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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
June 10, 1996
Date of Report (Date of earliest event reported)
PENULTIMATE, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-23152 33-0253408
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
845 Page Mill Road
Palo Alto, California 94304
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (415) 858-4920
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On June 10, 1996, PenUltimate Inc. (the "Company") completed a reverse
acquisition with PenWare, Inc., ("PenWare"), a California corporation. Pursuant
to the reverse acquisition, common and preferred shareholders of PenWare
exchanged their holdings in PenWare for shares of PenUltimate common stock, and
PenWare became a wholly owned subsidiary of PenUltimate, Inc. After giving
effect to a reverse stock split of approximately 1:108, the Company issued to
the PenWare shareholders 1,125,000 shares of common stock and 28,125 shares of
preferred stock (which, in addition to other rights, will convert to common
shares on a 40:1 basis) in consideration of the transaction. On an as-if
converted basis, the former shareholders of PenWare now hold approximately 90%
of the voting power in the Company.
The terms of the reverse acquisition were the result of arms-length negotiations
between the Company and PenWare. Prior to this transaction, no material
relationship existed between the Company and PenWare or any of its directors or
officers.
As previously reported in the Company's Form 10-Q for the period ended March 31,
1996, the former business operations of PenUltimate Inc. have been discontinued.
PenWare, which is primarily engaged in developing and marketing solutions for
signature transaction applications, now constitutes the Company's operations in
their entirety.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
a) Audited financial statements of PenWare for the years ended June 30, 1994 and
June 30, 1995 are not yet available. The Company intends to file these
statements before August 23, 1996.
b) It is currently impracticable to provide any pro forma financial information
that may be required pursuant to Article 11 of Regulation S-X. The Company
intends to file all required pro forma financial information on or before August
23, 1996.
7.1 Agreement and Plan of Reorganization dated June 10, 1996 among PenUltimate,
Inc., PenWare Inc., and the common and preferred shareholders of PenWare, Inc.
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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 hereunto duly authorized.
PENULTIMATE, INC.
Date: June 24, 1996 By:/S/ David M. Licurse, Sr.
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David M. Licurse, Sr.
Chief Financial Officer and
Vice President of Operations
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") made and
entered into as of the 10th day of June, 1996, is by and among PenUltimate,
Inc., a Delaware corporation (hereinafter referred to as the "Company"),
PenWare, Inc., a California corporation (hereinafter referred to as "PenWare")
and each of the holders of shares of Common Stock or Series A Preferred Stock of
PenWare (hereinafter collectively referred to as the "PenWare Stockholders")
listed on Exhibit A attached hereto.
RECITALS
WHEREAS, the PenWare Stockholders collectively own all of the issued
and outstanding Common Stock and Series A Preferred Stock of PenWare (the
"PenWare Shares"); and
WHEREAS, the Company desires to acquire all of the PenWare Shares and
the PenWare Stockholders desire to exchange all of the PenWare Shares for shares
of Common Stock of the Company in a transaction intended to qualify as a
tax-free exchange under Section 351 and/or under Section 368(a)(1)(B) of the
Internal Revenue Code of 1986, as amended (the "Code").
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and in reliance upon the representations and warranties
hereinafter set forth, the parties agree as follows:
1. EXCHANGE OF THE SHARES AND CONSIDERATION
1.1 Shares Being Exchanged. Subject to the terms and
conditions of this Agreement, at the closing provided for in Section 2 hereof
(the "Closing"), each of the PenWare Stockholders shall sell, assign, transfer
and deliver to the Company all of the PenWare Shares which each of them
respectively own.
1.2 Consideration. Subject to the terms and conditions of this
Agreement and in consideration of the sale, assignment, transfer and delivery of
the PenWare Shares to the Company, at the Closing the Company shall issue and
deliver to the PenWare Stockholders a total of one million one hundred and
twenty-five thousand (1,125,000) shares of Common Stock and (subject to and as
defined in Section 8.9(b)) one hundred and twelve thousand five hundred
(112,500) shares of Preferred Stock of the Company (hereinafter collectively
referred to as the "Company Shares"), each PenWare Stockholder to receive a pro
rata portion of the Company Shares based on the number and nature of PenWare
Shares held by each PenWare Stockholder as set forth on Exhibit A to the
Agreement.
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2. THE CLOSING
2.1 Time and Place. The closing of the transactions
contemplated by this Agreement (the "Closing") shall be held at the offices of
Day Campbell & McGill, 3070 Bristol Street, Suite 650, Costa Mesa, California
92626 at 10:00 a.m. fifteen days after the date hereof (the "Closing Date"), or
at such other time and place as the parties may agree upon in writing.
2.2 Deliveries by the PenWare Stockholders. At the Closing,
each PenWare Stockholder shall deliver to the Company the following: (a) stock
certificates representing the number of PenWare Shares set forth opposite the
name of such PenWare Stockholder on Exhibit A hereto, duly endorsed or
accompanied by stock powers duly executed in blank and otherwise in form
acceptable for transfer on the books of PenWare; and (b) an investment letter in
the form attached hereto as Exhibit B executed by such PenWare Stockholder.
2.3 Deliveries by PenWare. At the Closing, in addition to the
documents referred to in Section 9.2 hereof, PenWare shall deliver to the
Company the following: (a) certified resolutions of the PenWare Board of
Directors authorizing the execution and delivery of this Agreement and the
performance by PenWare of its obligations hereunder; and (b) a certificate of
good standing of PenWare from the Secretary of State of California dated as of
the most recent practicable date.
2.4 Deliveries by the Company. At the Closing, in addition to
the documents referred to in Section 9.3 hereof, the Company shall deliver to
the PenWare Stockholders the following: (a) a stock certificate issued in the
name of each PenWare Stockholder representing the number of Company Shares each
such PenWare Stockholder is entitled to receive; (b) certified resolutions of
the Company's Board of Directors authorizing the execution and delivery of this
Agreement and the performance by the Company of its obligations hereunder; (c) a
certificate of good standing of the Company from the Secretary of State of
Delaware and of the Company's subsidiary from the Secretary of State of
California dated as of the most recent practicable date; and (d) the Company's
minute book, corporate seal and copies of all corporate and financial books and
records.
2.5 Preferred Stock. Notwithstanding the foregoing and
anything appearing elsewhere herein, the obligation of the Company to deliver
shares of its preferred stock at Closing shall be subject to the terms of
Section 8.9(b) hereof, which provides that such shares may be issued following
the Closing.
3. INDIVIDUAL REPRESENTATIONS AND WARRANTIES BY THE PENWARE
STOCKHOLDERS
Each of the PenWare Stockholders, severally but not
jointly, represents and warrants to the Company as follows:
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3.1 Title. Such PenWare Stockholder owns the number of PenWare
Shares set forth opposite such PenWare Stockholder's name on Exhibit A hereto,
or any amendment to Exhibit A hereto approved by the Company, and shall transfer
to the Company at the Closing good and valid title to said number of PenWare
Shares, free and clear of all liens, claims, options, charges, and encumbrances
of every kind, character or description.
3.2 Valid and Binding Agreement. Such PenWare Stockholder has
full power and authority to execute this Agreement and consummate the
transactions contemplated hereby, and this Agreement is binding on him and
enforceable in accordance with its terms. The execution and delivery of this
Agreement and consummation of the transactions contemplated hereby do not
violate or conflict with or constitute a default under any contract, commitment,
agreement, understanding, arrangement or restriction of any kind to which he is
a party or by which he or his property is bound, or to his knowledge any
existing applicable law, rule, regulation, judgment, order or decree of any
government, governmental instrumentality or court, domestic or foreign, having
jurisdiction over him or any of his property.
3.3 Investment Representation. Such PenWare Stockholder
intends to acquire the Company Shares for investment and not with a view to the
public distribution or resale thereof, and such PenWare Stockholder shall
confirm such intention to the Company by delivering to the Company at the
Closing an investment letter in the form attached as Exhibit B hereto. Such
PenWare Stockholder agrees that the Company may place on any stock certificate
for the Company Shares to be delivered pursuant to this Agreement an appropriate
legend referring to the provisions of the investment letter attached as Exhibit
B hereto, and that the Company may instruct its transfer agent not to transfer
any Company Shares unless advised by the Company that such provisions have been
complied with.
4. REPRESENTATIONS AND WARRANTIES OF PENWARE
Except as set forth in the disclosure schedules
attached hereto and made a part hereof by this reference, PenWare represents and
warrants to the Company as follows:
4.1 Authority. PenWare has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated herein. The execution and delivery of this Agreement and the
consummation of the transactions contemplated herein have been duly authorized
and approved by all necessary corporate action on the part of PenWare. This
Agreement has been duly executed and delivered by PenWare and constitutes the
valid and binding obligation of PenWare, enforceable in accordance with its
terms.
4.2 Organization.
(a) PenWare is a corporation duly organized,
validly existing and in good standing under the laws of the State of California.
PenWare has the corporate power and authority to carry on its business as
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presently conducted, possesses all licenses, franchises, rights and privileges
material to the conduct of its business, and is qualified to do business in all
jurisdictions where the failure to be so qualified would have a material adverse
effect on its business or financial condition.
