EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
among
INTERPHASE CORPORATION,
SYNAPTEL
and
PHILIPPE OROS, XAVIER SUTTER, FRANCOIS LECERF,
SCHRODER VENTURES FRENCH ENTERPRISE FUND LPI (USA),
SCHRODER VENTURES FRENCH ENTERPRISE FUND UKLP (UK) AND
SCHRODER VENTURES HOLDING LIMITED (UK)
JUNE 29, 1996
En accord entre les parties, les presentes reliees par le procede
ASSEMBLACT R.C. empechant toute substitution ou addition sont seulement
signees a la derniere page.
INDEX
Page
----
ARTICLE 1
TERMS OF PURCHASE
1.1 Purchase and Sale of Stock................................... 1
1.2 Allocation of Purchase Price................................. 2
1.3 Closing...................................................... 2
1.4 Execution and Delivery of Closing Documents.................. 2
1.5 Further Assurances........................................... 2
ARTICLE 2
OTHER TRANSACTIONAL COVENANTS AND AGREEMENTS
2.1 Employment Agreements........................................ 3
2.2 Stock Option Agreements...................................... 3
2.3 Voting Agreements............................................ 3
2.4 Compensation and Incentives.................................. 3
2.5 Disposition of Cortical...................................... 3
2.6 Termination of Shareholder Agreements........................ 3
2.7 Restrictions on Interphase Stock............................. 4
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF INTERPHASE
3.1 Organization and Good Standing............................... 4
3.2 Authorization and Validity................................... 4
3.3 No Violation................................................. 4
3.4 Consents and Approvals....................................... 5
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLERS
4.1 Representations and Warranties of Sellers.................... 5
ARTICLE 5
COVENANTS OF SELLERS
5.1 Covenants of Sellers......................................... 5
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ARTICLE 6
COVENANTS OF INTERPHASE
6.1 Confidentiality.............................................. 5
6.2 Public Announcements......................................... 6
6.3 Access to Records............................................ 6
ARTICLE 7
CONDITIONS PRECEDENT TO
OBLIGATIONS OF INTERPHASE
7.1 Representations and Warranties............................... 6
7.2 Covenants.................................................... 6
7.3 Opinion...................................................... 6
7.4 Proceedings.................................................. 7
7.5 No Material Adverse Change................................... 7
7.6 Due Diligence Investigation.................................. 7
7.7 Transfer of Synaptel stock by Thebaut........................ 7
ARTICLE 8
CONDITIONS PRECEDENT TO OBLIGATIONS
OF
SELLERS
8.1 Representations and Warranties............................... 7
8.2 Covenants.................................................... 7
8.3 Proceedings.................................................. 7
8.4 Opinion...................................................... 8
ARTICLE 9
INDEMNIFICATION
9.1 Indemnification Obligations of Sellers....................... 8
9.2 Indemnification Obligations of Interphase.................... 8
9.3 Conditions of Indemnification................................ 8
9.4 Survival of Representations and Warranties................... 9
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ARTICLE 10
TERMINATION
10.1 Termination.................................................. 10
ARTICLE 11
MISCELLANEOUS
11.1 Amendment.................................................... 11
11.2 Assignment................................................... 11
11.3 Notice....................................................... 11
11.4 Entire Agreement............................................. 12
11.5 Costs, Fees and Legal Fees................................... 13
11.6 Specific Performance......................................... 13
11.7 Reliance on Representations.................................. 13
11.8 Governing Law, Jurisdiction and Venue........................ 13
11.9 Arbitration.................................................. 14
11.10 Captions..................................................... 14
11.11 Counterparts................................................. 14
11.12 Number and Gender............................................ 14
11.13 Legal Representation......................................... 14
11.14 Effective Date............................................... 14
11.15 Transfer of Shares by Oros................................... 14
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SCHEDULES AND EXHIBITS
SCHEDULES
- ---------
1.0 Synaptel Stock Ownership
1.1 Earn-Out
1.2A Allocation of Initial Purchase Price
1.2B Allocation of Cash Earn-Out
2.1 Synaptel Employees who will execute Employment Agreements
2.2A Interphase Stock Option Grant
2.2.B-C Synaptel Employees who may earn Interphase Stock Options
2.7 Restrictions on Interphase Stock
4.1 Representations and Warranties, Covenants and Indemnification
Obligations of Sellers
EXHIBITS
- --------
2.1 Form of Employment Agreements
2.2A-E Form of Stock Option Agreements
2.3 Form of Voting Agreement
7.3 Form of Legal Opinion of Seller's Counsel
8.4 Form of Legal Opinion of Interphase's Counsel
11.15 Stock Restriction Agreement
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement"), executed on June 29,
1996, is by and among INTERPHASE CORPORATION, a Texas corporation
("Interphase") or its assigns, SYNAPTEL, a French Societe Anonyme
("Synaptel"), and PHILIPPE OROS ("Oros"), XAVIER SUTTER, FRANCOIS LECERF,
SCHRODER VENTURES FRENCH ENTERPRISE FUND LPI ("SVFEF LPI"), SCHRODER VENTURES
FRENCH ENTERPRISE FUND UKLP ("SVFEF UKLP") and SCHRODER VENTURES HOLDING
LIMITED ("SVHL") (collectively, "Sellers").
W I T N E S S E T H:
WHEREAS, Sellers and JEAN-PIERRE THEBAUT own 27,000 A shares of common
stock, FF 100 par value, and 10,800 B shares of preferred stock, FF 100 par
value (collectively, "Synaptel Stock"), of Synaptel (unless the context
otherwise requires, Synaptel, when used herein, shall include any and all of
Synaptel's subsidiaries and affiliates), as set forth in SCHEDULE 1.0 hereof,
constituting all of the presently issued and outstanding shares of Synaptel
Stock; and
WHEREAS, Sellers desire to sell, and Interphase desires to purchase,
the Synaptel Stock;
NOW, THEREFORE, in consideration of the representations, warranties and
covenants herein contained, and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
TERMS OF PURCHASE
1.1 PURCHASE AND SALE OF STOCK.
On the terms and subject to the conditions set forth herein, at
the Closing (as hereinafter defined) Interphase agrees to purchase from
Sellers, and Sellers covenant and agree to sell and deliver to Interphase,
all of the shares of Synaptel Stock, free and clear of all liens, claims and
encumbrances, for an aggregate purchase price equal to (a) initial
consideration (the "Initial Purchase Price") to be paid to Sellers on the
Closing Date (as hereinafter defined), consisting of $8,000,000 in cash (the
"Cash Amount") and 594,595 shares of common stock, no par value, of
Interphase (the "Interphase Stock"), with restrictions, plus (b) additional
earn-out consideration (the "Cash Earn-Out"), as set forth in SCHEDULE 1.1
and paid to the Sellers set forth in SCHEDULE 1.2 B.
