notices. Intersolv or the Company shall give
prompt written notice to the holders of the Notes of any facts
known to it which would prohibit the making of any payment of
moneys to holders in respect of the Notes pursuant to the
provisions of this Article.
9.6. No Impairment of Subordination. No right of any
present or future holder of any Senior Indebtedness to enforce
subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part
of Intersolv or the Company or the holder of any of the Notes or
by any act, or failure to act, in good faith, by any such holder
of Senior Indebtedness, or by any noncompliance by Intersolv or
the Company or the holder of any of the Notes with the terms,
provisions and covenants of this Agreement, regardless of any
knowledge thereof which any such holder may have or otherwise be
charged with.
9.7. Article IX Not To Prevent Events of Default. The
failure to make a payment on account of principal of (premium,
if any) or interest on the Notes by reason of any provision in
this Article IX shall not be construed as preventing the
occurrence of an Event of Default.
ARTICLE X
CONVERSION OF NOTES
10.1. Right of Conversion; Conversion Price. The
holder of any Note shall have the right, at its option, at any
time (except that, with respect to any Note or portion of a Note
which shall be prepaid or called for redemption pursuant to
Article V hereof, such right shall terminate at the close of
business on the date prior to the date fixed for prepayment or
redemption of such Note or portion of a Note unless Intersolv
and the Company shall default in payment due upon prepayment or
redemption thereof), to convert, subject to the terms and
provisions of this Article X, the principal of any such Note or
any portion thereof into shares of Intersolv Common Stock upon
surrender of the Note, the principal of which is so to be
converted, accompanied by written notice of conversion duly
executed, to Intersolv. The conversion price per share of the
Notes shall be $3.7864; or, in case an adjustment of such price
has taken place pursuant to the provisions of this Article X,
then the price as last adjusted (such price or adjusted price
being referred to herein as the "conversion price"). For
convenience, the conversion of any portion of the principal of
any Note into shares of Intersolv Common Stock is hereinafter
sometimes referred to as the conversion of such Note. Whenever
the conversion price in effect shall be adjusted pursuant to
this Article X, Intersolv shall promptly notify each holder of a
Note then outstanding of such adjustment, which notice shall be
signed by the Chief Financial Officer of Intersolv and shall set
forth in reasonable detail a calculation to the nearest cent of
the conversion price, the method of calculation and the facts
requiring such adjustment.
10.2. Issuance of Shares on Conversion.
As promptly as practicable after the surrender, as
herein provided, of any Note for conversion, Intersolv shall
deliver or cause to be delivered to or upon the written order of
the holder of the Note so surrendered, certificates representing
the number of fully paid and nonassessable shares of Intersolv
Common Stock into which such Note may be converted in accordance
with the provisions of this Article X. Such conversion shall be
deemed to have been made as of the close of business on the date
that such Note shall have been surrendered for conversion by
delivery thereof, so that the rights of the holder of such Note
shall cease at such time and, subject to the following
provisions of this Section, the person or persons entitled to
receive the shares of Intersolv Common Stock upon conversion of
such Note shall be treated for all purposes as having become the
record holder or holders of such shares of Intersolv Common
Stock at such time and such conversion shall be at the
conversion price in effect at such time; provided, however, that
no such surrender on any date when the stock transfer books of
Intersolv shall be closed shall be effective to constitute the
person or persons entitled to receive the shares of Intersolv
Common Stock upon such conversion as the record holder or
holders of such shares of Intersolv Common Stock on such date,
but such surrender shall be effective to constitute the person
or persons entitled to receive such shares of common stock as
the record holder or holders thereof for all purposes at the
close of business on the next succeeding day on which such stock
transfer books are open; such conversion shall be at the
conversion price in effect on the date that such Note shall have
been surrendered for conversion by delivery thereof, as if the
stock transfer books of Intersolv had not been closed. Upon
conversion of any Note which is converted in part only, the
Company and Intersolv shall execute and deliver to or on the
order of the holder thereof, at the expense of Intersolv, a new
Note in principal amount equal to the unconverted portion of
such Note.
