1
Exhibit 12
____________________________________
COMMON STOCK PURCHASE AGREEMENT
Dated as of August 31, 1990
Among
ASK COMPUTER SYSTEMS, INC.,
ELECTRONIC DATA SYSTEMS CORPORATION
and
HEWLETT-PACKARD COMPANY
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TABLE OF CONTENTS
Page
SECTION 1 - Initial Sale of Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
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1.1 Sale of Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Legend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2 - Representations and Warranties of the Company . . . . . . . . . . . . . . . . . . 3
2.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.4 No Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.5 Accuracy of Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.6 Financial Statements and Changes . . . . . . . . . . . . . . . . . . . . . . 7
2.7 Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.8 Governmental Consent, etc . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.9 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.10 Amendment to Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3 - Representations and Warranties of the Purchasers . . . . . . . . . . . . . . . . . 10
3.1 Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.2 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.3 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.4 Government Consents, etc . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.5 Investigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.6 Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 4 - Conditions to Obligations of Purchasers . . . . . . . . . . . . . . . . . . . . . 13
4.1 Representations and Warranties Correct . . . . . . . . . . . . . . . . . . . 13
4.2 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.3 Opinion of Company's Counsel . . . . . . . . . . . . . . . . . . . . . . . . 13
4.4 No Order Pending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.5 HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.6 No Law Prohibiting or Restricting Such Sale . . . . . . . . . . . . . . . . . 14
4.7 Compliance Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.8 Notification Regarding Contingent Event . . . . . . . . . . . . . . . . . . . 15
SECTION 5 - Conditions to Obligations of Company . . . . . . . . . . . . . . . . . . . . . . . 15
5.1 Representations and Warranties Correct . . . . . . . . . . . . . . . . . . . 15
5.2 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.3 No Order Pending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
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5.4 HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.5 No Law prohibiting or Restricting Such Sale . . . . . . . . . . . . . . . . . 16
5.6 Compliance Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 6 - Covenants of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.1 No Objection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.2 Notice of Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.3 Sale of Additional Shares. . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.4 Membership on the Board of Directors . . . . . . . . . . . . . . . . . . . . 18
6.5 Equity Method Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.6 Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 7 - Covenants of the Purchasers . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.1 Limitation on Ownership of Voting Stock . . . . . . . . . . . . . . . . . . . 23
7.2 Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.3 Voting Trust, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.4 Solicitation of Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.5 Acts in Concert with Others . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.6 Restrictions on Transfer of Voting Stock . . . . . . . . . . . . . . . . . . 27
7.7 Confidential Information . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.8 Right to Maintain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.9 Acquisition of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 8 - Company Right of First Refusal . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.1 Right of First Refusal . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.2 Tender Offer Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.3 Assignment of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 9 - Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
9.1 Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
9.2 Termination of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 44
9.4 Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
9.5 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
9.6 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
9.7 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
9.8 Entire Agreement; Amendment . . . . . . . . . . . . . . . . . . . . . . . . . 47
9.9 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
9.10 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
9.11 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
9.12 Injunctive Relief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
9.13 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
9.14 Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
9.15 No Third Party Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
9.16 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
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TABLE OF CONTENTS
(continued)
Page
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Exhibits
A Registration Rights Agreement
B Opinion of Wilson, Sonsini, Goodrich & Rosati
C Company Compliance Certificate
D Purchaser's Compliance Certificate
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COMMON STOCK PURCHASE AGREEMENT
THIS COMMON STOCK PURCHASE AGREEMENT (this "Agreement") is made as of
this 31st day of August, 1990, among ASK Computer Systems, Inc., a Delaware
corporation (the "Company"), and Electronic Data Systems Corporation, a Texas
corporation ("EDS" or "Purchaser"), and Hewlett-Packard Company, a California
corporation ("HP" or "Purchaser") (collectively, the "Purchasers").
SECTION 1
Initial Sale of Common Stock
1.1 Sale of Common Stock. Subject to the terms and conditions
hereof, the Company will issue and sell to EDS and HP, and EDS and HP will
purchase from the Company, at the Closing as defined below, 3,710,575 shares
(the "EDS Shares") and 1,855,288 shares (the "HP Shares"), respectively, of
Common Stock, $.01 par value, of the Company (the "Common Stock") for an
aggregate of 5,565,863 shares (the "Shares") at a purchase price of $10.78 per
share, for a purchase price of $39,999,998.50 for the EDS Shares and a purchase
price of $20,000,004.64 for the HP Shares, and an aggregate purchase price of
$60,000,003.14; provided, however, that if the notification to be delivered by
the Company to the Purchasers pursuant to Section 4.8 states that the
Contingent Event will not occur, (i) the Company shall have no obligation to
sell to HP, and HP shall have no obligation to purchase, the HP Shares, and
(ii) the Company shall have the obligation to sell to EDS, and EDS shall have
the right (but not the obligation) to purchase, up to one-half of the EDS
Shares, which right must be exercised (if at
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all) by written notice to the Company within sixty (60) days following the
Company's notification with respect to the Contingent Event. In the event EDS
provides such notice of exercise, the sale and purchase of shares contemplated
thereby shall take place no later than five (5) days following delivery of such
notice. For purposes of this Agreement, "EDS Shares" shall mean the number of
shares of Common Stock actually purchased by EDS under this Section 1.1.
1.2 Closing Date. The closing of the purchase and sale of the
Shares (the "Closing") shall be held at the law offices of Wilson, Sonsini,
Goodrich & Rosati, P.C., Two Palo Alto Square, Suite 900, Palo Alto, California
at 10:00 a.m. on the third business day following expiration or early
termination of all waiting periods imposed by the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act") and satisfaction of all closing
conditions set forth in Sections 4 and 5 hereof or at such other time and place
upon which the Company and the Purchasers shall mutually agree (the date of the
Closing is hereinafter referred to as the "Closing Date").
1.3 Delivery. At the Closing, the Company will deliver to each of
the Purchasers a certificate or certificates representing that portion of the
Shares purchased by such Purchasers, against payment of the purchase price
therefor, by wire transfer in same day funds.
1.4 Legend. The certificate or certificates for the Shares shall
be subject to a legend restricting transfer under the Securi-
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ties Act of 1933, as amended (the "Securities Act"), and referring to
restrictions on transfer and rights of first refusal herein, such legend to be
substantially as follows:
"The shares represented by this certificate have been acquired
for investment and have not been registered under the Securities Act
of 1933. Such shares may not be sold or transferred in the absence of
such registration or an opinion of counsel satisfactory to the Company
as to the availability of an exemption from registration.
"The shares represented by this certificate are subject to
restrictions on transfer, including any sale, pledge or other
hypothecation, and rights of first refusal set forth in an agreement
dated as of August 31, 1990 among the Company and the other parties
identified therein, a copy of which agreement may be obtained at no
cost by written request made by the holder of record of this
certificate to the secretary of the Company at the Company's principal
executive offices."
SECTION 2
Representations and Warranties of the Company.
The Company hereby represents and warrants to each of the Purchasers
as follows:
2.1 Organization. The Company is a corporation duly organized and
validly existing under the laws of the State of Delaware and is in good
standing under such laws. The Company has all requisite corporate power and
authority to own, lease and operate its properties and assets, and to carry on
its business as presently conducted and as proposed to be conducted. The
Company is qualified to do business as a foreign corporation in each
jurisdiction in which the ownership of its property or the nature of its
business requires such qualification, except where failure to so qualify would
not have a material adverse effect on the Company. The Company has furnished
to the Purchasers true and correct copies
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of its Certificate of Incorporation and By-laws, as amended, and will furnish
upon request to the Purchasers true and correct copies of any amendments
thereto through the term of this Agreement.