(b) The copies of the Articles of Incorporation
and all amendments thereto of PenWare, as certified by the Secretary of State of
California, and the Bylaws and all amendments thereto, as certified by the
Secretary of PenWare, which have heretofore been delivered to the Company, are
complete and correct copies of the Articles of Incorporation and Bylaws of
PenWare as amended and in effect on the date hereof. All minutes of meetings and
actions in writing without a meeting of the Board of Directors and stockholders
of PenWare are contained in the minute book of PenWare heretofore delivered to
the Company for examination, and no minutes or actions in writing without a
meeting have been included in such minute book since such delivery to the
Company that have not also been delivered to the Company.
4.3 Capitalization.
(a) The authorized capital stock of PenWare consists
of 10,000,000 shares of Common Stock, no par value, of which 1,252,084 shares
are issued and outstanding, and 7,000,000 shares of Preferred Stock, no par
value, 3,000,000 of which have been designated Series A Preferred Stock, of
which 2,000,000 are outstanding. All of the issued and outstanding shares of
Common Stock and Preferred Stock of PenWare were issued in compliance with
applicable state and federal securities laws, are duly authorized, validly
issued, fully paid and nonassessable, and are not subject to preemptive rights
created by statute, PenWare's Articles of Incorporation or Bylaws or any
agreement to which PenWare is a party or is bound.
(b) There are currently 363,636 shares of Common
Stock reserved for issuance under the Company's 1992 Employee Stock Option Plan
(the "PenWare Options"). Except as set forth above, there are no other options,
warrants, calls, rights, commitments or agreements of any character to which
PenWare is a party or by which it is bound obligating PenWare to issue, deliver
or sell, or cause to be issued, delivered or sold, additional shares of capital
stock or any bond, note or other security of PenWare or obligating PenWare to
grant, extend or enter into any such option, warrant, call, right, commitment or
agreement.
4.4 Equity Investments. PenWare does not own any equity
interest, directly or indirectly, in any corporation, partnership or other form
of business entity.
4.5 Financial Statements. PenWare has delivered to the Company
copies of its unaudited balance sheets for the fiscal years ended June 30, 1994
and 1995 and the related statements of operations, stockholders' equity and cash
flows for the periods then ended, and copies of its unaudited balance sheet as
of March 31, 1996 and the related statement of operations, stockholders' equity
and cash flows for the seven month period then ended (the "PenWare Financial
Statements"), copies of which are attached hereto as
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Schedule 4.5. The PenWare Financial Statements have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
during the periods involved, and present fairly the financial condition of
PenWare and the results of its operations as of the dates and for the periods
indicated thereon, subject to normal year-end audit adjustments and the absence
of footnote disclosure.
4.6 Absence of Undisclosed Liabilities. At the date of the
most recent balance sheet of PenWare included in the PenWare Financial
Statements and as of the Closing Date, PenWare had and will have no liability or
obligation of any nature, whether accrued, absolute, contingent, or otherwise,
and whether due, or to become due, other than liabilities or obligations
individually or in the aggregate less than $20,000, that is not reflected or
reserved against in the most recent balance sheet of PenWare or the accompanying
notes thereto included in the PenWare Financial Statements, except for those
that may have been incurred after the date of such balance sheet and those that
are not required by generally accepted accounting principles to be included in
such balance sheet or the accompanying notes thereto. All liabilities and
obligations incurred after the date of such balance sheet were incurred in the
ordinary course of business.
4.7 Business Changes. Since the date of the most recent
balance sheet of PenWare included in the PenWare Financial Statements, except as
otherwise contemplated by this Agreement, PenWare has conducted its business
only in the ordinary and usual course and, without limiting the generality of
the foregoing:
(a) PenWare has not incurred additional debt for
borrowed money, nor incurred any obligation or liability except in the ordinary
and usual course of business.
(b) PenWare has not declared or made any
dividend, payment or other distribution on or with respect to any share of
capital stock of PenWare.
(c) PenWare has not mortgaged, pledged, or
otherwise, voluntarily or involuntarily, encumbered any of its assets or
properties, except for liens for current taxes which are not yet delinquent and
purchase-money liens arising out of the purchase or sale of products made in the
ordinary and usual course of business.
(d) PenWare has not disposed of, or agreed to
dispose of, by sale, lease, license or otherwise, any asset or property,
tangible or intangible, except in the ordinary and usual course of business.
(e) PenWare has not purchased or agreed to purchase
or otherwise acquire any securities of any corporation, partnership, joint
venture, firm or other entity.
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(f) PenWare has not made any expenditure or
commitment for the purchase, acquisition, construction or improvement of a
capital asset, except in the ordinary and usual course of business.
(g) PenWare has not effected or committed itself to
effect any amendment or modification to its Articles of Incorporation or Bylaws.
4.8 Properties. The most recent PenWare balance sheet included
in the PenWare Financial Statements reflects all of the real and personal
property used by PenWare in its business or otherwise held by PenWare except for
(i) property acquired or disposed of in the ordinary and usual course of the
business of PenWare since the date of the most recent PenWare balance sheet
included in the PenWare Financial Statements, and (ii) property not required
under generally accepted accounting principles to be reflected thereon. PenWare
has good and marketable title to all assets and properties listed on the most
recent PenWare balance sheet included in the PenWare Financial Statements and
thereafter acquired, free and clear of any liens, claims, encumbrances,
restrictions, charges or equities of any nature whatsoever, except for the lien
of current taxes not yet delinquent. All of the fixed assets and properties
listed on the most recent PenWare balance sheet included in the PenWare
Financial Statements or thereafter acquired are in satisfactory condition and
repair for the requirements of the business as presently conducted by PenWare.
4.9 Taxes. Within the times and in the manner prescribed by
law, PenWare has filed all federal, state, and local tax returns and reports
required by law and has paid in full all taxes, assessments, known penalties and
interest (all such items are collectively referred to as "Taxes"), due to, or
claimed to be due by, any governmental authority. The most recent balance sheet
of PenWare included in the PenWare Financial Statements fully accrues all
current and deferred Taxes. PenWare is not a party to any pending action or
proceeding, nor, to the actual knowledge of PenWare, is any such action or
proceeding threatened by any governmental authority for the assessment or
collection of Taxes. There are no liens for Taxes except for liens for property
taxes not yet delinquent.
4.10 Litigation. There is no claim, action, suit or
proceeding, at law or in equity, pending against PenWare, or involving any of
its assets or properties, before any court, agency, authority, arbitration panel
or other tribunal (other than those, if any, with respect to which service of
process or similar notice has not been made on PenWare), and, to the actual
knowledge of PenWare, none have been threatened in writing. PenWare is not
subject to any order, writ, injunction or decree of any court, agency,
authority, arbitration panel or other tribunal, nor is it in default with
respect to any notice, order, writ, injunction or decree.
4.11 Compliance with Law. All licenses, permits, clearances,
consents, certificates and other evidences of authority of PenWare which are
material to the conduct of PenWare's business ("Permits") are in full force and
effect and PenWare is not in violation of any Permit in any
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material respect. Except for possible exceptions the curing or non-curing of
which would not have a material adverse effect on the condition (financial or
otherwise), business, net worth, assets, prospects, properties or operations of
PenWare, to PenWare's knowledge, the business of PenWare has been conducted in
accordance with all applicable laws, regulations, orders and other requirements
of governmental authorities, including, without limiting the generality of the
foregoing, employment practices and procedures, the health and safety of
employees, export controls, Hazardous Materials (as hereinafter defined) and the
use, storage, treatment, disposal, transport, generation, release and exposure
of others to Hazardous Materials. PenWare has no knowledge of the presence of
Hazardous Materials in, under or about the soil and/or groundwater of any
properties at any time owned, leased or occupied by PenWare. "Hazardous
Materials" shall mean any substance regulated or prohibited by any law or
designated by any governmental agency to be toxic, radioactive or otherwise a
danger to health or the environment. PenWare has not received any notice of any
investigation, claim or proceeding against PenWare relating to Hazardous
Materials and PenWare is not aware of any fact or circumstance which could
involve PenWare in any environmental litigation, proceeding, investigation or
claim or impose any environmental liability upon PenWare.
4.12 Contracts and Undertakings. Schedule 4.12 attached hereto
contains a complete list of all contracts, instruments, leases, licenses,
agreements, commitments and other undertakings to which PenWare is a party or by
which it or its properties or assets are bound, copies of which have been
furnished or made available to the Company. PenWare is not in default, or
alleged to be in default, under any of the contracts, instruments, leases,
licenses, agreements, commitments or undertakings listed on Schedule 4.12 hereto
and, to the knowledge of PenWare, no other party to any of said contracts,
instruments, leases, licenses, agreements, commitments or undertakings is in
default thereunder nor, to the knowledge of PenWare, does there exist any
condition or event which, after notice or lapse of time or both, would
constitute a default by any party to any of said contracts, instruments, leases,
licenses, agreements, commitments or undertakings. PenWare has not entered into
and is not subject to any contract or agreement containing covenants limiting
the right of PenWare to compete in any business or with any person.
4.13 Real Property. Schedule 4.13 attached hereto contains a
full and complete list of all real property leased by PenWare. To the actual
knowledge of PenWare all such real property leased by PenWare is held under
valid, subsisting and enforceable leases and neither real property leased by
PenWare nor the operations of PenWare thereon violate any applicable building
code, zoning requirement or classification, or pollution control ordinance or
statute relating to the property or to such operations, and such non-violation
is not dependent, in any instance, on so-called nonconforming use exemptions.