10.3. No Adjustment for Interest or Dividends. No
payment or adjustment in respect of interest on the Notes or
dividends on the shares of Intersolv Common Stock shall be made
upon the conversion of any Notes.
10.4. Adjustment of Conversion Price.
(a) Except as hereinafter provided, in case Intersolv
shall at any time after the date hereof issue or sell any shares
of Intersolv Common Stock, for a consideration per share less
than the conversion price in effect immediately prior to the
issuance or sale of such shares, or without consideration, then,
and thereafter successively upon each such issuance or sale, the
conversion price in effect immediately prior to such issuance or
sale shall forthwith be reduced to a price determined by
dividing (i) an amount equal to (X) the total number of shares
of Intersolv Common Stock outstanding immediately prior to such
issuance or sale multiplied by the conversion price in effect
immediately prior to such issuance or sale, plus (Y) the
consideration, if any, received by Intersolv upon such issuance
or sale, by (ii) the total number of shares of Intersolv Common
Stock outstanding immediately after such issuance or sale.
For the purposes of any computation to be made in
accordance with the provisions of this paragraph (a), the
following shall be applicable:
(i) In case of the issuance or sale of shares of
Intersolv Common Stock for a consideration part or all of
which shall be cash, the amount of the cash consideration
therefor shall be deemed to be the amount of cash received
by Intersolv for such shares (or, if such shares of
Intersolv Common Stock are offered by Intersolv for
subscription, the subscription price, or, if shares of
Intersolv Common Stock shall be sold to underwriters or
dealers for public offering without a subscription
offering, the initial public offering price) before
deducting therefrom any commissions or other expenses paid
or incurred by Intersolv for any underwriting of, or
otherwise in connection with the issuance of such shares;
(ii) In case of the issuance or sale of shares
of Intersolv Common Stock for a consideration part or all
of which shall be other than cash (otherwise than as a
dividend or other distribution on any shares of Intersolv
Common Stock or on conversion or exchange of other
securities of Intersolv or upon acquisition of the assets
or securities of another company or upon merger or
consolidation with another entity), the amount of
consideration therefor other than cash shall be the value
of such consideration (as determined in good faith by the
Board of Directors of Intersolv) as of the date of the
issuance or sale of the shares of Intersolv Common Stock,
irrespective of any accounting treatment. The
reclassification of securities other than Intersolv Common
Stock into Intersolv Common Stock shall be deemed to
involve the issuance for a consideration other than cash of
such Intersolv Common Stock immediately prior to the close
of business on the date fixed for the determination of
security holders entitled to receive such Intersolv Common
Stock;
(iii) In case of the issuance of shares of
Intersolv Common Stock upon conversion or exchange of any
obligations or of any securities of Intersolv that shall be
convertible into or exchangeable for shares of Intersolv
Common Stock or upon the exercise of rights or options to
subscribe for or to purchase shares of Intersolv Common
Stock (other than upon conversion of the Notes), the amount
of consideration received by Intersolv for such shares of
Intersolv Common Stock shall be deemed to be the sum of (A)
the amount of the consideration received by Intersolv upon
the original issuance of such obligations, shares, rights
or options, as the case may be, plus (B) the consideration,
if any, other than such obligations, shares, rights or
options, received by Intersolv upon such conversion,
exchange, or exercise except in adjustment of interest and
dividends. The amount of the consideration received by
Intersolv upon the original issuance of the obligations,
shares, rights or options so converted, exchanged or
exercised and the amount of the consideration, if any,
other than such obligations, shares, rights or options,
received by Intersolv upon such conversion, exchange or
exercise shall be determined in the same manner provided in
subparagraphs (i) and (ii) above with respect to the
consideration received by Intersolv in case of the issuance
of shares of Intersolv Common Stock; if such obligations,
shares, rights or options shall have been issued as a
dividend upon any securities of Intersolv, the amount of
the consideration received by Intersolv upon the original
issuance thereof shall be deemed to be zero. In case of
the issuance of shares of Intersolv Common Stock upon
conversion of all or a portion of Notes, Intersolv shall be
deemed to have received the conversion price then in effect
as the consideration for each share of Intersolv Common
Stock so issued;
(iv) If Intersolv issues Intersolv Common Stock
upon acquisition by Intersolv of the assets or securities
of another company or upon merger or consolidation of
Intersolv with another entity (except for a consolidation
or merger referred to in Section 10.6 hereof), the
consideration therefor received by Intersolv for such
issuance shall be deemed to equal the cash paid and "market
value" of the securities issued by Intersolv. "Market
value" of securities issued shall be the lesser of the
market value of the securities on the date an agreement in
principle with respect to such merger, consolidation or
purchase is reached among the parties or the date the
agreement of consolidation, merger or purchase is executed.
