<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
---------- ----------
COMMISSION FILE NO. 0-20740
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PLATINUM SOFTWARE CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 33-0277592
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
195 TECHNOLOGY DRIVE
IRVINE, CALIFORNIA 92718-2402
(Address of principal executive offices, zip code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (714) 453-4000
----------------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
----- -----
As of April 30, 1996, there were 16,479,261 shares of common stock outstanding.
<PAGE> 2
INDEX
<TABLE>
<S> <C>
PART I - FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Item I - Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Unaudited Condensed Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . 3
Unaudited Condensed Consolidated Statements of Operations . . . . . . . . . . . . . . . 4
Unaudited Condensed Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . 5
Notes to Unaudited Condensed Consolidated Financial Statements . . . . . . . . . . . . . 6
Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations. . 9
PART II - OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Item 1 - Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Item 6 - Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SIGNATURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>
2
<PAGE> 3
PART I
FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS:
PLATINUM SOFTWARE CORPORATION
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
March 31, June 30,
1996 1995
- -----------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 14,336 $ 26,276
Restricted cash - 476
Accounts receivable, net 8,978 14,205
Notes receivable from divestitures, net 1,665 957
Inventories 457 672
Prepaid expenses and other 1,714 1,785
- -----------------------------------------------------------------------------------------
Total current assets 27,150 44,371
Property and equipment, net 9,497 11,961
Notes receivable from divestitures, net - 3,534
Software development costs, net 2,423 3,000
Acquired intangible assets, net 1,305 2,403
Other assets 478 564
- -----------------------------------------------------------------------------------------
$ 40,853 $ 65,833
=========================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of class action settlement $ 16,717 $ -
Accounts payable 2,983 3,920
Accrued expenses 8,178 5,964
Accrued restructuring costs 2,472 1,192
Deferred revenue 9,011 8,980
- -----------------------------------------------------------------------------------------
Total current liabilities 39,361 20,056
- -----------------------------------------------------------------------------------------
Long-term portion of class action settlement - 15,812
- -----------------------------------------------------------------------------------------
Stockholders' equity:
Preferred stock 31,996 31,996
Common stock 17 13
Additional paid-in capital 90,680 80,391
Notes receivable from officers (8,750) -
Accumulated foreign currency translation adjustments 240 304
Accumulated deficit (112,691) (82,739)
- -----------------------------------------------------------------------------------------
Total stockholders' equity 1,492 29,965
- -----------------------------------------------------------------------------------------
$ 40,853 $ 65,833
=========================================================================================
</TABLE>
The accompanying notes are an integral part of these unaudited condensed
consolidated balance sheets.
3
<PAGE> 4
PLATINUM SOFTWARE CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
March 31, March 31,
1996 1995 1996 1995
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues:
License fees $ 3,619 $ 8,386 $ 14,596 $25,730
Consulting and professional services 2,153 2,691 8,254 9,021
Support services 2,590 2,183 7,801 6,134
Royalty income - 112 505 394
- -----------------------------------------------------------------------------------------------
8,362 13,372 31,156 41,279
Cost of revenues 5,107 4,950 15,657 14,972
- -----------------------------------------------------------------------------------------------
Gross profit 3,255 8,422 15,499 26,307
- -----------------------------------------------------------------------------------------------
Operating expenses:
Sales and marketing 4,659 5,119 15,353 13,888
General and administrative 5,673 940 8,960 3,943
Software development 3,047 4,316 11,192 13,341
Charge for restructuring 4,200 - 9,800 -
- -----------------------------------------------------------------------------------------------
17,579 10,375 45,305 31,172
- -----------------------------------------------------------------------------------------------
Loss from operations (14,324) (1,953) (29,806) (4,865)
Other income (expense), net (186) 31 (146) 159
- -----------------------------------------------------------------------------------------------
Loss before provision for
income taxes (14,510) (1,922) (29,952) (4,706)
Provision for income taxes - 8 - 20
- -----------------------------------------------------------------------------------------------
Net loss $(14,510) $(1,930) (29,952) $(4,726)
===============================================================================================
Net loss per share $ (0.97) $ (0.15) $ (2.13) $ (0.37)
===============================================================================================
Shares used in computing
net loss per share 14,897 12,869 14,087 12,760
===============================================================================================
</TABLE>
The accompanying notes are an integral part of these unaudited condensed
consolidated statements.
4
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PLATINUM SOFTWARE CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Nine Months Ended
March 31,
1996 1995
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(29,952) $ (4,726)
Adjustments to reconcile net loss to net
cash used in operating activities
Depreciation and amortization 4,794 4,091
Interest accretion on notes receivable from divestitures - (383)
Interest accretion on debenture issued in connection with
class action settlement 905 613
Charge for restructuring 9,800 -
Change in operating assets and liabilities:
(Increase) decrease in accounts receivable, net 3,609 (1,982)
Decrease in inventories 215 241
(Increase) decrease in prepaid expenses and other 8 (98)
Decrease in other assets 59 48
Increase (decrease) in accounts payable (937) 196
Increase (decrease) in accrued expenses 1,992 (2,460)
Decrease in accrued restructuring costs (2,187) (2,097)
Increase (decrease) in deferred revenue 530 (6,279)
- -----------------------------------------------------------------------------------------------------
Cash used in operating activities (11,164) (12,836)
- -----------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Payments received on notes receivable from divestitures 378 2,569
Increase in notes receivable from divestitures (411) (399)
Capital expenditures (2,151) (1,752)
Capitalized software development costs (306) (195)
- -----------------------------------------------------------------------------------------------------
Cash provided by (used in) investing activities (2,490) 223
- -----------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from issuance of preferred stock - 13,770
Payment on class action settlement - (1,000)
Exercise of common stock options 1,033 1,154
Issuance of common stock under the Employee Stock Purchase Plan 269 312
Decrease in restricted cash 476 -
- -----------------------------------------------------------------------------------------------------
Cash provided by financing activities 1,778 14,236
- -----------------------------------------------------------------------------------------------------
Effect of exchange rate on cash (64) 17
- -----------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents (11,940) 1,640
Cash and cash equivalents, beginning of period 26,276 8,346
- -----------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 14,336 $ 9,986
=====================================================================================================
</TABLE>
The accompanying notes are an integral part of these unaudited condensed
consolidated statements.
5
<PAGE> 6
PLATINUM SOFTWARE CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements present
the financial position of Platinum Software Corporation (the "Company") as of
March 31, 1996 and June 30, 1995, the results of its operations for the three
and nine month periods ended March 31, 1996 and 1995, and its cash flows for
the nine month periods ended March 31, 1996 and 1995, and have been prepared by
the Company in accordance with generally accepted accounting principles and
pursuant to the rules and regulations of the Securities and Exchange Commission
(the "SEC"). Certain information and footnote disclosures normally included in
the financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures in these
financial statements are adequate to make the information presented not
misleading. The unaudited condensed consolidated financial statements should
be read in conjunction with the financial statements and notes thereto included
in the Company's Annual Report on Form 10-K for the year ended June 30, 1995.
In the opinion of management, the unaudited condensed consolidated financial
statements contain all adjustments (consisting only of normal recurring
accruals) necessary for a fair presentation of the Company's financial position
and results of operations.
The results of operations for the three and nine month periods ended March 31,
1996, are not necessarily indicative of the results of operations to be
expected for the entire fiscal year ending June 30, 1996.
REVENUE RECOGNITION
Revenue is recognized from licenses of software upon contract execution,
shipment of products and when the Company has performed all of its significant
contractual obligations. When a software license agreement obligates the
Company to provide more than one software module, all license revenue under the
agreement is deferred until all modules achieve general availability and are
delivered, except when the license agreement contains a specific financial
remedy in the event the unavailable module is not delivered. In such instance,
revenue is deferred in the amount attributable to the specific financial
remedy. The Company generally does not provide any post-contract customer
service or support as part of the software license fee; however, when such
services are provided for in the license agreement, an appropriate portion of
the license fee is deferred and amortized over the service or support period.
The Company's customers may enter into maintenance agreements with the Company
and such revenue is recognized ratably over the term of the agreement. Revenue
from consulting services is recognized as services are provided.
NET LOSS PER SHARE
Net loss per share is computed by dividing net loss by the weighted average
number of shares of common stock and common stock equivalents outstanding
during the period. During the quarter ended March 31, 1996, the Company issued
2,500,000 shares of restricted common stock to two officers of the Company at a
price of $3.50 per share. The shares are subject to vesting provisions and a
portion of the consideration for the shares included promissory notes secured
by the shares. The shares of common stock issuable in connection with the
repayment of the debenture which was issued in connection with the settlement
of the class action securities litigation have been treated as if they were
outstanding from July 26, 1995 to September 30, 1995. Due to the agreement to
rescind the Company's July 26, 1995 election to repay the debenture and the
reinstatement of the debenture (see "Contingencies"), the treatment for net
loss per share purposes of the shares of common stock issuable in connection
with the repayment of the debenture have been changed from being outstanding to
common stock equivalents from October 1, 1995 to March 31, 1996. However,
common stock equivalents were antidilutive for the three and nine month periods
ended March 31, 1996 and 1995, and therefore excluded from the calculation of
net loss per share for such periods.
6
<PAGE> 7
FISCAL 1996 RESTRUCTURING CHARGES
During the second quarter of fiscal 1996, the Company restructured its business
operations. As part of the restructuring, the Company discontinued the sale of
the version of its Platinum(R) SQL Enterprise product line that runs on the
Sybase/UNIX server platform. Also, the Company discontinued its direct sales
force for its Platinum SQL Enterprise product line, which resulted in the
termination of approximately 50 employees. As a result of this action, the
Company shifted the focus of its product distribution to third-party dealers or
value added resellers. The Company also expanded its field sales and corporate
marketing groups in an effort to support the distribution of its products
through its dealer channel. The Company terminated a total of approximately
100 employees as part of the second quarter restructuring, including
approximately 50 employees in its international, administrative and development
operations. During the second quarter of fiscal 1996, the Company recorded a
$5.6 million charge for the restructuring. The restructuring charge included
expenses related to work force reductions, severance payments, asset write
downs, lease termination costs and other costs.
In February 1996, the Company had another reduction in force of approximately
40 persons. This reduction in force resulted in an additional restructuring
charge of $4.2 million which was recorded in the third quarter of fiscal 1996.
The third quarter restructuring charge includes expenses related to work force
reductions, severance payments, lease termination costs, property and equipment
write-downs, reserves related to notes receivable from divestitures and other
costs.
CONTINGENCIES
On January 19, 1994, a complaint was filed against the Company and certain of
its officers and directors requesting certification of a class action, alleging
various violations of the Federal Securities Laws and claiming unspecified
compensatory damages and related fees and costs. A first amended class action
complaint was filed on April 18, 1994. On April 18, 1994, a derivative
complaint was filed against the Company and certain of its officers and
directors for violations of the Federal Securities Laws and breach of fiduciary
duties requesting unspecified compensatory and punitive damages from the
individual defendants on behalf of the Company. The Company was named as a
nominal defendant in the derivative action. A second class action suit was
filed on April 21, 1994, against the Company and certain of its officers. On
May 23, 1994, the District Court consolidated the class action complaints and
the derivative complaint into one action under the case name In Re Platinum
Software Corporation Securities Litigation, Case No. SACV-94-70-AHS, in the
U.S. District Court for the Central District of California. This consolidated
action includes three separate actions, Tauber v. Platinum Software
Corporation, Wolf v. Platinum Software Corporation, and Neomonitus v. Blackie,
et al.
In June 1994, the Company agreed to settle the litigation for $17.0 million,
$2.0 million in cash, of which $1.0 million was paid immediately, $1.0 million
was paid in December 1994, and $15.0 million was paid by issuing a redeemable,
convertible subordinated debenture in the principal amount of $15.0 million.
The debenture bore interest at eight percent and was subject to mandatory
redemption over a period of twenty-seven months following final court approval
of the settlement as follows: $5.0 million after nine months, $5.0 million
after eighteen months and $5.0 million after twenty-seven months. In lieu of
redeeming the debenture at a scheduled redemption date by making a cash
payment, the Company, at its option, could elect to repay the principal amount
of the debenture, plus interest accrued to date, by issuing common stock, or a
combination of stock and cash with the value of common stock determined at the
date of conversion. On September 26, 1994, the U.S. District Court approved
the settlement which became final thirty days thereafter.
On July 26, 1995, the Company elected to repay the first $5.0 million principal
installment, plus accrued interest thereon by issuing shares of common stock
and also elected to voluntarily repay the remaining $10.0 million principal
amount of the debenture and accrued interest thereon, by issuing shares of
common stock. The date fixed for the redemption was July 26, 1995. In
satisfaction of the above, the Company agreed to issue a total of 1,061,251
common shares in repayment of the debenture. In determining the number of
shares to be issued, the Company's common stock was valued at its average
closing price as quoted on the Nasdaq National Market for twenty of thirty days
preceding the tenth day prior to conversion, excluding the five highest and
five lowest days.
7
<PAGE> 8
Subsequent to July 26, 1995, the Company became engaged in discussions with the
attorneys for the plaintiff class regarding rescinding the July 26, 1995
election to repay the debenture and reinstating the debenture. Effective
February 28, 1996, the Company and Milberg, Weiss, Bershad, Hynes & Lerach, as
escrow agent ("the Escrow Agent") entered into an agreement in which the
election to repay the debenture by issuing shares of common stock was rescinded
and the debenture was reinstated. The terms of the debenture remain the same
except that the repayment terms were changed as follows: (i) the principal
amount of $7.5 million plus accrued interest is due on or before September 20,
1996 and (ii) the remaining principal amount of $7.5 million plus all accrued
interest is due on or before February 28, 1997. The Company and the Escrow
Agent also agreed that the Company may not elect to accelerate a mandatory
payment date on the debenture and exchange any principal amount of the
debenture by issuing shares of common stock if the election to exchange or the
computation period for the calculation of the number of shares to be issued in
the exchange falls within the period commencing fifteen (15) days prior to the
end of a fiscal quarter and ending forty-eight (48) hours following the
announcement of earnings for such quarter. In addition, the method for valuing
the Company's common stock for purposes of determining the number of shares to
be issued in an exchange was amended so that the determination of market value
shall be computed based on the average closing price during ten (10) of the
twenty (20) trading days preceding the redemption, excluding the closing price
on the five (5) highest and five (5) lowest days.
Since approximately April 1994, the Securities and Exchange Commission (the
"SEC") has been conducting an investigation relating to the circumstances
underlying the fiscal 1994 restatement of the Company's financial results and
possibly other matters. On May 9, 1996, the SEC announced that the Company,
without admitting or denying the SEC's findings, consented to the entry of an
administrative order that it cease and desist from future violations of the
books and records and internal control provisions of the Securities Exchange
Act of 1934.
The Company is subject to miscellaneous legal proceedings and other threatened
legal proceedings related to or arising out of the fiscal 1994 restructuring,
reduction in force and the discontinuance of certain client/server
applications. The Company is currently defending these proceedings and claims,
and anticipates that it will be able to resolve these matters in a manner that
will not have a material adverse effect on the Company's financial position or
results of operations.
8
<PAGE> 9
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS:
RESULTS OF OPERATIONS
Net loss for the third quarter of fiscal 1996 was $14.5 million or $0.97 per
share, as compared to a net loss of $1.9 million, or $0.15 per share, for the
comparable quarter of fiscal 1995. Net loss for the first nine months of
fiscal 1996 was $30.0 million, or $2.13 per share, as compared to a net loss of
$4.7 million or $0.37 per share for the comparable period of fiscal 1995.
Included in the results of operations for the three and nine month periods
ended March 31, 1996 was a $5.6 million restructuring charge incurred in the
second quarter of fiscal 1996 and a $4.2 million restructuring charge incurred
in the third quarter of fiscal 1996. The following summarizes the significant
aspects related to the Company's results of operations.
Revenues
Revenues were approximately $8.4 million and $13.4 million for the three months
ended March 31, 1996 and 1995, respectively, representing a decrease of 37% for
the three months ended March 31, 1996. Revenues were approximately $31.2
million and $41.3 million for the nine months ended March 31, 1996 and 1995,
respectively, representing a decrease of 25% for the nine months ended March
31, 1996. Included in revenues for the three months ended March 31, 1995, was
$1.3 million of license fee revenues that were previously deferred as part of
the fiscal 1994 restatement. Included in revenues for the nine months ended
March 31, 1996 and 1995 were $223,000 and $7.9 million, respectively, of
license fees that were previously deferred as part of the fiscal 1994
restatement. Excluding the impact of the license fee revenues deferred as part
of the fiscal 1994 restatement, revenues for the current quarter decreased $3.7
million, or 31% from the comparable quarter of fiscal 1995 and revenues for the
nine months ended March 31, 1996 decreased $2.4 million, or 7% from the
comparable nine month period of fiscal 1995.
Total license fee revenues were $3.6 million and $8.4 million for the three
months ended March 31, 1996 and 1995, respectively and $14.6 million and $25.7
million for the nine months ended March 31, 1996 and 1995, respectively.
Excluding license fee revenues that were deferred as part of the fiscal 1994
restatement, total license fee revenues were $3.6 million and $7.1 million for
the three months ended March 31, 1996 and 1995, respectively, and $14.4 million
and $17.8 million for the nine months ended March 31, 1996 and 1995,
respectively.
License fee revenues for the Company's Platinum SQL NT product line were
approximately $1.4 million and $414,000 for the three months ended March 31,
1996 and 1995, respectively, and $3.1 million and $1.1 million for the nine
months ended March 31, 1996 and 1995, respectively. The Company's Platinum SQL
NT product line was first released in the quarter ended December 31, 1994. The
Company attributes the growth in revenue from the Platinum SQL NT product in
the three and nine month periods ended March 31, 1996, in significant part, to
the increase in the number of authorized and trained Platinum SQL NT dealers.
License fee revenues for the Platinum-DOS and Platinum for Windows products
(first released in the quarter ended June 30, 1995) products were approximately
$1.5 million and $2.3 million for the three months ended March 31, 1996 and
1995, respectively, and $4.4 million and $7.1 million for the nine months ended
March 31, 1996 and 1995, respectively. The decrease in revenues resulted from
the unavailability of a complete Windows-based product suite. In December
1995, the Company released for general availability the Accounts Receivable and
Accounts Payable modules of Platinum for Windows, thus completing the suite of
core accounting software modules. The Company is scheduled to release the
remaining modules of Platinum for Windows (Order Entry, Purchase Order and
Inventory) during calendar year 1996. The Company has not yet achieved an
increase in Platinum for Windows license fee revenues over the prior quarter
principally due the unavailability of a complete suite of modules and due to
the Company's poor financial performance which caused customers to curtail
purchasing decisions or make purchases from other software vendors. See
"Certain Factors that May Affect Future Results - Disruption of Revenues." For
the remainder of fiscal 1996, the Company expects to achieve slightly increased
Platinum for Windows license fee revenues. See "Certain Factors That May
Affect Future Results - Forward Looking Statements."
Excluding license fee revenues that were deferred as part of the fiscal 1994
restatement, license fee revenues for the Company's Platinum SQL Enterprise
product line were approximately $331,000 and $3.3 million for the three months
ended March 31, 1996 and 1995, respectively, and $2.5 million and $7.0 million
for the nine months ended March 31, 1996 and 1995, respectively. In October
1995, the Company discontinued the sale of the version of its
9
<PAGE> 10
Platinum SQL Enterprise product line which runs on the Sybase/UNIX server
platform because of lack of recent license revenues (see "Notes to Unaudited
Condensed Consolidated Financial Statements - Fiscal 1996 Restructuring
Charges"). In addition, in October 1995, the Company discontinued its direct
sales force for this product. Since the end of the second quarter, the Company
hired three new senior executives. See "Certain Factors That May Affect Future
Results - Employees." Following an assessment of the Company's business
operations, the Company decided to sell a version of its client server
financial software product, Platinum SQL NT, which will run on the Sybase/UNIX
server platform. In addition, the Company has decided to start selling its
client server financial software product, Platinum SQL NT, through a direct
sales force and has commenced rebuilding a direct sales force which is intended
to be complementary to its third party dealer channel.
International license fee revenues decreased to $1.6 million for the three
months ended March 31, 1996 from $3.1 million for the three months ended March
31, 1995 and decreased to $4.7 million for the nine months ended March 31,
1996 from $7.3 million for the nine months ended March 31, 1995. The decreases
resulted principally from the discontinuance of the sale of the version of its
Platinum SQL Enterprise product line which runs on the Sybase/UNIX server
platform in international markets and the elimination of the direct sales force
for the Platinum SQL Enterprise product.
Consulting and professional services revenues decreased 20% from $2.7 million
for the three months ended March 31, 1995 to $2.2 million for the three months
ended March 31, 1996. The decrease was primarily due to the discontinuance of
the direct sales force and redeployment of consulting personnel to train and
support the Company's Platinum SQL NT VAR channel. Excluding the revenues of
the custom software development division, which was sold effective August 31,
1994, consulting and professional services revenues increased from $8.2 million
for the nine months ended March 31, 1995 to $8.3 million for the nine months
ended March 31, 1996. The increase was primarily attributable to an increase
in software implementation services which resulted from consulting services
sold as part of the sale of Platinum SQL Enterprise products. As a result of
the rebuilding of the direct sales force, the Company expects that consulting
and professional services revenues will increase in conjunction with the growth
of its direct sales force. See "Certain Factors That May Affect Future Results
- - Forward Looking Statements."
Support services revenues increased 19% from revenues of $2.2 million for the
three months ended March 31, 1995 to $2.6 million for the three months ended
March 31, 1996 and increased 27% from revenues of $6.1 million for the nine
months ended March 31, 1995 to $7.8 million for the nine months ended March 31.
1996. The increase was primarily attributable to an overall rise in the
installed base of end-users.
Gross Profit
Gross profit decreased as a percentage of revenues from 63% for the three
months ended March 31, 1995 to 39% for the three months ended March 31, 1996.
Gross profit decreased as a percentage of revenues from 64% for the nine months
ended March 31, 1995 to 50% for the nine months ended March 31, 1996. The
decrease in gross profit percentage in both periods is primarily due to lower
license fee revenues as a percentage of total revenues, which have higher
margins than consulting and professional services and support services
revenues.
Operating Expenses
Excluding the $4.2 million fiscal 1996 third quarter restructuring charge,
total operating expenses increased from $10.4 million for the three months
ended March 31, 1995 to $13.4 million for the three months ended March 31,
1996. Excluding the $5.6 million fiscal 1996 second quarter restructuring
charge and the $4.2 million fiscal 1996 third quarter restructuring charge,
total operating expenses increased from $31.1 million for the nine months ended
March 31, 1995 to $35.5 million for the nine months ended March 31, 1996. The
increases were due to the provision of additional reserves for accounts
receivable arising from Platinum SQL NT sales to third party dealers,
relocation costs associated with the hiring of new senior management
executives, additional reserves provided for estimated legal settlements
related to customer disputes and a write-down of property and equipment. Such
increases were offset in part by cost savings achieved from the termination of
approximately 100 employees during the second quarter of fiscal 1996 and 40
employees during the third quarter of fiscal 1996. Total operating expenses as
a percentage of revenues (excluding the fiscal 1996 third quarter restructuring
charge) were 160% and 78% for the three months ended March 31, 1996 and 1995,
respectively and 114% and 76% (excluding the fiscal 1996 second and third
quarter restructuring charges) for the nine months ended March 31, 1996 and
1995, respectively.
10
<PAGE> 11
Sales and marketing expenses were approximately $4.7 million and $5.1 million
for the three months ended March 31, 1996 and 1995, respectively, or
approximately 56% and 38% of total revenues. Sales and marketing expenses were
approximately $15.4 million and $13.9 million for the nine months ended March
31, 1996 and 1995, respectively, or approximately 49% and 34% of total
revenues. The increase during the nine months ended March 31, 1996 was
primarily attributable to the increase during fiscal 1995 and the first quarter
of fiscal 1996 in resources necessary to support the direct sales effort for
the Platinum SQL Enterprise product worldwide which was offset in part by
reduced employee costs following the termination of the same direct sales force
in October 1995. The decrease during the three months ended March 31, 1996 was
due to the cost savings achieved from the termination of the direct sales force
referenced above. The Company is in the process of re-establishing a direct
sales force, and, as a result, the Company expects the dollar amount of sales
and marketing expenses to increase over the next few quarters. See "Certain
Factors That May Affect Future Results - Forward Looking Statements."
General and administrative expenses were approximately $5.7 million and
$940,000 for the three months ended March 31, 1996 and 1995, respectively, or
approximately 68% and 7% of total revenues. General and administrative expenses
were approximately $9.0 million and $3.9 million for the nine months ended
March 31, 1996 and 1995, respectively, or approximately 29% and 10% of total
revenues. The increases were due to the provision of additional reserves for
accounts receivable arising from Platinum SQL NT sales to third party dealers,
relocation costs associated with the hiring of new senior management
executives, additional reserves provided for estimated legal settlements
related to customer disputes and a write-down of property and equipment. Such
increases were offset in part by cost savings achieved from the termination of
employees during the second and third quarter restructurings.
Software development expenditures were approximately $3.0 million and $4.4
million for the three months ended March 31, 1996 and 1995, respectively,
before capitalization of software costs of approximately $0 and $87,000.
Software development expenditures were approximately $11.5 million and $13.5
million for the nine months ended March 31, 1996 and 1995, respectively, before
capitalization of software costs of approximately $306,000 and $195,000. The
decreases in the amount of software development expenses was due to personnel
cuts and other cost savings in the fiscal 1996 second and third quarter
restructurings. Upon the release for general availability of the Company's
software products, the Company amortizes capitalized software development costs
over a five year period. Such amortization is included in cost of revenues. The
percentage of capitalized software development costs to total software
development costs was 0% for the three months ended March 31, 1996 and 2% for
the three months ended March 31, 1995. The percentage of capitalized software
development costs to total software development costs was 3% for the nine
months ended March 31, 1996 and 1% for the nine months ended March 31, 1995.
During the nine months ended March 31, 1996, costs were capitalized for the
Platinum for Windows Accounts Payable and Accounts Receivable modules and the
Fixed Asset module for Platinum SQL NT, whereas for the nine months ended March
31, 1995, costs were capitalized for the Platinum for Windows General Ledger
module and the Purchase Order module of Platinum SQL NT. The Company expects
that gross development expenditures should decline for the fourth quarter of
fiscal 1996 as compared to the prior quarter. See "Certain Factors That May
Affect Future Results - Forward Looking Statements."
Fiscal 1996 Restructuring Charges
During the second quarter of fiscal 1996 the Company restructured its business
operations. The restructuring included the cessation of licensing of the
version of the Company's Platinum SQL Enterprise product that runs on the
Sybase/UNIX server platform as well as the elimination of the Company's direct
sales force for its Platinum SQL Enterprise product line. The Company
estimates that expense savings from the second quarter 1996 restructuring, on a
quarterly basis, were $2.8 million. In February 1996, the Company had another
reduction in force of approximately 40 positions. This reduction in force
resulted in an additional restructuring charge of $4.2 million which was
recorded in the third quarter of fiscal 1996. Such charge includes expenses
related to work force reductions, severance costs, lease termination costs,
property and equipment write-downs, reserves related to notes receivable from
divestitures and other costs. The Company estimates that expense savings from
the third quarter 1996 restructuring, on a quarterly basis, to be approximately
$900,000.
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Other Income (Expense)
Other income (expense) for the three months ended March 31, 1996 and 1995, was
approximately ($186,000) and $31,000, respectively. For the nine months ended
March 31, 1996 and 1995, other income (expense) was approximately ($146,000)
and $159,000, respectively. The increases in other expense was principally due
the reduced interest income earned on the Company's investments due to lower
cash levels.
Provision for Income Taxes
The provision for income taxes was approximately $0 and $8,000 for the three
months ended March 31, 1996 and 1995, respectively, and $0 and $20,000 for the
nine months ended March 31, 1996 and 1995, respectively. The effective tax
rates during these periods was approximately 0% for each period presented. The
effective tax rate was lower than the statutory federal income tax rate of 34%,
primarily due to the inability to record benefits from current net operating
losses. The Company's federal net operating loss carry forward was
approximately $40,000,000 at June 30, 1995.
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FINANCIAL CONDITION
Liquidity and Capital Resources
As of March 31, 1996, the Company's principal sources of liquidity included
cash and cash equivalents of approximately $14.3 million. Cash and cash
equivalents decreased by approximately $11.9 million over the June 30, 1995
balance primarily due to the cash used in operations. Working capital was
$24.3 million at June 30, 1995 versus a deficit of $12.2 million at March 31,
1996. This decrease is primarily due to the cash used in operations and the
reinstatement on the balance sheet of the debenture issued in settlement of
certain class action litigation, $16.7 million of which is classified as a
current liability. See "Notes to Unaudited Condensed Consolidated Financial
Statements - Contingencies."
The Company's operations used approximately $11.2 million of cash and cash
equivalents in the nine months ended March 31, 1996. Included in the use of
cash and cash equivalents for operations was the investment of approximately
$11.5 million in software development expenditures.
As part of the sale of certain Company product lines and divisions in the
fiscal 1994 restructuring, the Company received payments on notes receivable
from divestitures of approximately $378,000 during the nine months ended March
31, 1996. The Company also paid approximately $975,000 in severance, lease and
other costs related to the fiscal 1994 restructuring, $1,034,000 in severance,
lease and other costs related to the second quarter fiscal 1996 restructuring
and $178,000 in severance, lease and other costs related to the third quarter
fiscal 1996 restructuring.
On July 26, 1995, the Company elected to repay the $15.0 million redeemable
convertible subordinated debenture issued in connection with the settlement of
class action securities litigation, including all accrued interest thereon, by
issuing 1,061,251 shares of common stock. Subsequent to July 26, 1995, the
Company became engaged in discussions with the attorneys for the plaintiff
class regarding rescinding the July 26, 1995 election to repay the debenture
and reinstating the debenture. Effective February 28, 1996, the Company
entered into an agreement in which the election to repay the debenture by
issuing shares of common stock was rescinded and the debenture was reinstated.
See "Notes to Unaudited Condensed Consolidated Financials Statements -
Contingencies."
On May 26, 1995 and September 22, 1994, the Company completed private
placements of Preferred Stock totaling $18.2 million and $13.8 million,
respectively. Such proceeds have been utilized to fund operations,
restructuring and software development requirements and capital expenditure
commitments.
Since May 1994, the Company has taken steps to significantly reduce its
operating expenses, through several reductions in work force, as well as the
disposition of several business units that were not within the Company's core
financial software application business. From May 1994 through November 1994,
the Company reduced its force by approximately 300 people, and in October 1995,
the Company again reduced its force by approximately 100 people in the sales,
international, development and administrative areas. In February 1996, the
Company reduced its work force by approximately 40 positions. See "Notes to
Unaudited Condensed Consolidated Financial Statements - Fiscal 1996
Restructuring Charges." If the Company is not successful in achieving targeted
revenues, the Company may be required to take additional actions to align its
operating expenses with its reduced revenues, such as further reductions in
work force or closing or sale of business units.
The Company has continued to experience negative operating cash flows. The
Company expects to incur additional cash expenditures related to the fiscal
1994 restructuring and the second and third quarter fiscal 1996 restructurings.
Accordingly, the Company is dependent upon its ability to generate cash flow
from license fees and other operating revenues, as well as the collection of
its outstanding accounts receivable to maintain current liquidity levels.
However, the Company believes that its current cash reserves, together with
existing sources of liquidity, will satisfy the Company's projected short-term
liquidity and other cash requirements for the next 12 months.
CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS
Liquidity. The Company's cash and cash equivalents decreased from $26.3
million at June 30, 1995 to $14.3 million at March 31, 1996, principally due to
the use of cash in operations. Although, the Company's fiscal 1994
restructuring is substantially complete, there will be additional cash outlays
in connection with discontinued products
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and lease terminations, estimated to be approximately $344,000. In addition,
there will be further cash outlays estimated at approximately $1.4 million in
connection with the second quarter fiscal 1996 restructuring and approximately
$671,000 in connection with the third quarter fiscal 1996 restructuring. The
Company has taken steps to significantly reduce its operating expenses, through
several reductions in work force, as well as the disposition of several
business units that are not within the Company's core financial software
application business. However, the Company has continued to experience
negative cash flow from operations. If the Company is not successful in
achieving targeted revenues, the Company may be required to take further
actions to align its operating expenses with its reduced revenues, such as
further reductions in work force or the closing or sale of business units.
Disruption of Revenues. The negative events that have occurred at the Company
since April 1994, including the fiscal 1994 restatement of the Company's
financial statements for prior periods, an investigation by the SEC relating to
the circumstances underlying the restatement and the securities class action
lawsuit discussed in "Part II, Item 1 -- Legal Proceedings," several reductions
in force, the closing of business units and poor financial performance, all
have caused potential customers to curtail purchasing decisions or make
purchases from other software vendors and have, accordingly, adversely impacted
the Company's ability to generate revenue. Although, the Company has settled
the securities class action, and raised additional equity financing, the
negative effects on revenue from the negative events at the Company have
continued. There can be no assurance that the difficulty in closing software
licenses will not continue in the future or that authorized dealers or
authorized consultants will continue to represent the Company's products and,
accordingly, revenues may be significantly impacted in the future.
Fluctuations in Quarterly Operating Results. The Company's operating results
can vary substantially from period-to-period. The Company's quarterly
operating results fluctuate in part due to the number and timing of new product
introductions and enhancements, discontinuance of product lines, the timing of
product orders and shipments, recognition of deferred revenue upon the
Company's completion of its contractual obligations, marketing and product
development expenditures and promotional programs. A significant portion of
the Company's quarterly revenues are recorded in the final month of the
quarter, with a concentration of such revenues in the final 10 business days of
that month. Also, the timing of the closing of direct sales in the latter part
of each quarter increases the risk of quarter-to-quarter fluctuations.
Accordingly, the Company believes that period-to-period comparisons of its
results of operations are not necessarily meaningful and should not be relied
upon as an indication of future performance. If revenues do not meet the
Company's expectations in any given quarter, operating results may be adversely
affected. There can be no assurance that the Company will be profitable in any
quarter or at all.
Dependence on Distribution Channels. As part of the second quarter fiscal 1996
restructuring, the Company terminated its direct sales force for its Platinum
SQL Enterprise product line and decided to distribute all of its products
exclusively through third-party dealers and value added resellers. The
Company's distribution channel includes distributors, resellers, software
consultants and systems integrators, and Authorized Consultants, which consist
primarily of professional firms. Although no one of these distribution channel
members is responsible for any material amount of the Company's license fees,
the Company's results of operations could be adversely affected if significant
numbers of its Authorized Dealers or Authorized Consultants were to cease
distributing or recommending the Company's products or were to choose to
emphasize competing products. Generally, the Company's agreements with its
Authorized Dealers and Authorized Consultants do not require them to
exclusively offer or recommend the Company's products and may be terminated by
either party without cause.
Since the end of the second quarter, the Company hired three new senior
executives. See "Certain Factors That May Affect Future Results - Employees."
Following an assessment of the Company's business operations, the Company has
decided to reestablish a direct sales force for its client server financial
software, Platinum SQL NT. There can be no assurance that the direct sales
force will be successful in generating revenue or that it will not lead to
conflicts with the Company's dealer channel.
The Company's Platinum SQL NT product was first introduced on a limited basis
to the network of Authorized Dealers during the quarter ended December 31,
1994. Platinum SQL NT, a client/server financial software application designed
to run exclusively on Microsoft Windows NT and Microsoft SQL server, is a more
technically complex product than Platinum for Windows and Platinum-DOS and
requires additional skill and training to successfully implement. The Company
presently has over 70 authorized Platinum SQL NT dealers who have completed
training and is actively seeking additional skilled Authorized Dealers to sell
Platinum SQL NT. Delays in training Authorized Dealers or in recruiting
additional skilled Authorized Dealers could adversely impact the
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<PAGE> 15
Company's ability to generate license revenues from its Platinum SQL NT product
line. The Company is emphasizing the enhancement and training of its dealer
channel with a particular focus on Platinum SQL NT dealers by using its
professional services personnel to work closely with such dealers. While
recruiting new Platinum SQL NT dealers, the Company has generally provided 90
day payment terms, which has resulted in the dealers placing orders of Platinum
SQL NT for stock in addition to orders for immediate resale to customers. The
Company ceased the policy of granting 90 day terms in the quarter ended
December 31, 1995. The Company has commenced rebuilding a direct sales force
which is intended to complement the Company's indirect distribution channels
for the Company's Platinum SQL NT product. There can be no assurance that the
Company's direct or indirect sales efforts will be successful.
Dependence on Platinum SQL Enterprise and Platinum SQL NT Product Lines.
Platinum SQL Enterprise, introduced in June 1992, and Platinum SQL NT,
introduced in December 1994, are relatively new integrated financial and
management information software products for use on client/server computing
systems. It is common for complex programs such as Platinum SQL Enterprise and
Platinum SQL NT to contain undetected errors when first released, which are
discovered only after the product has been used with many different computer
systems and in varying applications. The Company has been informed by
customers of certain errors with respect to its Platinum SQL Enterprise and
Platinum SQL NT products which the Company is addressing. The inability of the
Company to correct the errors, or any significant delay in correcting the
errors in Platinum SQL Enterprise and Platinum SQL NT will have a material
adverse effect on the Company's results of operations. In addition, there can
be no assurance that significant technical problems will not be discovered, or
if discovered, corrected in a timely manner. Technical problems with the
current release of the database platforms which Platinum SQL Enterprise and
Platinum SQL NT operate could impact sales of these Company products and any
significant technical problems could have a material adverse effect on the
Company's results of operations.
Employees. The Company recently appointed a new President and Chief Executive
Officer, a new Senior Vice President of Marketing and Business Development, a
new Senior Vice President of Worldwide Field Operations, a new Vice President
of Sales, a new Vice President of Development and a new Vice President of
Marketing. In addition, the Company reduced staff by approximately 100 in
October 1995, and reduced staff by approximately 40 in February 1996. The
Company's future operating results will depend on its ability to assimilate the
changes in senior management and reductions in staff, and its ability to retain
skilled employees.
New Product Introductions. The Company's future success will depend upon its
ability to develop and successfully introduce new products and to enhance its
current products on a timely basis as well as increasing customer acceptance of
its existing products. The Company has two principal product lines, Platinum
for Windows (including Platinum-DOS) and Platinum SQL NT. The Company
continues to provide maintenance and support services for its Platinum SQL
Enterprise product for existing customers. Platinum SQL NT was released in the
quarter ended December 31, 1994 and the core accounting modules of Platinum for
Windows were released during the quarters ended June 30, 1995 and December 31,
1995. Additional modules of Platinum for Windows are scheduled for release in
calendar 1996. In the past, the Company has occasionally experienced delays in
the introduction of new products and product enhancements. There can be no
assurance that the Company will be successful in developing and marketing these
new products or product enhancements on a timely basis or that the Company will
not experience significant delays in introducing the products in the future,
which could have a material adverse effect on the Company's results of
operations. In addition, there can be no assurance that new products or
product enhancements developed by the Company will achieve market acceptance.
Dependence on Client/Server Environment. The Company's development tools,
application products and consulting and education services are intended to help
organizations build, customize or deploy solutions that operate in a
client/server computing environment. The client/server market is relatively
new and there can be no assurance that organizations will continue to adopt
client/server environments or that customers of the Company that have begun the
migration to a client/server environment will broadly implement this model of
computing. The Company's future financial performance will depend in large
part on continued growth in the market for client/server software applications
and related services, which in turn will depend in part on the growth in the
number of organizations implementing client/server computing environments and
the number of applications developed for use in those environments. There can
be no assurance that these markets will continue to grow or that the Company
will be able to respond effectively to the evolving requirements of these
markets. If the market for client/server application products and services
does not grow in the future, or grows more slowly than the Company anticipates,
or if the
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<PAGE> 16
Company fails to respond effectively to evolving requirements of this market,
the Company's business, financial condition and results of operations would be
materially adversely affected.
Competition. The financial computer software industry is intensely competitive
and rapidly changing. A number of companies offer products similar to the
Company's products that target the same markets. Some of the Company's
existing competitors, as well as a number of new potential competitors, have
larger technical staffs, more established and larger marketing and sales
organizations and significantly greater financial resources than the Company.
There can be no assurance that competitors will not develop products that are
superior to the Company's products or that achieve greater market acceptance.
The Company's future success will depend significantly upon its ability to
increase its share of its target markets and to license additional products and
product enhancements to existing customers. The adverse publicity relating to
the restatement of previously issued financial results has resulted in
increased competitive challenges, which the Company expects will continue. In
addition, adverse publicity relative to the Company's restructuring efforts,
downsizing and poor financial results has resulted in further competitive
challenges. There can be no assurance that the Company will be able to compete
successfully or that competition will not have a material adverse effect on the
Company's results of operations.
Exposure to Rapid Technological Change. The market for the Company's financial
accounting software products is characterized by rapid technological advances,
changes in end-user requirements, frequent new product introductions and
enhancements, and evolving industry standards. The introduction of products
embodying new technologies and the emergence of new industry standards can
render the Company's existing products and products under development obsolete
and unmarketable. The Company's future success will depend upon its ability to
address the increasingly sophisticated needs of its customers by enhancing its
current products and by developing and introducing on a timely basis new
products that keep pace with technological developments and emerging industry
standards, respond to evolving end user requirements and achieve market
acceptance. Any failure by the Company to anticipate or adequately respond to
technological developments or end-user requirements, or any significant delays
in product development or introduction, could result in a loss of
competitiveness or reduced revenues. If the Company is unable, for
technological or any other reason, to develop, introduce and sell its products
in a timely manner, the Company's business, operating results and financial
condition would be materially adversely affected. From time to time, the
Company or its present or future competitors may announce new products,
capabilities or technologies that have the potential to replace or shorten the
life cycles of the Company's existing products. There can be no assurance that
announcements of currently planned or other new products will not cause
customers to delay or alter their purchasing decisions in anticipation of such
products, which could have a material adverse effect on the Company's business,
operating results and financial condition.
Shares Eligible for Future Sale. As of April 30, 1996, the Company had
16,479,261 shares of common stock outstanding. There are presently 2,490,000
shares of Series B Preferred Stock and 231,598 shares of Series C Preferred
Stock outstanding. Each share of Series B Preferred Stock is convertible into
one share of common stock, as adjusted for stock dividends, combinations or
splits at the option of the holder. Each share of Series C Preferred Stock is
convertible into ten shares of common stock, as adjusted for stock dividends,
combinations or splits at the option of the holder. As a result, the Series B
and Series C Preferred Stock are convertible into 2,490,000 and 2,315,980
shares of common stock, respectively. The holders of the Series B and Series C
Preferred Stock have the right to cause the Company to register the sale of the
shares of common stock issuable upon conversion of the Series B and Series C
Preferred Stock. In addition, the Company, at its option, may issue shares of
common stock in repayment of the debenture it issued as part of the settlement
of certain class action securities litigation filed against the Company. See
"Part II, Item 1 -- Legal Proceedings." These shares will be freely tradable.
Also, the Company has a substantial number of options or shares issuable to
employees under employee option plans. In addition, certain third parties hold
warrants to purchase an aggregate of 120,000 shares of common stock. The
holders of these warrants have the right to require the Company to register the
sale of the shares of common stock issuable upon exercise of the warrants. As
a result, a substantial number of shares of common stock will be eligible for
sale in the public market at various times in the future. Sales of substantial
amounts of such shares could adversely affect the market price of the Company's
common stock.
Forward Looking Statements. This quarterly report contains certain forward
looking statements that involve risks and uncertainties. Certain risks and
uncertainties which may impact the accuracy of the forward looking statements
with respect to revenues, expenses and operating results include, without
limitation, the impact of competitive products, pricing, the discovery of
undetected errors or software bugs in the Company's products, subsequent
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<PAGE> 17
changes in business strategy or plan, the ability of the Company to overcome
recent negative events such as restructurings and reductions in force, and the
ability of the Company to recruit and train dealers for the Platinum SQL NT
product. Certain other risks and uncertainties are described under "Certain
Factors That May Affect Future Results."
Because of these and other factors affecting the Company's operating results,
past financial performance should not be considered an indicator of future
performance, and investors should not use historical trends to anticipate
results or trends in future periods.
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PART II
OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS:
On January 19, 1994, a complaint was filed against the Company and certain of
its officers and directors requesting certification of a class action, alleging
various violations of the Federal Securities Laws and claiming unspecified
compensatory damages and related fees and costs. A first amended class action
complaint was filed on April 18, 1994. On April 18, 1994, a derivative
complaint was filed against the Company and certain of its officers and
directors for violations of the Federal Securities Laws and breach of fiduciary
duties requesting unspecified compensatory and punitive damages from the
individual defendants on behalf of the Company. The Company was named as a
nominal defendant in the derivative action. A second class action suit was
filed on April 21, 1994, against the Company and certain of its officers. On
May 23, 1994, the District Court consolidated the class action complaints and
the derivative complaint into one action under the case name In Re Platinum
Software Corporation Securities Litigation, Case No. SACV-94-70-AHS, in the
U.S. District Court for the Central District of California. This consolidated
action includes three separate actions, Tauber v. Platinum Software
Corporation, Wolf v. Platinum Software Corporation, and Neomonitus v. Blackie,
et al.
In June 1994, the Company agreed to settle the litigation for $17.0 million,
$2.0 million in cash, of which $1.0 million was paid immediately, $1.0 million
was paid in December 1994, and $15.0 million was paid by issuing a redeemable,
convertible subordinated debenture in the principal amount of $15.0 million.
The debenture bore interest at eight percent and was subject to mandatory
redemption over a period of twenty-seven months following final court approval
of the settlement as follows: $5.0 million after nine months, $5.0 million
after eighteen months and $5.0 million after twenty-seven months. In lieu of
redeeming the debenture at a scheduled redemption date by making a cash
payment, the Company, at its option, could elect to repay the principal amount
of the debenture, plus interest accrued to date, by issuing common stock, or a
combination of stock and cash with the value of common stock determined at the
date of conversion. On September 26, 1994, the U.S. District Court approved
the settlement which became final thirty days thereafter.
On July 26, 1995, the Company elected to repay the first $5.0 million principal
installment, plus accrued interest thereon by issuing shares of common stock
and also elected to voluntarily repay the remaining $10.0 million principal
amount of the debenture and accrued interest thereon, by issuing shares of
common stock. The date fixed for the redemption was July 26, 1995. In
satisfaction of the above, the Company agreed to issue a total of 1,061,251
common shares in repayment of the debenture. In determining the number of
shares to be issued, the Company's common stock was valued at its average
closing price as quoted on the Nasdaq National Market for twenty of thirty days
preceding the tenth day prior to conversion, excluding the five highest and
five lowest days.
Subsequent to July 26, 1995, the Company became engaged in discussions with the
attorneys for the plaintiff class regarding rescinding the July 26, 1995
election to repay the debenture and reinstating the debenture. Effective
February 28, 1996, the Company and Milberg, Weiss, Bershad, Hynes & Lerach, as
escrow agent ("the Escrow Agent") entered into an agreement in which the
election to repay the debenture by issuing shares of common stock was rescinded
and the debenture was reinstated. The terms of the debenture remain the same
except that the repayment terms were changed as follows: (i) the principal
amount of $7.5 million plus accrued interest is due on or before September 20,
1996 and (ii) the remaining principal amount of $7.5 million plus all accrued
interest is due on or before February 28, 1997. The Company and the Escrow
Agent also agreed that the Company may not elect to accelerate a mandatory
payment date on the debenture and exchange any principal amount of the
debenture by issuing shares of common stock if the election to exchange or the
computation period for the calculation of the number of shares to be issued in
the exchange falls within the period commencing fifteen (15) days prior to the
end of a fiscal quarter and ending forty-eight (48) hours following the
announcement of earnings for such quarter. In addition, the method for valuing
the Company's common stock for purposes of determining the number of shares to
be issued in an exchange was amended so that the determination of market value
shall be computed based on the average closing price during ten (10) of the
twenty (20) trading days preceding the redemption, excluding the closing price
on the five (5) highest and five (5) lowest days.
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Since approximately April 1994, the Securities and Exchange Commission (the
"SEC") has been conducting an investigation relating to the circumstances
underlying the fiscal 1994 restatement of the Company's financial results and
possibly other matters. On May 9, 1996, the SEC announced that the Company,
without admitting or denying the SEC's findings, consented to the entry of an
administrative order that it cease and desist from future violations of the
books and records and internal control provisions of the Securities Exchange
Act of 1934.
The Company is subject to miscellaneous legal proceedings and other threatened
legal proceedings related to or arising out of the fiscal 1994 restructuring,
reduction in force and the discontinuance of certain client/server
applications. The Company is currently defending these proceedings and claims,
and anticipates that it will be able to resolve these matters in a manner that
will not have a material adverse effect on the Company's financial position or
results of operations.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K:
(a) Exhibits
10.33 Employment Offer letter with L. George Klaus dated
February 7, 1996.
10.34 Restricted Stock Purchase Agreement between the
Company and L. George Klaus dated as of February 7,
1996.
10.35 Employment Offer letter with William L. Pieser dated
February 7, 1996.
10.36 Restricted Stock Purchase Agreement between the
Company and William L. Pieser dated as of February 7,
1996.
10.37 Agreement between the Company and Michael J. Simmons
dated February 8, 1996.
10.38 Agreement between the Company and Carmelo J. Santoro
dated February 8, 1996.
10.39 Agreement between the Company and Bruce C. Edwards
dated February 8, 1996.
10.40 Agreement of Purchase and Sale of Assets dated as of
February 29, 1996 between Strategic Advantage
Software Corporation, the Company, Cypher Business
Systems, Ltd. and Slatershelfco 173, Ltd. (excluding
disclosure schedules).
10.41 Agreement of Purchase and Sale of Assets dated as of
September 30, 1995 between Platinum Treasury Systems,
plc and the Company (excluding disclosure schedules).
(b) Reports on Form 8-K
The Company filed a Current Report on Form 8-K dated February 6,
1996 to report under Item 5, Other Information, its results for
the second fiscal quarter ending December 31, 1995. The Company
also filed a Current Report on Form 8-K dated February 12, 1996 to
report under Item 5, Other Information, the appointment of L.
George Klaus as President and Chief Executive Officer. In
addition, the Company filed a Current Report on Form 8-K dated
March 15, 1996 to report under Item 5, Other Information, its
agreement to reinstate the $15.0 million principal amount of the
debenture issued in settlement of certain class action securities
litigation.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PLATINUM SOFTWARE CORPORATION
-----------------------------
(Registrant)
Date: May 16, 1996 /s/ Michael J. Simmons
-----------------------------
Michael J. Simmons
Chief Financial Officer
(Principal Financial Officer
and Duly Authorized Officer)
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EXHIBIT 10.33
February 7, 1996
Mr. L. George Klaus
395 Golden Hills Drive
Portola Valley, CA 94028
Re: Offer of Employment
Dear George:
I am happy to extend you the following offer of employment at Platinum Software
Corporation (the "Company").
1. Title. Your position will be President, Chief Executive Officer and Director
and you will report to the Board of Directors of the Company. You will be
headquartered in the Company's Irvine, California offices. Subject to the
authority of the Board, you shall have full and complete authority to run the
Company's business and to conduct its operations, including, without limitation
the authority, in accordance with the Company's then existing personnel and
other policies, to employ and discharge all employees of the Company, and you
shall perform, on behalf of the Company, all duties and services as are
customarily incident to these offices. The Company acknowledges that you serve
as a consultant to or member of the Board of Directors of a number of other
companies and that you shall perform such duties as required by those positions
for so long as they do not conflict materially with your performance of services
hereunder.
2. Base Salary. Your base salary will be $500,000 per year paid semi-monthly
in accordance with the Company's normal payroll policies and subject to standard
withholding.
3. Annual Bonus. You will receive an annual bonus on a fiscal year basis of up
to $250,000 based on a performance plan to be agreed upon between you and the
Board of Directors. For fiscal 1996 you will receive a bonus payable on July 15,
1996 equal to $250,000 multiplied by the fraction, the numerator of which is the
number of days you were employed by the Company during its 1996 fiscal year and
the denominator of which is 365. The Company's fiscal year ends June 30, 1996.