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1.2 ALLOCATION OF PURCHASE PRICE. The Initial Purchase Price shall be
payable, and the Interphase Stock shall be issued to each Seller in the
proportions set forth in SCHEDULE 1.2 A to this Agreement. The Cash Earn-Out
shall be payable to the Sellers and in the percentages set forth in
SCHEDULE 1.2 B and in the manner set forth in SCHEDULE 1.1.
1.3 CLOSING.
(a) The initial closing of the transactions contemplated by this
Agreement (the "Closing") shall commence at 10:00 a.m., Paris, France time,
on Friday July 12, 1996 , at the offices of Gide Loyrette Nouel, 26, Cours
Albert 1ER, Paris, France (or at such other time and place as may be mutually
agreed upon by the parties hereto). The day on which the Closing occurs is
herein referred to as the "Closing Date".
(b) No action taken at the Closing with respect to the
consummation of the transactions contemplated by this Agreement shall be
deemed to have been taken until such time as the last of any such actions is
taken or completed.
(c) If any of the conditions to the obligations of the parties to
this Agreement have not been satisfied or waived by the agreed date for the
Closing, then the party to this Agreement that has made its obligations
hereunder subject to the satisfaction or waiver of such condition or
conditions shall be entitled to postpone the Closing by written notice to the
other parties until such condition or conditions shall have been satisfied or
waived and all parties shall seek to cause the satisfaction of such condition
or conditions at the earliest practicable date. In no event, however, may the
Closing be postponed by a party to a date later than July 24, 1996 by reason
of failure of satisfaction of or failure to waive a condition or conditions
to a party's obligations hereunder, unless all parties mutually agree in
writing.
1.4 EXECUTION AND DELIVERY OF CLOSING DOCUMENTS. At or before the
Closing, each party shall cause to be prepared, and at the Closing the
parties shall execute and deliver, each document, agreement and instrument
required by this Agreement to be so executed and delivered in connection with
the transactions contemplated by this Agreement and which have not been
theretofore accomplished. At the Closing, each of the Sellers shall execute
and deliver, or cause to be executed and delivered, to Interphase a transfer
order with respect to his or its shares of Synaptel Stock directing Synaptel
to transfer such shares to Interphase. At the Closing, Sellers shall deliver
to Interphase a statement issued by Synaptel reflecting that all shares of
Synaptel Stock are owned, free and clear of all liens, claims and
encumbrances, by Interphase. At the Closing Interphase will pay the Cash
Amount being part of the initial Purchase Price and shall deliver the
Interphase Stock certificates or other satisfactory evidence of such
ownership. At the Closing, each party also shall execute and deliver, or
cause to be executed and delivered, such other appropriate and customary
documents as any other party hereto reasonably may request for the purpose of
consummating the transactions contemplated by this Agreement.
1.5 FURTHER ASSURANCES. After the Closing, the parties hereto shall
execute and deliver such additional documents and take such additional
actions as any party may reasonably deem to be practical and necessary or
advisable in order more fully to consummate the transactions contemplated by
this Agreement and to carry out and effectuate the purposes intended hereby
to be accomplished. All such additional documents and actions shall be deemed
to have been executed and delivered, and shall be effective, on the Closing
Date unless specifically provided otherwise therein or in connection
therewith.
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ARTICLE 2
OTHER TRANSACTIONAL COVENANTS AND AGREEMENTS
2.1 EMPLOYMENT AGREEMENTS. At or before the Closing, Sellers shall
execute and deliver, or cause to be executed or delivered, to Interphase
employment agreements for each person listed in SCHEDULE 2.1, in form and
substance which shall be substantially as set forth in EXHIBIT 2.1 hereto and
reasonably acceptable to Interphase.
2.2 STOCK OPTION AGREEMENTS. Subject to the terms, conditions and
targets and in the amounts set forth in SCHEDULE 2.2A, Interphase shall grant
to key Synaptel employees who are listed in SCHEDULE 2.2B and SCHEDULE 2.2C
of this Agreement, non-qualified stock options in form and substance
substantially as set forth in Exhibits 2.2 A-E hereto, pursuant to the
Interphase Corporation Amended and Restated Stock Option Plan (the
"Interphase Plan"), subject to shareholder approval of the additional shares
needed to be authorized under the Interphase Plan. In this connection
Interphase agrees to register the stock options being issued under the
Agreement on a Form 5-8 registration statement under the Securities Act, as
soon as reasonably practicable after such shareholder approval of the
additional shares and to keep that registration in effect during the term of
the options. In the event that such shareholder approval is not obtained on
or before June 24, 1997, Interphase will either (i) grant such options
outside the Interphase Plan, if possible, or (ii) negotiate in good faith a
similar compensation plan for the employees listed in SCHEDULE 2.2B and
SCHEDULE 2.2C. Interphase shall use its best effort to amend the
non-qualified Stock Option Agreement in order to reflect changes proposed by
Sellers aimed at qualifying the Interphase Corporation Amended and Restated
Stock Option Plan for favorable tax treatment in France, to the extent that
such proposed changes are reasonable and do not adversely affect Interphase.
2.3 VOTING AGREEMENTS. At the Closing, Sellers shall execute and
deliver, or cause to be executed and delivered, to Interphase voting
agreements in form and substance which shall be substantially as set forth in
EXHIBIT 2.3 hereto and reasonably acceptable to Interphase.