For purposes hereof, "market value" shall be determined in
good faith by the Board of Directors of Intersolv;
(v) Shares of Intersolv Common Stock issuable by
way of dividend or other distribution on any securities of
Intersolv shall be deemed to have been issued and to be
outstanding at the close of business on the record date
fixed for the determination of security holders entitled to
receive such dividend or other distribution and shall be
deemed to have been issued without consideration. Shares
of Intersolv Common Stock issued otherwise than as a
dividend, shall be deemed to have been issued and to be
outstanding at the close of business on the date of issue;
(vi) The number of shares of Intersolv Common
Stock at any time outstanding shall not include any shares
then owned or held by or for the account of Intersolv, but
shall include the aggregate number of shares deliverable in
respect of options, rights and convertible and exchangeable
securities at all times while such options, rights or
securities remain outstanding and unexercised, unconverted
or unexchanged, as the case may be, and thereafter to the
extent such options, rights or securities have been
exercised, converted or exchanged;
(vii) No adjustment shall be made to the
conversion price in effect in the case of the issuance or
exercise of options granted or which may be granted under
Intersolv's and its subsidiaries' employee stock option
plans; and
(viii) No adjustment shall be made to the
conversion price then in effect in case of the issuance of
shares of Intersolv Common Stock upon conversion or
exchange of any obligations or of any securities of
Intersolv that shall be convertible into or exchangeable
for shares of Intersolv Common Stock or upon the exercise
of rights or options to subscribe for or to purchase shares
of Intersolv Common Stock for which an adjustment in the
conversion price has previously been made in accordance
with paragraph (b) of this Section 10.4.
(b) In case Intersolv shall at any time after the
date hereof issue options or rights to subscribe for shares of
Intersolv Common Stock, or issue any securities convertible into
or exchangeable for shares of Intersolv Common Stock otherwise
than as contemplated by Section 10.4(a)(vii) or pursuant to
Section 10.5 hereof, for a consideration per share less than the
conversion price in effect immediately prior to the issuance of
such options or rights or convertible or exchangeable
securities, or without consideration, the conversion price in
effect immediately prior to the issuance of such options or
rights or securities shall be reduced to a price determined by
making a computation in accordance with the provisions of
clause (a) of this Section 10.4, provided that:
(i) the aggregate maximum number of shares of
Intersolv Common Stock delivered under such options or
rights shall be considered to have been delivered at the
time such options or rights were issued, and for a
consideration equal to the minimum purchase price per share
of Intersolv Common Stock provided for in such options or
rights, plus the consideration (determined in the same
manner as consideration received on the issue or sale of
Intersolv Common Stock), if any, received by Intersolv for
such options or rights;
(ii) the aggregate maximum number of shares of
Intersolv Common Stock deliverable upon conversion of or
exchange for any such securities shall be considered to
have been delivered at the time of issuance of such
securities, and for a consideration equal to the
consideration (determined in the same manner as
consideration received on the issue or sale of Intersolv
Common Stock) received by Intersolv for such securities,
plus the consideration, if any, to be received by Intersolv
upon the exchange or conversion thereof; and
(iii) on the expiration of such options or rights,
or an increase in the minimum exercise price thereof, or a
decrease in the maximum number of shares of Intersolv
Common Stock deliverable upon exercise or conversion of
such options, rights or convertible or exchangeable
securities pursuant to the terms thereof (and not as a
result of exercise or conversion), or the termination of
such right to convert or exchange, the conversion price
then in effect shall forthwith be readjusted to such
conversion price as would have obtained had the adjustments
made upon the issuance of such options, rights or
convertible or exchangeable securities been made upon the
basis of the delivery of only the number of shares of
Intersolv Common Stock (A) actually deliverable upon the
exercise of such options or rights or upon conversion or
exchange of such securities, or (B) deliverable by reason
of such increase in price or decrease in number of shares.
