<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): June 7, 1999
INPRISE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 33-80946 94-2895440
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer)
incorporation or organization) Identification No.)
100 Enterprise Way
Scotts Valley, California 95066-3249
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (831) 431-1000
(Former name or former address, if changed since last report):
<PAGE>
Item 5. OTHER EVENTS
On June 11, 1999, Microsoft Corporation ("Microsoft") purchased 625 shares
of Inprise Series C Convertible Preferred Stock at a price of $40,000 per share,
for an aggregate purchase price of $25,000,000. The Series C shares are
convertible at the option of the holder at anytime after June 10, 2001, into
6,720,430 shares of common stock, subject to certain adjustments for stock
splits or other capital reorganizations.
In another transaction, Inprise Corporation (the "Company") and Microsoft
entered into a Patent Cross-License Agreement pursuant to which Microsoft paid
the Company $100,000,000 for the rights to use Inprise-patented technology in
Microsoft products and settle certain patent and technology licensing issues.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit No. Description
- ----------- -----------
3.1 Certificate of Designation of Series C Convertible Preferred
Stock for Inprise Corporation, dated June 7, 1999.
3.2 Certificate of Correction Filed to Correct a Certain Error in
the Certificate of Designation of Series C Convertible Preferred
Stock of Inprise Corporation filed in the Office of the
Secretary of State of Delaware on June 8, 1999, dated June 9,
1999.
4.1 Preferred Stock Purchase Agreement between the Company and
Microsoft, dated June 7, 1999.
4.2(a) Investor Rights Agreement between the Company and Microsoft,
dated June 7, 1999.
99.1 Press Release announcing the Patent Cross-License Agreement
between the Company and Microsoft and Microsoft's purchase of
Inprise Preferred Stock.
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Inprise Corporation
July 2, 1999 By: /s/ JOANNE M. BUTLER
--------------------------------
JoAnne M. Butler,
Vice President and Secretary
3
<PAGE>
Exhibit Index
Exhibit No. Description
- ----------- -----------
3.1 Certificate of Designation of Series C Convertible Preferred
Stock for Inprise Corporation, dated June 7, 1999.
3.2 Certificate of Correction Filed to Correct a Certain Error in
the Certificate of Designation of Series C Convertible Preferred
Stock of Inprise Corporation filed in the Office of the
Secretary of State of Delaware on June 8, 1999, dated June 9,
1999.
4.1 Preferred Stock Purchase Agreement between the Company and
Microsoft, dated June 7, 1999.
4.2(a) Investor Rights Agreement between the Company and Microsoft,
dated June 7, 1999.
99.1 Press Release announcing the Patent Cross-License Agreement
between the Company and Microsoft and Microsoft's purchase of
Inprise Preferred Stock.
4
<PAGE>
EXHIBIT 3.1
CERTIFICATE OF DESIGNATION
of
SERIES C CONVERTIBLE PREFERRED STOCK
for
INPRISE CORPORATION
INPRISE CORPORATION, a Delaware corporation (the "Corporation"), pursuant
to the provisions of Section 151 of the General Corporation Law of the State of
Delaware, does hereby make this Certificate of Designation and does hereby state
and certify that pursuant to the authority expressly vested in the Board of
Directors of the Corporation by the Restated Certificate of Incorporation of the
Corporation, the Board of Directors duly adopted the following resolutions,
which resolutions remain in full force and effect as of the date hereof:
RESOLVED, that, pursuant to Article Third of the Restated Certificate of
Incorporation of the Corporation, the Board of Directors hereby authorizes the
issuance of, and fixes the designation and preferences and relative,
participating, optional, and other special rights, and qualifications,
limitations and restrictions, of a series of Preferred Stock consisting of 625
shares, par value $0.01, to be designated "Series C Convertible Preferred Stock"
(the "Series C Stock").
RESOLVED, that each share of the Series C Stock shall rank equally in all
aspects and shall be subject to the following terms and provisions:
1. Dividends. Dividends shall be declared and set aside, out of funds or
---------
assets of the Company legally available therefor. Such dividends shall be
payable only upon resolution of the Board of Directors and shall be
noncumulative; provided, however:
-------- -------
1.1 Upon the happening of an Extraordinary Common Stock Event (as
defined below in this Section 1), the number of shares of common stock of the
Company, $0.01 par value per share (the "Common Stock"), to be received upon the
conversion of the shares of Series C Stock shall be adjusted as set forth in
Section 4;
1.2 If the Board of Directors declares a dividend payable upon shares
of Common Stock, the holders of shares of Series C Stock shall be entitled to
the same dividend per share of Series C Stock as would be declared payable on
the largest number of whole shares of Common Stock into which the shares of
Series C Stock held by each holder thereof could be converted pursuant to the
provisions of Section 4 hereof on the date of such event;
1.3 No dividends (other than those payable solely in the Common Stock
of the Company) shall be paid on any Common Stock of the Company until dividends
shall have been paid or declared and set aside in an amount for each share of
Series C Stock equal to or greater than the aggregate amount of such dividends
for all shares of Common Stock into which each such share of Series C Stock
could then be converted.
"Extraordinary Common Stock Event" shall mean (i) the issue of
additional shares of Common Stock as a dividend or other distribution on
outstanding Common Stock, (ii) a
<PAGE>
subdivision of outstanding shares of Common Stock into a greater number of
shares of Common Stock, or (iii) a combination of outstanding shares of Common
Stock into a smaller number of shares of Common Stock.
2. Liquidation, Dissolution or Winding Up. In the event of any liquidation,
--------------------------------------
dissolution or winding up of the Company, whether voluntary or involuntary,
subject to the rights of series of Preferred Stock which may from time to time
come into existence, including, but not limited to, the Company's outstanding
Series B Convertible Preferred Stock, the Company shall distribute or cause to
be distributed (whether directly or indirectly through agreement by a purchaser)
to the holders of shares of Series C Stock the same consideration as if the
Series C Stock had been converted into Common Stock immediately prior to such
event.
3. Voting Power. The holders of shares of Series C Stock shall have no
------------
voting rights except as required by law, provided, however, that the Company
-------- -------
shall not amend its Restated Certificate of Incorporation in any manner which
would materially alter or change the powers, preferences or special rights of
the Series C Stock so as to affect them adversely without the affirmative vote
of the holders of a majority or more of the outstanding shares of Series C
Stock, voting separately as a class.
4. Conversion Rights. The Series C Stock shall not be convertible into
-----------------
Common Stock until two years after the Series C Original Issue Date. All
conversions shall be subject to compliance with all applicable regulatory
requirements, including satisfaction of notification under the Hart-Scott-Rodino
Anti-trust Improvements Act. The right to convert and the ratio of such
conversion is subject to the foregoing, and to the following rights, limitations
and adjustments:
4.1 General.
-------
(a) Voluntary Conversion. At any time after the second anniversary
--------------------
of the Series C Original Issue Date any share of Series C Stock may, at the
option of the holder thereof, be converted into such number of fully paid and
non-assessable shares of Common Stock as are equal to the product obtained by
multiplying the Applicable Series C Conversion Rate (determined under Section
4.2) by the number of shares of Series C Stock being converted. "Series C
Original Issue Date" shall mean the date that the first share of Series C Stock
is issued by the Company.
(b) Automatic Conversion. Any share of Series C Stock shall
--------------------
automatically convert into the number of shares of Common Stock into which such
shares of Series C Stock are convertible pursuant to Section 4.1(a) hereof upon
transfer from the initial holder thereof to an unaffiliated third party, without
any further action by the holders of such shares, and whether or not the
certificates representing such shares are surrendered to the Company or its
transfer agent.
4.2 Applicable Conversion Rates.
---------------------------
-2-
<PAGE>
(a) With respect to the shares of Series C Stock, the conversion
rate in effect at any time (the "Applicable Series C Conversion Rate") shall be
the quotient obtained by dividing $100,000.00 by the Applicable Series C
Conversion Value, calculated as provided in Section 4.3 and Section 5. On the
Series C Original Issue Date, the Applicable Series C Conversion Value shall be
$3.72 per share.
4.3 Adjustments to Applicable Series C Conversion Values Upon
---------------------------------------------------------
Extraordinary Common Stock Event. Upon the happening of an Extraordinary Common
- --------------------------------
Stock Event (as defined in Section 1.3) after the Series C Original Issue Date,
the Applicable Series C Conversion Value shall, simultaneously with the
happening of such Extraordinary Common Stock Event, be adjusted by multiplying
the then effective Applicable Series C Conversion Value by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such Extraordinary Common Stock Event and the denominator
of which shall be the number of shares of Common Stock outstanding immediately
after such Extraordinary Common Stock Event, and the product so obtained shall
thereafter be the Applicable Series C Conversion Value. The Applicable Series C
Conversion Value, as so adjusted, shall be readjusted in the same manner upon
the happening of any successive Extraordinary Common Stock Event or Events.
4.4 Capital Reorganization or Reclassification. If the shares of
------------------------------------------
Common Stock issuable upon the conversion of shares of Series C Stock shall be
changed into the same or a different number of shares of any class or classes of
stock, whether by capital reorganization, reclassification or otherwise (other
than an Extraordinary Common Stock Event or a stock dividend, reorganization,
merger, consolidation or sale of assets provided for elsewhere herein), then and
in each such event the holder of each share of Series C Stock shall have the
right thereafter to convert such share into the kind and amount of shares of
stock and other securities and property receivable upon such reorganization,
reclassification or other change by holders of the number of shares of Common
Stock into which such shares of Series C Stock could have been converted
immediately prior to such reorganization, reclassification or change, all
subject to further adjustment as provided herein.