2.2 Capitalization. The authorized capital stock of the Company
consists of 40,000,000 shares of Common Stock, $.01 par value, of which at
August 23, 1990, 13,274,107 shares were issued and outstanding. All such
issued and outstanding shares have been duly authorized and validly issued and
are fully paid and nonassessable. As of August 23, 1990, the Company has
reserved a total of 3,152,537 shares of its Common Stock for issuance under its
1982 Incentive Stock Option Plan, of which 2,868,139 shares are reserved for
issuance upon exercise of outstanding options; a total of 149,400 shares for
issuance under its 1986 Director Option Plan, of which 68,600 shares are
reserved for issuance upon exercise of outstanding options; a total of 250,000
shares for issuance under its 1990 Employee Stock Purchase Plan; and a total of
6,314 shares for issuance under its 1981 Deferred Compensation Plan for
Directors. On August 14, 1990, the Company entered into a Common Shares Rights
Agreement (the "Rights Agreement") with The First National Bank of Boston, and
has announced the distribution of rights under the Rights Agreement to all
stockholders of record as of August 31, 1990. Except as provided or described
in this Agreement, there are no other options, warrants, conversion privileges
or other contractual rights presently outstanding to purchase or otherwise
acquire any authorized but unissued shares of the Company's capital stock or
other securities.
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2.3 Authorization. The Company has all corporate right, power and
authority to enter into this Agreement and the Registration Rights Agreement
set forth in Exhibit A hereto and to consummate the transactions contemplated
hereby and thereby. All corporate action on the part of the Company, its
directors and stockholders (other than stockholder approval, if required, under
the requirements of the National Association of Securities Dealers, Inc. (the
"NASD") for the issuance of the Shares where the only effect of the failure to
obtain stockholder approval is a loss of status of the Voting Stock as a
National Market System-designated security) necessary for the authorization,
execution, delivery and performance of this Agreement and the Registration
Rights Agreement by the Company, the authorization, sale, issuance and delivery
of the Shares and the performance of the Company's obligations hereunder and
under the Registration Rights Agreement has been taken. This Agreement and the
Registration Rights Agreement have been duly executed and delivered by the
Company and constitute legal, valid and binding obligations of the Company
enforceable in accordance with their respective terms, subject to laws of
general application relating to bankruptcy, insolvency and the relief of
debtors and rules of law governing specific performance, injunctive relief or
other equitable remedies, and to limitations of public policy as they may apply
to Section 4 of the Registration Rights Agreement. Upon their issuance and
delivery pursuant to this Agreement, the Shares will be validly issued, fully
paid and nonassessable. The issuance and sale of the Shares will not give rise
to any preemp-
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tive rights or rights of first refusal on behalf of any person in existence
either on the date hereof or immediately prior to the Closing.
2.4 No Conflict. Subject to compliance with the HSR Act, and
except for the failure to obtain stockholder approval, if required, of the
issuance of the Shares in accordance with the policies of the NASD, the
execution and delivery of this Agreement and the Registration Rights Agreement
do not, and the consummation of the transactions contemplated hereby and
thereby will not, conflict with, or result in any violation of, or default
(with or without notice or lapse of time, or both), or give rise to a right of
termination, cancellation or acceleration of any obligation or to a loss of a
material benefit, under, any provision of the Certificate of Incorporation or
By-laws of the Company or any mortgage, indenture, lease or other agreement or
instrument, permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to the Company, its
properties or assets, the effect of which would have a material adverse effect
on the Company or materially impair or restrict its power to perform its
obligations as contemplated hereby or thereby.
2.5 Accuracy of Reports. All reports (the "SEC Reports") required
to be filed by the Company during the period from June 30, 1989 to the date of
this Agreement under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), copies of which have been furnished to the Purchasers, have
been duly filed, were in substantial compliance with the requirements of their
respective
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forms, were complete and correct in all material respects as of the dates at
which the information was furnished, and none contained (as of such dates) any
untrue statement of a material fact nor omitted to state a material fact
necessary in order to make the statements made therein, in light of the
circumstances in which made, not misleading.
2.6 Financial Statements and Changes. The Company has delivered
to the Purchasers consolidated balance sheets as of June 30, 1989 and 1990 and
the related statements of operations, stockholders' equity and changes in
financial position and notes thereto for the fiscal years ended on June 30,
1988, 1989 and 1990, all of which are accompanied by the related audit opinion
of the Company's independent certified public accountants, Ernst & Young (or
its predecessor) (collectively, the "Financial Statements"). The Financial
Statements, with the notes thereto, have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the fiscal years covered by such statements (except as may be stated
in the notes to such statements or the related report of independent
accountants) and present fairly the Company's financial condition and results
of operations and changes in financial position as of the dates and for the
fiscal years indicated. Except as otherwise disclosed herein, in the Financial
Statements or in the SEC Reports, since June 30, 1990, there has not been:
(a) any change in the assets, liabilities, financial
condition or operations of the Company from that reflected in the
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Financial Statements except changes in the ordinary course of business which
have not been, either in any individual case or in the aggregate, materially
adverse;
(b) any change, except in the ordinary course of
business, in the contingent obligations of the Company, whether by way of
guaranty, endorsement, indemnity, warranty or otherwise;
(c) any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting the properties or
business of the Company;
(d) any declaration or payment of any dividend (other
than the rights distribution described in Section 2.2 hereof) or other
distribution of the assets of the Company;
(e) any labor organization activity; or
(f) to the best of the Company's knowledge, any other
event or condition of any character which has materially and adversely affected
the Company's assets, liabilities, financial condition or operations.
2.7 Registration Rights. Except as set forth in this Agreement or
the Registration Rights Agreement, and except for the continuing practice of
the Company to register its employee stock plans on Form S-8, the Company is
not under any obligation to register any of its presently outstanding
securities or any of its securities which may hereafter be issued.
2.8 Governmental Consent, etc. No consent, approval or
authorization of or designation, declaration or filing with any governmental
authority on the part of the Company is required in
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connection with the valid execution and delivery of this Agreement, or the
offer, sale or issuance of the Shares, or the consummation of any other
transaction contemplated hereby, except the filing of such forms with the
United States Department of Justice and the Federal Trade Commission as shall
be required by the HSR Act and the expiration of any waiting periods thereunder
and such filings as may be required to be made with the Securities and Exchange
Commission ("SEC") and the NASD and filings, if any, to be made in compliance
with applicable blue sky requirements.
2.9 Disclosure. No representation or warranty of the Company
contained in this Agreement or the exhibits attached hereto (when read together
and taken as a whole) contains any untrue statement of a material fact or omits
to state a material fact necessary in order to make the statements contained
herein or therein, in light of the circumstances under which they were made,
not misleading.
2.10 Amendment to Rights Agreement. All action required under the
Rights Agreement to amend the Rights Agreement has been taken (or will have
been taken prior to the Closing) so that the issuance of the Shares shall not
cause either of the Purchasers to become an "Acquiring Person" or cause a
"Shares Acquisition Date", "Distribution Date" or "Triggering Event" to occur
(each as defined in the Rights Agreement).
SECTION 3
Representations and Warranties of the Purchasers
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Each of the Purchasers hereby represents and warrants to the Company,
as to itself alone and not jointly with the other Purchaser, as follows:
3.1 Investment. The Purchaser will acquire the Shares and any
other shares purchased from the Company pursuant to this Agreement for
investment for its own account, not as a nominee or agent, and not with a view
to, or for resale in connection with, any distribution thereof. Purchaser
understands that the Shares and any other shares purchased by it from the
Company pursuant to this Agreement have not been, and will not be, registered
(unless sold in connection with a public offering by the Company) under the
Securities Act by reason of a specific exemption from the registration
provisions of the Securities Act which depends upon, among other things, the
bona fide nature of the Purchaser's investment intent and the accuracy of the
Purchaser's representations as expressed herein.
3.2 Organization. The Purchaser is a corporation duly organized
and validly existing and in good standing under the laws of the state of its
incorporation, with all requisite corporate power and authority to own, lease
and operate its properties and assets and to carry on its business as presently
conducted and as proposed to be conducted.
