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