2.4 COMPENSATION AND INCENTIVES. lt is understood and agreed that
prior to the Closing Interphase will establish (i) a compensation package for
Synaptel executives and salespersons with respect to sales by such persons of
Interphase products and (ii) an incentive program for Interphase salespersons
with respect to sales by such persons of Synaptel products, such program to
be consistent with the incentive program Interphase provides for sales by
such persons of Interphase products.
2.5 DISPOSITION OF CORTICAL. It is understood and agreed that
effective prior to the Effective Date as hereinafter defined Synaptel will,
in some manner acceptable to Interphase, dispose of Cortical (formerly known
as Sositech), an engineering consulting operation of Synaptel, and that
Cortical is not to be included as part of the operations being acquired by
Interphase. This may entail shareholder distributions or other corporate
reorganization or recapitalization transactions that will not interfere with
or have an adverse effect on Synaptel's other operations.
2.6 TERMINATION OF SHAREHOLDER AGREEMENTS. It is understood and
agreed that prior to the Closing Synaptel and Sellers will, in some manner
acceptable to Interphase, terminate, or cause to be terminated, all
shareholder agreements to which either Synaptel or the Sellers (relative to
Synaptel) are parties, including, but no limited to, that certain shareholder
agreement by and among Synaptel, Monsieur Gilles Renucci and Mercure, the
owners of the capital stock of Cortical, which provides among other things
that, upon a change in control of Synaptel, Synaptel shall be obligated to
exercise an option to buy out the shares of Cortical owned by Monsieur Gilles
Renuci and Mercure. Sellers shall bear the liabilities and obligations for
all damages and costs associated with such terminations.
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2.7 RESTRICTIONS ON INTERPHASE STOCK. It is understood and agreed
that the Interphase Stock is being acquired and will be held in the manner
and subject to the provisions set forth in Schedule 2.7 hereto.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF INTERPHASE
Interphase represents and warrants to Sellers as follows:
3.1 ORGANIZATION AND GOOD STANDING. Interphase is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Texas with all requisite corporate power and authority to carry on the
business in which it is now engaged and to own the properties it now owns.
3.2 AUTHORIZATION AND VALIDITY.
(a) Interphase has full corporate power and authority to execute
and deliver this Agreement and the other agreements, documents and
instruments contemplated hereby and thereby to be executed and delivered by
it, and to consummate the transactions contemplated hereby and thereby.
(b) The execution and delivery of this Agreement and the other
agreements, documents and instruments contemplated hereby to be executed by
Interphase, and the consummation of the transactions contemplated hereby and
thereby, have been duly authorized by all requisite corporate proceedings of
Interphase and approved by the board of directors of Interphase. At or
before Closing, Interphase shall deliver to Sellers evidence of such
corporate proceedings.
(c) This Agreement and each other agreement, document and
instrument contemplated hereby or thereby to be executed and delivered by
Interphase has been, or with respect to agreements, documents or instruments
to be executed and delivered at the Closing, will be at or before the
Closing, duly executed and delivered by Interphase and (assuming the due
authorization, execution and delivery hereof or thereof by the other party or
parties hereto or thereto) constitute or will constitute legal, valid and
binding obligations of Interphase, enforceable against it in accordance with
their respective terms, except as may be limited by applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally or the
availability of equitable remedies.
3.3 NO VIOLATION. Neither the execution and delivery by Interphase of
this Agreement or the other agreements, documents and instruments
contemplated hereby or thereby, nor the consummation by Interphase of the
transactions contemplated hereby or thereby, will:
(a) result in a breach or violation of the terms, conditions and
provisions of, or constitute a default under, the Articles of Incorporation
or Bylaws of Interphase or any agreement, indenture or other instrument under
which Interphase is bound or to which any of its assets are subject, or
result in the creation or imposition of any lien, charge or encumbrance upon
any of such assets; or
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(b) violate any judgment, decree, order, statute, rule or
regulation of any court or any public, governmental or regulatory agency or
body having jurisdiction over Interphase or its properties or assets.
3.4 CONSENTS AND APPROVALS. No authorization, consent, approval,
permit or license of, or filing with, any governmental or public body or
authority, any lender or lessor or any other person or entity is required to
be obtained or to be done by Interphase in order for it to execute or deliver
this Agreement or the other agreements, documents and instruments
contemplated hereby or thereby or to consummate any of the transactions
contemplated hereby or thereby.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLERS
4.1 REPRESENTATIONS AND WARRANTIES OF SELLERS. Each of the Sellers,
excluding Schroder Ventures French Enterprise Fund LPI (USA), Schroder
Ventures French Enterprise Fund UKLP (UK) and Schroder Ventures Holding
Limited (UK), jointly and severally, represents and warrants to Interphase as
set forth in SCHEDULE 4.1 hereto.
ARTICLE 5
COVENANTS OF SELLERS
5.1 COVENANTS OF SELLERS. Each of the Sellers, excluding Schroder
Ventures French Enterprise Fund LPI (USA), Schroder Ventures French
Enterprise Fund UKLP (UK) and Schroder Ventures Holding Limited (UK), jointly
and severally, covenants and agrees as set forth in SCHEDULE 4.1 hereto.
ARTICLE 6
COVENANTS OF INTERPHASE
6.1 CONFIDENTIALITY. Prior to the Closing, Interphase shall keep this
Agreement and its terms confidential. In the event that the transactions
contemplated by this Agreement are not consummated for any reason whatsoever,
Interphase agrees not to disclose or use any confidential information it may
have concerning the affairs of Sellers or Synaptel, except for information
which is required by law to be disclosed. Confidential information includes,
but is not limited to, customer lists and files, prices and costs, business
and financial records, information relating to personnel contracts, stock
ownership, liabilities and litigation. Should the transactions contemplated
hereby not be consummated, upon the request of Sellers or Synaptel,
Interphase shall return to the requesting party all confidential information
received from such party in connection with this transaction, and nothing
contained in this Section shall be construed to prohibit Interphase or its
affiliates from operating a business in competition with Sellers or Synaptel;
PROVIDED, HOWEVER, that Interphase shall not use any of the confidential
information received in connection with this Agreement to the detriment of
Sellers or Synaptel in the operations of such business. Notwithstanding the
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foregoing, Interphase may disclose the terms of this Agreement and the
transactions contemplated hereby and information concerning Synaptel and its
business to its affiliates, employees, attorneys and accountants, to the
extent necessary to consummate the transactions contemplated hereby, upon
advising them of the confidential nature of such terms and information, and
Interphase and its representatives, agents and affiliates may also disclose
such information to existing and prospective lenders, lessors, partners,
joint venturers and other third parties from which or whom a consent or
approval is necessary to consummate the transactions contemplated hereby.