(c) In case Intersolv shall at any time subdivide or
combine the outstanding shares of Intersolv Common Stock, the
conversion price in effect shall forthwith be proportionately
decreased in the case of the subdivision or proportionately
increased in the case of combination to the nearest one cent.
Any such adjustment shall become effective at the close of
business on the date that such subdivision or combination shall
become effective.
10.5. Dividends and Distributions. In the event that
Intersolv shall at any time after the date hereof pay any
dividend (other than in shares of Intersolv Common Stock) on, or
make any distribution of its assets or evidences of indebtedness
upon or with respect to, the Intersolv Common Stock, or in the
event that Intersolv shall offer options or rights to subscribe
for shares of Intersolv Common Stock, or issue any securities
convertible into or exchangeable for shares of Intersolv Common
Stock, to all of its holders of Intersolv Common Stock, each
holder of a Note on the record date for such payment,
distribution or offer or, in the absence of a record date, on
the date of such payment, distribution or offer, shall receive
what such holder would have received had such holder converted
the principal amount of its Note immediately prior to the record
date of such payment, distribution or offer or, in the absence
of a record date, immediately prior to the date of such payment,
distribution or offer.
10.6. Mergers, Consolidations, Reclassifications. In
the case of any reorganization or reclassification of the
outstanding shares of Intersolv Common Stock (other than a
change in par value, or from par value to no par value, or from
no par value to par value, or as a result of a subdivision or
combination) or in the case of any consolidation of Intersolv
into, or merger of Intersolv with another corporation in which
it is not the surviving entity (or it is the surviving entity,
but the Intersolv Common Stock become shares of another
corporation), or in the case of any sale, lease or conveyance of
all, or substantially all, of the property, assets, business and
goodwill of Intersolv as an entity, the holders of the Notes
shall thereafter have the right upon conversion to receive the
kind and amount of shares of stock and other securities, cash
and property receivable upon such reorganization,
reclassification, consolidation, merger, or sale by a holder of
the number of shares of Intersolv Common Stock which the holder
of a Note would have received had it converted such Note
immediately prior to such reorganization, reclassification,
consolidation, merger, or sale, at a price equal to the
aggregate conversion price in effect for converting the entire
outstanding principal amount of such Note (the kind, amount and
price of such stock and other securities to be subject to
adjustment as herein provided).
ARTICLE XI
EXCHANGE AND REPLACEMENT OF NOTES
11.1. Exchange of Notes. Subject to Article XII, at
any time at the request of any holder of one or more of the
Notes (including but not limited to Notes outstanding
immediately prior to the Effective Time, which Notes, even if
not exchanged, will be deemed automatically amended in
accordance herewith upon the occurrence of the Effective Time)
to the Company or Intersolv at its office provided below, the
Company and Intersolv at its expense (except for any transfer
tax or any other tax arising out of the exchange) will issue in
exchange therefor new Notes, in such denomination or
denominations as such holder may request, in aggregate principal
amount equal to the unpaid principal amount of the Note or Notes
surrendered and substantially in the form thereof, dated as of
the date to which interest has been paid on the Note or Notes
surrendered (or, if no interest has yet been so paid thereon,
then dated the date of the Note or Notes so surrendered) and
payable to such person or persons or order as may be designated
by such holder.