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4.14 Proprietary Rights.
(a) Schedule 4.14 attached hereto contains a
complete list of all patents and applications for patents, trademarks, trade
names, service marks, and copyrights, and applications therefor, owned or used
by PenWare or in which it has any rights or licenses. Schedule 4.14 attached
hereto contains a form of the agreement of PenWare with each officer, employee
or consultant of PenWare providing PenWare with title and ownership to patents,
patent applications, trade secrets and inventions developed or used by PenWare
in its business (the "PenWare Confidentiality Agreement"). To PenWare's actual
knowledge, all of such agreements so described are valid, enforceable and
legally binding.
(b) All patents, patent applications, trademarks,
trademark applications, trade secrets, service marks, trade names, copyrights,
inventions, drawings, designs, customer lists, proprietary know-how or
information, or other rights with respect thereto (collectively referred to as
"Proprietary Rights"), used in the business of PenWare, are owned by PenWare or
PenWare owns or possesses licenses or other rights to use the same, and the same
are sufficient to conduct the business of PenWare as it has been and is now
being conducted.
(c) To PenWare's actual knowledge, the
operations of PenWare do not conflict with or infringe, and no one has asserted
to PenWare that such operations conflict with or infringe, any Proprietary
Rights, owned, possessed or used by any third party. There are no claims,
disputes, actions, proceedings, suits or appeals pending against PenWare with
respect to any Proprietary Rights (other than those, if any, with respect to
which service of process or similar notice may not yet have been made on
PenWare), and none has been threatened in writing against PenWare.
(d) Each employee and officer of PenWare, and each
consultant or agent and their respective assigns retained since March 1, 1993,
has executed a PenWare Confidentiality Agreement in substantially the form
provided to the Company. PenWare is not aware that any of its employees are in
violation thereof. No employee of PenWare 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 PenWare or, to the actual knowledge of
PenWare, any previous employer.
4.15 Insurance. Schedule 4.15 attached hereto contains a
complete list of all policies of insurance to which PenWare is a party or is a
beneficiary or named insured. PenWare has in full force and effect, with all
premiums due thereon paid, the policies of insurance set forth therein. All the
insurable properties of PenWare are insured in amounts and coverages and against
risks and losses which PenWare believes are adequate and usually insured against
by persons holding or operating similar properties in similar businesses.
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4.16 No Conflict. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby do not and will not
conflict with, or result in a breach of any term or provision of, or constitute
a default under or result in a violation of, the Articles of Incorporation or
Bylaws of PenWare, any agreement, contract, lease, license or instrument to
which PenWare is a party or by which it or any of its properties or assets are
bound, or any judgment, decree, order, or writ by which PenWare is bound or to
which it or any of its properties or assets are subject.
4.17 Consent. No consent, approval, order or authorization of,
or registration, declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality is required by or
with respect to PenWare in connection with the execution and delivery of this
Agreement or the consummation by PenWare of the transactions contemplated
herein. No consent, waiver or approval of third parties is required to be
obtained by PenWare in connection with the execution and delivery of this
Agreement and the performance of PenWare's obligations hereunder, except such
consents, waivers or approvals as are not material to the operations of PenWare.
4.18 Brokers or Finders. PenWare has not dealt with any broker
or finder in connection with the transactions contemplated by this Agreement.
PenWare has not incurred, and shall not incur, directly or indirectly, any
liability for any brokerage or finders' fees or agents commissions or any
similar charges in connection with this Agreement or any transaction
contemplated herein.
4.19 Related Parties. No officer or director of PenWare, or
any affiliate of any such person, has, either directly or indirectly, (i) an
interest in any corporation, partnership, firm or other person or entity which
furnishes or sells services or products which are similar to those furnished or
sold by PenWare, or (ii) a beneficial interest in any contract, lease, license
or agreement to which PenWare is a party or by which PenWare may be bound.
4.20 Securities Law Violations.
(a) No formal or informal investigation
or examination by the Securities and Exchange Commission ("SEC") or by the
securities administrator of any state is pending or, to the knowledge of
PenWare, threatened in writing against PenWare nor, to its actual knowledge,
without independent investigation, any officer or director of PenWare or any of
PenWare's stockholders.
(b) Neither PenWare nor, to its
actual knowledge, without independent investigation, any of its officers,
directors, promoters or beneficial owners of more than 10% of its common stock
has been convicted of any felony or misdemeanor in connection with the purchase
and sale of any security or involving the making of any false filing with the
SEC.
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(c) Neither PenWare nor, to its
actual knowledge, without independent investigation, any of its officers,
directors, promoters or beneficial owners of more than 10% of its common stock
is subject to any order, judgement or decree of any court of competent
jurisdiction, temporarily or preliminarily restraining or enjoining, or subject
to any order, judgment or decree of any court of competent jurisdiction,
permanently restraining or enjoining, such person from engaging in or continuing
any conduct or practice in connection with the purchase or sale of any security
or involving the making of any false filing with the SEC.
(d) To the knowledge of PenWare, all
of the outstanding securities of PenWare have been issued in compliance with all
applicable Federal and state securities laws.
(e) No individual, corporation,
partnership, joint venture or other business enterprise or entity has demand or
other rights to cause PenWare to file any registration statement under the
Securities Act of 1933 relating to any securities of the Company or any rights
to participate in any such registration statement.
4.21 Underlying Documents. Copies of any underlying documents
listed or described as having been disclosed to the Company pursuant to this
Agreement, if requested by the Company, have been furnished to the Company. All
such documents furnished to the Company are true and correct copies, and there
are no amendments or modifications thereto that have not been disclosed to the
Company.
4.22 Full Disclosure. Any information furnished to the Company
by or on behalf of PenWare in writing pursuant to this Agreement and any
information contained in the PenWare Schedules referred to in this Agreement, at
the Closing Date, does not and will nor contain any untrue statement of a
material fact and does not and will not omit to state any material fact
necessary to make any statement, in light of the circumstances under which such
statement is made, not misleading.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on the disclosure schedules
attached hereto and made a part hereof by this reference, the Company represents
and warrants to PenWare and the PenWare Stockholders as follows:
5.1 Authority. The Company has all requisite corporate power
and authority to enter into this Agreement and, subject to satisfaction of the
conditions set forth herein, to consummate the transactions contemplated herein.
The execution and delivery of this Agreement, the consummation of the
transactions contemplated herein, and the issuance of the Company Shares in
accordance with the terms hereof, have been duly authorized by all necessary
action on the part of the Company, subject to approval of the Company's
stockholders. This Agreement has been duly executed and delivered by the Company
and constitutes the valid and binding obligation of the Company, enforceable in
accordance with its terms.
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5.2 Organization.
(a) 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 carry on its business as
presently conducted, possesses all licenses, franchises, rights and privileges
material to the conduct of its business and is qualified to do business in all
jurisdictions where the failure to be so qualified would have a material adverse
effect on its business or financial condition.
(b) The copies of the Certificate of
Incorporation and all amendments thereto of the Company, as certified by the
Secretary of State of Delaware, and the Bylaws of the Company and all amendments
thereto, as certified by the Secretary of the Company, which have heretofore
been delivered to PenWare and made available to the PenWare Stockholders for
examination, are complete and correct copies of the Certificate of Incorporation
and Bylaws of the Company as amended and in effect on the date hereof. All
minutes of meetings and actions in writing without a meeting of the Board of
Directors and stockholders of the Company are contained in the minute book of
the Company heretofore delivered to PenWare and made available to the PenWare
Stockholders for examination, and no minutes or actions in writing without a
meeting have been included in such minute book since such delivery to PenWare
that have not also been delivered to PenWare.
5.3 Capitalization.
(a) The authorized capital stock of the Company
consists of 20,000,000 shares of Common Stock, $.001 par value, of which
16,740,934 shares were issued and outstanding on the date hereof. All of the
issued and outstanding shares of Common Stock of the Company were issued in
compliance with applicable state and federal securities laws, are duly
authorized, validly issued, fully paid and non-assessable, and are not subject
to preemptive rights created by statute, the Company's Certificate of
Incorporation or Bylaws or any agreement to which the Company is a party or is
bound.
(b) There are currently 456,617 shares of Common
Stock reserved for issuance under the Company's 1992 and 1995 Stock Option
Plans, and a further 1,129,147 reserved for issuance pursuant to warrants
granted by the Company, all as set forth on Schedule 4.3(b) hereto. Except as
contemplated by this Agreement, there are no other options, warrants, calls,
rights, commitments or agreements of any character to which the Company is a
party or by which it is bound obligating the Company to issue, deliver or sell,
or cause to be issued, delivered or sold, additional shares of capital stock or
any bond, note, or other security of the Company or obligating the Company to
grant, extend or enter into any such option, warrant, call, right, commitment or
agreement.
5.4 Equity Investments. Company does not own any
equity interest in any corporation, partnership, or other form of business
entity
<PAGE> 15
other than PenUltimate, Inc., a California corporation, in which it owns
100% of the outstanding common stock.