6.2 PUBLIC ANNOUNCEMENTS. Whether prior to or after the Closing
Interphase agrees to use its best efforts to consult with Sellers before
issuing any press releases or otherwise making any public statements with
respect to the transactions contemplated by this Agreement and, except as
Interphase or its affiliates may deem necessary in order to comply with legal
or stock exchange requirements applicable to Interphase, shall not issue any
such press release, make any such public statement or file any report prior
to Sellers approving in writing of such press release, public statement or
report. No approval by Sellers of any such press release or public statement
shall be unreasonably withheld or delayed.
6.3 ACCESS TO RECORDS. Following the Closing, Interphase will, at
Sellers' reasonable request, provide Sellers reasonable access during normal
business hours to the books and records of Synaptel for purposes of preparing
their tax returns and for audits.
ARTICLE 7
CONDITIONS PRECEDENT TO
OBLIGATIONS OF INTERPHASE
Except as may be waived in writing by Interphase, the obligations of
Interphase hereunder are subject to the fulfillment at or prior to the
Closing of each of the following conditions:
7.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Sellers contained herein, in the Exhibits and Schedules hereto
and in each of the agreements, documents and instruments executed pursuant
hereto or thereto shall be substantially in the form attached hereto. In
this connection, Sellers agree to complete all schedules and exhibits prior
to Closing, and all representations and warranties contained in this
Agreement shall be true and correct in all material respects at the Closing
Date, with the same force and effect as if such representations and
warranties had been made at and as of the Closing Date.
7.2 COVENANTS. Sellers shall have performed and complied in all
material respects with all covenants, agreements and conditions required by
this Agreement, the Exhibits and Schedules hereto and any of the agreements,
documents or instruments executed pursuant hereto or thereto to be performed
and complied with by any of them at or prior to the Closing.
7.3 OPINION. Interphase shall have received the legal opinion of
counsel to Sellers, dated the Closing Date and in form and substance which
shall be substantially as set forth in EXHIBIT 7.3 hereto, and reasonably
acceptable to Interphase.
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7.4 PROCEEDINGS. No action, proceeding or order by any court or
governmental body or agency shall have been threatened in writing, asserted,
instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated by this Agreement or which would impose any material
limitation on the ability of Interphase effectively to exercise full rights of
ownership as the sole shareholder of Synaptel after the Closing Date or that
would impose any material limitation on the ability of Interphase to exercise
full control and to operate the business, after the Closing Date, theretofore
conducted by Synaptel.
7.5 NO MATERIAL ADVERSE CHANCE. No material adverse change in the
condition (financial or otherwise), business, operations or assets of Synaptel
shall have occurred since the December 31, 1995 Consolidated Balance Sheet.
7.6 DUE DILIGENCE INVESTIGATION. Interphase, through its own personnel
and representatives, shall have completed and been satisfied with the results of
a review of the Schedules and Exhibits to this Agreement, and the assets,
business, operations, books and records of Synaptel, the scope of such review
and such satisfaction to be determined in the sole discretion of Interphase,
provided that Interphase will not unreasonably withhold such satisfaction.
7.7 TRANSFER OF SYNAPTEL STOCK BY THEBAUT. Jean-Pierre Thebaut shall have
transferred all Synaptel stock owned by him to Oros prior to Closing.
ARTICLE 8
CONDITIONS PRECEDENT TO OBLIGATIONS
OF
SELLERS
Except as may be waived in writing by Sellers, the obligations of
Sellers hereunder are subject to fulfillment at or prior to the Closing of
each of the following conditions:
8.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Interphase contained herein and in each of the agreements, documents and
instruments executed pursuant hereto or thereto shall have been true and correct
in all material respects as of the date hereof, and shall be true and correct in
all material respects at the Closing Date, with the same force and effect as if
such representations and warranties had been made at and as of the Closing Date.
8.2 COVENANTS. Interphase shall have performed and complied in all
material respects with all covenants or conditions required by this Agreement or
any other of the agreements, documents or instruments executed pursuant hereto
or thereto to be performed and complied with by it at or prior to the Closing.
8.3 PROCEEDINGS. No action, proceeding or order by any court or
governmental body or agency shall have been threatened in writing, asserted,
instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated by this Agreement.
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8.4 OPINION. Sellers shall have received the legal opinion or opinions of
Gardere & Wynne, L.L.P. or Gide Loyrette Nouel, counsel to Interphase, dated the
Closing Date and in form and substance which shall be substantially as set forth
in EXHIBIT 8.4 hereto, and reasonably acceptable to Sellers.
ARTICLE 9
INDEMNIFICATION
9.1 INDEMNIFICATION OBLIGATIONS OF SELLERS. Each of the Sellers,
excluding Schroder Ventures French Enterprise Fund LPI (USA), Schroder Ventures
French Enterprise Fund UKLP (UK) and Schroder Ventures Holding Limited (UK),
hereby agree to indemnify, defend and hold harmless Interphase and Synaptel as
set forth in SCHEDULE 4.1 hereto.
9.2 INDEMNIFICATION OBLIGATIONS OF INTERPHASE. Subject to the terms and
conditions of this Article 9, Interphase hereby agrees to indemnify, defend and
hold harmless Sellers and (unless the transactions contemplated hereby are
consummated) Synaptel from and against all Damages (as hereinafter defined)
asserted against or incurred by any or all of the Sellers and (if applicable)
Synaptel by reason of or resulting from the existence of any facts or
circumstances that would cause or render any representation or warranty
contained herein, or in any agreement, document or instrument executed pursuant
hereto or thereto, by Interphase to be untrue or incorrect, or the breach or
failure of compliance of any covenant herein or therein contained by Interphase.