<PAGE> 2
February 7, 1996
Mr. L. George Klaus
Page 2
4. Additional Incentive Bonus. You will be eligible to receive an
annual "additional incentive bonus" of up to $250,000. The performance criteria
for this bonus will be agreed upon and determined by you and the Board of
Directors before August 1, 1996. This bonus will begin with the Company's 1997
fiscal year.
5. Restricted Stock. The Company offers you the right to purchase
2,000,000 shares of the Company's common stock ("Restricted Stock") on the
following terms:
(a) The purchase price of the Restricted Stock will be the closing
price of the Company's Common Stock on the NASDAQ National Market System on the
day before your start date and the purchase will take place on such date.
(b) In order to fund the purchase, the Company will provide you a loan
in the amount of the purchase price. The loan will be evidenced by a recourse
promissory note which will bear simple interest at a rate of 6% per annum or
such higher rate of interest as is sufficient to avoid imputed income under
Sections 483, 1274 or 7872 of the Internal Revenue Code of 1986, as amended.
Interest may be paid annually by you, deferred until the stock is sold, or
forgiven by the Board of Directors, at its sole discretion. The principal on the
loan will be due on a pro rata basis when the Restricted Stock is sold by you or
on the fifth anniversary of the promissory note, whichever occurs first. The
promissory note will be secured by a pledge of the Restricted Stock and shall be
recourse only to the extent of any deficiency in the value of the Common Stock.
If your employment is terminated for cause (as defined below) the repayment of
the promissory note shall be accelerated.
(c) The Company will retain the right to repurchase the Restricted
Stock at a price equal to the initial purchase price. The repurchase rights with
respect to 1,400,000 shares of Restricted Stock will lapse according to the
following schedule:
(i) 350,000 shares immediately upon the date of
commencement of your employment.
(ii) 29,167 shares on the first day of each month
beginning on the date of commencement of your
employment and continuing for each month thereafter
for a period of 36 months.
The Company's repurchase rights with respect to the remaining
600,000 shares of Restricted Stock will lapse according to the following
schedule assuming the Company's fiscal year ending June 30, 1996 is the Base
Year:
(i) 100,000 shares if FY 1997 operating revenues exceed
the Base Year revenues by 25% and 100,000 shares if
the Company's profit
<PAGE> 3
February 7, 1996
Mr. L. George Klaus
Page 3
after taxes for FY 1997 is equal to or exceeds 5% of
FY 1997 operating revenues.
(ii) 100,000 shares if FY 1998 operating revenues exceed
the Base Year revenues by 50% and 100,000 shares if
the Company's profit after taxes for FY 1998 is equal
to or exceeds 10% of FY 1998 operating revenues.
(iii) 100,000 shares if FY 1999 operating revenues exceed
the Base Year revenues by 75% and 100,000 Shares if
the Company's profit after taxes for FY 1999 is equal
to or exceeds 15% of FY 1999 operating revenues.
(d) All of the Company's repurchase rights with respect to any of the
Restricted Stock under this paragraph 5 shall lapse immediately upon a Change of
Control. For purposes of this section, a Change in Control shall mean (i) the
sale, lease, conveyance or other disposition of all or substantially all of the
Company's assets as an entirety or substantially as an entirety to any person,
entity or group of persons acting in concert, (ii) any transaction or series of
transactions that results in, or that is in connection with, any person, entity
or group acting in concert (other than existing affiliates of the Company),
acquiring "beneficial ownership" (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934), directly or indirectly, of such percentage of the
aggregate voting power of all classes of voting equity stock of the Company as
shall exceed fifty percent (50%) of such aggregate voting power, (iii) the
stockholders of the Company approve a merger or consolidation of the Company
with any other corporation, other than a merger or consolidation which would
result in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at least fifty percent
(50%) of the total voting power represented by the voting securities of the
Company or such surviving entity outstanding immediately after such merger or
consolidation; or (iv) a liquidation of the Company. Upon a Change of Control,
you may elect, in your sole discretion, not to have any portion of such
restrictions lapse in order to avoid any "parachute payment" under Section
280G(b)(2) of the Internal Revenue Code of 1986, as amended.
(e) If the Company shall terminate your employment agreement without
"cause" or if a "constructive termination" has occurred or if you die or become
disabled, the Company shall (i) pay you all compensation (including the base
salary and any bonus that would have been payable for the next twelve months
under paragraph 4 hereof) and benefits due you to the date of termination and
for a period of twelve months following the date of such termination and (ii)
cancel the Company's repurchase rights on the Restricted Stock for shares that
otherwise could be repurchased by the Company with
<PAGE> 4
February 7, 1996
Mr. L. George Klaus
Page 4
respect to the twelve months following your termination such that the Restricted
Stock shall continue to vest for such twelve-month period. During such period,
you shall continue to be entitled to participate in the Company's employee
benefits plans or arrangements (as set forth in Section 4 above) on the same
basis as if you were an employee. For purposes of this Agreement, disabled shall
mean your inability due to any physical or mental condition to perform a
substantial portion of your duties as President and CEO for 24 or more
consecutive weeks.
(f) For the purposes of this paragraph 5: (i) "cause" shall mean (A)
willful and repeated failure to comply with the lawful directions of the
Company's Board of Directors, (B) gross negligence or willful misconduct in the
performance of duties to the Company and/or its subsidiaries, (C) commission of
any act of fraud with respect to the Company and/or its subsidiaries, (D)
conviction of a felony or a crime involving moral turpitude causing material
harm to the standing and reputation of the Company and/or its subsidiaries, in
each case as determined in good faith by the Company's Board of Directors; and
(ii) "constructive termination" shall be deemed to occur if (A)(1) there is a
material adverse change in your position causing it to be of less stature or of
less responsibility, (2) a change in the persons to whom you report (other than
a change in Board of Director composition) or (3) a reduction of more than 20%
of your base compensation and (B) the Company shall fail to correct the
occurrence to your reasonable satisfaction following written notice by you
within the thirty (30) days following receipt of such notice and you elect to
terminate your employment voluntarily.
(g) Registration Rights. In connection with the Restricted Stock, the
Company will register such shares on Form S-8. If registration of such shares of
Restricted Stock is not permissible on Form S-8 the Company will register such
shares on Form S-3, subject to customary underwriter lock ups and cutbacks, if
applicable, and shall rank in equal priority with the registration rights held
by existing preferred stockholders.
6. Relocation Allowances. The Company agrees to assist you in relocating to
Irvine, California. In this regard, you agree to list your home in Portola
Valley, California for sale and the Company will reimburse you for the carrying
costs of the house until the house is sold. Provided that you substantiate that
your investment in this residence is approximately $2,600,000, the Company will,
upon the sale of your house, make up any shortfall in the sales price from your
investment either by, at the Company's election, : (i) reimbursing you the
shortfall amount within 30 days following the closing or (ii) by participating
in a simultaneous closing and absorbing the shortfall. Any amount of
reimbursement will be grossed up to include income taxes on the amount of any
reimbursement pursuant to this paragraph 6 such that you will have no additional
taxes solely because of any such reimbursements. In addition, in order to assist
you in purchasing a home in Orange County, California, the Company will
reimburse you for up
<PAGE> 5
February 7, 1996
Mr. L. George Klaus
Page 5
to three (3) points of financing and closing costs, and will guarantee bridge
financing, if necessary. The Company will provide temporary housing to you in
its corporate apartment. In addition, the Company will reimburse you for your
costs incurred in leasing a vehicle during any temporary living period. Finally,
the Company will cover your moving expenses to Southern California as well as
return moving expenses to Northern California at a time no earlier than three
years unless the Company is sold or relocated in which case they will be
provided at the time of the sale or relocation.
7. Country Club Membership. The Company will purchase a membership in Big Canyon
Country Club in your name (or the name you choose). You will agree to return any
proceeds from the sale of this membership immediately after its sale, unless
otherwise agreed in writing by the Board of Directors.
8. Other. The Company understands that you have previously arranged a vacation
in March of 1996 and will honor this arrangement. The Company will reimburse you
for your reasonable legal expenses incurred for document reviews related to your
employment. Effective the beginning of the month following your start date, you
will be eligible to participate in the Company's health plan, including the
Exec-U-Care plan. After meeting eligibility requirements, you will be able to
participate in various company benefit programs including the Company's 401(k)
savings program, Section 125 Reimbursement Account, and the Confidential
Employee Assistance Program (EAP).
9. Indemnification. In the event you are made, or threatened to be made, a party
to any legal action or proceeding, whether civil or criminal, by reason of the
fact that you are or were a director or officer of the Company or serves or
served any other corporation fifty percent (50%) or more owned or controlled by
the Company in any capacity at Company's request, you shall be indemnified by
the Company, and the Company shall pay your related expenses when and as
incurred, all to the full extent permitted by law.
10. Successors. Any successor to the Company (whether direct or indirect and
whether by purchase, lease, merger, consolidation, liquidation or otherwise) to
all or substantially all of the Company's business and/or assets shall assume
the obligations under this Agreement and agree expressly to perform the
obligations under this Agreement in the same manner and to the same extent as
the Company would be required to perform such obligations in the absence of a
succession. The terms of this Agreement and all of your rights hereunder shall
inure to the benefit of, and be enforceable by, your personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.
This offer is contingent upon execution of the Company's Employee Proprietary
Agreement and the Employee Acknowledgment Statement and your having a physical
exam within thirty (30) days after commencing employment and remedying any
<PAGE> 6
February 7, 1996
Mr. L. George Klaus
Page 6
deficiencies from any unsatisfactory results of the physical. Upon accepting
this offer, you will be required to sign and agree to the terms therein.
Additionally, due to the Immigration Reform Act and Control of 1986, if you are
an employee of the Company in the United States, prior to or on your first day
of employment, you will be required to show proof of identity and authorization
to work in the United States. Please be prepared to show appropriate
documentation for evidence of identity and employment eligibility.
Please indicate your acceptance of this offer by signing in the space below.
Upon receipt, I will have the necessary agreements prepared to document the
items described in this offer letter. If you have any questions, please do not
hesitate to call.
Very truly yours, Accepted:
____________________________
Carmelo J. Santoro L. George Klaus
Chief Executive Officer
CJS:cl
<PAGE> 1
EXHIBIT 10.34
PLATINUM SOFTWARE CORPORATION
RESTRICTED STOCK PURCHASE AGREEMENT
THIS RESTRICTED STOCK PURCHASE AGREEMENT (the "Agreement") is entered
into as of this 7th day of February, 1996, between L. GEORGE KLAUS (hereinafter
referred to as "Purchaser"), and PLATINUM SOFTWARE CORPORATION, a Delaware
corporation (hereinafter referred to as the "Company"), with reference to the
following facts:
R E C I T A L S :
A. Purchaser is an employee, director, consultant or other
person who provides services to the Company or a parent or subsidiary of the
Company, as those terms are defined in Sections 424(e) and 424(f) of the
Internal Revenue Code of 1986, as amended (a "Service Provider"), and in
connection therewith has rendered services for and on behalf of the Company.
B. The Company desires to issue shares of common stock to
Purchaser for the consideration set forth herein to provide an incentive for
Purchaser to remain a Service Provider of the Company and to exert added effort
towards its growth and success.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth, and for other good and valuable consideration, the parties agree as
follows:
1. ISSUANCE OF SHARES. The Company hereby agrees to issue and sell to
Purchaser, and Purchaser hereby agrees to purchase from the Company an aggregate
of Two Million (2,000,000) shares of the Common Stock, $0.001 par value, of the
Company (the "Shares") on the terms and conditions herein set forth.
2. CONSIDERATION. The purchase price for the Shares shall be $3.50 per
share which is the fair market value of the Shares as of the date hereof, or
$7,000,000 in the aggregate, which shall be paid by (i) the delivery of
Purchaser's check in the amount of $3,500,000, and (ii) the delivery of
Purchaser's promissory note in the principal amount of $3,500,000 in the form of
Exhibit A attached hereto (the "Note") which shall be executed and delivered by
Purchaser concurrently herewith. The Note shall be secured by a pledge of the
Shares pursuant to the terms and provisions of a Stock Pledge Agreement in the
form of Exhibit B attached hereto which shall be executed and delivered
concurrently herewith.
3. RECONVEYANCE UPON TERMINATION OF SERVICE.
(a) RECONVEYANCE OPTION. If Purchaser should cease to be a
Service Provider of the Company or a parent or its subsidiaries, for any reason
(hereinafter referred to as the "Termination Date"), the Company shall have the
option to acquire (hereinafter referred to as the "Reconveyance Option") from
Purchaser all or part of the unvested Shares. The Shares shall vest according to
the following schedule:
<PAGE> 2
(i) 350,000 Shares shall vest immediately upon the date of this
Agreement.
(ii) 29,167 Shares shall vest on the first day of each month beginning
on the date of this Agreement and continuing for each month
thereafter for a period of thirty-six (36) months, at which time
an aggregate of 1,400,000 Shares shall be vested and shall not be
subject to the Reconveyance Option.
(iii) The Company's Reconveyance Option with respect to the remaining
600,000 Shares will lapse according to the following schedule,
assuming the Company's fiscal year ending June 30, 1996 is the
Base Year:
(A) 100,000 Shares if Fiscal Year 1997 operating revenues exceed
the Base Year operating revenues by twenty-five percent
(25%) or more, and 100,000 Shares if the Company's profit
after taxes for Fiscal Year 1997 is equal to or exceeds five
percent (5%) of Fiscal Year 1997 operating revenues.
(B) 100,000 Shares if Fiscal Year 1998 operating revenues exceed
the Base Year operating revenues by fifty percent (50%) or
more, and 100,000 Shares if the Company's profit after taxes
for Fiscal Year 1998 is equal to or exceeds ten percent
(10%) of Fiscal Year 1998 operating revenues.
(C) 100,000 Shares if Fiscal Year 1999 operating revenues exceed
the Base Year operating revenues by seventy-five percent
(75%) or more, and 100,000 Shares if the Company's profit
after taxes for Fiscal Year 1999 is equal to or exceeds
fifteen percent (15%) of Fiscal Year 1999 operating
revenues.
(D) If any of such 600,000 Shares have not otherwise vested
pursuant to the provisions of clauses (A), (B) or (C) above,
all of the remaining unvested Shares shall vest on February
7, 2006.
(b) TERMINATION OF RECONVEYANCE OPTION. All of the Company's
rights with respect to the Reconveyance Option to purchase any of the unvested
Shares under this Section 3 shall lapse immediately upon a "Change in Control"
(as defined below). For purposes of this Section 3, a Change in Control shall
mean:
(i) The sale, lease, conveyance or other disposition of all or
substantially all of the Company's assets as an entirety or
substantially as an entirety to any person, entity or group of
persons acting in concert;
(ii) Any transaction or series of transactions that result in, or that
is in connection with, any person, entity or group acting in
concert (other than existing affiliates of the Company),
acquiring "beneficial ownership" (as defined in Rule 13d-3 under
the Securities Exchange Act of 1934, as amended), directly or
indirectly, of such percentage of the aggregate voting power of
all classes of voting equity stock of the Company as shall exceed
fifty percent (50%) of such aggregate voting power;
2
<PAGE> 3
(iii) The stockholders of the Company approve a merger or consolidation
of the Company with any other corporation, other than a merger or
consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or being converted
into voting securities of the surviving entity) at least fifty
percent (50%) of the total voting power represented by the voting
securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation; or
(iv) A liquidation of the Company.
Upon a Change in Control, Purchaser may elect, in his sole discretion, not to
have any portion of the Reconveyance Option lapse in order to avoid any
"parachute payment" under Section 280G(b)(2) of the Internal Revenue Code of
1986, as amended.
(c) Termination of Employment Without Cause. In the event the
Company shall terminate Purchaser's employment without "Cause," or if a
"Constructive Termination" of Purchaser's employment with the Company has
occurred, or if Purchaser should die or become disabled, the Repurchase Option
shall lapse on the Shares that otherwise could be repurchased by the Company
pursuant to the Reconveyance Option with respect to the twelve (12) months
following the date of Purchaser's termination of employment, such that the
Shares shall continue to vest for such twelve (12) month period. For the
purposes of this Section 3:
(i) "Cause" shall mean:
(A) Willful and repeated failure to comply with the lawful
directions of the Company's Board of Directors;
(B) Gross negligence or willful misconduct in the performance of
duties of the Company and/or its subsidiaries;
(C) The commission of any act of fraud with respect to the
Company and/or its subsidiaries; or
(D) Conviction of a felony or a crime involving moral turpitude
causing material harm to the standing and reputation of the
Company and/or its subsidiaries;
in each case as determined in good faith by the Company's Board
of Directors.
(ii) "Constructive Termination" shall be deemed to occur if:
(A) (1) There is a material adverse change in Purchaser's
position with the Company causing such position to be
of less stature or of less responsibility; or
(2) A change in persons to whom Purchaser reports (other
than a change in the Board of Director's composition);
or
3
<PAGE> 4
(3) A reduction of more than twenty percent (20%) of
Purchaser's base compensation; and
(B) The Company shall fail to correct the occurrence to Purchaser's
reasonable satisfaction following written notice by Purchaser
within thirty (30) days following receipt of such notice, and
Purchaser elects to terminate his employment voluntarily.
(iii) "Disability" shall mean Purchaser's inability due to any physical
or mental condition to perform a substantial portion of his
duties as President and Chief Executive Officer of the Company
for twenty-four (24) or more consecutive weeks.
(d) CONSIDERATION FOR RECONVEYANCE OPTION. The Company shall
pay Purchaser as consideration for the unvested Shares to be acquired upon any
exercise of the Reconveyance Option the original purchase price paid by
Purchaser. The Company may elect to pay such purchase price in cash or by
cancellation of indebtedness of Purchaser to the Company pursuant to the Note,
or otherwise.
(e) PROCEDURE FOR EXERCISE OF RECONVEYANCE OPTION. The Company
shall have the right to exercise the Reconveyance Option by acquiring all or any
part of the Shares subject to the Reconveyance Option by delivery to Purchaser
and/or any other person obligated to transfer the Shares written notice of
election to purchase the Shares or any portion thereof within sixty (60) days
following the Termination Date. Such written notice shall indicate the number of
Shares to be purchased by the Company. In the event that the Company does not
elect to exercise the Reconveyance Option as to all or part of the Shares under
the provisions of this Section 3 by written notice to Purchaser within the
period specified above, the Reconveyance Option shall expire as to all Shares
which the Company has not elected to acquire.
(f) NOTIFICATION AND SETTLEMENT. In the event that the Company
has elected to exercise the Reconveyance Option as to part or all of the Shares
within the period described above, Purchaser or such other person shall deliver
to the Company certificate(s) representing the Shares to be acquired by the
Company within thirty (30) days following the date of the notice from the
Company. The Company shall deliver to Purchaser against delivery of the Shares,
checks of the Company payable to Purchaser and/or any other person obligated to
transfer the Shares and/or instruments effecting cancellation of indebtedness of
Purchaser to the Company in the aggregate amount of the purchase price to be
paid as set forth in paragraph (d) above.
4. ESCROW.
(a) DEPOSIT. Upon issuance, the certificates for the unvested
Shares shall be deposited in escrow with the Corporate Secretary to be held in
accordance with the provisions of this Section 4. The deposit obligations of
Purchaser under this Section 4 shall be in addition to the obligations of
Purchaser to deliver possession of the Shares to the Company under the Stock
Pledge Agreement. Each deposited certificate shall be accompanied by a
duly-executed Assignment Separate from Certificate. The deposited certificates,
together with any other assets or securities from time to time deposited with
the Corporate Secretary pursuant to the requirements of this Agreement, shall
remain in escrow until such time or times as the certificates (or other assets
or securities) are to be released or otherwise surrendered for cancellation in
accordance with this Section 4.
4
<PAGE> 5
(b) RECAPITALIZATION. In the event of any stock split, stock
dividend, recapitalization, reorganization, combination of shares, exchange of
shares, or other change affecting the Company's outstanding Common Stock as a
class effected without the Company's receipt of consideration, any new,
substituted or additional securities or other property which is by reason of
such transaction distributed with respect to the Shares shall be immediately
delivered to the Corporate Secretary to be held in escrow under this Section 4,
but only to the extent the Shares are at the time subject to the escrow
requirements of this Section 4. However, all regular cash dividends on the
Shares (or other securities a the time held in escrow) shall be paid directly to
Purchaser and sall not be held in escrow.
(c) RELEASE/SURRENDER. The Shares, together with any other assets
or securities held in escrow hereunder, shall be subject to the following terms
and conditions relating to their release from escrow or their surrender to the
Company for repurchase and cancellation:
(i) Should the Company (or its assignees) elect to exercise the
Reconveyance Option with respect to any Shares, then the escrowed
certificates for such Shares (together with any other assets or
securities attributable thereto) shall be delivered to the Company
concurrently with the payment to Purchaser, in cash or cash
equivalent (including the cancellation of any indebtedness), of an
amount equal to the aggregate purchase price for such Shares, and
Purchaser shall cease to have any further rights or claims with
respect to such Shares (or other assets or securities attributable
to such Shares). Any balance of Shares not purchased by the Company
pursuant to the exercise of the Reconveyance Option shall be
delivered to Purchaser.
(ii) As the interest of Purchaser in the Shares (or any other assets or
securities attributable thereto) vests in accordance with the
provisions of Section 3, subject to the provisions set forth in the
Stock Pledge Agreement, the certificates for such vested Shares (as
well as all other vested assets and securities) shall be released
from escrow upon Purchaser's request, but not more frequently than
six (6) times per year.
(iii) All Shares (or other assets or securities) released from escrow
shall nevertheless remain subject to the market stand-off
provisions set forth in Section 16 hereof.
5. INVESTMENT REPRESENTATIONS. Purchaser represents and warrants to
the Company as follows:
(a) He is acquiring the Shares for his own account, not as
nominee or agent, for investment and not with a view to, or for resale in
connection with, any distribution or public offering thereof within the meaning
of the 1933 Act.
(b) He understands that (i) the Shares have not been registered
under the 1933 Act by reason of a specific exemption therefrom, that they must
be held by him indefinitely, and that he must, therefore, bear the economic risk
of such investment indefinitely, unless a subsequent disposition thereof is
registered under the 1933 Act or is exempt from such registration; (ii) the
Shares will be endorsed with the following legend:
"THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT
5
<PAGE> 6
BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS PURSUANT TO SEC
RULE 144 OR RULE 144A OR THERE IS AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE 1933 ACT COVERING SUCH SECURITIES OR THE COMPANY RECEIVES AN
OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY
SATISFACTORY TO THE COMPANY, STATING THAT SUCH SALE, TRANSFER,
ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF THE 1933 ACT."
and (iii) the Company will instruct any transfer agent not to register the
transfer of any of the Shares unless the conditions specified in the foregoing
legend are satisfied; provided, however, that no such opinion of counsel shall
be necessary if the sale, transfer or assignment is made pursuant to SEC Rule
144 or Rule 144A and Purchaser provides the Company with evidence reasonably
satisfactory to the Company and its counsel that the proposed transaction
satisfies the requirements of Rule 144 or Rule 144A. The Company agrees to
remove the foregoing legend from any securities if the requirements of SEC Rule
144(k) (or any successor rule or regulation) apply with respect to such
securities and the Company and its counsel are provided with reasonably
satisfactory evidence that the requirements of Rule 144(k) apply.
(c) He acknowledges that he is able to fend for himself, can
bear the economic risk of his investment and has such knowledge and experience
in financial or business matters that he is capable of evaluating the merits and
risks of the investment in the Shares and the Underlying Common Stock.
(d) He is an "accredited investor" within the meaning of SEC
Rule 501 of Regulation D, as presently in effect.
(e) He understands that the Shares he is purchasing are
characterized as "restricted securities" under the federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the 1933 Act, only in
certain limited circumstances, and he represents that he is familiar with SEC
Rule 144 and Rule 144A, as presently in effect, and understands the resale
limitations imposed thereby and by the 1933 Act.
6. REGISTRATION OF SHARES. Upon the request of Purchaser, the Company
agrees to use its best efforts to register the resale of the Shares on Form S-8
or Form S-3, whichever is available, subject to customary underwriter lock-ups
and cutbacks, if applicable, and the registration rights with respect to the
Shares shall rank in equal priority with the registration rights held by the
existing preferred stockholders of the Company. Purchaser understands that the
approval of the holders of a majority of the outstanding shares of preferred
stock is required in order to grant the foregoing registration rights, and the
Company agrees to use its best efforts to promptly obtain such approval.
The Company and Purchaser agree that the registration rights of Purchaser set
forth above shall be on terms and provisions substantially the same as the
applicable terms and provisions of the Registration Rights Agreement between the
Company and its existing preferred stockholders.
6
<PAGE> 7
7. SHARES FREE AND CLEAR. All Shares purchased by the Company pursuant
to this Agreement shall be delivered by Purchaser free and clear of all claims,
liens and encumbrances of every nature (except the provisions of this Agreement
and any conditions concerning the Shares relating to compliance with applicable
federal or state securities laws), and the purchaser thereof shall acquire full
and complete title and right to all of the shares, free and clear of any claims,
liens and encumbrances of every nature (again except for the provisions of this
Agreement and such securities laws).
8. NOTICES. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly given when
personally delivered or three (3) days after being mailed, by United States
certified or registered mail, prepaid, to the parties or their assignees at the
addresses set forth opposite their signatures below (or such other address as
shall be given in writing by either party to the other).
9. BINDING OBLIGATIONS. All covenants and agreements herein contained
by or on behalf of any of the parties hereto shall bind and inure to the benefit
of the parties hereto and their permitted successors and assigns.
10. CAPTIONS AND SECTION HEADINGS. Captions and section headings used
herein are for convenience only, and are not part of this Agreement and shall
not be used in construing it.
11. AMENDMENT. This Agreement may not be amended, waived, discharged,
or terminated other than by written agreement of the parties.
12. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
prior or contemporaneous written or oral agreements and understandings of the
parties, either express or implied.
13. ASSIGNMENT. No party hereto shall have the right, without the
prior written consent of the other party, to sell, assign, mortgage, pledge or
otherwise transfer any interest or right created hereby. This Agreement is made
solely for the benefit of the parties hereto, and no other person, partnership,
association or corporation shall acquire or have any right under or by virtue of
this Agreement.
14. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one agreement and any
party hereto may execute this Agreement by signing any such counterpart. This
Agreement shall be binding upon Purchaser and the Company at such time as the
Agreement, in counterpart or otherwise, is executed by Purchaser and the
Company.
15. APPLICABLE LAW. This Agreement shall be construed under, and
enforced in accordance with and governed by the laws of the State of California.
16. NO AGREEMENT TO EMPLOY. Nothing in this Agreement shall be
construed to constitute or be evidence of any agreement or understanding,
express or implied, on the part of the Company to employ or retain Purchaser for
any specific period of time. Purchaser acknowledges and agrees that he is an
"at-will" employee of the Company and that the terms and conditions of
7
<PAGE> 8
his employment are governed by a letter agreement dated February 7, 1996 between
the Company and Purchaser.
17. MARKET STANDOFF AGREEMENT. Purchaser agrees in connection with any
registration of the Company's securities that, upon the request of the Company
or the underwriters managing any public offering of the Company's securities,
Purchaser will not sell or otherwise dispose of any Shares without the prior
written consent of the Company or such underwriters, as the case may be, for a
period of time (not to exceed the lesser of (i) 180 days or (ii) the time period
generally applicable to other affiliates of the Company) from the effective date
of such registration as the Company or the underwriters may specify.
18. TAX ELECTIONS. Purchaser acknowledges that Purchaser has
considered the advisability of all tax elections in connection with the purchase
of the Shares hereunder, including the making of an election under Section 83(b)
under the Internal Revenue Code of 1986, as amended, and that the Company has no
responsibility for the making of any such election.
19. ATTORNEYS' FEES. If any party shall bring an action in law or
equity against another to enforce or interpret any of the terms, covenants and
provisions of this Agreement, the prevailing party in such action shall be
entitled to recover reasonable attorneys' fees and costs.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
THE COMPANY:
PLATINUM SOFTWARE CORPORATION
195 Technology Drive
Irvine, California 92718
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
PURCHASER:
- --------------------------- ---------------------------------------
- ---------------------------
L. George Klaus
---------------------------------------
(print name)
8
<PAGE> 9
CONSENT AND RATIFICATION OF SPOUSE
The undersigned, the spouse of L. George Klaus, a party to the attached
Restricted Stock Purchase Agreement (the "Agreement"), dated as of
_______________, hereby consents to the execution of said Agreement by such
party; and ratifies, approves, confirms and adopts said Agreement, and agrees to
be bound by each and every term and condition thereof as if the undersigned had
been a signatory to said Agreement, with respect to the Shares (as defined in
the Agreement) made the subject of said Agreement in which the undersigned has
an interest, including any community property interest therein.
Date: February _____, 1996 ______________________________
______________________________
(Print Name)
9
<PAGE> 10
SECTION 83(b) TAX ELECTION
This statement is being made under Section 83(b) of the Internal Revenue Code,
pursuant to Treas. Reg. Section 1.83-2.
(1) The taxpayer who performed the services is:
Name: L. George Klaus
Address:
Taxpayer Ident. No.:
(2) The property with respect to which the election is being made is
1,650,000 shares of the common stock of Platinum Software Corporation.
(3) The property was issued on February 7, 1996.
(4) The taxable year in which the election is being made is the calendar
year 1996.
(5) The property is subject to a repurchase right pursuant to which the
issuer has the right to acquire the property at the original purchase
price if for any reason taxpayer's employment with the issuer is
terminated. The issuer's repurchase right as to 1,050,000 shares lapses
in a series of annual and monthly installments over a three-year period
ending on February 7, 1999. In addition, the issuer's repurchase rights
as to 600,000 shares lapses according to certain financial performance
criteria over a period of three fiscal years of the issuer through the
fiscal year ending on June 30, 1999, and in any event on February 7,
2006.
(6) The fair market value at the time of transfer (determined without
regard to any restriction other than a restriction which by its terms
will never lapse) is $3.50 per share.
(7) The amount paid for such property is $3.50 per share.
(8) A copy of this statement was furnished to Platinum Software Corporation
for whom taxpayer rendered the services.
(9) This statement is executed as of February ___, 1996.
________________________________ _______________________________
Spouse Taxpayer - L. George Klaus
This election must be filed with the Internal Revenue Service Center with which
taxpayer files his or her Federal income tax returns and must be made within
thirty (30) days after the execution date of the Stock Purchase Agreement. This
filing should be made by registered or certified mail, return receipt requested.
Taxpayer must retain two (2) copies of the completed form for filing with his or
her Federal and state tax returns for the current tax year and an additional
copy for his or her records.
<PAGE> 11
EXHIBIT A
NOTE SECURED BY STOCK PLEDGE AGREEMENT
$3,500,000 February 7, 1996
Irvine, California
FOR VALUE RECEIVED, the undersigned L. George Klaus promises to pay to
Platinum Software Corporation, (the "Company'), at its principal offices at 195
Technology Drive, Irvine, California 92718-2402, the principal sum of Three
Million Five Hundred Thousand Dollars ($3,500,000), together with interest from
the date of this Note on the unpaid principal balance upon the terms and
conditions specified below.
1. Principal and Interest. The principal balance of this Note
together with interest accrued and unpaid to date shall be due and payable on or
before five (5) years from the date of this Note or on or before February 7,
2001. The foregoing notwithstanding, in the event of the sale of any shares of
Common Stock of the Company which are pledged as security under the Stock Pledge
Agreement securing this Note, a principal amount of this Note equal to the
lesser of (i) the net proceeds received by the undersigned in connection with
the sale of the shares of Common Stock, or (ii) the number of shares of Common
Stock sold multiplied by Three Dollars and Fifty Cents ($3.50), together with
interest accrued and unpaid on such principal amount, shall be paid to the
Company concurrently upon receipt of the proceeds from the sale of the shares of
Common Stock.
2. Rate of Interest. Interest shall accrue under the Note on any
unpaid principal balance at the rate of 6.0% per annum, compounded annually, and
shall be paid on or before the maturity date of this Note.
3. Application Payments. Each payment shall be made in lawful tender
of the United States. Prepayment of principal and interest may be made at any
time without penalty.
4. Events of Acceleration. The entire unpaid principal and unpaid
interest of this Note shall become immediately due and payable upon one or more
of the following events:
A. the default in any payment due under this Note, and the
failure to cure such default within ten (10) days of written notice of such
default;
B. the insolvency of L. George Klaus, the commission of an act
of bankruptcy by L. George Klaus, the execution by L. George Klaus of a general
assignment for the benefit of creditors, the filing by or against L. George
Klaus of a petition in bankruptcy or a petition for relief under the provisions
of the federal bankruptcy act or another state or federal law for the relief of
debtors and the continuation of such petition without dismissal for a period of
ninety (90) days or more;
<PAGE> 12
C. the occurrence of a material event of default under the
Stock Pledge Agreement securing this Note; or
D. the termination of employment of L. George Klaus by the
Company for "cause," as defined in that certain letter agreement between the
Company and L. George Klaus dated February 7, 1996.
5. Security. Payment of this Note shall be secured by a Stock Pledge
Agreement to be executed by L. George Klaus and covering 2,000,000 shares of the
Company's Common Stock. L. George Klaus, however, shall remain personally liable
for payment of this Note to the extent of any deficiency in the value of the
Common Stock. Anything herein to the contrary notwithstanding, in the event of
any default in payment or principal or interest under this Note, the Company
agrees to pursue to the fullest extent possible its rights and remedies to
foreclose upon and dispose of the shares of Common Stock pledged as collateral
under the Stock Pledge Agreement prior to pursuing any right or remedy as to the
personal liability or other assets of L. George Klaus.
6. Collection. If action is instituted to collect this Note, L. George
Klaus promises to pay all reasonable costs and expenses (including reasonable
attorneys fees) incurred in connection with such action.
7. Waiver. No previous waiver and no failure or delay by Platinum
Software Corporation or L. George Klaus in acting with respect to the terms of
this Note or the Stock Pledge Agreement shall constitute a waiver of any breach,
default, or failure of condition under this Note, the Stock Pledge Agreement, or
the obligations secured thereby. A waiver of any term of this Note, the Stock
Pledge Agreement, or of any of the obligations secured thereby must be made in
writing and shall be limited to the express terms of such waiver. L. George
Klaus hereby expressly waives presentment and demand for payment at such time as
any payments are due under this Note.
8. Conflicting Agreements. In the event of any inconsistencies between
the terms of this Note and the terms of any other document related to the loan
evidenced by the Note, the terms of this Note shall prevail.
9. Governing Law. This Note shall be construed in accordance with the
law of the State of California.
--------------------------------
L. George Klaus
2
<PAGE> 13
EXHIBIT B
STOCK PLEDGE AGREEMENT
In order to secure payment of that certain February 7, 1996 promissory
note (the Note") payable to the order of Platinum Software Corporation, a
Delaware corporation (the "Company") having its corporate offices at 195
Technology Drive, Irvine, California 92718-2402, in the principal amount of
Three Million Five Hundred Thousand Dollars ($3,500,000), the undersigned hereby
grants the Company a security interest in, and assigns, transfers to and pledges
the Company the following securities and other property:
(i) the 2,000,000 shares of Company common stock ("Common
Stock") and deposited with the Company as collateral for the Note;
(ii) any and all new, additional or different securities or
other property subsequently distributed with respect to the shares identified in
subparagraph (i) that are to be delivered to and deposited with the Company
pursuant to the requirements of paragraph 3 of this Agreement; and
(iii) any and all other properly and money that is delivered to
or comes into the possession of the Company pursuant to the terms and provisions
of this Agreement.
All securities, property and money so assigned, transferred to and
pledged with the Company shall be herein referred to as the "Collateral" and
shall be accompanied by one or more stock power assignments properly endorsed by
the undersigned. The Company shall hold the Collateral in accordance with the
following terms and provisions:
1. Warranties. The undersigned hereby warrants that the undersigned is
the owner of the Collateral and has the right to pledge the Collateral and that
the Collateral is free from all liens, adverse claims and other security
interests (other than those created hereby).
2. Rights and Powers. The Company may without obligation to do so,
exercise one or more of the following rights and powers with respect to the
Collateral:
(a) accept in its discretion, but subject to the applicable
limitations of paragraphs 6(c) and 6(e), other property of the undersigned in
exchange for all or part of the Collateral and release Collateral to the
undersigned to the extent necessary to effect such exchange, and in such event
the money, property or securities received in the exchange shall be held by the
Company as substitute security for the Note and all other indebtedness secured
hereunder, and
(b) transfer record ownership of the Collateral to the Company or
its nominee and receive, endorse and give receipt for, or collect by legal
proceedings or otherwise, dividends or other distributions made or paid with
respect to the Collateral, provided and only if there exists at the time an
outstanding event of default under paragraph 7 of this Agreement.
<PAGE> 14
The Company will notify the undersigned of any action taken by
the Company pursuant to the provisions of this Section 2. Expenses reasonably
incurred in connection with such action shall be payable by the undersigned and
form part of the indebtedness secured hereunder as provided in paragraph 9.
So long as there exists no event of default under Section 7 of
this Agreement, the undersigned may exercise all stockholder voting rights and
be entitled to receive any and all regular cash dividends paid on the
Collateral. Accordingly, until such time as an event of default occurs under
this Agreement, all proxy statements and other stockholder materials pertaining
to the Collateral shall be delivered to the undersigned at the address indicated
below.
Any cash sums that the Company may receive in the exercise of its
rights and powers under paragraph 2(b) above shall be applied to the payment of
the Note and any other indebtedness secured hereunder, in such order of
application as the Company deems appropriate. Any remaining cash shall be paid
over to the undersigned.
3. Duty to Deliver. Any new, additional or different securities that
may now or hereafter become distributable with respect to the Collateral by
reason of (i) any stock dividend, stock split or reclassification of the Common
Stock of the Company, or (ii) any merger, consolidation or other reorganization
affecting the capital structure of the Company, shall, upon receipt by the
undersigned, be promptly delivered to and deposited with the Company as part of
the Collateral hereunder. Such securities shall be accompanied by one or more
properly endorsed stock power assignments.
4. Care of Collateral. The Company shall exercise reasonable care in
the custody and preservation of the Collateral, but shall have no obligation to
initiate any action with respect to any conversion, call, exchange right,
preemptive right, subscription right, purchase offer or other right or privilege
relating to or affecting the Collateral. The Company shall have no duty to
preserve the rights of the undersigned against adverse claims or to protect the
Collateral against the possibility of a decline in market value. The Company
shall not be obligated to take any action with respect to the Collateral
requested by the undersigned unless the request is made in writing and the
Company determines that the requested action will not unreasonably jeopardize
the value of the Collateral as security for the Note and other indebtedness
secured hereunder.
The Company may at any time release and deliver all or part of the
Collateral to the undersigned, and the receipt thereof by the undersigned shall
constitute a complete and full acquittance for the Collateral so released and
delivered. The Company shall accordingly be discharged from any further
liability or responsibility for the Collateral, and the released Collateral
shall no longer be subject to the provisions of this Agreement. However, any and
all release of the Collateral shall be effected in compliance with the
applicable limitations of paragraphs 6(c) and 6(e).
5. Payment of Taxes and Other Changes. The undersigned shall pay,
prior to the delinquency date, all taxes, liens, assessments and other charges
against the Collateral, and in the event of the undersigned's failure to do so,
the Company may at its election pay any or all of such taxes and charges without
contesting the validity or legality thereof. The payment so made shall
2
<PAGE> 15
become a part of the indebtedness secured hereunder and until paid shall bear
interest at the Company's bank interest rate then being earned by the Company on
its deposits.
6. Release of Collateral. Provided (i) there does not otherwise exist
any event of default under Section 7, including without limitation any default
under the Note, and (ii) the shares of Common Stock are not otherwise subject to
the Reconveyance Option of the Company as set forth in that certain Restricted
Stock Purchase Agreement between the undersigned and the Company dated February
7, 1996, the pledged shares of Common Stock together with any additional
Collateral that may hereafter be pledged and deposited hereunder, shall be
released from pledge and returned to the undersigned in accordance with the
following provisions:
(a) Upon payment or prepayment of principal under the Note,
together with payment of all accrued interest to date, one or more shares of the
Common Stock held as Collateral hereunder shall (subject to the applicable
limitations of paragraphs 6(c) and 6(e) below) be released to the undersigned
within three (3) days after such payment or prepayment. The number of the shares
to be so released shall be equal to the number obtained by multiplying (i) the
total number of shares of Common Stock held under this Agreement at the time of
the payment or prepayment, by (ii) a fraction the numerator of which shall be
the amount of the principal paid or prepaid and the denominator of which shall
be, the unpaid principal balance of the Note immediately prior to such payment
or prepayment. In no event, however, shall any fractional shares be released.
(b) Any additional Collateral that may hereafter be pledged and
deposited with the Company (pursuant to the requirements of Section 3) with
respect to the shares of Common Stock pledged hereunder shall be released at the
same time the particular shares of Common Stock to which the additional
Collateral relates are to be released in accordance with the applicable
provisions of paragraph 6(a). Under no circumstances, however, shall any shares
of Common Stock or any other Collateral be released if previously applied to the
payment of any indebtedness secured hereunder.
(c) In no event, however, shall any shares of Common Stock be
released pursuant to the provisions of paragraph 6(a) or 6(b) if, and to the
extent, the fair market value of the Common Stock and all other Collateral that
would otherwise remain in pledge hereunder after such release were effected
would be less than one hundred fifty percent (150%) of the unpaid balance of the
Note (principal and accrued interest).
(d) For all valuation purposes under this Agreement, the fair
market value per share of Common Stock on any relevant date shall be determined
in accordance with the following provisions:
(i) If the Common Stock is not at the time listed or
admitted to trading on any stock exchange but is traded in the over-the-counter
market, the fair market value shall be the mean between the highest bid and
lowest asked prices (or, if such information is available, the closing selling
price) per share of Common Stock on the date in question in the over-the-counter
market, as such prices are reported by the National Association of Securities
Dealers on the NASDAQ National Market or any successor system. If there are no
reported bid and asked prices (or closing selling price) for the Common Stock on
the date in question,
3
<PAGE> 16
then the mean between the highest bid price and lowest asked price (or the
closing selling price) on the last preceding date for which such quotations
exist shall be determinative of fair market value.
(ii) If the Common Stock is at the time listed or admitted
to trading on any stock exchange, then the fair market value shall be the
closing selling price per share of Common Stock on the date in question on the
stock exchange serving as the primary market for the Common Stock, as such price
is officially quoted in the composite tape of transactions on such exchange. If
there is no reported sale of Common Stock on such exchange on the date in
question, then the fair market value shall be the closing selling price on the
exchange on the last preceding date for which such quotation exists.
(iii) If the Common Stock at the time is neither listed nor
admitted to trading on any stock exchange nor traded in the over-the-counter
market, then the fair market shall be the most current value per share
determined in good faith by the Company's Board of Directors.
(e) In the event the securities constituting the Collateral are
"margin securities" (within the meaning of Section 207.2(i) of Regulation G of
the Federal Reserve Board), then, to the extent applicable, the number of shares
to be released pursuant to paragraph 6(a) or (b) shall be reduced to the extent
necessary to comply with Regulation G.
7. Events of Default. The occurrence of one or more of the following
events shall constitute an event of default under this Agreement:
(a) the failure of the undersigned to pay the principal and
accrued interest when due under the Note; or
(b) the failure of the undersigned to perform a material
obligation imposed upon the undersigned by reason of this Agreement and the
failure to cure such default within sixty (60) days of written notice of the
Company to the undersigned.
Upon the occurrence of any such event of default, the Company may, at
its election, declare the Note and all other indebtedness secured hereunder to
become immediately due and payable and may exercise any or all of the rights and
remedies granted to a secured party under the provisions of the California
Uniform Commercial Code (as now or hereafter in effect), including (without
limitation) the power to dispose of the Collateral by public or private sale or
to accept the Collateral in full payment of the Note and all other indebtedness
secured hereunder. Anything herein to the contrary notwithstanding, the Company
agrees to pursue its rights to foreclose and dispose of the Collateral pursuant
to the applicable provisions of the California Uniform Commercial Code prior to
seeking recourse against the undersigned personally, or any other assets of the
undersigned.
Any proceeds realized from the disposition of the Collateral pursuant to
the foregoing power of sale shall be applied first to the payment of reasonable
expenses incurred by the Company in connection with the disposition, then to the
payment of the Note and finally to any other indebtedness
4
<PAGE> 17
EXHIBIT B
secured hereunder. Any surplus proceeds shall be paid over to the undersigned.
However, in the event such proceeds prove insufficient to satisfy all
obligations of the undersigned under the Note, then the undersigned shall remain
personally liable for the resulting deficiency.
8. Other Remedies. The rights, powers and remedies granted to the
Company and the undersigned pursuant to the provisions of this Agreement shall
be in addition to all rights, powers and remedies granted to the Company and the
undersigned under any statute or rule of law. Any forbearance, failure or delay
by the Company or the undersigned in exercising any right, power or remedy under
this Agreement shall not be deemed to be a waiver of such right, power or
remedy. Any single or partial exercise of any right, power or remedy under this
Agreement shall not preclude the further exercise thereof, and every right,
power and remedy of the Company and the undersigned under this Agreement shall
continue in full force and effect unless such right power or remedy is
specifically waived by an Instrument executed by the Company or the undersigned,
as the case may be.
9. Costs and Expenses. All reasonable costs and expenses (including
reasonable attorneys' fees) incurred by the Company in the exercise or
enforcement of any right, power or remedy granted it under this Agreement shall
become part of the indebtedness secured hereunder and shall constitute a
personal liability of the undersigned payable immediately upon demand.
10. Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of California and shall be binding upon
the executors, administrators, heirs and assigns of the undersigned.
11. Arbitration. Any controversy between the parties hereto involving
the construction or application of any terms, covenants or conditions of this
Agreement or the Note, or any claims arising out of or relating to this
Agreement or the Note, or the breach hereof or thereof, will be submitted to and
settled by final and binding arbitration in Orange County, California, in
accordance with the rules of the American Arbitration Association then in
effect, and judgment upon the award rendered by the arbitrator may be entered in
any court having jurisdiction thereof. In the event of any arbitration under
this Agreement or the Note, the prevailing party shall be entitled to recover
from the losing party reasonable expenses, attorneys' fees, and costs incurred
therein or in the enforcement or collection of any judgment or award rendered
therein. The "prevailing party" means the party determined by the arbitrator to
have most nearly prevailed, even if such party did not prevail in all matters,
not necessarily the one in whose favor a judgment is rendered.
12. Severability. If any provision of this Agreement is held to be
invalid under applicable law, then such provision shall be ineffective only to
the extent of such invalidity, and neither the remainder of such provision nor
any other provisions of this Agreement shall be affected thereby.
5
<PAGE> 18
IN WITNESS WHEREOF, this Agreement has been executed by the undersigned
as of February 7, 1996.
--------------------------------
L. George Klaus
Address:
--------------------------------
--------------------------------
Agreed to and Accepted by:
PLATINUM SOFTWARE CORPORATION
By:
-------------------------
Title:
----------------------
Dated: February 7, 1996
6
<PAGE> 1
EXHIBIT 10.35
February 7, 1996
Mr. William R. Pieser
5010 Birkdale Way
San Jose, CA 95138
Re: Offer of Employment
Dear Bill:
I am happy to extend you the following offer of employment at Platinum Software
Corporation (the "Company").
1. Title. Your position will be Senior Vice President, Marketing and
Business Development and you will report to the President of the Company. You
will be headquartered in the Company's Irvine, California offices.
2. Base Salary. Your base salary will be $210,000 per year paid
semi-monthly in accordance with the Company's normal payroll policies and
subject to standard withholding.
3. Annual Bonus. You will receive an annual bonus on a fiscal year basis
of up to $105,000 based on a performance plan to be agreed upon between you and
the President of the Company. For fiscal 1996 you will receive a bonus payable
on July 15, 1996 equal to $105,000 multiplied by the fraction, the numerator of
which is the number of days you were employed by the Company during its 1996
fiscal year and the denominator of which is 365. The Company's fiscal year ends
June 30, 1996.
4. Additional Incentive Bonus. You will be eligible to receive an annual
"additional incentive bonus" of up to $105,000. The performance criteria for
this bonus will be agreed upon and determined by you and the President of the
Company before August 1, 1996. This bonus will begin with the Company's 1997
fiscal year.
5. Restricted Stock. The Company offers you the right to purchase
500,000 shares of the Company's common stock ("Restricted Stock") on the
following terms:
<PAGE> 2
February 7, 1996
Mr. William R. Pieser
Page 2
(a) The purchase price of the Restricted Stock will be the closing
price of the Company's Common Stock on the NASDAQ National Market System on the
date of this offer letter, which is $3.50.
(b) In order to fund the purchase, the Company will provide you a
loan in the amount of the purchase price. The loan will be evidenced by a
recourse promissory note which will bear simple interest at a rate of 6% per
annum or such higher rate of interest as is sufficient to avoid imputed income
under Sections 483, 1274 or 7872 of the Internal Revenue Code of 1986, as
amended. Interest may be paid annually by you, deferred until the stock is sold,
or forgiven by the Board of Directors, at its sole discretion. The principal on
the loan will be due on a pro rata basis when the Restricted Stock is sold by
you or on the fifth anniversary of the promissory note, whichever occurs first.
The promissory note will be secured by a pledge of the Restricted Stock and
shall be recourse only to the extent of any deficiency in the value of the
Common Stock. If your employment is terminated for cause (as defined below) the
repayment of the promissory note shall be accelerated.
(c) The Company will retain the right to repurchase the Restricted
Stock at a price equal to the initial purchase price. The repurchase rights with
respect to 350,000 shares of Restricted Stock will lapse according to the
following schedule:
(i) 50,000 shares immediately upon the date of commencement of
your employment.
(ii) 8,334 shares on the first day of each month beginning on
the date of commencement of your employment and continuing
for each month thereafter for a period of 36 months.
The Company's repurchase rights with respect to the remaining
150,000 shares of Restricted Stock will lapse according to the following
schedule assuming the Company's fiscal year ending June 30, 1996 is the Base
Year:
(i) 25,000 shares if FY 1997 operating revenues exceed the
Base Year revenues by 25% and 25,000 shares if the
Company's profit after taxes for FY 1997 is equal to or
exceeds 5% of FY 1997 operating revenues.
(ii) 25,000 shares if FY 1998 operating revenues exceed the
Base Year revenues by 50% and 25,000 shares if the
Company's profit after taxes for FY 1998 is equal to or
exceeds 10% of FY 1998 operating revenues.
<PAGE> 3
February 7, 1996
Mr. William R. Pieser
Page 3
(iii) 25,000 shares if FY 1999 operating revenues exceed the
Base Year revenues by 75% and 25,000 Shares if the
Company's profit after taxes for FY 1999 is equal to or
exceeds 15% of FY 1999 operating revenues.
(d) All of the Company's repurchase rights with respect to any of
the Restricted Stock under this paragraph 5 shall lapse immediately upon a
Change of Control. For purposes of this section, a Change in Control shall mean
(i) the sale, lease, conveyance or other disposition of all or substantially all
of the Company's assets as an entirety or substantially as an entirety to any
person, entity or group of persons acting in concert, (ii) any transaction or
series of transactions that results in, or that is in connection with, any
person, entity or group acting in concert (other than existing affiliates of the
Company), acquiring "beneficial ownership" (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934), directly or indirectly, of such percentage of
the aggregate voting power of all classes of voting equity stock of the Company
as shall exceed fifty percent (50%) of such aggregate voting power, (iii) the
stockholders of the Company approve a merger or consolidation of the Company
with any other corporation, other than a merger or consolidation which would
result in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at least fifty percent
(50%) of the total voting power represented by the voting securities of the
Company or such surviving entity outstanding immediately after such merger or
consolidation; or (iv) a liquidation of the Company. Upon a Change of Control,
you may elect, in your sole discretion, not to have any portion of such
restrictions lapse in order to avoid any "parachute payment" under Section
280G(b)(2) of the Internal Revenue Code of 1986, as amended.