3.3 Authority. The Purchaser has all corporate right, power and
authority to enter into this Agreement and the Registration Rights Agreement
and to consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement
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and the Registration Rights Agreement by the Purchaser and the consummation by
the Purchaser of the transactions contemplated hereby and thereby have been
duly authorized by all necessary corporate action on behalf of the Purchaser.
This Agreement and the Registration Rights Agreement have been duly executed
and delivered by the Purchaser and constitute legal, valid and binding
obligations of the Purchaser, enforceable in accordance with their respective
terms, subject to laws of general application relating to bankruptcy,
insolvency and the relief of debtors and rules of law governing specific
performance, injunctive relief or other equitable remedies, and to limitations
of public policy as they may apply to Section 4 of the Registration Rights
Agreement. Subject to compliance with the HSR Act and such filings as may be
required to be made with the SEC and any exchange or quotation system on which
the Purchaser's securities are listed or designated, the execution and delivery
of this Agreement and the Registration Rights Agreement do not, and the
consummation of the transactions contemplated hereby and thereby will not,
conflict with or result in any violation of any obligation under any provision
of the Certificate or Articles of Incorporation or By-laws of the Purchaser or
any judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to the Purchaser.
3.4 Government Consents, etc. No consent, approval or
authorization of or designation, declaration or filing with any governmental
authority on the part of the Purchaser is required in connection with the valid
execution and delivery of this Agreement,
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or the offer, sale or issuance of the Shares or the consummation of any other
transaction contemplated hereby, except the filing of such forms with the
United States Department of Justice and the Federal Trade Commission as shall
be required by the HSR Act and the expiration of any waiting periods thereunder
and such filings as may be required to be made with the SEC and any exchange or
quotation system on which the Purchaser's securities are listed or principally
traded.
3.5 Investigation. The Purchaser has had a reasonable opportunity
to discuss the Company's business, management and financial affairs with the
Company's management and the Purchaser has received satisfactory responses from
management of the Company to the Purchaser's inquiries.
3.6 Financing. The Purchaser has the funds, or has written
commitments from responsible financial institutions, to provide the Company
with the funds necessary to consummate the transactions to occur at the
Closing.
SECTION 4
Conditions to Obligations of Purchasers
The obligation of each Purchaser to purchase its portion of the Shares
at the Closing is subject to the fulfillment on or prior to the Closing Date of
the following conditions, any or all of which may be waived at the option of
such Purchaser:
4.1 Representations and Warranties Correct. The representations
and warranties made by the Company in Section 2 hereof shall be true and
correct in all material respects when made, and shall
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be true and correct in all material respects on the Closing Date with the same
force and effect as if they had been made on and as of said date.
4.2 Covenants. All covenants, agreements and conditions contained
in this Agreement to be performed by the Company on or prior to the Closing
Date shall have been performed or complied with in all material respects.
4.3 Opinion of Company's Counsel. Each of the Purchasers shall
have received from Wilson, Sonsini, Goodrich & Rosati, P.C., counsel to the
Company, an opinion addressed to it, dated the Closing Date, in substantially
the form of Exhibit B.
4.4 No Order Pending. There shall not then be in effect any order
enjoining or restraining the transactions contemplated by this Agreement.
4.5 HSR Act. The Purchasers and the Company shall have filed such
forms with the United States Department of Justice and the Federal Trade
Commission as shall be required by the HSR Act and the applicable waiting
periods under such HSR Act shall have expired without notice from such
governmental agencies that additional inquiries are being made.
4.6 No Law Prohibiting or Restricting Such Sale. There shall not
be in effect any law, rule or regulation prohibiting or restricting such sale,
or requiring any consent or approval of any person which shall not have been
obtained to issue the Shares (except as otherwise provided in this Agreement).
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4.7 Compliance Certificate. The Company shall have delivered to
each of the Purchasers a certificate in the form of Exhibit C hereto, executed
on behalf of the Company by the Chief Executive Officer of the Company, dated
the Closing Date, and certifying to the fulfillment of the conditions specified
in Sections 4.1 and 4.2.
4.8 Notification Regarding Contingent Event. The Company shall
have provided written notice to each of the Purchasers stating that the
Contingent Event either will or will not occur.
SECTION 5
Conditions to Obligations of Company
The Company's obligation to sell and issue the Shares at the Closing
is subject to the fulfillment on or prior to the Closing Date of the following
conditions, any or all of which may be waived at the option of the Company:
5.1 Representations and Warranties Correct. The representations
and warranties made by the Purchasers in Section 3 hereof shall be true and
correct in all material respects when made, and shall be true and correct in
all material respects on the Closing Date with the same force and effect as if
they had been made on and as of said date.
5.2 Covenants. All covenants, agreements and conditions contained
in this Agreement to be performed by the Purchasers on or prior to the Closing
Date shall have been performed or complied with in all material respects.
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5.3 No Order Pending. There shall not then be in effect any order
enjoining or restraining the transactions contemplated by this Agreement.
5.4 HSR Act. The Purchasers and the Company shall have filed such
forms with the United States Department of Justice and the Federal Trade
Commission as shall be required by the HSR Act and the applicable waiting
periods under such HSR Act shall have expired without notice from such
governmental agencies that additional inquiries are being made.
5.5 No Law prohibiting or Restricting Such Sale. There shall not
be in effect any law, rule or regulation prohibiting or restricting such sale,
or requiring any consent or approval of any person which shall not have been
obtained to issue the Shares (except as otherwise provided in this Agreement).
5.6 Compliance Certificate. Each of the Purchasers shall have
delivered to the Company a certificate in the form of Exhibit D hereto,
executed on behalf of each of the Purchasers by a Vice President of such
Purchaser, dated the Closing Date, and certifying to the fulfillment of the
conditions specified in Section 5.1 and 5.2 of this Agreement.
SECTION 6
Covenants of the Company
Until the termination of this Agreement in accordance with Section 9.2
hereof or the particular covenant, as the case may be:
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6.1 No Objection. In the case of either Purchaser, provided the
Purchaser is in compliance with and has performed all covenants, agreements and
conditions contained in this Agreement to be performed by the Purchaser, the
Company shall not interpose any objection or take any legal action as a
plaintiff in connection with the acquisition by the Purchaser of such number of
shares of Common Stock as is permitted to be owned by the Purchaser pursuant to
this Agreement.
6.2 Notice of Acquisition.
(a) The Company shall give the Purchasers prompt notice
of the receipt by the Company of (i) any written notice from any person or
group couched in such terms as to put the Company reasonably on notice of the
likelihood that such person or group has acquired or is proposing to acquire
any shares of Voting Stock which results in, or, if successful, would result
in, such person or group owning or having the right to acquire more than 5% of
the Total Voting Power of the Company, (ii) any notice under the HSR Act, and
(iii) any statement on Schedule 13D or Schedule 14D-1 (or any successor
schedule or form to such schedules) under the Exchange Act.
(b) In the event the Company should engage or propose to
engage in any significant discussions of any proposed offer from any person
relating to any merger, consolidation or acquisition involving the sale or
transfer of all or substantially all of the assets of, or any substantial
equity interest in, the Company, the Company will advise the Purchaser of such
discussions at the
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earliest opportunity, but only to the extent the giving of such advice, in the
opinion of legal counsel to the Company, is not inconsistent with the fiduciary
obligations of the Company's Board of Directors.
6.3 Sale of Additional Shares. The Company shall take such action
as is reasonably necessary, subject to compliance with applicable law, to issue
and sell to the Purchasers any additional shares which the Purchasers shall be
entitled to purchase from the Company pursuant to this Agreement.
6.4 Membership on the Board of Directors.
(a) Upon the Closing of the transactions contemplated
hereby, the Company shall permit each of the Purchasers, upon its request, to
have an observer designated by the Purchaser, reasonably satisfactory to the
Company, present at all meetings of the Company's Board of Directors, including
any meetings of any committee designated by the Board. The Company's
obligation to so permit an observer designated by a Purchaser shall terminate
if such Purchaser's percentage interest in the Total Voting Power of the
Company, after adjustment for the exercise, or failure to exercise, of the
right to maintain by such Purchaser pursuant to Section 7.8 below (except in
the event of a delaying notice pursuant to Section 7.8(e)), is less than 5%
(even if such Purchaser's percentage interest should subsequently increase for
any reason to 5% or more). A Purchaser may not exercise its right to
representation on the Company's Board of Directors under paragraph (b) below
for so
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long as the Purchaser shall have designated an observer as permitted herein.