For purposes of Section 9.2 "Damages" means all liabilities, losses, costs,
damages, penalties, assessments, demands, claims, causes of action, including,
without limitation, reasonable attorneys', accountants' and consultants' fees
and expenses, court costs incurred by an indemnified party specifically
referenced hereunder, and amounts that the indemnified party may incur or be
required to pay in order to obtain the economic benefit of the transactions
contemplated by this Agreement and the other agreements and instruments to be
executed and delivered pursuant hereto, in each case less any tax benefits and
any insurance or third party recoveries received by the indemnified party with
respect to such item.
9.3 CONDITIONS OF INDEMNIFICATION. The obligations and liabilities of
Interphase to the parties to be indemnified under Section 9.2 hereof with
respect to claims resulting from the assertion of liability by third parties
shall be subject to the following terms and conditions:
(a) Promptly after receipt of notice of commencement of any action
evidenced by service of process or other legal pleading, or within 30 days (or
such shorter period as may be necessary in order that the rights of Interphase
will not be prejudiced) after the assertion in writing of any other claim by a
third party, the party to be indemnified shall give Interphase written notice
thereof together with a copy of such claim, process or other legal pleading, and
Interphase shall have the right to undertake the defense thereof by
representatives of its own choosing and at its own expense; PROVIDED, HOWEVER,
that the party to be indemnified may participate in the defense with counsel of
its own choice and at its own expense.
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(b) If Interphase, by the 30th day after its receipt of notice of any
such claim (or, if earlier, by the 5th day preceding the day on which an answer
or other pleading must be served in order to prevent judgment by default in
favor of the person asserting such claim), does not notify the party to be
indemnified that it has elected to defend against such claim, the party to be
indemnified will have the right to undertake the defense, compromise or
settlement of such claim on behalf of and for the account and risk of Interphase
and at Interphase's expense, subject to the right of Interphase to assume the
defense of such claims at any time prior to settlement, compromise or final
determination thereof. The party to be indemnified will notify Interphase of
any proposed settlement no later than three days before such settlement is
effected.
(c) Anything in this Section 9.3 to the contrary notwithstanding,
Interphase shall not settle any claim without the consent of the party to be
indemnified unless such settlement involves only the payment of money and the
claimant provides to the party to be indemnified, in form and substance
satisfactory to that party, a release from all liability in respect of such
claim. If the settlement of the claim involves more than the payment of money,
Interphase shall not settle the claim without the prior written consent of the
party to be indemnified.
(d) The party to be indemnified and Interphase will each cooperate
with all reasonable requests of the other.
(e) The failure of a party seeking indemnity hereunder to provide any
notice required hereunder shall not relieve Interphase from any liability it
would otherwise have hereunder, except to the extent that Interphase has been
materially prejudiced thereby.
9.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
(a) Except as provided in (b) below or in SCHEDULE 4.1 hereto, all
representations and warranties in this Agreement or in any agreement, document,
certificate, schedule, exhibit or other instrument delivered by or on behalf of
a party hereto and the indemnification obligations of the parties hereto
relating to such representations and warranties shall survive for a period of 2
years after the Closing; provided, however, that with respect to any claim made
by any party hereto on or before the expiration of the period, the
representations and warranties that are the subject of such claim and
indemnification obligations with respect thereto shall continue in effect,
insofar as they relate or allegedly relate to the claim, until the claim is
finally resolved.
(b) Except as provided in SCHEDULE 4.1 all representations and
warranties in this Agreement or in any agreement, document, certificate,
schedule, exhibit or other instrument delivered by or on behalf of a party
hereto which relate to administrative matters and the indemnification
obligations of the parties hereto relating to such representations and
warranties shall survive for a period of 3 1/2 years after the Closing;
provided, however, that with respect to any claim made by any party hereto on or
before the expiration of the period, the representations and warranties that are
the subject of such claim and indemnification obligations with respect thereto
shall continue in effect, insofar as they relate or allegedly relate to the
claim, until the claim is finally resolved.
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ARTICLE 10
TERMINATION
10.1 TERMINATION. This Agreement and the transactions contemplated
hereby may be terminated at any time on or before the Closing:
(a) by mutual written consent of the parties hereto;
(b) by Interphase, if there has been a material misrepresentation
or breach of warranty in the representations and warranties of Sellers herein
or if there has been any material failure on the part of Sellers to comply with
their obligations hereunder;
(c) by Sellers if there has been a material misrepresentation or
breach of warranty in the representations and warranties of Interphase herein or
if there has been any material failure on the part of Interphase to comply with
its obligations hereunder;
(d) by Interphase or Sellers if the conditions precedent to their
respective obligations to close the transactions contemplated by this Agreement
have not been satisfied or waived by them at or before the Closing or if the
transactions contemplated by this Agreement to be consummated on or before the
Closing Date have not been consummated by July 24, 1996, unless such failure of
satisfaction or consummation is due to the failure of the terminating party to
perform or observe the covenants, agreements and conditions hereof to be
performed or observed by it at or before the Closing; or
(e) by Interphase or Sellers, if the consummation of the
transactions contemplated hereby would violate any law, non-appealable final
order, decree or judgment of any court or governmental body or agency having
competent jurisdiction.
No such termination shall affect any rights that the parties have against each
other as a result of a material misrepresentation or breach of warranty by a
party or a material failure by a party to comply with its obligations hereunder.
If any of the Sellers purport to terminate this Agreement as to one or more but
not all of them, Interphase shall have the right either to proceed with the
consummation of this Agreement with respect to the non-terminating parties or to
terminate this Agreement with respect to all parties and transactions
contemplated hereby.
10
ARTICLE 11
MISCELLANEOUS
11.1 AMENDMENT. This Agreement may be amended, modified or
supplemented only by an instrument in writing executed by the party against
which enforcement of the amendment, modification or supplement is sought.