5.5 Financial Statements. Company has delivered to PenWare and
made available to the PenWare Stockholders copies of its audited balance sheets
for the years ended June 30, 1994 and 1995 and the related statements of
operations, stockholders' equity and cash flows for the periods then ended
together with appropriate notes to such financial statements, and copies of its
unaudited balance sheet as of March 31, 1996 and the related statement of
operations, stockholders' equity and cash flows for the nine month period then
ended (the "Company Financial Statements"), copies of which are attached hereto
as Schedule 5.5. The Company Financial Statements have been prepared in
conformity with generally accepted accounting principles applied on a consistent
basis during the periods involved, and present fairly the financial condition of
the Company and the results of operations as of the dates and for the periods
indicated therein, subject in the case of the unaudited portion of the Company
Financial Statements to normal year-end audit adjustments and the absence of
certain footnote disclosures.
5.6 Absence of Undisclosed Liabilities. The Company has and at
the Closing Date will have no liability or obligation of any nature, whether
accrued, absolute, contingent, threatened or otherwise, and whether due or to
become due, that is not set forth in Schedule 8.11 hereto.
5.7 Business Changes. Since the date of the most recent
balance sheet of the Company included in the Company Financial Statements until
January 31, 1996, the Company conducted its business only in the ordinary and
usual course. On January 31, 1996, the Company discontinued its ongoing business
operations and has been engaged principally in matters pertinent to this
Agreement and otherwise winding up its affairs as a going concern.
5.8 Properties. The most recent Company balance sheet included
in the Company Financial Statements reflects all of the real and personal
property used by the Company in its business or otherwise held by the Company
except for (i) property acquired or disposed of in the ordinary and usual course
of the business of the Company since the date of the most recent Company balance
sheet included in the Company Financial Statements, and (ii) property not
required under generally accepted accounting principles to be reflected thereon.
The Company has good and marketable title to all assets and properties listed on
the most recent Company balance sheet included in the Company Financial
Statements and thereafter acquired, free and clear of any liens, claims,
encumbrances, restrictions, charges or equities of any nature whatsoever, except
for the lien of current taxes not yet delinquent. All of the fixed assets and
properties listed on the most recent Company balance sheet included in the
Company Financial Statements or thereafter acquired are in satisfactory
condition and repair for the requirements of the business as conducted by the
Company immediately prior to its discontinuing ongoing operations on January 31,
1996.
<PAGE> 16
5.9 Taxes. Within the times and in the manner prescribed by
law, the Company has filed all federal, state, and local tax returns and reports
required by law and has paid in full all Taxes due to, or claimed to be due by,
any governmental authority. The most recent balance sheet of the Company
included in the Company Financial Statements fully accrues all current and
deferred Taxes. The Company is not a party to any pending action or proceeding,
nor, to the actual knowledge of the Company, is any such action or proceeding
threatened by any governmental authority for the assessment or collection of
Taxes. There are no liens for Taxes except for liens for property taxes not yet
delinquent.
5.10 Litigation. There is no claim, action, suit or
proceeding, at law or in equity, pending against the Company, or involving any
of its assets or properties, before any court, agency, authority, arbitration
panel or other tribunal (other than those, if any, with respect to which service
of process or similar notice has not been made on the Company), and, to the
actual knowledge of the Company, none have been threatened in writing. The
Company is not subject to any order, writ, injunction or decree of any court,
agency, authority, arbitration panel or other tribunal, nor is it in default
with respect to any notice, order, writ, injunction or decree.
5.11 Compliance with Law. All licenses, permits, clearances,
consents, certificates and other evidences of authority of the Company which are
material to the conduct of the Company's business ("Permits") are in full force
and effect and the Company is not in violation of any Permit in any material
respect. Except for possible exceptions the curing or non-curing of which would
not have a material adverse effect on the condition (financial or otherwise),
business, net worth, assets, prospects, properties or operations of the Company,
to the Company's knowledge, the business of the Company has been conducted in
accordance with all applicable laws, regulations, orders and other requirements
of governmental authorities, including, without limiting the generality of the
foregoing, employment practices and procedures, the health and safety of
employees, export controls, Hazardous Materials (as hereinafter defined) and the
use, storage, treatment, disposal, transport, generation, release and exposure
of others to Hazardous Materials. The Company has no knowledge of the presence
of Hazardous Materials in, under or about the soil and/or groundwater of any
properties at any time owned, leased or occupied by the Company. "Hazardous
Materials" shall mean any substance regulated or prohibited by any law or
designated by any governmental agency to be toxic, radioactive or otherwise a
danger to health or the environment. The Company has not received any notice of
any investigation, claim or proceeding against the Company relating to Hazardous
Materials and the Company is not aware of any fact or circumstance which could
involve the Company in any environmental litigation, proceeding, investigation
or claim or impose any environmental liability upon the Company.
5.12 Contracts and Undertakings. The Company is not a party to
or bound by nor are any of its properties and assets subject to any contract,
instrument, lease, license, agreement, commitment or undertaking. The Company is
not in default, or alleged to be in default, under any of the contracts,
instruments, leases, licenses, agreements, commitments or
<PAGE> 17
undertakings listed on Schedule 5.12 hereto and, to the knowledge of the
Company, no other party to any of said contracts, instruments, leases, licenses,
agreements, commitments or undertakings is in default thereunder nor, to the
knowledge of the Company, does there exist any condition or event which, after
notice or lapse of time or both, would constitute a default by any party to any
of said contracts, instruments, leases, licenses, agreements, commitments or
undertakings. The Company has not entered into and is not subject to any
contract or agreement containing covenants limiting the right of the Company to
compete in any business or with any person.
5.13 Real Property. Schedule 5.13 attached hereto contains a
full and complete list of all real property leased by the Company. To the actual
knowledge of the Company all such real property leased by the Company is held
under valid, subsisting and enforceable leases and neither real property leased
by the Company nor the operations of the Company immediately prior to January
31, 1996, thereon violate or violated any applicable building code, zoning
requirement or classification, or pollution control ordinance or statute
relating to the property or to such operations, and such non-violation is not
dependent, in any instance, on so-called nonconforming use exemptions.
5.14 Proprietary Rights.
(a) Schedule 5.14 attached hereto contains a
complete list of all patents and applications for patents, trademarks, trade
names, service marks, and copyrights, and applications therefor, owned or used
by the Company or in which it has any rights or licenses. Schedule 5.14 attached
hereto contains a form of the agreement of the Company with each officer or
employee of the Company providing the Company with title and ownership to
patents, patent applications, trade secrets and inventions developed or used by
the Company in its business (the "Company Confidentiality Agreement"). To the
Company's actual knowledge, all of such agreements so described are valid,
enforceable and legally binding.
(b) The Company owns or possesses licenses or
other rights to use all Proprietary Rights used in the business of the Company.
(c) To the Company's actual knowledge, the
operations of the Company did not and do not conflict with or infringe, and no
one has asserted to the Company that such operations conflict with or infringe,
any Proprietary Rights, owned, possessed or used by any third party. There are
no claims, disputes, actions, proceedings, suits or appeals pending against the
Company with respect to any Proprietary Rights (other than those, if any, with
respect to which service of process or similar notice may not yet have been made
on the Company), and none has been threatened in writing against the Company.
(d) Each employee and officer of the Company,
and each consultant or gent and their respective assigns retained since March 1,
1993, has executed a Company Confidentiality Agreement in substantially the form
provided to the Company. The Company is not aware that any of its employees are
in violation thereof. No employee of the Company is in
<PAGE> 18
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 the Company or,
to the actual knowledge of the Company, any previous employer.
(e) The Company has not provided source code,
object code or other rights in its "Locomotion" software to Apple Computer.
5.15 Insurance. Schedule 5.15 attached hereto contains a
complete list of all policies of insurance to which the Company is a party or is
a beneficiary or named insured. The Company has in full force and effect, with
all premiums paid, the policies of insurance set forth therein. The insurance
will be in force through the Closing Date, at which point such policies will
lapse unless renewed. All the insurable properties of the Company are insured in
amounts and coverages and against risks and losses which the Company believes
are adequate and usually insured against by persons holding or operating similar
properties in similar businesses.
5.16 No Conflict. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby do not and will not
conflict with, or result in a breach of any term or provision of, or constitute
a default under or result in a violation of, the Certificate of Incorporation or
Bylaws of the Company, any agreement, contract, lease, license, or instrument to
which the Company is a party or by which it or any of its assets are bound, or
any judgment, decree, order or writ by which the Company is bound or to which it
or any of its properties or assets are subject.
5.17 Consent. No consent, approval, order or authorization of,
or registration, declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality is required by or
with respect to the Company in connection with the execution and delivery of
this Agreement or the consummation by the Company of the transactions
contemplated herein, except for such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
applicable state law and such other consents, approvals, orders, authorizations,
registrations, declarations and filings which if not obtained or made would not
have a material adverse effect on the Company.
5.18 Brokers or Finders. The Company has not dealt with any
broker or finder in connection with the transactions contemplated by this
Agreement. The Company has not incurred, and shall not incur, directly or
indirectly, any liability for any brokerage or finders' fees or agents
commissions or any similar charges in connection with this Agreement or any
transaction contemplated herein.
5.19 Related Parties. No officer or director of the Company,
or any affiliate of any such person, has, either directly or indirectly, (i) an
interest in any corporation, partnership, firm or other person or entity which
furnishes or sells services or products which are similar to those furnished or
sold by the Company, or (ii) a beneficial
<PAGE> 19
interest in any contract, lease, license or agreement to which the Company is a
party or by which the Company may be bound.