(b) Upon the Closing of the transactions contemplated
hereby, the Company shall cause to be appointed to the Company's Board of
Directors, upon the request of a Purchaser, any person designated by such
Purchaser and approved by the Company, which approval shall not unreasonably be
withheld. Any such person shall serve until his successor has been duly
elected and qualified. Thereafter, the Company shall include in the slate of
nominees recommended by the Company's Board of Directors or management to
stockholders for election as directors at each annual meeting of stockholders
of the Company any person designated pursuant to this paragraph, or such
substitute as may be designated by a Purchaser and who is reasonably acceptable
to the Company, and the Company shall use its best efforts to cause the shares
for which the Company's management or directors hold proxies or are otherwise
entitled to vote to be voted in favor of the election of such designee to the
extent necessary to ensure his election assuming that all Voting Stock
beneficially owned by the Purchaser is voted for such designee. In the event
that any such designee shall cease to serve as a director for any reason, the
Company shall use its best efforts to fill such vacancy by a designee of the
Purchaser reasonably acceptable to the Company. The Company shall not
unreasonably withhold its acceptance of any such designee. Notwithstanding the
foregoing, the Company's obligation under this paragraph shall terminate as to
a Purchaser if the percentage
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interest of such Purchaser in the Total Voting Power of the Company, after
adjustment for the exercise, or failure to exercise, of the right to maintain
by such Purchaser pursuant to Section 7.8 below (except in the event of a
delaying notice pursuant to Section 7.8(e)) is less than 8% (even if such
Purchaser's percentage interest should subsequently increase for any reason to
8% or more). A Purchaser may not exercise its right to have an observer attend
meetings of the Company's Board of Directors under paragraph (a) above for so
long as the Purchaser shall have exercised the right to Board representation as
permitted herein.
(c) Any designee of a Purchaser, whether acting as an
observer or as a director on the Board of Directors, shall be entitled to
except himself from all discussions and deliberations of the Board of Directors
of the Company (or any committee constituted by the Board) concerning
competitors of the Purchaser or relationships between the Company and either of
the Purchasers. Upon notice to a Purchaser's designee, the Company may refrain
from sending or providing to the Purchaser, or the Purchaser may refuse to
receive, any information otherwise disseminated to the directors of the Company
concerning competitors of the Purchaser or relationships between the Company
and either of the Purchasers. The Company shall not be obligated to compensate
a designee-director of a Purchaser on the same terms as other outside directors
(except for any designee-director of the other Purchaser) but shall provide all
rights and benefits of indemnity to such designee-director as are provided such
other directors.
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6.5 Equity Method Accounting. If either of the Purchasers desires
at some date after the Closing to account for its investment in the Company
pursuant to the equity method, the Company shall furnish to such Purchaser all
information that is required by generally accepted accounting principles to
enable such Purchaser so to account, to the extent reasonably available to the
Company. To the extent requested by such Purchaser, the Company shall provide
information, to the extent reasonably available, regarding the Company to, and
otherwise cooperate with, such Purchaser so as to enable such Purchaser to
prepare financial statements in accordance with generally accepted accounting
principles and to comply with its reporting requirements under applicable
United States securities laws and regulations.
6.6 Registration Rights. The Company will comply with the
provisions regarding registration rights contained in the Registration Rights
Agreement attached as Exhibit A hereto.
6.7 HP Marketing Agreement. On or before the execution date
hereof, the Company will have entered in to a marketing agreement with HP on
terms mutually acceptable to the Company and HP.
6.8 EDS Agreements. On or before the execution date hereof, "the
Company shall have executed and delivered to EDS an amendment to that certain
Software License and Services Agreement dated March 29, 1990 between the
Company and EDS on terms mutually acceptable to the Company and EDS, which
amendment will include agreements regarding EDS' designation by the Company as
a preferred systems integrator of Company software products. In addition, the
Company
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and EDS agree to continue negotiating in good faith and expeditiously the terms
of a facilities management contract as contemplated by that certain letter of
intent dated August 8, 1990 between the Company and EDS, it being understood
that such contract will be executed by October 15, 1990.
6.9 Inspection Rights.
(a) Between the date hereof and the Closing, upon the
request of a Purchaser, the Company shall permit the Purchaser and any of its
authorized agents, at the Purchaser's expense, to visit and inspect any of the
properties of the Company, to examine its books of account and records relating
to the business and affairs of the Company, and to discuss the affairs,
finances and accounts with the Company's officers and other principal
executives, all at such reasonable times as may be reasonably requested.
(b) Until the termination of this Agreement in accordance
with Section 9.2 hereof, the Company shall furnish to each of the Purchasers,
promptly upon filing thereof with the SEC, copies of all reports and documents
required to be filed by the Company with the SEC (other than preliminary
material) under the Securities Act and Exchange Act and the rules and
regulations thereunder.
SECTION 7
Covenants of the Purchasers
Until the termination of this Agreement in accordance with Section 9.2
hereof:
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7.1 Limitation on Ownership of Voting Stock. Neither of the
Purchasers shall (and neither Purchaser shall permit any of its subsidiaries
to) acquire, directly or indirectly, beneficial ownership of any Voting Stock,
any securities convertible into or exchangeable for Voting Stock, or any other
right to acquire Voting Stock (except, in any case, as provided herein or by
way of stock dividends or other distributions or offerings made available to
holders of any Voting Stock generally) or authorize or make a tender, exchange
or other offer, without the written consent of the Company, if the effect of
such acquisition or offer would be to increase the Voting Power of all Voting
Stock then owned by such Purchaser or which it has a right to acquire to more
than the percentage of the Total Voting Power of the Company which such
Purchaser is entitled to hold at such time as provided in this Section 7.1:
(a) EDS and HP shall be entitled to hold Voting Stock up
to, and not to exceed except as permitted by this Agreement, 22% and 11%,
respectively, of the Total Voting Power of the Company. Subject to such
limitation, shares of Voting Stock not acquired by a Purchaser from the Company
under Section 7.8 may be acquired by such Purchaser in the open market or from
third parties.
(b) Either of the Purchasers may acquire Voting Stock
without regard to the limitations in this Section 7.1 if a tender offer is made
(as evidenced by the filing with the SEC of a Schedule 14D-1 (or any successor
schedule or form promulgated or adopted for such purpose by the SEC) and the
actual dissemination
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of tender offer materials to security holders) by another person or group to
purchase or exchange for cash or other consideration any Voting Stock which, if
successful, would result in such person or group owning or having the right to
acquire shares of Voting Stock with aggregate Voting Power of at least 40% of
the Total Voting Power of the Company then in effect; provided, however, that
this provision shall not be effective until such time as the Purchaser in the
exercise of the reasonable judgment of its Board of Directors, after
consultation with its investment bankers and those of the Company (who shall
make themselves promptly available) shall reasonably conclude that such tender
offeror can finance such tender offer. If an offer or proposed acquisition is
made by any person or group which pursuant to this Section 7.1(b) releases a
Purchaser from the limitations set forth herein, which offer or proposed
acquisition subsequently expires, is enjoined or terminated prior to any
purchases thereunder or is otherwise withdrawn, then the limitations of this
Section 7.1(b) shall be reimposed, except that the Purchaser shall not be
obligated to dispose of any Voting Stock acquired of record or beneficially
during the pendency of such offer or proposed acquisition.