4.5 Treatment of Consolidations, Mergers, Tender Offers and Sales of
----------------------------------------------------------------
Assets. In the event of a (i) consolidation or merger of the Company into or
- ------
with another corporation as a result of which the holders of the Company's
outstanding shares immediately before such consolidation or merger do not,
immediately after such consolidation or merger, retain stock representing a
majority of the voting power of the surviving corporation resulting from such
consolidation or merger; (ii) tender offer (as that term is defined and
interpreted (including judicial and administrative interpretations) pursuant to
Section 14 of the Securities Exchange Act of 1934, as amended) or agreements to
sell shares, as a result of which the holders of the Company's outstanding
shares immediately before such tender offer do not, immediately after such
tender offer or such sales, retain stock representing a majority of the voting
power of the surviving corporation resulting from such tender offer or such
sales; or (iii) sale of all or substantially all of the assets of the Company,
then, upon consummation of such transaction, each share of Series C Stock shall
automatically be converted into the right to receive the same
-3-
<PAGE>
consideration as if the Series C Stock had been converted into Common Stock
immediately prior to such event.
4.6 Exercise of Conversion Privilege and Procedure for Conversion. To
-------------------------------------------------------------
exercise its conversion privilege, a holder of shares of Series C Stock shall
surrender the certificate or certificates representing the shares being
converted to the Company at its principal office, duly endorsed, and shall give
written notice to the Company at that office that such holder elects to convert
such shares. As promptly as practicable after the Series C Conversion Date (as
defined below), the Company shall issue and shall deliver to the holder of
shares of Series C Stock being converted, such certificate or certificates as it
may request for the number of whole shares of Common Stock issuable upon the
conversion of such Series C Shares in accordance with the provisions of this
Section 4. Such conversion shall be deemed to have been effected immediately
prior to the close of business on the Series C Conversion Date. At such time,
the rights of the holder as holder of the converted shares of Series C Stock
shall cease and the person or persons in whose name or names any certificate or
certificates for shares of Common Stock shall be issuable upon such conversion
shall be deemed to have become the holder or holders of record of the shares of
Common Stock represented thereby.
"Series C Conversion Date" means: (i) the date when such written
notice required by Section 4.6 is received by the Company, together with the
certificate or certificates representing the shares of Series C Stock being
converted, or (ii) the date on which any event occurs causing an automatic
conversion of the shares of Series C Stock pursuant to Section 4.1(b).
4.7 Cash in Lieu of Fractional Shares. No fractional shares of Common
---------------------------------
Stock or scrip representing fractional shares shall be issued upon the
conversion of shares of Series C Stock. Instead of any fractional shares of
Common Stock which would otherwise be issuable upon conversion of shares of
Series C Stock, the Company shall pay to the holder of converted shares of
Series C Stock, as promptly as possible after the date of receipt of written
notice from such holder, a cash payment in respect of such fractional shares in
an amount equal to the same fraction of the market price per share of Common
Stock (as determined in a reasonable manner prescribed by the Board of
Directors) at the close of business on the Series C Conversion Date.
4.8 Partial Conversion. In the event some but not all of the shares
------------------
of Series C Stock represented by a certificate or certificates surrendered by a
holder are converted, the Company shall execute and deliver to the holder a new
certificate representing the number of shares of Series C Stock which were not
converted.
4.9 Reservation of Common Stock. The Company shall at all times
---------------------------
reserve and keep available out of its authorized but unissued shares of Common
Stock, solely for the purpose of effecting the conversion of the shares of
Series C Stock, such number of its shares of Common Stock as shall from time to
time be sufficient to effect the conversion of all outstanding shares of Series
C Stock, and if at any time the number of authorized but unissued shares of
Common Stock shall not be sufficient to effect the conversion of all then
outstanding shares of Series C Stock, the Company shall take such corporate
action as may be necessary to increase its
-4-
<PAGE>
authorized but unissued shares of Common Stock to such number of shares as shall
be sufficient for such purpose.
5. Notices. The Corporation shall distribute to the holders of shares of
-------
Series C Stock copies of all notices, materials, annual and quarterly reports,
proxy statements, information statements and any other documents distributed
generally to the holders of shares of Common Stock of the Corporation, at such
times and by such method as such documents are distributed to such holders of
such Common Stock.
7. No Reissuance. No shares of Series C Stock acquired by the Corporation
-------------
by reason of redemption, purchase, conversion or otherwise shall be reissued.
-5-
<PAGE>
RESOLVED, FURTHER, that the appropriate officers of the Corporation hereby
are authorized to execute and acknowledge a certificate setting forth these
resolutions and to cause such certificate to be filed and recorded, all in
accordance with the requirements of Section 151 of the General Corporation Law
of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designation to be signed by its President, and attested by its Secretary, this
7th day of June, 1999.
INPRISE CORPORATION
By: /s/ DALE FULLER
--------------------------
Dale Fuller
President
Attested:
By: /s/ JOANNE M. BUTLER
-------------------------
JoAnne M. Butler
Secretary
<PAGE>
EXHIBIT 3.2
CERTIFICATE OF CORRECTION FILED TO
CORRECT A CERTAIN ERROR IN
THE CERTIFICATE OF DESIGNATION OF
SERIES C CONVERTIBLE PREFERRED STOCK
OF INPRISE CORPORATION
FILED IN THE OFFICE OF THE SECRETARY OF STATE
OF DELAWARE ON JUNE 8, 1999
JoAnne M. Butler certifies and acknowledges that:
1. She is a Vice President and Secretary of Inprise Corporation, a
corporation organized and existing under and by virtue of the General
Corporation Law of the State of Delaware.
2. A Certificate of Designation of Series C Convertible Preferred Stock
was filed by the Secretary of State of Delaware on June 8, 1999 and forwarded
for recording in the office of the Recorder of Deeds of Kent County on June 8,
1999, and said Certificate of Designation requires correction as permitted by
subsection (f) of Section 103 of the General Corporation Law of the State of
Delaware.
3. The inaccuracy or defect of the Certificate of Designation to be
corrected is as follows:
Section 4.2(a) of the Certificate of Designation as is set forth
below:
"(a) With respect to the shares of Series C Stock, the conversion rate
in effect at any time (the "Applicable Series C Conversion Rate") shall be the
quotient obtained by dividing $100,000.00 by the Applicable Series C Conversion
Value, calculated as provided in Section 4.3 and Section 5. On the Series C
Original Issue Date, the Applicable Series C Conversion Value shall be $3.72 per
share."
is corrected to read as follows:
<PAGE>
"(a) With respect to the shares of Series C Stock, the conversion rate
in effect at any time (the "Applicable Series C Conversion Rate") shall be the
quotient obtained by dividing $40,000.00 by the Applicable Series C Conversion
Value, calculated as provided in Section 4.3 and Section 5. On the Series C
Original Issue Date, the Applicable Series C Conversion Value shall be $3.72 per
share."
IN WITNESS WHEREOF, the undersigned authorized officer of Inprise
Corporation, has hereunto set her hand this 9th day of June, 1999.
INPRISE CORPORATION
/s/ JOANNE M. BUTLER
----------------------------
JoAnne M. Butler
Vice President and Secretary
<PAGE>
EXHIBIT 4.1
PREFERRED STOCK PURCHASE AGREEMENT
This Preferred Stock Purchase Agreement (this "Agreement") is made and
entered into as of June 7, 1999 (the "Effective Date"), by and between Inprise
Corporation, a Delaware corporation ("Inprise"), and Microsoft Corporation, a
Washington corporation ("Microsoft").
RECITALS:
Inprise desires to sell to Microsoft, and Microsoft desires to purchase
from Inprise, 625 shares of Inprise's Series C Convertible Preferred Stock (the
"Series C Shares") with the rights and preferences set forth in the form of
Certificate of Designation (the "Certificate") attached as Exhibit A to this
---------
Agreement;
Inprise and Microsoft will enter into a Patent Cross License Agreement and
an amendment to an existing license agreement between the parties (collectively,
the "Patent License Agreements") concurrently with the closing of the purchase
contemplated by this Agreement; and
Inprise and Microsoft will, concurrently with the closing of the purchase
contemplated by this Agreement, enter into an Investor Rights Agreement (the
"Rights Agreement").
This Agreement, together with the Certificate, the Patent License Agreement
and the Rights Agreement are referred to herein collectively as the "Transaction
Documents."
AGREEMENT:
NOW, THEREFORE, based on these premises and in consideration of the mutual
covenants and agreements contained herein, the parties hereby agree as follows:
ARTICLE I
PURCHASE OF PREFERRED STOCK AND CLOSING
1.1 Agreement to Purchase and Sell Stock. Inprise agrees to sell to
------------------------------------
Microsoft at the Closing (as defined below), and Microsoft agrees to purchase
from Inprise at the Closing, 625 shares of Series C Convertible Preferred Stock
at a price of $40,000.00 per share, for an aggregate purchase price of $25
million (the "Purchase Price"). The Series C Shares purchased and sold pursuant
to this Agreement will be collectively hereinafter referred to as the "Series C
Preferred Shares" and the shares of Common Stock issuable upon conversion of the
Series C Preferred Shares will be collectively hereinafter referred to as the
"Conversion Shares."