11.2 ASSIGNMENT. Neither this Agreement nor any right created hereby
shall be assignable by any party hereto; PROVIDED, HOWEVER, that Interphase
shall be permitted to assign this Agreement and its rights and obligations
hereunder to any of its affiliates. Any other attempted assignment in violation
of this Agreement shall be void.
11.3 NOTICE. Any notice or communication must be in writing and given
by (a) deposit in the mail, addressed to the patty to be notified, postage
prepaid and registered or certified with return receipt requested, (b) delivery
in person or by Federal Express or similar courier service providing evidence of
delivery or (c) transmission by telegram, telecopy or telex. Each notice or
communication that is mailed, delivered, or transmitted in the manner described
above shall be deemed sufficiently given, served, sent and received, in the case
of mailed notices, on the seventh business day following the date on which it is
mailed and, in the case of notices delivered by hand, courier service, telegram
telecopy or telex, at such time as it is delivered to the addressee (with the
delivery receipt, the affidavit of messenger or, with respect to a telecopy or
telex, the confirmation of transmission or answerback being deemed conclusive
evidence of such delivery) or at such time as delivery is refused by the
addressee upon presentation. For purposes of notice, the addresses of the
parties shall be:
If to Sellers: SYNAPTEL
10eme Avenue
855 Avenue Roger Salengro
92370 CHAVILLE - FRANCE
Fax: (1)41.15.12.13
Attn: Philippe Oros
with a copy (which
shall not constitute
notice) to: Stibbe Simmont Monahan Duhot
154 Rue de l'Universite
75007 Paris
France
Fax: (1)40.62.20.62
Attn: Antoine Martin
If to SVFEF LPI : Schroder Ventures French Enterprise Fund LPI
Schroder Venture Manager Inc.
787 Seventh Avenue
New York 10019 NY
USA
11
If to SVFEF UKLP
and SVHL: Schroder Ventures Holding Ltd
20 Southampton Street
London WCZE 7QG
UK
If to Synaptel: SYNAPTEL
10me Avenue
855, Avenue Roger Salengro
92370 Chaville - France
Fax: (1)41.15.12.13
Attn: Philippe Oros
with a copy (which
shall not constitute
notice) to: Stibbe Simont Monahan Duhot
154 Rue de l'Universite
75007 Paris
France
Fax: (1)40.62.20.62
Attn: Antoine Martin
If to Interphase: Interphase Corporation
13800 Senlac
Dallas, Texas 75234
Fax: 214-654-5401
Attn: R. Stephen Polley
with a copy (which
shall not constitute
notice) to: Gardere & Wynne, L.L.P.
3000 Thanksgiving Tower
1601 Elm Street
Dallas, Texas 75201
Fax: 214-999-4667
Attn: David H. Segrest
Any party may change its address for notice by written notice given to the other
parties.
11.4 ENTIRE AGREEMENT. This Agreement and the Exhibits and Schedules
hereto supersede all prior agreements and understandings relating to the subject
matter hereof, except that the obligations of any party under any agreement
executed or required to be executed pursuant to this Agreement shall not be
affected by this Section.
12
11.5 COSTS FEES AND LEGAL FEES. Each party hereto agrees to pay its
own costs and expenses in connection with the transactions contemplated by
this Agreement, and the costs and expenses (including reasonable attorneys'
fees) incurred by the other party hereto in successfully enforcing any of the
terms of this Agreement or proving that the other party breached any of the
terms of this Agreement, except that Interphase will reimburse Sellers for up
to a maximum of $475,000 of documented expenses incurred by Sellers for
services performed by Von Gehr International and Seller's attorneys and
accountants in connection with the transactions contemplated by this
Agreement.
11.6 SPECIFIC PERFORMANCE. Each of the parties acknowledges that their
refusal to comply with each and every term and provision of this Agreement and
of any other agreement or instrument executed and delivered by the parties
pursuant to or in connection with this Agreement, will cause irrevocable harm to
the other parties hereto, for which there may be no adequate remedy at law and
for which the ascertainment of damages would be difficult. Therefore, each party
hereto shall be entitled, in addition to, and without having to prove the
inadequacy of' other remedies at law, to specific performance as well as
injunctive relief (without being required to post bond or other security) from a
court of competent jurisdiction for all of such terms and provisions, except
with respect to matters covered by SCHEDULE 1.1 and SCHEDULE 2.2.A hereto which
shall be controlled by the dispute resolution terms provided in Sections 4 and 6
thereof respectively.
11.7 RELIANCE ON REPRESENTATIONS. All parties hereto shall be entitled
to rely in full upon the accuracy of the representations and warranties of the
other parties hereto contained in this Agreement and upon the representations
and warranties of the other parties at Closing in determining whether the
conditions precedent to its obligations hereunder have been met, and no party
shall have an obligation to investigate any such matters.
11.8 GOVERNING LAW, JURISDICTION AND VENUE.
(a) Except as provided in (b) below, this Agreement and the rights
and obligations of the parties hereto shall be governed, construed and enforced
in accordance with the laws of the State of Texas.
(b) The rights and obligations of the parties set forth in
Article 4, Article 5, and Section 9.1 of this Agreement shall be governed,
construed and enforced in accordance with the laws of France.
(c) With respect to matters covered by Section 11.6 hereof,
except as set forth in (d) below, each party hereby irrevocably submits to
the exclusive jurisdiction of the Dallas County District Court, Dallas,
Texas, U.S. in any action, suit or proceeding arising from or in connection
with this Agreement, and agrees that any such action, suit or proceeding
shall be brought only in such court, and waives any objection based on forum
non conveniens or any other objection to venue therein.
13
(d) Each party hereby irrevocably submits to the exclusive
jurisdiction of the French Courts, in any action, suit or proceeding arising
from or in connection with Article 4, Article 5, or Section 9. I of this
Agreement, and agrees that any such action, suit or proceeding shall be brought
only in such court, and waives any objection based on forum non conveniens or
any other objection to venue therein.