(c) Either of the Purchasers may acquire Voting Stock (or
rights to acquire Voting Stock) without regard to the limitations in this
Section 7.1 if it is publicly disclosed or such Purchaser otherwise learns that
another person or group has acquired any Voting Stock (or rights to acquire
Voting Stock), without the affirmative support of the Company's Board of Direc-
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tors, which results in such person or group owning or having the right to
acquire Voting Stock with Total Voting Power of not less than 20%; provided,
however, that the Purchasers shall have no rights under this paragraph if the
person acquiring Voting Stock (or rights to acquire Voting Stock) is the
Affiliate.
(d) No Purchaser will be obligated to dispose of any
shares of Voting Stock if the aggregate percentage ownership of such Purchaser
in the Total Voting Power of the Company is increased as a result of a
recapitalization of the Company or a repurchase of securities by the Company or
any other action taken by the Company or its affiliates, but the Purchasers
shall not acquire any additional Voting Stock unless such acquisition would
otherwise be permitted under this Agreement. If, after either or both of the
Purchasers have acquired Voting Stock in response to the acquisition of Voting
Stock by another person or group, as permitted by this Section 7.1, then such
Purchasers shall not be obligated to dispose of any shares of Voting Stock if
the aggregate percentage ownership of such third party or group is thereafter
reduced.
7.2 Voting. Each Purchaser shall take such action as may be
required so that all shares of Voting Stock owned by the Purchasers are voted
for nominees to the Board of Directors of the Company in accordance with the
recommendation of the Board of Directors consistent with the provisions of
Section 6.4. Unless the Company otherwise consents in writing, each Purchaser
shall take such action as may be required so that all shares of Voting Stock
owned
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by the Purchaser are voted in accordance with the recommendations of the Board
of Directors on all other matters to be voted on by holders of Voting Stock in
not less than the same proportion as the votes cast by the other holders of
Voting Stock (other than the other Purchasers) with respect to such matters;
provided, however, that Voting Stock owned by a Purchaser may be voted as the
Purchaser determines in its sole discretion on any Significant Event (as
defined in Section 9.1 below) presented to be voted on by the holders of Voting
Stock. Each Purchaser, as the holder of shares of Voting Stock, shall be
present, in person or by proxy, at all meetings of stockholders of the Company
so that all shares of Voting Stock beneficially owned by the Purchasers may be
counted for the purposes of determining the presence of a quorum at such
meetings.
7.3 Voting Trust, etc. No Purchaser shall deposit any shares of
Voting Stock in a voting trust or, except as otherwise provided herein, subject
any Voting Stock to any arrangement or agreement with respect to the voting of
such Voting Stock.
7.4 Solicitation of Proxies. Without the Company's prior written
consent, no Purchaser shall solicit proxies with respect to any Voting Stock,
or become a "participant" in any "election contest" (as such terms are used in
Rule 14a-11 of Regulation 14A under the Exchange Act relating to the election
of directors of the Company); provided, however, that a Purchaser shall not be
deemed to be a "participant" by reason of the exercise of any right permitted
by Section 6.4.
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7.5 Acts in Concert with Others. No Purchaser shall join a
partnership, limited partnership, syndicate or other group, or otherwise act in
concert with any third person, for the purpose of acquiring, holding, or
disposing of Voting Stock.
7.6 Restrictions on Transfer of Voting Stock. No Purchaser shall,
directly or indirectly, sell or transfer any Voting Stock except (i) to the
Company or any person or group approved by the Company; or (ii) to any
subsidiary of the Purchaser, all of the Voting Stock of which is owned by the
Purchaser (a "Wholly Owned Subsidiary"); or (iii) pursuant to a bona fide
public offering (which shall be structured to distribute such shares or rights
through an underwriter or otherwise in such a manner, to the best ability of
the Purchaser or Purchasers, as will not result in a sale or sales, by either
or both of the Purchasers, of beneficial ownership of Voting Stock with
aggregate Voting Power of 5% or more of the Total Voting Power of the Company
then in effect being transferred to a single person or group) registered under
the Securities Act of either Voting Stock or securities exchangeable or
exercisable for Voting Stock or pursuant to a rights offering or a dividend or
other ratable distribution to shareholders of the Purchaser; or (iv) pursuant
to Rule 144 under the Securities Act (but only to the extent the sale or
transfer of Voting Stock at any time is in compliance with the volume
limitations under paragraph (e) thereunder); or (v) subject to the Company's
right of first refusal as set forth in Section 8.1 hereof, in transactions not
otherwise described herein so long as such transactions do not,
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directly or indirectly, result, to the best knowledge of the Purchaser, after
reasonable inquiry, in any single person or group owning or having the right to
acquire Voting Stock with aggregate Voting Power of 5% or more of the Total
Voting Power of the Company then in effect; or (vi) in response to (1) an offer
to purchase or exchange for cash or other consideration any Voting Stock (a)
which is made by or on behalf of the Company or (b) which is made by another
person or group and is not opposed by the Board of Directors of the Company
within the time such Board is required, pursuant to regulations under the
Exchange Act, to advise the Company's stockholders of such Board's position on
such offer, or (2) subject to the Company's right of first refusal as set forth
in Section 8.2, any other offer made by another person or group to purchase or
exchange for cash or other consideration any Voting Stock which, if successful,
would result in such person or group owning or having the right to acquire
Voting Stock with aggregate Voting Power of more than 40% of the Total Voting
Power of the Company then in effect.
7.7 Confidential Information. The Company may from time to time
pursuant to this Agreement (including pursuant to Section 6.4 hereof) disclose
to a Purchaser certain strategic, technical, financial or other information
which the Company deems to be confidential. The Purchaser agrees that all such
confidential information will be kept confidential unless such information (i)
is already lawfully in the Purchaser's possession, (ii) becomes generally
available to the public other than as a result of a
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disclosure by the Purchaser or any of its directors, officers, employees,
agents or advisors, (iii) becomes available to the Purchaser on a
non-confidential basis from a source other than the Company or its advisors,
provided that such source is not known to the Purchaser to be bound by a
confidentiality agreement with or other obligation of secrecy to the Company or
another party, (iv) is required to be disclosed by the Purchaser by operation
of law, (v) is disclosed by the Purchaser with the Company's prior written
approval, or (vi) has been held by the Purchaser for not less than three (3)
years from the date of receipt, provided, that the confidentiality of
confidential information furnished to an individual designated by the Purchaser
as an observer or director on the Company's Board of Directors (and not
additionally furnished to other representatives of the Purchaser) shall not
lapse by virtue of this clause. Notwithstanding anything to the contrary, the
Purchaser may disclose such confidential information to its directors,
officers, employees, agents or advisors so long as it takes appropriate
measures to protect the confidentiality thereof, which measures shall include
at least the same degree of care that the Purchaser uses to protect its own
confidential information of a similar nature. In the event that a Purchaser or
any of its representatives is requested or required to disclose any of the
confidential information referred to above, the Purchaser will provide the
Company with prompt notice of such request or requirement so that the Company
may seek a protective order or waive the Purchaser's compliance with this
Section 7.7, as
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appropriate. Each Purchaser further acknowledges and understands that any
information so obtained which may be considered "insider" non-public
information will not be utilized by the Purchaser in connection with purchases
and/or sales of the Company's securities except in compliance with applicable
state and federal securities laws.
7.8 Right to Maintain.
(a) If the percentage interest of a Purchaser in the
Total Voting Power of the Company is at or less than the Standstill Limit and
is reduced as a result of an issuance by the Company of any Voting Stock
(including any issuance following conversion of any security convertible into
or exchangeable for Voting Stock or upon exercise of any option, warrant or
other right to acquire any Voting Stock), the Purchaser shall have the right to
purchase from the Company for cash upon the terms set forth in this Section 7.8
that number of shares of Voting Stock which, if purchased by the Purchaser,
would result in the Purchaser's retaining the percentage interest in the Total
Voting Power of the Company held by the Purchaser immediately prior to such
reduction of the Purchaser's interest.