11.2. Lost or Mutilated Notes. Upon receipt of
evidence satisfactory to the Company or Intersolv of the loss,
theft, destruction or mutilation of any Note and, in the case of
any such loss, theft, or destruction, upon delivery of a bond of
indemnity satisfactory to the Company or Intersolv (provided
that if the holder is a financial institution, its own agreement
will be satisfactory), or in the case of any such mutilation,
upon surrender and cancellation of such Note, the Company and
Intersolv will issue a new Note of like tenor as if the lost,
stolen, destroyed or mutilated Note were then surrendered for
exchange in lieu of such lost, stolen, destroyed or mutilated
Note.
ARTICLE XII
TRANSFER OF NOTES
12.1. Notification of Proposed Sale.
(a) Subject to Section 12.1(b), each holder of a Note
by acceptance thereof agrees that it will give the Company and
Intersolv ten (10) days written notice prior to selling or
otherwise disposing of such Note. No sale or other disposition
shall be made with respect to any Securities or any other
securities issued in respect of the Securities upon any stock
split, stock dividend, recapitalization, merger, consolidation
or similar event unless (i) the holder shall have supplied to
the Company and Intersolv an opinion of counsel for the holder
reasonably acceptable to the Company and Intersolv to the effect
that no registration under the Securities Act is required with
respect to such sale or other disposition, or (ii) an
appropriate registration statement with respect to such sale or
other disposition shall have been filed and declared effective
by the SEC.
(b) If a holder of Notes has obtained an opinion of
counsel reasonably acceptable to the Company and Intersolv to
the effect that the sale of its Notes may be made without
registration under the Securities Act pursuant to compliance
with Rule 144 or Rule 144A (or any successor rule under the
Securities Act), the holder shall not be required to provide the
Company with the notice required in Section 16.1(a).
(c) The Company and Intersolv may endorse on all
Securities a legend restricting their transfer except upon
compliance with this Section 12.1; provided, however, that no
such legend shall be endorsed on any Security which, when
issued, is no longer subject to the restrictions of this
Section 12.1, and provided, further, that if an opinion of
counsel satisfactory to the Company and Intersolv concludes that
the legend is no longer necessary, the Company and Intersolv
will deliver upon transfer Securities without such legends.
(d) Each transferee of Securities (other than
Securities which are not restricted securities) shall agree in
writing to be bound by the terms of this Agreement.
12.2. Payment. The Company and Intersolv will make
payments of principal and interest to the holders of Notes no
later than 11:00 a.m., Eastern Standard Time, on the date when
such payment is due. Payments shall be made by delivery to such
holder of an unendorsed certified or official bank check payable
to the order of such holder in New York Clearinghouse funds or
by wire transfer to an account in the United States designated
by such holder at least two (2) days prior to the date when such
payment is due. Each Purchaser further agrees that, before its
Note is assigned or transferred, it will make or cause to be
made a notation thereon of principal payments previously made
thereof and of the date to which interest thereon has been paid
and will notify the Company and Intersolv of the name and
address of the transferee of such Note if such name and address
are known it.
ARTICLE XIII
MISCELLANEOUS
13.1. Governing Law. This Agreement and the rights
of the parties hereunder shall be governed in all respects by
the laws of the State of New York without giving effect to the
provisions thereof relating to conflicts of law.
13.2. Survival. The representations, warranties,
covenants and agreements made herein shall survive the issuance
of the Notes.
13.3. Successors and Assigns. Except as otherwise
expressly provided herein, the provisions hereof shall inure to
the benefit of, and be binding upon and enforceable by and
against, the successors, assigns, heirs, executors and
administrators of the parties hereto; provided, however, that
neither the Company nor Intersolv may assign its rights
hereunder.