1.2 Closing. The purchase and sale of the Series C Preferred Shares
-------
will take place at 2:00 p.m. Pacific Standard Time, on such date as is agreed by
Inprise and Microsoft, but in no event later than ten days from the date of this
Agreement (the "Closing Date") at the offices of Gray Cary Ware & Freidenrich
LLP, 400 Hamilton Avenue, Palo Alto, California 94301 (the "Closing"). At the
Closing: (i) Inprise will deliver to Microsoft a certificate representing the
-1-
<PAGE>
number of Series C Preferred Shares that Microsoft has agreed to purchase
hereunder, together with executed copies of the Transaction Documents and such
other agreements, documents and certificates required pursuant to Section 4.2
hereof; and (ii) Microsoft will deliver to Inprise the Purchase Price by wire
transfer of immediately available funds, together with executed copies of the
Transaction Documents and such other agreements, documents and certificates
required pursuant to Section 4.3 hereof.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of Inprise. Except as disclosed in a
-----------------------------------------
document referring specifically to the representations and warranties in this
Agreement which identifies by section number the section and subsection to which
such disclosure relates and is delivered by Inprise to Microsoft prior to the
execution of this Agreement (the "Inprise Disclosure Schedule"), Inprise
represents and warrants to Microsoft as follows:
2.1.1 Organization, Standing and Power. Inprise is a corporation
--------------------------------
duly organized, validly existing and in good standing under the laws of
Delaware. Inprise has all requisite power and authority to own, lease and
operate its properties and to carry on its businesses as now being conducted and
as proposed to be conducted. Inprise is qualified to do business as a foreign
corporation in each jurisdiction in which the ownership of its property or the
nature of its business requires such qualification, except where the failure to
be so qualified would not have a materially adverse effect on Inprise. Except
for those entities as set forth in the SEC Documents (as hereinafter defined) or
which otherwise do not conduct any material operations of the company, Inprise
does not own or control, directly or indirectly, any corporation, partnership,
limited liability company, or other entity.
2.1.2 Capital Structure and Stock Issuance.
------------------------------------
(a) The authorized capital stock of Inprise as of the Closing
Date and immediately prior to the Closing will consist of 100,000,000 shares of
Inprise Common Stock, par value $0.01 ("Inprise Common Stock") of which not more
than 55,000,000 will be issued and outstanding (exclusive of shares of Inprise
Common Stock issuable upon conversion of Series B Convertible Preferred Stock),
and 1,000,000 shares of Preferred Stock of which 100,000 will be designated
Series A Junior Participating Preferred Stock, par value $0.01 none of which
will be issued and outstanding, of which 1,470 will be designated Series B
Convertible Preferred Stock, par value $0.01 ("Inprise Series B Stock") of which
not more than 422 will be issued and outstanding, and of which 250 will be
designated Series C Preferred Stock, par value $0.01 none of which are issued
and outstanding. In addition, as of the date hereof, not more than 14 million
shares of Inprise Common Stock are reserved for issuance upon the exercise of
outstanding stock options and not more than 1.8 million shares of Inprise Common
Stock are available for future options grants ("Inprise Options"). Those shares
described above as well as the Inprise Options are collectively referred to as
the "Inprise Securities." Except for the Inprise Common Stock described above
issuable pursuant to Inprise Options, pursuant to the Inprise employee stock
purchase plans or upon conversion of the Inprise Series B Stock, there are no
options, warrants,
-2-
<PAGE>
calls, conversion rights, agreements, contracts, or rights of any character to
which Inprise is a party or by which Inprise may be bound obligating Inprise to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of the capital stock of Inprise, or obligating Inprise to grant, extend
or enter into any such option, warrant, call, conversion right, agreement,
contract, or right. Inprise does not have outstanding any bonds, debentures,
notes or other indebtedness the holders of which have the right to vote (or
convertible or exercisable into securities having the right to vote) with
holders of Inprise Securities on any matter.
(b) The Series C Preferred Shares, when issued, sold and
delivered in accordance with the terms of this Agreement, will be duly and
validly issued, fully paid and nonassessable. The Conversion Shares have been
duly and validly reserved for issuance and, upon issuance in accordance with the
terms of the Certificate will be duly and validly issued, fully paid and
nonassessable.
2.1.3 Authority. All corporate action on the part of Inprise
---------
necessary for the authorization, execution, delivery and performance of the
Transaction Documents by Inprise, the authorization, sale, issuance and delivery
of the Series C Preferred Shares hereunder, and the performance of Inprise's
obligations under said Transaction Documents has been taken. Each Transaction
Document constitutes a valid, binding, and enforceable obligation of Inprise in
accordance with its terms, except as may be limited by (i) applicable
bankruptcy, insolvency, reorganization or other laws of general application
relating to or affecting the enforcement of creditors' rights generally, and
(ii) the effect of rules of law governing the availability of equitable
remedies. Inprise hereby represents that it has full power and authority to
enter into the Transaction Documents.
2.1.4 Compliance with Laws and Other Instruments. Inprise holds all
------------------------------------------
licenses, permits, and authorizations from all Governmental Entities (as defined
below) necessary for the lawful conduct of its business pursuant to all
applicable statutes, laws, ordinances, rules, and regulations of all such
authorities having jurisdiction over it or any part of its operations,
excepting, however, when such failure to hold would not have a material adverse
effect on Inprise's business and financial condition. Except for applicable
filings necessary to claim an exemption from the registration requirements under
applicable federal and state securities laws and the filing of the Certificate,
no consent, approval, order or authorization of or registration, declaration or
filing with or exemption (collectively "Governmental Consents") by, any court,
administrative agency or commission or other governmental authority or
instrumentality, whether domestic or foreign (each a "Governmental Entity") is
required by or with respect to Inprise in connection with the execution and
delivery of the Transaction Documents by Inprise or the consummation by Inprise
of the transactions contemplated hereby.
2.1.5 No Conflicts. The execution, delivery and performance of the
------------
Transaction Documents by Inprise and the consummation by Inprise of the
transactions contemplated hereby and thereby and the filing of the Certificate
do not and will not (i) result in a violation of Inprise's charter documents or
bylaws or (ii) conflict with, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture,
-3-
<PAGE>
patent, patent license or instrument to which Inprise or any of its subsidiaries
is a party (except where such conflict or default would not have a material
adverse effect on Inprise's business or financial condition), or (iii) result in
a violation of any federal, state, local or foreign law, rule, regulation,
order, judgment or decree (including Federal and state securities laws and
regulations) applicable to Inprise or any of its subsidiaries or by which any
property or asset of Inprise or any of its subsidiaries is bound or affected.
The business of Inprise and its direct and indirect subsidiaries is being
conducted in material compliance with all applicable laws, ordinances or
regulations of any Governmental Entity.
2.1.6 SEC Documents. Inprise has filed all required reports,
-------------
schedules, forms, statements and other documents with the Securities and
Exchange Commission (the "SEC") since June 1, 1997 (the "SEC Documents"). As of
their respective dates, the SEC Documents complied in all material respects with
requirements of the Securities Act or the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as the case may be and the rules and regulations
of the SEC promulgated thereunder applicable to such SEC Documents, and none of
the 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 therein, in light of the circumstances under which they were
made, not misleading. Except to the extent that information contained in any SEC
Document has been revised or superseded by a later filed SEC Document, none of
the SEC Documents contains any untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The financial statements of Inprise included in the SEC
Documents comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with U.S. generally accepted
accounting principles ("GAAP") (except, in the case of unaudited statements as
permitted by Form 10-Q of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto) and fairly
present the financial position of Inprise as of the dates thereof and the
results of its operation and cashflows for the periods then ended in accordance
with GAAP (subject, in the case of the unaudited statements, to normal year end
audit adjustments). Except as set forth in the filed SEC Documents, Inprise has
no liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) required by GAAP to be set forth on a balance sheet of
Inprise or in the notes thereto and which could reasonably be expected to have a
material adverse effect on Inprise, except such liabilities incurred in the
ordinary course of Inprise's business since March 31, 1999, which liabilities do
not or would not have a material adverse effect on Inprise.
2.1.7 No Material Adverse Change. Except as disclosed in the SEC
--------------------------
Documents, since the date of the most recent audited financial statements
included in the SEC Documents, there has not been (i) any declaration, setting
aside or payment of any dividend or distribution (whether in cash, stock or
property) with respect to any of Inprise's capital stock, (ii) any split,
combination or reclassification of any of its capital stock or any issuance or
the authorization of any issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock, (iii) any damage,
destruction or loss of property, whether or not covered by insurance, that has
or could reasonably be expected to have a material adverse effect on Inprise,
-4-
<PAGE>
or (iv) any change in accounting methods, principles or practices by Inprise
materially affecting its assets, liabilities, or business, except insofar as may
have been required by a change in GAAP.
2.1.8 No Undisclosed Events or Circumstances. No event or
--------------------------------------
circumstance has occurred or exists with respect to Inprise or its businesses,
properties, prospects, operations or financial condition, which, under
applicable law, rule or regulation, requires public disclosure or announcement
by Inprise but which has not been so publicly announced or disclosed.
2.1.9 Intellectual Property.
---------------------
(a) The "Inprise Intellectual Property" consists of the
following:
(i) all patents, trademarks, trade names, service
marks, trade dress, copyrights and any renewal rights therefor, mask works, net
lists, schematics, technology, manufacturing processes, supplier lists, trade
secrets, know-how, moral rights, computer software programs or applications (in
both source and object code form), applications and registrations for any of the
foregoing;
(ii) all goodwill associated with trademarks, trade
names, service marks and trade dress;
(iii) all software and firmware listings, and updated
software source code, and complete system build software and instructions
related to all software described herein;
(iv) all documents, records and files relating to
design, end user documentation, manufacturing, quality control, sales, marketing
or customer support for all intellectual property described herein;
(v) all other tangible or intangible proprietary
information and materials; and
(vi) all license and other rights in any third party
product, intellectual property, proprietary or personal rights, documentation,
or tangible or intangible property, including without limitation the types of
intellectual property and tangible and intangible proprietary information
described in (i) through (v) above;
that are owned or held by or on behalf of Inprise or that are being, and/or have
been, used, or are currently under development for use, in the business of
Inprise as it has been, is currently or is currently anticipated to be (up to
the Closing), conducted.
(b) Inprise has taken reasonable measures and precautions to
protect and maintain the confidentiality, secrecy and value of the Inprise
Intellectual Property.