(b) The purchase price per share at which the Purchaser
shall be entitled to purchase Voting Stock under this Section 7.8 shall be
determined as follows:
(i) If the event giving rise to the Purchaser's
rights is one or more issuances of Voting Stock (including any issuance
resulting from the conversion or exercise of any security
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or other right to acquire Voting Stock) pursuant to the Company's present or
future stock option, stock purchase or other stock plans for the benefit of
employees, directors, consultants or others, the price shall be the Average
Market Price per share of Voting Stock determined as of the date of the
issuance and sale of such Voting Stock.
(ii) If the event giving rise to the Purchaser's
rights is a sale or issuance of Voting Stock for cash or property, including
without limitation, for securities or assets or by way of merger in connection
with the acquisition of another company, and is not treated under paragraph
7.8(b)(i) above, the price shall be the price per share specified in the
agreement relating to such issuance or, if no such price is specified, the
Average Market Price per share of Voting Stock determined as of the date of
issuance and sale of such Voting Stock;
(iii) If the event giving rise to the Purchaser's
right is an issuance of Common Stock upon conversion of any security
convertible into or exchangeable for Common Stock or upon exercise of any
option, warrant or right to acquire any Common Stock, and is not treated under
paragraph 7.8(b)(i) or (ii) above, the price shall be the Average Market Price
per share of Common Stock determined as of the date of such conversion or
exercise.
(iv) If the event giving rise to the Purchaser's
rights is an underwritten public offering or an institutional private
placement, the price shall be the price per share at which the Voting Stock was
sold by the Company.
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(v) In all other cases, the price shall be the
Average Market Price per share of Voting Stock determined as of the date of the
issuance and sale of such Voting Stock.
(c) The Company shall notify the Purchaser by written,
dated notice not later than ten (10) business days after an issuance giving
rise to the Purchaser's rights under this Section 7.8 and, if such offer is
accepted in writing within thirty (30) days of such offer (except as provided
in the next sentence), effect the sale of the securities to the Purchaser in
accordance with this paragraph. If the event giving rise to the Purchaser's
rights is an underwritten public offering or an institutional private placement
of securities by the Company, and if the Company gives the Purchaser notice of
such offering at least fifteen (15) days in advance of the effective date of
the offering, then unless the Purchaser notifies the Company of its irrevocable
acceptance of such offer within the first ten (10) days of such 15-day period
(for the purpose of permitting the Company to disclose the fact of the
Purchaser's intention in the prospectus relating to such underwritten public
offering or institutional private placement), the Company shall be under no
obligation to sell securities to the Purchaser under this Section 7.8 as a
result of such underwritten public offering or institutional private placement.
(d) The purchase and sale of any shares of Voting Stock
pursuant to any offer made under this Section 7.8 that is accepted by the
Purchaser shall take place at 10:00 a.m. on the third business day following
the expiration or early termination of all
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36
waiting periods imposed on such purchase and sale by the HSR Act and the
receipt of all other applicable regulatory approvals, or, if no waiting period
is imposed on such purchase and sale by the HSR Act, on the third business day
following the Purchaser's acceptance of such offer and compliance with
applicable laws and regulations, at the offices of the Company located at the
address set forth in this Agreement, or at such other time and place as the
Company and the Purchaser may agree. The purchase price shall be payable by
wire transfer in same day funds. The Company and the Purchaser shall comply
with all federal and state laws and regulations and requirements of the NASD
(subject to the right of the Company to elect to decline to comply with any
applicable stockholder approval requirement if the only effect thereof is a
loss of status of the Voting Stock as a National Market System-designated
security), or any securities exchange on which the Company's securities may
then be listed, applicable to any purchase and sale of shares of Voting Stock
under this Section 7.8.
(e) Notwithstanding the foregoing, if any issuance of
securities requiring the Company to make an offer of Voting Stock to a
Purchaser under this Section 7.8 shall be for a number of securities
representing less than 2% of the Total Voting Power of the Company immediately
following such issuance, the Company shall have the right to delay giving the
notice otherwise required by Section 7.8(c) until the earlier of (i) the next
issuance which, together with all issuances after which notice was delayed
pursuant to this sentence, shall represent an aggregate of 2% or more of the
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37
Total Voting Power of the Company then in effect or (ii) the 45th calendar day
preceding the last day of the Company's fiscal year for accounting purposes,
and, thereupon, the Company shall give such notice with respect to all shares
of Voting Stock which it shall be obligated to offer to sell to the Purchaser
at the price determined in Section 7.8(b) hereof and which shall not have been
the subject of a previous notice pursuant to Section 7.8(c); provided, however,
that the Purchaser shall have the right to request the purchase of all shares
of Voting Stock which the Purchaser has a right to acquire under this Section
7.8 at any time (a) if a bona fide tender or exchange offer is made by another
person or group to purchase or exchange for cash or other consideration any
Voting Stock from the Company's stockholders generally, or (b) upon the
Company's publication or setting of a record date of its stockholders; and, in
either such event and upon the receipt of such request, the Company shall use
its reasonable efforts to issue all such shares to the Purchaser pursuant to
the provisions of this Section 7.8.
(f) If a Purchaser sells any Voting Stock, or fails to
exercise its right to acquire additional Voting Stock as permitted in this
Section 7.8 within the time period prescribed, the percentage ownership in the
Total Voting Power of the Company which such Purchaser is then entitled to
maintain under this Section 7.8 shall be reduced to the Purchaser's percentage
ownership that results immediately following such sale or failure to exercise.
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(g) The Purchaser shall forfeit all rights under this
Section 7.8 if at any time the Purchaser's Voting Stock represents less than
five percent (5%) (inclusive of the shares the Purchaser is entitled to
purchase under an outstanding offer pursuant to this Section 7.8) of the Total
Voting Power the Company (even if such Purchaser's percentage interest should
subsequently increase for any reason to 5% or more).
7.9 Acquisition of Stock. Each Purchaser shall advise management
of the Company as to the Purchaser's general plans to acquire any additional
shares of Voting Stock, or rights thereto, reasonably in advance of any such
acquisitions; provided, however, that if advance notice of acquisitions of
Voting Stock, or rights thereto, in the open market is not reasonably
practicable, notice of any such acquisition shall be made promptly following
such acquisition. All of such Purchaser's purchases of Voting Stock shall be
in compliance with applicable laws and regulations and the provisions of this
Agreement.
SECTION 8
Company Right of First Refusal
8.1 Right of First Refusal. Prior to making any sale or transfer
of Voting Stock of the Company pursuant to Section 7.6(v), each Purchaser shall
give the Company the opportunity to purchase such Voting Stock in the following
manner:
(a) The Purchaser shall give notice (the "Transfer
Notice") to the Company in writing of such intention specifying the
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39
names of the proposed purchasers or transferees, the amount of Voting Stock
proposed to be sold or transferred, the proposed price per share therefor (the
"Transfer Price") and the other material terms upon which such disposition is
proposed to be made.
(b) The Company shall have the right, exercisable by
written notice given by the Company to the Purchaser within twenty (20) days
after receipt of such Transfer Notice, to purchase all but not part (unless
otherwise agreed) of the Voting Stock specified in such Transfer Notice for
cash per share equal to the Transfer Price.
(c) If the Company exercises its right of first refusal
hereunder, the closing of the purchase of the Voting Stock with respect to
which such right has been exercised shall take place within ninety (90) days
after the Company gives notice of such exercise, which period of time shall be
extended if necessary to comply with applicable securities laws and
regulations. Upon exercise of its right of first refusal, the Company and the
Purchaser shall be legally obligated to consummate the purchase contemplated
thereby and shall use their best efforts to secure any approvals required in
connection therewith.
(d) If the Company does not exercise its right of first
refusal hereunder within the time specified for such exercise, the Purchaser
shall be free, during the period of 90 days following the expiration of such
time for exercise, to sell the Voting Stock specified in such Transfer Notice
on terms no less favorable to the Purchaser than the terms specified in such
Transfer Notice. The
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transferee shall acquire such Voting Stock free from any of the provisions of
this Agreement, provided, however, such Voting Stock shall be subject to any
restrictions imposed under applicable securities laws and regulations.