11.9 ARBITRATION. Except with respect to matters covered by Section
11.8(c) and (d) hereof and SCHEDULE 1.1 and SCHEDULE 2.2.A hereto, any
controversy or claim between or among the parties arising out of or relating to
this Agreement or any related agreements or instruments shall be determined by
binding arbitration administered by the American Arbitration Association under
its International Arbitration Rules. The arbitration proceedings shall be
conducted in Dallas, Texas, U.S. The language of the arbitration shall be
English. In rendering the award, the arbitrator shall determine the rights and
obligations of the parties according to the substantive and procedural laws of
the State of Texas.
11.10 CAPTIONS. The captions in this Agreement are for convenience of
reference only and shall not limit or otherwise affect any of the terms or
provisions hereof.
11.11 COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original, and all of which together shall
constitute one and the same instrument.
11.12 NUMBER AND GENDER. Whenever the context requires, references in
this Agreement to the singular number shall include the plural, the plural
number shall include the singular and words denoting gender shall include the
masculine, feminine and neuter.
11.13 LEGAL REPRESENTATION. All of the parties to this Agreement
acknowledge that they have had the opportunity to seek and have sought counsel
to review this Agreement and the transactions contemplated hereby and to obtain
the advice of such counsel regarding this agreement and the transactions
contemplated hereby.
11.14 EFFECTIVE DATE. This Agreement shall be effective as of June 29,
1996 (the "Effective Date"). The parties hereto agree that as of the Effective
Date and thereafter Synaptel will be operated for the benefit of Interphase,
provided that the transaction contemplated by this Agreement closes.
11.15 TRANSFER OF SHARES BY OROS. Philippe Oros has informed Interphase
that he intends to transfer certain shares of Interphase stock received under
this agreement to Jean-Pierre Thebaut ("Thebaut") immediately after Closing
which amount will not exceed 45,000 shares of such Interphase stock. Interphase
has agreed to permit such transaction only on the condition that Thebaut
executes the Stock Restriction Agreement attached hereto as EXHIBIT 11.15.
14
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the date first above written.
INTERPHASE CORPORATION
(a Texas corporation)
/s/ R. Stephen Polley
--------------------------------------------------------
R. Stephen Polley, Chief Executive Officer and President
SYNAPTEL
(a French corporation)
By: /s/ (ILLEGIBLE)
---------------------------------------------------
Its: President
-------------------------------------------------
SELLERS
/s/ PHILIPPE OROS
--------------------------------------------------------
PHILIPPE OROS
/s/ XAVIER SUTTER
--------------------------------------------------------
XAVIER SUTTER
/s/ FRANCOIS LECERF
--------------------------------------------------------
FRANCOIS LECERF
15
SCHRODER VENTURES FRENCH ENTERPRISE
FUND LPI (USA)
By: /s/ (ILLEGIBLE)
-----------------------------------
Its: Attorney-in-fact
-----------------------------------
SCHRODER VENTURES FRENCH ENTERPRISE
FUND UKLP (UK)
By: /s/ (ILLEGIBLE)
-----------------------------------
Its: Attorney-in-fact
-----------------------------------
SCHRODER VENTURES HOLDING LIMITED (UK)
By: /s/ (ILLEGIBLE)
-----------------------------------
Its: Attorney-in-fact
-----------------------------------
16
The following spouses hereby intervene in order to acknowledge the
commitments and obligations taken by their respective husbands:
/s/ FRANCOISE OROS
---------------------------------------
FRANCOISE OROS
/s/ CATHERINE SUTTER
---------------------------------------
CATHERINE SUTTER
/s/ CHRISTINE de LOGINIERE
---------------------------------------
CHRISTINE de LOGINIERE
17
SCHEDULE 1.1
1. The provisions of the earn-out (the "Earn-Out") are as follows:
(a) The cash component of the Earn-Out will be $3,500,000, subject to
adjustment as set forth in Paragraph 9 below. Upon attainment by
Synaptel of the targets set forth herein, the cash component of the
Earn-Out will be paid to the persons and in the percentages set forth
in SCHEDULE 1.2 B of the Agreement (the "Beneficiaries"). The Earn-Out
will be tied to achievement by Synaptel of the following Revenue
(hereinafter defined) and Operating Income (hereinafter defined)
targets during the following periods:
Period Revenue Operating Income
------ ------- ----------------
3rd quarter - 1996 $ 4,020,000 $ 320,000
4th quarter - 1996 $ 6,570,000 $ 1,200,000
1997 $ 25,000,000 $ 3,750,000
1998 $ 40,000,000 $ 7,150,000
(b) The cash component of the Earn-Out (the "Payment") will be paid by the
later of either (i) 60 days after the target is attained or (ii) the
last day for filing with the U.S. Securities and Exchange Commission
the applicable Form 10-Q or 10-K Report for the period in which the
target is attained.
2. The periods for which the Payment will be determined are the 3rd quarter
of 1996, 4th quarter of 1996, fiscal 1997 and fiscal 1998 (together, the
"Earn-Out Period").
3. Interphase shall provide financing to Synaptel during the Earn-Out Period
in accordance with the following schedule:
Time Period Amount of Funding
----------- -----------------
4. The cash component of the Earn-Out for each period stands by itself. There
will be no carryovers or carrybacks.
5. All calculations of Synaptel's performance against the Earn-Out targets
are to be calculated in accordance with United States generally accepted
accounting principles ("GAAP").
(a) "Revenue" shall mean gross revenues less applicable returns and
allowances, customs, insurance and freight, computed according to
GAAP.
(b) "Operating Income" shall mean revenues less cost of sales and
operating expenses, computed according to GAAP.
(c) Any sales by Interphase of Synaptel products, less commissions
and selling costs, shall be treated as sales by Synaptel for
purpose of computing Synaptel's performance against the Earn-Out
targets.
(d) Any sales by Synaptel of Interphase products shall be excluded
from Synaptel's sales for purposes of computing Synaptel's
performance against the Earn-Out targets.
(e) However, for purposes of computing actual Operating Income
performance against the Earn-Out targets described in Paragraph
1(a) above, the excess of the R&D tax credit over the R&D
expenses eligible to be capitalized according to French tax laws
shall be added to actual Operating Income.