-5-
<PAGE>
(c) Except as set forth in the SEC Documents and except for
matters which are not reasonably likely to result in a material adverse effect
on the business or financial condition of Inprise, to the knowledge of Inprise:
(i) all patents, trademarks, service marks and copyrights held by Inprise are
valid, enforceable and subsisting; (ii) no Inprise Intellectual Property and no
Inprise Intellectual Property that is currently being developed by Inprise
(either by itself or with any other person) infringes, misappropriates or
conflicts with any intellectual property owned or used by any other person;
(iii) none of the products that are or have been designed, created, developed,
assembled, manufactured or sold by Inprise is infringing, misappropriating or
making any unlawful or unauthorized use of any intellectual property owned or
used by any other person, and none of such products has at any time infringed,
misappropriated or made any unlawful or unauthorized use of, and Inprise has not
received any notice or other communication (in writing or otherwise) of any
actual, alleged, possible or potential infringement, misappropriation or
unlawful or unauthorized use of, any intellectual property owned or used by any
other person; (iv) no other person is infringing, misappropriating or making any
unlawful or unauthorized use of, and no intellectual property owned or used by
any other person infringes or conflicts with, any Inprise Intellectual Property.
(d) To Inprise' knowledge, the Inprise Intellectual Property
constitutes all the intellectual property necessary to enable Inprise to conduct
its business in the manner in which such business has been and is being
conducted. Inprise has not (i) licensed any of the Inprise Intellectual Property
to any person on an exclusive basis, or (ii) entered into any covenant not to
compete or contract limiting its ability to exploit fully any of its Inprise
Intellectual Property or to transact business in any market or geographical area
or with any person.
2.1.10 Brokers. Inprise has taken no action which would give rise to
-------
any claim by any person, for brokerage commissions, finder's fees or similar
payments by Inprise or Microsoft relating to this Agreement or the transactions
contemplated hereby.
2.1.11 Litigation and Other Proceedings. Neither Inprise nor any of
--------------------------------
its officers, directors, or, to Inprise's knowledge, employees, is a party to
any pending or, to Inprise's knowledge, threatened action, suit, labor dispute
(including any union representation proceeding), proceeding, investigation, or
discrimination claim in or by any court or governmental board, commission,
agency, department, or officer, or any arbitrator, arising from the actions or
omissions of Inprise or, in the case of an individual, from acts in his capacity
as an officer, director, or employee of Inprise which individually or in the
aggregate would be materially adverse to Inprise. Inprise is not subject to any
order, writ, judgment, decree, or injunction that has or would be reasonably
expected to have a material adverse effect on the Inprise business and financial
condition.
2.1.12 Registration Rights. Except as provided in that certain
-------------------
Registration Rights Agreement dated June 26, 1997 by and among Inprise and the
purchasers of the Inprise Series B Stock specified therein, Inprise is not under
any obligation to register any presently outstanding securities, or any
securities which may hereafter be issued, under the Securities Act of 1933, as
amended ("1933 Act").
-6-
<PAGE>
2.1.13 Contracts. All material contracts, arrangements, plans,
---------
agreements, leases, licenses, franchises, permits, indentures, authorizations,
instruments and other commitments to which Inprise is a party and which are
material to its business have been disclosed in the SEC Documents to the extent
required in accordance with the rules of the SEC and are valid and in full force
and effect. Inprise has not, nor, to the knowledge of Inprise, has any other
party thereto, breached any material provisions of, or is in default in any
material respect under the terms thereof.
2.1.14 Related Party Transactions. None of the directors or
--------------------------
executive officers of Inprise, or any member of any of their families, is
presently a party to, or was a party to preceding the date of this Agreement,
any transaction with Inprise, other than compensation arrangements in the
ordinary course of Inprise's business and purchases of securities and other than
transactions not required to be reported in the SEC Documents in accordance with
SEC rules, including, without limitation, any contract, agreement, or other
arrangement: (i) providing for the furnishing of services to or by, (ii)
providing for rental of real or personal property to or from, or (iii) otherwise
requiring payments to or from, any such person or any corporation, partnership,
trust, or other entity in which any such person has or had a 10%-or-more
interest (as a shareholder, partner, beneficiary, or otherwise) or is or was a
director, officer, employee, or trustee.
2.1.15 Disclosure. Neither the representations or warranties made by
----------
Inprise in this Agreement, nor the Inprise Disclosure Schedule or any other
certificate or document executed and/or delivered by Inprise pursuant to this
Agreement, when taken together, contains any untrue statement of a material
fact, or omits to state a material fact necessary to make the statements or
facts contained herein or therein not misleading in light of the circumstances
under which they were furnished.
2.2 Representations and Warranties of Microsoft. Microsoft hereby
-------------------------------------------
represents and warrants to, and agrees with Inprise that:
2.2.1 Authorization. Microsoft has full corporate power and
-------------
authority to enter into the Transaction Documents, and each such agreement
constitutes Microsoft's valid and legally binding obligation, enforceable in
accordance with its terms except as may be limited by (i) applicable bankruptcy,
insolvency, reorganization or other laws of general application relating to or
affecting the enforcement of creditors' rights generally and (ii) the effect of
rules of law governing the availability of equitable remedies.
2.2.2 No Conflict. The execution, delivery and performance of the
-----------
Transaction Documents by Microsoft and the consummation by Microsoft of the
transactions contemplated hereby will not (i) result in a violation of
Microsoft's charter documents or bylaws or (ii) conflict with, or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture, patent, patent
license or instrument to which Microsoft or any of its subsidiaries is a party,
or (iii) result in a violation of any federal, state, local or foreign law,
rule, regulation, order, judgment or decree (including Federal and state
-7-
<PAGE>
securities laws and regulations) applicable to Microsoft or any of its
subsidiaries or by which any property or asset of Microsoft or any of its
subsidiaries is bound or affected.
2.2.3 Purchase for Own Account. The Series C Preferred Shares to be
------------------------
purchased by Microsoft hereunder and any Conversion Shares (collectively, the
"Securities") will be acquired for investment for Microsoft's own account, not
as nominee or agent, and not with a view to public resale or distribution
thereof within the meaning of the 1933 Act, and Microsoft has no present
intention of selling, granting any participation in, or otherwise distributing
the same. Microsoft further represents that it does not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any of the
Securities.
2.2.4 Investment Experience. Microsoft understands that the purchase
---------------------
of the Securities involves substantial risk. Microsoft acknowledges that it is
able to fend for itself, can bear the economic risk of Microsoft's investment in
the Securities and has such knowledge and experience in financial or business
matters such that Microsoft is capable of evaluating the merits and risks of
this investment in the Securities and protecting its own interests in connection
with this investment.
2.2.5 Restricted Securities. Microsoft understands that the
---------------------
Securities are characterized as "restricted securities" under the 1933 Act
inasmuch as they are being acquired from Inprise in a transaction not involving
a public offering and that under the 1933 Act and applicable regulations
thereunder such securities may be resold without registration under the 1933 Act
only in certain limited circumstances. In this connection, Microsoft represents
that it is familiar with Rule 144 of the SEC, as presently in effect, and
understands the resale limitations imposed thereby and by the 1933 Act.
Microsoft understands that Inprise is under no obligation to register any of the
securities sold hereunder except as provided in the Rights Agreement.
2.2.6 Legends. It is understood that the certificates evidencing the
-------
Securities will bear the legends substantially as provided below:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
UNDER THE SECURITIES LAWS OF ANY STATE. THESE SECURITIES ARE
SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND
MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER
THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT
TO REGISTRATION OR EXEMPTION THEREFROM.
The legends provided above shall be removed by Inprise from any certificate
evidencing the Securities upon delivery to Inprise of an opinion by counsel,
reasonably satisfactory to Inprise, that such security can be freely transferred
in a public sale without such a registration statement being in effect and that
such transfer will not jeopardize the exemption or exemptions from registrations
pursuant to which Inprise issued the Securities.
-8-
<PAGE>
For purposes of clarification, and provided that any transactions satisfy the
terms of SEC Rule 144 and are not in conflict with the Rights Agreement,
Microsoft may enter into bona fide transactions which constitute a hedge against
changes in the market price of the Inprise Common Stock, provided, however, no
public disclosure is made with respect to such hedge transactions, except in an
initial Schedule 13D, the text of which is reasonably satisfactory to Inprise,
or if in the opinion of counsel to Microsoft such disclosure is required as a
matter of law.
ARTICLE III
ADDITIONAL AGREEMENTS
Microsoft and Inprise each agree as follows:
3.1 Expenses. Whether or not the purchase and sale of the Series C
--------
Preferred Shares is consummated, all costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such expense.
ARTICLE IV
CONDITIONS PRECEDENT
4.1 Conditions to Each Party's Obligation to Close. The respective
----------------------------------------------
obligation of each party to close the transactions contemplated by this
Agreement shall be subject to the satisfaction prior to the Closing Date of the
following conditions:
4.1.1 Governmental Approvals. Other than the filing of a Form D with
----------------------
the SEC and the California Department of Corporations, all Governmental Consents
legally required for the consummation of the transactions contemplated by this
Agreement shall have been filed, occurred, or been obtained, other than such
Governmental Consents, for which the failure to obtain would have no material
adverse effect on the consummation of the transactions contemplated hereby.
4.1.2 No Restraints. No statute, rule, regulation, executive order,
-------------
decree or injunction shall have been enacted, entered, promulgated or enforced
by any Governmental Entity of competent jurisdiction enjoining or prohibiting
the consummation of the transactions herein contemplated.
4.1.3 Securities Exemption. The offer and sale of the Series C
--------------------
Preferred Shares to Microsoft pursuant to this Agreement shall be exempt from
the registration requirements of the 1933 Act, and the registration and/or
qualification requirements of all other applicable state securities laws.
4.2 Conditions to Obligations of Microsoft. The obligations of Microsoft
--------------------------------------
to purchase the Series C Preferred Shares are subject to the satisfaction of the
following conditions unless waived by Microsoft.