(e) If the Company shall terminate your employment agreement without
"cause" or if a "constructive termination" has occurred or if you die or become
disabled, the Company shall (i) pay you all compensation (including the base
salary and any bonus that would have been payable for the next six months under
paragraph 4 hereof) and benefits due you to the date of termination and for a
period of six months following the date of such termination and (ii) cancel the
Company's repurchase rights on the Restricted Stock for shares that otherwise
could be repurchased by the Company with respect to the six months following
your termination such that the Restricted Stock shall continue to vest for such
six-month period. During such period, you shall continue to be entitled to
participate in the Company's employee benefits plans or arrangements (as set
forth in Section 4 above) on the same basis as if you were an employee. For
purposes of this Agreement, disabled shall mean your inability due to any
physical or mental condition to perform a substantial portion of your duties as
Senior Vice President of Marketing and Business Development for 24 or more
consecutive weeks.
<PAGE> 4
February 7, 1996
Mr. William R. Pieser
Page 4
(f) For the purposes of this paragraph 5: (i) "cause" shall mean (A)
willful and repeated failure to comply with the lawful directions of the
Company's Board of Directors, or the President (B) gross negligence or willful
misconduct in the performance of duties to the Company and/or its subsidiaries,
(C) commission of any act of fraud with respect to the Company and/or its
subsidiaries, (D) conviction of a felony or a crime involving moral turpitude
causing material harm to the standing and reputation of the Company and/or its
subsidiaries, in each case as determined in good faith by the Company's Board of
Directors; and (ii) "constructive termination" shall be deemed to occur if
(A)(1) there is a material adverse change in your position causing it to be of
less stature or of less responsibility, (2) a change in the persons to whom you
report (other than a change in Board of Director composition) or (3) a reduction
of more than 20% of your base compensation and (B) the Company shall fail to
correct the occurrence to your reasonable satisfaction following written notice
by you within the thirty (30) days following receipt of such notice and you
elect to terminate your employment voluntarily.
(g) Registration Rights. In connection with the Restricted Stock,
the Company will register such shares on Form S-8. If registration of such
shares of Restricted Stock is not permissible on Form S-8 the Company will
register such shares on Form S-3, subject to customary underwriter lock ups and
cutbacks, if applicable, and shall rank in equal priority with the registration
rights held by existing preferred stockholders.
6. Relocation Allowances. The Company agrees to assist you in relocating
to Irvine, California. In this regard, you agree to list your home in San Jose,
California for sale. Provided that you substantiate that your investment in this
residence is approximately $640,000, the Company will, upon the sale of your
house, make up any shortfall in the sales price from your investment either by,
at the Company's election, : (i) reimbursing you the shortfall amount within 30
days following the closing or (ii) by participating in a simultaneous closing
and absorbing the shortfall. Any amount of reimbursement will be grossed up to
include income taxes on the amount of any reimbursement pursuant to this
paragraph 6 such that you will have no additional taxes solely because of any
such reimbursements. In addition, in order to assist you in purchasing a home in
Orange County, California, the Company will reimburse you for up to three (3)
points of financing and closing costs, and will guarantee bridge financing, if
necessary. The Company will provide temporary housing to you in its corporate
apartment. In addition, the Company will reimburse you for your costs incurred
in leasing a vehicle during any temporary living period. Finally, the Company
will cover your moving expenses to Southern California as well as return moving
expenses to Northern California at a time no earlier than three years unless the
Company is sold or relocated in which case they will be provided at the time of
the sale or relocation.
<PAGE> 5
February 7, 1996
Mr. William R. Pieser
Page 5
7. Country Club Membership. The Company will purchase a membership in a
country club of your choice in your name (or the name you choose) provided the
Company will not be obligated to pay more than $50,000 for the initial
membership fee. You will agree to return any proceeds from the sale of this
membership immediately after its sale, unless otherwise agreed in writing by the
President of the Company.
8. Other. Effective the beginning of the month following your start date,
you will be eligible to participate in the Company's health plan, including the
Exec-U-Care plan. After meeting eligibility requirements, you will be able to
participate in various company benefit programs including the Company's 401(k)
savings program, Section 125 Reimbursement Account, and the Confidential
Employee Assistance Program (EAP).
9. Indemnification. In the event you are made, or threatened to be made,
a party to any legal action or proceeding, whether civil or criminal, by reason
of the fact that you are or were a director or officer of the Company or serves
or served any other corporation fifty percent (50%) or more owned or controlled
by the Company in any capacity at Company's request, you shall be indemnified by
the Company, and the Company shall pay your related expenses when and as
incurred, all to the full extent permitted by law.
10. Successors. Any successor to the Company (whether direct or indirect
and whether by purchase, lease, merger, consolidation, liquidation or otherwise)
to all or substantially all of the Company's business and/or assets shall assume
the obligations under this Agreement and agree expressly to perform the
obligations under this Agreement in the same manner and to the same extent as
the Company would be required to perform such obligations in the absence of a
succession. The terms of this Agreement and all of your rights hereunder shall
inure to the benefit of, and be enforceable by, your personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.
This offer is contingent upon execution of the Company's Employee Proprietary
Agreement and the Employee Acknowledgment Statement and your having a physical
exam within thirty (30) days after commencing employment and remedying any
deficiencies from any unsatisfactory results of the physical. Upon accepting
this offer, you will be required to sign and agree to the terms therein.
Additionally, due to the Immigration Reform Act and Control of 1986, if you are
an employee of the Company in the United States, prior to or on your first day
of employment, you will be required to show proof of identity and authorization
to work in the United States. Please be prepared to show appropriate
documentation for evidence of identity and employment eligibility.
<PAGE> 6
February 7, 1996
Mr. William R. Pieser
Page 6
Please indicate your acceptance of this offer by signing in the space below.
Upon receipt, I will have the necessary agreements prepared to document the
items described in this offer letter. If you have any questions, please do not
hesitate to call.
Very truly yours, Accepted:
______________________________
L. George Klaus William R. Pieser
President and Chief Executive Officer
LGK:cl
<PAGE> 1
EXHIBIT 10.36
PLATINUM SOFTWARE CORPORATION
RESTRICTED STOCK PURCHASE AGREEMENT
THIS RESTRICTED STOCK PURCHASE AGREEMENT (the "Agreement") is entered
into as of this 7th day of February, 1996, between WILLIAM R. PIESER
(hereinafter referred to as "Purchaser"), and PLATINUM SOFTWARE CORPORATION, a
Delaware corporation (hereinafter referred to as the "Company"), with reference
to the following facts:
R E C I T A L S :
A. Purchaser is an employee, director, consultant or other
person who provides services to the Company or a parent or subsidiary of the
Company, as those terms are defined in Sections 424(e) and 424(f) of the
Internal Revenue Code of 1986, as amended (a "Service Provider"), and in
connection therewith has rendered services for and on behalf of the Company.
B. The Company desires to issue shares of common stock to
Purchaser for the consideration set forth herein to provide an incentive for
Purchaser to remain a Service Provider of the Company and to exert added effort
towards its growth and success.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth, and for other good and valuable consideration, the parties agree as
follows:
1. ISSUANCE OF SHARES. The Company hereby agrees to issue and sell to
Purchaser, and Purchaser hereby agrees to purchase from the Company an aggregate
of Five Hundred Thousand (500,000) shares of the Common Stock, $0.001 par value,
of the Company (the "Shares") on the terms and conditions herein set forth.
2. CONSIDERATION. The purchase price for the Shares shall be $3.50 per
share which is the fair market value of the Shares as of the date hereof, or
$1,750,000 in the aggregate, which shall be paid by (i) the delivery of
Purchaser's check in the amount of $875,000, and (ii) the delivery of
Purchaser's promissory note in the principal amount of $875,000 in the form of
Exhibit A attached hereto (the "Note") which shall be executed and delivered by
Purchaser concurrently herewith. The Note shall be secured by a pledge of the
Shares pursuant to the terms and provisions of a Stock Pledge Agreement in the
form of Exhibit B attached hereto which shall be executed and delivered
concurrently herewith.
3. RECONVEYANCE UPON TERMINATION OF SERVICE.
(a) RECONVEYANCE OPTION. If Purchaser should cease to be a Service
Provider of the Company or a parent or its subsidiaries, for any reason
(hereinafter referred to as the "Termination Date"), the Company shall have the
option to acquire (hereinafter referred to as the "Reconveyance Option") from
Purchaser all or part of the unvested Shares. The Shares shall vest according to
the following schedule:
<PAGE> 2
(i) 50,000 Shares shall vest immediately upon the date of this
Agreement.
(ii) 8,334 Shares shall vest on the first day of each month beginning
on the date of this Agreement and continuing for each month
thereafter for a period of thirty-six (36) months, at which time
an aggregate of 350,000 Shares shall be vested and shall not be
subject to the Reconveyance Option.
(iii) The Company's Reconveyance Option with respect to the remaining
150,000 Shares will lapse according to the following schedule,
assuming the Company's fiscal year ending June 30, 1996 is the
Base Year:
(A) 25,000 Shares if Fiscal Year 1997 operating revenues exceed
the Base Year operating revenues by twenty-five percent
(25%) or more, and 25,000 Shares if the Company's profit
after taxes for Fiscal Year 1997 is equal to or exceeds five
percent (5%) of Fiscal Year 1997 operating revenues.
(B) 25,000 Shares if Fiscal Year 1998 operating revenues exceed
the Base Year operating revenues by fifty percent (50%) or
more, and 25,000 Shares if the Company's profit after taxes
for Fiscal Year 1998 is equal to or exceeds ten percent
(10%) of Fiscal Year 1998 operating revenues.
(C) 25,000 Shares if Fiscal Year 1999 operating revenues exceed
the Base Year operating revenues by seventy-five percent
(75%) or more, and 25,000 Shares if the Company's profit
after taxes for Fiscal Year 1999 is equal to or exceeds
fifteen percent (15%) of Fiscal Year 1999 operating
revenues.
(D) If any of such 150,000 Shares have not otherwise vested
pursuant to the provisions of clauses (A), (B) or (C) above,
all of the remaining unvested Shares shall vest on February
7, 2006.
(b) TERMINATION OF RECONVEYANCE OPTION. All of the Company's
rights with respect to the Reconveyance Option to purchase any of the unvested
Shares under this Section 3 shall lapse immediately upon a "Change in Control"
(as defined below). For purposes of this Section 3, a Change in Control shall
mean:
(i) The sale, lease, conveyance or other disposition of all or
substantially all of the Company's assets as an entirety or
substantially as an entirety to any person, entity or group of
persons acting in concert;
(ii) Any transaction or series of transactions that result in, or that
is in connection with, any person, entity or group acting in
concert (other than existing affiliates of the Company),
acquiring "beneficial ownership" (as defined in Rule 13d-3 under
the Securities Exchange Act of 1934, as amended), directly or
indirectly, of such percentage of the aggregate voting power of
all classes of voting equity stock of the Company as shall exceed
fifty percent (50%) of such aggregate voting power;
(iii) The stockholders of the Company approve a merger or consolidation
of the Company with any other corporation, other than a merger or
consolidation which would result
2
<PAGE> 3
in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining
outstanding or being converted into voting securities of the
surviving entity) at least fifty percent (50%) of the total
voting power represented by the voting securities of the Company
or such surviving entity outstanding immediately after such
merger or consolidation; or
(iv) A liquidation of the Company.
Upon a Change in Control, Purchaser may elect, in his sole discretion, not to
have any portion of the Reconveyance Option lapse in order to avoid any
"parachute payment" under Section 280G(b)(2) of the Internal Revenue Code of
1986, as amended.
(c) TERMINATION OF EMPLOYMENT WITHOUT CAUSE. In the event the
Company shall terminate Purchaser's employment without "Cause," or if a
"Constructive Termination" of Purchaser's employment with the Company has
occurred, or if Purchaser should die or become disabled, the Repurchase Option
shall lapse on the Shares that otherwise could be repurchased by the Company
pursuant to the Reconveyance Option with respect to the six (6) months following
the date of Purchaser's termination of employment, such that the Shares shall
continue to vest for such six (6) month period. For the purposes of this Section
3:
(i) "Cause" shall mean:
(A) Willful and repeated failure to comply with the lawful
directions of the Company's Board of Directors or the
President;
(B) Gross negligence or willful misconduct in the performance of
duties of the Company and/or its subsidiaries;
(C) The commission of any act of fraud with respect to the
Company and/or its subsidiaries; or
(D) Conviction of a felony or a crime involving moral turpitude
causing material harm to the standing and reputation of the
Company and/or its subsidiaries;
in each case as determined in good faith by the Company's Board
of Directors.
(ii) "Constructive Termination" shall be deemed to occur if:
(A) (1) There is a material adverse change in Purchaser's
position with the Company causing such position to be of
less stature or of less responsibility; or
(2) A change in persons to whom Purchaser reports (other than
a change in the Board of Director's composition); or
(3) A reduction of more than twenty percent (20%) of
Purchaser's base compensation; and
3
<PAGE> 4
(B) The Company shall fail to correct the occurrence to
Purchaser's reasonable satisfaction following written notice
by Purchaser within thirty (30) days following receipt of
such notice, and Purchaser elects to terminate his
employment voluntarily.
(iii) "Disability" shall mean Purchaser's inability due to any physical
or mental condition to perform a substantial portion of his
duties as Senior Vice President of Marketing and Business
Development of the Company for twenty-four (24) or more
consecutive weeks.
(d) CONSIDERATION FOR RECONVEYANCE OPTION. The Company shall
pay Purchaser as consideration for the unvested Shares to be acquired upon any
exercise of the Reconveyance Option the original purchase price paid by
Purchaser. The Company may elect to pay such purchase price in cash or by
cancellation of indebtedness of Purchaser to the Company pursuant to the Note,
or otherwise.
(e) PROCEDURE FOR EXERCISE OF RECONVEYANCE OPTION. The Company
shall have the right to exercise the Reconveyance Option by acquiring all or any
part of the Shares subject to the Reconveyance Option by delivery to Purchaser
and/or any other person obligated to transfer the Shares written notice of
election to purchase the Shares or any portion thereof within sixty (60) days
following the Termination Date. Such written notice shall indicate the number of
Shares to be purchased by the Company. In the event that the Company does not
elect to exercise the Reconveyance Option as to all or part of the Shares under
the provisions of this Section 3 by written notice to Purchaser within the
period specified above, the Reconveyance Option shall expire as to all Shares
which the Company has not elected to acquire.
(f) NOTIFICATION AND SETTLEMENT. In the event that the Company
has elected to exercise the Reconveyance Option as to part or all of the Shares
within the period described above, Purchaser or such other person shall deliver
to the Company certificate(s) representing the Shares to be acquired by the
Company within thirty (30) days following the date of the notice from the
Company. The Company shall deliver to Purchaser against delivery of the Shares,
checks of the Company payable to Purchaser and/or any other person obligated to
transfer the Shares and/or instruments effecting cancellation of indebtedness of
Purchaser to the Company in the aggregate amount of the purchase price to be
paid as set forth in paragraph (d) above.
4. ESCROW.
(a) DEPOSIT. Upon issuance, the certificates for the unvested
Shares shall be deposited in escrow with the Corporate Secretary to be held in
accordance with the provisions of this Section 4. The deposit obligations of
Purchaser under this Section 4 shall be in addition to the obligations of
Purchaser to deliver possession of the Shares to the Company under the Stock
Pledge Agreement. Each deposited certificate shall be accompanied by a
duly-executed Assignment Separate from Certificate. The deposited certificates,
together with any other assets or securities from time to time deposited with
the Corporate Secretary pursuant to the requirements of this Agreement, shall
remain in escrow until such time or times as the certificates (or other assets
or securities) are to be released or otherwise surrendered for cancellation in
accordance with this Section 4.
4
<PAGE> 5
(b) RECAPITALIZATION. In the event of any stock split, stock
dividend, recapitalization, reorganization, combination of shares, exchange of
shares, or other change affecting the Company's outstanding Common Stock as a
class effected without the Company's receipt of consideration, any new,
substituted or additional securities or other property which is by reason of
such transaction distributed with respect to the Shares shall be immediately
delivered to the Corporate Secretary to be held in escrow under this Section 4,
but only to the extent the Shares are at the time subject to the escrow
requirements of this Section 4. However, all regular cash dividends on the
Shares (or other securities a the time held in escrow) shall be paid directly to
Purchaser and sall not be held in escrow.
(c) RELEASE/SURRENDER. The Shares, together with any other assets
or securities held in escrow hereunder, shall be subject to the following terms
and conditions relating to their release from escrow or their surrender to the
Company for repurchase and cancellation:
(i) Should the Company (or its assignees) elect to exercise the
Reconveyance Option with respect to any Shares, then the escrowed
certificates for such Shares (together with any other assets or
securities attributable thereto) shall be delivered to the
Company concurrently with the payment to Purchaser, in cash or
cash equivalent (including the cancellation of any indebtedness),
of an amount equal to the aggregate purchase price for such
Shares, and Purchaser shall cease to have any further rights or
claims with respect to such Shares (or other assets or securities
attributable to such Shares). Any balance of Shares not purchased
by the Company pursuant to the exercise of the Reconveyance
Option shall be delivered to Purchaser.
(ii) As the interest of Purchaser in the Shares (or any other assets
or securities attributable thereto) vests in accordance with the
provisions of Section 3, subject to the provisions set forth in
the Stock Pledge Agreement, the certificates for such vested
Shares (as well as all other vested assets and securities) shall
be released from escrow upon Purchaser's request, but not more
frequently than six (6) times per year.
(iii) All Shares (or other assets or securities) released from escrow
shall nevertheless remain subject to the market stand-off
provisions set forth in Section 16 hereof.
5. INVESTMENT REPRESENTATIONS. Purchaser represents and warrants to
the Company as follows:
(a) He is acquiring the Shares for his own account, not as
nominee or agent, for investment and not with a view to, or for resale in
connection with, any distribution or public offering thereof within the meaning
of the 1933 Act.
(b) He understands that (i) the Shares have not been registered
under the 1933 Act by reason of a specific exemption therefrom, that they must
be held by him indefinitely, and that he must, therefore, bear the economic risk
of such investment indefinitely, unless a subsequent disposition thereof is
registered under the 1933 Act or is exempt from such registration; (ii) the
Shares will be endorsed with the following legend:
"THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT
5
<PAGE> 6
BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS PURSUANT TO SEC
RULE 144 OR RULE 144A OR THERE IS AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE 1933 ACT COVERING SUCH SECURITIES OR THE COMPANY RECEIVES AN
OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY
SATISFACTORY TO THE COMPANY, STATING THAT SUCH SALE, TRANSFER,
ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF THE 1933 ACT."
and (iii) the Company will instruct any transfer agent not to register the
transfer of any of the Shares unless the conditions specified in the foregoing
legend are satisfied; provided, however, that no such opinion of counsel shall
be necessary if the sale, transfer or assignment is made pursuant to SEC Rule
144 or Rule 144A and Purchaser provides the Company with evidence reasonably
satisfactory to the Company and its counsel that the proposed transaction
satisfies the requirements of Rule 144 or Rule 144A. The Company agrees to
remove the foregoing legend from any securities if the requirements of SEC Rule
144(k) (or any successor rule or regulation) apply with respect to such
securities and the Company and its counsel are provided with reasonably
satisfactory evidence that the requirements of Rule 144(k) apply.
(c) He acknowledges that he is able to fend for himself, can
bear the economic risk of his investment and has such knowledge and experience
in financial or business matters that he is capable of evaluating the merits and
risks of the investment in the Shares and the Underlying Common Stock.
(d) He is an "accredited investor" within the meaning of SEC
Rule 501 of Regulation D, as presently in effect.
(e) He understands that the Shares he is purchasing are
characterized as "restricted securities" under the federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the 1933 Act, only in
certain limited circumstances, and he represents that he is familiar with SEC
Rule 144 and Rule 144A, as presently in effect, and understands the resale
limitations imposed thereby and by the 1933 Act.
6. REGISTRATION OF SHARES. Upon the request of Purchaser, the Company
agrees to use its best efforts to register the resale of the Shares on Form S-8
or Form S-3, whichever is available, subject to customary underwriter lock-ups
and cutbacks, if applicable, and the registration rights with respect to the
Shares shall rank in equal priority with the registration rights held by the
existing preferred stockholders of the Company. Purchaser understands that the
approval of the holders of a majority of the outstanding shares of preferred
stock is required in order to grant the foregoing registration rights, and the
Company agrees to use its best efforts to promptly obtain such approval. The
Company and Purchaser agree that the registration rights of Purchaser set forth
above shall be on terms and provisions substantially the same as the applicable
terms and provisions of the Registration Rights Agreement between the Company
and its existing preferred stockholders.
6
<PAGE> 7
7. SHARES FREE AND CLEAR. All Shares purchased by the Company pursuant
to this Agreement shall be delivered by Purchaser free and clear of all claims,
liens and encumbrances of every nature (except the provisions of this Agreement
and any conditions concerning the Shares relating to compliance with applicable
federal or state securities laws), and the purchaser thereof shall acquire full
and complete title and right to all of the shares, free and clear of any claims,
liens and encumbrances of every nature (again except for the provisions of this
Agreement and such securities laws).
8. NOTICES. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly given when
personally delivered or three (3) days after being mailed, by United States
certified or registered mail, prepaid, to the parties or their assignees at the
addresses set forth opposite their signatures below (or such other address as
shall be given in writing by either party to the other).
9. BINDING OBLIGATIONS. All covenants and agreements herein contained
by or on behalf of any of the parties hereto shall bind and inure to the benefit
of the parties hereto and their permitted successors and assigns.
10. CAPTIONS AND SECTION HEADINGS. Captions and section headings used
herein are for convenience only, and are not part of this Agreement and shall
not be used in construing it.
11. AMENDMENT. This Agreement may not be amended, waived, discharged,
or terminated other than by written agreement of the parties.
12. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
prior or contemporaneous written or oral agreements and understandings of the
parties, either express or implied.
13. ASSIGNMENT. No party hereto shall have the right, without the prior
written consent of the other party, to sell, assign, mortgage, pledge or
otherwise transfer any interest or right created hereby. This Agreement is made
solely for the benefit of the parties hereto, and no other person, partnership,
association or corporation shall acquire or have any right under or by virtue of
this Agreement.
14. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one agreement and any
party hereto may execute this Agreement by signing any such counterpart. This
Agreement shall be binding upon Purchaser and the Company at such time as the
Agreement, in counterpart or otherwise, is executed by Purchaser and the
Company.
15. APPLICABLE LAW. This Agreement shall be construed under, and
enforced in accordance with and governed by the laws of the State of California.
16. NO AGREEMENT TO EMPLOY. Nothing in this Agreement shall be
construed to constitute or be evidence of any agreement or understanding,
express or implied, on the part of the Company to employ or retain Purchaser for
any specific period of time. Purchaser acknowledges and agrees that he is an
"at-will" employee of the Company and that the terms and conditions of
7
<PAGE> 8
his employment are governed by a letter agreement dated February 7, 1996 between
the Company and Purchaser.
17. MARKET STANDOFF AGREEMENT. Purchaser agrees in connection with any
registration of the Company's securities that, upon the request of the Company
or the underwriters managing any public offering of the Company's securities,
Purchaser will not sell or otherwise dispose of any Shares without the prior
written consent of the Company or such underwriters, as the case may be, for a
period of time (not to exceed the lesser of (i) 180 days or (ii) the time period
generally applicable to other affiliates of the Company) from the effective date
of such registration as the Company or the underwriters may specify.
18. TAX ELECTIONS. Purchaser acknowledges that Purchaser has considered
the advisability of all tax elections in connection with the purchase of the
Shares hereunder, including the making of an election under Section 83(b) under
the Internal Revenue Code of 1986, as amended, and that the Company has no
responsibility for the making of any such election.
19. ATTORNEYS' FEES. If any party shall bring an action in law or
equity against another to enforce or interpret any of the terms, covenants and
provisions of this Agreement, the prevailing party in such action shall be
entitled to recover reasonable attorneys' fees and costs.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
THE COMPANY:
PLATINUM SOFTWARE CORPORATION
195 Technology Drive
Irvine, California 92718
By:
--------------------------
Name:
------------------------
Title:
-----------------------
PURCHASER:
- --------------------------
- -------------------------- -----------------------------
William R. Pieser
-----------------------------
(print name)
8
<PAGE> 9
CONSENT AND RATIFICATION OF SPOUSE
The undersigned, the spouse of William R. Pieser, a party to the
attached Restricted Stock Purchase Agreement (the "Agreement"), dated as of
_______________, hereby consents to the execution of said Agreement by such
party; and ratifies, approves, confirms and adopts said Agreement, and agrees to
be bound by each and every term and condition thereof as if the undersigned had
been a signatory to said Agreement, with respect to the Shares (as defined in
the Agreement) made the subject of said Agreement in which the undersigned has
an interest, including any community property interest therein.
Date: February _____, 1996
______________________________
______________________________
(Print Name)
<PAGE> 10
SECTION 83(b) TAX ELECTION
This statement is being made under Section 83(b) of the Internal Revenue Code,
pursuant to Treas. Reg. Section 1.83-2.
(1) The taxpayer who performed the services is:
Name: William R. Pieser
Address:
Taxpayer Ident. No.:
(2) The property with respect to which the election is being made is
450,000 shares of the common stock of Platinum Software Corporation.
(3) The property was issued on February 7, 1996.
(4) The taxable year in which the election is being made is the calendar
year 1996.
(5) The property is subject to a repurchase right pursuant to which the
issuer has the right to acquire the property at the original purchase
price if for any reason taxpayer's employment with the issuer is
terminated. The issuer's repurchase right as to 300,000 shares lapses
in a series of annual and monthly installments over a three-year period
ending on February 7, 1999. In addition, the issuer's repurchase rights
as to 150,000 shares lapses according to certain financial performance
criteria over a period of three fiscal years of the issuer through the
fiscal year ending on June 30, 1999, and in any event on February 7,
2006.
(6) The fair market value at the time of transfer (determined without
regard to any restriction other than a restriction which by its terms
will never lapse) is $3.50 per share.
(7) The amount paid for such property is $3.50 per share.
(8) A copy of this statement was furnished to Platinum Software Corporation
for whom taxpayer rendered the services.
(9) This statement is executed as of February ___, 1996.
______________________________ ______________________________
Spouse Taxpayer - William R. Pieser
This election must be filed with the Internal Revenue Service Center with which
taxpayer files his or her Federal income tax returns and must be made within
thirty (30) days after the execution date of the Stock Purchase Agreement. This
filing should be made by registered or certified mail, return receipt requested.
Taxpayer must retain two (2) copies of the completed form for filing with his or
her Federal and state tax returns for the current tax year and an additional
copy for his or her records.
<PAGE> 11
NOTE SECURED BY STOCK PLEDGE AGREEMENT
$875,000 FEBRUARY 7, 1996
IRVINE, CALIFORNIA
FOR VALUE RECEIVED, the undersigned William R. Pieser promises to pay to
Platinum Software Corporation, (the "Company'), at its principal offices at 195
Technology Drive, Irvine, California 92718-2402, the principal sum of Eight
Hundred Seventy-Five Thousand Dollars ($875,000), together with interest from
the date of this Note on the unpaid principal balance upon the terms and
conditions specified below.
1. Principal and Interest. The principal balance of this Note together
with interest accrued and unpaid to date shall be due and payable on or before
five (5) years from the date of this Note or on or before February 7, 2001. The
foregoing notwithstanding, in the event of the sale of any shares of Common
Stock of the Company which are pledged as security under the Stock Pledge
Agreement securing this Note, a principal amount of this Note equal to the
lesser of (i) the net proceeds received by the undersigned in connection with
the sale of the shares of Common Stock, or (ii) the number of shares of Common
Stock sold multiplied by Three Dollars and Fifty Cents ($3.50), together with
interest accrued and unpaid on such principal amount, shall be paid to the
Company concurrently upon receipt of the proceeds from the sale of the shares of
Common Stock.
2. Rate of Interest. Interest shall accrue under the Note on any
unpaid principal balance at the rate of 6.0% per annum, compounded annually, and
shall be paid on or before the maturity date of this Note.
3. Application Payments. Each payment shall be made in lawful tender
of the United States. Prepayment of principal and interest may be made at any
time without penalty.
4. Events of Acceleration. The entire unpaid principal and unpaid
interest of this Note shall become immediately due and payable upon one or more
of the following events:
A. the default in any payment due under this Note, and the
failure to cure such default within ten (10) days of written notice of such
default;
B. the insolvency of William R. Pieser, the commission of an
act of bankruptcy by William R. Pieser, the execution by William R. Pieser of a
general assignment for the benefit of creditors, the filing by or against
William R. Pieser of a petition in bankruptcy or a petition for relief under the
provisions of the federal bankruptcy act or another state or federal law for the
relief of debtors and the continuation of such petition without dismissal for a
period of ninety (90) days or more;
C. the occurrence of a material event of default under the
Stock Pledge Agreement securing this Note; or
<PAGE> 12
D. the termination of employment of William R. Pieser by the
Company for "cause," as defined in that certain letter agreement between the
Company and William R. Pieser dated February 7, 1996.
5. Security. Payment of this Note shall be secured by a Stock Pledge
Agreement to be executed by William R. Pieser and covering 500,000 shares of the
Company's Common Stock. William R. Pieser, however, shall remain personally
liable for payment of this Note to the extent of any deficiency in the value of
the Common Stock. Anything herein to the contrary notwithstanding, in the event
of any default in payment or principal or interest under this Note, the Company
agrees to pursue to the fullest extent possible its rights and remedies to
foreclose upon and dispose of the shares of Common Stock pledged as collateral
under the Stock Pledge Agreement prior to pursuing any right or remedy as to the
personal liability or other assets of William R. Pieser.
6. Collection. If action is instituted to collect this Note, William
R. Pieser promises to pay all reasonable costs and expenses (including
reasonable attorneys fees) incurred in connection with such action.
7. Waiver. No previous waiver and no failure or delay by Platinum
Software Corporation or William R. Pieser in acting with respect to the terms of
this Note or the Stock Pledge Agreement shall constitute a waiver of any breach,
default, or failure of condition under this Note, the Stock Pledge Agreement, or
the obligations secured thereby. A waiver of any term of this Note, the Stock
Pledge Agreement, or of any of the obligations secured thereby must be made in
writing and shall be limited to the express terms of such waiver. William R.
Pieser hereby expressly waives presentment and demand for payment at such time
as any payments are due under this Note.
8. Conflicting Agreements. In the event of any inconsistencies
between the terms of this Note and the terms of any other document related to
the loan evidenced by the Note, the terms of this Note shall prevail.
9. Governing Law. This Note shall be construed in accordance with
the law of the State of California.
-------------------------------
William R. Pieser
2
<PAGE> 13
STOCK PLEDGE AGREEMENT
In order to secure payment of that certain February 7, 1996 promissory
note (the Note") payable to the order of Platinum Software Corporation, a
Delaware corporation (the "Company") having its corporate offices at 195
Technology Drive, Irvine, California 92718-2402, in the principal amount of
Eight Hundred Seventy-Five Thousand Dollars ($875,000), the undersigned hereby
grants the Company a security interest in, and assigns, transfers to and pledges
the Company the following securities and other property:
(i) the 500,000 shares of Company common stock ("Common Stock")
and deposited with the Company as collateral for the Note;
(ii) any and all new, additional or different securities or
other property subsequently distributed with respect to the shares identified in
subparagraph (i) that are to be delivered to and deposited with the Company
pursuant to the requirements of paragraph 3 of this Agreement; and
(iii) any and all other property and money that is delivered to
or comes into the possession of the Company pursuant to the terms and provisions
of this Agreement.
All securities, property and money so assigned, transferred to and
pledged with the Company shall be herein referred to as the "Collateral" and
shall be accompanied by one or more stock power assignments properly endorsed by
the undersigned. The Company shall hold the Collateral in accordance with the
following terms and provisions:
1. Warranties. The undersigned hereby warrants that the undersigned
is the owner of the Collateral and has the right to pledge the Collateral and
that the Collateral is free from all liens, adverse claims and other security
interests (other than those created hereby).
2. Rights and Powers. The Company may without obligation to do so,
exercise one or more of the following rights and powers with respect to the
Collateral:
(a) accept in its discretion, but subject to the applicable
limitations of paragraphs 6(c) and 6(e), other property of the undersigned in
exchange for all or part of the Collateral and release Collateral to the
undersigned to the extent necessary to effect such exchange, and in such event
the money, property or securities received in the exchange shall be held by the
Company as substitute security for the Note and all other indebtedness secured
hereunder, and
(b) transfer record ownership of the Collateral to the Company
or its nominee and receive, endorse and give receipt for, or collect by legal
proceedings or otherwise, dividends or other distributions made or paid with
respect to the Collateral, provided and only if there exists at the time an
outstanding event of default under paragraph 7 of this Agreement.
The Company will notify the undersigned of any action taken by
the Company pursuant to the provisions of this Section 2. Expenses reasonably
incurred in connection with such action shall
<PAGE> 14
be payable by the undersigned and form part of the indebtedness secured
hereunder as provided in paragraph 9.
So long as there exists no event of default under Section 7 of
this Agreement, the undersigned may exercise all stockholder voting rights and
be entitled to receive any and all regular cash dividends paid on the
Collateral. Accordingly, until such time as an event of default occurs under
this Agreement, all proxy statements and other stockholder materials pertaining
to the Collateral shall be delivered to the undersigned at the address indicated
below.
Any cash sums that the Company may receive in the exercise of its
rights and powers under paragraph 2(b) above shall be applied to the payment of
the Note and any other indebtedness secured hereunder, in such order of
application as the Company deems appropriate. Any remaining cash shall be paid
over to the undersigned.
3. Duty to Deliver. Any new, additional or different securities that
may now or hereafter become distributable with respect to the Collateral by
reason of (i) any stock dividend, stock split or reclassification of the Common
Stock of the Company, or (ii) any merger, consolidation or other reorganization
affecting the capital structure of the Company, shall, upon receipt by the
undersigned, be promptly delivered to and deposited with the Company as part of
the Collateral hereunder. Such securities shall be accompanied by one or more
properly endorsed stock power assignments.
4. Care of Collateral. The Company shall exercise reasonable care in
the custody and preservation of the Collateral, but shall have no obligation to
initiate any action with respect to any conversion, call, exchange right,
preemptive right, subscription right, purchase offer or other right or privilege
relating to or affecting the Collateral. The Company shall have no duty to
preserve the rights of the undersigned against adverse claims or to protect the
Collateral against the possibility of a decline in market value. The Company
shall not be obligated to take any action with respect to the Collateral
requested by the undersigned unless the request is made in writing and the
Company determines that the requested action will not unreasonably jeopardize
the value of the Collateral as security for the Note and other indebtedness
secured hereunder.
The Company may at any time release and deliver all or part of the
Collateral to the undersigned, and the receipt thereof by the undersigned shall
constitute a complete and full acquittance for the Collateral so released and
delivered. The Company shall accordingly be discharged from any further
liability or responsibility for the Collateral, and the released Collateral
shall no longer be subject to the provisions of this Agreement. However, any and
all release of the Collateral shall be effected in compliance with the
applicable limitations of paragraphs 6(c) and 6(e).
5. Payment of Taxes and Other Changes. The undersigned shall pay,
prior to the delinquency date, all taxes, liens, assessments and other charges
against the Collateral, and in the event of the undersigned's failure to do so,
the Company may at its election pay any or all of such taxes and charges without
contesting the validity or legality thereof. The payment so made shall become a
part of the indebtedness secured hereunder and until paid shall bear interest at
the Company's bank interest rate then being earned by the Company on its
deposits.
2
<PAGE> 15
6. Release of Collateral. Provided (i) there does not otherwise
exist any event of default under Section 7, including without limitation any
default under the Note, and (ii) the shares of Common Stock are not otherwise
subject to the Reconveyance Option of the Company as set forth in that certain
Restricted Stock Purchase Agreement between the undersigned and the Company
dated February 7, 1996, the pledged shares of Common Stock together with any
additional Collateral that may hereafter be pledged and deposited hereunder,
shall be released from pledge and returned to the undersigned in accordance with
the following provisions:
(a) Upon payment or prepayment of principal under the Note,
together with payment of all accrued interest to date, one or more shares of the
Common Stock held as Collateral hereunder shall (subject to the applicable
limitations of paragraphs 6(c) and 6(e) below) be released to the undersigned
within three (3) days after such payment or prepayment. The number of the shares
to be so released shall be equal to the number obtained by multiplying (i) the
total number of shares of Common Stock held under this Agreement at the time of
the payment or prepayment, by (ii) a fraction the numerator of which shall be
the amount of the principal paid or prepaid and the denominator of which shall
be, the unpaid principal balance of the Note immediately prior to such payment
or prepayment. In no event, however, shall any fractional shares be released.
(b) Any additional Collateral that may hereafter be pledged and
deposited with the Company (pursuant to the requirements of Section 3) with
respect to the shares of Common Stock pledged hereunder shall be released at the
same time the particular shares of Common Stock to which the additional
Collateral relates are to be released in accordance with the applicable
provisions of paragraph 6(a). Under no circumstances, however, shall any shares
of Common Stock or any other Collateral be released if previously applied to the
payment of any indebtedness secured hereunder.
(c) In no event, however, shall any shares of Common Stock be
released pursuant to the provisions of paragraph 6(a) or 6(b) if, and to the
extent, the fair market value of the Common Stock and all other Collateral that
would otherwise remain in pledge hereunder after such release were effected
would be less than one hundred fifty percent (150%) of the unpaid balance of the
Note (principal and accrued interest).
(d) For all valuation purposes under this Agreement, the fair
market value per share of Common Stock on any relevant date shall be determined
in accordance with the following provisions:
(i) If the Common Stock is not at the time listed or
admitted to trading on any stock exchange but is traded in the over-the-counter
market, the fair market value shall be the mean between the highest bid and
lowest asked prices (or, if such information is available, the closing selling
price) per share of Common Stock on the date in question in the over-the-counter
market, as such prices are reported by the National Association of Securities
Dealers on the NASDAQ National Market or any successor system. If there are no
reported bid and asked prices (or closing selling price) for the Common Stock on
the date in question, then the mean between the highest bid price and lowest
asked price (or the closing selling price) on the last preceding date for which
such quotations exist shall be determinative of fair market value.
3
<PAGE> 16
(ii) If the Common Stock is at the time listed or admitted
to trading on any stock exchange, then the fair market value shall be the
closing selling price per share of Common Stock on the date in question on the
stock exchange serving as the primary market for the Common Stock, as such price
is officially quoted in the composite tape of transactions on such exchange. If
there is no reported sale of Common Stock on such exchange on the date in
question, then the fair market value shall be the closing selling price on the
exchange on the last preceding date for which such quotation exists.
(iii) If the Common Stock at the time is neither listed nor
admitted to trading on any stock exchange nor traded in the over-the-counter
market, then the fair market shall be the most current value per share
determined in good faith by the Company's Board of Directors.
(e) In the event the securities constituting the Collateral are
"margin securities" (within the meaning of Section 207.2(i) of Regulation G of
the Federal Reserve Board), then, to the extent applicable, the number of shares
to be released pursuant to paragraph 6(a) or (b) shall be reduced to the extent
necessary to comply with Regulation G.
7. Events of Default. The occurrence of one or more of the following
events shall constitute an event of default under this Agreement:
(a) the failure of the undersigned to pay the principal and
accrued interest when due under the Note; or
(b) the failure of the undersigned to perform a material
obligation imposed upon the undersigned by reason of this Agreement and the
failure to cure such default within sixty (60) days of written notice of the
Company to the undersigned.
Upon the occurrence of any such event of default, the Company may, at
its election, declare the Note and all other indebtedness secured hereunder to
become immediately due and payable and may exercise any or all of the rights and
remedies granted to a secured party under the provisions of the California
Uniform Commercial Code (as now or hereafter in effect), including (without
limitation) the power to dispose of the Collateral by public or private sale or
to accept the Collateral in full payment of the Note and all other indebtedness
secured hereunder. Anything herein to the contrary notwithstanding, the Company
agrees to pursue its rights to foreclose and dispose of the Collateral pursuant
to the applicable provisions of the California Uniform Commercial Code prior to
seeking recourse against the undersigned personally, or any other assets of the
undersigned.
Any proceeds realized from the disposition of the Collateral pursuant
to the foregoing power of sale shall be applied first to the payment of
reasonable expenses incurred by the Company in connection with the disposition,
then to the payment of the Note and finally to any other indebtedness secured
hereunder. Any surplus proceeds shall be paid over to the undersigned. However,
in the event such proceeds prove insufficient to satisfy all obligations of the
undersigned under the Note, then the undersigned shall remain personally liable
for the resulting deficiency.
4
<PAGE> 17
8. Other Remedies. The rights, powers and remedies granted to the
Company and the undersigned pursuant to the provisions of this Agreement shall
be in addition to all rights, powers and remedies granted to the Company and the
undersigned under any statute or rule of law. Any forbearance, failure or delay
by the Company or the undersigned in exercising any right, power or remedy under
this Agreement shall not be deemed to be a waiver of such right, power or
remedy. Any single or partial exercise of any right, power or remedy under this
Agreement shall not preclude the further exercise thereof, and every right,
power and remedy of the Company and the undersigned under this Agreement shall
continue in full force and effect unless such right power or remedy is
specifically waived by an Instrument executed by the Company or the undersigned,
as the case may be.
9. Costs and Expenses. All reasonable costs and expenses (including
reasonable attorneys' fees) incurred by the Company in the exercise or
enforcement of any right, power or remedy granted it under this Agreement shall
become part of the indebtedness secured hereunder and shall constitute a
personal liability of the undersigned payable immediately upon demand.
10. Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California and shall be
binding upon the executors, administrators, heirs and assigns of the
undersigned.
11. Arbitration. Any controversy between the parties hereto
involving the construction or application of any terms, covenants or conditions
of this Agreement or the Note, or any claims arising out of or relating to this
Agreement or the Note, or the breach hereof or thereof, will be submitted to and
settled by final and binding arbitration in Orange County, California, in
accordance with the rules of the American Arbitration Association then in
effect, and judgment upon the award rendered by the arbitrator may be entered in
any court having jurisdiction thereof. In the event of any arbitration under
this Agreement or the Note, the prevailing party shall be entitled to recover
from the losing party reasonable expenses, attorneys' fees, and costs incurred
therein or in the enforcement or collection of any judgment or award rendered
therein. The "prevailing party" means the party determined by the arbitrator to
have most nearly prevailed, even if such party did not prevail in all matters,
not necessarily the one in whose favor a judgment is rendered.
12. Severability. If any provision of this Agreement is held to be
invalid under applicable law, then such provision shall be ineffective only to
the extent of such invalidity, and neither the remainder of such provision nor
any other provisions of this Agreement shall be affected thereby.
5
<PAGE> 18
IN WITNESS WHEREOF, this Agreement has been executed by the
undersigned as of February 7, 1996.
------------------------------
William R. Pieser
Address:
------------------------------
------------------------------
Agreed to and Accepted by:
PLATINUM SOFTWARE CORPORATION
By:
-----------------------------
Title:
--------------------------
Dated: February 7, 1996
6
<PAGE> 1
EXHIBIT 10.37
AGREEMENT
This Agreement is entered into as of this 8th day of February, 1996,
by and between Platinum Software Corporation, a Delaware corporation (the
"Company"), and Michael J. Simmons ("Simmons"), with reference to the
following:
RECITALS
A. Simmons is the Chief Financial Officer of the Company; and
B. The Company and Simmons desire to assure that the Company will
have the continued dedication of Simmons and to provide Simmons with the
compensation and benefits arrangements set forth herein.
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby agree as follows:
1. Involuntary Termination or Constructive Termination of
Employment. In the event that (i) the employment of Simmons by the Company is
involuntarily terminated, with or without cause, or (ii) a "Constructive
Termination" (as defined below) of the employment of Simmons has occurred, then
in either such event, (A) all of the options to purchase shares of Common Stock
of the Company held by Simmons, as set forth on Exhibit A hereto (collectively,
the "Options"), shall immediately vest and become exercisable, and (B) in the
event such involuntary termination or Constructive Termination occurs within
one year from the date hereof, Simmons shall receive a severance benefit equal
to his total compensation for the twelve months prior to termination as would
have been reflected in a Form W-2, payable as a lump sum or in installments at
the option of Simmons. For the purposes of this Agreement, "Constructive
Termination" shall be deemed to occur if (i) there is a material adverse change
in Simmons' title or job function, causing it to be of less stature or of less
responsibility than his existing position as Chief Financial Officer, (ii) a
reduction of more than fifteen percent (15%) of Simmons' base compensation
shall occur, or (iii) Simmons shall be required to relocate his residence more
than fifty (50) miles from his existing residence.
The severance payments payable to Simmons as set forth in Clause (B)
above shall be in lieu of and not in addition to the severance payments payable
to Simmons pursuant to the letter agreement dated April 29, 1994 between
Simmons and the Company. However, if for any reason the severance payments as
set forth in Clause (B) above are not payable to Simmons, Simmons shall be
entitled to such payments, if any, as are provided under the terms and
provisions of the letter agreement dated April 29, 1994.
2. Voluntary Termination of Employment. In the event that
Simmons shall voluntarily terminate his employment with the Company, the next
vesting installment of the Options shall accelerate such that the number of
Options which shall be exercisable as of the date of termination
<PAGE> 2
shall be the number of Options exercisable on the next date of vesting
following the date of termination.
3. Consulting. In the event of any termination of employment,
whether pursuant to paragraph 1 or 2 above, Simmons shall remain available to
provide advice and consulting to the Company, as requested by the Board of
Directors, subject to his availability, existing commitments and schedule, for
a period of fifteen (15) months following such termination. As a result,
Simmons shall be deemed to continue to be a "Service Provider" to the Company
for the fifteen (15) month period; provided, however, that except as provided
in Section 1 or Section 2 above, the Options shall not continue to vest
following the date of termination of Simmons' employment. The Options as so
vested on the date of termination shall accordingly be exercisable by Simmons
for a period of eighteen (18) months following any such termination of
employment.
4. General. This Agreement, together with the agreements
relating to the Options, constitute the entire agreement between the parties
with respect to the subject matter hereof and supersedes all prior
contemporaneous written or oral agreements and understandings of the parties.
This Agreement may be executed in one or more counterparts, all of which taken
together shall constitute one agreement. This Agreement shall be construed
under and enforced in accordance with and governed by the laws of the State of
California.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year first above written.
PLATINUM SOFTWARE CORPORATION
By:
--------------------------------------
Richard Goeglein
Chairman of the Compensation Committee
--------------------------------------
Michael J. Simmons
2
<PAGE> 3
EXHIBIT A
<TABLE>
<CAPTION>
OPTIONS EXERCISE PRICE*
- ------- ---------------
<S> <C>
Option to Purchase 20,000 Shares of Common Stock (4/17/94 Grant - 1993 Plan) $4.25
Option to Purchase 20,000 Shares of Common Stock (5/23/94 Grant - 1994 Plan) $5.625
Option to Purchase 100,000 Shares of Common Stock (9/1/94 Grant - 1994 Plan) $7.375
</TABLE>
- ----------
* Effective February 8, 1996, all of the Options were repriced to an exercise
price of $3.50 per share.
3
<PAGE> 1
EXHIBIT 10.38
AGREEMENT
This Agreement is entered into as of this 8th day of February, 1996,
by and between Platinum Software Corporation, a Delaware corporation (the
"Company"), and Carmelo J. Santoro ("Santoro"), with reference to the
following:
RECITALS
A. Santoro is the Chairman of the Board of Directors of the
Company; and
B. The Company and Santoro desire to assure that the Company will
have the continued dedication of Santoro and to provide Santoro with the
compensation and benefits arrangements set forth herein.
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby agree as follows:
1. Involuntary Termination. In the event that (i) Santoro is
involuntarily removed from the Board of Directors or is not included in the
management slate of Directors at any annual meeting or special meeting of
stockholders during which Directors will be elected, or (ii) Santoro shall
involuntarily be removed as Chairman of the Board, then in either such event,
all options to purchase shares of Common Stock of the Company held by Santoro,
as set forth on Exhibit A attached hereto (collectively, the "Options"), shall
accelerate and become exercisable as of the date of any such termination.
2. Voluntary Termination of Position. In the event that Santoro
shall voluntarily terminate his position as a member of the Board of Directors
of the Company or as Chairman of the Board of Directors, the next vesting
installment of the Options shall accelerate such that the number of Options
which shall be exercisable as of the date of termination shall be the number of
Options exercisable on the next date of vesting following the date of
termination.
3. Consulting. In the event of any termination of Santoro's
position as a member of the Board of Directors, whether pursuant to paragraph 1
or 2 above, Santoro shall remain available to provide advice and consulting to
the Company, subject to his availability, existing commitments and schedule,
for a period of fifteen (15) months following such termination. As a result,
Santoro shall be deemed to continue to be a "Service Provider" to the Company
for the fifteen (15) month period; provided, however, that except as provided
in Section 1 and Section 2 above, the Options shall not continue to vest
following the date of termination of Santoro's position as a member of the
Board of Directors. The Options as so vested on the date of termination shall
therefor be exercisable by Santoro for a period of eighteen (18) months
following any such termination.
<PAGE> 2
4. Repricing. The Options held by Santoro to purchase sixty
thousand (60,000) shares of Common Stock at a purchase price of $21.17 per
share as set forth in that certain Stock Option Agreement dated April 16, 1993
are hereby repriced to $7.87 per share, effective as of the date hereof.
5. General. This Agreement, together with the agreements
relating to the Options, constitute the entire agreement between the parties
with respect to the subject matter hereof and supersedes all prior
contemporaneous written or oral agreements and understandings of the parties.
This Agreement may be executed in one or more counterparts, all of which taken
together shall constitute one agreement. This Agreement shall be construed
under and enforced in accordance with and governed by the laws of the State of
California.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year first above written.
PLATINUM SOFTWARE CORPORATION
By:
--------------------------------------
Richard Goeglein
Chairman of the Compensation Committee
--------------------------------------
Carmelo J. Santoro
2
<PAGE> 3
EXHIBIT A
<TABLE>
<CAPTION>
OPTIONS EXERCISE PRICE
- ------- --------------
<S> <C>
Option to Purchase 60,000 Shares of Common Stock (4/16/93 Grant - 1990 Plan) $21.17
Option to Purchase 150,000 Shares of Common Stock (4/20/94 Grant - 1990 Plan) $ 4.25
Option to Purchase 150,000 Shares of Common Stock (4/20/94 Grant - 1994 Plan) $ 4.25
Option to Purchase 200,000 Shares of Common Stock (9/1/94 Grant - 1994 Plan) $ 7.375
</TABLE>
3
<PAGE> 1
EXHIBIT 10.39
AGREEMENT
This Agreement is entered into as of this 8th day of February, 1996,
by and between Platinum Software Corporation, a Delaware corporation (the
"Company"), and Bruce C. Edwards ("Edwards") with reference to the following
facts:
RECITALS
A. Edwards is a Director of the Company and has served in such
capacity for some time.
B. Edwards has recently undertaken new job responsibilities which
Edwards anticipates will require an increasing amount of his time. As a result
Edwards may be required to resign from the Board of Directors, in which event
he would remain available for consulting from time to time.
C. The Company has granted to Edwards options to purchase shares
of its Common Stock as set forth on Exhibit A attached hereto (the "Options")
and desires to clarify certain terms and provisions relating to the Options.
D. In order to reward Edwards for the substantial time incurred
for the Company, his substantial contributions to the Company, and his
availability for advice and consultation, the Company desires to clarify the
exercisability of the Options as set forth herein.
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby agree as follows:
1. Consultation. In the event Edwards should resign from the
Board of Directors or his position as a director of the Company should
terminate for any reason, Edwards agrees to remain available to provide advice
and consulting services to the Company, as requested by the Board of Directors
of the Company, subject to his availability, existing commitments and schedule,
for a period of nine (9) months following his resignation or termination as a
member of the Board of Directors. As a result, Edwards shall be considered for
the purposes of the Options, to be a "Service Provider" to the Company during
such period with the result that the Options shall continue to vest during such
period and shall be exercisable at any time during the twelve (12) months
following his resignation as a Director of the Company. Except as otherwise
set forth herein, the terms and provisions of the Options shall remain in full
force and effect.