5.20 Compliance with Securities Laws.
(a) The Company has delivered to PenWare and
made available to the PenWare Stockholders for examination, true and complete
copies of the Company's Registration Statement on Form SB-2 which was declared
effective by the SEC on December 22, 1993.
(b) The Company has delivered to PenWare and
made available to the PenWare Stockholders for examination true and complete
copies, including exhibits and, as applicable, amendments thereto, of the
Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1995 and
all Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed since
June 30, 1995. All reports required to be filed by the Company with the
Securities and Exchange Commission (collectively, the "Reports") have been
properly and timely filed and comply in all material respects with the
requirements of the Securities Exchange Act of 1934 and the rules and
regulations promulgated thereunder with respect to such Reports.
(c) No formal or informal investigation or
examination by the SEC or by the securities administrator of any state is
pending or, to the knowledge of the Company, threatened in writing against the
Company, any officer or director of the Company or any of the Company's
stockholders.
(d) Neither the Company nor, to its actual knowledge,
without independent investigation, any of its officers, directors, promoters or
beneficial owners of more than 10% of its Common Stock has been convicted of any
felony or misdemeanor in connection with the purchase and sale of any security
or involving the making of any false filing with the SEC.
(e) Neither the Company nor any of its officers,
directors, promoters or beneficial owners of more than 10% of its Common Stock
is subject to any order, judgment or decree of any court of competent
jurisdiction, temporarily or preliminarily restraining or enjoining, or subject
to any order, judgment or decree of any court of competent jurisdiction,
permanently restraining or enjoining, such person from engaging in or continuing
any conduct or practice in connection with the purchase or sale of any security
or involving the making of any false filing with the SEC.
(f) All of the outstanding securities of the
Company have been issued in compliance with all applicable Federal and state
securities laws.
(g) Except as set forth in Schedule 5.20(g), no
individual, corporation, partnership, joint venture or other business enterprise
or entity has demand or other rights to cause the Company to file any
registration statement under the Securities Act of 1933 relating to any
<PAGE> 20
securities of the Company or any rights to participate in any such registration
statement.
5.21 Underlying Documents. Copies of any underlying documents
listed or described as having been disclosed to PenWare pursuant to this
Agreement, if requested by PenWare, have been furnished to PenWare and made
available to the PenWare Stockholders. All such documents furnished to PenWare
are true and correct copies, and there are no amendments or modifications
thereto that have not been disclosed to PenWare.
5.22 Full Disclosure. Any information furnished by or on
behalf of the Company in writing pursuant to this Agreement (including without
limitation all information and financial data pertaining to the Company
contained in the 14f-1 Statement referred to in Section 8.3 hereof) and any
information contained in the Company's Schedules referred to in this Agreement,
at any time prior to the Closing Date, does not and will not contain any untrue
statement of a material fact and does not and will not omit to state any
material fact necessary to make any statement, in light of the circumstances
under which such statement is made, not misleading.
6. COVENANTS RELATING TO CONDUCT OF BUSINESS OF PENWARE
During the period from the date of this Agreement
and continuing until the Closing Date, PenWare agrees (except as expressly
contemplated by this Agreement or the most current draft of the PenWare Private
Placement Memorandum delivered by Cruttenden Roth, Inc. to the Company prior to
the date hereof (the "PPM"), or to the extent that the Company shall otherwise
consent in writing) that:
6.1 Ordinary Course. PenWare shall carry on its business in
the usual and ordinary course, including the payment of all state and federal
taxes, in substantially the same manner as heretofore conducted and, to the
extent consistent with such business, use all reasonable efforts consistent with
past practice and policies to preserve intact its present business organization,
keep available the services (but not increase the compensation) of its present
officers and key employees (but not enter into employment agreements with new
officers and employees) and preserve its relationship with customers, providers
and others having business dealings with it to the end that its goodwill and
ongoing business shall be unimpaired at the Closing Date.
6.2 Dividends; Changes in Stock. Except as disclosed in
Schedule 4.3 or as specifically disclosed in this Agreement, PenWare shall not
and shall not propose to declare or pay any cash dividends on or make other
distributions in respect of any of its capital stock.
6.3 Governing Documents. PenWare shall not amend its Articles
of Incorporation or Bylaws.
6.4 No Acquisitions. PenWare shall not acquire or agree to
acquire by merging or consolidating with, or by purchasing a substantial
<PAGE> 21
portion of the assets of, or by any other manner, any business or any
corporation, partnership, association or other business organization or division
thereof or otherwise acquire or agree to acquire any assets which are material,
individually or in the aggregate, to PenWare except in the usual and ordinary
course of business consistent with prior practice.
6.5 No Dispositions. PenWare shall not sell, assign,
transfer, pledge, encumber or otherwise dispose of any of its assets, which are
material, individually or in the aggregate, to PenWare except in the usual and
ordinary course of business consistent with prior practice.
6.6 No Debt. PenWare shall not incur any amount of long or
short-term debt for money borrowed, guarantee or agree to guarantee the
obligations of others, indemnify or agree to indemnify others or incur any other
liabilities other than those incurred in the usual and ordinary course of
business consistent with past practices, or except as set forth in Schedule 6.6
hereof.
6.7 Maintain Insurance. PenWare shall keep in full force
and effect insurance covering PenWare, its assets and business comparable in
amount and scope of coverage to that now maintained.
6.8 Notice. PenWare shall promptly notify the Company of any
default, the written threat or commencement of any litigation, or any
development that occurs before the Closing that could in any way materially
affect PenWare, its assets or business.
7. COVENANTS RELATING TO CONDUCT OF BUSINESS OF THE COMPANY
PENDING CLOSING
During the period from the date of this Agreement
and continuing until the Closing Date, the Company agrees (except as expressly
contemplated by this Agreement or to the extent that PenWare and the PenWare
Shareholders shall otherwise consent in writing) that:
7.1 Ordinary Course. The Company shall wind up its business
and settle its liabilities as contemplated in Section 8.11.
7.2 Dividends; Changes in Stock. Except as contemplated herein
or as set forth in Schedule 5.3(b), the Company shall not and shall not propose
to (i) declare or pay any dividends on or make other distributions in respect of
any of its capital stock, (ii) split, combine or reclassify any of its capital
stock or issue or authorize the issuance of any other securities in respect of,
in lieu of or in substitution for shares of capital stock of the Company, or
(iii) repurchase or otherwise acquire any shares of its capital stock or rights
to acquire any shares of its capital stock.
7.3 Governing Documents. The Company shall not amend its
Certificate of Incorporation or Bylaws.
7.4 No Acquisitions. The Company shall not acquire or agree to
acquire by merging or consolidating with, or by purchasing a substantial
<PAGE> 22
portion of the assets of, or by any other manner, any business or any
corporation, partnership, association or other business organization or division
thereof or otherwise acquire or agree to acquire any assets which are material,
individually or in the aggregate, to the Company except in the usual and
ordinary course of business consistent with prior practice.
7.5 No Dispositions. Except as provided in Section 8.12, the
Company shall not sell, assign, transfer, pledge, encumber or otherwise dispose
of any of its assets, which are material, individually or in the aggregate, to
the Company except in the usual and ordinary course of business consistent with
prior practice.
7.6 No Debt. The Company shall not incur any amount of long or
short-term debt for money borrowed, guarantee or agree to guarantee the
obligations of others, indemnify or agree to indemnify others or incur any other
liabilities.
7.7 Maintain Insurance. The Company shall keep in full force
and effect insurance covering the Company, its assets and business comparable in
amount and scope of coverage to that now maintained until the Closing Date.
7.8 Notice. The Company shall promptly notify PenWare of any
default, the written threat or commencement of any litigation, or any
development that occurs before the Closing that could in any way materially
affect the Company, its assets or business.
7.9 Apple Agreement. The Company will not provide source code,
object code or any other rights in its "Locomotion" software to Apple Computer,
and consents to representatives of PenWare contacting Apple Computer with
respect to the transfer, delivery or other grant of rights in such software.
8. ADDITIONAL AGREEMENTS
8.1 Access to Information.
(a ) PenWare shall afford to the Company and shall
cause its independent accountants to afford to the Company, and its accountants,
counsel and other representatives, reasonable access during normal business
hours during the period prior to the Closing Date to all of PenWare's
properties, books, contracts, commitments and records and to the audit work
papers and other records of PenWare's independent accountants. During such
period, PenWare shall use reasonable efforts to furnish promptly to the Company
all information concerning the business, properties and personnel of PenWare as
the Company may reasonably request, provided that PenWare shall not be required
to disclose any information which it is legally required to keep confidential.
The Company will not use such information for purposes other than this Agreement
and will otherwise hold such information in confidence (and the Company will
cause its consultants and advisors also to hold such information in confidence)
until such time as such information otherwise becomes publicly available, and in
the event of termination of this
<PAGE> 23
Agreement for any reason the Company shall promptly return, or cause to be
returned, to the disclosing party all documents obtained from PenWare, and any
copies made of such documents, extracts and copies thereof.