-9-
<PAGE>
4.2.1 Representations and Warranties of Inprise. The representations
-----------------------------------------
and warranties of Inprise set forth in this Agreement shall be true and correct
in all material respects as of the date of this Agreement and as of the Closing
Date as though made on and as of the Closing Date, except as otherwise
contemplated by this Agreement. Microsoft shall have received a certificate
signed on behalf of Inprise by an officer of Inprise to such effect on the
Closing Date.
4.2.2 Performance of Obligations of Inprise. Inprise shall have
-------------------------------------
performed in all material respects all agreements and covenants required to be
performed by it under this Agreement prior to the Closing Date.
4.2.3 Rights Agreement. Microsoft and Inprise shall have each duly
----------------
executed a Rights Agreement substantially in the form attached hereto as Exhibit
-------
B.
- -
4.2.4 Patent License Agreement. Microsoft and Inprise shall have
------------------------
each duly executed the Patent License Agreements in the form attached hereto as
Exhibit C-1 and C-2.
- -------------------
4.2.5 Corporate Documentation. Inprise shall have filed with the
-----------------------
Delaware Secretary of State the Certificate of Designation in the form attached
hereto as Exhibit A.
---------
4.2.6 Opinion of Counsel. Microsoft shall have received from Gray
------------------
Cary Ware & Freidenrich LLP, counsel to Inprise, an opinion addressed to
Microsoft, dated the Closing Date, substantially in the form attached as Exhibit
D.
4.3 Conditions to Obligation of Inprise. The obligation of Inprise to
-----------------------------------
effect the sale of the Series C Preferred Shares is subject to the satisfaction
of the following conditions unless waived by Inprise.
4.3.1 Representations and Warranties of Microsoft. The
-------------------------------------------
representations and warranties of Microsoft set forth in this Agreement shall be
true and correct in all material respects as of the date of this Agreement and
as of the Closing Date as though made on and as of the Closing Date, except as
otherwise contemplated by this Agreement.
4.3.2 Performance of Obligations of Microsoft. Microsoft shall have
---------------------------------------
performed in all material respects all agreements and covenants required to be
performed by it under this Agreement prior to the Closing Date.
4.3.3 Payment of Purchase Price. Microsoft shall have delivered to
-------------------------
Inprise the Purchase Price specified in Article I hereof.
ARTICLE V
TERMINATION
5.1 Mutual Agreement. This Agreement may be terminated at any time prior
----------------
to the Closing by the written consent of Microsoft and Inprise.
-10-
<PAGE>
5.2 Termination by Inprise. This Agreement may be terminated by Inprise
----------------------
alone, by means of written notice to Microsoft, if there has been a material
breach by Microsoft of any representation, warranty, covenant or agreement set
forth in this Agreement or any Transaction Document, which breach has not been
cured within ten business days following receipt by Microsoft of notice of such
breach.
5.3 Termination by Microsoft. This Agreement may be terminated by
------------------------
Microsoft alone, by means of written notice to Inprise, if there has been a
material breach by Inprise of any representation, warranty, covenant or
agreement set forth in this Agreement or any Transaction Document, which breach
has not been cured within ten business days following receipt by Inprise of
notice of such breach.
5.4 Effect of Termination. In the event of termination of this Agreement
---------------------
by either Inprise or Microsoft as provided in this Article, and notwithstanding
that Inprise may have taken certain actions in contemplation of the Closing,
this Agreement shall forthwith become void and have no effect, and there shall
be no liability or obligation on the part of Microsoft, Inprise or their
respective officers or directors or shareholders, except that (i) the provisions
of Sections 3.1, 3.2 and 6.2 shall survive any such termination and abandonment,
and (ii) no party shall be released or relieved from any liability arising from
the willful breach by such party of any of its representations, warranties,
covenants or agreements as set forth in this Agreement.
ARTICLE VI
MISCELLANEOUS
6.1 Entire Agreement. This Agreement, including the exhibits and
----------------
schedules delivered pursuant to this Agreement, together with the Transaction
Documents between the parties contain all of the terms and conditions agreed
upon by the parties relating to the subject matter of this Agreement and
supersede all prior agreements, negotiations, correspondence, undertakings, and
communications of the parties, whether oral or written, respecting that subject
matter.
6.2 Governing Law. This Agreement shall be governed by, and construed in
-------------
accordance with, the laws of the State of Delaware.
6.3 Headings. The headings contained in this Agreement are intended
--------
principally for convenience and shall not, by themselves, determine the rights
of the parties to this Agreement.
6.4 Notices. All notices, requests, demands, or other communications
-------
which are required or may be given pursuant to the terms of this Agreement shall
be in writing and shall be deemed to have been duly given: (i) on the date of
delivery if personally delivered by hand, (ii) upon the third day after such
notice is (a) deposited in the United States mail, if mailed by registered or
certified mail, postage prepared, return receipt requested, or (b) sent by a
nationally recognized overnight express courier, or (iii) by facsimile upon
written confirmation (other than the automatic confirmation that is received
from the recipient's facsimile machine) of receipt by the recipient of such
notice:
-11-
<PAGE>
If to Microsoft: Microsoft Corporation
---------------
One Microsoft Way
Redmond, WA 98052-6399
Attention: Robert A. Eshelman
Telephone No.: (425) 936-7520
Facsimile No.: (425) 869-1327
If to Inprise: Inprise Corporation
-------------
100 Enterprise Way
Scotts Valley, CA 95066-3249
Attention: JoAnne M. Butler
Telephone No.: (831) 431-4643
Facsimile No.: (831) 431-4171
With a copy to: Gary Cary Ware & Freidenrich LLP
--------------
400 Hamilton Avenue
Palo Alto, CA 94301
Attention: Peter M. Astiz
Telephone No.: (650) 833-2036
Facsimile No.: (650) 327-3699
Such addresses may be changed, from time to time, by means of a notice given in
the manner provided in this Section 6.4.
6.5 Severability. In the event any provision of this Agreement shall be
------------
unenforceable or invalid under any applicable law or be so held by applicable
court decision, such unenforceablility or invalidity shall not render this
Agreement unenforceable or invalid as a whole, and, in such even, such provision
shall be changed and interpreted so as to best accomplish the objectives of such
provision within the limits of applicable law or applicable court decisions.
6.6 Survival of Representations and Warranties. The representations,
------------------------------------------
warranties and covenants of Inprise and Microsoft contained in or made pursuant
to this Agreement shall survive the execution and delivery of this Agreement and
the Closing and shall in no way be affected by any investigation of the subject
matter thereof made by or on behalf of Microsoft or its counsel or Inprise or
its counsel, as the case may be.
6.7 Assignment. No party to this Agreement may assign, by operation of
----------
law or otherwise, all or any portion of its rights, obligations, or liabilities
under this Agreement.
6.8 Counterparts. This Agreement may be executed in two or more partially
------------
or fully executed counterparts and by facsimile signatures each of which shall
be deemed an original and shall bind the signatory, but all of which together
shall constitute but one and the same instrument. The execution and delivery of
a signature page in the form annexed to this
-12-
<PAGE>
Agreement by any party hereto who shall have been furnished the final form of
this Agreement shall constitute the execution and delivery of this Agreement by
such party.
6.9 Amendment. This Agreement may not be amended except by an instrument
---------
in writing signed on behalf of each of the parties hereto.
6.10 Extension, Waiver. At any time prior to the Closing, any party hereto
-----------------
may, to the extent legally allowed: (i) extend the time for the performance of
any of the obligations or other acts of the other party hereto, (ii) waive any
inaccuracies in the representations and warranties made to such party contained
herein or in any document delivered pursuant hereto and (iii) waive compliance
with any of the agreements, covenants or conditions for the benefit of such
party contained herein. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party.
6.11 Interpretation. When a reference is made in this Agreement to
--------------
Sections, Exhibits or Schedules, such reference shall be to a Section, Exhibit
or Schedule to this Agreement unless otherwise indicated. The words "include,"
"includes," and "including" when used therein shall be deemed in each case to be
followed by the words "without limitation." The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
-13-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
"Inprise"
INPRISE CORPORATION
By: /s/ JAY R. LEITE
--------------------------------
Jay R. Leite
Chief Financial Officer
"MICROSOFT"
MICROSOFT CORPORATION
By: /s/ PAUL MARITZ
--------------------------------
Paul Maritz
Vice President
-14-
<PAGE>
EXHIBIT 4.2(a)
INVESTOR RIGHTS AGREEMENT
This Investor Rights Agreement (this "Agreement") is made and entered into
as of June 7, 1999 by and between Inprise Corporation, a Delaware corporation
(the "Company") and Microsoft Corporation, a Washington corporation
("Microsoft").
RECITALS
A. Microsoft has agreed to purchase from the Company, and the Company has
agreed to sell to Microsoft, an aggregate of six hundred twenty-five (625)
shares of the Company's Series C Convertible Preferred Stock, par value $0.01
(the "Series C Shares"), on the terms and conditions set forth in the
Certificate of Designation (the "Certificate") attached as Exhibit A to that
---------
certain Preferred Stock Purchase Agreement, dated June 7, 1999, by and between
the Company and Microsoft (the "Preferred Stock Purchase Agreement").
B. The Preferred Stock Purchase Agreement provides that Microsoft shall
be granted certain additional rights, all as more fully set forth herein.
C. Terms beginning with an initial capital which are not otherwise
defined herein shall have the same meaning as set forth in the Preferred Stock
Purchase or the Certificate, as appropriate.
NOW, THEREFORE, the parties hereto agree as follows:
1. Registration Rights.
-------------------
1.1 Definitions. For purposes of this Section 1:
-----------
(a) Registration. The terms "register," "registered," and
------------
"registration" refer to a registration effected by preparing and filing a
registration statement in compliance with the Securities Act of 1933, as amended
("Securities Act"), and the declaration or ordering of effectiveness of such
registration statement by the U.S. Securities and Exchange Commission (the
"SEC").