2. General. This Agreement, together with the agreements
relating to the Options, constitute the entire agreement between the parties
with respect to the subject matter hereof and supersedes all prior
contemporaneous written or oral agreements and understandings of the parties.
This Agreement may be executed in one or more counterparts, all of which taken
together shall constitute one agreement. This Agreement shall be construed
under and enforced in accordance with and governed by the laws of the State of
California.
<PAGE> 2
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year first above written.
PLATINUM SOFTWARE CORPORATION
By:_____________________________________
Richard Goeglein
Chairman of the Compensation
Committee
________________________________________
Bruce C. Edwards
2
<PAGE> 3
EXHIBIT A
<TABLE>
<CAPTION>
OPTIONS EXERCISE PRICE
- ------- --------------
<S> <C>
Option to Purchase 15,000 Shares of Common Stock (10/29/93 Grant - 1990 Plan) $22.25
Option to Purchase 50,000(1) Shares of Common Stock (4/20/94 Grant - 1990 Plan) $ 4.25
Option to Purchase 50,000(1) Shares of Common Stock (4/20/94 Grant - 1994 Plan) $ 4.25
Option to Purchase 10,000 Shares of Common Stock
(11/28/94 Formula Plan Grant - 1994 Plan) $13.00
Option to Purchase 10,000 Shares of Common Stock
(10/26/95 Formula Plan Grant - 1994 Plan) $ 7.0625
</TABLE>
- ------------
(1) 25,000 shares of which have previously been exercised, such that 25,000
shares are outstanding under the option.
3
<PAGE> 1
EXHIBIT 10.40
AGREEMENT OF PURCHASE AND SALE OF ASSETS
THIS AGREEMENT OF PURCHASE AND SALE OF ASSETS (the "Agreement") is made
effective as of February 29, 1996 by and between STRATEGIC ADVANTAGE SOFTWARE
CORPORATION, a Wisconsin corporation (the "Buyer"), and PLATINUM SOFTWARE
CORPORATION, a Delaware corporation ("Platinum"), CYPHER BUSINESS SYSTEMS, LTD.,
a corporation organized under the laws of England and Wales ("Cypher") and
SLATERSHELFCO 173 LIMITED, a corporation organized under the laws of England and
Wales ("Slatershelfco") (collectively, the "Seller").
W I T N E S S E T H
WHEREAS, Seller is engaged in the business of developing, marketing and
distributing a variety of financial and accounting software products; and
WHEREAS, Seller desires to divest certain assets, operations and
business associated with its Distribution Software Division (the "Business"),
including without limitation the distribution software product originally
developed by the Business (the "Distribution Product"); and
WHEREAS, subject to the terms and conditions of this Agreement, Buyer
desires to purchase and Seller desires to sell and transfer to Buyer, the
Distribution Product and certain assets related to the Business as described
herein.
NOW, THEREFORE, in consideration of the terms, covenants, and
conditions hereinafter set forth, the parties hereto hereby agree as follows:
1. Purchase and Sale of Assets.
1.1 Purchased Assets. Subject to the terms and
conditions of this Agreement, Seller hereby agrees to sell, convey, assign,
transfer, set over and deliver to Buyer, and Buyer agrees to purchase and accept
from Seller certain of the assets of Seller related to the Business, whether
tangible, intangible, real, personal or mixed, and wherever located (hereinafter
sometimes collectively referred to as the "Purchased Assets"), which are more
particularly described as set forth below and in the schedules to this
Agreement. The Purchased Assets shall be free and clear of all liens,
encumbrances, liabilities, obligations, claims, security interests or rights of
third parties except as otherwise specifically provided herein and shall consist
of the following:
(a) exclusive title and all rights to the
intellectual property relating to the Distribution Product, including all source
code, object code, work-in-progress and developments with respect thereto;
(b) trade names, trademarks, service marks and
copyrights (including registrations, licenses and applications pertaining
thereto) identified on Schedule 1.1(b) hereto, together with all goodwill
associated therewith (the "Trademarks and Copyrights") (jointly, with the items
described in (a) above, the "Intellectual Property Rights");
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(c) all remaining equipment, Sybase license,
other licensed software and other tangible assets as specified in Schedule
1.1(c) (collectively, the "Tangible Assets"); and
(d) all marketing data, promotional materials,
artwork and supplies listed on Schedule 1.1(d) (collectively, the "Miscellaneous
Assets").
2. Purchase Price and Payment of Purchase Price.
2.1 Purchase Price; Payment. As consideration for the
sale and transfer of the Purchased Assets (exclusive of the Tangible Assets
specified on Schedule 1.1(c)) to Buyer, Buyer shall pay to Cypher the sum of One
Million Five Hundred Thousand United States Dollars (US$1,500,000) (the
"Purchase Price"). In payment of the Purchase Price, Buyer shall deliver to
Cypher at the Physical Closing two promissory notes in aggregate principal
amount of US$1,500,000 (the "Royalty Payment"). The Royalty Payment shall be due
and payable from time to time pursuant to Section 2.2 below and shall be
evidenced by promissory notes (collectively the "Royalty Notes"),one of which
shall be substantially in the form attached hereto as Exhibit A-1 ("Royalty
Note-No. 1") and the other of which shall be substantially in the form attached
hereto as Exhibit A-2 ("Royalty Note-No. 2"). The obligation of Buyer under the
Royalty Notes shall be secured by a security interest on all of the assets of
Buyer as set forth in the security agreement attached hereto as Exhibit B.
2.2 Payment of Royalties; Royalty Notes.
(a) Buyer shall pay the principal amount due
under the Royalty Note- No. 1 as set forth herein. Royalty Note-No.1 shall not
bear interest except in the event of default as specified therein. Buyer shall
pay to Cypher five percent (5%) of Buyer's Net Revenues (as defined below) from
the licensing of the Distribution Product (or future versions, updates,
improvements and enhancements, including versions using different databases)
from the date of Physical Closing until the earlier of the tenth (10th)
anniversary of the Physical Closing or such time as the aggregate amount paid
under this paragraph 2.2(a) shall equal One Million United States Dollars
(US$1,000,000). In the event that the aggregate payments under Royalty Note-No.
1 do not total US$1,000,000 as of the tenth (10th) anniversary of the Physical
Closing, the difference between US$1,000,000 and the total paid shall be due and
payable within sixty (60) days after the tenth (10th) anniversary date. If
necessary, Seller, in its sole discretion, may allow Buyer an extension of time
to pay such amount provided that such obligation shall be documented by a
promissory note on such terms and conditions as shall be reasonably agreed to by
the parties at the time specifically including, however, a term of Buyer's
choosing, but not more than three (3) years, and interest payable at the prime
rate as quoted by Platinum's primary bank plus two percent (2%).
(b) Additionally, Buyer shall pay the
principal due under Royalty Note-No. 2 as set forth herein. Royalty Note-No. 2
shall not bear interest except in the event of default as specified therein.
Buyer shall pay to Cypher five percent (5%) of Buyer's Net Revenues from the
licensing of the Distribution Product from the tenth (10th) anniversary through
the twentieth (20th) anniversary of the Physical Closing. Payments under this
Royalty Note-No. 2 are to be made under this paragraph 2.2(b) until either the
aggregate amount of the royalties paid by Buyer to Cypher under this paragraph
equals Five Hundred Thousand Dollars (US$500,000) or until the twentieth (20th)
anniversary of the Physical Closing. In the event that the aggregate payments
under Royalty Note-No. 2 do not equal US$500,000 as of the twentieth (20th)
anniversary of the Physical Closing, any remaining principal balance shall be
excused and forgiven.
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(c) Following the Closing, Buyer shall use
its commercially reasonable efforts to sell, license or otherwise commercially
exploit the Distribution Product. Buyer agrees that such transactions entered
into by Buyer following the Closing will be in good faith and will not be
structured for the purpose of minimizing or avoiding the payment of royalties to
Seller hereunder.
(d) "Net Revenues" shall mean, for any
calendar month, all revenues from the licensing of the Distribution Product (and
future versions thereof, updates, improvements or enhancements, including
versions using different databases). Net revenues shall be net of shipping
costs, sales/use/VAT taxes, credits for returns, rebates and dealer or OEM
discounts allowed. In the event the Distribution Product is licensed by Buyer as
part of a larger software license, Net Revenues shall be allocated on the
relationship the license revenues specifically attributable to the Distribution
Product bear to the overall license revenues, and if such larger software
license includes unallocated product discounts or unallocated license fees, such
discounts and license fees shall be allocated on the relationship the suggested
retail price of the Distribution Product bears to the overall suggested retail
price of all licensed software, unless an alternative method of allocation shall
have been mutually agreed to. Under no circumstances will Buyer be required to
report for royalty purposes net sales in excess of the proceeds actually
received on such joint sales. Net Revenues shall be calculated each month and
royalties shall be payable to Seller on a quarterly basis as described below.
(e) So long as Buyer is required to pay
royalties hereunder, Buyer shall cause separate records to be maintained for the
licensing of the Distribution Product. The royalties shall be paid within thirty
(30) days following the end of each calendar quarter; provided, however, that
the first royalty payment under Royalty Note-No. 1 shall be due and payable
thirty (30) days after the six (6) month anniversary of the first license sale
of the Distribution Product (and future versions, updates, enhancements or
improvements, including versions using different databases), such payment shall
cover the entire period following the first license sale through the six (6)
month anniversary. Within thirty (30) days following the end of each calendar
quarter thereafter, Buyer shall deliver to Seller a written computation of Net
Revenues in accordance with this Section 2.2, which shall set forth the method
by which Net Revenues were computed and shall be certified as true and correct
in all material respects by the principal financial officer of Buyer. If Seller
does not agree with the determination of Net Revenues shown in Buyer's
computation, then Seller shall notify Buyer in writing within ten (10) days
after the receipt thereof, specifying with sufficient specificity the objections
thereto, and the parties shall in good faith attempt to reach agreement thereon.
If Buyer and Seller are unable to reach an agreement within thirty (30) days
after Seller's notice, the determination of the proper amount of Net Revenues
shall be submitted to an independent "big six" accounting firm, or such other
accounting firm mutually agreed to by Buyer and Seller. Seller and Buyer shall
split the costs of the accounting firm and if either party disagrees with the
determination of the independent accounting firm the matter shall be submitted
to arbitration in accordance with the arbitration provisions set forth in
Section 16.15 hereof; provided, however, that in the event that the amount of
Net Revenues determined by the independent accounting firm exceeds by ten
percent (10%) or more the amount of Net Revenues as calculated by Buyer, or is
at least ten percent (10%) less than the amount of Net Revenues calculated by
Seller, then the party whose calculation differs shall pay the full cost of the
accounting firm making such determination. At the end of each calendar quarter,
Buyer shall provide to Seller a forecast of revenues from the licensing of the
Distribution Product for the subsequent quarter.
(f) The Royalty Notes shall not be assignable
by Buyer except: (i) in the event of full settlement by Buyer or its assignee of
the outstanding balance prior to or concurrent with such
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assignment; or (ii) with the prior written consent of Seller, which consent
shall not be unreasonably withheld. In determining whether to approve any
assignment request, Seller shall take into consideration the creditworthiness of
the proposed assignee, the nature of the business of the proposed assignee and
such other factors that a lender would ordinarily consider in a credit
determination.
2.3 Tangible Asset Payment. As consideration for the
sale and transfer of the Tangible Assets described on Schedule 1.1(c) to Buyer,
Buyer shall pay to Cypher the net book value, as of February 29, 1996, thereof
(the "Tangible Assets Purchase Price"). In payment of the Tangible Assets
Purchase Price, Buyer shall deliver to Cypher a promissory note at the Tangible
Assets Closing (as defined below) in the principal amount of the Tangible Assets
Purchase Price in the form attached hereto as Exhibit C (the "Tangible Assets
Note"). The Tangible Assets Note shall bear eight percent (8%) simple interest
and shall be payable in sixty (60) equal consecutive monthly installments of
principal and accrued interest on the first day of each calendar month
commencing on the first day of the month following the six (6) month anniversary
of the Tangible Assets Closing. There shall be no prepayment penalty. The
obligation of the Buyer under the Tangible Assets Note shall be secured by a
security interest on all of the assets of Buyer as set forth in the security
agreement attached hereto as Exhibit B.
2.4 Allocation of Purchase Price. The Purchase Price
of the Purchased Assets shall be allocated as set forth on Schedule 2.4 attached
hereto. Buyer and Seller agree to execute any forms or notices required to
effect such allocation pursuant to the Internal Revenue Code of 1986, as amended
(the "Code"), including but not limited to Form 8594 under the Code.
2.5 Rights of Offset. Each of Seller and Buyer shall
have the right, in its reasonable discretion, to offset from time to time the
amount of any payment due to the other party against the reciprocal obligation
to receive any payment from such party which is past due and remains unpaid for
a period of sixty (60) days following receipt of written notice thereof.
2.6 Financing Contingency. Should Buyer be unable to
secure sufficient financing to allow it to generate royalty sales for the
Distribution Product (or future versions, updates, improvements and
enhancements, including versions using different databases) on or before June
30, 1998, then Buyer shall be required to return and convey title to the
Distribution Product, in its improved state. Thereafter, Buyer shall have no
further obligation under this Agreement.
3. Assumption Only of Specified Liabilities, Obligations,
Contracts and Agreements.
3.1 No Assumption of Liabilities Unless Expressly
Assumed. Buyer shall not assume nor have any duty or obligation with respect to
any liability, duty, obligation, contract, claim or agreement of any Seller.
3.2 Payment of Liabilities Not Assumed. Each of
Sellers shall indemnify, defend and hold Buyer harmless from, in accordance with
Section 13 below, all of the liabilities, duties, contracts, agreements, claims
and obligations of Seller.
3.3 Taxes. Buyer shall not be responsible for any
"Taxes" related to any period before the Closing Date (as hereinafter defined)
or the Tangible Assets Closing Date (as defined below) or arising from the
purchase of the Purchased Assets. "Taxes" for purposes of this Agreement
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means any federal, state, local, or foreign income, gross receipts, license,
payroll, employment, excise, severance, stamp, occupation, premium, windfall
profits, environmental (including taxed under Code Section59A), customs duties,
capital stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum, estimated,
or other tax of any kinds whatsoever, including any interest, penalty, or
addition thereto, whether disputed or not.
4. Closing.
4.1 Closing Date; Physical Closing. Provided that all
conditions precedent set forth in this Agreement have been satisfied or waived,
the closing of the transactions contemplated hereby (the "Closing") shall occur
effective as of the close of business on February 29, 1996 (the "Closing Date").
The actual physical closing (the "Physical Closing") and the Closing deliveries
specified below shall occur as soon as practicable thereafter, but in no event
later than March 29, 1996, provided that all of the conditions set forth in this
Agreement have been satisfied or waived. The Physical Closing shall be held at
the offices of Seller, unless another place is mutually agreed upon by the
parties.
4.2 Tangible Assets Closing. In regard to the
Tangible Assets, Buyer and Seller shall mutually agree on the Tangible Assets
and Miscellaneous Assets to be purchased by Buyer and the Tangible Assets
Purchase Price. Upon such determination, Schedules 1.1(c) and 1.1(d) shall be
amended to reflect such items. The actual closing in regard to the Tangible
Assets (the "Tangible Assets Closing") shall occur as soon as practicable
following the Physical Closing, but in no event later than April 15, 1996 (the
"Tangible Assets Closing Date"). The Tangible Assets Closing shall be held at
the offices of Platinum, unless another place is mutually agreed upon by the
parties.
5. Representations and Warranties of Seller. As a material
inducement to Buyer to enter into this Agreement, Seller represents and warrants
the following, the truth and accuracy of each of which shall also constitute a
condition precedent to the obligations of Buyer hereunder:
5.1 Organization and Good Standing. Each of Sellers
is duly incorporated and, except for a delinquency in U.K. Companies House
filing, validly existing under the laws of the state or country of its
incorporation. Each of Sellers has full corporate power and authority to carry
on its business as it is now conducted. Each of Sellers is not in violation of
its charter documents in any manner which would adversely affect the validity,
binding nature or enforceability of its obligations under this Agreement or,
following the Physical Closing, Buyer's title to the Purchased Assets.
5.2 Authority. Each of Sellers has all the necessary
corporate power and authority to enter into this Agreement and the other
documents and agreements contemplated to be entered into in connection with the
Agreement (the "Transaction Documents"), to perform the obligations to be
performed by it hereunder and to consummate the transactions contemplated
hereby. The Transaction Documents have been duly authorized and approved by all
necessary action on the part of each of Sellers, as applicable. The Transaction
Documents have been duly executed and delivered by each of Sellers, as
applicable, and constitute valid and binding obligations of each of Sellers,
enforceable against each of Sellers in accordance with their respective terms,
subject as to enforceability to any applicable bankruptcy, insolvency,
moratorium or other laws affecting creditors' rights generally or such
principles of equity as a court of competent jurisdiction might apply.
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5.3 Approvals. No consent, approval or agreement of
any person, entity, party, court or government is required to be obtained by
Seller in connection with the execution and delivery of the Transaction
Documents or the performance of the terms hereof or thereof or the consummation
of the transactions provided for herein or therein.
5.4 Property of Seller. Seller owns and has the full
and complete right to use all of the Purchased Assets tangible and intangible.
Except as disclosed on Schedule 5.4, Seller warrants that it has, and at the
Physical Closing or Tangible Assets Closing, as applicable, will convey and
transfer to Buyer, good, complete and marketable title to all of the Purchased
Assets, free and clear of restrictions or conditions to transfer or assignment,
and free and clear of all defects of title, mortgages, liens, encumbrances,
pledges, leases, licenses, equities, claims, charges, easements, rights of way,
covenants, conditions, conditional sale contracts, security interests and
restrictions, except for the lien of current taxes not yet due and payable which
shall remain the obligation of Sellers. Other than the warranties, conditions,
terms or representations specified in this Agreement and the related documents
delivered pursuant to this Agreement, Seller makes no express or implied
warranty, term, condition or representation regarding the Purchased Assets. THE
PURCHASED ASSETS, INCLUDING THE DISTRIBUTION PRODUCT AND THE SOURCE CODE
THEREOF, ARE BEING PURCHASED BY BUYER "AS IS" AND SELLER EXPRESSLY DISCLAIMS ALL
IMPLIED WARRANTIES, CONDITIONS, TERMS OR REPRESENTATIONS OF MERCHANTABILITY,
SATISFACTORY QUALITY OR FITNESS FOR A PARTICULAR PURPOSE.
5.5 No Conflict. Neither the execution and delivery
of, nor the consummation of the transactions contemplated by, this Agreement
will conflict with or result in the breach of the terms, conditions and
provisions of, or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, or result in the creation of a lien
or encumbrance on any of the Purchased Assets pursuant to (A) the charter
documents of each of Sellers, (B) any agreement, document or instrument to which
any Seller is a party or by which any Seller is bound or (C) any judgment,
decree, order, statute, injunction, rule or regulation applicable to any Seller
or the Purchased Assets.
5.6 Litigation. Except as set forth in Schedule 5.6
hereto, there are (i) no actions, suits or proceedings pending or threatened
against Seller, the Purchased Assets or the Business which, individually or in
the aggregate, would have an adverse effect on any of the Purchased Assets or
the transactions contemplated herein, whether at law or in equity, or before or
by any court or governmental agency, authority or body or before any arbitrator
of any kind, and (ii) to the best knowledge of each of Sellers, no
investigations are being conducted which could lead to any such action, suit or
proceeding.
5.7 Finder's Fees. Seller has not incurred any
liability to any broker, finder or agent for any brokerage fees, finder's fees
or commissions with respect to the transactions contemplated by this Agreement.
5.8 Material Misstatements or Omissions. No
representations or warranties of Seller contained in this Agreement or the
schedules and exhibits hereto or in any document, statement or certificate
furnished or to be furnished pursuant to this Agreement, contain, nor on the
date of the Physical Closing or Tangible Assets Closing will contain an untrue
statement of a material fact, or omit, nor on the date of the Physical Closing
or Tangible Assets Closing will omit to state a material fact necessary to make
the statements of fact herein or therein not misleading.
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5.9 Trademarks, Patents, etc.
(a) Schedule 1.1(b) contains a complete list
of the Trademarks and Copyrights applicable to the Purchased Assets, including
any jurisdictions in which each right has been issued or registered or in which
any application for such issuance and/or registration has been filed. Seller
owns and possesses the Intellectual Property with no known or suspected
infringement of, or conflict with, the rights of others. Such ownership,
possession or license is exclusive, assignable and not subject to termination
without Seller's consent where the failure to be exclusive or not subject to
termination without Seller's consent would have a material adverse effect on the
rights of Seller, or Buyer upon transfer as provided herein, applicable to the
Purchased Assets. Seller is not aware of any third party that is infringing or
violating any of the Intellectual Property.
(b) Seller is not aware of any unauthorized
use, disclosure, infringement or misappropriation of any Intellectual Property
rights of Seller, any trade secret material to Seller related to the Business,
or any Intellectual Property right of any third party to the extent licensed by
or through Seller, by any third party, including any employee or former employee
of Seller. Seller has not entered into any agreement to indemnify any other
person against any charge of infringement of any Intellectual Property, other
than indemnification provisions contained in purchase orders and customer
licenses and support agreements arising in the ordinary course of business.
(c) Seller is not, nor will it be, as a
result of the execution and delivery of this Agreement or the performance of its
obligations under this Agreement, in breach of any license, sublicense or other
agreement relating to the Intellectual Property.
(d) All registered trademarks held by Seller
are valid and subsisting. Seller has no patents or registered copyrights with
respect to the Distribution Product. Seller (i) has not been sued in any suit,
action or proceeding which involves a claim of infringement of any patents,
trademarks, service marks, copyrights or violation of any trade secret or other
proprietary right of any third party with respect to the Distribution Product or
the Business and (ii) has not brought any action, suit or proceeding for
infringement of Intellectual Property or breach of any license or agreement
involving Intellectual Property with respect to the Distribution Product or the
Business against any third party. The manufacture, marketing, licensing or sales
of the Distribution Product does not infringe any patent, trademark, service
mark, copyright, trade secret or other proprietary right of any third party.
(e) Seller believes that it has taken all
reasonable and appropriate steps to protect and preserve the confidentiality of
all Intellectual Property not otherwise protected by patents or patent
applications or copyright.
5.10 Taxes. Seller has no material liability for any
Taxes with respect to the Purchased Assets, except for taxes which have accrued
and are not yet payable. Seller has not elected pursuant to the Code to be
treated as a Subchapter S corporation or a collapsible corporation pursuant to
Section 341(f) or Section 1362(a) of the Code.
5.11 Compliance with Laws. Seller is not in violation
of any law, ordinance, order, decree, rule or regulation of any governmental
agency, the violation of which could have a material adverse effect on the
Purchased Assets.
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6. Representations and Warranties of Buyer. As a material
inducement to Seller to enter into this Agreement, Buyer represents and warrants
the following, the truth and accuracy of each of which shall also constitute a
condition precedent to the obligations of Seller hereunder:
6.1 Organization and Good Standing. Buyer is duly
organized, validly existing and in good standing under the laws of the State of
Wisconsin. Buyer was incorporated on February 29, 1996, and prior to the date
hereof had no business, operations, assets or liabilities, other than for
nominal capital received upon its initial capitalization and for the obligations
and liabilities related to this Agreement and the transactions contemplated
hereby.
6.2 Authority. Buyer has all the necessary corporate
power and authority to enter into this Agreement, and the other documents and
agreements contemplated to be entered into in connection herewith, and to
perform the obligations to be performed by it hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. This Agreement and
the other documents and agreements contemplated to be entered into in connection
herewith have been duly authorized and approved by all necessary action on the
part of the Board of Directors and shareholders of Buyer. This Agreement and the
other documents and agreements contemplated to be entered into in connection
herewith have been duly executed and delivered by Buyer and constitute valid and
binding obligations of Buyer, enforceable against Buyer in accordance with their
respective terms, subject as to enforceability to any applicable bankruptcy,
insolvency, moratorium or other laws affecting creditors' rights generally or
such principles of equity as a court of competent jurisdiction might apply.
6.3 Finder's Fees. Buyer has not incurred any
liability to any broker, finder or agent for any brokerage fees, finder's fees
or commissions with respect to the transactions contemplated by this Agreement.
6.4 Agreement Will Not Cause Breach. Consummation of
the transactions contemplated by this Agreement will not cause a default or an
event that, with notice or the lapse of time or both, would constitute a
default, breach or violation of Buyer's Certificate of Incorporation or Bylaws
or any agreement to which Buyer is a party or by which it or its property is
bound.
6.5 Approvals. No consent, approval or agreement of
any person, entity, party, court or government is required to be obtained by
Buyer in connection with the execution and delivery of this Agreement or any of
the documents and agreements contemplated to be entered into in connection
herewith, or the performance of the terms hereof or thereof or the consummation
of the transactions provided for herein or therein.
6.6 Material Misstatements or Omissions. No
representations or warranties of Buyer contained in this Agreement or the
schedules and exhibits hereto or in any document, statement or certificate
furnished or to be furnished pursuant to this Agreement, contain, nor on the
date of the Physical Closing or Tangible asset Closing will contain an untrue
statement of a material fact, or omit, nor on the date of the Physical Closing
or Tangible Asset Closing will omit to state a material fact necessary to make
the statements of fact herein or therein not misleading.
6.7 Trademarks, Patents, Etc. To the best knowledge
of Buyer, Buyer is unaware of any unauthorized use, disclosure, infringement or
misappropriation of any Intellectual Property rights of Seller, any trade secret
material to Seller related to the Business, or any Intellectual Property
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Right of any third party to the extent licensed by or through Seller, by any
third party, including any employee or former employee of Seller.
7. Covenants and Agreements of Seller. Seller covenants and
agrees to the following, the fulfillment of each of which shall also constitute
a condition precedent to the obligations of Buyer hereunder:
7.1 Agreement Not to Negotiate With Others. At or
anytime prior to Physical Closing or Tangible Asset Closing, neither Seller nor
any of its affiliates, directors, officers, employees or representatives, will,
directly or indirectly, solicit, initiate discussions or engage in negotiations
with, or distribute any information regarding the transaction contemplated by
this Agreement, the Distribution Product or the Business to any person (whether
such negotiations are initiated by Seller or otherwise) other than Buyer, and
its representatives, concerning a possible sale of all or any substantial
portion of the assets of the Business.
7.2 Confidentiality Agreements. All Seller's
employees working with the Distribution Product will be held to all of the
confidentiality provisions to which they are or have been subject when working
on Seller's own software products. Product managers will be required to sign
non-disclosure agreements with Buyer as pertains to the existing code as well as
to Buyer's planned enhancements that have been disclosed to Seller's product
marketing and development employees. Seller agrees to not share Buyer's current
or future functional or technical designs with any third party. Seller hereby
releases Carol Skorupan from her obligations under the confidentiality agreement
now in effect as it relates to the development and marketing of the Distribution
Product.
7.3 Mundy Service Payments. Seller agrees to bring
current and fund the remaining Cypher service agreement payments to David Mundy
and Jack Mundy through May 31, 1996, as required under the current agreements.
All payments required to bring these agreements current and funded through May
31, 1996 will be made on or before the Physical Closing.
7.4 Benefits Provided by Platinum. Platinum agrees as
follows:
(a) to allow Buyer access to information
concerning Platinum's dealer channel sales, sales force, Btrieve installed base
and possible funding sources, under reasonable and appropriate confidentiality
terms;
(b) to provide an opportunity for Buyer to
make a presentation to Platinum's chief executive officer or other similarly
situated executive regarding recommending funding sources for Buyer;
(c) to provide a process for considering
Platinum customers as possible pilot sites for Buyer's Distribution Product
following the Physical Closing;
(d) to allow Buyer to attend and exhibit at
its user conference, Platinum Perspectives, at no charge for the next two (2)
conferences; and
(e) to negotiate in good faith, within six
(6) months of the Physical Closing, a mutually agreeable OEM agreement with
Buyer covering Buyer's Distribution Products.
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8. Additional Covenants.
8.1 Cooperation. Seller and Buyer will use their
reasonable best efforts to cause all of their respective representations and
warranties contained in this Agreement to be true and correct on and as of the
date of the Physical Closing and to cause all of the conditions precedent
disclosed in Sections 10 and 11 to be satisfied on or prior to the date of the
Physical Closing.
8.2 Adverse Changes. Seller shall promptly notify
Buyer in writing of any material adverse facts or developments affecting, or
which may affect, the Purchased Assets which become known to Seller, including,
without limitation, (i) any damage, destruction or loss (whether or not covered
by insurance) materially and adversely affecting any of the Purchased Assets, or
(ii) anything which, if not corrected prior to the date of the Physical Closing,
could prevent Seller from fulfilling any condition precedent described in
Section 11 below.
8.3 Subordination of Security Agreement. Seller
undertakes with Buyer that if so requested by Buyer after the Physical Closing
it will execute a subordination agreement in respect of the Security Agreement,
whereby Seller will agree to subordinate the security created by its Security
Agreement so that it ranks behind any security created in favor of Buyer's
primary lender providing capital for business operations to Buyer. Seller and
Buyer agree to use the standard form of subordination agreement provided by the
bank, provided the terms and conditions are reasonably acceptable to Buyer and
Seller, with such changes as either party may reasonably request.
8.4 U.K. Companies House Report. Seller shall use its
best efforts to bring all required filings with the UK Companies House current
no later than March 31, 1996 and keep them current.
8.5 Competitive Product. Seller agrees that, for a
period of three (3) years from the Physical Closing, it shall not develop a
software product which competes directly with the Distribution Product. Seller
agrees not to disclose to third parties any Confidential Information (as defined
below) with respect to the Distribution Product. For the purposes of this
Agreement, "Confidential Information" means nonpublic technical information and
may include source code, API data files, documentation, specifications, data
bases, system design, file layouts, tool combinations and development methods.
Confidential Information shall not include any information that (i) is or
becomes publicly known through no wrongful act of Seller or its affiliates; (ii)
is received by Seller from a third party without any confidentiality
requirements; (iii) is disclosed to third parties by Buyer following Physical
Closing without any confidentiality requirements; or (iv) is approved for
release by prior written authorization of Buyer.
9. Survival of Covenants, Representations and Warranties. All
of the covenants, representations and warranties set forth in this Agreement
shall remain in full force and effect regardless of any investigation,
verification or approval by any party hereto or by anyone on behalf of any party
hereto, and shall survive the date of the Physical Closing until June 30, 1998
unless a longer period is provided elsewhere herein. All representations and
warranties shall be true at and as of the date of the Physical Closing, as
though said representations and warranties were made at and as of that time.
Termination of this Agreement shall not relieve any party hereto of its
liability for any breach by such party of this Agreement or any representation
or warranty contained in or made pursuant hereto.
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10. Conditions Precedent to the Obligations of Seller. The
obligations of Seller to consummate this Agreement are subject to the following
express conditions precedent, each of which shall be deemed independent,
severable and waivable in whole or in part at the option of Seller.
10.1 Correctness of Representations and Warranties.
All representations and warranties of Buyer contained herein shall be true and
accurate in all material respects at and as of the date of the Physical Closing,
as though said representations and warranties were made at and as of that time;
and Buyer shall have performed all covenants and agreements on its part required
to be performed prior to the date of the Physical Closing and shall not be in
default of its material obligations or representations or warranties under this
Agreement at the date of the Physical Closing.
10.2 Delivery of Instruments. Buyer shall have
delivered all instruments, documents and other matters to be delivered to Seller
by Buyer in accordance with the terms of this Agreement.
10.3 Officer's Certificate. Seller shall have received
a certificate, dated as of the date of the Physical Closing and executed by the
President of Buyer, to the effect that to the best of her knowledge (i) all of
the representations and warranties of Buyer contained in this Agreement are true
and accurate in all material respects at the date of the Physical Closing; and
(ii) all of the covenants and agreements of Buyer contained in this Agreement
and required to be performed before the Physical Closing have been performed and
Buyer is not in default of any of its obligations or representations or
warranties under this Agreement.
10.4 Approvals, etc. No action or proceeding shall be
completed or pending against Buyer that has resulted or is likely to result in a
judgment, decree or order that would prevent or make unlawful the consummation
of the transactions under this Agreement, and there shall be in effect no order
restraining or prohibiting the consummation of the transactions contemplated by
this Agreement, nor any proceedings pending with respect thereto.
10.5 Opinion of Buyer's Counsel. Seller shall have
received an opinion, dated the date of the Physical Closing, of DeWitt, Ross &
Stevens, counsel for Buyer, substantially in the form of Exhibit D hereto.
10.6 Security Agreement. Buyer shall have entered into
the Security Agreement in the form attached hereto as Exhibit B.
10.7 Mutual Releases . David Mundy, Jack Mundy Abacus
Trustees (Jersey) Limited, Whiteley Trustees Limited and each of Sellers shall
have executed a mutual release in the form attached hereto as Exhibit D.
11. Conditions Precedent to the Obligations of Buyer. The
obligations of Buyer to consummate this Agreement are subject to the following
express conditions precedent, each of which shall be deemed independent,
severable and waivable in whole or in part at the option of Buyer.
11.1 No Adverse Change. There shall not have occurred
any material adverse change in the assets of the Business, or any other event or
condition or state of facts of any character affecting Seller which would
materially and adversely affect the Business or the Purchased Assets.
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11.2 Litigation. As of the date of the Physical
Closing, no material litigation, governmental action or other proceeding shall
be threatened or commenced against Seller with respect to any matter or against
any person with respect to any transactions contemplated herein, or which could
adversely affect any of the Purchased Assets or the Business.
11.3 Delivery of Documents. On or before the date of
the Physical Closing, Buyer shall have received from Seller all necessary
instruments, assignments and other documents called for in this Agreement,
including, without limitation, good and sufficient bills of sale in the form
attached hereto as Exhibits F-1, F-2 and F-3, assignments of copyrights and
other assignments of title, in duly recordable form where applicable, and all
other instruments and legal opinions necessary to effectuate the transfer of the
Purchased Assets as provided for herein.
11.4 Verification of Source Code . Buyer shall have
obtained the source code applicable to the Distribution Product, compiled same
and verified that the result conforms to the current object code.
11.5 Correctness of Representations and Warranties.
All of the representations and warranties of Seller contained in this Agreement
shall be true and accurate in all material respects at the date of the Physical
Closing as though also made at and as of such date.
11.6 Performance of Covenants and Agreements. All of
the covenants and agreements of Seller contained in this Agreement and required
to be performed before the Physical Closing shall have been performed and Seller
shall not be in default under any provisions of this Agreement.
11.7 Officer's Certificate. Buyer shall have received
a certificate, dated the date of the Physical Closing and executed by an officer
of each of Sellers, to the effect that to the best of his knowledge (i) all of
the representations and warranties of each of Sellers contained in this
Agreement are true and accurate in all material respects at the date of the
Physical Closing; and (ii) all of the covenants and agreements of each of
Sellers contained in this Agreement and required to be performed before the
Physical Closing have been performed and Seller is not in default of any of its
obligations or representations or warranties under this Agreement.
11.8 Approvals, etc. No action or proceeding shall be
completed or pending against Seller that has resulted or is likely to result in
a judgment, decree or order that would prevent or make unlawful the consummation
of the transactions under this Agreement, and there shall be in effect no order
restraining or prohibiting the consummation of the transactions contemplated by
this Agreement, nor any proceedings pending with respect thereto.
11.9 Mutual Releases . David Mundy, Jack Mundy Abacus
Trustees (Jersey) Limited, Whitley Trustees Limited and each of Sellers shall
each have executed a mutual general release in the form attached hereto as
Exhibit D.
11.10 Opinions of Seller's Counsel. Buyer shall have
received an opinion, dated the date of the Physical Closing of Hopkins & Wood,
counsel for Cypher and Slatershelfco, and Stradling, Yocca, Carlson & Rauth,
counsel for Platinum, substantially in the form of Exhibit G hereto.
12. Closing Deliveries at Physical Closing.
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12.1 Seller's Deliveries. In connection with and at
the time of the Physical Closing, Seller shall deliver to Buyer the following:
(a) Bills of Sale. Bill of sale in the forms
attached hereto as Exhibits F-1, F-2 and F-3 from Cypher, Platinum and
Slatershelfco and all other instruments and documents of transfer necessary to
transfer and vest in Buyer good title to the Purchased Assets, excluding the
Tangible Assets, free and clear of any liabilities, liens, encumbrances or
restrictions whatsoever, in the form and substance satisfactory to Buyer's
counsel.
(b) Other Documents. Each of the certificates
and other documents and instruments required to be delivered by Seller to Buyer
pursuant to Section 11 above, together with such additional documents or
instruments as Buyer's counsel reasonably may request to give effect to the
transactions contemplated herein. Other Documents. Each of the certificates and
other documents and instruments required to be delivered by Seller to Buyer
pursuant to Section 11 above, together with such additional documents or
instruments as Buyer's counsel reasonably may request to give effect to the
transactions contemplated herein.
12.2 Buyer's Deliveries at Physical Closing. In
connection with and at the time of the Physical Closing, Buyer shall deliver to
Seller the following:
(a) Purchase Price. The Royalty Note-No. 1
and Royalty Note-No. 2.
(b) Other Documents. Each of the
certificates and other documents and instruments required to be delivered by
Buyer pursuant to Section 10 above, together with such additional documents or
instruments as Seller's counsel reasonably may request to give effect to the
transactions contemplated herein.
12.3 Tangible Assets Closing. In connection with and
at the time of the Tangible Assets Closing, (A) Seller shall deliver to Buyer
Bills of Sale in regard to the Tangible Assets in the form attached hereto as
Exhibits F-1, F-2 and F-3, together with such additional documents or
instruments as may be reasonably be requested by Buyer to give effect to the
transactions contemplated herein, and (B) Buyer shall deliver the Tangible
Assets Note, together with such additional documents or instruments as may be
reasonably requested by Seller to give effect to the transaction herein.
13. Indemnification.
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13.1 Indemnification of Buyer. Each of Platinum,
Cypher and Slatershelfco shall indemnify, defend and hold harmless Buyer and its
officers, directors, shareholders, employees and agents against and in respect
of any and all claims, demands, losses, liabilities, costs, expenses,
obligations and damages, including, without limitation, interest, penalties and
reasonable attorneys' fees, suffered or incurred by Buyer which arise, result
from or relate to any breach of or failure by Seller to perform any of its
respective representations, warranties, covenants, obligations or agreements in
this Agreement or in any schedule, certificate, exhibit or other instrument
furnished or to be furnished under this Agreement or which arise, result from or
relate to any liability or obligation of Seller not specifically assumed by
Buyer or otherwise provided for hereunder, or any matter, liability (contingent
or otherwise), obligation, occurrence or transaction which relates to the
Purchased Assets (excluding the Tangible Assets and the Miscellaneous Assets)
occurring or arising prior to the Physical Closing Date and/or the Tangible
Assets and the Miscellaneous Assets occurring or arising prior to the Tangible
Assets Closing. Nothing herein shall, however, prevent Seller from contesting,
in good faith, its liability therefor and no right to indemnity shall accrue
hereunder in respect of any such liability which Seller is contesting diligently
and in good faith until final resolution of such contest.
13.2 Indemnification of Seller. Buyer shall indemnify,
defend and hold harmless Seller, its subsidiaries and its officers, directors,
shareholders, employees and agents against and in respect of any and all claims,
demands, losses, liabilities, costs, expenses, obligations and damages,
including, without limitation, interest, penalties and reasonable attorneys'
fees, suffered or incurred by Seller (and its subsidiaries) as a result of any
breach of or failure by Buyer to perform any of its representations, warranties,
covenants, obligations or agreements in this Agreement or in any schedule,
certificate, exhibit or other instrument furnished or to be furnished under this
Agreement. Nothing herein shall, however, prevent Buyer from contesting, in good
faith, its liability therefor and no right to indemnity shall accrue hereunder
in respect of any such liability which Buyer is contesting diligently and in
good faith until final resolution of such contest.
13.3 Procedures for Establishment of Right to Indemnity
and Right to Defend Third Party Claims. In the event that any person or entity
hereto asserts the existence of any right to indemnity under Sections 13.1 or
13.2 ("Indemnifiable Damages"), such party (the "Indemnitee") shall give written
notice to the other party or parties (the "Indemnitors") of the nature and
amount of the Indemnity asserted promptly, and, in the case of any claim
relating to a third party action, as soon as reasonably practicable, but no less
than ten (10) days prior to the date a response or answer thereto is due, in
writing, thereof. The failure, refusal or neglect of such Indemnitee to notify
the Indemnitors within the time period specified above of any such claim or
action shall not relieve such Indemnitors from any liability which they may have
to such Indemnitee in connection therewith, unless the Indemnitors were
prejudiced by such a delay, and then only to the extent of the harm suffered by
such delay. In case any claim, demand or assessment shall be asserted or suit,
action or proceeding commenced against an Indemnitee and such Indemnitee shall
have notified the Indemnitor of the commencement thereof, the Indemnitor may, to
the extent that such claim, demand or assessment includes or may include
Indemnifiable Damages, assume the defense, conduct or settlement thereof, in
which event, Indemnitor shall be responsible for all Indemnifiable Damages which
may be suffered or incurred by the Indemnitee in connection therewith, as set
forth in Sections 13.1 and 13.2, and the defense thereof, with the assistance of
counsel selected by Indemnitor and approved by Indemnitee, which approval shall
not be unreasonably withheld. After notice from the Indemnitor to the Indemnitee
that it will so assume the defense thereof, the Indemnitors will not be liable
to the Indemnitee for expenses incurred in connection with the defense, conduct
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or settlement thereof, except for such expenses as may be reasonably required to
enable the Indemnitors to take over such defense, conduct or settlement. The
Indemnitee will cooperate with the Indemnitors in connection with any such
claim, make personnel, witnesses, books and records relevant to the claim
available to the Indemnitors and grant such authorizations or powers of attorney
to the agents, representatives and counsel of the Indemnitors as the Indemnitors
may reasonably request in connection with the defense or settlement of any such
claim. In the event that the Indemnitors do not so assume the defense, conduct
or settlement of any claim, demand or assessment within thirty (30) days after
receiving notice of any claim relating to a third party action, claim, demand,
assertion or action as set forth above, the Indemnitee shall be entitled to
defend, conduct or settle such claim, demand or assessment without the written
consent of the Indemnitors and without relieving the Indemnitors from any of the
obligations, including reasonable attorney fees, to indemnify the Indemnitee
under Sections 13.1 or 13.2. The Indemnitee and the Indemnitors may agree in
writing, at any time, as to the existence and amount of an Indemnity, and, upon
the execution of such agreement, such Indemnity shall be deemed established.
13.4 Limitations.
(a) Except with respect to claims (i)
relating to covenants or agreements by either party, or (ii) based upon fraud,
neither party shall have any obligation to indemnify the other party under
Sections 13.1 or 13.2 above in respect to any Indemnifiable Damages unless the
aggregate cumulative total of all Indemnifiable Damages incurred by the
Indemnitee exceeds Ten Thousand United States Dollars (US$10,000), which amount
shall be deemed to be "material" as such term is used in the representations and
warranties of Seller and Buyer set forth in Sections 5 and 6 hereof,
respectively. In such event, the Indemnitees shall be entitled to
indemnification for the entire aggregate cumulative amount of such Indemnifiable
Damages. In no event shall the liability or obligation of Seller exceed the
Purchase Price. Notwithstanding the previous sentence, if a claim for
Indemnifiable Damages is brought by Buyer: (I) the out-of-pocket liability of
Sellers shall not exceed the greater of (i) $150,000 (plus Buyer's actual
reasonable attorneys fees) or (ii) that portion of the Purchase Price paid as of
the date a claim for Indemnifiable Damages is brought; and (II) Buyer shall have
the additional right to offset against the Purchase Price, payable under the
Royalty Note No. 1 and No. 2, the amount of the actual Indemnifiable Damages
incurred by Buyer, (less the amount recovered in clause (I) above), up to the
amount of the Purchase Price.
(b) Further, notwithstanding anything to the
contrary in this Section 13.4, Section 9 hereof or any other section of this
Agreement, (i) the limitations contained in the final sentence of Section
13.4(a) shall not apply to claims for Indemnifiable Damages relating to claims
of customers of Sellers arising from transactions prior to the Physical Closing;
and (ii) each of Platinum, Cypher and Slatershelfco, for a period of five (5)
years from the date of the Physical Closing, shall indemnify, defend and hold
harmless Buyer against and in respect of any Indemnifiable Damages that are the
direct result of a challenge to Buyer's title to the Purchased Assets, including
but not limited to, challenges to title based on claims that the present
transaction is a fraudulent conveyance or transfer by Seller or a preferential
transaction; provided, however, in no event shall the aggregate liability of
Platinum, Cypher and Slatershelfco exceed the Purchase Price.
13.5 Payment of Indemnity. The Indemnitors shall pay
the amount of each established Indemnity to the Indemnitee promptly, but not
more than thirty (30) days, after it has been properly established. Subject to
the limitations herein contained, the Indemnitee shall have all rights and
remedies available at law or equity for enforcement of its rights hereunder.
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14. Affirmative Covenants of Buyer. Buyer covenants and agrees
with Seller, for as long as any amounts are due hereunder or under the Royalty
Notes or the Tangible Assets Note, as follows:
14.1 Financial Statements. Buyer will furnish to
Seller as soon as practicable, and in any event within ninety (90) days after
the end of each fiscal year of Buyer, the compiled financial statements of Buyer
or reviewed or audited financial statements if Buyer has its financial
statements reviewed or audited, including a consolidated balance sheet as at the
end of such fiscal year and a consolidated statement of operations and a
consolidated statement of cash flows for such fiscal year, setting forth in each
case in comparative form corresponding figures for the preceding fiscal year,
all of which will be correct and complete and will present fairly the financial
condition of Buyer on a consolidated basis at the date shown and the
consolidated results of its operations for the period then ended. Seller shall
be permitted access to work papers as they relate to the calculation of Net
Revenues.
14.2 Reports and Inspection. Buyer will furnish
promptly to Seller such documents, reports and financial data as Seller may
reasonably request in order to determine Buyer's Net Revenues and the amounts
payable by Buyer in accordance with this Agreement and the Royalty Note, and
will, upon reasonable prior notice, make available to Seller and its
representatives during normal business hours (a) all business records of Buyer
relating to determination of Net Revenues for inspection and (b) the directors,
officers and employees of Buyer for interviews concerning the determination of
Net Revenues by Buyer. Seller agrees to execute in favor of Buyer the standard
form of Buyer's nondisclosure and confidentiality agreement with respect to the
information disclosed to Seller pursuant to this Section 14.2.
14.3 Business Insurance. Buyer will at all times
maintain and keep in full force and effect valid fire and theft insurance
policies with financially sound insurers with respect to its properties, assets
and business of the kinds and in amounts not less than is customarily obtained
by corporations engaged in the same or similar businesses and similarly located.
14.4 Distribution Product Object Code. Buyer has
granted and delivered to Platinum one (1) copy of the Distribution Product
object code and documentation in "as is" condition for use in internal design
review only. Seller may not sell or in any way transfer this code, or translate
or reverse engineer the code for its own use or that of another party.
14.5 OEM Agreement. Buyer agrees to negotiate in good
faith, within six (6) months following the Physical Closing, a mutually
agreeable OEM agreement with Platinum covering Buyer's distribution software
products.
14.6 Consulting Services. Buyer agrees to provide
independent consulting services to Platinum product managers to help them in
understanding the Distribution Product at an internal hourly rate of One Hundred
Dollars (US$100), plus travel time and expenses. Such services will be limited
to one hundred (100) hours in total, shall be no more than forty (40) hours in
any one month, and must be utilized within the period extending from Physical
Closing through June 30, 1998. Payment for such services will be due within
thirty (30) days following receipt of an invoice, and Buyer reserves the right
to discontinue consulting services if invoices are not paid within thirty (30)
days of receipt by Seller.
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15. Negative Covenants of Buyer. Buyer covenants and agrees
with Seller, for as long as any amounts are due hereunder or under the Royalty
Notes or the Tangible Assets Note, that Buyer will not take any of the following
actions without the prior approval of Seller:
15.1 Merger; Sale of Assets. Buyer will not become a
party to any merger or consolidation, or sell, lease or otherwise dispose of all
or substantially all of its properties or assets, other than sales or leases of
properties or assets in the ordinary course of business or the replacement of
outmoded or damaged equipment with other equipment (a "Reorganization");
provided, however, that Seller's approval shall not be unreasonably withheld or
delayed, and provided further that no prior approval of Seller shall be required
for any Reorganization in connection with which all obligations of Buyer to
Seller hereunder and under the Royalty Notes are accelerated and paid in full by
Buyer on or prior to the closing or effectiveness of such Reorganization.
15.2 Transactions with Management Stockholders. Buyer
will not engage in any transaction, enter into any contract, agreement or other
arrangement providing for the employment of, furnishing of services by, rental
of real or personal property from, or otherwise requiring payments to, any
"affiliates" or "associates" of Buyer (as such terms are defined under the rules
and regulations of the Securities Exchange Act of 1934), except transactions
which are on terms and conditions substantially similar to those which would be
available to Buyer in an arms' length transaction with an unaffiliated third
party and except for the payment of customary and reasonable salaries.
15.3 Dissolution or Liquidation. Buyer will not
voluntarily dissolve, wind up or carry out any partial liquidation or enter
into a members voluntary liquidation.
16. Miscellaneous.
16.1 Further Acts. After the Closing Date, Seller and
Buyer shall execute and deliver all instruments and documents and shall perform
all other acts which the other may reasonably request in order to further effect
or perfect the sale and transfer of the Purchased Assets to Buyer and the other
transactions contemplated in this Agreement.
16.2 Sales Tax. Seller shall pay all sales, use and
transfer taxes, if any, arising out of the transfer of the Purchased Assets and
Tangible Assets and Seller shall pay all state and local real and personal
property taxes of the Business. Buyer shall not be responsible for any business,
occupation, withholding or similar tax, or any Taxes of any kind related to any
period before the Physical Closing Date or the Tangible Assets Closing Date.
16.3 Expenses. Each of the parties shall pay all costs
and expenses incurred or to be incurred by it in negotiating and preparing this
Agreement and in closing and carrying out the transactions contemplated by this
Agreement.
16.4 Notices. Any notices and other communications
required or permitted in this Agreement shall be effective if in writing and
delivered personally or sent by telecopier, Federal Express, or registered or
certified air mail, postage prepaid, addressed as follows:
(a) If to Buyer, addressed to:
Strategic Advantage Software Corporation
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1810 Thorstrand Road
Madison, Wisconsin 53705
Telecopier: (608) 238-6674
Attention: Carol McNeill Skorupan
with copies to:
DeWitt, Ross & Stevens
8000 Excelsior Drive, No. 401
Madison, Wisconsin 53717
Attention: Stuart C. Herro, Esq.
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(b) If to Seller, addressed to:
Platinum Software Corporation
195 Technology Drive
Irvine, California, 92718
Telecopier: (714) 727-1255
Attention: Michael J. Simmons,
Chief Financial Officer
with copies to:
Stradling, Yocca, Carlson & Rauth
660 Newport Center Drive, Suite 1600
Newport Beach, California, 92660
Telecopier: (714) 725-4100
Attention: K.C. Schaaf, Esq.
Unless otherwise specified herein, such notices or other communications
shall be deemed effective (a) on the date delivered, if delivered personally,
(b) two (2) business days after being sent by Federal Express, if sent by
Federal Express, (c) one (1) business day after being delivered, if delivered by
telecopier, and (d) three (3) business days after being sent, if sent by
registered or certified air mail. Each of the parties hereto shall be entitled
to specify a different address by giving notice as aforesaid to each of the
other parties hereto.
16.5 Attorneys' Fees. In the event of any controversy,
claim or dispute between the parties hereto arising out of or relating to this
Agreement or any of the documents provided for herein, or the breach thereof,
the prevailing party shall be entitled to recover from the losing party
reasonable attorneys' fees, expenses and costs.