(b) The Company shall afford to PenWare and shall
cause its independent accountants to afford to PenWare, and its accountants,
counsel and other representatives, reasonable access during normal business
hours during the period prior to the Closing Date to all of the Company's
properties, books, contracts, commitments and records and to the audit work
papers and other records of the Company's independent accountants. During such
period, the Company shall use reasonable efforts to furnish promptly to PenWare
such information concerning the Company as PenWare may reasonably request,
provided that the Company shall not be required to disclose any information
which it is legally required to keep confidential. PenWare will not use such
information for purposes other than this Agreement and will otherwise hold such
information in confidence (and PenWare will cause PenWare's consultants and
advisors also to hold such information in confidence) until such time as such
information otherwise becomes publicly available, and in the event of
termination of this Agreement for any reason PenWare shall promptly return, or
cause to be returned, to the disclosing party all documents obtained from the
Company, and any copies made of such documents, extracts and copies thereof.
8.2 Legal Conditions to the Transactions Contemplated by This
Agreement. Each party will take all reasonable actions necessary to comply
promptly with all legal requirements that may be imposed on such party with
respect to the transactions contemplated by this Agreement and will promptly
cooperate with and furnish information to the other party in connection with any
such requirements imposed upon such other party in connection with the
transactions contemplated by this Agreement. Each party will take all reasonable
actions to obtain (and to cooperate with the other party in obtaining) any
consent, authorization, order or approval of, or any exemption by, any
governmental authority, or other third party, required to be obtained or made by
such party (or by the other party) in connection with the transactions
contemplated by this Agreement.
8.3 Rule 14f-1 Statement. As promptly as practicable after the
date hereof, the Company, with the cooperation of PenWare, shall prepare and, no
less than ten days prior to the Closing Date, shall file with the SEC and
distribute to the Company's shareholders the information required by Rule 14f-1
under the Securities Exchange Act of 1934, if any. PenWare shall furnish to the
Company all information as may be reasonably requested in connection with any
action contemplated by this Section 8.3.
8.4 Blue Sky Laws. The Company shall take such steps as may be
necessary to comply with the securities and Blue Sky laws of all jurisdictions
which are applicable in connection with the issuance of the Company Shares to
the PenWare Stockholders pursuant to this Agreement. PenWare shall use its best
efforts to assist the Company as may be necessary to comply with such laws.
<PAGE> 24
8.5 Communications. Between the date hereof and the Closing
Date, neither PenWare nor the Company will, without the prior written approval
of the other party, furnish any communication to the public generally if the
subject matter thereof relates to the other party or to the transactions
contemplated by this Agreement, except as may be necessary, in the opinion of
their respective counsel, to comply with the requirements of any law,
governmental order or regulation.
8.6 Update to Disclosures. Without limiting any party's right
to rely on the representations and warranties of any other party as of the date
of this Agreement, each party shall provide the other parties with updates to
the disclosures previously provided or made available as to material facts which
arise between the date of this Agreement and the Closing Date and which, if they
had occurred and been known prior to the date of this Agreement, would have been
required to have been disclosed in order to make the representations and
warranties contained in Articles 4 and 5 true and correct as of the date of this
Agreement.
8.7 Good Faith. Each party shall act in good faith in an
attempt to cause all the conditions precedent to its obligations under this
Agreement to be satisfied. Each party will act in good faith and take all
reasonable action within its capability necessary to render accurate as of the
Closing Date its representations and warranties contained in this Agreement.
8.8 Securities Law Matters. The Company Shares issued to the
PenWare Stockholders shall be issued without registration under the Securities
Act of 1933, as amended, (the "Act"), in reliance upon certain exemptions from
the registration requirements of the Act, including Regulation D adopted
thereunder. Accordingly, the Company Shares may not be resold by the holders
thereof without registration under the Act unless a further exemption from the
registration requirements of the Act is available for such resale. All
certificates representing the Company Shares shall bear the following legend or
a legend of similar import:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER CERTAIN STATE
SECURITIES LAWS. NO SALE OR TRANSFER OF THESE SHARES MAY BE MADE IN THE ABSENCE
OF (1) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR (2) AN OPINION OF
COUNSEL THAT REGISTRATION UNDER THE ACT OR UNDER APPLICABLE STATE SECURITIES
LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED SALE OR TRANSFER."
8.9 Reverse Stock Split; Reduction in Outstanding Capital
Stock.
(a) Prior to the Closing Date, the Company
shall effect a reverse split of its outstanding Common Stock. Upon completion of
the reverse stock split, and as of the Closing Date, the Company will have two
hundred and fifty thousand (250,000) shares of Common Stock outstanding or
issuable upon exercise of options, warrants, calls, rights, commitments or any
other agreements of any kind whatsoever, excluding up to an additional one
thousand (1,000) shares of Common Stock which may be issued by the Company in
<PAGE> 25
connection with rounding up fractional shares resulting from the reverse stock
split; and there are no other options, warrants, calls, rights, commitments or
agreements of any character to which the Company is a party or by which it is
bound obligating the Company to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or any bond, note, or
other security of the Company or obligating the Company to grant, extend or
enter into any such option, warrant, call, right, commitment or agreement.
(b) As of the Closing Date, PenWare will have
4,500,000 shares of common stock, and options to purchase common stock,
outstanding, which common stock and options shall be converted into (or be
substituted for, in the case of the options) 1,125,000 shares of the Company's
Common Stock (or options therefor, as applicable). PenWare will also have
4,500,000 shares of its Series A Preferred Stock outstanding, which Series A
Preferred Stock shall be converted into 112,500 shares of the Company's Series C
Preferred Stock in the form attached as Exhibit C hereto following the Closing
Date.
8.10 Private Placement. As of or prior to the Closing Date,
PenWare and the Company shall have entered into a letter of intent with
Cruttenden Roth, Inc. ("Cruttenden") pursuant to which Cruttenden will act as
placement agent for a best efforts private placement of the Company's common or
preferred stock (the "PenWare Private Placement") in the aggregate amount of at
least $4,000,000. Those investors who purchased the Company's common stock in a
private placement (the "PenUltimate Private Placement") that closed on December
15, 1995 (the "December 15 Investors") shall have the right to invest up to
$1,000,000 in the PenWare Private Placement at a valuation of $10,000,000, which
right to invest shall terminate at the time that Cruttenden completes or
terminates the PenWare Private Placement.
8.11 Liabilities of the Company. As at the date hereof the
Company had known liabilities as set forth on Schedule 8.11 attached hereto,
including but not limited to an $85,000 loan by the December 15 Investors to the
Company (which loan is repayable as provided in the last sentence of this
Section 8.11) (the "Loan"), accounts payables, payroll and payroll related
expenses, severance payments, equipment leases, rent, notes and other operating
expenses (the "Known Liabilities"). PenWare agrees that the Company can retain
the responsibility for two leases with AT&T Corp. (the "AT&T Leases"), one for
telephone equipment and one for office furniture, with monthly lease payment
obligations commencing on the later of the Closing Date or April 1, 1996 and
aggregating approximately $43,500 for the lifetime of the leases. The Company
shall discharge all Known Liabilities of the Company other than the AT&T Leases
and the Loan before the Closing, and shall provide satisfactory evidence of such
discharge to PenWare prior to Closing. Upon the closing of a pending offering of
an aggregate (net to the Company) of at least $2,000,000 in sales of the
Company's capital stock (not including debt financing or other bridge financing)
at or after the Closing (an "Offering"), the PenWare Stockholders agree to cause
the Company to pay, pursuant to Section 9.2(f), $85,000 to the December 15
Investors, pro rata among them based upon their percentage invested in the
PenUltimate Private Placement, net of the amount of any liabilities of the
Company (known or unknown, but not including the AT&T Leases or the Loan) that
arose prior to Closing and have
<PAGE> 26
not since been paid or otherwise discharged ("Liabilities"), and to pay, 45 days
after the Closing, the balance remaining from the $5,000 cash remaining in the
Company's bank account at Closing, which amount is available only to discharge
Liabilities.
8.12 Assets of the Company. At the Closing the Company shall
have retained its corporate existence, the AT&T Leases and digital telephones,
all leased furniture and all accumulated tax credits and its computer systems,
software technologies and proprietary rights, applications software, office
equipment and furniture identified in Schedule 8.12 attached hereto. In the
event the Company decides to license software product prior to the Closing,
PenWare's consent shall be obtained (which consent shall not be unreasonably
withheld or delayed). The license granted shall provide for royalties payable to
PenWare, and the Company will retain a perpetual, royalty free, non-exclusive
world-wide license therein and thereto. After signing and before closing, the
parties shall mutually agree to cause certain of the items set forth on Schedule
8.12 (and any other Company furniture and equipment) to be transferred to
PenWare's offices or to such other location as PenWare may instruct.
8.13 Tax Reporting. PenWare and the Company shall comply
with the record keeping and reporting requirements of Treasury Regulation
SectionSection1.351-3 and 1.368-3.
8.14 PenWare Options.
(a) Subject to the provisions of this
Section 8.14 at and as of the Closing, the Company will assume the PenWare
Options and all obligations of PenWare under the PenWare 1992 Employee Stock
Option Plan. Each PenWare Option so assumed by the Company under this Agreement
will continue to have, and be subject to, the same terms and conditions set
forth in the PenWare Employee Stock Option Plan and in the other documents
governing such PenWare Option immediately prior to the Closing. The number of
shares of Company Common Stock issuable upon exercise of each such PenWare
Option will be equal to .25 (the exchange ratio) multiplied by the number of
shares of PenWare Stock subject to such PenWare Option, and the aggregate
exercise price will be equal to the aggregate exercise price of the PenWare
Option immediately prior to the transaction divided by .25 (the exchange ratio).