13.4. Entire Agreement. This Agreement (including
the Schedules and Exhibits hereto), the Merger Agreement and the
other documents delivered pursuant hereto and thereto constitute
the full and entire understanding and agreement between the
parties with regard to the subject matter hereof and thereof.
13.5. Notices, etc. All notices, demands or other
communications given hereunder shall be in writing and shall be
sufficiently given if delivered either personally or by a
nationally recognized courier service marked for next business
day delivery or sent by facsimile or in a sealed envelope by
first class mail, postage prepaid and either registered or
certified, addressed as follows:
(a) if to the Company:
TechGnosis International Inc.
9420 Key West Avenue
Rockville, Maryland 20850
Telephone: (301) 838-5210
Facsimile: (301) 838-5060
Attention: Kenneth A. Sexton
(b) if to Intersolv:
9420 Key West Avenue
Rockville, Maryland 20850
Telephone: (301) 838-5210
Facsimile: (301) 838-5060
Attention: Kenneth A. Sexton
(c) if to the Purchasers:
To their addresses or facsimile numbers shown on
the signature pages to this Agreement;
or to such other address with respect to any party hereto as
such party may from time to time notify (as provided above) the
other parties hereto. Any such notice, demand or communication
shall be deemed to have been given (i) on the date of delivery,
if delivered personally, (ii) one business day after delivery to
a nationally recognized overnight courier service, if marked for
next day delivery, (iii) five business days after the date of
mailing, if mailed or (iv) on the date of transmission, if sent
by facsimile.
13.6. Delays or Omissions. No delay or omission to
exercise any right, power or remedy accruing to any holder of
any Securities upon any breach or default of Intersolv or the
Company under this Agreement shall impair any such right, power
or remedy of such holder nor shall it be construed to be a
waiver of any such breach or default, or an acquiescence,
therein, or of or in any similar breach or default thereafter
occurring; nor shall any waiver of any single breach or default
be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval
of any kind or character on the part of any holder of any breach
or default under this Agreement, or any waiver on the part of
any holder of any provisions or conditions of this Agreement
must be, made in writing and shall be effective only to the
extent specifically set forth in such writing. All remedies,
either under this Agreement or by law or otherwise afforded to
any holder, shall be cumulative and not alternative.
13.7. Rights; Severability. Unless otherwise
expressly provided herein, each Purchaser's rights hereunder are
several rights, not rights jointly held with any other person.
In case any provision of this Agreement shall be invalid,
illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way
be affected or impaired thereby.
13.8. Agent's Fees. The Company and Intersolv hereby
represent and warrant to the Purchasers that it has not retained
a finder or broker in connection with the transactions
contemplated by this Agreement. Each of the Purchasers,
severally and not jointly, represents and warrants to the
Company and Intersolv that it has retained no finder or broker
in connection with the transactions contemplated by this
Agreement.
13.9. Information Confidential; No Solicitation.
(a) Each of the Purchasers severally
acknowledges that the information received by it pursuant hereto
may be confidential and for its use only, and will not use such
confidential information or reproduce, disclose or disseminate
such information to any other person (other than its employees
or agents having a need to know the contents of such
information, and its attorneys), except in connection with the
exercise of rights under this Agreement, unless Intersolv or the
Company has made such information available to the public
generally or such Purchaser is required to disclose such
information by a governmental body or pursuant to legal
proceedings. For purposes herein, "confidential information"
shall mean and include any financial, operational, technical and
other proprietary information relating to the business and
affairs of Intersolv and its subsidiaries, whether such
information is provided in written, oral, graphic, pictorial or
recorded form or stored on computer discs, hard drives or
magnetic tapes or in digital or any other electronic medium.