16.6 Assignment. Neither Buyer nor Seller may assign,
without the prior written consent of the other, its rights, duties or
obligations under this Agreement to any person or entity, in whole or in party;
provided, however, that this Agreement may be assigned by Seller without the
consent of Buyer (i) to a purchaser of all or substantially all of the assets or
outstanding capital stock of Seller, whether by merger, consolidation to
otherwise provided the assignee agrees to be bound by all of the terms and
conditions of this Agreement, or (ii) to a subsidiary all of whose stock is
owned by Seller, provided Seller shall continue to remain subject to the
obligations hereof.
16.7 Binding Effect. This Agreement shall be binding
upon and inure to the benefit of the successors and permitted assigns of the
respective parties hereto.
16.8 Parties in Interest. Nothing in this Agreement,
whether express or implied, is intended to confer any rights or remedies under
or by reason of this Agreement on any persons other than the parties to it and
their respective successors and assigns, nor is anything in this Agreement
intended to relieve or discharge the obligation or liability of any third
persons to any party to this Agreement, nor shall any provision give any third
persons any right of subrogation over or action against any party to this
Agreement.
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16.9 Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be an original and
all of which together shall be deemed to be one and the same instrument.
Facsimile signatures shall be effective for purposes of execution hereunder.
However, this Agreement shall be ineffective for any purposes whatsoever unless
or until executed by all parties hereto.
16.10 Headings. The subject headings of the paragraphs
and subparagraphs of this Agreement are included for purposes of convenience
only and shall not affect the construction or interpretation of any of its
provisions.
16.11 Severability. Nothing contained herein shall be
construed to require the commission of any act contrary to applicable law.
Should there be any conflict between any provisions hereof and any present or
future statute, law, ordinance, regulation, or other pronouncement having the
force of law, the latter shall prevail, but the provision of this Agreement
affected thereby shall be curtailed and limited only to the extent necessary to
bring it within the requirements of the law, and the remaining provisions of
this Agreement shall remain in full force and effect.
16.12 Integration. This Agreement (together with its
schedules, exhibits and other attachments) sets forth all the promises,
covenants, agreements, conditions and understandings between the parties hereto,
and supersedes all prior and contemporaneous agreements and understandings,
inducements or conditions, express or implied, oral or written, with respect to
the subject matter hereof except as herein contained.
16.13 Amendment; Waiver. This Agreement may be amended,
modified, extended or terminated, either retroactively or prospectively, and the
provisions hereof may be waived, only by an instrument in writing signed by the
parties hereto. In addition, each party hereto may waive any right hereunder by
an instrument in writing signed by such party.
16.14 Governing Law; Interpretation. This Agreement
shall be governed by, construed in accordance with and enforced under the laws
of the State of California applicable to contracts made and to be performed in
California, without regard to choice of law principles. Words used herein,
regardless of the number and gender specifically used, shall be deemed and
construed to include any other number, singular or plural, and any other gender,
masculine, feminine or neuter, as the context requires. All amounts referenced
herein are in United States Dollars.
16.15 Arbitration. Except for the right of either
party to apply to a court of competent jurisdiction for a temporary restraining
order, a preliminary injunction or other equitable relief to preserve the status
quo or prevent irreparable harm, each controversy, dispute or claim arising out
of or in connection with or relating to this Agreement shall be submitted by the
parties hereto to arbitration by the American Arbitration Association in the
County of Orange, State of California, in accordance with the commercial rules
then in effect for that Association. A transcribed record shall be prepared to
document all proceedings. Each party hereto shall choose one arbitrator within
fifteen (15) days of receipt of notice of the intent to arbitrate. Within thirty
(30) days of receipt of the notice of the intent to arbitrate, the two
arbitrators shall choose a neutral third arbitrator who shall act as chairman.
The award rendered by the arbitrator shall include costs of arbitration,
reasonable attorneys' fees and reasonable costs for expert and other witnesses,
and judgment upon such award may be entered in any court having jurisdiction
thereover.
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16.16 RTPA Registration. Any provision of this
Agreement by virtue of which it (or any agreement or arrangement of which it
forms part) is subject to registration under the U.K. Restrictive Trade
Practices Acts 1976 and 1977 shall not take effect until the day after the
required particulars of it have been submitted to the Director General of Fair
Trading in accordance with the requirements of those Acts. The parties undertake
to procure that the required particulars are submitted within thirty (30) days
from the date of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
BUYER:
STRATEGIC ADVANTAGE SOFTWARE CORPORATION
By: ___________________________________________
Its: __________________________________________
SELLER:
PLATINUM SOFTWARE CORPORATION
By: ___________________________________________
Michael J. Simmons, Chief Financial Officer
CYPHER BUSINESS SYSTEMS, LTD.
By: ___________________________________________
Its: __________________________________________
SLATERSHELFCO 173 LIMITED
By: ___________________________________________
Its: __________________________________________
21
<PAGE> 22
INDEX OF SCHEDULES
Schedule Description
- -------- ------------
1.1(b) Copyrights and Trademarks
1.1(c) Tangible Assets
1.1(d) Miscellaneous Assets
2.4 Allocation of Purchase Price
5.4 Exceptions to Title
5.6 Litigation
22
<PAGE> 23
INDEX OF EXHIBITS
Exhibit Description
- ------- -----------
A-1 Form of Royalty Note-No. 1
A-2 Form of Royalty Note-No. 2
B Form of Security Agreement
C Tangible Assets Promissory Note
D Form of Mutual Release Agreement
E Form of Opinion of Counsel for Buyer
F-1 Form of Bill of Sale, General Conveyance and Assignment For Cypher
F-2 Form of Bill of Sale, General Conveyance and Assignment For
Platinum
F-3 Form of Bill of Sale, General Conveyance and Assignment For
Slatershelfco
G Form of Opinion of Counsel for Seller
23
<PAGE> 24
EXHIBIT A-1
SECURED ROYALTY PROMISSORY NOTE-NO. 1
US $1,000,000 _______________, 1996
FOR VALUE RECEIVED, STRATEGIC ADVANTAGE SOFTWARE CORPORATION, a
Wisconsin corporation with offices located at 1810 Thorstrand Road, Madison,
Wisconsin 53705 (the "Maker") promises to pay to the order of CYPHER BUSINESS
SYSTEMS, LTD., a corporation organized under the laws of England and Wales with
offices at c/o Platinum Software Corporation, 195 Technology Drive, Irvine,
California 92718 ("Cypher"), or such other place as the holder (the "Holder") of
this Secured Royalty Promissory Note-No. 1 (this "Note") may from time to time
in writing direct, the principal sum of One Million United States Dollars
(US$1,000,000), payable in full as set forth below. Except as provided below,
the principal amount of this Note shall not bear interest.
This Note is the Royalty Note-No. 1 referred to in that certain
Agreement of Purchase and Sale of Assets, dated as of February 29, 1996, between
the Maker and Platinum Software Corporation, Cypher and Slatershelfco 173
Limited (the "Purchase Agreement") and is secured by a security interest created
under that certain Security Agreement of even date (the "Security Agreement")
between Maker and Cypher and Cypher is entitled to all of the benefits and
security of the collateral as set forth in the Security Agreement. Capitalized
terms used herein and not otherwise defined shall have the meanings assigned to
them in the Purchase Agreement.
If any principal payable hereunder is not paid when due, or, in the
event of a default by Maker under the Purchase Agreement, the Security Agreement
or this Note, such overdue principal shall bear interest at a rate per annum
equal to ten percent (10%) from the due date until paid. Prepayment of principal
hereunder may be made at any time without penalty.
All amounts due hereunder shall be payable in lawful money of the
United States of America. Maker shall pay to Cypher the principal amount of One
Million United States Dollars (US$1,000,000) as set forth herein. Maker shall
pay to Cypher five percent (5%) of Maker's Net Revenues from the licensing of
the Distribution Product until either (A) the aggregate amount of the royalties
paid by Maker to Cypher under Section 2 of the Purchase Agreement shall equal
US$1,000,000, or (B) the tenth (10th) anniversary of the date hereof, whichever
first occurs. In the event the tenth (10th) anniversary of the date hereof
occurs first and the aggregate royalties paid by Maker to Cypher under Section
2.2(a) of the Purchase Agreement does not total US$1,000,000, the difference
between US$1,000,000 and the aggregate royalties paid shall be paid in full by
Maker within sixty (60) days following such tenth (10th) anniversary of the date
hereof (the "Royalty Deficit Payment"); provided, however, Cypher in its sole
discretion, may allow Maker an extension of time to make the Royalty Deficit
Payment provided that such
<PAGE> 25
obligation shall be documented by a promissory note on terms and conditions as
shall be reasonably agreed to by the parties at the time but specifically
including a term of Maker's choosing, but not more than three (3) years, and
interest payable at the prime rate quoted by Platinum's primary lender then in
effect plus two percent (2%). The royalties shall be payable within thirty (30)
days following the end of each calendar quarter in the manner set forth in the
Purchase Agreement; provided, however, that the first royalty payment shall be
due and payable thirty (30) days after the six (6) month anniversary of the
first license sale of the Distribution Product (and future versions, updates,
enhancements or improvements, including versions using different databases).
Such payment shall cover the entire period following the first license sale
through the six (6) month anniversary.
In the event the Purchase Agreement shall terminate pursuant to Section
2.6 thereof, Maker shall have no further obligation under this Note.
The principal amount of this Note and all accrued but unpaid interest
thereon, if any, shall become immediately due and payable, at the option of
Cypher, upon the occurrence of any of the following (an "Event of Default"):
(a) Any uncontested payment due under this Note shall have been in
default for at least thirty (30) days following the receipt of a written notice
of default in payment;
(b) The Maker shall fail or neglect to perform, keep or observe any
covenant or obligation of Maker as set forth in Sections 2.2, 15.1 and 15.3 of
the Purchase Agreement, which breach is not cured within thirty (30) days
following receipt by Maker of written notice thereof; or
(c) The Maker fails or neglects to comply with any covenant or
obligation of Maker set forth in the Security Agreement which breach is not
cured within the cure period provided in the Security Agreement;
(d) The Maker shall commence a voluntary case concerning itself
under Title 11 of the United States Code entitled "Bankruptcy" as now or
hereafter in effect; or an involuntarily case shall be commenced against the
Maker and the petition shall not be controverted within thirty (30) days, or
shall not be dismissed within one hundred eighty (180) days after commencement
of the case; or a custodian shall be appointed for, or shall take charge of, all
or substantially all of the property of the Maker, or the Maker shall commence
any other proceeding under any reorganization, arrangement, adjustment of debt,
relief of debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to the Maker, or there
shall be commenced against the Maker any such proceeding, or the Maker shall be
adjudicated insolvent or bankrupt; or
(e) Greater than fifty percent (50%) of the voting capital stock of
the Maker passes without the consent of Cypher to any person, firm or company
acting either individually or
2
<PAGE> 26
in concert, provided that transfers of shares between the registered
shareholders of Maker as of the date hereof will not be considered a change of
control. Notwithstanding the foregoing sentence, no consent of Cypher shall be
required for any transaction or series of transactions prior to June 30, 1998 in
which Maker secures capital or funding for business operations.
The Maker hereby waives presentment for payment, protest and notice of
nonpayment and dishonor. If the Holder takes any action to collect this Note,
then the Maker shall be obligated to pay, in addition to all other amounts due
under this Note, all costs of collection and reasonable attorneys' fees and
other legal costs and expenses, provided that Maker is determined by a court of
competent jurisdiction to be liable for the amount sought to be collected.
No delay or failure on the part of the Holder in the exercise of any
right or remedy hereunder shall operate as a waiver thereof, nor as an
acquiescence in any default, nor shall any single or partial exercise by the
Holder of any right or remedy preclude any other right or remedy. The Holder, at
its option, may enforce its rights against any collateral securing this Note
without enforcing its rights against the Maker or any other indebtedness due or
to become due to the Maker. The Maker agrees that, without releasing or
impairing the Maker's liability hereunder, the Holder may at any time release,
surrender, substitute or exchange any collateral securing this Note and may
release any party secondarily liable for the indebtedness evidenced by this
Note.
This Note shall be governed by and construed in accordance with the
internal laws of the State of California of the United States. Cypher and Maker
each irrevocably agree that all actions arising directly or indirectly as a
result or in consequence of this Note shall be instituted and litigated only in
courts having situs in the State of California, and Cypher and Maker each hereby
consent to the exclusive jurisdiction and venue of any state or federal court
located and having its situs in the State of California.
IN WITNESS WHEREOF, the Maker has caused this Note to be executed and
delivered on the day and year first above written.
STRATEGIC ADVANTAGE SOFTWARE
CORPORATION
By: _________________________________
Carol McNeill Skorupan, President
3
<PAGE> 27
EXHIBIT A-2
SECURED ROYALTY PROMISSORY NOTE-NO. 2
US $500,000 _______________, 1996
FOR VALUE RECEIVED, STRATEGIC ADVANTAGE SOFTWARE CORPORATION, a
Wisconsin corporation with offices located at 1810 Thorstrand Road, Madison,
Wisconsin 53705 (the "Maker") promises to pay to the order of CYPHER BUSINESS
SYSTEMS, LTD., a corporation organized under the laws of England and Wales with
offices at c/o Platinum Software Corporation, 195 Technology Drive, Irvine,
California 92718 ("Cypher"), or such other place as the holder (the "Holder") of
this Secured Royalty Promissory Note-No. 2 (this "Note") may from time to time
in writing direct, the principal sum of Five Hundred Thousand United States
Dollars (US$500,000), payable as set forth below. Except as provided below, the
principal amount of this Note shall not bear interest.
This Note is the Royalty Note-No. 2 referred to in that certain
Agreement of Purchase and Sale of Assets, dated as of February 29, 1996, between
the Maker and Platinum Software Corporation, Cypher and Slatershelfco 173
Limited (the "Purchase Agreement") and is secured by a security interest created
under that certain Security Agreement of even date (the "Security Agreement")
between Maker and Cypher, and Cypher is entitled to all of the benefits and
security of the collateral as set forth in the Security Agreement. Capitalized
terms used herein and not otherwise defined shall have the meanings assigned to
them in the Purchase Agreement.
In the event of a default by Maker under the Purchase Agreement, the
Security Agreement or this Note, the then-due, but unpaid principal shall bear
interest at a rate per annum equal to ten percent (10%). Prepayment of principal
hereunder may be made at any time without penalty.
All amounts due hereunder shall be payable in lawful money of the
United States of America. Maker shall pay to Cypher the principal amount of Five
Hundred Thousand United States Dollars (US$500,000) as set forth herein. Maker
shall pay to Cypher five percent (5%) of Maker's Net Revenues from the licensing
of the Distribution Product from the day after the tenth (10th) anniversary of
the date hereof until either (A) the aggregate amount of the royalties paid by
Maker to Cypher under Section 2.2b of the Purchase Agreement shall equal
US$500,000, or (B) the twentieth (20th) anniversary of the date hereof,
whichever first occurs. In the event the twentieth (20th) anniversary of the
date hereof occurs first and the amount by which the aggregate royalties paid by
Maker to Cypher under Section 2.2(b) of the Purchase Agreement does not total
US$500,000, the difference between US$500,000 and the aggregate royalties paid
to date shall be excused and forgiven. The royalties shall be payable within
thirty (30) days following the end of each calendar quarter in the manner set
forth in the Purchase Agreement.
<PAGE> 28
In the event the Purchase Agreement shall terminate pursuant to Section
2.6 thereof, Maker shall have not further obligation under this Note.
The then-due, but unpaid principal amount of this Note and all accrued
but unpaid interest thereon, if any, shall become immediately due and payable,
at the option of Cypher, upon the occurrence of any of the following (an "Event
of Default"):
(a) Any uncontested payment due under this Note shall
have been in default for at least thirty (30) days following the receipt of a
written notice of default in payment;
(b) The Maker shall fail or neglect to perform, keep
or observe any covenant or obligation of Maker as set forth in Sections 2.2,
15.1 and 15.3 of the Purchase Agreement, which breach is not cured within thirty
(30) days following receipt by Maker of written notice thereof; or
(c) The Maker fails or neglects to comply with any
covenant or obligation of Maker set forth in the Security Agreement which breach
is not cured within the cure period provided in the Security Agreement;
(d) The Maker shall commence a voluntary case
concerning itself under Title 11 of the United States Code entitled "Bankruptcy"
as now or hereafter in effect; or an involuntarily case shall be commenced
against the Maker and the petition shall not be controverted within thirty (30)
days, or shall not be dismissed within one hundred eighty (180) days after
commencement of the case; or a custodian shall be appointed for, or shall take
charge of, all or substantially all of the property of the Maker, or the Maker
shall commence any other proceeding under any reorganization, arrangement,
adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or
similar law of any jurisdiction whether now or hereafter in effect relating to
the Maker, or there shall be commenced against the Maker any such proceeding, or
the Maker shall be adjudicated insolvent or bankrupt; or
(e) Greater than fifty-percent (50%) of the voting
capital stock of the Maker passes without the consent of Cypher to any person,
firm or company acting either individually or in concert, provided that
transfers of shares between the registered shareholders of Maker as of the date
hereof will not be considered a change of control. Notwithstanding the foregoing
sentence, no consent of Cypher shall be required for any transaction or series
of transactions prior to June 30, 1998 in which Maker secures capital or funding
for business obligations.
The Maker hereby waives presentment for payment, protest and notice of
nonpayment and dishonor. If the Holder takes any action to collect this Note,
then the Maker shall be obligated to pay, in addition to all other amounts due
under this Note, all costs of collection and reasonable attorneys' fees and
other legal costs and expenses provided that Maker is determined by a court of
competent jurisdiction to be liable for the amount sought to be collected.
2
<PAGE> 29
No delay or failure on the part of the Holder in the exercise of any
right or remedy hereunder shall operate as a waiver thereof, nor as an
acquiescence in any default, nor shall any single or partial exercise by the
Holder of any right or remedy preclude any other right or remedy. The Holder, at
its option, may enforce its rights against any collateral securing this Note
without enforcing its rights against the Maker or any other indebtedness due or
to become due to the Maker. The Maker agrees that, without releasing or
impairing the Maker's liability hereunder, the Holder may at any time release,
surrender, substitute or exchange any collateral securing this Note and may
release any party secondarily liable for the indebtedness evidenced by this
Note.
This Note shall be governed by and construed in accordance with the
internal laws of the State of California of the United States. Cypher and Maker
each irrevocably agree that all actions arising directly or indirectly as a
result or in consequence of this Note shall be instituted and litigated only in
courts having situs in the State of California, and Cypher and Maker each hereby
consent to the exclusive jurisdiction and venue of any state or federal court
located and having its situs in the State of California.
IN WITNESS WHEREOF, the Maker has caused this Note to be executed and
delivered on the day and year first above written.
STRATEGIC ADVANTAGE SOFTWARE
CORPORATION
By: __________________________________
Carol McNeill Skorupan, President
3
<PAGE> 30
EXHIBIT B
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (the "Agreement"), is made as of __________,
1996, by and between STRATEGIC ADVANTAGE SOFTWARE CORPORATION, a Wisconsin
corporation (the "Debtor"), and CYPHER BUSINESS SYSTEMS, LTD, a company
registered under the laws of England and Wales (the "Secured Party"), with
reference to the following:
R E C I T A L S
A. Debtor and Secured Party are parties to that certain Agreement
of Purchase and Sale of Assets dated as of February 29, 1996 (the "Purchase
Agreement"), pursuant to which Debtor has agreed to purchase from Secured Party
and Secured Party has agreed to sell and transfer to Debtor certain assets,
operations and businesses of Secured Party, as described more particularly
therein (the "Purchased Assets").
B. Pursuant to the terms of the Purchase Agreement, Debtor is
executing and delivering to Secured Party (i) a Secured Royalty Promissory
Note-No. 1 and (ii) a Secured Royalty Promissory Note-No. 2, each of even date
herewith in the original aggregate principal amount of One Million Five Hundred
Thousand United States Dollars (US$1,500,000) payable to the order of the
Secured Party (the "Notes") in connection with the purchase by Debtor of the
Purchased Assets.
C. Pursuant to the terms of the Purchase Agreement, Debtor is
executing and delivering to Secured Party a Tangible Assets Promissory Note
dated as of the Tangible Assets Closing Date.
D. As a condition to the purchase of, and as part of the
consideration for, the Purchased Assets, and in order to secure the payment and
performance of the obligations of Debtor to Secured Party under the Notes and
the Tangible Assets Promissory Note executed pursuant to the terms of the
Purchase Agreement, Debtor has agreed to grant to Secured Party a security
interest in the Collateral, as provided for herein.
E. Capitalized terms used herein and not otherwise defined shall
have the meanings assigned to them in the Purchase Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals, the
following mutual agreements and promises, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
<PAGE> 31
A G R E E M E N T
1. Security Interest.
(a) Creation of Security Interest. Debtor hereby grants to
Secured Party a continuing security interest in all of Debtor's right, title and
interest in and to the Collateral, as defined in Subsection 1(b) below, in order
to secure the payment and performance of the obligations of Debtor to Secured
Party described in Subsection 1(c) below.
(b) Collateral. As used herein, the term "Collateral" shall
mean all of the assets, properties and business of Debtor either tangible,
intangible, real, personal or mixed, whether now owned or hereafter acquired and
wherever located, together with all proceeds or products thereof including,
without limitation, all payments under insurance (whether or not the Secured
Party is the loss payee thereof), or any indemnity, warranty or guaranty (save
any obligation which is the responsibility of Secured Party, Platinum Software
Corporation or Slatershelfco 173 Limited), payable by reason of loss or damage
or otherwise with respect thereto.
(c) Obligations Secured. The security interest granted to
Secured Party by Debtor pursuant to this Section 1 shall secure payment and
performance of Debtor's obligations under (i) the Notes; (ii) the Tangible
Assets Promissory Note; and (iii) any amendment, modification, renewal or
extension of the Notes or the Tangible Assets Promissory Note (collectively the
"Secured Obligations.").
(d) Subordination. Notwithstanding any other provision
contained herein to the contrary, Secured Party undertakes with Debtor that if
so requested Secured Party will agree to subordinate its security interest
herein so that it ranks behind any security created in favor of Debtor's primary
lender providing capital for business operations to Debtor. Secured Party and
Debtor agree to use the standard form of subordination agreement provided by the
primary lender, provided the terms and conditions are reasonably acceptable to
Secured Party and Debtor, with such changes as either party may reasonably
request.
2. Representations and Warranties of Debtor. Debtor hereby
represents and warrants to Secured Party that:
(a) Debtor is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Wisconsin. Debtor was
incorporated on February 29, 1996, and prior to the date hereof Debtor had no
business, operations, assets or liabilities, other than for nominal capital
received upon its initial capitalization and for the obligations and liabilities
related to the Purchase Agreement and the transactions contemplated thereby.
(b) Debtor has all the necessary corporate power and authority
to enter into this Agreement and to perform the obligations to be performed by
it hereunder and to consummate the transactions contemplated hereby. This
Agreement has been duly authorized and approved by all necessary action on the
part of the Board of Directors and stockholders of
<PAGE> 32
Debtor. This Agreement has been duly executed and delivered by Debtor and
constitutes the valid and binding obligation of Debtor, enforceable against
Debtor in accordance with its terms, subject as to enforceability to any
applicable bankruptcy, insolvency, moratorium or other laws affecting creditors'
rights generally or such principles of equity as a court of competent
jurisdiction might apply.
(c) The Collateral is now and, so long as any of the Secured
Obligations are outstanding, will continue to be owned solely by Debtor. Except
as provided in Section 1(d) above, and except for purchase money security
interests, the Collateral is, and from time to time hereafter will be, free from
any lien or other right, title or security interest of any person other than
Secured Party. Debtor shall defend the Collateral against all claims and demands
of all persons at any time claiming the same or any interest therein adverse to
Secured Party, except for claims and demands of persons holding purchase money
security interests and except for claims and demands of persons holding
interests to which Secured Party has subordinated or to which Secured Party is
required to be subordinate to pursuant to Section 1(d) above.
(d) Assuming the filing of the UCC-1 Financing Statement in
the form attached hereto as Exhibit A in the appropriate state or county
governmental office, the payment of all requisite fees in connection with such
filing and the satisfaction of all other filing requirements imposed by statute
or otherwise, all filings, registrations and recordings necessary or appropriate
to create, preserve, protect and perfect the security interest granted by Debtor
to Secured Party hereby in respect of the Collateral will have been accomplished
and the security interest granted to Secured Party pursuant to this Agreement in
and to the Collateral will constitute a valid and enforceable perfected security
interest therein, and Secured Party is entitled to all the rights, priorities
and benefits afforded by the Wisconsin Uniform Commercial Code or other relevant
law as enacted in any relevant jurisdictions to perfected security interests.
(e) There is no financing statement (or similar statement or
instrument of registration under the law of any jurisdiction) other than Secured
Party's covering or purporting to cover any interest of any kind in the
Collateral and so long as any of the Secured Obligations remain unpaid, Debtor
will not execute or authorize to be filed at any public office any other
financing statement (or similar statement or instrument of registration under
the law of any jurisdiction) or statements relating to the Collateral, except
financing statements filed or to be filed in respect of and covering the
security interest granted hereby by Debtor, except for interests permitted by
Section 1(d) and 2(c) above. Debtor further covenants that it will not grant any
additional security interests which rank in priority to the security interest in
the Collateral granted in this Agreement in the assets, properties or the
business of Debtor without the prior written consent of Secured Party except for
interests permitted by Sections 1(d) and 2(c) above.
(f) No representations or warranties of Debtor contained in
this Agreement or in any document, statement or certificate furnished or to be
furnished pursuant to this Agreement, contain an untrue statement of a material
fact, or omit to state a material fact necessary to make the statements of fact
herein not misleading.
3. Covenants of Debtor. Until payment in full of all Secured
Obligations, Debtor agrees that, unless Secured Party shall have otherwise
consented in writing:
<PAGE> 33
(a) Debtor shall execute and take such action as may reasonably
be requested from time to time by Secured Party, including the execution and
delivery of financing statements and certificates of title, and the filing of
financing statements, as may be necessary to perfect and maintain the security
interest granted to Secured Party hereby. In the event Debtor refuses or fails
to timely execute and deliver any financing statement reasonably requested by
Secured Party, Debtor authorizes Secured Party to file any such financing
statements without the signature of Debtor.
(b) Debtor shall not misuse, abuse, waste or allow to
deteriorate the Collateral, except for ordinary wear and tear. Secured Party may
examine and inspect the Collateral, wherever located, during normal business
hours and upon at least 48 hours' prior notice to Debtor. Debtor will insure the
Collateral against all risks to which the Collateral is exposed in the ordinary
course, and shall cause Secured Party to be named as loss payee thereunder to
the extent of its interest therein.
(c) Debtor shall pay and discharge all taxes, assessments and
governmental charges or levies imposed upon it or its property or assets, prior
to the date on which penalties attach thereto, and all lawful claims (except as
permitted by Sections 1(d) and 2(c) above) which, if unpaid, would become a lien
or charge upon the Collateral, except to the extent that the imposition of any
such tax, assessment, charge or levy or the validity of any such claim is being
contested in good faith by the appropriate proceedings.
(d) Debtor shall notify Secured Party within ten (10) days of
any change in (i) Debtor's corporate name, (ii) Debtor's business or legal
structure, or (iii) Debtor's place of business or chief executive office if the
Debtor has more than one place of business. The Collateral will at all times be
kept by Debtor at Debtor's place of business in the State of Wisconsin or the
United Kingdom, and shall not, be moved therefrom except, prior to an Event of
Default, the Collateral may be moved to locations within the continental United
States other than that listed above if (i) Debtor gives Secured Party written
notice of a new storage location at least thirty (30) days prior to storing
Collateral at such location, (ii) Secured Party's security interest in such
Collateral is and continues to be a duly perfected lien thereon, (iii) neither
Secured Party's nor Debtor's right of entry upon the premises where such
Collateral is stored, or its right to remove the Collateral therefrom, is in any
way restricted, (iv) the owner of such premises agrees with Secured Party not to
assert any landlord's, bailee's or other lien in respect of the Collateral for
unpaid rent or storage charges and (v) all negotiable documents and receipts in
respect of any Collateral maintained at such premises are properly delivered to
Secured Party. No Collateral is now, nor shall any Collateral at any time or
times hereafter be, stored with a bailee, warehouseman or similar party without
Secured Party's prior written consent and, if Secured Party gives such consent,
Debtor will concurrently therewith cause any such bailee, warehouseman or
similar party to issue and deliver to Secured Party, in form and substance
acceptable to Secured Party, warehouse receipts therefor in Secured Party's
name.
4. Events of Default. The occurrence of any one or more the
following events shall constitute an "Event of Default" hereunder:
<PAGE> 34
(a) Event of Default Pursuant to Transaction Documents. There
shall occur an Event of Default pursuant to the Note or the Tangible Assets
Promissory Note or Debtor shall fail or neglect to perform, keep or observe any
covenant or obligation of Debtor as set forth in Sections 2.2, 15.1 or 15.3 of
the Purchase Agreement which breach is not cured within 30 days following
receipt by Debtor of written notice thereof.
(b) Misrepresentation. Any warranty or representation of
Debtor to Secured Party in this Security Agreement is determined by a court of
competent jurisdiction to have been false or misleading in any material respect
when made.
(c) Breach of Covenants. Debtor shall fail or neglect to
perform, keep or observe any covenant or obligation of Debtor contained in this
Security Agreement and the breach of any such covenant or obligation is not
cured within thirty (30) days after Debtor's receipt of written notice of such
breach from Secured Party.
(d) Insolvency, Etc. The Debtor shall commence a voluntary
case concerning itself under Title 11 of the United States Code entitled
"Bankruptcy" as now or hereafter in effect; or an involuntarily case shall be
commenced against the Debtor and the petition shall not be controverted within
thirty (30) days, or shall not be dismissed within one hundred eighty (180) days
after commencement of the case; or a custodian shall be appointed for, or shall
take charge of, all or substantially all of the property of the Debtor, or the
Debtor shall commence any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or
liquidation or similar law of any jurisdiction whether now or hereafter in
effect relating to the Debtor, or there shall be commenced against the Debtor
any such proceeding, or the Debtor shall be adjudicated insolvent or bankrupt.
5. Secured Party's Rights and Remedies.
(a) Upon the occurrence of an Event of Default as hereinabove
set forth, Secured Party may exercise all rights or remedies that Secured Party
may have as a secured party under the Uniform Commercial Code.
(b) Upon the occurrence of any Event of Default, as
hereinabove set forth, Secured Party may sell, lease or otherwise dispose of all
or any part of the Collateral upon any terms which are commercially reasonable.
Debtor agrees that fifteen (15) days prior written notice to Debtor of any
public or private sale or other disposition of the Collateral shall be
reasonable notice thereof, and such sale shall be at such location as Secured
Party may designate in such notice.
(c) All proceeds from the sale or other disposition of the
Collateral, and all other amounts received by Secured Party pursuant to the
terms of this Agreement, unless otherwise expressly required by law or
regulation, shall be applied as follows:
(i) First, to the payment of all expenses reasonably
incurred by Secured Party in connection with any sale or disposition of the
Collateral, including, but not limited to, the
<PAGE> 35
expenses of taking, advertising, processing, preparing and storing the
Collateral to be sold, and all court costs and all reasonable legal fees of
Secured Party in connection therewith;
(ii) Second, to the payment of all obligations owed to
Secured Party pursuant to the Secured Royalty Promissory Note-No. 1 and which
have come due and are unpaid;
(iii) Third, to the payment of all obligations owed
Secured Party pursuant to the Secured Royalty Promissory Note-No. 2 which have
come due and are unpaid;
(iv) Fourth, to the payment of all obligations owed
Secured Party pursuant to the Tangible Assets Promissory Note which have come
due and are unpaid; and
(v) Fifth, the balance, if any, to Debtor.
Debtor shall remain liable to the extent of any deficiency between the amount of
the proceeds of the Collateral and the aggregate amount of the sums referenced
in clauses (i) and (ii) of this Section 5(c).
(d) No delay or omission by Secured Party in exercising any
right or remedy hereunder or with respect to any obligation of Debtor to Secured
Party secured hereunder shall operate as a waiver thereof or of any other right
or remedy available to Secured Party, and no single or partial exercise thereof
shall preclude any other or further exercise thereof or the exercise of any
other right or remedy. Secured Party, in its sole discretion, on at least seven
(7) days' prior written notice to Debtor, may (but shall have no obligation to)
remedy any Event of Default by Debtor hereunder or with respect to any
obligation of Debtor to the Secured Party or any other person, firm, corporation
or other entity in any reasonable manner without waiving the Event of Default
remedied and without waiving any other prior or subsequent Event of Default by
Debtor, and shall be reimbursed for its necessary and reasonable out-of-pocket
expenses in so remedying any of such Event of Default. All rights and remedies
of Secured Party hereunder are cumulative.
6. Miscellaneous.
(a) Further Acts. Debtor and Secured Party shall execute and
deliver all instruments and documents and shall perform all other acts which the
other may reasonably request in order to effect the rights and obligations of
the parties hereto and the other transactions contemplated in this Agreement.
(b) Notices. Any notices and other communications required or
permitted in this Agreement shall be effective if in writing and delivered
personally or sent by telecopier, Federal Express, or registered or certified
air mail, postage prepaid, addressed as follows:
If to Debtor, addressed to:
<PAGE> 36
Strategic Advantage Software Corporation
1810 Thorstrand Road
Madison, Wisconsin 53705
Telecopier: (608) 238-6674
Attention: Carol McNeill Skorupan
with copies to:
De Witt, Ross & Stevens
8000 Excelsior Drive, #401
Madison, Wisconsin 53717
Telecopier: (608) 831-2106
Attention: Stuart C. Herro, Esq.
If to Secured Party, addressed to:
Cypher Business Systems, Ltd.
c/o Platinum Software Corporation
195 Technology Drive
Irvine, California 92718
Telecopier: (714) 453-4091
Attention: Legal Department
with copies to:
Platinum Software Corporation
195 Technology Drive
Irvine, California, 92718
Telecopier: (714) 727-1255
Attention: Michael J. Simmons, Chief Financial Officer
and
Stradling, Yocca, Carlson & Rauth
660 Newport Center Drive, Suite 1600
Newport Beach, California, 92660
Telecopier: (714) 725-4100
Attention: K.C. Schaaf, Esq.
Unless otherwise specified herein, such notices or other communications
shall be deemed effective (a) on the date delivered, if delivered personally,
(b) two (2) business day after being sent by Federal Express, if sent by Federal
Express, (c) one (1) business day after being delivered, if delivered by
telecopier, and (d) three (3) business days after being sent, if sent by
registered or certified air mail. Each of the parties hereto shall be entitled
to specify a different address by giving notice as aforesaid to each of the
other parties hereto.
<PAGE> 37
(c) Attorneys' Fees. In the event of any controversy, claim or
dispute between the parties hereto arising out of or relating to this Agreement
or any of the documents provided for herein, or the breach thereof, the
prevailing party shall be entitled to recover from the losing party reasonable
attorneys' fees, expenses and costs.
(d) Assignment. Neither party may assign, without the prior
written consent of the other, its rights, duties or obligations under this
Agreement to any person or entity, in whole or in part; provided, however, that
this Agreement may be assigned by Secured Party without the consent of Debtor
(i) to a purchaser of all or substantially all of the assets or outstanding
capital stock of Secured Party, whether by merger, consolidation or otherwise
provided the assignee agrees to be bound by all of the terms and conditions of
this Agreement, or (ii) provided Secured Party shall continue to remain subject
to the obligations hereof, to a subsidiary all of whose stock is owned by
Secured Party.
(e) Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the successors and permitted assigns of the respective
parties hereto.
(f) Parties in Interest. Nothing in this Agreement, whether
express or implied, is intended to confer any rights or remedies under or by
reason of this Agreement on any persons other than the parties to it and their
respective successors and assigns, nor is anything in this Agreement intended to
relieve or discharge the obligation or liability of any third persons to any
party to this Agreement, nor shall any provision give any third persons any
right of subrogation over or action against any party to this Agreement.
(g) Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original and all of
which together shall be deemed to be one and the same instruments. However, this
Agreement shall be ineffective for any purposes whatsoever unless or until
executed by all parties hereto.
(h) Headings. The subject headings of the paragraphs and
subparagraphs of this Agreement are included for purposes of convenience only
and shall not affect the construction or interpretation of any of its
provisions.
(i) Integration. This Agreement, together with the Purchase
Agreement and the documents, exhibits and other attachments thereto, sets forth
all the promises, covenants, agreements, conditions and understandings between
the parties hereto, and supersedes all prior and contemporaneous agreements and
understandings, inducements or conditions, express or implied, oral or written,
with respect to the subject matter hereof except as herein contained.
(j) Amendment; Waiver. This Agreement may be amended,
modified, extended or terminated, either retroactively or prospectively, and the
provisions hereof may be waived, only by an instrument in writing signed by the
parties hereto. In addition, each party hereto may waive any right hereunder by
an instrument in writing signed by such party.
<PAGE> 38
(k) Governing Law; Interpretation. This Agreement shall be
governed by, construed in accordance with and enforced under the laws of the
State of California applicable to contracts made and to be performed in
California, without regard to choice of law principles. Words used herein,
regardless of the number and gender specifically used, shall be deemed and
construed to include any other number, singular or plural, and any other gender,
masculine, feminine or neuter, as the context requires. Debtor and Secured Party
each irrevocably agree that all actions arising directly or indirectly as a
result or in consequence of this Agreement, shall be instituted and litigated
only in courts having situs in California, and Debtor and Secured Party each
hereby consent to the exclusive jurisdiction and venue of any state or federal
court located and having its situs in California.
(l) Termination, Release. When all Secured Obligations have
been paid to the extent required by their terms, or the Purchase Agreement shall
terminate pursuant to Section 2.6 thereof, this Agreement shall terminate, and
Secured Party, at the request and expense of Debtor, will execute and deliver to
Debtor the proper instruments (including Uniform Commercial Code Termination
Statements) acknowledging the termination of this Agreement, and will duly
assign, transfer and deliver to Debtor (without recourse and without any
representation and warranty) such of the Collateral as may be in possession of
Secured Party and has not theretofore been sold or otherwise applied or released
pursuant to this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
"Debtor"
STRATEGIC ADVANTAGE SOFTWARE CORPORATION
By: ______________________________________
Carol McNeill Skorupan
President
"Secured Party"
CYPHER BUSINESS SYSTEMS, LTD.
By: _____________________________________
Its: ____________________________________
<PAGE> 39
EXHIBIT C
SECURED TANGIBLE ASSETS PROMISSORY
NOTE
US $______________________ _______________, 1996
FOR VALUE RECEIVED, STRATEGIC ADVANTAGE SOFTWARE CORPORATION, a
Wisconsin corporation with offices located at 1810 Thorstrand Road, Madison,
Wisconsin 53705 (the "Maker") promises to pay to the order of CYPHER BUSINESS
SYSTEMS, LTD., a corporation organized under the laws of England and Wales with
offices at c/o Platinum Software Corporation, 195 Technology Drive, Irvine,
California 92718 ("Cypher"), or such other place as the holder (the "Holder") of
this Secured Tangible Assets Promissory Note (this "Note") may from time to time
in writing direct, the principal sum of__________________ United States Dollars
(US$ _________), payable in sixty (60) equal installments of principal in the
amount of United States Dollars (US$____), together with accrued interest at
the rate of eight percent (8%) per annum on the unpaid principal balance from
the date of Tangible Asset Closing, on the first day of each calendar month
commencing on the first day of the month following the six (6) month anniversary
of the Tangible Asset Closing, until such principal balance and accrued interest
are paid in full. Attached hereto as Exhibit 1 is an amortization schedule.
This Note is the Tangible Assets Note referred to in that certain
Agreement of Purchase and Sale of Assets, dated as of February 29, 1996, between
the Maker and Platinum Software Corporation, Cypher and Slatershelfco 173
Limited (the "Purchase Agreement") and is secured by a security interest created
under that certain Security Agreement of even date (the "Security Agreement")
between Maker and Cypher, and Cypher is entitled to all of the benefits and
security of the collateral as set forth in the Security Agreement. Capitalized
terms used herein and not otherwise defined shall have the meanings assigned to
them in the Purchase Agreement.
All amounts due hereunder shall be payable in lawful money of the
United States. Overdue principal and, to the extent permitted by law, overdue
interest in respect of this Note shall bear interest at a rate per month equal
to one (1) percent or the maximum rate permitted by law, whichever is less.
Prepayment of principal hereunder may be made at any time without penalty.
The principal amount of this Note and all accrued but unpaid interest
thereon shall become immediately due and payable, at the option of Cypher, upon
the occurrence of any of the following (an "Event of Default"):
(a) Any payment due under this Note shall have been in default for
at least thirty (30) days following the receipt of a written notice of default
in payment;
<PAGE> 40
(b) The Maker shall fail or neglect to perform, keep or observe
any covenant or obligation of Maker as set forth in Sections 2.2, 15.1 and 15.3
of the Purchase Agreement, which breach is not cured within thirty (30) days
following receipt by Maker of written notice thereof; or
(c) The Maker fails or neglects to comply with any covenant or
obligation of Maker set forth in the Security Agreement which breach is not
cured within the cure period provided in the Security Agreement;
(d) The Maker shall commence a voluntary case concerning itself
under Title 11 of the United States Code entitled "Bankruptcy" as now or
hereafter in effect; or an involuntarily case shall be commenced against the
Maker and the petition shall not be controverted within thirty (30) days, or
shall not be dismissed within one hundred eighty (180) days after commencement
of the case; or a custodian shall be appointed for, or shall take charge of, all
or substantially all of the property of the Maker, or the Maker shall commence
any other proceeding under any reorganization, arrangement, adjustment of debt,
relief of debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to the Maker, or there
shall be commenced against the Maker any such proceeding, or the Maker shall be
adjudicated insolvent or bankrupt; or
(e) Greater than fifty percent (50%) of the voting capital stock
of the Maker passes without the consent of Cypher to any person, firm or company
acting either individually or in concert, provided that transfers of shares
between the registered shareholders of Maker as of the date hereof will not be
considered a change of control. Notwithstanding the foregoing sentence, no
consent of Cypher shall be required for any transaction or series of
transactions prior to June 30, 1998 in which Maker secured capital or funding
for business operations.
The Maker hereby waives presentment for payment, protest and notice of
nonpayment and dishonor. If the Holder takes any action to collect this Note,
then the Maker shall be obligated to pay, in addition to all other amounts due
under this Note, all costs of collection and reasonable attorneys' fees and
other legal costs and expenses, provided that Maker is determined by a court of
competent jurisdiction to be liable for the amount sought to be collected.
No delay or failure on the part of the Holder in the exercise of any
right or remedy hereunder shall operate as a waiver thereof, nor as an
acquiescence in any default, nor shall any single or partial exercise by the
Holder of any right or remedy preclude any other right or remedy. The Holder, at
its option, may enforce its rights against any collateral securing this Note
without enforcing its rights against the Maker or any other indebtedness due or
to become due to the Maker. The Maker agrees that, without releasing or
impairing the Maker's liability hereunder, the Holder may at any time release,
surrender, substitute or exchange any collateral securing this Note and may
release any party secondarily liable for the indebtedness evidenced by this
Note.
This Note shall be governed by and construed in accordance with the
internal laws of the State of California of the United States. Cypher and Maker
each irrevocably agree that all actions
2
<PAGE> 41
arising directly or indirectly as a result or in consequence of this Note shall
be instituted and litigated only in courts having situs in the State of
California, and Cypher and Maker each hereby consent to the exclusive
jurisdiction and venue of any state or federal court located and having its
situs in the State of California.
IN WITNESS WHEREOF, the Maker has caused this Note to be executed and
delivered on the day and year first above written.
STRATEGIC ADVANTAGE
SOFTWARE CORPORATION
By: _________________________________
Carol McNeill Skorupan, President
3
<PAGE> 42
EXHIBIT 1
Amortization Schedule
4
<PAGE> 43
EXHIBIT D
DEED OF RELEASE
THIS DEED OF RELEASE (the "Release"), dated and effective as of
______________, 1996, is entered into by and among PLATINUM SOFTWARE CORPORATION
("PSC"), CYPHER BUSINESS SYSTEMS, LTD. ("Cypher"), SLATERSHELFCO 173 LIMITED
("Slatershelfco"), JACK MUNDY, DAVID MUNDY, ABACUS TRUSTEES (JERSEY) LIMITED
("Abacus") and WHITELEY TRUSTEES LIMITED ("Whiteley"), Abacus and Whiteley as
trustees of the Jack Mundy Trust dated 10 March 1989.
R E C I T A L S
A. On or about May 5, 1993, PSC acquired all of the outstanding
share capital of Slatershelfco, the parent organization of Cypher, pursuant to a
purchase agreement (the "Purchase Agreement") and in connection with such
transaction Cypher entered into a Service Agreement (the "Service Agreement")
with each of Jack Mundy and David Mundy.
B. By acquiring all of the share capital of Slatershelfco, Platinum
acquired ownership of Cypher whose principal business was the development and
sale of a distribution software product.
C. The parties hereto desire finally to resolve any claims that they
may have against the other, including, but not limited to, claims under each of
the Service Agreements, the Purchase Agreement, the Restrictive Covenant and
Warranty Deed, the deeds of Tax Indemnity and all other ancillary transaction
documents (collectively, the "Purchase Documents").
D. PSC, Cypher and Slatershelfco are in the process of selling the
distribution software product to a newly formed corporation, Strategic Advantage
Software Corporation, and the parties hereto intend that this Release be
effective simultaneously upon the closing of such sale.
A G R E E M E N T
Upon full and complete execution of this Release and payment to each of
Jack Mundy and David Mundy of an amount required to bring their respective
Service Agreements current and funded through May 31, 1996, and in consideration
of the mutual covenants and releases contained herein, PSC, Cypher,
Slatershelfco, Jack Mundy, David Mundy, Abacus and Whiteley, forever mutually
release, acquit and discharge each other, as well as, to the extent applicable,
their respective officers, directors, employees, agents, administrators, and any
parent, subsidiary or affiliated entity, past, present or future, from any and
all claims, demands, costs, contracts liabilities, objections, actions and
causes of action of every nature, whether in law or in equity, or known or
unknown, or suspected or unsuspected, which the parties ever had or now have or
may claim to have against each other of any type, nature or description which in
any way arise out of, are related to, or are connected with the Purchase
Documents or the employment of Jack Mundy and David Mundy by Cypher,
Slatershelfco and PSC, as applicable ("Released Claims"), save and except the
obligations set forth, created, or preserved in this Release. Further, in
consideration of the above, Cypher and Jack Mundy and David Mundy each agree to
the extent applicable to them that each of the Service Agreements is mutually
terminated on the date hereof. For the avoidance of doubt, Abacus and Whiteley
are hereby fully so released by PSC from their undertaking at clause 12 of the
Purchase Agreement. The parties hereto
<PAGE> 44
specifically intend that the release contained herein shall bar all Released
Claims, including those which are currently unknown to them.
Notwithstanding anything to the contrary above, section 4 of the
Restrictive Covenant and Warranty Deed and section 12 of each of the Service
Agreements regarding confidentiality of proprietary information shall remain in
full force and effect and such obligations shall not be relinquished or
extinguished as a result of this Release; provided, however, Jack Mundy and
David Mundy may provide services to Strategic Advantage Software Corporation in
any capacity, including, but not limited to, as an employee, agent, independent
contractor, partner, shareholder or director, free of the foregoing
restrictions. Except as otherwise provided in the prior sentence, this Release
sets forth the entire agreement between the parties and supersedes and all prior
agreements or understandings in connection with the subject matters of this
Release, and the parties hereto agree that all continuing and future obligations
under the Purchase Documents are terminated upon the effectiveness of this
Release.
It is agreed between Cypher and each of David Mundy and Jack Mundy that
in relation to the release of any claim Jack Mundy and David Mundy may have in
respect of their Service Agreements, the conditions set forth in section 140 of
the Employment Protection (Consolidation) Act 1978 regulating compromise
agreements are satisfied.
The effectiveness of this Release is contingent upon the execution and
completion of a definitive purchase agreement relating to the distribution
software product by and between Platinum and Strategic Advantage Software
Corporation.
PSC has not assigned any of the warranties under the Purchase
Agreement, nor does the sale referred to in Recital D above assign such
warranties.
This Release is governed by and shall be construed in accordance with
the laws of England. If any provision of this Release is held by a court of
competent jurisdiction to be invalid, void or unenforceable for any reason, the
remaining provisions not so declared shall nevertheless continue in full force
and effect, but shall be construed in a manner so as to effectuate the intent of
this Release as a whole, notwithstanding such stricken provision or provisions.
The parties hereto hereby submit to the exclusive jurisdiction of the
High Court of Justice in England in relation to any claim, dispute or difference
which may arise hereunder.
<PAGE> 45
IN WITNESS WHEREOF, the parties have executed this Deed of Release as
their deed and delivered it on the date first above written.
PLATINUM SOFTWARE CORPORATION
By: __________________________________
Its: __________________________________
Executed as a Deed by
CYPHER BUSINESS SYSTEMS, LTD., acting by
________________________________________
(a director) and
________________________________________
(a second director/company secretary)
Executed as a Deed by
SLATERSHELFCO 173 LIMITED, acting by
________________________________________
(a director) and
________________________________________
(a second director/company secretary)
The Common Seal of
ABACUS TRUSTEES (JERSEY) LIMITED
was herein affixed in the presence of:
________________________________________
Director
________________________________________
Authorized Signatory
<PAGE> 46
The Common Seal of
WHITELEY TRUSTEES LIMITED was
herein affixed in the presence of:
_________________________________________
Director
_________________________________________
Authorized Signatory
Having read, understood and received
independent legal advice on this Deed of
Release I accept the above-mentioned
terms and conditions
_________________________________________
Executed as a Deed by Jack Mundy
in the presence of:
_________________________________
Witness' Signature
_________________________________
Witness' Name
_________________________________
Witness' Address
_________________________________
Witness' Occupation
I have advised Mr. Jack Mundy fully as to
the terms and effect of this Deed of
Release and in particular its effect on
his ability to pursue his rights before
an industrial tribunal.
_________________________________________
Signed by [ ], an
independent solicitor of the Supreme
Court of Judicature of England and Wales.
<PAGE> 47
Having read, understood and received
independent legal advice on this Deed of
Release I accept the above-mentioned
terms and conditions
_________________________________________
Executed as a Deed by David Mundy in the
presence of:
______________________________
Witness' Signature
______________________________
Witness' Name
______________________________
Witness' Address
______________________________
Witness' Occupation
I have advised Mr. David Mundy fully as
to the terms and effect of this Deed of
Release and in particular its effect on
his ability to pursue his rights before
an industrial tribunal.
_________________________________________
Signed by [ ], an
independent solicitor of the Supreme
Court of Judicature of England and Wales.
<PAGE> 48
EXHIBIT E
FORM OF OPINION OF BUYER'S COUNSEL
1. The Buyer is a company duly incorporated, validly existing and in
good standing under the laws of the State of Wisconsin. The Buyer has the
corporate power and authority to own its properties and assets, to carry on its
business as presently conducted and to enter into the Purchase Agreement, the
Royalty Note-No. 1, the Royalty Note-No. 2, the Tangible Assets Promissory Note,
the Security Agreement, (the "Transaction Documents"), and to perform its
obligations under the Transaction Documents.
2. Each of the Transaction Documents has been duly authorized by all
necessary corporate action on the part of the Buyer and has been duly executed
and delivered by the Buyer. Each of the Transaction Documents is a legal, valid
and binding obligation of the Buyer enforceable against it in accordance with
its respective terms, except as the enforceability thereof may be subject to or
limited by (a) bankruptcy, insolvency, reorganization, arrangement, moratorium
or other similar laws relating to or affecting rights or creditors, and (b)
general equitable principles, regardless of whether the issue of enforceability
is considered in a proceeding in equity of law.
3. The execution and delivery of the Transaction Documents and the
performance by the Buyer of their respective terms (a) will not breach or result
in a violation of the Buyer's charter documents, or any judgment, order or
decree of any court or arbitrator, known to us, to which the Buyer is a party or
is subject, and (b) will not constitute a material breach of the terms,
conditions or provisions of, or constitute a default under, any material
contract, undertaking, indenture or other agreement or instrument known to such
counsel to which the Buyer is a party or by which it is bound.