If the foregoing calculation results in a PenWare Option being exercisable for a
fraction of a share, then the number of shares of Company Common Stock subject
to such option will be rounded down to the nearest whole number and the value of
the fractional share will be paid in cash. The right to receive an assumed
PenWare Option may not be assigned or transferred in any manner except by
operation of law, by will or by the laws of descent. Any attempted assignment in
violation of this Section shall be void.
(b) It is the intention of the parties that each
assumed PenWare Option qualify as an "incentive stock option" within the meaning
of Section 422 of the Code ("ISOs") to the extent that such PenWare Option
constituted an ISO immediately prior to the Closing. No assumed PenWare Option
will entitle the holder thereof to any additional benefits within the
<PAGE> 27
meaning of Section 424(a)(2) of the Code that were not available prior to such
assumption.
(c) After the Closing Date, the Company shall
issue to each holder of an outstanding PenWare Option, upon the surrender of
such PenWare Option to the Company, a document evidencing the foregoing
assumption by the Company.
8.15 Form 10-Q. The Company shall prepare and timely file its
Quarterly Report on Form 10-QSB for the quarter ended March 31, 1996, such
report to comply in all material respects with the requirements of the Exchange
Act.
8.16 Bridge Financing. The parties hereto agree that it is in
their mutual best interest to cause the Company, prior to the closing of the
transactions contemplated by this Agreement, to enter into a bridge financing to
fund ongoing operations. The parties further agree that because PenUltimate has
ceased operations and PenWare, post-closing under this Agreement, will become a
subsidiary of PenUltimate, PenWare should enter into the bridge financing on
behalf of PenUltimate, so long as the obligations contained in such bridge
financing are obligations of PenUltimate in the event of a closing under this
Agreement. Therefore, the parties hereto agree, notwithstanding any other
statements contained in the bridge financing documents prepared by Cruttenden
Roth to be executed prior to the closing of the private placement contemplated
by the PPM, that the indebtedness evidenced by such bridge financing documents
shall be convertible into PenUltimate Common Stock (and not PenWare capital
stock) upon the closing of the transactions contemplated by this Agreement.
Further, such conversion shall proportionately dilute the PenWare shareholders'
ninety percent (90%) interest in PenUltimate immediately following the closing
of the transactions contemplated by this Agreement, and the existing PenUltimate
stockholders' ten percent (10%) interest in PenUltimate immediately following
the closing of the transactions contemplated by this Agreement. The parties
agree to take such further actions and execute such further documents as may be
necessary or desirable to effectuate the foregoing agreement, including without
limitation causing to be issued or transferred the appropriate amounts of
PenUltimate Common Stock or Preferred Stock to cause their respective ownership
interest in PenUltimate immediately following the conversion of the bridge
financing to comport with the result desired to be achieved by the above
agreement.
9. CONDITIONS PRECEDENT
9.1 Conditions to Each Party's Obligations. The respective
obligations of each party to consummate the transactions contemplated by this
Agreement shall be subject to the satisfaction on or prior to the Closing Date
of the following conditions unless waived by such party:
(a) Government Approvals. All authorizations,
consents, orders or approvals of, or declarations or filings with, or expiration
of waiting periods imposed by, any governmental authority necessary
<PAGE> 28
for the consummation of the transactions contemplated by this Agreement shall
have been filed, occurred or been obtained.
(b) Third-Party Approvals. Any and all consents
or approvals required from third parties relating to contracts, licenses, leases
and other instruments, material to the respective businesses of the Company and
PenWare shall have been obtained.
(c) Rule 14f-1 Statement. The definitive statement
required pursuant to Rule 14f-1 under the Securities Exchange Act of 1934 (the
"14f-1 Statement") shall have been filed by the Company with the SEC and
transmitted to the Company's Shareholders no less than ten days prior to the
Closing Date. None of the information supplied by the Company or PenWare for
inclusion in the Information Statement at the date such information shall have
been supplied and at the time it is mailed to the Company's Stockholders, shall
have contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(d) Legal Action. No temporary restraining order,
preliminary injunction or permanent injunction or other order preventing the
consummation of the transaction contemplated by this Agreement shall have been
issued by any federal or state court and remain in effect, and no litigation
seeking the issuance of such an order or injunction, shall be pending which, in
the good faith judgment of either of the Company's or PenWare's Board of
Directors, has a reasonable probability of resulting in such order, injunction
or damages. In the event any such order or injunction shall have been issued,
each party agrees to use its reasonable efforts to have any such injunction
lifted.
9.2 Conditions to Obligations of the Company. The obligations
of the Company to consummate the transactions contemplated by this Agreement are
subject to the satisfaction on or prior to the Closing Date of the following
conditions, unless waived by the Company:
(a) Representations and Warranties of PenWare
Stockholders. The representations and warranties of the PenWare Stockholders set
forth in this Agreement shall be true and correct in all material respects as of
the date of this Agreement and as if made at and as of the Closing Date, except
as otherwise contemplated by this Agreement.
(b) Representations and Warranties of PenWare. The
representations and warranties of PenWare set forth in this Agreement shall be
true and correct in all material respects as of the date of this Agreement and
as if made at and as of the Closing Date, except as otherwise contemplated by
this Agreement, and the Company shall have received a certificate or
certificates to such effect signed by the chief executive officer and chief
financial officer of PenWare.
<PAGE> 29
(c) Performance of Obligations of PenWare.
PenWare shall have performed in all material respects all obligations required
to be performed by it under this Agreement prior to the Closing Date, and the
Company shall have received a certificate signed by the chief executive officer
and chief financial officer of PenWare to such effect.
(d) No Material Adverse Change. Since the date of
the most recent balance sheet included in the PenWare Financial Statements
except as expressly contemplated by this Agreement or the PPM, there shall have
been no changes in the condition (financial or otherwise), business, prospects,
employees, operations, obligations or liabilities of PenWare which have had or
may be reasonably expected to have a materially adverse effect on the financial
condition, business, or operations of PenWare.
(e) Legal Opinion. The Company shall have received
a legal opinion substantially in the form of Exhibit C hereto from Wilson
Sonsini Goodrich & Rosati, P.C.
(f) December 15 Investors. There shall be
delivered to the December 15 Investors directly by wire transfer the aggregate
amount of $85,000, as contemplated by Section 8.11 and otherwise in accordance
with instructions received from the Company.
(g) Additional Closing Documents. The Company
shall have received the documents and instruments referred to at Sections 2.2
and 2.3, and such other documents and instruments as are required to be
delivered pursuant to the provisions of this Agreement or otherwise reasonably
requested by the Company.
9.3 Conditions to Obligations of PenWare. The obligations of
PenWare and the PenWare Stockholders to consummate the transactions contemplated
by this Agreement are subject to the satisfaction on or prior to the Closing
Date of the following conditions unless waived by PenWare and the PenWare
Stockholders:
(a) Representations and Warranties. The
representations and warranties of the Company set forth in this Agreement shall
be true and correct in all material respects as of the date of this Agreement
and as if made at and as of the Closing Date, except as otherwise contemplated
by this Agreement, and PenWare shall have received a certificate signed by the
chief executive officer and chief financial officer of the Company to such
effect.
(b) Performance of Obligations of the Company.
The Company shall have performed in all material requests all obligations
required to be performed by it under this Agreement prior to the Closing Date,
and PenWare shall have received a certificate signed by Rich Lull and Bill
Slater to such effect.
<PAGE> 30
(c) SEC Reports. The Company shall have timely
filed all reports that it is required to file prior to the Closing Date under
Section 13(a) or 15(d) of the Securities Exchange Act of 1934.
(d) No Material Adverse Change. Since the date
of the most recent balance sheet included in the Company Financial Statements,
except as expressly contemplated by this Agreement or disclosed in Section 5.7
of this Agreement, there shall have been no changes in the condition (financial
or otherwise), business, prospects, employees, operations, obligations or
liabilities of the Company which, in the aggregate, have had or may be
reasonably expected to have a materially adverse effect on the financial
condition, business or operations of the Company.
(e) Resignations. The Company shall have
received and accepted the written resignations of all of the Company's officers
and all of the Company's directors, which resignations shall contain mutual
releases of claims by and among the Company and such officers and directors as
of the Closing Date, and shall have delivered such resignations to PenWare. The
Company shall have no employees.
(f) Election of Directors and Officers. The Board
of Directors of the Company shall have elected the following persons to serve as
directors and officers of the Company effective as of the Closing Date:
Name Title
Aziz A. Valliani President, Chief Executive Officer and Director
David M. Licurse Chief Financial Officer and Treasurer
Arthur F. Schneiderman Secretary
Paul Dali Chairman and Director
Nazim Kareemi Executive Vice President and Director
Llavan Fernando Vice President of Hardware Development
Abbas Rafii Vice President of Software Development
(g) Known Liabilities. The Known Liabilities
shall have been paid or otherwise discharged.
(h) Legal Opinion. PenWare shall have received a
legal opinion substantially in the form of Exhibit D hereto from Horwitz, Cutler
& Beam.