8.2 Tender Offer Sale. Prior to making any sale or exchange of
Voting Stock pursuant to Section 7.6(vi)(2) in response to a tender or exchange
offer, each Purchaser shall give the Company the opportunity to purchase such
Voting Stock in the following manner:
(a) The Purchaser shall give notice (the "Tender Notice")
to the Company in writing of such intention no later than ten (10) days prior
to the latest time (as the same may be extended) by which Voting Stock must be
tendered in order to be accepted pursuant to such offer or to qualify for any
proration applicable to such offer (the "Tender Date"), specifying the amount
of Voting Stock proposed to be tendered. For purposes hereof, a tender offer
to purchase Voting Stock shall be deemed to be an offer at the price specified
therein, without regard to any provisions thereof with respect to proration or
conditions to the offeror's obligation to purchase (assuming such conditions
are not impossible of performance when the offer is made, without giving effect
to the Company's right of first refusal).
(b) If the Tender Notice is given, the Company shall have
the right, exercisable by giving notice (the "Purchase Notice") to the
Purchaser at least three (3) business days prior to the Tender Date, to
purchase all but not part of the Voting Stock specified in the Tender Notice
for cash. If the Company exercises
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such right by giving such notice, the closing of the purchase of such Voting
Stock shall take place on the fifth business day after the tender offer is
consummated, or such earlier time as the Company shall agree; provided that the
Company's obligation to purchase such shares of Voting Stock following delivery
of any Purchase Notice shall be contingent on consummation of the tender offer
referred to in the corresponding Tender Notice. As a condition to the
effectiveness of any exercise by the Company of its rights to purchase under
this Section 8.2, at the time the Company delivers a Purchase Notice, it shall
have provided for the payment to the Purchaser of the purchase price for such
shares by an escrow of funds, letter of credit facility, bank guarantee or
similar arrangement reasonably acceptable to the Purchaser. If the purchase
price specified in the tender offer includes any property other than cash, the
value of any property included in the purchase price, for purposes of
determining the amount to be provided for by the Company pursuant to the
preceding sentence only, shall be determined by a nationally recognized
investment banking firm selected by the Company. Upon exercise of the right of
first refusal (including provision for payment as described above), the Company
and the Purchaser shall be legally obligated to consummate the purchase
contemplated thereby and shall use their best efforts to secure any approvals
required in connection therewith, subject only to consummation of the tender
offer referred to in the corresponding Tender Notice.
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(c) The purchase price to be paid by the Company pursuant
to this Section 8.2, if such tender offer is consummated, shall be the purchase
price that the Purchaser would have received if it had tendered the Voting
Stock purchased by the Company and all such Voting Stock had been purchased in
such tender offer, including any increases in the price paid by the tender
offeror after exercise by the Company of its right of first refusal hereunder.
If the purchase price paid by the tender offeror includes any property other
than cash, the value of such property shall be jointly determined by a
nationally recognized investment banking firm selected by the Company and the
Purchaser or, in the event such firms are unable to agree, a third nationally
recognized investment banking firm to be selected by such two firms. The
Company and the Purchaser shall use their best efforts to cause any
determination of the value of any such property included in the purchase price
to be made within two (2) business days after consummation of the tender offer.
If the firms selected by the Company and the Purchaser are unable to agree upon
the value of any such securities within such 2-day period, the firms shall
promptly select a third firm whose determination shall be made promptly and
shall be conclusive. The Company and the Purchaser shall each bear the cost of
its own investment banking firm and shall share equally the costs of any third
firm selected hereunder.
(d) If the Company does not exercise such right by giving
such notice or fails to complete the purchase, then the
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Purchaser shall be free to accept the tender offer with respect to which the
Tender Notice was given.
8.3 Assignment of Rights. In the event that the Company elects to
exercise a right of first refusal under this Section 8, the Company may specify
prior to closing such purchase another person as its designee to purchase all
or part of the Voting Stock to which such notice relates. Any such designee
shall be subject to the approval of the Purchaser proposing to sell or tender,
as the case may be, any of its Shares, which approval shall not unreasonably be
withheld. If the Company shall designate another person as the purchaser
pursuant to this Section 8, the giving of notice of acceptance of the right of
first refusal by the Company shall constitute a legally binding obligation of
the Company to complete such purchase if such person shall fail to do so.
SECTION 9
Miscellaneous.
9.1 Certain Definitions. As used in this Agreement:
(a) The term "Total Voting Power of the Company" means
the total number of votes which may be cast in the election of directors of the
Company at any meeting of stockholders of the Company if all securities
entitled to vote in the election of directors of the Company were present and
voted at such meeting (other than votes that may be cast only upon the
happening of a contingency).
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(b) The term "Voting Stock" means the Common Stock and
any other securities issued by the Company having the ordinary power to vote in
the election of directors of the Company (other than securities having such
power only upon the happening of a contingency).
(c) The term "Significant Event" means (i) any proposed
amendment to the Certificate of Incorporation or By-laws of the Company (other
than a proposal to create an authorized class of Preferred Stock or increase
the number of authorized shares of Common Stock or Preferred Stock, provided
such creation or increase is not contrary to clauses (v) or (vi) of this
Section 9.1(c)), (ii) disposition of the Company (by way of merger, disposition
of all or substantially all assets or otherwise), (iii) recapitalization, (iv)
liquidation or dissolution, (v) any vote pursuant to any provision of law or
the Company's Certificate of Incorporation or By-laws requiring or permitting
stockholders to approve any business combination proposed by or with another
person or its affiliates which have acquired a certain percentage of the
Company's shares or to grant voting rights to such person or to waive or adopt
provisions requiring such a vote, or (vi) any action, including a change in the
size, structure or membership of the Company's Board of Directors which the
Purchaser, in its sole discretion, determines would be materially adverse to
the Purchaser's interest in the Company (other than actions contemplated by
this Agreement).
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(d) The term "Contingent Event" means the payment
(including the incurrence of an unconditional obligation to make payment) by
the Company of such consideration as may be agreed to acquire (whether by way
of offer to purchase outstanding shares or statutory merger) a controlling
position in Ingres Corporation.
(e) The term "Affiliate" means Sandra L. Kurtzig,
including any family members or trusts for the benefit of such members, but
only for so long as Ms. Kurtzig continues as a director or employee of the
Company.
(f) "Average Market Price" of the Voting Stock at any
date shall be the average, based on the 20 consecutive trading days ending on
the trading date last preceding the date of determination of such price (the
"Average"), of the closing prices for a share of such security on the principal
national securities exchange on which such security is listed, or, if such
security is not listed on any national securities exchange, the Average of the
closing prices for a share of such security on the National Association of
Securities Dealers Automated Quotation System ("NASDAQ") or, if such closing
prices shall not be reported on NASDAQ, the Average of the mean between the
closing bid and asked prices of a share of such security in such case as
reported by The Wall Street Journal, or, if such prices shall not be so
reported, as the same shall be reported by the National Quotation Bureau
Incorporated, or, in all other cases, the value as determined by a single
nationally recognized investment banking firm jointly selected by the Company
and the Purchaser or Purchasers. For this purpose, the parties shall
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use their best efforts to cause any determination of the value to be made
within ten (10) business days after the date on which the value is to be
measured. The determination by the investment banking firm selected in the
manner set forth above shall be conclusive.
(g) The terms "beneficial ownership" or "beneficial
owner" refer to the meaning of such terms as provided in Rule 13d-3 promulgated
under the Exchange Act. References to the acquiring, holding or ownership of
Voting Stock hereunder mean beneficial ownership.
(h) The term "group" shall have the meaning comprehended
by Section 13(d)(3) of the Exchange Act and the rules and regulations
promulgated thereunder.
(i) The term "person" shall mean any person, individual,
corporation, partnership, trust or other nongovernmental entity or any
governmental agency, court, authority or other body (whether foreign, federal,
state, local or otherwise).