4. No consent, approval or authorization of, or designation,
declaration or filing with, any governmental authority is required in connection
with the valid execution, delivery and performance by the Buyer of the
Transaction Documents, other than such consents, approvals, authorizations,
designations, declarations or filings as have been made or obtained on or before
the date hereof or which are not required to be made or obtained until after the
date hereof.
5. Except as disclosed in the Purchase Agreement or the Exhibits and
Schedules delivered by the Buyer in connection therewith, there is, to such
counsel's current actual knowledge, no action, suit or proceeding pending
against the Buyer or its properties in any court or before any governmental
authority or agency, or arbitration board or tribunal, (a) which seeks to
restrain, enjoin, prevent the consummation of or otherwise challenge the
Agreement or any of the transactions contemplated thereby, or (b) which, if
adversely determined, could have a material adverse effect on the Buyer or its
business or properties.
6. The provisions of the Security Agreement are sufficient to create
a security interest in those items and types of Collateral in which a security
interest may be created under Article 9 of the Wisconsin Uniform Commercial Code
(the "Article 9 Collateral"). The UCC-1 Financing Statement of the Buyer in the
form presented to such counsel is in adequate and legally sufficient form with
regard to Article 9 Collateral for which perfection may occur by the filing of a
UCC-1 Financing Statement with the Secretary of State of Wisconsin. The place
for filing such
<PAGE> 49
UCC-1 Financing Statement for Article 9 Collateral, for which perfection may
occur by the filing of a UCC-1 Financing Statement, other than fixtures, is with
the Secretary of State for the State of Wisconsin in accordance with the
provisions of the Wisconsin Uniform Commercial Code.
2
<PAGE> 50
EXHIBIT F-1
BILL OF SALE, GENERAL CONVEYANCE AND ASSIGNMENT
This Bill of Sale, General Conveyance and Assignment, dated as of March
___, 1996, between CYPHER BUSINESS SYSTEMS, LTD., a corporation organized and
existing under the laws of England and Wales (the "Assignor"), and STRATEGIC
ADVANTAGE SOFTWARE CORPORATION, a Wisconsin corporation (the "Buyer"), is
executed pursuant to that certain Agreement of Purchase and Sale of Assets dated
as of February 29, 1996 (the "Agreement"), among Assignor, Platinum Software
Corporation and Slatershelfco 173 Limited (collectively, the "Seller") and the
Buyer. Capitalized terms used herein and not otherwise defined shall have the
meanings assigned to them in the Agreement.
W I T N E S S E T H
That for consideration set forth in the Agreement to be delivered to
Seller, the receipt and sufficiency of which is hereby acknowledged by Seller,
Assignor hereby sells, conveys, assigns, transfers, set over and delivers to and
vests in Buyer, its successors and assigns forever, those Purchased Assets
(excluding the Tangible Assets and the Miscellaneous Assets) as described in the
Agreement and the schedules thereto, free and clear of all liens, encumbrances,
liabilities, obligations, claims, security interests or rights of third parties.
The Purchased Assets (excluding the Tangible Assets and the Miscellaneous
Assets) shall consist of the following: (a) exclusive title and all rights to
the intellectual property relating to Distribution Product, including all source
code, object code, work-in-progress and developments with respect thereto; and
(b) tradenames, trademarks, service marks and copyrights (including
registrations, licenses and applications pertaining thereto) identified in
Schedule 1.1(b) to the Agreement together with all goodwill associated
therewith. Subject to the provisions of the Agreement, Assignor represents that
Assignor owns the Purchased Assets free and clear of all liens and encumbrances,
that Assignor has good right to sell same and Assignor will warrant and defend
same against claims and demands of all persons.
Assignor shall from time to time after the Closing, at the Buyer's
request and without further consideration, execute and deliver such other
instruments of transfer, conveyance and assignment, and take such other action
as the Buyer may require more effectively to transfer, convey and assign to and
vest in Buyer, and to put Buyer into possession of any property untransferred,
conveyed, assigned and delivered hereunder.
This Bill of Sale, General Conveyance and Assignment is executed as its
deed by and shall be binding upon Assignor and its successors and assigns, and
for the purposes and use as set forth and referred to above, effective as of the
date and year first above written.
Executed as a deed by CYPHER BUSINESS
SYSTEMS, LTD. acting by
By: ________________________________________
(a director) and
________________________________________
(a second director/company secretary)
<PAGE> 51
EXHIBIT F-2
BILL OF SALE, GENERAL CONVEYANCE AND ASSIGNMENT
This Bill of Sale, General Conveyance and Assignment, dated as of March
___, 1996, between PLATINUM SOFTWARE CORPORATION, a Delaware corporation (the
"Assignor"), and STRATEGIC ADVANTAGE SOFTWARE CORPORATION, a Wisconsin
corporation (the "Buyer"), is executed pursuant to that certain Agreement of
Purchase and Sale of Assets dated as of February 29, 1996 (the "Agreement"),
among Assignor, Cypher Business Systems, Ltd. and Slatershelfco 173 Limited
(collectively, the "Seller") and the Buyer. Capitalized terms used herein and
not otherwise defined shall have the meanings assigned to them in the Agreement.
W I T N E S S E T H
That for consideration set forth in the Agreement to be delivered to
Seller, the receipt and sufficiency of which is hereby acknowledged by Seller,
Assignor hereby sells, conveys, assigns, transfers, set over and delivers to and
vests in Buyer, its successors and assigns forever, those Purchased Assets
(excluding the Tangible Assets and the Miscellaneous Assets) as described in the
Agreement and the schedules thereto, free and clear of all liens, encumbrances,
liabilities, obligations, claims, security interests or rights of third parties.
The Purchased Assets (excluding the Tangible Assets and the Miscellaneous
Assets) shall consist of the following: (a) exclusive title and all rights to
the intellectual property relating to Distribution Product, including all source
code, object code, work-in-progress and developments with respect thereto; and
(b) tradenames, trademarks, service marks and copyrights (including
registrations, licenses and applications pertaining thereto) identified in
Schedule 1.1(b) to the Agreement together with all goodwill associated
therewith. Subject to the provisions of the Agreement, Assignor represents that
Assignor owns the Purchased Assets free and clear of all liens and encumbrances,
that Assignor has good right to sell same and Assignor will warrant and defend
same against claims and demands of all persons.
Assignor shall from time to time after the Closing, at the Buyer's
request and without further consideration, execute and deliver such other
instruments of transfer, conveyance and assignment, and take such other action
as the Buyer may require more effectively to transfer, convey and assign to and
vest in Buyer, and to put Buyer into possession of any property untransferred,
conveyed, assigned and delivered hereunder.
This Bill of Sale, General Conveyance and Assignment is executed by and
shall be binding upon Assignor and its successors and assigns, and for the
purposes and use as set forth and referred to above, effective as of the date
and year first above written.
PLATINUM SOFTWARE CORPORATION
By:___________________________________
Its:__________________________________
<PAGE> 52
EXHIBIT F-3
BILL OF SALE, GENERAL CONVEYANCE AND ASSIGNMENT
This Bill of Sale, General Conveyance and Assignment, dated as of March
___, 1996, between SLATERSHELFCO 173 LIMITED, a corporation organized and
existing under the laws of England and Wales (the "Assignor"), and STRATEGIC
ADVANTAGE CORPORATION, a Wisconsin corporation, (the "Buyer") is executed
pursuant to that certain Agreement of Purchase and Sale of Assets dated as of
February 29, 1996 (the "Agreement"), among Assignor, Cypher Business Systems,
Ltd. and Platinum Software Corporation (collectively, the "Seller") and the
Buyer. Capitalized terms used herein and not otherwise defined shall have the
meanings assigned to them in the Agreement.
W I T N E S S E T H
That for consideration set forth in the Agreement to be delivered to
Seller, the receipt and sufficiency of which is hereby acknowledged by Seller,
Assignor hereby sells, conveys, assigns, transfers, set over and delivers to and
vests in Buyer, its successors and assigns forever, those Purchased Assets
(excluding Tangible Assets and the Miscellaneous Assets) as described in the
Agreement and the schedules thereto, free and clear of all liens, encumbrances,
liabilities, obligations, claims, security interests or rights of third parties.
The Purchased Assets (excluding the Tangible Assets and the Miscellaneous
Assets) shall consist of the following: (a) exclusive title and all rights to
the intellectual property relating to Distribution Product, including all source
code, object code, work-in-progress and developments with respect thereto; and
(b) tradenames, trademarks, service marks and copyrights (including
registrations, licenses and applications pertaining thereto) identified in
Schedule 1.1(b) to the Agreement together with all goodwill associated
therewith. Subject to the provisions of the Agreement, Assignor represents that
Assignor owns the Purchased Assets free and clear of all liens and encumbrances,
that Assignor has good right to sell same and Assignor will warrant and defend
same against claims and demands of all persons.
Assignor shall from time to time after the Closing, at the Buyer's
request and without further consideration, execute and deliver such other
instruments of transfer, conveyance and assignment, and take such other action
as the Buyer may require more effectively to transfer, convey and assign to and
vest in Buyer, and to put Buyer into possession of any property untransferred,
conveyed, assigned and delivered hereunder.
This Bill of Sale, General Conveyance and Assignment is executed as its
deed by and shall be binding upon Assignor and its successors and assigns, and
for the purposes and use as set forth and referred to above, effective as of the
date and year first above written.
Executed as a deed by SLATERSHELFCO 173 LIMITED
acting by
By: ___________________________________________
(a director) and
___________________________________________
(a second director/company secretary)
<PAGE> 53
EXHIBIT G
[STRADLING, YOCCA, CARLSON & RAUTH LETTERHEAD]
March __, 1996
Strategic Advantage Software Corporation
c/o DeWitt Ross & Stevens
8000 Excelsior Drive, Suite 401
Madison, Wisconsin 53717
RE: Platinum Software Corporation
Ladies and Gentlemen:
We have acted as counsel to Platinum Software Corporation, a Delaware
corporation (the "Company"), in connection with the execution and delivery by
the Company of that certain Agreement of Purchase and Sale of Assets, dated as
of February 29, 1996 (the "Agreement") among the Company, Cypher Business
Systems, Ltd., a corporation organized under the laws of England and Wales,
Slatershelfco 173 Limited, a corporation organized under the laws of England and
Wales and Strategic Advantage Software Corporation, a Wisconsin corporation (the
"Buyer"). This opinion is being delivered pursuant to Section 11.10 of the
Agreement. Unless specifically defined herein or the context requires
otherwise, capitalized terms used herein shall have the meanings assigned to
them in the Agreement.
In connection with the preparation of this opinion, we have examined such
documents and considered such questions of law as we have deemed necessary or
appropriate. We have assumed that, except for the Agreement and the documents
required or contemplated thereby, there are no other documents or agreements
between the Company and Buyer which would expand or otherwise modify the
respective rights and obligations of the Company or Buyer as set forth in the
Agreement and the documents required or contemplated thereby.
We have assumed the authenticity of all documents submitted to us as
originals, the conformity with originals of all documents submitted to us as
copies, and the genuineness of all signatures. We have also assumed that, with
respect to all parties to agreements or instruments relevant hereto other than
the Company, such parties had the requisite power and authority to execute,
deliver and perform such agreements or instruments, that such agreements or
instruments
<PAGE> 54
Strategic Advantage Software Corporation
March __,1996
Page 2
have been duly authorized by all requisite action, executed and delivered by
such parties and that such agreements or instruments are the valid, binding and
enforceable obligations of such parties.
As to questions of fact material to our opinions, we have relied upon the
representations of each party made in the Agreement and other documents and
certificates delivered in connection therewith, certificates of officers of the
Company, and certificates and advices of public officials and we have made no
independent investigation of such matters.
Whenever a statement herein is qualified by "known to us," "to our current
actual knowledge," or similar phrase, it is intended to indicate that, during
the course of our representation of the Company, no information that would give
us current actual knowledge of the inaccuracy of such statement has come to the
attention of those attorneys in this firm who have rendered legal services in
connection with the transaction described in the introductory paragraph hereof.
However, except as otherwise expressly indicated, we have not undertaken any
independent investigation to determine the accuracy of such statement, and any
limited inquiry undertaken by us during the preparation of this opinion letter
should not be regarded as such an investigation; no inference as to our
knowledge of any matters bearing on the accuracy of any such statement should be
drawn from the fact of our representation of the Company.
Based upon the foregoing, and subject to the assumptions, exceptions,
qualifications and limitations set forth herein, we are of the opinion that:
1. The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. The Company has the
corporate power and authority to own its properties and assets, to carry on its
business as presently conducted and to enter into the Agreement and the Bill of
Sale, General Conveyance and Assignment (the "Transaction Documents"), and to
perform its obligations under the Transaction Documents.
2. Each of the Transaction Documents has been duly authorized by all
necessary corporate action on the part of the Company and has been duly executed
and delivered by the Company. Each of the Transaction Documents is a legal,
valid and binding obligation of the Company enforceable against it in accordance
with its respective terms, except as the enforceability thereof may be subject
to or limited by (a) bankruptcy, insolvency, reorganization, arrangement,
moratorium or other similar laws relating to or affecting rights of creditors,
and (b) general equitable principles, regardless of whether the issue of
enforceability is considered in a proceeding in equity or law.
3. The execution and delivery of the Transaction Documents and the
performance by the Company of their respective terms (a) will not breach or
result in a violation of the Company's Certificate of Incorporation or Bylaws,
or any judgment, order or decree of any court or arbitrator, known to us, to
which the company is a party or is subject, and (b) will not constitute a
material breach of the terms, conditions or provisions of, or constitute a
default under, any material contract,
<PAGE> 55
Strategic Advantage Software Corporation
March __, 1996
Page 3
undertaking, indenture or other agreement or instrument filed as an exhibit to
the Company's Annual Report on Form 10-K for the fiscal year ended June 30,
1995.
4. No consent, approval or authorization of, or designation,
declaration or filing with, any governmental authority is required in connection
with the valid execution, delivery and performance by the Company of the
Transaction Documents, other than such consents, approvals, authorizations,
designations, or filings listed in the Agreement and Schedule 5.3 thereto or as
have been made or obtained on or before the date hereof or which are not
required to be made or obtained until after the date hereof.
5. Except as disclosed in the Agreement or the Exhibits and Schedules
delivered by the Company in connection therewith, there is, to our current
actual knowledge, no action, suit or proceeding pending against the Company or
its properties in any court or before any governmental authority or agency, or
arbitration board or tribunal, (a) which seeks to restrain, enjoin, prevent the
consummation of or otherwise challenge the Agreement or any of the transactions
contemplated thereby or (b) which if adversely determined could have a material
adverse effect on the Company, or its business or properties.
We expressly do not comment upon or render any opinion with respect to any
documents referenced in the Transaction Documents.
We are members of the Bar of the State of California and, accordingly, do
not purport to be experts on or to be qualified to express any opinion herein
concerning, nor do we express any opinion herein concerning, any laws other than
the laws of the State of California, the General Corporation Law of Delaware and
federal law.
The foregoing opinions are being furnished to you solely for your benefit
and may not be relied upon by any other person without our prior written
consent.
Very truly yours,
/s/ Stradling, Yocca, Carlson & Rauth
-------------------------------------
STRADLING, YOCCA, CARLSON & RAUTH
<PAGE> 1
EXHIBIT 10.41
AGREEMENT OF PURCHASE AND SALE OF ASSETS
THIS AGREEMENT OF PURCHASE AND SALE OF ASSETS (the "Agreement") is
made effective as of September 30, 1995 by and between PLATINUM TREASURY
SYSTEMS, PLC, (the "Buyer"), and PLATINUM SOFTWARE CORPORATION, a Delaware
corporation, ("Platinum" or the "Seller") on behalf of itself and the following
majority owned subsidiaries: Platinum Software Canada Ltd., Platinum Software
(Ireland) Limited, and Platinum Software (Aust.) Pty, Limited (collectively, the
"Subsidiaries").
W I T N E S S E T H
WHEREAS, Seller is engaged in the business of developing, marketing
and distributing a variety of financial and accounting software products; and
WHEREAS, Seller and the Subsidiaries desire to divest certain assets,
operations and business associated with its Treasury software product line,
which consists of the assets described in Section 1 of this Agreement,
including, without limiting the generality of the foregoing, the DOS and Windows
versions of the Treasury software designed to provide a comprehensive and
integrated means of monitoring and managing the corporate treasury environment
(collectively, the "Treasury Product");
WHEREAS, subject to the terms and conditions of this Agreement, Buyer
desires to purchase and Seller and the Subsidiaries desire to sell and transfer
to Buyer, their assets, operations and business related to the Treasury Product
(the "Business") as described herein; and
WHEREAS, some of the assets being transferred under this Agreement and
liabilities being assumed reside within the Subsidiaries and the term Seller in
this Agreement shall be construed to include the Subsidiaries of Seller, as the
context requires.
NOW, THEREFORE, in consideration of the terms, covenants, and
conditions hereinafter set forth, the parties hereto hereby agree as follows:
1. Purchase and Sale of Assets.
1.1 Purchased Assets. Subject to the terms and conditions of this
Agreement, Seller hereby agrees to sell, convey, assign, transfer, set over and
deliver to Buyer, and Buyer agrees to purchase and accept from Seller the
assets, properties and business of Seller related to the Business, whether
tangible, intangible, real, personal or mixed, and wherever located (hereinafter
sometimes collectively referred to as the "Purchased Assets"), which are more
particularly described as set forth below and in the schedules to this
Agreement. The Purchased Assets shall be free and clear of all liens,
encumbrances, liabilities, obligations, claims, security
<PAGE> 2
interests or rights of third parties except as otherwise specifically provided
herein and shall consist of the following:
(a) All of Seller's accounts receivable, including all license
fees, maintenance fees and professional services fees and charges owing or to
become owing under Software Contracts (as defined below) as of the Closing Date
as specified on Schedule 1.1(a).
(b) All of Seller's rights and benefits relating to contractual
rights, sales representative agreements, distributor agreements, OEM agreements,
license agreements, lease agreements, vendor's warranties on the Inventory and
other assets and properties relating to the Business (the "General Contracts"),
which are listed on Schedule 1.1(b) hereto.
(c) All of Seller's rights and benefits under the contracts,
agreements, licenses and other commitments or arrangements, oral or written,
with any person or entity respecting the ownership, license, acquisition,
design, development, distribution, marketing, use or maintenance of computer
program code, related technical or user documentation, and data bases relating
to the Business (the "Software Contracts"), which are listed on Schedule 1.1(c)
hereto.
(d) The inventory and stock in trade owned by Seller on the
Closing Date related to the Business, as listed on Schedule 1.1(d) hereto.
(e) The trade names, trademarks, service marks and copyrights
(including registrations, licenses and applications pertaining thereto)
identified on Schedule 1.1(e) hereto, together with all goodwill associated
therewith (the "Trademarks and Copyrights").
(f) The customer and client lists, parts lists, vendor lists,
catalogues, promotion lists and marketing data and other compilations of names
and requirements, and trade secrets and other material information related to
the Business, consisting of those items set forth on Schedule 1.1(f) hereto.
(g) The computer programs, designs, processes, drawings,
schematics, blueprints, copyrights, copyright applications, know-how, or trade
secrets or proprietary information, patents, and patent applications relating to
Treasury Product as detailed on Schedule 1.1(g).
(h) All technical and descriptive materials (other than
Inventory) relating to the acquisition, design, development, use, or maintenance
of computer code and program documentation and materials in any and all
languages related to the Business as listed on Schedule 1.1(h) (the "Technical
Documentation");
1.2 Excluded Assets. Anything herein to the contrary
notwithstanding, the Purchased Assets shall include, without limitation, all
assets of the Business including specifically the assets set forth on the
Schedules referred to in Section 1.1 above, and the assets listed on Schedule
1.2 attached hereto shall be retained by Seller.
2
<PAGE> 3
2. Purchase Price and Payment of Purchase Price.
2.1 Purchase Price; Payment. As consideration for the sale and
transfer of the Purchased Assets (exclusive of the accounts receivable specified
on Schedule 1.1(a)) to Buyer, Buyer shall pay to Seller the sum of One Million
Five Hundred Thousand United States Dollars (US$1,500,000) (the "Purchase
Price"). In payment of the Purchase Price, Buyer shall deliver to Seller at the
Physical Closing (defined below) a promissory note in the principal amount of
US$1,500,000 (the "Royalty Payment"). The principal under the Royalty Payment
shall be due and payable from time to time pursuant to Section 2.2 below and
shall be evidenced by a promissory note ("Royalty Note") in the form attached
hereto as Exhibit A. The obligation of Buyer under the Royalty Note shall be
secured by a charge on the assets of Buyer as set forth in the debenture
attached hereto as Exhibit A-1.
2.2 Payment of Royalties.
(a) Buyer shall pay the principal amount due under the Royalty
Note as set forth herein. Buyer shall pay to Seller a percentage of Buyer's Net
Revenues (as defined below) from the licensing of the Treasury Product (or
future versions, updates, improvements and enhancements, including versions
using different databases) as follows: (i) Five percent (5.0%) of Buyer's Net
Revenues from the licensing of the Treasury Product from the date of Physical
Closing until the second anniversary thereof, and (ii) Ten percent (10%) of
Buyer's Net Revenues from the licensing of the Treasury Product from the second
anniversary of the Physical Closing through the seventh (7th) anniversary of the
Physical Closing. Royalty payments are to be made until either the aggregate
amount of the royalties paid by Buyer to Seller under this subsection (a) of
Section 2.2 shall equal the Royalty Payment or the seventh (7th) anniversary of
the Physical Closing, whichever occurs first. In the event the aggregate amount
of all payments under the Royalty Note do not equal the Royalty Payment as of
the seventh (7th) anniversary of the Physical Closing, the difference between
the amount paid and the Royalty Payment shall be due sixty (60) days following
the seventh (7th) anniversary of the Physical Closing.
(b) Following the Closing, Buyer shall use its reasonable best
efforts to sell, license or otherwise commercially exploit the Treasury Product.
Buyer agrees that such transactions entered into by Buyer following the Closing
will be in good faith and will not be structured for the purpose of minimizing
or avoiding the payment of royalties to Seller hereunder.
(c) "Net Revenues" shall mean, for any calendar quarter, all
revenues from the licensing by Buyer of the Treasury Product and future versions
thereof, updates, improvements or enhancements, (including versions using
different databases), including license fees, but excluding the accounts
receivable specified on Schedule 1.1(a), maintenance fees, support,
customization, consulting and training. In the event the Treasury Product is
licensed by Buyer as part of a larger software license, Net Revenues shall be
allocated on the relationship the license revenues specifically attributable to
the Treasury Product bears to the overall license revenues, and if such larger
software license includes unallocated product discounts or unallocated license
fees, such discounts and license fees shall be allocated on the relationship the
suggested retail price of the Treasury Product bears to the overall suggested
retail price of all
3
<PAGE> 4
licensed software, unless an alternative allocation of Net Revenues shall have
been agreed to in advance of such third-party transaction by Buyer and Seller.
Net Revenues shall be calculated each month and royalties shall be payable to
Seller on a quarterly basis as described below.
(d) So long as Buyer is required to pay royalties hereunder,
Buyer shall cause separate records to be maintained for the licensing of the
Treasury Product. The royalties shall be paid within thirty (30) days following
the end of each calendar quarter. The first payment under the Royalty Note shall
not be due until six (6) months following the Physical Closing, and such payment
shall cover the six (6) month period following the Physical Closing. Within
fifteen (15) days following the end of each calendar quarter, Buyer shall
deliver to Seller a written computation of Net Revenues in accordance with this
Section 2.2, which shall set forth the method by which Net Revenues were
computed and shall be certified as true and correct in all material respects by
the principal financial officer of Buyer. If Seller does not agree with the
determination of Net Revenues shown in Buyer's computation, then Seller shall
notify Buyer in writing within ten (10) days after the receipt thereof,
specifying with sufficient specificity the objections thereto, and the parties
shall in good faith attempt to reach agreement thereon. If Buyer and Seller are
unable to reach an agreement within twenty (20) days after Seller's notice, the
determination of the proper amount of Net Revenues shall be submitted to an
independent "big six" accounting firm, or such other accounting firm mutually
agreed to by Buyer and Seller. Seller and Buyer shall split the costs of the
accounting firm and if either party disagrees with the determination of the
independent accounting firm the matter shall be submitted to arbitration in
accordance with the arbitration provisions set forth in Section 29 hereof;
provided, however, that in the event that the amount of Net Revenues determined
by the independent accounting firm exceeds by ten percent (10%) or more the
amount of Net Revenues as calculated by Buyer, or is at least ten percent (10%)
less than the amount of Net Revenues calculated by Seller, then the party whose
calculation differs shall pay the full cost of the accounting firm making such
determination. At the end of each calendar quarter, Buyer shall provide to
Seller a forecast of revenues from the licensing of the Treasury Product for the
subsequent quarter.
2.4 Accounts Receivable Payment. As consideration for the sale and
transfer of the Accounts Receivable described on Schedule 1.1(a) to Buyer, Buyer
shall pay to Seller the sum of $259,545 (the "Accounts Receivable Purchase
Price"). In payment of the Accounts Receivable Purchase Price, Buyer shall
deliver to Seller a promissory note in the principal amount of $259,545 in the
form attached hereto as Exhibit B (the "Accounts Receivable Note"). The Accounts
Receivable Note shall bear eight percent (8%) simple interest and shall be
payable in ten (10) equal consecutive monthly installments of principal and
accrued interest on the first day of each calendar month commencing on the first
day of the month following the three (3) month anniversary of the Physical
Closing. The payment of the Accounts Receivable Note shall be secured by a
charge on the assets of Buyer as set forth in the debenture attached hereto as
Exhibit A-1.
2.5 Allocation of Purchase Price. The Purchase Price of the
Purchased Assets shall be allocated as set forth on Schedule 2.5 attached
hereto. Buyer and Seller agree to execute any forms or notices required to
effect such allocation pursuant to the Internal Revenue Code of 1986, as amended
(the "Code"), including but not limited to Form 8594 under the Code. Buyer and
Seller acknowledge that the principal amount of the Accounts Receivable Note has
been
4
<PAGE> 5
reduced in the amount of $17,138 to reflect the assumption by Buyer of certain
referral fees listed on Schedule 3.1.
2.6 Rights of Offset. Each of Seller and Buyer shall have the
right, in its reasonable discretion, to offset from time to time the amount of
any payment due to the other party against the reciprocal obligation to receive
any payment from such party which is past due and remains unpaid for a period of
thirty (30) days following receipt of written notice thereof.
3. Assumption Only of Specified Liabilities, Obligations, Contracts
and Agreements.
3.1 No Assumption of Liabilities Unless Expressly Assumed. Unless
otherwise specifically provided in Section 3.2 below, Buyer shall not assume or
have any duty or obligation with respect to any liability, duty, obligation,
contract or agreement of Seller.
3.2 Specification of Liabilities Assumed. Buyer agrees to assume
the liabilities, obligations, contracts, leases and agreements of Seller
relating to the Business existing as of the Closing Date as specifically set
forth on Schedule 3.2 hereto (the "Assumed Liabilities"), and to hold Seller
harmless therefrom in accordance with Section 3.3 and Section 13.2 below. It is
expressly understood and agreed that, except for the Assumed Liabilities, Buyer
shall not be liable for any of the obligations, liabilities, contracts or
agreements of Seller.
3.3 Payment of Liabilities Not Assumed. Seller shall indemnify,
defend and hold Buyer harmless from, in accordance with Section 13 below, all of
the liabilities, claims and obligations of Seller not expressly assumed by
Buyer.
3.4 Taxes. Buyer shall not be responsible for any "Taxes" related
to any period before the Closing Date or arising from the purchase f the
Purchased Assets except those set forth in Schedule 3.2, if any, which Buyer is
expressly assuming pursuant to this Agreement. "Taxes" for purposes of this
Agreement means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxed under Code Section59A), customs
duties, capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kinds whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not.
4. Closing.
4.1 Provided that all conditions precedent set forth in this
Agreement have been satisfied or waived, the closing of the transactions
contemplated hereby (the "Closing") shall occur effective as of the close of
business on September 30, 1995 (the "Closing Date"). The actual physical closing
(the "Physical Closing") and the Closing deliveries specified below shall occur
as soon as practicable thereafter, but in no event later than January 15, 1996,
provided that all of the conditions set forth in this Agreement have been
satisfied or waived. The Physical Closing shall be held at the offices of
Seller, unless another place is mutually agreed upon by the parties.
5
<PAGE> 6
4.2 Buyer shall be responsible for all obligations, trade payables,
taxes and liabilities, including employee wages (including the wages of J.
Townsend, A. Tuddenham, B. Lotz and D. Webb, who were hired between Closing and
Physical Closing), taxes and benefits related to the operation of the Business
during the period between the Closing Date and the Physical Closing, except as
provided in Section 8.6 below. Seller shall be responsible for all employee
expense reports related to the Business, unless otherwise expressly assumed by
Buyer, outstanding or accrued as of the Closing, including without limitation,
royalties accrued to John Morgan and Richard Franklin under agreements with
Seller. Such amounts referenced in the previous sentence shall be paid at the
Physical Closing. Notwithstanding the above: (i) Seller shall continue general
liability insurance coverage on the Purchased Assets for a period of thirty (30)
days following the Physical Closing. Seller shall invoice Buyer for the
insurance premiums related to this transition period and payment shall be due
net thirty (30) days from receipt of an invoice. If there is a claim for a loss
under the liability policy during the thirty (30) day transition period, Buyer
shall pay to Seller all deductibles, co-payments and/or non-covered amounts
relating to any such loss. In addition, certain employees of Buyer have Seller
company credit cards or credit cards guaranteed by Seller. Seller agrees to not
cancel such credit cards for a period of thirty (30) days following the Physical
Closing, and Buyer agrees to indemnify Seller for any liability which it may
incur if the employees do not pay their credit card bills. Buyer shall be
responsible for expenses incurred by Seller in connection with continuation of
employee benefits with respect to the Retained Employees (as defined herein)
pursuant to the Consolidated Omnibus Budget Reconciliation Act, as codified in
the Code at Section 4980B, and as Part 6 of Title I of the Employee Retirement
Income Security Act of 1974. At the Physical Closing, Seller shall provide Buyer
with a list of the amount of funds that were advanced on behalf of Buyer for
trade payables, taxes, wages and other similar items described above relating to
the Business between Closing and Physical Closing and Buyer shall reimburse
Seller within thirty (30) days thereafter. Upon mutual agreement of the parties
hereto, Seller may offset the amount of accounts receivable collected pursuant
to Section 4.3 below against Buyer's obligation to reimburse Seller for advances
made under this Section 4.2.
4.3 Seller shall act as a fiduciary agent of Buyer for the period
from the Closing Date to Physical Closing for all accounts receivable and cash
related to the operation of the Business during such period. Within thirty (30)
days following the Physical Closing, Seller shall provide to Buyer a list of all
sales of the Products between the Closing and the Physical Closing together with
payments received by Seller as of such date with respect to such sales.
Thereafter, on a monthly basis thirty (30) days following the end of each month,
Seller shall remit to Buyer the collection of any of such accounts receivable
that are collected. If any accounts receivable are paid by third parties to
Seller following the Physical Closing, Seller shall remit these funds to Buyer
on a monthly basis thirty (30) days following the end of each month.
6
<PAGE> 7
5. Representations and Warranties of Seller.
As a material inducement to Buyer to enter into this Agreement,
Seller represents and warrants the following, the truth and accuracy of each of
which shall also constitute a condition precedent to the obligations of Buyer
hereunder:
5.1 Organization and Good Standing. Seller is duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Seller has full corporate power and authority to carry on its business as it is
now conducted. Seller is not in violation of its Certificate of Incorporation or
Bylaws in any manner which would adversely affect the validity, binding nature
or enforceability of its obligations under this Agreement or, following the
Physical Closing, Buyer's title to the Purchased Assets or right to operate the
Business.
5.2 Authority. Seller has all the necessary corporate power and
authority to enter into this Agreement and the related documentation, to perform
the obligations to be performed by it hereunder and to consummate the
transactions contemplated hereby. This Agreement has been duly authorized and
approved by all necessary action on the part of the Board of Directors of
Seller. This Agreement has been duly executed and delivered by Seller and
constitutes a valid and binding obligation of Seller, enforceable against Seller
in accordance with its terms, subject as to enforceability to any applicable
bankruptcy, insolvency, moratorium or other laws affecting creditors' rights
generally or such principles of equity as a court of competent jurisdiction
might apply.
5.3 Approvals. No consent, approval or agreement of any person,
entity, party, court or government is required to be obtained by Seller in
connection with the execution and delivery of this Agreement or the performance
of the terms hereof or the consummation of the transactions provided for herein
except as specifically set forth in Schedule 5.3.
5.4 Property of Seller. Seller owns and has the full and complete
right to use all of the Purchased Assets, real and personal, tangible and
intangible. Except as disclosed on Schedule 5.4, Seller has, and at the Physical
Closing will convey and transfer to Buyer, good, complete and marketable title
to all of the Purchased Assets, free and clear of restrictions or conditions to
transfer or assignment, and free and clear of all defects of title, mortgages,
liens, encumbrances, pledges, leases, equities, claims, charges, easements,
rights of way, covenants, conditions, conditional sale contracts, security
interests and restrictions, except for the lien of current taxes not yet due and
payable. Other than the warranties, conditions, terms or representations
specified in this Agreement and the related documents delivered pursuant to this
Agreement, Seller makes no express or implied warranty, term, condition or
representation regarding the Purchased Assets. THE PURCHASED ASSETS, INCLUDING
THE TREASURY PRODUCT AND THE SOURCE CODE THEREOF, ARE BEING PURCHASED BY BUYER
"AS IS" AND SELLER EXPRESSLY DISCLAIMS ALL IMPLIED WARRANTIES, CONDITIONS, TERMS
OR REPRESENTATIONS OF MERCHANTABILITY, SATISFACTORY QUALITY OR FITNESS FOR A
PARTICULAR PURPOSE.
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<PAGE> 8
5.5 No Conflict. Neither the execution and delivery of, nor the
consummation of the transactions contemplated by, this Agreement will conflict
with or result in the breach of the terms, conditions and provisions of, or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or result in the creation of a lien or
encumbrance on any of the Purchased Assets pursuant to (1) the Certificate of
Incorporation or Bylaws of Seller, (2) any agreement, document or instrument to
which Seller is a party or by which Seller is bound or (3) any judgment, decree,
order, statute, rule or regulation applicable to Seller, the Purchased Assets or
the Business.
5.6 Litigation. Except as set forth in Schedule 5.6 hereto, there
are (i) no actions, suits or proceedings pending or threatened against Seller,
the Purchased Assets or the Business which, individually or in the aggregate,
would have an adverse effect on any of the Purchased Assets or the transactions
contemplated herein, whether at law or in equity, or before or by any court or
governmental agency, authority or body or before any arbitrator of any kind, and
(ii) to the best knowledge of Seller, no investigations are being conducted
which could lead to any such action, suit or proceeding.
5.7 Finder's Fees. Seller has not incurred any liability to any
broker, finder or agent for any brokerage fees, finder's fees or commissions
with respect to the transactions contemplated by this Agreement.
5.8 Inventories. All of the items comprising the inventory listed
on Schedule 1.1(d) are, and on the date of the Physical Closing will be, usable
and saleable in the ordinary course of business by Seller. No items included in
the inventory have been pledged as collateral or are held by Seller on
consignment from others.
5.9 Accounts Receivable. The accounts receivable listed on
Schedule 1.1(a) arose from valid sales in the ordinary course of the business
of Seller.
5.10 Material Misstatements or Omissions. No representations or
warranties of Seller contained in this Agreement or the schedules and exhibits
hereto or in any document, statement or certificate furnished or to be furnished
pursuant to this Agreement, contain or on the date of the Physical Closing will
contain an untrue statement of a material fact, or omit or on the date of the
Physical Closing will omit to state a material fact necessary to make the
statements of fact herein or therein not misleading.
5.11 Trademarks, Patents, etc.
(a) Schedule 1.1(e) contains a complete list of the Trademarks
and Copyrights and Schedule 1.1(g) contains a complete list of patents and
patent applications applicable to the Purchased Assets (collectively, the
"Intellectual Property"), including the jurisdictions in which each such
Intellectual Property right has been issued or registered or in which any
application for such issuance and/or registration has been filed. Except as set
forth therein, Seller owns and possesses or is licensed under the Intellectual
Property with no known or suspected infringement of or conflict with the rights
of others. Such ownership, possession or license is exclusive and not subject to
termination without Seller's consent where the failure to be
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exclusive or not subject to termination without Seller's consent would have a
material adverse effect on the rights of Seller applicable to the Purchased
Assets. Seller is not aware of any third party that is infringing or violating
any of the Intellectual Property.
(b) Schedules 1.1(b) and 1.1(c) set forth all licenses,
sublicenses and other agreements as to which Seller is a party and pursuant to
which any person is authorized to use any Intellectual Property, and all
material licenses, sublicenses and other agreements as to which Seller is a
party and pursuant to which Seller is authorized to use any third party patents,
trademarks or copyrights, including software ("Third Party Intellectual Property
Rights") which are incorporated in, are, or form a part of the Treasury Product
or the Business.
(c) Seller is not aware of any unauthorized use, disclosure,
infringement or misappropriation of any Intellectual Property rights of Seller,
any trade secret material to Seller related to the Business, or any Intellectual
Property right of any third party to the extent licensed by or through Seller,
by any third party, including any employee or former employee of Seller. Seller
has not entered into any agreement to indemnify any other person against any
charge of infringement of any Intellectual Property, other than indemnification
provisions contained in purchase orders and customer licenses and support
agreements arising in the ordinary course of business.
(d) Seller is not, nor will it be as a result of the execution
and delivery of this Agreement or the performance of its obligations under this
Agreement, in breach of any license, sublicense or other agreement relating to
the Intellectual Property or Third Party Intellectual Property Rights.
(e) All registered trademarks held by Seller are valid and
subsisting. Seller has no patents or registered copyrights with respect to the
Treasury Product. Seller (i) has not been sued in any suit, action or proceeding
which involves a claim of infringement of any patents, trademarks, service
marks, copyrights or violation of any trade secret or other proprietary right of
any third party with respect to the Treasury Product or the Business and (ii)
has not brought any action, suit or proceeding for infringement of Intellectual
Property or breach of any license or agreement involving Intellectual Property
with respect to the Treasury Product or the Business against any third party.
The manufacture, marketing, licensing or sales of the Treasury Product does not
infringe any patent, trademark, service mark, copyright, trade secret or other
proprietary right of any third party.
(f) Seller has secured valid written assignments from all
consultants and employees who contributed to the creation or development of
Intellectual Property of the rights to such contributions that Seller does not
already own by operation of law.
(g) Seller believes that it has taken all reasonable and
appropriate steps to protect and preserve the confidentiality of all
Intellectual Property not otherwise protected by patents or patent applications
or copyright ("Confidential Information").
5.12 Taxes. Seller has no material liability for any Taxes with
respect to the Purchased Assets, except for taxes which have accrued and are not
yet payable. Seller has not
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elected pursuant to the Code to be treated as a Subchapter S corporation or a
collapsible corporation pursuant to Section 341(f) or Section 1362(a) of the
Code.
5.13 Compliance with Laws. Seller is not in violation of any law,
ordinance, order, decree, rule or regulation of any governmental agency, the
violation of which could have a material adverse effect on the Purchased Assets.
5.14 Employees. Except for those certain employment agreements, in
each case dated as of July 14, 1993 (collectively the "Employment Agreements")
and those certain Non-Competition Agreements of even date therewith
(collectively, the "Non-Competition Agreements") in each case between Seller and
John Morgan and Richard Franklin, as applicable, none of the Employees as
defined in Section 8.3 is obligated under any contract (including licenses,
covenants or commitments of any nature) or other agreement, or subject to any
judgment, decree or order of any court or administrative agency that would
conflict with such employee's obligation to use his best efforts to promote the
Business or that would have a material adverse effect on the Purchased Assets or
the Business. None of the Employees is in violation of any term of any
employment contract, proprietary information and inventions agreement,
non-competition agreement or any other contract or agreement relating to the
relationship of any such employee with Seller or any previous employer which
would have a material adverse effect on the Business. Seller has no collective
bargaining agreements with any of the Employees, including "employee pension
benefit plans" as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended. Each of the Employment Agreements and
Non-Competition Agreements shall be terminated at the Physical Closing pursuant
to Termination Agreements in the form of Exhibits C-1 and C-2.
5.15 Reliance.
(a) Buyer acknowledges that Seller has relied upon Mr. Morgan
and Mr. Franklin with respect to the furnishing of a portion of the information
used by Seller in the making of Seller's representations and warranties
contained in Sections 5.8, 5.9 and 5.11(b), (c), (f) and (g) of this Agreement
and as to the accuracy and completeness of the information set forth on
Schedules 1.1(a), 1.1(b), 1.1(c), 1.1(f), 1.1(g) and 1.1(h) hereto. Buyer
further acknowledges that Messrs. Franklin and Morgan have assisted in the
management of the Business for Seller and are associated with Buyer and now have
or will have an equity interest in Buyer and/or the business to be acquired from
Seller by Buyer, and that each of Messrs. Franklin and Morgan will continue to
have a senior management position with respect to such business operations
subsequent to the Physical Closing Date with Buyer. Seller acknowledges that the
input and information provided by Messrs. Morgan and Franklin as described above
was based on their actual knowledge at the time the information was supplied.
(b) Seller shall not be deemed in breach of any of Seller's
representations or warranties set forth in this Agreement to the extent that
such breach is a direct result of the furnishing by Messrs. Morgan or Franklin
of inaccurate or false information to Seller or by the omission or failure of
Messrs. Morgan or Franklin to disclose and furnish to Seller requisite
information actually known to Messrs. Morgan or Franklin whether any such acts
or omissions are done intentionally or unintentionally. Buyer shall cause
Messrs. Morgan and
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Franklin to deliver a certificate at the Physical Closing to
Seller wherein they will certify to their best knowledge that they have provided
complete and accurate information to Seller for its reliance in connection with
the above, and that they have reviewed the Schedules to this Agreement and, to
the best of their knowledge, such Schedules are correct and complete.
6. Representations and Warranties of Buyer.
As a material inducement to Seller to enter into this Agreement,
Buyer represents and warrants the following, the truth and accuracy of each of
which shall also constitute a condition precedent to the obligations of Seller
hereunder:
6.1 Organization and Good Standing. Buyer is a company duly
incorporated and validly existing under the laws of England and Wales. Buyer was
incorporated on August 2, 1995, and prior to the date hereof had no business,
operations, assets or liabilities, other than for nominal capital received upon
its initial capitalization and for the obligations and liabilities related to
this Agreement and the transactions contemplated hereby. Buyer represents and
warrants to Seller that it has sufficient capital and funding to operate the
Business following the Physical Closing as contemplated by this Agreement.
6.2 Authority. Buyer has all the necessary corporate power and
authority to enter into this Agreement, and the other documents and agreements
contemplated to be entered into in connection herewith, and to perform the
obligations to be performed by it hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. This Agreement and the other
documents and agreements contemplated to be entered into in connection herewith
have been duly authorized and approved by all necessary action on the part of
the Board of Directors and shareholders of Buyer. This Agreement and the other
documents and agreements contemplated to be entered into in connection herewith
have been duly executed and delivered by Buyer and constitute valid and binding
obligations of Buyer, enforceable against Buyer in accordance with their
respective terms, subject as to enforceability to any applicable bankruptcy,
insolvency, moratorium or other laws affecting creditors' rights generally or
such principles of equity as a court of competent jurisdiction might apply.
6.3 Finder's Fees. Buyer has not incurred any liability to any
broker, finder or agent for any brokerage fees, finder's fees or commissions
with respect to the transactions contemplated by this Agreement.
6.4 Agreement Will Not Cause Breach. Consummation of the
transactions contemplated by this Agreement will not cause a default or an event
that, with notice or the lapse of time or both, would constitute a default,
breach or violation of Buyer's Certificate of Incorporation or Memorandum of
Articles of Association or any agreement to which Buyer is a party or by which
it or its property is bound.
6.5 Approvals. No consent, approval or agreement of any person,
entity, party, court or government is required to be obtained by Buyer in
connection with the execution and delivery of this Agreement or any of the
documents and agreements contemplated to be
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entered into in connection herewith, or the performance of the terms hereof or
thereof or the consummation of the transactions provided for herein or therein.
6.6 Material Misstatements or Omissions. No representations or
warranties of Buyer contained in this Agreement or the schedules and exhibits
hereto or in any document, statement or certificate furnished or to be furnished
pursuant to this Agreement, contain or on the date of the Physical Closing will
contain an untrue statement of a material fact, or omit or on the date of the
Physical Closing will omit to state a material fact necessary to make the
statements of fact herein or therein not misleading.
6.7 Acknowledgment of Disclosure by Seller. Buyer has received a
copy of the most recent Annual Report on Form 10-K for the fiscal year ended
June 30, 1995, prepared by Seller pursuant to the Securities Exchange Act of
1934, as amended, and Quarterly Report on Form 10-Q for the quarter ended
September 30, 1995, and has had sufficient opportunity to review and discuss
with Seller the contents thereof.
7. Covenants and Agreements of Seller.
Seller covenants and agrees to the following, the fulfillment of
each of which shall also constitute a condition precedent to the obligations of
Buyer hereunder:
7.1 Conduct of Business Before the Physical Closing. Between the
date hereof and the date of the Physical Closing, Seller will not, without the
prior written consent of Buyer, enter into any transaction (other than as
contemplated by this Agreement) relating to the Business which is not at
arm's-length or which is inconsistent with Seller's past practice in conducting
the Business.
7.2 Consents. As soon as reasonably practicable after the date
hereof, Seller shall use its reasonable best efforts, and Buyer will cooperate
with Seller, to obtain all of the necessary consents to the transactions
contemplated hereby.
8. Additional Covenants.
8.1 Access and Information. Between the date hereof and the date of
the Physical Closing, Seller will afford to Buyer and its counsel, accountants
and other representatives, reasonable access to all of Seller's properties,
books, contracts and records related to the Business, and will furnish Buyer
with all the information, including copies of books, contracts and records,
concerning Seller's affairs which Buyer may reasonably request. Buyer will
advise Seller of any result of such investigation which leads Buyer to believe
that any representation or warranty of Seller contained herein may not be true
and accurate.
8.2 Cooperation. Seller and Buyer will use their reasonable best
efforts to cause all of their respective representations and warranties
contained in this Agreement to be true and correct on and as of the date of the
Physical Closing and to cause all of the conditions
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precedent disclosed in Sections 10 and 11 to be satisfied on or prior to the
date of the Physical Closing.
8.3 Retained Employees. Seller shall notify all employees of Seller
engaged in the conduct and operation of the Business (the "Employees") that
their employment by Seller will be terminated effective as of September 30, 1995
by reason of the transactions contemplated by this Agreement, and Buyer shall
notify the Employees designated on Schedule 8.3 hereto (the "Retained
Employees") that Buyer desires to hire them. On the date of the Physical
Closing, Seller shall (i) notify the Employees of their termination, and (ii)
waive any rights it may have to prohibit the Retained Employees from being
employed by the Buyer.
8.4 Termination of Employment Agreements. The Employees include,
among others, Messrs. Morgan and Franklin, who are employed by Seller pursuant
to the Employment Agreements. The Employment Agreements and the Non-Competition
Agreements shall be terminated by Seller as of the Physical Closing date
pursuant to the Termination Agreements and Buyer shall procure the consent of
Messrs. Morgan and Franklin to such termination and shall indemnify, defend and
hold harmless Seller against and in respect of any and all liabilities relating
to the Employment Agreements and Non-Competition Agreements from and after the
Physical Closing date, in accordance with Section 13.2 below. Seller shall
indemnify, defend and hold harmless Buyer against and in respect of any and all
liabilities relating to the termination of the Employment Agreements in
accordance with Section 13.1 below.
8.5 Adverse Changes. Seller shall promptly notify Buyer in writing
of any material adverse facts or developments affecting or which may affect the
Business which become known to Seller, including, without limitation, (i) any
damage, destruction or loss (whether or not covered by insurance) materially and
adversely affecting any of the Purchased Assets or the Business, or (ii)
anything which, if not corrected prior to the date of the Physical Closing,
could prevent Seller from fulfilling any condition precedent described in
Section 11 below.
8.6 Use of Office Space. Seller, and its subsidiaries have
conducted the Business in Seller's Sydney, Australia and Oakbrook, Illinois
office. Following the Physical Closing, Seller agrees to allow Buyer to continue
to use Seller's office facilities in Sydney, Australia on a rent-free basis,
consistent with the use of such facilities prior to the Physical Closing for a
period of fifteen (15) days, or such longer period, as mutually agreed upon.
Seller agrees to allow Buyer to continue to use Seller's office facilities in
Oakbrook, Illinois on a rent free basis, consistent with the use of such
facilities prior to physical Closing for a period of three (3) months. Buyer
shall be responsible though for all variable costs associated with the use of
these facilities during this period, including, but not limited to, supplies and
telecommunications charges which will be billed at a variable cost. Seller will
pay all telephone expenses associated with the facilities during the transition
period and Buyer agrees to reimburse Seller for twenty percent (20%) of the
telephone expenses within ten (10) days following receipt by Buyer of an invoice
from Seller.
8.7 Non-Solicitation of Employees. For a period of two (2) years
following the Physical Closing, Buyer and Seller agree that they shall not
solicit the employment of any of each company's respective employees, including
specifically the Retained Employees, including
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without limitation the offer to any such Retained Employee or other employee of
a salary increase or bonus in excess of usual and customary increases in salary
or bonuses commonly offered by Seller in the conduct of its business.
8.8 Software Product License. Within ten (10) days following the
Physical Closing, Seller shall provide to Buyer, at no charge, a 1-5 user
license for the following modules of Sellers Platinum(R) SQL NT accounting
software: General Ledger, Accounts Payable, Accounts Receivable, Inventory,
Asset Management, Cash Management, Purchase Order, Order Entry and Tools.
8.9 Subordination of Debenture. Seller undertakes with Buyer that
if so requested by Buyer after completion it will execute a Deed of
Subordination in respect of Seller's debenture dated January 11, 1996, whereby
Seller will agree to subordinate the security created by its debenture so that
it ranks behind any security created in favor of a clearing bank providing
working capital facilities to Buyer, provided that it will be a term of any such
subordination that the interest of such bank will only rank in priority to that
of Seller up to a maximum total sum (including interest and costs) of $US500,000
and that thereafter the security of Seller shall rank in priority to the
interests of such bank as a first fixed and floating security. Seller and Buyer
agree to use the standard form of deed of priority provided by the bank,
provided the terms and conditions are reasonably acceptable to Buyer and Seller,
with such changes as either party may reasonably request.
9. Survival of Covenants, Representations and Warranties.
All of the covenants, representations and warranties set forth in
this Agreement shall remain in full force and effect regardless of any
investigation, verification or approval by any party hereto or by anyone on
behalf of any party hereto, and shall survive the date of the Physical Closing
for a period of two (2) years. All representations and warranties shall be true
at and as of the date of the Physical Closing, as though said representations
and warranties were made at and as of that time. Termination of this Agreement
shall not relieve any party hereto of its liability for any breach by such party
of this Agreement or any representation or warranty contained in or made
pursuant hereto.
10. Conditions Precedent to the Obligations of Seller.
The obligations of Seller to consummate this Agreement are subject
to the following express conditions precedent, each of which shall be deemed
independent, severable and waivable in whole or in part at the option of Seller.
10.1 Correctness of Representations and Warranties. All
representations and warranties of Buyer contained herein shall be true and
accurate in all material respects at and as of the date of the Physical Closing,
as though said representations and warranties were made at and as of that time;
and Buyer shall have performed all covenants and agreements on its part required
to be performed prior to the date of the Physical Closing and shall not be in
default of its material obligations or representations or warranties under this
Agreement at the date of the Physical Closing.
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10.2 Delivery of Instruments. Buyer shall have delivered all
instruments, documents and other matters to be delivered to Seller by Buyer in
accordance with the terms of this Agreement.