(b) Registrable Securities. The term "Registrable Securities"
----------------------
means: (1) to the extent permitted by applicable SEC rules, the Series C Shares;
(2) all the shares of common stock of the Company, par value $0.01 per share
("Common Stock") issued or issuable upon the conversion of any Series C Shares;
and (3) all shares of Common Stock of the Company issuable upon the conversion
or exercise of any warrant, right or other security which is issued as a
dividend or other distribution with respect to, or in exchange for, in
replacement of or in connection with a share split of, all such shares described
in clauses (1) and (2) of this subsection (b); excluding in all cases, however,
any Registrable Securities sold by a person in a transaction in which rights
under this Section 1 are not assigned in accordance with this Agreement or sold
to the public or sold pursuant to Rule 144 promulgated under the Securities Act.
1
<PAGE>
1.2 Form S-3 Registration. At any time after the second anniversary
---------------------
of the Series C Original Issue Date, Microsoft may make a written request that
the Company effect a registration on Form S-3 with respect to all or a part of
the Registrable Securities owned by Microsoft, in which case the Company will,
as soon as reasonably practicable, effect such registration on Form S-3 as may
be so requested and as would permit or facilitate the sale and distribution of
all or such portion of Microsoft's Registrable Securities as are specified in
such request; provided, however, that the Company shall not be obligated to
effect any such registration, qualification or compliance pursuant to this
Section 1.2:
(i) if Form S-3 is not available for such offering by
Microsoft;
(ii) if the aggregate value of the Registrable Securities
proposed to be sold by Microsoft in such offering is not at least $10,000,000;
(iii) if the Company shall furnish to Microsoft a
certificate signed by the President or Chief Executive Officer of the Company
stating that, in the good faith judgment of the Board of Directors of the
Company, it would be seriously detrimental to the Company and its shareholders
for such Form S-3 registration to be effected at such time, in which event the
Company shall have the right to defer the filing of the Form S-3 registration
statement for a period of not more than 90 days after receipt of the request of
Microsoft under this Section 1.2;
(iv) if the Company has already effected three (3)
registrations for Microsoft pursuant to this Section 1.2; or
(v) in any particular jurisdiction in which the Company
would be required to qualify to do business or to execute a general consent to
service of process in effecting such registration, qualification or compliance.
Each Form S-3 registration must be commenced in time to be declared
effective within the 15-day period following the date the Company would
reasonably be expected to file its Annual Report on Form 10-K or any Quarterly
Report on Form 10-Q with the SEC.
1.3 Obligations of the Company.
--------------------------
(a) Expenses. All expenses incurred in connection with all
--------
registrations pursuant to Section 1.2, including without limitation all
registration and qualification fees, printers' and accounting fees, fees and
disbursements of counsel for the Company (but excluding underwriters' and
brokers' discounts and commissions and fees and disbursements of counsel for
Microsoft), shall be borne by Microsoft.
(b) Registration. Whenever required to effect the registration
------------
of any Registrable Securities under this Agreement, the Company shall, as
expeditiously as reasonably possible:
2
<PAGE>
(i) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities, use its best efforts to cause such
registration statement to become effective and, upon the request of Microsoft,
keep such registration statement effective for up to ninety (90) days plus any
additional periods represented by any "Black-Out Period" (as defined in the last
paragraph of Subsection 1.3() below).
(ii) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as the Company may determine to be necessary to
comply with the provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement.
(iii) Furnish to Microsoft such number of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as it may
reasonably request in order to facilitate the disposition of the Registrable
Securities owned by it and included in such registration.
(iv) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as shall be reasonably requested by
Microsoft, provided that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions.
(v) Notify Microsoft at any time when a prospectus
relating to the Registrable Securities 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, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
necessary, in light of the circumstances under which made, to make the
statements therein not misleading, and, at the request of Microsoft, the Company
will promptly prepare and provide to it a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of Microsoft's
Registrable Securities, such prospectus will not contain an untrue statement of
a material fact or omit to state any material fact necessary, in light of the
circumstances under which made, to make the statements therein not misleading.
(vi) Microsoft agrees that if the Company has delivered
preliminary or final prospectuses to Microsoft and after having done so (a) the
Company determines that the prospectus needs to be amended or supplemented to
comply with the requirements of the Securities Act, (b) a stop order suspending
the effectiveness of the registration statement is issued by the SEC or (c) the
Company shall, in good faith and for business reasons, enter into negotiations
relating to or otherwise commence a material business transaction, including,
without limitation, the acquisition or divestiture of assets or the offering or
sale of securities, then the Company shall promptly notify Microsoft and
Microsoft shall immediately cease making offers and sales of Registrable
Securities and return all remaining prospectuses to the Company. Following such
amendment or supplement, the lifting of any stop order or the completion or
termination of any material transaction, the Company shall promptly
3
<PAGE>
provide Microsoft with revised prospectuses and, following receipt of the
revised prospectuses, Microsoft shall be free to resume making offers of the
Registrable Securities, or any portion thereof. The period during which the
Company exercises its rights as described in this paragraph to postpone, delay
or interrupt the offer and sale of the Registrable Securities or during the
pendency of any stop order, injunction or other order or requirement of the SEC
or any other governmental agency or court shall be referred to herein as "Black-
Out Period."
1.4 Furnish Information. It shall be a condition precedent to the
-------------------
obligations of the Company to take any action pursuant to Section 1.2 that
Microsoft shall furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities and such other information as the Company may reasonably request
to timely effect the registration of its Registrable Securities.
1.5 Indemnification. In the event any Registrable Securities are
---------------
included in a registration statement under Section 1.2:
(a) By the Company. To the extent permitted by law, the Company
--------------
will indemnify and hold harmless Microsoft, the officers and directors of
Microsoft, any underwriter (as defined in the Securities Act) for Microsoft and
each person, if any, who controls Microsoft or its underwriter within the
meaning of the Securities Act or the Securities Exchange Act of 1934, as
amended, (the "1934 Act"), against any losses, claims, damages, or liabilities
(joint or several) to which they may become subject under the Securities Act,
the 1934 Act or other federal or state law, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any of the following statements, omissions or violations (collectively a
"Violation"):
(i) any untrue statement or alleged untrue statement of a
material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any amendments
or supplements thereto;
(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; or
(iii) any violation or alleged violation by the Company of
the Securities Act, the 1934 Act, any federal or state securities law or any
rule or regulation promulgated under the Securities Act, the 1934 Act or any
federal or state securities law in connection with the offering covered by such
registration statement;
and the Company will reimburse Microsoft, its officers or directors, underwriter
or controlling persons for any legal or other expenses reasonably incurred by
them, as incurred, in connection with investigating or defending any such loss,
claim, damage, liability or action; provided however, that the indemnity
agreement contained in this subsection 1.5() shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be liable in any such case
for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a Violation which occurs in
4
<PAGE>
reliance upon and in conformity with written information furnished expressly for
use in connection with such registration by or on behalf of Microsoft, its
officers, directors, underwriter or controlling persons or by Microsoft's
failure to deliver a copy of the registration statement or prospectus or any
amendments or supplements thereto after the Company has furnished Microsoft or
its underwriters with copies of the same.
(b) By Microsoft. To the extent permitted by law, Microsoft will
------------
indemnify and hold harmless the Company, each of its directors, each of its
officers who have signed the registration statement, each person, if any, who
controls the Company within the meaning of the Securities Act or the 1934 Act,
any underwriter and each person, if any, who controls such underwriter within
the meaning of the Securities Act or the 1934 Act, against any losses, claims,
damages or liabilities (joint or several) to which the Company or any such
director, officer, underwriter, or controlling person of the Company may become
subject under the Securities Act, the 1934 Act or other federal or state law,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereto) arise out of or are based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in reliance upon and
in conformity with written information furnished by Microsoft expressly for use
in connection with such registration; and Microsoft will reimburse any legal or
other expenses reasonably incurred by the Company or any such director, officer,
underwriter or controlling person, as incurred, in connection with investigating
or defending any such loss, claim, damage, liability or action; provided,
however, that the indemnity agreement contained in this subsection 1.5() shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of
Microsoft, which consent shall not be unreasonably withheld; and provided
further, that the total amounts payable in indemnity by Microsoft under this
subsection 1.5() in respect of any Violation shall not exceed the proceeds (net
of underwriters' and brokers' discounts and commissions) received by Microsoft
in the registered offering out of which such Violation arises.
(c) Notice. Promptly after receipt by an indemnified party
------
under this Section 1.5 of notice of the commencement of any action (including
any governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section 1.5,
deliver to the indemnifying party a written notice of the commencement thereof
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential conflict of interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if prejudicial to its ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 1.5, but the omission so to deliver written
notice to the indemnifying party will not relieve it of any liability that it
may have to any indemnified party otherwise than under this Section 1.5.
5
<PAGE>
(d) Contribution. If the indemnification provided in this
------------
Section 1.5 is unavailable or insufficient to hold harmless an indemnified party
under subsection 1.5() or (), then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to above (i) in such proportion as is
appropriate to reflect the relative benefits received by the indemnifying party
on the one hand and the indemnified party on the other from the offering of the
securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the indemnifying party on the one hand and the indemnified party on the
other in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other equitable
considerations. The relative benefits received by the indemnifying party on the
one hand and the indemnified party on the other shall be deemed to be in the
same proportion as the total net proceeds from the offering received by the
indemnifying party bear to the total net proceeds received by the indemnified
party. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact related to information
supplied by the indemnifying party or information supplied by the indemnified
party, and the parties' relevant intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The amount
paid by an indemnified party as a result of the losses, claims, damages or
liabilities referred to in the first sentence of this paragraph () shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending against any
action or claim that is the subject of this section. Notwithstanding the
provisions of this section, Microsoft shall not be required to contribute any
amount in excess of the amount of the total net proceeds (net of underwriters'
and brokers' discounts and commissions) received by Microsoft from the sale of
the securities pursuant to this Agreement. No person guilty of fraudulent
misrepresentation (within the meaning of Section II(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) Survival. The obligations of the Company and Microsoft
--------
under this Section 1.5 shall survive the completion of any offering of
Registrable Securities in a registration statement, and otherwise.