9.2 Termination of Agreement. This Agreement may be terminated at
any time:
(a) As to EDS, by the mutual consent of the Company and
EDS, or as to HP, by the mutual consent of the Company and HP;
(b) As to either Purchaser, by the Company, if such
Purchaser violates any of the covenants or agreements of the Purchaser under
this Agreement; provided, however, that the Company shall not be entitled to
terminate this Agreement pursuant to this sentence unless it shall have
delivered written notice of such default to
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the Purchaser and such default shall not have been cured within thirty (30)
days after delivery of such notice;
(c) As to the Company, by either Purchaser, if the
Company violates or fails to perform any of the covenants or agreements of the
Company under this Agreement; provided, however, that the Purchaser may not
terminate this Agreement pursuant to this sentence unless it shall have
delivered written notice of such default to the Company and such default shall
not have been cured within thirty (30) days after delivery of such notice;
(d) As to either of the Purchasers and the Company, by
such Purchaser or the Company if the Closing shall not have taken place on or
before December 31, 1990;
(e) As to either of the Purchasers and the Company, by
the Company or such Purchaser if the Purchaser at any time after the Closing
owns less than five percent (5%) of the Total Voting Power of the Company;
(f) As to either of the Purchasers, by such Purchaser in
the event of the sale of all or substantially all of the Company's assets to
another party, or other acquisition of the Company by another party in which
50% or more of the Voting Stock of the Company is sold or transferred to such
party or an affiliate thereof;
(g) As to either of the Purchasers and the Company, by
such Purchaser or the Company on or after August 31, 1997; and
(h) As to HP and the Company, by HP or the Company, if at
the Closing HP does not purchase the HP Shares.
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9.3 Effect of Termination.
(a) From and after the termination of this Agreement, the
covenants, obligations and agreements of the parties set forth herein shall be
of no further force or effect and the parties shall be under no further
obligation with respect thereto; provided, however, that in the event of such
termination, to the extent the terms thereof continue to be applicable, (i) the
covenant of the Company and EDS set forth in the second sentence of Section 6.8
shall continue in full force and effect, and (ii) the obligations of the
Purchasers as set forth in the letter agreements, as to HP dated July 6, 1990,
and, as to EDS, dated June 25, 1990, shall continue in full force and effect.
(b) In addition, notwithstanding the provisions of
Section 9.3(a), the rights and obligations of the parties set forth in the
Registration Rights Agreement shall survive any termination of this Agreement.
9.4 Best Efforts. The Company and each of the Purchasers shall
use their respective best efforts to take all actions required under the HSR
Act and under any law, rule or regulation adopted subsequent to the date hereto
in order that the Company may sell the full amount of Shares to the Purchasers
and the Purchasers may purchase the full amount of Shares and any Voting Stock
it may wish to purchase in the future and to ensure that the conditions to the
Closing set forth herein are satisfied on or before the scheduled date of such
Closing.
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9.5 Governing Law. This Agreement shall be governed in all
respects by the laws of the State of California as applied to contracts entered
into solely between residents of, and to be performed entirely within, such
state.
9.6 Survival. The representations and warranties in Sections 2
and 3 of this Agreement shall survive any investigation made by the Purchasers
or the Company.
9.7 Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns. This Agreement may not be assigned by a party
without the prior written consent of the other party; provided, however, that a
Purchaser shall have the right, upon prior notice to the Company, to assign
this Agreement to any Wholly Owned Subsidiary of such Purchaser.
9.8 Entire Agreement; Amendment. This Agreement and the other
documents delivered pursuant hereto constitute the full and entire
understanding and agreement between the parties with regard to the subject
matter hereof and thereof and supersede all prior agreements and understandings
among the parties relating to the subject matter hereof. Neither this
Agreement nor any term hereof may be amended, waived, discharged or terminated
other than by a written instrument signed by the party against whom enforcement
of any such amendment, waiver, discharge or termination is sought.
9.9 Notices and Dates. Any notice or other communication given
under this Agreement shall be sufficient if in writing and sent by registered
or certified mail, return receipt requested,
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postage prepaid, to a party at its address set forth below (or at such other
address as shall be designated for such purpose by such party in a written
notice to the other party hereto):
(a) if to the Company, to it at:
2440 West El Camino Real
Mountain View, CA 94039-7640
Attn: General Counsel
with a copy to:
Douglas H. Collom, Esq.
Wilson, Sonsini, Goodrich & Rosati
Two Palo Alto Square
Palo Alto, CA 94306
(b) if to EDS, to it at:
7171 Forest Lane
Dallas, TX 75230
Attn: President, Manufacturing and
Distribution Division
with a copy to:
General Counsel
Electronic Data Systems Corporation
7171 Forest Lane
Dallas, TX 75230
(c) if to HP, to it at:
3000 Hanover Street
Palo Alto, CA 94304
Attn: Director, Corporate Development
with a copy to:
General Counsel
Hewlett-Packard Company
3000 Hanover Street
Palo Alto, CA 94304
All such notices and communications shall be effective when received by the
addressee. In the event that any date provided for
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in this Agreement falls on a Saturday, Sunday or legal holiday, such date shall
be deemed extended to the next business day.
9.10 Brokers.
(a) The Company has not engaged, consented to or
authorized any broker, finder or intermediary, except Unterberg Harris DeSantis
("UHD"), to act on its behalf, directly or indirectly, as a broker, finder or
intermediary in connection with the transactions contemplated by this
Agreement. All fees, commissions and other payments owing to UHD as a result
of its or its employees' participation, negotiations, or other actions, taken
in connection with this Agreement are the sole responsibility and obligation of
the Company. The Company hereby agrees to indemnify and hold harmless each of
the Purchasers from and against all fees, commissions or other payments owing
to UHD or any other party acting on behalf of the Company hereunder.
(b) Neither of the Purchasers has engaged, consented to
or authorized any broker, finder or intermediary to act on its behalf, directly
or indirectly, as a broker, finder or intermediary in connection with the
transactions contemplated by this Agreement. Each of the Purchasers hereby
agrees to indemnify and hold harmless the Company from and against all fees,
commissions or other payments owing to any party acting on its behalf.
9.11 Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and
restriction of this Agreement
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shall remain in full force and effect and shall in no way be affected, impaired
or invalidated.
9.12 Injunctive Relief. Each of the Purchasers, on the one hand,
and the Company, on the other, acknowledge and agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent or cure breaches of the provisions of this Agreement and
to enforce specific performance of the terms and provisions hereof in any court
of the United States or any state thereof having jurisdiction, this being in
addition to any other remedy to which they may be entitled at law or equity.
9.13 Attorneys' Fees. The prevailing party in any litigation
between a Purchaser and the Company involving this Agreement or the
Registration Rights Agreement shall be entitled to recover from the other party
its reasonable attorneys' fees and costs.
9.14 Costs and Expenses. Each party hereto shall pay its own costs
and expenses incurred in connection herewith, including the fees of its
counsel, auditors and other representatives, whether or not the transactions
contemplated herein are consummated.
9.15 No Third Party Rights. Nothing in this Agreement shall
create or be deemed to create any rights in any person or entity not a party to
this Agreement.
9.16 Publicity. The Purchasers and the Company shall not, without
the prior approval of each other party hereto, make or
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cause to be made any press release or other public statement concerning the
transactions contemplated from time to time by this Agreement, except as and to
the extent that any party hereto is so obligated by law or the regulations of
any stock exchange or the NASD (but only after the Company or the Purchaser or
Purchasers, as the case may be, shall have consulted with the other party in
advance regarding the form and substance of such press release or public
statement).
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective authorized officers as of the date aforesaid.
"COMPANY" ASK COMPUTER SYSTEMS, INC.
By: ________________________________
Name:
Title:
Attest:
By: ________________________________
Name:
Title:
"PURCHASERS" ELECTRONIC DATA SYSTEMS CORPORATION
By: ________________________________
Name:
Title:
HEWLETT-PACKARD COMPANY
By:_________________________________
Name:
Title:
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