10.3 Officer's Certificate. Seller shall have received a
certificate, dated as of the date of the Physical Closing and executed by the
Chairman of the Board of Buyer or any other Director, to the effect that (i) all
of the representations and warranties of Buyer contained in this Agreement are
true and accurate in all material respects at the date of the Physical Closing;
and (ii) all of the covenants and agreements of Buyer contained in this
Agreement and required to be performed before the Physical Closing have been
performed and Buyer is not in default of any of its obligations or
representations or warranties under this Agreement.
10.4 Approvals, etc. All required regulatory approvals shall have
been received with respect to the transactions contemplated under this
Agreement. No action or proceeding shall be completed or pending against Buyer
that has resulted or is likely to result in a judgment, decree or order that
would prevent or make unlawful the consummation of the transactions under this
Agreement, and there shall be in effect no order restraining or prohibiting the
consummation of the transactions contemplated by this Agreement, nor any
proceedings pending with respect thereto.
10.5 Opinion of Buyer's Counsel. Seller shall have received an
opinion, dated the date of the Physical Closing, of Garrett & Co., counsel for
Buyer, substantially in the form of Exhibit D hereto.
10.6 Assignment and Assumption Agreement. Buyer shall have executed
and delivered Assignment and Assumption Agreements in the form attached hereto
as Exhibit E (the "Assumption Agreement").
10.7 Trademark License. Buyer shall have entered into the Trademark
License Agreement in the form of Exhibit F attached hereto.
10.8 Debenture. Buyer shall have entered into the agreement in the
form attached hereto as Exhibit A-1.
10.9 Termination of Employment Agreements. Each of Messrs. Franklin
and Morgan shall have executed a Termination Agreement in the form attached
hereto as Exhibit C-1 and C-2, respectively.
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11. Conditions Precedent to the Obligations of Buyer.
The obligations of Buyer to consummate this Agreement are subject
to the following express conditions precedent, each of which shall be deemed
independent, severable and waivable in whole or in part at the option of Buyer.
11.1 No Adverse Change. There shall not have occurred any material
adverse change in the financial condition, properties or assets, business,
prospects or operations of the Business, or any other event or condition or
state of facts of any character affecting Seller which would materially and
adversely affect the Business or the Purchased Assets.
11.2 Litigation. As of the date of the Physical Closing, no
material litigation, governmental action or other proceeding shall be threatened
or commenced against Seller with respect to any matter or against any person
with respect to any transactions contemplated herein, or which could adversely
affect any of the Purchased Assets or the Business.
11.3 Consents, etc. Buyer shall have received from all governmental
agencies, licensees, lenders, creditors, lessors and other persons such
consents, releases and permissions, as are necessary for the sale and transfer
of the Purchased Assets and the consummation of the transactions contemplated in
this Agreement, including, without limitation, those consents and approvals
listed on Schedule 5.3 attached hereto. Buyer waives the requirement obtaining
the consents listed on Schedule 5.3 prior to the Physical Closing. Following the
Physical Closing, Seller shall use its reasonable best efforts to assist Buyer
in obtaining the consents listed on Schedule 5.3.
11.4 Delivery of Documents. On or before the date of the Physical
Closing, Buyer shall have received from Seller, and the Subsidiaries, as
applicable, all instruments, consents, approvals, deeds, assignments, policies
and other documents called for in this Agreement, including, without limitation,
good and sufficient bills of sale in the form attached hereto as Exhibit G,
assignments of copyrights and other assignments of title, in duly recordable
form where applicable, and all other instruments and legal opinions necessary to
effectuate the transfer of the Purchased Assets as provided for herein.
11.5 Correctness of Representations and Warranties. All of the
representations and warranties of Seller contained in this Agreement shall be
true and accurate in all material respects at the date of the Physical Closing
as though also made at and as of such date.
11.6 Performance of Covenants and Agreements. All of the covenants
and agreements of Seller contained in this Agreement and required to be
performed before the Physical Closing shall have been performed and Seller shall
not be in default under any provisions of this Agreement.
11.7 Officer's Certificate. Buyer shall have received a
certificate, dated the date of the Physical Closing and executed by an officer
of Seller, to the effect that to the best of his knowledge (i) all of the
representations and warranties of Seller contained in this Agreement are true
and accurate in all material respects at the date of the Physical Closing; and
(ii) all of the
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covenants and agreements of Seller contained in this Agreement and required to
be performed before the Physical Closing have been performed and Seller is not
in default of any of its obligations or representations or warranties under this
Agreement.
11.8 Approvals, etc. All required regulatory approvals shall have
been received with respect to the transactions contemplated under this
Agreement. No action or proceeding shall be completed or pending against Seller
that has resulted or is likely to result in a judgment, decree or order that
would prevent or make unlawful the consummation of the transactions under this
Agreement, and there shall be in effect no order restraining or prohibiting the
consummation of the transactions contemplated by this Agreement, nor any
proceedings pending with respect thereto.
11.9 Opinion of Seller's Counsel. Buyer shall have received an
opinion, dated the date of the Physical Closing, of Stradling, Yocca, Carlson &
Rauth, counsel for Seller, substantially in the form of Exhibit H hereto.
11.10 Assumption Agreement. Seller shall have executed and
delivered Assumption Agreements in the form of Exhibit E hereto.
11.11 Trademark License. Seller shall have entered into the
Trademark License Agreement in the form of Exhibit F attached hereto.
11.12 Termination of Employment Agreements. Seller shall have
entered into Termination Agreements with each of Messrs. Franklin and Morgan in
the form attached hereto as Exhibit C-1 and C-2.
11.13 Transition Letter. Seller shall have delivered to Buyer the
form of a letter to existing users of the Treasury Product informing such users
of the sale contemplated by this Agreement.
12. Closing Deliveries.
12.1 Seller's Deliveries. In connection with and at the time of
the Physical Closing, Seller shall deliver to Buyer the following:
(a) Bills of Sale. A bill of sale in the form attached hereto
as Exhibit G from each of the applicable Subsidiaries and from Seller and all
other instruments and documents of transfer necessary to transfer and vest in
Buyer good title to the Purchased Assets, free and clear of any liabilities,
liens, encumbrances or restrictions whatsoever, in the form and substance
satisfactory to Buyer's counsel.
(b) Other Documents. Each of the certificates and other
documents and instruments required to be delivered by Seller to Buyer pursuant
to Section 11 above, together with such additional documents or instruments as
Buyer's counsel reasonably may request to give effect to the transactions
contemplated herein.
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12.2 Buyer's Deliveries. In connection with and at the time of the
Physical Closing, Buyer shall deliver to Seller the following:
(a) Purchase Price. The Royalty Note and the Accounts
Receivable Note.
(b) Other Documents. Each of the certificates and other
documents and instruments required to be delivered by Buyer pursuant to Section
10 above, together with such additional documents or instruments as Seller's
counsel reasonably may request to give effect to the transactions contemplated
herein.
13. Indemnification.
13.1 Indemnification of Buyer. Seller shall indemnify, defend and
hold harmless Buyer against and in respect of any and all claims, demands,
losses, liabilities, costs, expenses, obligations and damages, including,
without limitation, interest, penalties and reasonable attorneys' fees, suffered
or incurred by Buyer which arise, result from or relate to any breach of or
failure by Seller to perform any of its respective representations, warranties,
covenants or agreements in this Agreement or in any schedule, certificate,
exhibit or other instrument furnished or to be furnished under this Agreement or
which arise, result from or relate to any liability or obligation of Seller not
specifically assumed by Buyer or otherwise provided for hereunder, or any
matter, liability (contingent or otherwise), obligation, occurrence or
transaction which relates to the Business occurring or arising prior to the
Closing Date, except for the Assumed Liabilities. Nothing herein shall, however,
prevent Seller from contesting, in good faith, its liability therefor and no
right to indemnity shall accrue hereunder in respect of any such liability which
Seller is contesting diligently and in good faith until final resolution of such
contest.
13.2 Indemnification of Seller. Buyer shall indemnify, defend and
hold harmless Seller (and its subsidiaries) against and in respect of any and
all claims, demands, losses, liabilities, costs, expenses, obligations and
damages, including, without limitation, interest, penalties and reasonable
attorneys' fees, suffered or incurred by Seller (and its subsidiaries) as a
result of any breach of or failure by Buyer to perform any of its
representations, warranties, covenants or agreements in this Agreement or in any
schedule, certificate, exhibit or other instrument furnished or to be furnished
under this Agreement or which arise or result from Buyer's failure to satisfy or
otherwise discharge any of the Assumed Liabilities as, when and to the extent
they become due and payable. Nothing herein shall, however, prevent Buyer from
contesting, in good faith, its liability therefor and no right to indemnity
shall accrue hereunder in respect of any such liability which Buyer is
contesting diligently and in good faith until final resolution of such contest.
13.3 Procedures for Establishment of Right to Indemnity and Right
to Defend Third Party Claims. In the event that any party hereto asserts the
existence of any right to indemnity under Sections 13.1 or 13.2 ("Indemnifiable
Damages"), such party (the "Indemnitee") shall give written notice to the other
party or parties (the "Indemnitors") of the nature and amount of the Indemnity
asserted promptly, and, in the case of any claim relating to a third party
action, within ten (10) days prior to the date a response or answer thereto is
due, in writing, thereof. The failure, refusal or neglect of such Indemnitee to
notify the Indemnitors within the time period
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specified above of any such claim or action shall not relieve such Indemnitors
from any liability which they may have to such Indemnitee in connection
therewith, unless the Indemnitors were prejudiced by such a delay, and then only
to the extent of the harm suffered by such delay. In case any claim, demand or
assessment shall be asserted or suit, action or proceeding commenced against an
Indemnitee and such Indemnitee shall have notified the Indemnitor of the
commencement thereof, the Indemnitor may, to the extent that such claim, demand
or assessment includes or may include Indemnifiable Damages, assume the defense,
conduct or settlement thereof, in which event, Indemnitor shall be responsible
for all Indemnifiable Damages which may be suffered or incurred by the
Indemnitee in connection therewith, as set forth in Sections 13.1 and 13.2, and
the defense thereof, with the assistance of counsel selected by Indemnitor and
approved by Indemnitee, which approval shall not be unreasonably withheld. After
notice from the Indemnitor to the Indemnitee that it will so assume the defense
thereof, the Indemnitors will not be liable to the Indemnitee for expenses
incurred in connection with the defense, conduct or settlement thereof, except
for such expenses as may be reasonably required to enable the Indemnitors to
take over such defense, conduct or settlement. The Indemnitee will, at its own
expense, cooperate with the Indemnitors in connection with any such claim, make
personnel, witnesses, books and records relevant to the claim available to the
Indemnitors at no cost, and grant such authorizations or powers of attorney to
the agents, representatives and counsel of the Indemnitors as the Indemnitors
may reasonably request in connection with the defense or settlement of any such
claim. In the event that the Indemnitors do not so assume the defense, conduct
or settlement of any claim, demand or assessment within thirty (30) days after
receiving notice of any claim relating to a third party action as set forth
above, the Indemnitee shall be entitled to defend, conduct or settle such claim,
demand or assessment without the written consent of the Indemnitors and without
relieving the Indemnitors from any of the obligations to indemnify the
Indemnitee under Sections 13.1 or 13.2.
(c) The Indemnitee and the Indemnitors may agree in writing, at
any time, as to the existence and amount of an Indemnity, and, upon the
execution of such agreement, such Indemnity shall be deemed established.
13.4 Limitations.
(a) Except with respect to claims (i) relating to covenants or
agreements by either party, or (ii) based upon fraud, neither party shall have
any obligation to indemnify the other party under Sections 13.1 or 13.2 above in
respect to any Indemnifiable Damages unless the aggregate cumulative total of
all Indemnifiable Damages incurred by the Indemnitee exceeds Fifty Thousand
United States Dollars (US$50,000), which amount shall be deemed to be "material"
as such term is used in the representations and warranties of Seller and Buyer
set forth in Sections 5 and 6 hereof, respectively. In such event, the
Indemnitees shall be entitled to indemnification for the entire aggregate
cumulative amount of such Indemnifiable Damages in excess of such amount.
(b) In no event shall the liability or obligation of Seller
exceed that portion of the Purchase Price paid as of the date a claim for
Indemnifiable Damages is brought by Buyer. Notwithstanding the previous
sentence, if a claim for Indemnifiable Damages is brought by Buyer for breach of
the representations contained in Section 5.11: (I) the out-of-pocket
19
<PAGE> 20
liability of Seller shall not exceed the greater of (i) $100,000 or (ii) that
portion of the Purchase Price paid as of the date a claim for Indemnifiable
Damages is brought; and (II) Buyer shall have the additional right to offset
against the Purchase Price, payable under the Royalty Note, the amount of the
actual Indemnifiable Damages incurred by Buyer, (less the amount recovered in
clause (I) above), up to the amount of the Purchase Price, provided that Seller
has not disputed in good faith the Indemnifiable Damages within five (5)
business days following written notice by Buyer of its desire to offset. By way
of illustration, Buyer and Seller intend this section to apply as follows:
Facts: (a) One (1) year after execution of this Agreement, Buyer has paid Seller
$150,000 of the Purchase Price under the Royalty Note; and (b) Seller breaches
the representation in Section 5.11 of the Agreement and Buyer incurs $500,000 in
actual Indemnifiable Damages which it has paid to a third party. Result: Buyer
could recover $150,000 from Seller, subject to the "basket" described in Section
13.4(a) and could offset $350,000 against amounts payable under the Royalty
Note.
13.5 Payment of Indemnity. The Indemnitors shall pay the amount of
each established Indemnity to the Indemnitee promptly after it has been properly
established. Subject to the limitations herein contained, the Indemnitee shall
have all rights and remedies available at law or equity for enforcement of its
rights hereunder.
14. Affirmative Covenants of Buyer.
Buyer covenants and agrees with Seller, for as long as any amounts
are due hereunder or under the Royalty Note or the Accounts Receivable Note, as
follows:
14.1 Financial Statements. Buyer will furnish to Seller as soon as
practicable, and in any event within ninety (90) days after the end of each
fiscal year of Buyer, the compiled financial statements of Buyer or audited
financial statements if Buyer has its financial statements audited, including a
consolidated balance sheet as at the end of such fiscal year and a consolidated
statement of operations and a consolidated statement of cash flows for such
fiscal year, setting forth in each case in comparative form corresponding
figures for the preceding fiscal year, all of which will be correct and complete
and will present fairly the financial condition of Buyer on a consolidated basis
at the date shown and the consolidated results of its operations for the period
then ended. Seller shall be permitted access to work papers as they relate to
the calculation of Net Revenues.
14.2 Budgets. Buyer will furnish to Seller as soon as practicable,
and in any event not less than thirty (30) days prior to the end of each fiscal
quarter and fiscal year of Seller, a quarterly or annual revenue forecast with
respect to the Treasury Product for the succeeding fiscal quarter or fiscal
year, respectively. Buyer will furnish promptly to Seller any revisions of such
forecasts previously furnished to Seller.
14.3 Reports and Inspection. Buyer will furnish promptly to Seller
such documents, reports and financial data as Seller may reasonably request in
order to determine Buyer's Net Revenues and the amounts payable by Buyer in
accordance with this Agreement and the Royalty Note, and will, upon reasonable
prior notice, make available to Seller and its representatives during normal
business hours (a) all business records of Buyer relating to
20
<PAGE> 21
determination of Net Revenues for inspection and (b) the directors, officers and
employees of Buyer for interviews concerning the determination of Net Revenues
by Buyer. Seller agrees to execute in favor of Buyer the standard form of
Buyer's nondisclosure and confidentiality agreement with respect to the
information disclosed to Seller pursuant to this Section 14.3.
14.4 Business Insurance. Buyer will at all times maintain and keep
in full force and effect valid fire and theft insurance policies with
financially sound insurers with respect to its properties, assets and business
of the kinds and in amounts not less than is customarily obtained by
corporations engaged in the same or similar businesses and similarly located.
15. Negative Covenants of Buyer.
Buyer covenants and agrees with Seller, for as long as any amounts
are due hereunder or under the Royalty Note or the Accounts Receivable Note,
that Buyer will not take any of the following actions without the prior approval
of Seller:
15.1 Merger; Sale of Assets. Buyer will not become a party to any
merger or consolidation, or sell, lease or otherwise dispose of any of its
properties or assets, other than sales or leases of properties or assets in the
ordinary course of business or the replacement of outmoded or damaged equipment
with other equipment (a "Reorganization"); provided, however, that Seller's
approval shall not be unreasonably withheld or delayed, and provided further
that no prior approval of Seller shall be required for any Reorganization in
connection with which all obligations of Buyer to Seller hereunder and under the
Royalty Note are accelerated and paid in full by Buyer on or prior to the
closing or effectiveness of such Reorganization.
15.2 Transactions with Management Stockholders. Buyer will not
engage in any transaction, enter into any contract, agreement or other
arrangement providing for the employment of, furnishing of services by, rental
of real or personal property from, or otherwise requiring payments to, any
"affiliates" or "associates" of Buyer (as such terms are defined under the rules
and regulations of the Securities Exchange Act of 1934), except transactions
which are on terms and conditions substantially similar to those which would be
available to Buyer in an arms'-length transaction with an unaffiliated third
party.
15.3 Dissolution or Liquidation. Buyer will not voluntarily
dissolve, wind up or carry out any partial liquidation or enter into a members
voluntary liquidation.
15.4 Assignment of Accounts Receivable. Buyer will not assign,
pledge, mortgage or transfer to any third party any of the accounts receivable
specified on Schedule 1.1(a); provided however that Seller's approval shall not
be unreasonably withheld or delayed, and provided further that no prior approval
of Seller shall be required in connection with such assignment if the Accounts
Receivable Note is paid in full by Buyer on or prior to the closing of the
effectiveness of such assignment.
21
<PAGE> 22
16. Further Acts.
After the Closing Date, Seller and Buyer shall execute and deliver
all instruments and documents and shall perform all other acts which the other
may reasonably request in order to further effect or perfect the sale and
transfer of the Purchased Assets to Buyer and the other transactions
contemplated in this Agreement. Certain of the Purchased Assets are owned by the
Subsidiaries, and Seller shall cause the Subsidiaries, as applicable, to execute
all bills of sale and other documents necessary to convey and transfer to Buyer
of any of the Purchased Assets owned by such subsidiaries.
17. Sales Tax.
Seller shall pay all sales, use and transfer taxes, if any, arising
out of the transfer of the Purchased Assets and Tangible Assets and Seller shall
pay its portion, prorated as of the Closing Date, of state and local real and
personal property taxes of the Business. Buyer shall not be responsible for any
business, occupation, withholding or similar tax, or any Taxes of any kind
related to any period before the Closing Date, except to the extent listed on
Schedule 3.2 hereto.
18. Expenses.
Each of the parties shall pay all costs and expenses incurred or to
be incurred by it in negotiating and preparing this Agreement and in closing and
carrying out the transactions contemplated by this Agreement.
19. Notices.
Any notices and other communications required or permitted in this
Agreement shall be effective if in writing and delivered personally or sent by
telecopier, Federal Express, or registered or certified air mail, postage
prepaid, addressed as follows:
(a) If to Buyer, addressed to:
Platinum Treasury Systems, plc
32 Peascod Street
Windsor, Berkshire SL4 1EA
United Kingdom
Telecopier: 44 0 753 852224
Attention: Richard Franklin
with copies to:
Brobeck, Phleger & Harrison
2200 Geng Road
Palo Alto, CA 94303
Telecopier: (415) 496-2921
Attention: Ed Lennard, Esq.
22
<PAGE> 23
(b) If to Seller, addressed to:
Platinum Software Corporation
195 Technology Drive
Irvine, California, 92718 Telecopier:
(714) 727-1255
Attention: Michael Simmons, Chief Financial Officer
with copies to:
Stradling, Yocca, Carlson & Rauth
660 Newport Center Drive, Suite 1600
Newport Beach, California, 92660
Telecopier: (714) 725-4100
Attention: K.C. Schaaf, Esq.
Unless otherwise specified herein, such notices or other
communications shall be deemed effective (a) on the date delivered, if delivered
personally, (b) two (2) business days after being sent by Federal Express, if
sent by Federal Express, (c) one (1) business day after being delivered, if
delivered by telecopier, and (d) seven (7) business days after being sent, if
sent by registered or certified air mail. Each of the parties hereto shall be
entitled to specify a different address by giving notice as aforesaid to each of
the other parties hereto.
20. Attorneys' Fees.
In the event of any controversy, claim or dispute between the
parties hereto arising out of or relating to this Agreement or any of the
documents provided for herein, or the breach thereof, the prevailing party shall
be entitled to recover from the losing party reasonable attorneys' fees,
expenses and costs.
21. Assignment.
Neither party may assign, without the prior written consent of the
other, its rights, duties or obligations under this Agreement to any person or
entity, in whole or in party; provided, however, that this Agreement may be
assigned by Seller without the consent of Buyer (i) to a purchaser or all or
substantially all of the assets or outstanding capital stock of Seller, or its
parent corporation or other corporation controlled by its parent corporation,
whether by merger, consolidation to otherwise, or (ii) to a subsidiary all of
whose stock is owned by Seller.
22. Binding Effect.
This Agreement shall be binding upon and inure to the benefit of
the successors and permitted assigns of the respective parties hereto.
23
<PAGE> 24
23. Parties in Interest.
Nothing in this Agreement, whether express or implied, is intended
to confer any rights or remedies under or by reason of this Agreement on any
persons other than the parties to it and their respective successors and
assigns, nor is anything in this Agreement intended to relieve or discharge the
obligation or liability of any third persons to any party to this Agreement, nor
shall any provision give any third persons any right of subrogation over or
action against any party to this Agreement.
24. Counterparts.
This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original and all of which together shall be
deemed to be one and the same instruments. Facsimile signatures shall be
effective for purposes of execution hereunder. However, this Agreement shall be
ineffective for any purposes whatsoever unless or until executed by all parties
hereto.
25. Headings.
The subject headings of the paragraphs and subparagraphs of this
Agreement are included for purposes of convenience only and shall not affect the
construction or interpretation of any of its provisions.
26. Integration.
This Agreement (together with its schedules, exhibits and other
attachments) sets forth all the promises, covenants, agreements, conditions and
understandings between the parties hereto, and supersedes all prior and
contemporaneous agreements and understandings, inducements or conditions,
express or implied, oral or written, with respect to the subject matter hereof
except as herein contained.
27. Amendment; Waiver.
This Agreement may be amended, modified, extended or terminated,
either retroactively or prospectively, and the provisions hereof may be waived,
only by an instrument in writing signed by the parties hereto. In addition, each
party hereto may waive any right hereunder by an instrument in writing signed by
such party.
28. Governing Law; Interpretation.
This Agreement shall be governed by, construed in accordance with
and enforced under the laws of the State of California applicable to contracts
made and to be performed in California, without regard to choice of law
principles. Words used herein, regardless of the number and gender specifically
used, shall be deemed and construed to include any other number, singular or
plural, and any other gender, masculine, feminine or neuter, as the context
requires.
24
<PAGE> 25
29. Arbitration.
29.1 Generally. Except for collection actions for non-payment of
amounts due under this Agreement or documents delivered pursuant to this
Agreement or the right of either party to apply to a court of competent
jurisdiction for a temporary restraining order, a preliminary injunction or
other equitable relief to preserve the status quo or prevent irreparable harm,
each dispute, difference, controversy or claim arising in connection with or
related or incidental to, or question occurring under, this Agreement or the
subject matter hereof shall be finally settled under the Commercial Arbitration
Rules of the American Arbitration Association by an arbitral tribunal composed
of three arbitrators, at least one of whom shall be an attorney experienced in
corporate transactions, appointed by agreement of the parties in accordance with
said Rules. Such arbitration shall take place in Orange County, California. If,
at the time of the arbitration, the parties agree in writing to submit the
dispute to a single arbitrator, said single arbitrator shall be appointed by
agreement of the parties in accordance with said Rules. The foregoing
arbitration proceedings may be commenced by any party by notice to the other
parties. Buyer and Seller shall each pay their own fees and expenses therein and
one-half of the cost and charges of arbitration and the American Arbitration
Association, except as otherwise provided herein. Buyer and Seller agree that
there shall be discovery in the arbitration and such discovery shall be governed
by rules contained in the California Code of Civil Procedure.
29.2 Recourse to Courts. The parties hereby exclude any right of
appeal to any court on the merits of the dispute. The provisions of this Section
29 may be enforced in any court having jurisdiction over the award or any of the
parties or any of their respective assets, and judgment on the award (including
without limitation equitable remedies) granted in any arbitration hereunder may
be entered in any such court. Nothing contained in this Section 29 shall prevent
any party from seeking interim measures of protection in the form of pre-award
attachment of assets or preliminary or temporary equitable relief.
30. RTPA Registration.
Any provision of this Agreement by virtue of which it (or any
agreement or arrangement of which it forms part) is subject to registration
under the U.K. Restrictive Trade Practices Acts 1976 and 1977 shall not take
effect until the day after the required particulars of it have been submitted to
the Director General of Fair Trading in accordance with the requirements of
those Acts. The parties undertake to procure that the required particulars are
submitted within thirty (30) days from the date of this Agreement.
25
<PAGE> 26
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
BUYER:
PLATINUM TREASURY SYSTEMS, PLC
By: /s/ Arthur Diggle
-------------------------------------------
Its: Arthur Diggle
SELLER:
PLATINUM SOFTWARE CORPORATION,
a Delaware corporation
By: /s/ Michael J. Simmons
-------------------------------------------
Michael J. Simmons, Chief Financial Officer
26
<PAGE> 27
INDEX OF SCHEDULES
<TABLE>
<CAPTION>
Schedule Description
- -------- -----------
<S> <C>
1.1(a) Accounts Receivable of Seller and Subsidiaries
1.1(b) General Contracts
1.1(c) Software Contracts
1.1(d) Inventory
1.1(e) Trade Names, Trademarks and Service Marks
1.1(f) Customer and Client Lists
1.1(g) Computer Programs
1.1(h) Technical Documentation
1.2 Excluded Assets
2.5 Allocation of Purchase Price
3.2 Assumed Liabilities
5.3 Required Third Party Consents
5.4 Exceptions to Title
5.6 Litigation
8.3 Retained Employees
</TABLE>
27
<PAGE> 28
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
Exhibit Description
- ------- -----------
<S> <C>
A Promissory Note (Royalty Note)
A-1 Debenture
B Accounts Receivable Promissory Note
C-1 Franklin Termination of Employment Agreement
C-2 Morgan Termination of Employment Agreement
D Form of Opinion of Counsel for Buyer
E Assignment and Assumption Agreement
F Trademark License Agreement
G Bill of Sale, General Conveyance and Assignment
H Form of Opinion of Counsel for Seller
</TABLE>
28
<PAGE> 29
EXHIBIT A
PROMISSORY NOTE
US$1,500,000 January 11, 1996
FOR VALUE RECEIVED, PLATINUM TREASURY SYSTEMS, plc, a company
registered in England and Wales (Company No. 3086549), (registered office -32
Peascod Street, Windsor, Berkshire, SL4 1EA United Kingdom), (the "Maker")
promises to pay to the order of PLATINUM SOFTWARE CORPORATION, a Delaware
corporation ("Platinum"), at 195 Technology Drive, Irvine, California 92718, or
such other place as the holder (the "Holder") of this Promissory Note (this
"Note") may from time to time in writing direct, the principal sum of One
Million Five Hundred Thousand United States Dollars (US$1,500,000), payable in
full as set forth below. The principal amount of this Note shall not bear
interest.
This Note is the Royalty Note referred to in that certain Agreement of
Purchase and Sale of Assets, dated as of September 30, 1995, between the Maker
and Platinum (the "Purchase Agreement") and is secured by a debenture created
under that agreement of even date (the "Debenture") between Maker and Platinum
and Platinum is entitled to all of the benefits and security of the collateral
as set forth in the Debenture. Capitalized terms used herein and not otherwise
defined shall have the meanings assigned to them in the Purchase Agreement.
If any principal payable hereunder is not paid when due, such overdue
principal shall bear interest at a rate per annum equal to twelve percent (12%)
from the due date until paid. Prepayment of principal hereunder may be made at
any time without penalty.
All amounts due hereunder shall be payable in lawful money of the
United States of America. Maker shall pay to Platinum the principal amount of
One Million Five Hundred Thousand Dollars ($1,500,000) as set forth herein.
Maker shall pay to Platinum a percentage of Maker's Net Revenues from the
licensing of the Treasury Product as follows: (i) Five percent (5%) of
Maker's Net Revenues from the licensing of the Treasury Product from the date
hereof until the second anniversary hereof, and (ii) Ten percent (10%) of
Maker's Net Revenues from the licensing of the Treasury Product from the second
anniversary of the date hereof through the seventh anniversary of the date
hereof. Royalty payments are to be made until either the aggregate amount of
the royalties paid by Maker to Platinum under Section 2.2(a) of the Purchase
Agreement shall equal One Million Five Hundred Thousand United States Dollars
(US$1,500,000) or the seventh anniversary of the date hereof, whichever first
occurs. In the event the seventh anniversary of the date hereof occurs first,
any amount by which the Royalty Payment (US$1,500,000) exceeds the aggregate
amount paid by Maker to Platinum under Section 2.2(a) of the Purchase Agreement
and this Note shall be paid in full by Maker within sixty
<PAGE> 30
(60) days following such seventh anniversary of the date hereof (the "Royalty
Deficit Payment"). The royalties shall be paid in the manner set forth in the
purchase Agreement.
The principal amount of this Note and all accrued but unpaid interest
thereon, if any, shall become immediately due and payable, at the option of
Platinum, upon the occurrence of any of the following (an "Event of Default"):
(a) Any payment due under this Note shall have been in
default for at least fifteen (15) days following the receipt of a notice of
default in payment;
(b) The Maker shall fail or neglect to perform, keep or
observe any covenant or obligation of Maker set forth in the Purchase
Agreement, which breach is not cured within twenty (20) days following receipt
by Maker of written notice thereof; or
(c) The Maker fails or neglects to comply with any
covenant or obligation of Maker set forth in the Debenture which breach is not
cured within the cure period provided in the Debenture; or
(d) The Maker defaults in the performance of any other
agreement for borrowed monies or such borrowed monies are not repaid in full on
the due date or repayment of any such borrowed monies is due on demand and is
not paid in full forthwith on such demand being made;
(e) The Maker is unable to pay its debts within the
meaning of section 123 of the UK Insolvency Act 1986 or the Maker otherwise
becomes insolvent or suspends making payments to all or any class of its
creditors or announces an intention to do so; or
(f) Any distress, execution, attachment or other similar
legal process which affects the whole or a material part of the assets of the
Maker; or
(g) An Administrative or other Receiver or similar
officer is appointed over the whole or any part of the assets of the Maker or
the Maker requests any person to appoint such a Receiver or similar officer or
any other steps are taken to enforce any charge or other security over any of
the property of the Maker; or
(h) An order is made or any effective resolution is
passed or a petition is presented or other steps are taken for:
(i) the winding up, dissolution or liquidation of
the Maker other than for the purpose of a
reconstruction or amalgamation, the terms of
which have previously been approved by
Platinum in writing; or
(ii) the making of an Administration Order against
the Maker or;
2
<PAGE> 31
(i) Control of the Maker passes without the consent of
Platinum to any person, firm or company acting either individually or in
concert, provided that transfers of shares between the shareholders of Maker on
the date hereof will not be considered a change of control.
The Maker hereby waives presentment for payment, protest and notice of
nonpayment and dishonor. If the Holder takes any action to collect this Note,
then the Maker shall be obligated to pay, in addition to all other amounts due
under this Note, all costs of collection and reasonable attorneys' fees and
other legal costs and expenses.
No delay or failure on the part of the Holder in the exercise of any
right or remedy hereunder shall operate as a waiver thereof, nor as an
acquiescence in any default, nor shall any single or partial exercise by the
Holder of any right or remedy preclude any other right or remedy. The Holder,
at its option, may enforce its rights against any collateral securing this Note
without enforcing its rights against the Maker or any other indebtedness due or
to become due to the Maker. The Maker agrees that, without releasing or
impairing the Maker's liability hereunder, the Holder may at any time release,
surrender, substitute or exchange any collateral securing this Note and may
release any party secondarily liable for the indebtedness evidenced by this
Note.
This Note shall be governed by and construed in accordance with the
internal laws of the State of California of the United States. Platinum and
Maker each irrevocably agree that all actions arising directly or indirectly as
a result or in consequence of this Note shall be instituted and litigated only
in courts having situs in the State of California, and Platinum and Maker each
hereby consent to the exclusive jurisdiction and venue of any state or federal
court located and having its situs in the State of California provided always,
that Platinum may, at its sole option, enforce the Debenture in the United
Kingdom or other appropriate jurisdiction.
IN WITNESS WHEREOF, the Maker has caused this Note to be executed and
delivered as its deed on the day and year first above written.
Executed and delivered as a deed by )
Platinum Treasury Systems, plc by the signatures )
)
of [____________________________], Director ) ___________________________
) Director
and )
)
[______________________________], Director ) ___________________________
) Director
in the presence of: ________________________ )
3
<PAGE> 32
EXHIBIT A-1
(1) PLATINUM TREASURY SYSTEMS PLC
- and -
(2) PLATINUM SOFTWARE CORPORATION
---------
DEBENTURE
---------
HOPKINS & WOOD
2-3 CURSITOR STREET
LONDON EC4A 1NE
TEL: 0171-404 0475
FAX: 0171 831 2190
REF: AJS/126/P/16:653
<PAGE> 33
THIS DEBENTURE is dated 1995
and made BETWEEN:
(1) PLATINUM TREASURY SYSTEMS PLC (registered in England and Wales
number _______) whose registered office is at ___________________ (the
"Borrower"); and
(2) PLATINUM SOFTWARE CORPORATION whose registered office is at 195
Technology Drive, Irvine, California 92718, USA (the "Debenture Holder")
In this Debenture the following words shall have the following meanings:
"Accounts Receivable Debt" all sums which are or may become owing by the
Borrower to the Debenture Holder under the
Accounts Receivable Note (as that phrase is
defined in Agreement of Purchase and Sale of
Assets of even date herewith between the
Borrower and the Debenture Holder);
"Royalty Debt" all sums which are or may become owing by the
Borrower to the Debenture Holder under the
Royalty Note (as that phrase is defined in the
said Agreement of Purchase and Sale of Assets).
WITNESSES as follows:
1 COVENANT TO PAY
1.1 The Borrower covenants to pay and discharge to the Debenture Holder the
Royalty Debt and the Accounts Receivable Debt in accordance with the
provisions of the Royalty Note and the Accounts Receivable Note as the
case may be (together "the Debt") together with interest to date of
payment as set out in the said Royalty Note and Accounts Receivable Note
and all commission, fees and other charges and all legal and other costs
and expenses properly and reasonably incurred by the Debenture Holder in
relation to the enforcement of the security hereby granted.
2 CHARGE
2.1 The Borrower as owner with full title guarantee and as a continuing
security charges with the payment or discharge of the Debt:
-1-
<PAGE> 34
(a) by way of first fixed charge;
(i) any freehold leasehold and other immovable property now
or in the future belonging to the Borrower together
with all buildings, trade and other fixtures, fixed
plant and machinery of the Borrower from time to time
thereon;
(ii) all plant and machinery now or in the future belonging
to the Borrower other than fixed plant and machinery;
(iii) all book debts and other debts now or in the future due
or owing to the Borrower;
(iv) all stocks shares and other securities now or in the
future belonging to the Borrower together with all
dividends and other rights deriving therefrom;
(v) the goodwill of the Borrower and its uncalled capital
for the time being;
(vi) all patents trade marks service marks designs and other
intellectual property rights choses in action and
claims and all fees, royalties and other rights of
every kind deriving therefrom now or in the future
belonging to the Borrower;
(b) by way of first floating charge the whole of the Borrower's
undertaking and all its property and assets whatsoever and
wheresoever present and future other than the property and
assets from time to time effectively charged to the Debenture
Holder by way of legal mortgage or fixed charge by this
Debenture.
2.2 The Debenture Holder may after failure by the Borrower to pay any sums
due under the Accounts Receivable Note and/or the Royalty Note convert
the floating charge by notice in writing to the Borrower into a fixed
charge as regards all the property and assets which for the time being
are the subject of such floating charge or, as the case may be, such of
the said property and assets as are specified by such notice.
2.3 Continuing Security
This security shall be a continuing security notwithstanding any
settlement of account or other matter whatsoever and is in addition to
and shall not merge with or otherwise prejudice or affect any
contractual or other right or remedy or any guarantee indemnity lien
pledge bill note mortgage charge or other security (whether
-2-
<PAGE> 35
created by the deposit of documents of otherwise) now or hereafter held
by or available to the Debenture Holder and shall not be in any way
prejudiced or affected thereby or by the invalidity thereof or by the
Debenture Holder now or hereafter dealing with exchanging releasing
varying or abstaining from perfecting or enforcing any of the same or
any rights which it may now or hereafter have or giving time for payment
or indulgence or compounding with any other person liable. Without
prejudice to the generality of the foregoing, this security shall
continue in full force and effect until the proper discharge by the
Borrower of all sums which may now or hereafter be owing pursuant to the
Accounts Receivable Note and/or the Royalty Note but thereafter shall
cease.
3. RESTRICTIONS ON DEALING
3.1 The Borrower shall not without the prior written consent of the
Debenture Holder (which consent in the case of sub-clauses 3.1(e) and
(d) only shall not be unreasonably withheld or delayed):
(a) create or permit to subsist any mortgage charge pledge
hypothecation lien (other than a lien arising by operation of
law) or other security interest on any of its assets ranking in
priority or pari passu with the fixed and floating charges
hereby created other than this Debenture (save as set out in
Clause 8.9 of the Agreement of Purchase and Sale of Assets);
(b) sell transfer lease lend or otherwise dispose of the whole or
any part of its undertaking or (save in the normal course of
trading at not less than market value) of its assets or enter
into any agreement or grant any option for any such sale
transfer lease loan or other disposal;
(c) part with possession of any freehold or leasehold property grant
or agree to grant any option or any licence tenancy or other
right of occupation to any person or exercise the powers of
leasing or agreeing to lease or of accepting or agreeing to
accept surrenders conferred by Sections 99 and 100 of the Law of
Property Act 1925 provided that such restrictions shall not be
construed as a limitation on the powers of any receiver
appointed under this Debenture and being an agent of the
Borrower and the Debenture Holder may grant or accept surrenders
of leases without restriction at any time after the Debenture
Holder shall have demanded the payment or discharge of any of
the monies obligations and liabilities hereby secured;
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<PAGE> 36
(d) pull down or remove or redevelop or make any material alteration
to the whole or any part of any buildings or sever unfix or
remove any fixtures or remove any plant or machinery belonging
to or in use by the Borrower except for the purpose of effecting
repairs or replacing the same.
4 COVENANTS BY THE BORROWER
4.1 Until this security is discharged the Borrower shall:
(a) keep all buildings and all plant machinery fixtures and fittings
in good repair and condition and permit any person or persons
nominated by the Debenture Holder access by and on 24 hours
written notice to view the state and condition thereof;
(b) insure and keep insured such of its property as is properly
insurable with such insurer and against such risks and in such
amounts and otherwise in such terms as the Debenture Holder may
require and will maintain such other insurances as are normally
maintained by prudent companies carrying on similar businesses
with the interest of the Debenture Holder noted upon all
policies of such insurance or, if the Debenture Holder shall
require, in the joint names of the Borrower and the Debenture
Holder and will (if required) produce or deposit with the
Debenture Holder all such policies and receipts for all premium
and other payments necessary for effecting and maintaining such
insurances;
(c) apply any insurance proceeds in making good the loss or damage
or at the Debenture Holder's option in or towards the discharge
of the monies obligations and liabilities secured by this
Debenture;
(d) punctually pay all rents taxes duties assessments and other
outgoings properly payable and observe and perform all
restrictive and other covenants under which any of the property
subject to this Debenture is held;
(e) pay into its account or accounts all monies which it may receive
in respect of its book or other debts and all licence fees,
royalties and other monies deriving from its intellectual
property and until such payment will hold all such monies on
trust for the Debenture Holder and shall not without the prior
written consent of the Debenture Holder release factor sell at
discount charge or otherwise deal with such debts
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<PAGE> 37
license fees royalties or other monies otherwise than by getting
in and paying the same into such account;
(f) subject to the rights of any prior mortgagee deposit with the
Debenture Holder all deeds certificates and documents
constituting or evidencing title to the property or any part
thereof charged by this Debenture and all insurance policies;
(g) comply with the provisions of all present or future statutes and
directives and every notice order or direction made under any of
the foregoing;
(h) provide the Debenture Holder with such financial and other
information with respect to the assets, liabilities and affairs
of the Borrower and its subsidiaries and associated companies
(if any) that the Debenture Holder may from time to time
reasonably require in order to determine the net revenues of the
Borrower and the amount of any royalty payments due to the
Debenture Holder under the Royalty Note.
4.2 If the Borrower shall fail to satisfy the Debenture Holder that it has
performed any of its obligations under clause 4.1 then the Debenture
Holder may take such reasonable steps as it considers appropriate to
procure the performance of such obligation and shall not thereby be
deemed to be a mortgagee in possession and the monies reasonably
expended by the Debenture Holder shall be reimbursed by the Borrower on
demand.
5 ENFORCEMENT
5.1 This Debenture shall become enforceable:
(a) if any of the Debt shall not be paid or discharged by the
Borrower in accordance with the terms of the Accounts Receivable
Note or the Royalty Note, as the case may be; or
(b) if the Borrower shall be in material breach of any provision of
this Debenture or of any agreement containing any terms and
conditions of or applicable to the monies obligations and
liabilities secured by this Debenture and such breach (if
capable of remedy) has not been remedied to the satisfaction of
the Debenture Holder before the expiry of 14 days after notice
calling upon the Borrower to do so has been given by the
Debenture Holder; or
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<PAGE> 38
(c) upon the presentation of a petition for the winding-up of the
Borrower which is not discharged within 21 days of the making of
an order for the winding-up of the Borrower or the passing by
the Borrower of a resolution for voluntary winding-up; or
(d) if an encumbrancer shall take possession of or a receiver or
administrative receiver shall be appointed over or any secured
creditor of the Borrower shall seek to enforce his security in
respect of all or any material part of the property or assets
charged by this Debenture; or
(e) if a petition shall be presented for an administration order in
relation to the Borrower; or
(f) if the Borrower shall enter into any composition or arrangement
for the benefit of its creditors under section 1 of the
Insolvency Act 1986; or
5.2 Section 103 of the Law of Property Act 1925 shall not apply and the
statutory power of sale and all other powers under that or any other Act
as varied or extended by this Debenture shall arise on and be
exercisable at any time after the Debenture Holder shall properly have
demanded the payment or discharge by the Borrower of any of the monies,
obligations and liabilities secured by this Debenture.
5.3 Section 93 of the Law of Property Act 1925 dealing with the
consolidation of mortgages shall not apply to this Debenture.
6 RECEIVER
6.1 At any time after this Debenture has become enforceable or if the
Borrower so requests in writing the Debenture Holder may without further
notice to the Borrower appoint by writing under hand or under seal any
one or more persons either singly jointly severally or jointly and
severally to be a receiver, receiver and manager or administrative
receiver (each a "Receiver") of all or any part of the property charged
by this Debenture and either at the time of appointment or any time
thereafter may fix his or their remuneration and except as otherwise
required by statute may remove any such Receiver and appoint another or
others in his or their place.
6.2 Any Receiver shall be the agent of the Borrower which shall be solely
responsible for his acts and defaults and the payment of his
remuneration.
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<PAGE> 39
6.3 Any Receiver shall subject to any liabilities or restriction expressed
in the deed or instrument appointing him have all the powers conferred
by the Law of Property Act 1925 and the Insolvency Act 1986 on
mortgagees in possession (but without liability as such) receivers
administrative receivers and administrators appointed under those Acts
which in the case of joint receivers may be exercised either jointly or
severally. In addition, but without prejudice to the generality of the
foregoing the Receiver shall have power (in the name of the Borrower or
otherwise and in such manner and on such terms and conditions as he
shall think fit) to:
(a) take possession of collect and get in all or any part of the
property in respect of which he is appointed and for that
purpose to take any proceedings;
(b) carry on or concur in carrying on the business of the Borrower;
(c) purchase or acquire any land and purchase, acquire and grant any
interest in or right over land;
(d) sell or concur in selling lot or concur in letting and terminate
or accept surrenders of leases or tenancies of any of the
property charged by this Debenture and to carry any such
transactions into effect;
(e) sell, assign let or otherwise dispose of or concur in selling,
assigning, letting or otherwise disposing of all or any of the
debts and any other property in respect of which he is
appointed;
(f) make any arrangement or compromise between the Borrower and any
other person which he may think expedient;
(g) make and effect all repairs improvement and insurances;
(h) purchase materials tools equipment goods or supplies;
(i) call up any uncalled capital of the Borrower with all the powers
conferred by the Articles of Association of the Borrower in
relation to calls;
(j) employ engage and appoint managers and other employees and
professional advisers;
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<PAGE> 40
(k) do all such other acts and things as may be considered to be
incidental or conducive to any other matters or powers aforesaid
or to the realization of the security constituted by this
Debenture and which he lawfully may or can do.
7 Application of Proceeds
7.1 Any monies received by the Debenture Holder or any Receiver shall
subject to the repayment of any claims having priority to the charges
created by this Debenture be applied in the following order but without
prejudice to the right of the Debenture Holder to recover any shortfall
from the Borrower:
(a) in the payment of all costs charges and expenses of and
incidental to the proper appointment of the Receiver and the
exercise of all or any of his powers and of all outgoings paid
by him;
(b) in the payment of the Receiver's proper and reasonable
remuneration;
(c) in or towards the satisfaction of the monies obligations and
liabilities secured by this Debenture in such order as the
Debenture Holder in its absolute discretion thinks fit;
(d) in payment of the surplus (if any) to the person or persons
entitled to it.
8 Protection of Third Parties
8.1 No person dealing with a Receiver or the Debenture Holder shall be
concerned to enquire whether any power which he or it is purporting to
exercise has become exercisable or whether any money is due under this
Debenture or as to the application of any money paid raised or borrowed
or as to the propriety or regularity of any sale be or other dealing
with such Receiver or the Debenture Holder. All the protection to
purchasers contained in Sections 104 and 107 of the Law of Property Act
1925 shall apply to any person purchasing from or dealing with a
Receiver or the Debenture Holder.
9 Entry into Possession
9.1 If the Debenture Holder or any Receiver shall enter into possession of
the property hereby charged or any part thereof it or he may from time
to time and at any time go out of such possession.
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10 Power of Attorney
10.1 The Borrower irrevocably appoints the Debenture Holder any Receiver and
any person nominated by the Debenture Holder jointly and also severally
to be the attorney of the Borrower with the power of substitution and
in its name and otherwise on its behalf and as its act and deed to sign
or execute all deeds instruments and documents which the Debenture
Holder or any Receiver may require or deem proper for any of the
purposes of or which the Borrower ought to do under this Debenture. The
Borrower agrees to ratify and confirm anything such attorney shall
lawfully and properly do.
11 Currency Indemnity
11.1 For the purpose of or pending the discharge of any of the monies
obligations and liabilities secured by this Debenture the Debenture
Holder may convert any monies received or realised by the Debenture
Holder under this Debenture (including the proceeds of any previous
conversion) from their existing currency into such other currency as the
Debenture Holder may think fit and any such conversion shall be effected
at the Barclays Bank plc's then prevailing spot selling rate of exchange
for such other currency against the existing currency. As a separate
and independent obligation the Borrower agrees to indemnify and hold
harmless the Debenture Holder against any shortfall between any amount
received or recovered by it in respect of any payment due under this
Debenture and converted in accordance with the clause into the currency
in which such amount was payable ("the converted amount") and the amount
in such currency which was due and payable to the Debenture Holder under
this Debenture ("the due amount"). If the converted amount exceeds the
due amount, the Debenture Holder shall repay to the Borrower an amount
equal to the excess.
12 Prior Charges
12.1 If there is any encumbrance over any of the property charged by this
Debenture which ranks in priority to this Debenture and any proceedings
or steps are taken to exercise or enforce any powers or remedies
conferred by such prior encumbrance the Debenture Holder or any Receiver
appointed under this Debenture in respect of such property may (but
without prejudice to any rights the Receiver may have under Section 43
or the Insolvency Act 1936) redeem such prior encumbrance or procure its
transfer to itself and may settle and pass the accounts of any prior
mortgagee charges or encumbrancer. Any account so settled and passed
shall be conclusive and binding on the Borrower and all the
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<PAGE> 42
principal interest costs charges and expenses of and incidental to such
redemption or transfer shall be secured on the property charged by this
Debenture and all the powers conferred by any prior encumbrance upon the
encumbrancer or any receiver thereunder shall be exercisable by the
Debenture Holder or a Receiver included in this Debenture.
13 FURTHER ASSURANCE
13.1 The Borrower shall whenever requested by the Debenture Holder by notice
in writing immediately execute and sign all such deeds and documents and
do all such things as the Debenture Holder may require at the Borrower's
cost over any property or assets properly specified by the Debenture
Holder for the purpose of perfecting or more effectively providing
security to the Debenture Holder for the payment and discharge of the
monies obligations and liabilities secured by this Debenture.
14 SET-OFF
14.1 The Debenture Holder may at any time after this Debenture has become
enforceable and without notice to the Borrower combine or consolidate
all or any of the Borrower's then existing liabilities to the Debenture
Holder and set off or transfer any sum or sums standing to the credit of
any one or more of such accounts in or towards satisfaction of any of
the liabilities of the Borrower to the Debenture Holder on any other
account or in any other respects. The Debenture Holder shall notify the
Borrower that such a transfer has been made.
15 COSTS AND INDEMNITY
15.1 All reasonable and proper costs charges and expenses incurred by the
Debenture Holder in relation to this Debenture or the monies and
liabilities hereby secured shall be reimbursed by the Borrower to the
Debenture Holder on demand on a full indemnity basis.
15.2 The Debenture Holder and every Receiver attorney or other person
appointed by the Debenture Holder under this Debenture and their
respective employees shall be entitled to be indemnified on a full
indemnity basis out of the property charged by this Debenture in respect
of all liabilities and expenses properly incurred by any of them in or
directly or indirectly as a result of the exercise or purported exercise
of any of the powers authorities or discretions vested in them under
this Debenture and against all actions proceedings losses costs claims
and demands in respect of any matter or thing properly done or properly
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<PAGE> 43
omitted in any way relating to the property charged by this Debenture
and the Debenture Holder and any such Receiver may retain and pay all
sums in respect of the same out of the monies received under the powers
conferred by this Debenture.
16 Miscellaneous
16.1 The Debenture Holder may without discharging or in any way affecting the
security created by this Debenture or any remedy of the Debenture Holder
grant time or other indulgence or abstain from exercising or enforcing
any remedies securities guarantees or other rights which it may now or
in the future have from or against the Borrower and may make any
arrangement variation or release with any person or persons without
prejudice either to this Debenture or the liability of the Borrower for
the monies obligations and liabilities secured by this Debenture.
16.2 The Debenture Holder shall have a full and unfettered right to assign
the whole or any part of the benefit of this Debenture to any person or
company who acquires a material part of the assets or undertaking of the
Debenture Holder, or who acquires the majority of the Debenture Holder's
issued share capital, or with whom the Debenture Holder merges. Save as
aforesaid the Debenture Holder may not assign the benefit of this
Debenture without the prior written consent of the Borrower. The
expression "the Debenture Holder" shall include its proper successors
and assigns and the Debenture Holder shall be entitled to disclose any
information to any actual or prospective assignee successor or
participant.
16.3 The provisions of this Debenture shall be severable and if at any time
any one or more such provisions is or becomes invalid illegal or
unenforceable the validity legality and enforceability of the remaining
provisions shall not in any way be impaired.
16.4 The rights and remedies of the Debenture Holder provided by this
Debenture are cumulative and are not exclusive of any rights powers or
remedies provided by law and may be exercised from time to time and as
often as the Debenture Holder may deem expedient.