(b) Each of the Purchasers severally agrees that
it will not, either alone or in conjunction with any person,
firm, corporation, association or other entity, solicit or
attempt to solicit any employee of the Company or its
subsidiaries to leave his or her employment and accept
employment elsewhere or solicit any person who was an employee
of the Company or its subsidiaries to accept employment
elsewhere within three (3) months of the termination of such
employee's employment with the Company or its subsidiaries.
13.10. Litigation. The parties each hereby waive
trial by jury in any action or proceeding of any kind or nature
in any court in which an action may be commenced arising out of
this Agreement or by reason of any other cause or dispute
whatsoever between them. The parties hereto agree that the State
and Federal courts which sit in the State of New York and the
County of New York shall have exclusive jurisdiction to hear and
determine any claims or disputes pertaining directly or
indirectly to this Agreement or to any matter arising therefrom.
The parties each expressly submit and consent in advance to such
jurisdiction in any action or proceeding commenced in such
courts provided that such consent shall not be deemed to be a
waiver of personal service of the summons and complaint, or
other process or papers issued therein. The choice of forum set
forth in this Section 13.10 shall not be deemed to preclude the
enforcement of any judgment obtained in such forum or the taking
of any action under this Agreement to enforce the same in any
appropriate jurisdiction. The parties each waive any objection
based upon forum non conveniens and any objection to venue of
any action instituted hereunder.
13.11. Titles and Subtitles. The titles of the
articles, sections and subsections of this Agreement are for
convenience of reference only and are not to be considered in
construing this Agreement.
13.12. Counterparts. This Agreement may be executed
in any number of counterparts, each of which shall be an
original, but all of which together shall constitute one
instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date first above written.
TECHGNOSIS INTERNATIONAL INC.
By: /s/ Marc Van Rompaey
Name: Marc Van Rompaey
Title: President
INTERSOLV, INC.
By: /s/ Kevin J. Burns
Name: Kevin J. Burns
Title: Chief Executive
Officer and Chairman
of the Board
<PAGE>
FURMAN SELZ SBIC, L.P.
By: Furman Selz SBIC Investments,
Inc., General Partner
By: /s/ Brian P. Friedman
Brian P. Friedman, President
Address for Notices:
Furman Selz SBIC Investments, Inc.
230 Park Avenue
New York, New York 10169
Attention: Brian P. Friedman,
President
Telephone: (212) 309-8200
Facsimile: (212) 692-9147
/s/ Edmund A. Hajim
Edmund A. Hajim
Address for Notices:
21 Guinea Road
Greenwich, Connecticut 06830
Telephone: (203) 661-3439
/s/ Terence Quinn
Terence Quinn
Address for Notices:
Furman Selz Incorporated
230 Park Avenue
New York, New York 10169
Telephone: (212) 309-8200
/s/ Marc Van Rompaey
Marc Van Rompaey
Address for Notices:
Hoogboomsteenweg 164
B-2930 Brasschaat
Belgium
/s/ Karel De Gucht
Karel De Gucht
Address for Notices:
Hoogstraat 9
B-9290 Berlare
Belgium
/s/ Jean-Claude Deschamps
Jean-Claude Deschamps
Address for Notices:
Rue Bernard de Clairvaux 5
F-75003 Paris
France
/s/ Andre Van den Bogaert
Andre Van den Bogaert
Address for Notices:
Burvingenstraat 3
B-1670 Pepingen
Belgium
TEG HOLDING BV
/s/ Karel De Gucht
By: /s/ Jean-Claude Deschamps
Name:
Title:
GIMV BV
/s/ G. Braechmans
By: /s/ G. Mampaey
Name: G. Braechmans
G. Mampaey
Title: Directeurs
PARNIB DEELNEMINGEN BV
/s/ T. E. M. Van der Burg
By: /s/ R. van Stater
Name: T. E. M. Van der Burg
Title: Managing Director
R. van Stater
Legal Adviser
RIDIS BV
By: /s/ A. Challamel
Name: Anne Challamel
Title: President