1.6 Rule 144 Reporting. With a view to making available the benefits
------------------
of certain rules and regulations of the Commission which may at any time permit
the sale of the Registrable Securities to the public without registration, after
such time as a public market exists for the Common Stock of the Company, the
Company agrees to:
(a) Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act, at all times
after the effective date of the first registration under the Securities Act
filed by the Company for an offering of its securities to the general public;
6
<PAGE>
(b) Use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the 1934 Act (at any time after it has become subject to such
reporting requirements); and
(c) So long as Microsoft owns any Registrable Securities, to
furnish to Microsoft forthwith upon request (i) a written statement by the
Company as to its compliance with the reporting requirements of said Rule 144,
and of the Securities Act and the 1934 Act, (ii) a copy of the most recent
annual or quarterly report of the Company, and (iii) such other reports and
documents of the Company as Microsoft may reasonably request in availing itself
of any rule or regulation of the Commission allowing Microsoft to sell any such
securities without registration.
1.7 Termination of the Company's Obligations. The Company shall have
----------------------------------------
no obligations pursuant to Section 1.2 with respect to any Registrable
Securities proposed to be sold by Microsoft in a registration pursuant to
Section 1.2 if, in the opinion of counsel to the Company, all such Registrable
Securities proposed to be sold by Microsoft may be sold in a three month period
without registration under the Securities Act pursuant to Rule 144 under the
Securities Act.
2. Transfer Restrictions.
---------------------
Subject to the restrictions and limitations on transfer set forth herein,
Microsoft may transfer its shares in the Company only after the second
anniversary of the Series C Original Issue Date and only: (i) to a subsidiary in
which Microsoft owns shares representing at least 80% of the total voting power,
(ii) pursuant to Rule 144, (iii) in bona fide public offerings registered under
the Securities Act of 1933, (iv) in a private transaction exempt from
registration under the Securities Act, or (v) in response to an offer to
purchase not opposed by the Company's Board of Directors and which would result
in the offerer's acquiring shares representing more than 50% of the total voting
power of the Company's outstanding shares or an offer opposed by the Company's
Board of Directors which has been accepted by the holders of more than 50% of
the voting power of the Company. Any transfer in a permitted public offering or
private transaction must be for shares equal to no more than 3% of the Company's
outstanding shares during any 90 day period and shall be made so as not to
result, to Microsoft's knowledge after due inquiry, in any person or group
having, as a result of the transfer, beneficial ownership of shares representing
more than 5% of the total voting power of outstanding equity securities.
3. Microsoft Covenants.
-------------------
3.1 Standstill. Microsoft covenants that prior to the fifth
----------
anniversary of the Series C Original Issue Date, it will not, unless the prior
written consent of the Company has been obtained, acquire, or permit any
subsidiary of Microsoft to acquire, by purchase or otherwise, beneficial
ownership (which term shall include for the purposes of this Agreement, without
limitation, direct or indirect ownership or any direct or indirect ability to
influence voting) of any securities of the Company entitled to vote with respect
to the election of any directors of the Company ("Voting Securities"), any
security convertible into, exchangeable for
7
<PAGE>
or exercisable for or that may become any Voting Securities or any other right
to acquire Voting Securities.
3.2 Proxy Solicitations. Microsoft covenants that prior to the fifth
-------------------
anniversary of the Series C Original Issue Date, it will not, acting by itself
or with others, participate in any proxy solicitation or election contest, make
any proposal for any acquisition of the Company unless solicited by the
Company's Board of Directors, propose any matter for submission to a vote of the
Company's stockbrokers, or take related or similar actions. Neither Microsoft
nor any affiliated entity shall join a partnership, limited partnership,
syndicate or other group, or otherwise act in concert with any third person, for
the purpose of acquiring, holding, voting or disposing of Voting Securities.
3.3 Voting. Microsoft covenants that, to the extent that the Series
------
C Stock enjoys any voting rights under law, it will vote all shares it holds in
the Company in favor of all director-nominees nominated by the Company's Board
of Directors. On all other matters (other than a proposed amendment of the terms
of the Series C Shares), Microsoft will vote in accordance with the
recommendation of the Company's Board of Directors. If Microsoft has voting
rights, its representative will be present, in person or by proxy, at all
meetings of the Company's stockholders, so that Microsoft's shares can be
counted for the purpose of determining the presence of a quorum. Microsoft will
not subject Microsoft's shares to any voting trust or other voting agreement.
Microsoft covenants that prior to the fifth anniversary of the Series C Original
Issue Date, it will not, unless the prior written consent of the Company has
been obtained, acquire, or permit any subsidiary of Microsoft to acquire, by
purchase or otherwise, any equity securities of the Company.
3.4 Hedging. Microsoft covenants that prior to the date 90 days
-------
following the Series C Original Issue Date, it shall not engage in any hedging
or similar strategies with respect to the Company's securities.
3.5 Minimum Holding Period. Microsoft covenants that prior to the
----------------------
second anniversary of the Series C Original Issue Date, it shall not transfer
any of the Series C Shares or the shares of Common Stock issuable upon
conversion of the Series C Shares.
4. Company's Repurchase Right.
--------------------------
4.1 Grant. The Company shall have the right, at any time after two
-----
years following the Series C Original Issue Date, to repurchase the Series C
Shares at the market value of the Common Stock into which the Series C Shares
are then convertible (the "Repurchase Right"). In lieu of exercising such
Repurchase Right and subject to compliance with all regulatory requirements, the
Company may require that all or part of the Series C Shares be converted into
Common Stock at the then applicable Conversion Price and in accordance with the
Certificate.
4.2 Exercise of the Repurchase Right. The Repurchase Right shall be
--------------------------------
exercisable by written notice delivered to Microsoft. The notice shall indicate
the number of Series C Shares to be repurchased and the date on which the
repurchase is to be effected, such date to be
8
<PAGE>
not more than thirty (30) days after the date of notice. Microsoft shall, prior
to the close of business on the date specified for the repurchase, deliver to
the Secretary of the Company the certificates representing the Series C Shares
to be repurchased, each certificate to be properly endorsed for transfer. The
Company shall, concurrently with the receipt of such stock certificates, pay to
Microsoft in cash or cash equivalents the repurchase price pursuant to Section
4.1.
5. Company's Right of First Refusal.
--------------------------------
5.1 Grant. The Corporation shall have a right of first refusal (the
-----
"First Refusal Right") exercisable in connection with any proposed transfer of
the Series C Shares. For purposes of this Section 5, the term "transfer" shall
include any sale, assignment, pledge, encumbrance or other disposition of the
Purchased Shares intended to be made by Microsoft, but shall not include any of
the permitted transfers under clauses (i), (iii) and (v) of Section 2.
5.2 Notice of Intended Disposition. In the event Microsoft desires
------------------------------
to sell all or any part of the Series C Shares or to accept a bona fide third-
party offer for the transfer of any or all of such Series C Shares (the Series C
Shares subject to such offer to be hereinafter called the "Target Shares"),
Microsoft shall promptly (i) deliver to the Secretary of the Company written
notice (the "Disposition Notice") of the terms and conditions of the offer,
including the purchase price and the identity of the third-party offeror or that
the sale is to be made into the public market, and (ii) provide satisfactory
proof that the disposition of the Target Shares to such third-party offeror
would not be in contravention of the provisions set forth in Section 2.
5.3 Exercise of Right. The Company shall, for a period of thirty
-----------------
(30) days following receipt of the Disposition Notice, have the right to
repurchase any or all of the Target Shares subject to the Disposition Notice
upon the same terms and conditions as those specified therein. Such right shall
be exercisable by delivery of written notice (the "Exercise Notice") to
Microsoft prior to the expiration of the thirty (30) day exercise period. If
such right is exercised with respect to all the Target Shares, then the Company
shall effect the repurchase of such shares, including payment of the purchase
price, not more than five (5) business days after delivery of the Exercise
Notice; and at such time Microsoft shall deliver to the Company the certificates
representing the Target Shares to be repurchased, each certificate to be
properly endorsed for transfer. If the Disposition Notice is with respect to a
sale into the public market, then the price payable by the Company upon exercise
of the right of first refusal shall be the average closing price for the
Company's Common Stock from and including the date of the Disposition Notice
through the date of the Exercise Notice.
5.4 Non-Exercise of Right. In the event the Exercise Notice is not
---------------------
given to Microsoft within thirty (30) days following the date of the Company's
receipt of the Disposition Notice, Microsoft shall have a period of forty-five
(45) days thereafter in which to sell or otherwise dispose of the Target Shares
to the third-party offeror identified in the Disposition Notice upon terms and
conditions (including the purchase price) no more favorable to such third-party
offeror than those specified in the Disposition Notice; provided, however, that
any such sale or disposition must not be effected in contravention of the
provisions of Section 2, and provided further, that if the sale or disposition
is a sale into the public market, the shares may be
9
<PAGE>
sold at any price obtained in such market. In the event Microsoft does not
effect such sale or disposition of the Target Shares within the specified forty-
five (45) day period, the First Refusal Right shall continue to be applicable to
any subsequent disposition of the Target Shares by Microsoft.
5.5 Partial Exercise of Right. In the event the Company makes a
-------------------------
timely exercise of the First Refusal Right with respect to a portion, but not
all, of the Target Shares specified in the Disposition Notice, Microsoft shall
have the option, exercisable by written notice to the Company delivered within
five (5) days after Microsoft's receipt of the Exercise Notice, to effect the
sale of those Target Shares not repurchased by the Company to the third-party
offeror, subject to the restrictions contained herein. In the event Microsoft
does not effect such sale or disposition of the Target Shares within a period of
forty-five (45) days thereafter, the First Refusal Right shall continue to be
applicable to any subsequent disposition of the Target Shares by Microsoft.