16.5 Any reference in this Debenture to any statute or any section of any
statute shall be deemed to include reference to any statutory
modification or re-enactment thereof for the time being in force.
17 Notices
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<PAGE> 44
17.1 Any demand or notice under this Debenture shall be in writing signed by
any director or officer of the Debenture Holder and may be served
personally on any director or the secretary of the Borrower or may be
sent by post telex or facsimile or may be delivered to the registered
office of the Borrower or its last known place of business. If such
demand or notice is sent by post it shall be deemed to have been
received on the day following the fifth day on which it was posted and
shall be effective notwithstanding that it was not in fact delivered
or was returned undelivered. If sent by telex or facsimile it shall be
deemed to have been received (whether or not actually received) at the
time of dispatch, PROVIDED THAT, in the case of facsimile transmission
the sender's machine shall have indicated due transmission to the
relevant facsimile number shown below (or such other number or shall be
notified by the relevant party for this purpose):
The Debenture Holder No. (001) (714) 450 4447
The Borrower No.
18 Governing Law and Jurisdiction
18.1 This Debenture shall be governed by and construed in accordance with the
laws of England and the Borrower irrevocably submits to the
non-exclusive jurisdiction of the English Courts.
19 Land Registry
19.1 The Borrower certifies that this Debenture does not contravene its
Memorandum and Articles of Association and has been executed in
accordance therewith and hereby applies to the Chief Land Registrar for
a restriction to be entered on the register of its title to registered
properties charged by this Debenture that: "Except under an Order of the
Registrar no disposition or dealing by the proprietor of the land is to
be registered or noted without the consent of the proprietor for the
time being of Charge No. ______".
IN WITNESS whereof the Borrower has executed and delivered this Debenture as a
Deed and the Debenture Holder has executed this Debenture the day and year
first above written.
Executed as a deed by )
PLATINUM TREASURY SYSTEMS )
PLC by the signatures of ) _______________________________
_____________ (Director) ) Director
and ____________ (Director) )
and duly delivered ) _______________________________
Director
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<PAGE> 45
Executed as a deed by )
PLATINUM SOFTWARE )
CORPORATION the signature )
of _____________ (Director) ) _______________________________
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<PAGE> 46
EXHIBIT B
ACCOUNTS RECEIVABLE PROMISSORY NOTE
$259,545 January 11, 1996
FOR VALUE RECEIVED, PLATINUM TREASURY SYSTEMS, plc, a company
registered in England and Wales (Company No. 3086549), (registered office -32
Peascod Street, Windsor, Berkshire, SL4 1EA United Kingdom), (the "Maker"),
promises to pay to the order of PLATINUM SOFTWARE CORPORATION, a Delaware
corporation ("Platinum"), at 195 Technology Drive, Irvine, California 92718, or
such other place as the holder (the "Holder") of this Promissory Note (this
"Note") may from time to time in writing direct, the principal sum of Two
Hundred Fifty-Nine Thousand Five Hundred Forty-Five United States Dollars
(US$259,545), payable in ten (10) consecutive equal monthly installments of
principal, together with accrued interest at the rate of eight percent (8%) per
annum on the unpaid principal balance from September 30, 1995, until such
principal balance and accrued interest are paid in full. Payments shall
commence on the first day of May 1996 and shall be due on the first day of the
nine (9) consecutive calendar months thereafter. Interest shall begin accruing
as of September 30, 1995.
This Note is the Accounts Receivable Promissory Note referred to in
that certain Agreement of Purchase and Sale of Assets, dated as of September
30, 1995, between the Maker and Platinum (the "Purchase Agreement"). This Note
is secured by a debenture created under that certain Agreement of even date
(the "Debenture"), between the Maker and Platinum and is entitled to all of the
benefits and security of the collateral as set forth in the Debenture.
All amounts due hereunder shall be payable in lawful money of the
United States of America. If any principal or interest payable hereunder is
not paid when due, such overdue amount shall bear interest at a rate per annum
equal to twelve percent (12%) from the due date until paid. Prepayment of
principal hereunder may be made at any time without penalty.
The principal amount of this Note and all accrued but unpaid interest
thereon, if any, shall become immediately due and payable, at the option of the
Holder, upon the occurrence of any of the following (an "Event of Default"):
(a) Any payment due under this Note shall have been in
default for at least fifteen (15) days following the receipt of a notice of
default in payment;
(b) The Maker shall fail or neglect to perform, keep or
observe any covenant or obligation of Maker set forth in the Purchase
Agreement, which breach is not cured within twenty (20) days following receipt
by Maker of written notice thereof; or
<PAGE> 47
(c) The Maker fails or neglects to comply with any
covenant or obligation of Maker set forth in the Debenture, which breach is not
cured within the cure period set forth in the Debenture; or
(d) The Maker defaults in the performance of any other
agreement for borrowed monies or such borrowed monies are not repaid in full on
the due date or repayment of any such borrowed monies is due on demand and is
not paid in full forthwith on such demand being made;
(e) The Maker is unable to pay its debts within the
meaning of section 123 of the UK Insolvency Act 1986 or the Maker otherwise
becomes insolvent or suspends making payments to all or any class of its
creditors or announces an intention to do so; or
(f) Any distress, execution, attachment or other similar
legal process which affects the whole or a material part of the assets of the
Maker; or
(g) An Administrative or other Receiver or similar
officer is appointed over the whole or any part of the assets of the Maker or
the Maker requests any person to appoint such a Receiver or similar officer or
any other steps are taken to enforce any charge or other security over any of
the property of the Maker; or
(h) An order is made or any effective resolution is
passed or a petition is presented or other steps are taken for:
(i) the winding up, dissolution or liquidation of
the Maker other than for the purpose of a
reconstruction or amalgamation, the terms of
which have previously been approved by
Platinum in writing; or
(ii) the making of an Administration Order against
the Maker or;
(i) Control of the Maker passes without the consent of
Platinum to any person, firm or company acting either individually or in
concert, provided that transfers of shares between the shareholders of Maker on
the date hereof will not be considered a change of control.
The Maker hereby waives presentment for payment, protest and notice of
nonpayment and dishonor. If the Holder takes any action to collect this Note,
then the Maker shall be obligated to pay, in addition to all other amounts due
under this Note, all costs of collection and reasonable attorneys' fees and
other legal costs and expenses.
No delay or failure on the part of the Holder in the exercise of any
right or remedy hereunder shall operate as a waiver thereof, nor as an
acquiescence in any default, nor shall any single or partial exercise by the
Holder of any right or remedy preclude any other right or remedy. The Holder,
at its option, may enforce its rights against any collateral securing this Note
without enforcing its rights against the Maker or any other indebtedness due or
to become due to the Maker. The Maker agrees that, without releasing or
impairing the Maker's liability hereunder, the Holder may at any time release,
surrender, substitute or exchange any collateral securing this Note and may
release any party secondarily liable for the indebtedness evidenced by this
Note.
2
<PAGE> 48
This Note shall be governed by and construed in accordance with the
internal laws of the State of California. Platinum and Maker each irrevocably
agree that all actions arising directly or indirectly as a result or in
consequence of this Note shall be instituted and litigation only in courts
having situs in the State of California, and Platinum and Maker hereby consent
to the exclusive jurisdiction and venue of any state or federal court located
and having its situs in the State of California provided always, that Platinum
may at its option enforce the Debenture in the United Kingdom.
IN WITNESS WHEREOF, the Maker has caused this Note to be executed and
delivered as its deed on the day and year first above written.
Executed and delivered as a deed by )
Platinum Treasury Systems, plc by the signatures )
)
of [____________________________], Director ) _________________________
) Director
and )
)
[______________________________], Director ) _________________________
) Director
in the presence of: ________________________ )
3
<PAGE> 49
EXHIBIT C-1
TERMINATION AGREEMENT
THIS TERMINATION AGREEMENT (this "Agreement") is made effective as of
the 30th day of September, 1995, by and between PLATINUM SOFTWARE CORPORATION,
a Delaware corporation (the "Company") and RICHARD FRANKLIN ("Franklin").
WHEREAS, the Company and Franklin are parties to that certain
Employment Agreement (the "Employment Agreement") and that certain Non-
Competition Agreement (the "Non-Competition Agreement"), each dated as of July
14, 1993;
WHEREAS, concurrently with the execution and delivery of this
Agreement, pursuant to that certain Agreement of Purchase and Sale of Assets of
even date herewith (the "Purchase Agreement") between the Company and Platinum
Treasury Systems, plc, ("Buyer"), of which Franklin is a shareholder, the
Company is selling to Buyer and Buyer is acquiring from the Company
substantially all of the assets related to the Company's Treasury Product, as
described more particularly therein;
WHEREAS, pursuant to the Purchase Agreement, the Company has agreed
that it shall terminate the employment of Franklin in order that he may be
employed by Buyer following the consummation of the sale of assets to Buyer,
and Franklin desires that such employment be terminated;
NOW, THEREFORE, in consideration of the terms, covenants and
conditions hereinafter set forth, the parties hereto hereby agree as follows:
1. Termination. Subject to the terms and conditions hereinafter
set forth, the Company and Franklin mutually agree that the Employment
Agreement and the Non-Competition Agreement and any continuing obligations
thereunder, except as provided below, are terminated effective as of the date
hereof. The Company and Franklin acknowledge that, with respect to the
Employment Agreement, such termination is in advance of the term set forth
therein, and further agree that no liability for such early termination under
the Employment Agreement shall be imposed upon the Company or Franklin as a
result thereof. Without limiting the generality of the foregoing, the Company
acknowledges that it is intended by the Company and Buyer pursuant to the
Purchase Agreement that Franklin be employed by Buyer concurrently with the
effectiveness of this Agreement, and the Company hereby waives any right which
it may have pursuant to the Employment Agreement or the Non-Competition
Agreement to prevent Franklin from being employed by Buyer as contemplated by
the terms of the Purchase Agreement.
2. Continuing Obligations Not Affected. Notwithstanding the
above, the following continuing obligations of Franklin as set forth in the
Employment Agreement and the Non-Competition Agreement, shall remain in full
force and effect for the period set forth in the Employment Agreement or the
Non-Competition Agreement, as applicable: (i) nonsolicitation of Company
personnel as set forth in Section 6 of the
<PAGE> 50
Employment Agreement (excluding the Retained Employees as defined in the
Purchase Agreement); and (ii) the maintenance of the confidentiality of
proprietary information of the Company as set forth in Section 3 of the
Non-Competition Agreement and 5 of the Employment Agreement except that
Proprietary Information shall not include Proprietary Information (as such term
is defined in the Non-Competition Agreement) relating to the Treasury Product
or the Business (as such term is defined in the Purchase Agreement). The
obligations of Franklin pursuant to the Employee Proprietary Information
Agreement, dated as of July 14, 1993, shall not in any way be affected by this
Agreement except that the confidentiality restrictions shall not apply
confidential information relating to the Treasury Product or the Business (as
such term is defined in the Purchase Agreement).
3. Acknowledgment of Payment by the Company. Franklin
acknowledges and agrees that the Company has paid to Franklin, and Franklin is
in receipt of, all amounts payable to Franklin in full satisfaction of the
Company's obligations under both the Employment Agreement and the
Non-Competition Agreement.
4. Stock Option. Effective upon the Physical Closing of the
purchase described in the Purchase Agreement, the Company hereby accelerates
the vesting of Franklin under that certain Nonqualified Stock Option Agreement
dated June 30, 1993 so that the option may be immediately exercised by Franklin
for all 9,375 shares.
5. Miscellaneous. This Agreement shall be binding upon and inure
to the benefit of the successors and assigns of the parties hereto. This
Agreement shall be governed by and construed in accordance with the internal
laws of the State of California applicable to contracts made and to be
performed in California, without regard to choice of law principles. The
invalidity or unenforceability of any particular provision of this Agreement
shall not affect the other provisions hereof, and this Agreement shall be
construed in all respects as if such invalid or unenforceable provisions were
omitted. This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original and all of which shall constitute one
instrument. Any controversy or claim arising out of or relating to this
Agreement or the making, performance or interpretation thereof shall be settled
by arbitration in accordance with the rules of the American Arbitration
Association then existing, and judgment on the arbitration award may be entered
in any court having jurisdiction over the subject matter of the controversy.
2
<PAGE> 51
IN WITNESS WHEREOF, the parties hereto have executed this Termination
Agreement as of the date first above written.
PLATINUM SOFTWARE CORPORATION
By:
--------------------------------
Michael J. Simmons
Chief Financial Officer
-----------------------------------
Richard Franklin
3
<PAGE> 52
TERMINATION AGREEMENT
THIS TERMINATION AGREEMENT (this "Agreement") is made effective as of
the 30th day of September, 1995, by and between PLATINUM SOFTWARE CORPORATION,
a Delaware corporation (the "Company") and JOHN MORGAN ("Morgan").
WHEREAS, the Company and Morgan are parties to that certain Employment
Agreement (the "Employment Agreement") and that certain Non-Competition
Agreement (the "Non-Competition Agreement"), each dated as of July 14, 1993;
WHEREAS, concurrently with the execution and delivery of this
Agreement, pursuant to that certain Agreement of Purchase and Sale of Assets of
even date herewith (the "Purchase Agreement") between the Company and Platinum
Treasury Systems, plc, ("Buyer"), of which Morgan is a shareholder, the Company
is selling to Buyer and Buyer is acquiring from the Company substantially all
of the assets related to the Company's Treasury Product, as described more
particularly therein;
WHEREAS, pursuant to the Purchase Agreement, the Company has agreed
that it shall terminate the employment of Morgan in order that he may be
employed by Buyer following the consummation of the sale of assets to Buyer,
and Morgan desires that such employment be terminated;
NOW, THEREFORE, in consideration of the terms, covenants and
conditions hereinafter set forth, the parties hereto hereby agree as follows:
1. Termination. Subject to the terms and conditions hereinafter
set forth, the Company and Morgan mutually agree that the Employment Agreement
and the Non-Competition Agreement and any continuing obligations thereunder,
except as provided below, are terminated effective as of the date hereof. The
Company and Morgan acknowledge that, with respect to the Employment Agreement,
such termination is in advance of the term set forth therein, and further agree
that no liability for such early termination under the Employment Agreement
shall be imposed upon the Company or Morgan as a result thereof. Without
limiting the generality of the foregoing, the Company acknowledges that it is
intended by the Company and Buyer pursuant to the Purchase Agreement that
Morgan be employed by Buyer concurrently with the effectiveness of this
Agreement, and the Company hereby waives any right which it may have pursuant
to the Employment Agreement or the Non-Competition Agreement to prevent Morgan
from being employed by Buyer as contemplated by the terms of the Purchase
Agreement.
2. Continuing Obligations Not Affected. Notwithstanding the
above, the following continuing obligations of Morgan as set forth in the
Employment Agreement and the Non-Competition Agreement, shall remain in full
force and effect for the period
<PAGE> 53
set forth in the Employment Agreement or the Non-Competition Agreement, as
applicable: (i) nonsolicitation of Company personnel as set forth in Section 6
of the Employment Agreement (excluding the Retained Employees as defined in the
Purchase Agreement); and (ii) the maintenance of the confidentiality of
proprietary information of the Company as set forth in Section 3 of the
Non-Competition Agreement and 5 of the Employment Agreement except that
Proprietary Information shall not include Proprietary Information (as such term
is defined in the Non-Competition Agreement) relating to the Treasury Product
or the Business (as such term is defined in the Purchase Agreement). The
obligations of Morgan pursuant to the Employee Proprietary Information
Agreement, dated as of July 14, 1993, shall not in any way be affected by this
Agreement except that the confidentiality restrictions shall not apply
confidential information relating to the Treasury Product or the Business (as
such term is defined in the Purchase Agreement).
3. Acknowledgment of Payment by the Company. Morgan acknowledges
and agrees that the Company has paid to Morgan, and Morgan is in receipt of,
all amounts payable to Morgan in full satisfaction of the Company's obligations
under both the Employment Agreement and the Non- Competition Agreement.
4. Stock Option. Effective upon the Physical Closing of the
purchase described in the Purchase Agreement, the Company hereby accelerates
the vesting of Morgan under that certain Nonqualified Stock Option Agreement
dated June 30, 1993 so that the option may be immediately exercised by Morgan
for all 9,375 shares.
5. Miscellaneous. This Agreement shall be binding upon and inure
to the benefit of the successors and assigns of the parties hereto. This
Agreement shall be governed by and construed in accordance with the internal
laws of the State of California applicable to contracts made and to be
performed in California, without regard to choice of law principles. The
invalidity or unenforceability of any particular provision of this Agreement
shall not affect the other provisions hereof, and this Agreement shall be
construed in all respects as if such invalid or unenforceable provisions were
omitted. This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original and all of which shall constitute one
instrument. Any controversy or claim arising out of or relating to this
Agreement or the making, performance or interpretation thereof shall be settled
by arbitration in accordance with the rules of the American Arbitration
Association then existing, and judgment on the arbitration award may be entered
in any court having jurisdiction over the subject matter of the controversy.
2
<PAGE> 54
IN WITNESS WHEREOF, the parties hereto have executed this Termination
Agreement as of the date first above written.
PLATINUM SOFTWARE CORPORATION
By:
--------------------------------
Michael J. Simmons
Chief Financial Officer
-----------------------------------
John Morgan
3
<PAGE> 55
EXHIBIT D
FORM OF OPINION OF BUYER'S COUNSEL
The Buyer is a company duly incorporated, validly existing and in good
standing under the laws of England and Wales. The Buyer has the corporate
power and authority to own its properties and assets, to carry on its business
as presently conducted and to enter into the Purchase Agreement, the Royalty
Note, the Accounts Receivable Note, the Trademark License, the Assignment and
Assumption Agreement, and the Debenture (the "Transaction Documents"), and to
perform its obligations under the Transaction Documents.
Each of the Transaction Documents has been duly authorized by all
necessary corporate action on the part of the Buyer and has been duly executed
and delivered by the Buyer. Each of the Transaction Documents is a legal,
valid and binding obligation of the Buyer enforceable against it in accordance
with its respective terms, except as the enforceability thereof may be subject
to or limited by (a) bankruptcy, insolvency, reorganization, arrangement,
moratorium or other similar laws relating to or affecting rights of creditors,
and (b) general equitable principles, regardless of whether the issue of
enforceability is considered in a proceeding in equity or law.
The execution and delivery of the Transaction Documents and the
performance by the Buyer of their respective terms (a) will not breach or
result in a violation of the Buyer's Certificate of Incorporation or Memorandum
and Articles of Association, or any judgment, order or decree of any court or
arbitrator, known to us, to which the Buyer is a party or is subject, and (b)
will not constitute a material breach of the terms, conditions or provisions
of, or constitute a default under, any material contract, undertaking,
indenture or other agreement or instrument known to us to which the Buyer is a
party or by which it is bound.
No consent, approval or authorization of, or designation, declaration
or filing with, any governmental authority is required in connection with the
valid execution, delivery and performance by the Buyer of the Transaction
Documents, other than such consents, approvals, authorizations, designations,
declarations or filings as have been made or obtained on or before the date
hereof or which are not required to be made or obtained until after the date
hereof.
Except as disclosed in the Purchase Agreement or the Exhibits and
Schedules delivered by the Buyer in connection therewith, there is, to our
current actual knowledge, no action, suit or proceeding pending against the
Buyer or its properties in any court or before any governmental authority or
agency, or arbitration board or tribunal, (a) which seeks to restrain, enjoin,
prevent the consummation of or otherwise challenge the Agreement or any of the
transactions contemplated thereby, or (b) which, if adversely determined, could
have a material adverse effect on the Buyer or its business or properties.
6. The choice of the law of the State of California to govern
each of the transaction documents other than the Debenture is a valid choice of
law.
<PAGE> 56
7. No winding up petitions have been presented against the Buyer
and the Buyer is not subject to any winding up or administration order nor has
any liquidator or receiver or administrative receiver been appointed in respect
of the Buyer.
<PAGE> 57
EXHIBIT E
ASSIGNMENT AND ASSUMPTION AGREEMENT
This ASSIGNMENT AND ASSUMPTION AGREEMENT is entered into this ___ day
of January, 1996, by and between PLATINUM TREASURY SYSTEMS, plc, a company
registered in England and Wales (Company No. ________), (registered office
_______________), (the "Assignee"), and PLATINUM SOFTWARE CORPORATION, a
Delaware corporation (the "Assignor").
R E C I T A L S
Assignor and Assignee are parties to an Agreement of Purchase and Sale
of Assets made as of September 30, 1995 (the "Agreement"), in which Assignor
has agreed to sell and Assignee has agreed to purchase certain assets,
operations and business of the Assignor as more particularly described in the
Agreement. The Agreement provides for, among other things, the assumption by
Assignee of specific liabilities, obligations, contracts and agreements of
Assignor.
NOW, THEREFORE, for and in consideration of the above recitals, the
parties entering into the transaction contemplated by the Agreement, and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. The above recitals are incorporated in and form an integral
part of this Assignment and Assumption Agreement.
2. The Assignor hereby assigns to the Assignee all of its right,
title, interest, obligations and liabilities under the liabilities,
obligations, contracts and agreements listed on Schedule 3.2 attached to the
Agreement. All rights and benefits under such contracts and agreements are
being transferred pursuant to a bill of sale of even date herewith.
3. The Assignee accepts such assignment and assumes all of such
right, title, interest, obligations and liabilities, and agrees to indemnify,
defend and hold harmless Assignor as set forth in Section 13 of the Agreement
with respect to such assumed liabilities.
IN WITNESS WHEREOF, the parties have executed this Assignment and
Assumption Agreement as of the date first above written.
ASSIGNEE: ASSIGNOR:
PLATINUM TREASURY SYSTEMS, plc PLATINUM SOFTWARE CORPORATION,
a Delaware corporation
By: By:
------------------------------- ---------------------------------
Michael J. Simmons
Chief Financial Officer
Its:
------------------------------
<PAGE> 58
ASSIGNMENT AND ASSUMPTION AGREEMENT
This ASSIGNMENT AND ASSUMPTION AGREEMENT is entered into this ___ day
of January, 1996, by and between PLATINUM TREASURY SYSTEMS, plc, a company
registered in England and Wales (Company No. ________), (registered office
_______________), (the "Assignee"), and PLATINUM SOFTWARE CANADA LIMITED, an
Ontario corporation (the "Assignor").
R E C I T A L S
Platinum Software Corporation ("Platinum") and Assignee are parties to
an Agreement of Purchase and Sale of Assets made as of September 30, 1995 (the
"Agreement"), in which Platinum has agreed to sell and Assignee has agreed to
purchase certain assets, operations and business of Platinum and certain of its
subsidiaries as more particularly described in the Agreement. The Agreement
provides for, among other things, the assumption by Assignee of specific
liabilities, obligations, contracts and agreements of Assignor.
NOW, THEREFORE, for and in consideration of the above recitals, the
parties entering into the transaction contemplated by the Agreement, and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. The above recitals are incorporated in and form an integral
part of this Assignment and Assumption Agreement.
2. The Assignor hereby assigns to the Assignee all of its right,
title, interest, obligations and liabilities under the liabilities,
obligations, contracts and agreements listed on Schedule 3.2 attached to the
Agreement. All rights and benefits under such contracts and agreements are
being transferred pursuant to a bill of sale of even date herewith.
3. The Assignee accepts such assignment and assumes all of such
right, title, interest, obligations and liabilities, and agrees to indemnify,
defend and hold harmless Assignor as set forth in Section 13 of the Agreement
with respect to such assumed liabilities.
IN WITNESS WHEREOF, the parties have executed this Assignment and
Assumption Agreement as of the date first above written.
ASSIGNEE: ASSIGNOR:
PLATINUM TREASURY SYSTEMS, plc PLATINUM SOFTWARE CANADA LIMITED,
an Ontario corporation
By: By:
------------------------------- ---------------------------------
Its: Its:
------------------------------ --------------------------------
<PAGE> 59
ASSIGNMENT AND ASSUMPTION AGREEMENT
This ASSIGNMENT AND ASSUMPTION AGREEMENT is entered into this ___ day
of January, 1996, by and between PLATINUM TREASURY SYSTEMS, plc, a company
registered in England and Wales (Company No. ________), (registered office
_______________), (the "Assignee"), and PLATINUM SOFTWARE (IRELAND) LTD., (the
"Assignor").
R E C I T A L S
Platinum Software Corporation ("Platinum") and Assignee are parties to
an Agreement of Purchase and Sale of Assets made as of September 30, 1995 (the
"Agreement"), in which Platinum, and certain of its subsidiaries have agreed to
sell and Assignee has agreed to purchase certain assets, operations and
business of the Assignor as more particularly described in the Agreement. The
Agreement provides for, among other things, the assumption by Assignee of
specific liabilities, obligations, contracts and agreements of Assignor.
NOW, THEREFORE, for and in consideration of the above recitals, the
parties entering into the transaction contemplated by the Agreement, and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. The above recitals are incorporated in and form an integral
part of this Assignment and Assumption Agreement.
2. The Assignor hereby assigns to the Assignee all of its right,
title, interest, obligations and liabilities under the liabilities,
obligations, contracts and agreements listed on Schedule 3.2 attached to the
Agreement. All rights and benefits under such contracts and agreements are
being transferred pursuant to a bill of sale of even date herewith.
3. The Assignee accepts such assignment and assumes all of such
right, title, interest, obligations and liabilities, and agrees to indemnify,
defend and hold harmless Assignor as set forth in Section 13 of the Agreement
with respect to such assumed liabilities.
IN WITNESS WHEREOF, the parties have executed this Assignment and
Assumption Agreement as of the date first above written.
ASSIGNEE: ASSIGNOR:
PLATINUM TREASURY SYSTEMS, plc PLATINUM SOFTWARE (IRELAND) LTD.,
By: By:
------------------------------- ---------------------------------
Its: Its:
------------------------------ --------------------------------
<PAGE> 60
ASSIGNMENT AND ASSUMPTION AGREEMENT
This ASSIGNMENT AND ASSUMPTION AGREEMENT is entered into this ___ day
of January, 1996, by and between PLATINUM TREASURY SYSTEMS, plc, a company
registered in England and Wales (Company No. ________), (registered office
_______________), (the "Assignee"), and PLATINUM SOFTWARE (AUST) PTY, LTD.,
(the "Assignor").
R E C I T A L S
Platinum Software Corporation ("Platinum") and Assignee are parties to
an Agreement of Purchase and Sale of Assets made as of September 30, 1995 (the
"Agreement"), in which Platinum, and certain of its subsidiaries have agreed to
sell and Assignee has agreed to purchase certain assets, operations and
business of the Assignor as more particularly described in the Agreement. The
Agreement provides for, among other things, the assumption by Assignee of
specific liabilities, obligations, contracts and agreements of Assignor.
NOW, THEREFORE, for and in consideration of the above recitals, the
parties entering into the transaction contemplated by the Agreement, and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. The above recitals are incorporated in and form an integral
part of this Assignment and Assumption Agreement.
2. The Assignor hereby assigns to the Assignee all of its right,
title, interest, obligations and liabilities under the liabilities,
obligations, contracts and agreements listed on Schedule 3.2 attached to the
Agreement. All rights and benefits under such contracts and agreements are
being transferred pursuant to a bill of sale of even date herewith.
3. The Assignee accepts such assignment and assumes all of such
right, title, interest, obligations and liabilities, and agrees to indemnify,
defend and hold harmless Assignor as set forth in Section 13 of the Agreement
with respect to such assumed liabilities.
IN WITNESS WHEREOF, the parties have executed this Assignment and
Assumption Agreement as of the date first above written.
ASSIGNEE: ASSIGNOR:
PLATINUM TREASURY SYSTEMS, plc PLATINUM SOFTWARE (AUST) PTY, LTD.,
By: By:
------------------------------- ---------------------------------
Its: Its:
------------------------------ --------------------------------
<PAGE> 61
EXHIBIT F
TRADEMARK LICENSE AGREEMENT
THIS LICENSE AGREEMENT (the "Agreement") is made as of January ____,
1996, by and between PLATINUM SOFTWARE CORPORATION, a Delaware corporation
("Platinum"), and PLATINUM TREASURY SYSTEMS, plc, a company formed under the
laws of England and Wales ("Treasury").
R E C I T A L S
A. Platinum is in the business of developing, producing,
distributing and licensing the use of certain computer software programs and
related documentation for financial, management information and distribution
software applications.
B. Platinum and Treasury have entered into that certain Agreement
of Purchase and Sale of Assets (the "Purchase Agreement") dated as of September
30, 1995 pursuant to which Treasury has agreed to purchase, and Platinum has
agreed to sell, certain assets of Platinum related to its Treasury software
product line, DOS and Windows versions (collectively the "Product").
C. Platinum and Treasury desire to enter into this Agreement
whereby Platinum shall grant a non-exclusive license to use the Platinum(R)
trademark in connection with the licensing of the Product subject to the terms
and conditions contained below. The Platinum(R) mark is registered in the
United States, England and certain other countries, but not registered in all
countries.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants, terms and conditions hereinafter contained the parties hereto agree
as follows:
1. TRADEMARK LICENSE.
1.1 Platinum(R). Platinum hereby grants to Treasury and
Treasury hereby acknowledges the grant of a fully paid revocable non-exclusive
license to use the Platinum(R) trademark ("Trademark") solely to identify
the Product and in connection with the advertising, promotion, distribution and
sublicensing of the Product and as part of its corporate name. The Trademark
may not be sublicensed by Treasury to any third party. The parties acknowledge
that Treasury's distributors may distribute the Product in packaging produced
by or for Treasury which contains the Trademark and may use marketing materials
produced by or for Treasury which contains the Trademark. Platinum shall
retain exclusive title and ownership of the Trademark. Except for the rights
granted herein, Treasury shall not have any right, title or interest, express
or implied, in the
<PAGE> 62
Trademark. The Trademark shall be used only in accordance with generally
accepted practices, and the parties shall consult regularly and execute such
agreements or documents, or such amendments to this Agreement as are reasonably
necessary to ensure proper maintenance and use of the Trademark. All use of
the Trademark by Treasury and goodwill associated with the Trademark shall
inure to the sole benefit of Platinum in any and all jurisdictions.
1.2 Display of Trademarks. Platinum shall have the right of
approval of any usage of the Trademark in connection with any advertising,
product packaging and other promotional materials utilizing the Trademark
prepared by Treasury or its agents (the "Advertising Materials") prior to their
final production and use. Upon receipt of the Advertising Materials, Platinum
shall have thirty (30) days, or other such period as the parties may from time
to time agree, to review the Advertising Materials and to issue its approval or
disapproval. Any of the Advertising Materials not expressly approved on or
before said thirtieth (30th) day shall be deemed approved as of the
thirty-first (31st) day after receipt. In the event of disapproval, Platinum
will provide suggestions, objections or corrections concerning Advertising
Materials within the time period specified above.
1.3 Modification of Advertising Materials. Platinum may direct
Treasury (by notice hereunder) to modify subsequently produced copies of
Advertising Materials as appropriate to reflect changes in Platinum's own use
of the Trademark and changes in the registration status of the Trademark.
However, Treasury may exhaust its supplies on hand or those ordered which
display a Trademark upon Platinum notifying Treasury of a change in the
Trademark.
1.4 Use of Other Marks; Conflicting Use. Treasury may use its own
trademarks in conjunction with the Trademark provided that appropriate
footnotes or other notations are displayed to indicate Platinum's ownership of
the Trademark. Treasury agrees to notify Platinum in writing of any
conflicting uses of and applications for registration of the Trademark or of
any acts of infringement or of unfair competition involving the Trademark
promptly after such matters are brought to its attention or it has knowledge
thereof. Treasury shall not use or adapt, during the term of this Agreement
nor at any time thereafter, except as expressly permitted by this Agreement, in
its business, in its business name, in its trading style or in any of its
services or on any of its products any trademark, service mark, name, style or
dress which is so similar to, or so nearly resembles the Trademark or any other
trademark, service mark, trade name, trade dress or label of Platinum as to be
likely to cause or as to be calculated to cause deception or confusion, or
which is graphically or phonetically similar to or is derived from or based
upon any of Platinum's trademarks.
1.5 Registered User. In any jurisdiction where Treasury must be
recorded as a registered user of the Trademark in order for use by Treasury to
inure to the benefit of or be beneficial to Platinum, Treasury shall cooperate
with Platinum to execute such a registered user agreement in a form reasonably
requested by Platinum and to have it so recorded for the term of this Agreement
only.
(a) Treasury hereby irrevocably appoints Platinum its
attorney in fact (such appointment to be coupled with an interest) to act for
it and represent it in initiating any registered
2
<PAGE> 63
user recordation or canceling any registered user recordation in the event of
termination of this Agreement.
(b) Apart from such registered-user recordation, Treasury
shall not otherwise apply anywhere or at any time for any registration as owner
of the Trademark or any mark confusingly similar to the Trademark.
1.6 Jeopardy to the Trademark. If in the reasonable business
judgment of Platinum any act or failure to act by Treasury constitutes a danger
to the value or validity or ownership of the Trademark, then Platinum may, in
lieu of or in addition to any other remedy available to it, give notice to
Treasury describing the material danger and may suspend in whole or in part
Treasury's right to use the Trademark in the specific manner viewed as
materially dangerous, effective on Treasury's receipt of the notice. The
suspension shall continue until Platinum, reasonably determines that the danger
no longer exists or Treasury has eliminated the danger.
1.7 General. To the fullest extent permitted by the law of the
applicable jurisdiction, at no time during or after the term of this Agreement
shall Treasury challenge or assist others in challenging Platinum's rights in
the Trademark, contest the validity of any registration thereon or use or aid
in the use of the Trademark other than as licensed herein.
2. TERM.
This Agreement shall be effective as of the date hereof and shall
continue in full force and effect for a period of two (2) years unless sooner
terminated pursuant to the provisions of this Agreement. After the initial
term of two (2) years, this Agreement shall be extended automatically from year
to year unless either party has provided the other party with written notice at
least ninety (90) days prior to any expiration date that it intends to
terminate such agreement.
3. TERMINATION.
3.1 Treasury Default. Platinum may, at its option, terminate this
Agreement: (1) in the event that Treasury materially defaults on its
obligations hereunder and fails to cure its default within thirty (30) days
after having been given notice of such default; and (2) effective immediately
and without any requirement of notice, in the event that (a) Treasury is unable
to pay its debts within the meaning of section 123 of the UK Insolvency Act
1986 or Treasury otherwise becomes insolvent or suspends making payments to all
or any class of its creditors or announces an intention to do so; or (b) any
distress, execution, attachment or other legal process affects the whole or a
material part of the assets of Treasury; or (c) an Administrative or other
Receiver or similar officer is appointed over the whole or any part of the
assets of Treasury or Treasury requests any person to appoint such a Receiver
or similar officer or any other steps are taken to enforce any charge or other
security over any of the property of Treasury; or (d) an order is made or any
effective resolution is passed or a petition is presented or other steps are
taken for (i) the winding up, dissolution or liquidation of Treasury other than
for the purpose of a reconstruction or amalgamation, the terms of which have
previously been approved by Platinum in writing; or (ii) the making of an
Administration Order against Treasury.
3
<PAGE> 64
3.2 Effect of Termination. Upon termination, Treasury shall
immediately cease use of the Trademark in all documents, advertising,
collateral materials and other printed materials, and shall change its
corporate name to exclude the Trademark. Any termination of this Agreement
shall be without prejudice to any other rights or remedies available under this
Agreement or at law.
4. ARBITRATION.
Except for the right of either party to apply to a court of competent
jurisdiction for a temporary restraining order, a preliminary injunction or
other equitable relief to preserve the status quo or prevent irreparable harm,
any controversy or claim arising out of or relating to this Agreement or to its
breach shall be settled by arbitration by a single arbitrator in accordance
with Rules of the American Arbitration Association, pursuant to an arbitration
held in Orange County, California, and judgment upon the award rendered by the
arbitrator may be entered in any court of competent jurisdiction. The
prevailing party shall be entitled to receive from the other party its
reasonable attorneys' fees and costs incurred in connection with any action,
proceeding or arbitration hereunder.
5. MISCELLANEOUS; JURISDICTION AND VENUE.
5.1 Choice of Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California in the United
States of America.
5.2 Notices. Any notice or other communication required or
permitted in this Agreement shall be in writing and shall be deemed to have
been duly given on the day of service if served personally or by facsimile
transmission with confirmation, or seven (7) business days after mailing if
mailed by First Class mail, registered or certified, postage prepaid, and
addressed to the respective parties at the addresses set forth below, or at
such other addresses as may be specified by either party pursuant to the terms
and provisions of this paragraph. If notice is sent by overnight courier, such
as Federal Express or DHL, it shall be deemed to have been duly given two (2)
business days after being sent by such overnight courier.
If to Platinum:
Platinum Software Corporation
195 Technology Drive
Irvine, California 92718
(714) 453-4000
Attention: Michael J. Simmons
Chief Financial Officer
4
<PAGE> 65
If to Treasury:
Platinum Treasury Systems, plc
32 Peascod Street
Windsor, Berkshire
SL4 1EA United Kingdom
Attention: Managing Director
5.3 Assignment. Neither party may assign, without the prior
written consent of the other, its rights, duties or obligations under this
Agreement to any person or entity, in whole or in part; provided, however, that
this Agreement may be assigned by Platinum without the consent of Treasury (i)
to a purchaser of all or substantially all of the assets or outstanding capital
stock of Platinum, or its parent corporation or other corporation controlled by
its parent corporation, whether by merger, consolidation to otherwise, or (ii)
to a subsidiary all of whose stock is owned by Platinum provided any transferee
agrees to be bound by the terms of this Agreement. Subject to the foregoing
limitations, this Agreement shall inure to the benefit of and be binding upon
the parties hereto, their successors, and assigns.
5.4 Force Majeure. Neither party shall be responsible for failure
to perform in a timely manner under this Agreement when its failure results
from any of the following causes: Acts of God or public enemies, civil war,
insurrection or riot, fire, flood, explosion, earthquake or serious accident,
strike, labor trouble or work interruption or any cause beyond its reasonable
control.
5.5 Severability. If any provision of this Agreement is invalid
under any applicable statute or rule of law, it is to that extent to be deemed
omitted. The remainder of the Agreement shall be valid and enforceable to the
maximum extent possible.
5.6 Entire Agreement. This Agreement (together with all
attachments and exhibits hereto) constitutes the entire agreement between the
parties and supersedes any and all prior agreements between them, whether
written or oral, with respect to the subject matter hereof, and may not be
amended or modified except in a writing signed by the parties hereto. No
waiver by either party, whether express or implied, of any provision of this
Agreement, or of any breach thereof, shall constitute a continuing waiver of
such provision or a breach or waiver of any other provision of this Agreement.
5.7 Independent Contractor. Each party hereto shall be and remain
in independent contractor and nothing herein shall be deemed to constitute the
parties as partners. Further, neither party shall have any authority to act,
or attempt to act, or represent itself, directly or by implication, as an agent
of the other or in any manner assume or create, or attempt to assume or create,
any obligation on behalf of or in the name of the other, nor shall either be
deemed the agent or employee of the other.
5.8 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original and each of which
together shall constitute a single instrument.
5
<PAGE> 66
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date shown below.
"PLATINUM" "TREASURY"
PLATINUM SOFTWARE CORPORATION PLATINUM TREASURY SYSTEMS, plc
By: By:
------------------------------- ---------------------------------
Title: Title:
---------------------------- ------------------------------
6
<PAGE> 67
EXHIBIT G
BILL OF SALE, GENERAL CONVEYANCE AND ASSIGNMENT
This Bill of Sale, General Conveyance and Assignment, dated as of
January _____, 1996, between PLATINUM SOFTWARE CORPORATION, a Delaware
corporation (the "Seller"),and PLATINUM TREASURY SYSTEMS, plc, a company
registered in England and Wales (Company No. ________), (registered office
_______________), (the "Buyer"), is executed pursuant to that certain Agreement
of Purchase and Sale of Assets dated as of September 30, 1995 (the
"Agreement"), between the Seller and the Buyer. Capitalized terms used herein
and not otherwise defined shall have the meanings assigned to them in the
Agreement.
W I T N E S S E T H
That for consideration set forth in the Agreement to be delivered to
Seller, the receipt and sufficiency of which is hereby acknowledged by Seller,
Seller hereby sells, conveys, assigns, transfers, sets over and delivers to and
vests in Buyer, its successors and assigns forever, the Purchased Assets as
described in the Agreement, free and clear of all liens, liabilities,
obligations, claims, security interests or rights of third parties, except as
otherwise specifically provided for in the Agreement.
Seller shall from time to time after the Physical Closing, at the
Buyer's request and without further consideration, execute and deliver such
other instruments of transfer, conveyance and assignment, and take such other
action as the Buyer may require more effectively to transfer, convey and assign
to and vest in Buyer, and to put Buyer into possession of any property
untransferred, conveyed, assigned and delivered hereunder.
This Bill of Sale, General Conveyance and Assignment is
executed by and shall be binding upon Seller and its successors and assigns,
and for the purposes and use as set forth and referred to above, effective as
of the date and year first above written.
PLATINUM SOFTWARE CORPORATION,
a Delaware corporation
By:
--------------------------------
Michael J. Simmons
Chief Financial Officer
<PAGE> 68
BILL OF SALE, GENERAL CONVEYANCE AND ASSIGNMENT
This Bill of Sale, General Conveyance and Assignment, dated as of
January _____, 1996, between PLATINUM SOFTWARE CANADA, LTD., an Ontario
corporation (the "Assignor"), and PLATINUM TREASURY SYSTEMS, plc, a company
registered in England and Wales (Company No. ________), (registered office
_______________), (the "Buyer"), is executed pursuant to that certain Agreement
of Purchase and Sale of Assets dated as of September 30, 1995 (the
"Agreement"), between Platinum Software Corporation ("Seller") and the Buyer.
Capitalized terms used herein and not otherwise defined shall have the meanings
assigned to them in the Agreement.
W I T N E S S E T H
That for consideration set forth in the Agreement to be delivered to
Seller, the receipt and sufficiency of which is hereby acknowledged by Seller,
Assignor hereby sells, conveys, assigns, transfers, sets over and delivers to
and vests in Buyer, its successors and assigns forever, those Purchased Assets
as described in the Agreement and the schedules thereto, free and clear of all
liens, liabilities, obligations, claims, security interests or rights of third
parties, except as otherwise specifically provided for in the Agreement.
Assignor shall from time to time after the Physical Closing, at the
Buyer's request and without further consideration, execute and deliver such
other instruments of transfer, conveyance and assignment, and take such other
action as the Buyer may require more effectively to transfer, convey and assign
to and vest in Buyer, and to put Buyer into possession of any property
untransferred, conveyed, assigned and delivered hereunder.
This Bill of Sale, General Conveyance and Assignment is executed by
and shall be binding upon Assignor and its successors and assigns, and for the
purposes and use as set forth and referred to above, effective as of the date
and year first above written.
PLATINUM SOFTWARE CANADA, LTD.,
an Ontario corporation
By:
------------------------------------
Its:
-----------------------------------
<PAGE> 69
BILL OF SALE, GENERAL CONVEYANCE AND ASSIGNMENT
This Bill of Sale, General Conveyance and Assignment, dated as of
January _____, 1996, between PLATINUM SOFTWARE (AUST) PTY, LIMITED, an
Australian corporation (the "Assignor"), and PLATINUM TREASURY SYSTEMS, plc, a
company registered in England and Wales (Company No. ________), (registered
office _______________), (the "Buyer"), is executed pursuant to that certain
Agreement of Purchase and Sale of Assets dated as of September 30, 1995 (the
"Agreement"), between Platinum Software Corporation ("Seller") and the Buyer.
Capitalized terms used herein and not otherwise defined shall have the meanings
assigned to them in the Agreement.
W I T N E S S E T H
That for consideration set forth in the Agreement to be delivered to
Seller, the receipt and sufficiency of which is hereby acknowledged by Seller,
Assignor hereby sells, conveys, assigns, transfers, sets over and delivers to
and vests in Buyer, its successors and assigns forever, those Purchased Assets
as described in the Agreement and the schedules thereto, free and clear of all
liens, liabilities, obligations, claims, security interests or rights of third
parties, except as otherwise specifically provided for in the Agreement.
Assignor shall from time to time after the Physical Closing, at the
Buyer's request and without further consideration, execute and deliver such
other instruments of transfer, conveyance and assignment, and take such other
action as the Buyer may require more effectively to transfer, convey and assign
to and vest in Buyer, and to put Buyer into possession of any property
untransferred, conveyed, assigned and delivered hereunder.
This Bill of Sale, General Conveyance and Assignment is executed by
and shall be binding upon Assignor and its successors and assigns, and for the
purposes and use as set forth and referred to above, effective as of the date
and year first above written.
PLATINUM SOFTWARE (AUST) PTY, LIMITED,
an Australian corporation
By:
------------------------------------
Its:
-----------------------------------
<PAGE> 70
BILL OF SALE, GENERAL CONVEYANCE AND ASSIGNMENT
This Bill of Sale, General Conveyance and Assignment, dated as of
January _____, 1996, between PLATINUM SOFTWARE (IRELAND) LIMITED, a corporation
formed under the laws of Ireland (the "Assignor"), and PLATINUM TREASURY
SYSTEMS, plc, a company registered in England and Wales (Company No.
________), (registered office _______________), (the "Buyer"), is executed
pursuant to that certain Agreement of Purchase and Sale of Assets dated as of
September 30, 1995 (the "Agreement"), between Platinum Software Corporation
("Seller") and the Buyer. Capitalized terms used herein and not otherwise
defined shall have the meanings assigned to them in the Agreement.
W I T N E S S E T H
That for consideration set forth in the Agreement to be delivered to
Seller, the receipt and sufficiency of which is hereby acknowledged by Seller,
Assignor hereby sells, conveys, assigns, transfers, sets over and delivers to
and vests in Buyer, its successors and assigns forever, those Purchased Assets
as described in the Agreement and the schedules thereto, free and clear of all
liens, liabilities, obligations, claims, security interests or rights of third
parties, except as otherwise specifically provided for in the Agreement.
Assignor shall from time to time after the Physical Closing, at the
Buyer's request and without further consideration, execute and deliver such
other instruments of transfer, conveyance and assignment, and take such other
action as the Buyer may require more effectively to transfer, convey and assign
to and vest in Buyer, and to put Buyer into possession of any property
untransferred, conveyed, assigned and delivered hereunder.
This Bill of Sale, General Conveyance and Assignment is executed by
and shall be binding upon Assignor and its successors and assigns, and for the
purposes and use as set forth and referred to above, effective as of the date
and year first above written.
PLATINUM SOFTWARE (IRELAND) LIMITED,
By:
--------------------------------
Its:
-------------------------------
<PAGE> 71
EXHIBIT H
FORM OF OPINION OF STRADLING, YOCCA, CARLSON & RAUTH
(714) 725-4000
December ___, 1995
Platinum Treasury Systems, plc.
- -------------------------------
- -------------------------------
RE: Platinum Software Corporation
-----------------------------
Ladies and Gentlemen:
We have acted as counsel to Platinum Software Corporation, a Delaware
corporation (the "Company"), in connection with the execution and delivery by
the Company of that certain Agreement of Purchase and Sale of Assets, dated as
of September 30, 1995 (the "Agreement") between the Company and Platinum
Treasury Systems, plc, a company formed under the laws of England and Wales
(the "Buyer"). This opinion is being delivered pursuant to Section 11.9 of the
Agreement. Unless specifically defined herein or the context requires
otherwise, capitalized terms used herein shall have the meanings assigned to
them in the Agreement.
In connection with the preparation of this opinion, we have examined
such documents and considered such questions of law as we have deemed necessary
or appropriate. We have assumed that, except for the Agreement and the
documents required or contemplated thereby, there are no other documents or
agreements between the Company and Buyer which would expand or otherwise modify
the respective rights and obligations of the Company or Buyer as set forth in
the Agreement and the documents required or contemplated thereby.
We have assumed the authenticity of all documents submitted to us as
originals, the conformity with originals of all documents submitted to us as
copies, and the genuineness of all signatures. We have also assumed that, with
respect to all parties to agreements or instruments relevant hereto other than
the Company, such parties had the requisite power and authority to execute,
deliver and perform such agreements or instruments, that such agreements or
instruments have been duly authorized by all requisite action, executed and
delivered by such parties and that such agreements or instruments are the
valid, binding and enforceable obligations of such parties.
<PAGE> 72
Platinum Treasury Systems, plc.
December ___, 1995
Page 2
As to questions of fact material to our opinions, we have relied upon
the representations of each party made in the Agreement and other documents and
certificates delivered in connection therewith, certificates of officers of the
Company, and certificates and advices of public officials and we have made no
independent investigation of such matters.
Whenever a statement herein is qualified by "known to us," "to our
current actual knowledge," or similar phrase, it is intended to indicate that,
during the course of our representation of the Company, no information that
would give us current actual knowledge of the inaccuracy of such statement has
come to the attention of those attorneys in this firm who have rendered legal
services in connection with the transaction described in the introductory
paragraph hereof. However, except as otherwise expressly indicated, we have
not undertaken any independent investigation to determine the accuracy of such
statement, and any limited inquiry undertaken by us during the preparation of
this opinion letter should not be regarded as such an investigation; no
inference as to our knowledge of any matters bearing on the accuracy of any
such statement should be drawn from the fact of our representation of the
Company.
Based upon the foregoing, and subject to the assumptions, exceptions,
qualifications and limitations set forth herein, we are of the opinion that:
1. The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. The Company has
the corporate power and authority to own its properties and assets, to carry on
its business as presently conducted and to enter into the Agreement, the
Trademark License Agreement, the Morgan and Franklin Termination Agreements,
the Bill of Sale, General Conveyance and Assignment, the Debenture, and the
Assignment and Assumption Agreement (the "Transaction Documents"), and to
perform its obligations under the Transaction Documents.
2. Each of the Transaction Documents has been duly authorized by
all necessary corporate action on the part of the Company and has been duly
executed and delivered by the Company. Each of the Transaction Documents is a
legal, valid and binding obligation of the Company enforceable against it in
accordance with its respective terms, except as the enforceability thereof may
be subject to or limited by (a) bankruptcy, insolvency, reorganization,
arrangement, moratorium or other similar laws relating to or affecting rights
of creditors, and (b) general equitable principles, regardless of whether the
issue of enforceability is considered in a proceeding in equity or law.
3. The execution and delivery of the Transaction Documents and
the performance by the Company of their respective terms (a) will not breach or
result in a violation of the Company's Certificate of Incorporation or Bylaws,
or any judgment, order or decree of any court or arbitrator, known to us, to
which the Company is a party or is subject, and (b) will not constitute a
material breach of the terms, conditions or provisions of, or constitute a
default under, any
2
<PAGE> 73
Platinum Treasury Systems, plc.
December ___, 1995
Page 3
material contract, undertaking, indenture or other agreement or instrument
filed as an exhibit to the Company's Annual Report on Form 10-K for the fiscal
year ended June 30, 1995.
4. No consent, approval or authorization of, or designation,
declaration or filing with, any governmental authority is required in
connection with the valid execution, delivery and performance by the Company of
the Transaction Documents, other than such consents, approvals, authorizations,
designations, declarations or filings listed in the Agreement and Schedule 5.3
thereto or as have been made or obtained on or before the date hereof or which
are not required to be made or obtained until after the date hereof.
5. Except as disclosed in the Agreement or the Exhibits and
Schedules delivered by the Company in connection therewith, there is, to our
current actual knowledge, no action, suit or proceeding pending against the
Company or its properties in any court or before any governmental authority or
agency, or arbitration board or tribunal, which seeks to restrain, enjoin,
prevent the consummation of or otherwise challenge the Agreement or any of the
transactions contemplated thereby.
We expressly do not comment upon or render any opinion with respect to
any documents referenced in the Transaction Documents.
We are members of the Bar of the State of California and, accordingly,
do not purport to be experts on or to be qualified to express any opinion
herein concerning, nor do we express any opinion herein concerning, any laws
other than the laws of the State of California, the General Corporation Law of
Delaware and federal law.
The foregoing opinions are being furnished to you solely for your
benefit and may not be relied upon by any other person without our prior
written consent.
Very truly yours,
STRADLING, YOCCA, CARLSON & RAUTH
3
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