(i) The PenWare Private Placement shall have been
completed.
(j) Additional Closing Documents. PenWare and the
PenWare Stockholders shall have received the documents and instruments referred
to at Section 2.1, and such other documents and instruments as are required to
be delivered pursuant to the provisions of this Agreement or otherwise
reasonably requested by PenWare.
<PAGE> 31
10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The respective representations and warranties of
the parties contained herein shall not survive the Closing, provided, however,
that such limitation on the survival of the representations and warranties of
the parties contained herein shall not apply to any fraudulent breach of a
representation or warranty or to any breach or inaccuracy in any representation
or warranty known to such party on or before the date of Closing.
11. OBLIGATIONS OF THE COMPANY AFTER THE CLOSING
11.1 SEC Filing. The Company shall file a Form 8-K which
contains the audited financial statements of PenWare and proforma financial
information required by Form 8-K with the SEC within 75 days after the Closing
Date.
11.2 Change of Name. As promptly as practical after the
Closing, the Company shall change its name to MobiNetix Systems, Inc.; provided
that this obligation shall not force the Company to hold a shareholder meeting
prior to its next annual meeting held in accordance with its by-laws, to obtain
shareholder approval, if required, for such name change.
11.3 Registration Statement. At such time as the Company
registers any of the Common Stock (other than on Form S-8), the Company shall
register the resale of the shares of the Company's common stock owned by the
December 15 Investors and any other shares the Company wishes to register, in
the sole discretion of the Company's Board of Directors. The Company shall use
its best efforts to cause any such registration statement to be declared
effective by the SEC as promptly as practical. All costs and expenses relating
to the Registration Statement shall be paid by the Company.
12. PAYMENT OF EXPENSES
The Company and PenWare shall each pay their own
fees and expenses incurred incident to the preparation and carrying out of the
transactions herein contemplated (including legal and accounting fees).
13. TERMINATION
13.1 This Agreement may be terminated at any time prior to the
Closing Date:
(a) by mutual written consent of the Company, PenWare
and the PenWare Stockholders;
(b) by the Company if there has been a
material breach of any representation, warranty, covenant or agreement contained
in this Agreement by PenWare or the PenWare Stockholders;
<PAGE> 32
(c) by PenWare and the PenWare Stockholders if
there has been a material breach of any representation, warranty, covenant or
agreement contained in this Agreement by the Company;
(d) by either the Company or PenWare and the PenWare
Stockholders if the Closing shall not have occurred by May 31, 1996;
(e) by the Company if any condition to the
Company's obligation to consummate the transactions contemplated by this
Agreement has not been satisfied or waived by the Company;
(f) by PenWare and the PenWare Stockholders if
any condition to the obligations of PenWare and PenWare Stockholders to
consummate the transactions contemplated by this Agreement has not been
satisfied or waived by PenWare and the PenWare Stockholders; or
(g) by either party in its sole discretion on or
prior to the date that is ten days after the date hereof in the event such party
is not satisfied with the results of its due diligence investigation.
13.2 Effect of Termination. Termination of this Agreement in
accordance with Section 13.1 may be effected by written notice from either the
Company or PenWare and the PenWare Stockholders, as appropriate, specifying the
reasons for termination and shall not subject the terminating party to any
liability for any valid termination.
14. MISCELLANEOUS
14.1 Tax Treatment. The transaction contemplated herein is
intended to result in a "tax-free" exchange under the provisions of Section 351
and/or Section 368 of the Internal Revenue Code. PenWare, the PenWare
Stockholders and the Company acknowledge, however, that they each have been
represented by their own tax advisors in connection with this transaction; that
no party hereto has made any representation or warranty to the other with
respect to the treatment of such transaction or the effect thereof under
applicable tax laws, regulations, or interpretations; and that no attorney's
opinion or private revenue ruling has been obtained with respect to the effects
thereof under the Internal Revenue Code of 1986, as amended.
14.2 Further Assurances. From time to time, at the other
party's request and without further consideration, each of the parties will
execute and deliver to the others such documents and take such action as the
other party may reasonably request in order to consummate more effectively the
transactions contemplated hereby.
14.3 Payment of Fees and Expenses. If any legal action or any
arbitration or other proceeding is brought for the enforcement of this
Agreement, or because of an alleged dispute, breach, default, or
misrepresentation in connection with any of the provisions of this Agreement,
the successful or prevailing party or parties shall be entitled to recover
reasonable attorneys' fees and other costs incurred in that action or
<PAGE> 33
proceeding, in addition to any other relief to which it or they may be entitled.
14.4 Parties in Interest. Except as otherwise expressly
provided herein, all the terms and provisions of this Agreement shall be binding
upon, shall inure to the benefit of and shall be enforceable by the respective
heirs, beneficiaries, personal and legal representatives, successors and assigns
of the parties hereto.
14.5 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California as applied to
agreements made and performed in California by residents thereof.
14.6 Entire Agreement; Amendments. This Agreement, including
the Schedules, Exhibits and other documents and writings referred to herein or
delivered pursuant hereto, which form a part hereof, contains the entire
understanding of the parties with respect to its subject matter. There are no
restrictions, agreements, promises, warranties, covenants or undertakings other
than those expressly set forth herein or therein. This Agreement supersedes all
prior agreements and understandings between the parties with respect to its
subject matter. This Agreement may be amended only by a written instrument duly
executed by the parties or their respective successors or assigns.
14.7 Headings, Etc.. The section and paragraph headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
14.8 Pronouns. All pronouns and any variations thereof shall
be deemed to refer to the masculine, feminine or neuter, singular or plural, as
the identity of the person, persons, entity or entities may require.
14.9 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
14.10 Notices. Any and all notices, demands or other
communications required or desired to be given hereunder by any party shall be
in writing and shall be validly given or made to another party if given by
personal delivery, telex, facsimile, telegram or if deposited in the United
States mail, certified or registered, postage prepaid, return receipt requested.
If such notice, demand or other communication is given by personal delivery,
telex, facsimile or telegram, service shall be conclusively deemed made at the
time of receipt. If such notice, demand or other communication is given by mail,
such notice shall be conclusively deemed given forty-eight (48) hours after the
deposit thereof in the United States mail addressed to the party to whom such
notice, demand or other communication is to be given as hereinafter set forth:
<PAGE> 34
If to PenWare or the PenWare Stockholders: At the addresses
set forth below their names on the signature page of this Agreement or on
Exhibit A hereto
If to Company: At the address set forth below its name on
the signature page of this Agreement
15. APPOINTMENT OF AGENT
The PenWare Stockholders hereby irrevocably
constitute and appoint Aziz Valliani as their true and lawful attorney (the
"Agent") with full right and power in their names and stead to take any and all
action by and on behalf of them necessary or desirable to consummate the
transactions contemplated by this Agreement, including without limitation, the
right and power to receive certificates representing the Company Shares on
behalf of each of the PenWare Stockholders, to deliver to the Company the
certificates representing the PenWare Shares, to give notices on behalf of the
PenWare Stockholders pursuant to this Agreement, to waive performance of any of
the obligations of the Company or waive compliance by the Company with any of
its covenants hereunder, to deliver investment letters of the PenWare
Stockholders referred to in Section 3.3 hereof, and to amend or terminate this
Agreement as herein provided. Any such action taken by the Agent on behalf of a
PenWare Stockholder shall be binding upon such PenWare Stockholder. The Company
shall not have any responsibility to the PenWare Stockholders or any of them for
the distribution by the Agent of the certificates representing the Company
Shares to be delivered to the PenWare Stockholders, nor shall the Company be
liable in any manner whatsoever to the PenWare Stockholders or any of them by or
on account of any act or omission of the Agent. In taking any action whatsoever
hereunder, the Agent shall be protected in relying upon any notice, paper or
other document reasonably believed by him to be genuine, or upon any evidence
reasonably deemed by him to be sufficient. The Agent shall not be liable to the
Company, PenWare or the PenWare Stockholders for any act performed or omitted to
be performed by him in good faith and shall be liable only in the case of his
own bad faith or willful misconduct or gross negligence. The Agent may consult
with counsel in connection with his duties hereunder and shall be fully
protected in any act taken, suffered or permitted by him in good faith in
accordance with the advice of counsel. The Agent shall not be responsible for
determining or verifying the authority of any person acting or purporting to act
on behalf of any party hereto. The Agent may be replaced at any time by
affirmative vote or written consent of the holders of a majority-in-interest of
the PenWare Stockholders.
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the parties hereto as of the date first above written.
PENWARE, INC.,
a California corporation
By: /s/ Aziz Valliani
Its: President and CEO
Address: 845 Page Mill Road
<PAGE> 35
Palo Alto, CA 94304
PENULTIMATE, INC.,
a Delaware corporation
By: /s/ Richard Lull
Its: President and CEO
Address: 19000 MacArthur Blvd
Irvine, CA 92715
PENWARE STOCKHOLDERS
SIGNATURE PAGE
/s/ Faruq Ahmad
/s/ Martin Alexander
/s/ Llavan Fernando
/s/ Laurene Garchow
/s/ Nazim Kareemi
/s/ David Licurse
/s/ Tom Nunan
/s/ Abbas Raffi
/s/ Michael Sclafani
/s/ Aziz Valliani
/s/ Nazem & Company III, L.P. by Paul Dali