6. Legend. To assist in effectuating the provisions of this
------
Agreement, Microsoft hereby consents to the placement of the following legend on
all certificates certifying ownership of any securities purchased by Microsoft
pursuant to the Preferred Stock Purchase Agreement until such securities have
been sold, transferred or disposed of pursuant to the requirements of this
Agreement:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AN AGREEMENT
IMPOSING RESTRICTIONS ON THE VOTING AND DISPOSITION OF SUCH SECURITIES,
INCLUDING A RIGHT OF FIRST REFUSAL AND REPURCHASE IN FAVOR OF THE ISSUER. A
COPY OF SAID AGREEMENT IS ON FILE AT THE OFFICE OF THE SECRETARY OF INPRISE
CORPORATION."
7. General Provisions.
------------------
7.1 Assignment. Except as provided in Section 2 above, no party to
----------
this Agreement may assign, by operation of law or otherwise, all or any portion
of its rights, obligations, or liabilities under this Agreement.
7.2 Third Parties. Nothing in this Agreement, express or implied, is
-------------
intended to confer upon any person, other than the parties hereto and their
successors and assigns, any rights or remedies under or by reason of this
Agreement.
7.3 Governing Law and Venue. This Agreement shall be governed by and
-----------------------
construed under the internal laws of the State of Delaware as applied to
agreements among Delaware residents entered into and to be performed entirely
within Delaware, without reference to principles of conflict of laws or choice
of laws.
7.4 Counterparts. This Agreement may be executed in two or more
------------
counterparts each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10
<PAGE>
7.5 Headings. The headings and captions used in this Agreement are
--------
used for convenience only and are not to be considered in construing or
interpreting this Agreement. All references in this Agreement to sections,
paragraphs, exhibits and schedules shall, unless otherwise provided, refer to
sections and paragraphs hereof and exhibits and schedules attached hereto, all
of which exhibits and schedules are incorporated herein by this reference.
7.6 Notices. All notices, requests, demands or other communications
-------
which are required or may be given pursuant to the terms of this Agreement shall
be in writing and shall be deemed to have been duly given: (i) on the date of
delivery if personally delivered by hand, (ii) upon the third day after such
notice is (a) deposited in the United States mail, if mailed by registered or
certified mail, postage prepaid, return receipt requested, or (b) sent by a
nationally recognized overnight express courier, or (iii) by facsimile upon
written confirmation (other than the automatic confirmation that is received
from the recipient's facsimile machine) of receipt by the recipient of such
notice:
If to Microsoft: Microsoft Corporation
One Microsoft Way
Redmond, WA 98052-6399
Attention: Robert A. Eshelman
Telephone No.: (425) 936-7520
Facsimile No.: (425) 869-1327
If to Inprise: Inprise Corporation
100 Enterprise Way
Scotts Valley, CA 95066-3249
Attention: JoAnne M. Butler
Telephone No.: (831) 431-4643
Facsimile No.: (831) 431-4171
With a copy to: Gray Cary Ware & Freidenrich LLP
400 Hamilton Avenue
Palo Alto, CA 94301-1825
Attention: Peter M. Astiz
Telephone No.: (650) 833-2036
Facsimile No.: (650) 327-3699
Such addresses may be changed, from time to time, by means of a notice given in
the manner provided in this Section.
7.7 Attorneys' Fees. If any action at law or in equity is necessary
---------------
to enforce or interpret the terms of this Agreement, the prevailing party shall
be entitled to recover its reasonable attorneys' fees, experts' fees and costs,
including those for pretrial, trial, on appeal, in arbitration and in bankruptcy
and all other costs and necessary disbursements associated with any such
actions, in addition to any other relief to which such party may be entitled.
11
<PAGE>
7.8 Adjustments for Stock Splits, Etc. Wherever in this Agreement
---------------------------------
there is a reference to a specific number of shares of Common Stock or Preferred
Stock of the Company of any class or series, then, upon the occurrence of any
subdivision, combination or stock dividend of such class or Series of stock, the
specific number of shares so referenced in this Agreement shall automatically be
proportionally adjusted to reflect the affect on the outstanding shares of such
class or Series of stock by such subdivision, combination or stock dividend.
7.9 Aggregation of Stock. All shares held or acquired by affiliated
--------------------
entities or persons shall be aggregated together for the purpose of determining
rights and obligations under this Agreement.
7.10 Amendments and Waivers. Any term of this Agreement may be amended
----------------------
and the observance of any provision of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and Microsoft. Any
amendment or waiver effected in accordance with this Section shall be binding
upon Microsoft and Company. No waiver of any of the provisions of this Agreement
shall be deemed to be or shall constitute a waiver of any other provisions
hereof, whether or not similar, nor shall any such waiver constitute a
continuing waiver. No waiver shall be binding unless expressed as such in a
document executed by the party making the waiver.
7.11 Severability. If one or more provisions of this Agreement are
------------
held to be unenforceable under applicable law, such provision(s) shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision(s) were so excluded and shall be enforceable in
accordance with its terms.
7.12 Entire Agreement. This Agreement constitutes the entire agreement
----------------
and understanding of the parties with respect to the subject matter hereof and
supersedes any and all prior negotiations, correspondence, agreements,
understandings, duties or obligations between the parties with respect to the
subject matter hereof.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
12
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
"COMPANY" "MICROSOFT"
INPRISE CORPORATION MICROSOFT CORPORATION
By: /s/ JAY R. LEITE By: /s/ PAUL MARITZ
---------------- ---------------
Jay R. Leite Paul Maritz
Chief Financial Officer Vice President
13
<PAGE>
EXHIBIT 99.1
INPRISE AND MICROSOFT CONFIRM COMMITMENT OF INPRISE TOOLS FOR THE WINDOWS
PLATFORM
Technology-Licensing Agreements Backed Up by 10 Percent Investment in Inprise by
Microsoft
SCOTTS VALLEY, Calif. -- June 8, 1999 -- Microsoft Corp. (Nasdaq: MSFT) and
Inprise Corp. (Nasdaq: INPR) today announced the completion of a set of
strategic technology and licensing agreements that will be the foundation for
a long-term alliance between the two companies. The announcement includes a
$25 million purchase by Microsoft of shares of Inprise preferred stock.
Key components of the arrangement include Inprise's commitment to do the
following:
. Support the Microsoft(r) Windows(r) 2000 operating system,
including the COM+ and the Windows Distributed interNet
Applications (Windows DNA) architecture. Inprise will enhance its
family of Windows development tools to support this technology as
well as the Windows-based DNA architecture and to conform to the
Windows 2000 Application Specification.
. License the latest version of the Microsoft Foundation Classes
(MFC), the standard C++ class library for developing applications
for Windows. MFC will ship with Borland C++Builder.
. License the latest version of the Windows platform software
development kit (SDK) through the Microsoft Open Tools licensing
program. Elements of the Windows platform SDK will be incorporated
into Inprise's Borland family of Windows-based development tools.
"We're extremely pleased with this alliance," said Dale Fuller,
interim president and CEO of Inprise. "This provides a great basis for
expanding Inprise's support for the Windows platforms and newer
Microsoft technologies in the Internet and elsewhere."
In turn, Microsoft made a long-term commitment to provide Inprise with
technologies related to the Windows platform and Internet technologies.
Microsoft also paid Inprise $100 million for the rights to use Inprise-
patented technology in Microsoft products and to settle a number of long-
standing patent and technology licensing issues. The total value of the
investment and payment to Inprise is $125 million.
"Microsoft is pleased to enter into this alliance with Inprise", said
Paul Maritz, vice president of the Developer Group at Microsoft.
"Windows customers will benefit from Inprise's additional support of
Microsoft technologies."
"Inprise is widely known for its Borland family of developer tools
that support Windows, and we look forward to expanding our alliance
with the company," said Morris Beton, general manager of MSDN(tm) and
Developer Programs at Microsoft. "We are pleased that Inprise is
positioned to create tools and provide technologies that support the
Windows platform and that complement Microsoft's product offerings."
<PAGE>
About Inprise Inprise is a leading provider of software and services that
simplify the complexity of application development for corporations and
individual programmers. Founded in 1983, Inprise is headquartered in Scotts
Valley, Calif., and has operations worldwide.
About Microsoft Founded in 1975, Microsoft is the worldwide leader in
software for personal computers. The company offers a wide range of
products and services for business and personal use, each designed with the
mission of making it easier and more enjoyable for people to take advantage
of the full power of personal computing every day.
Microsoft, Windows and MSDN are either registered trademarks or trademarks
of Microsoft Corp. in the United States and/or other countries.
Inprise product names are trademarks or registered trademarks of Inprise
Corporation. Other names mentioned herein may be trademarks of the party
using such names.
Forward-looking statements in this release, including but not limited to,
those concerning Inprise's future financial performance, product
availability dates, results of the Company's strategic review, and the
potential features of or benefits to be derived from the Company's
products, involve a number of uncertainties and risks, and actual events or
results may differ materially. Factors that could cause actual events or
results to differ materially include, among others, the following: possible
disruptive effects of organizational or personnel changes, shifts in
customer demand, market acceptance of the Company's new or enhanced
products, delays in scheduled product availability dates, actions or
announcements by competitors, software errors, general business conditions
and market growth rates in the client/server and Internet software markets,
and other factors described in the Company's SEC reports on forms 8-K, 10-Q
and 10-K.
Note to editors: If you are interested in viewing additional information on
Microsoft, please visit the Microsoft Web page at
http://www.microsoft.com/presspass/ on Microsoft's corporate information
-----------------------------------
pages.