6. In the event of a dispute between the parties with regard to the
computation of Synaptel's performance against targets, each of Interphase
and the Beneficiaries, at their own expense, shall appoint one
representative from a "Big Six" accounting firm to resolve the dispute. If
the two appointed representatives are unable to agree on a resolution to
the dispute, the two representatives shall jointly agree on a third
representative from a third "Big Six" accounting firm to resolve the
dispute. The expense in connection with a third representative shall be
divided equally between the parties. The resolution reached by the
appointed representatives shall be final and binding on the parties.
Disputes relating to the Earn-Out, other than disputes relating to the
computation of Synaptel's performance against the Earn-Out targets, shall
be settled by binding arbitration to be held in Geneva, Switzerland. All
matters contained herein shall be governed by Texas law and all dispute
resolutions, including arbitration, shall be conducted in English.
7. The cash component of the Earn-Out for each period is to be divided as set
forth in Paragraphs 8 below, such that 65% is dependent upon the
achievement of Revenue targets and 35% is dependent upon the achievement
of Operating Income targets. These are to be paid independently of each
other to reflect the view that while profitability of the target is
important, growth is even more so.
8. The allocation of the cash component of the Earn-Out is to be spread among
the periods as follows:
Attributable to:
----------------
Period Total Revenue Operating Income
------ ----- ------- ----------------
3rd quarter - 1996 $ 400,000 $ 260,000 $ 140,000
4th quarter - 1996 $ 600,000 $ 390,000 $ 210,000
1997 $1,600,000 $ 1,040,000 $ 560,000
1998 $ 900,000 $ 585,000 $ 315,000
Earn-Out Page 2
The early periods are weighted more heavily to emphasize the importance
of building momentum early so that even greater growth can be achieved
in the following years.
9. The Payment will individually be increased or decreased if performance is
either more or less than the specific target set for each Revenue and
Operating Income level on a period by period basis as follows
Amount of targeted cash
Performance level component to be awarded
----------------- -----------------------
less than 75% of target = zero
75% of target 50% of the Payment
76% thru 99% of target = the Payment is decreased 2% for every 1%
below target
100% of target = 100% of the Payment
101% and more of target = the Payment is increased 2.5% for every 1%
performance is above target
The potential upside from exceeding targets is greater than the potential
downside from underachieving targets.
10. Interphase shall have the right to buy out the remaining eligible cash
component of the Earn-Out if Synaptel does not achieve at least 40% of any
one target for any one period. For purposes of this provision, the 3rd and
4th quarters of 1996 shall be treated as one period. The purchase price of
such buy-out shall equal 25% of the remaining cash component (determined
by assuming future performance would have equaled 100% of target
performance). The buy-out right must be exercised by written notice to the
Sellers set forth in SCHEDULE 1.2 B within six months after the end of the
period of underachievement.
11. Interphase, in its sole judgment and discretion, shall have the right from
time to time to buy out any one individual, any combination of individuals
or all individuals covered under the Earn-Out by paying cash for the full
remaining balance (determined by assuming future performance would have
equaled 100% of target performance) plus a 15% premium.
12. Interphase will cause the financial records to be maintained such that the
Revenue and Operating Income, as herein defined, for Synaptel and its
business will be determinable as if it had continued as a separate
business throughout the entire term of the Earn-Out period unless
Interphase shall have exercised its buy-out rights under paragraphs 10 or
11 herein.
SCHEDULE 2.2 A
1. The provisions for the earn-out stock option grants are as follows:
(a) Upon attainment by Synaptel of the targets set forth herein, grants
will be made to the persons and in the proportions set forth in
SCHEDULE 2.2 B and SCHEDULE 2.2 C of the Agreement (the "Option
Beneficiaries"). The grants will be tied to achievement by Synaptel of
the following Revenue (hereinafter defined) and Operating Income
(hereinafter defined) targets (the "Targets") during the following
periods:
Period Revenue Operating Income
------ ------- ----------------
3rd quarter - 1996 $ 4,020,000 $ 320,000
4th quarter - 1996 $ 6,570,000 $ 1,200,000
1997 $ 25,000,000 $ 3,750,000
1998 $ 40,000,000 $ 7,150,000
(b) Upon attainment by Synaptel of the Targets set forth in (a) above,
Interphase will grant to the key Synaptel employees named and in the
proportions set forth in SCHEDULE 2.2 B and SCHEDULE 2.2 C of the
Agreement non-qualified stock options for up to 450,000 shares of
Interphase Common Stock, subject to adjustment as set forth in
Paragraph 7 below. The exercise price of the options will be $18.50,
which is the same price used for the initial Purchase Price. The
SCHEDULE 2.2 B options will be in accordance with the terms set forth
in EXHIBITS 2.2 A-D of the Agreement, and the SCHEDULE 2.2 C options
will be in accordance with the terms set forth in EXHIBIT 2.2 E of the
Agreement.
(c) The stock options will be granted by the later of either (i) 60 days
after the target is attained or (ii) the last day for filing with the
U.S. Securities and Exchange Commission the applicable Form 10-Q or
10-K Report for the period in which the Target is attained.
2. The stock options for each period stand by themselves. There will be no
carryovers or carrybacks.
3. All calculations of Synaptel's performance against the Targets are to be
calculated in accordance with United States generally accepted accounting
principles ("(GAAP").
(a) "Revenue" shall mean gross revenues less applicable returns and
allowances, customs, insurance and freight, computed according to
GAAP.
(b) "Operating Income" shall mean revenues less cost of sales and
operating expenses, computed according to GAAP.
(c) Any sales by Interphase of Synaptel products, less commissions and
selling costs, shall be treated as sales by Synaptel for purposes of
computing Synaptel's performance against the Targets.
(d) Any sales by Synaptel of Interphase products shall be excluded from
Synaptel's sales for purposes of computing Synaptel's performance
against the Targets.
(e) However, for purposes of computing actual operating Income performance
against the Targets described in Paragraph 1(a) above, the excess of
the R&D tax credit over the R&D expenses eligible to be capitalized
according to French tax laws shall be added to actual Operating
Income.
4. In the event of a dispute between the parties with regard to the
computation of Synaptel's performance against Targets, each of Interphase
and the Option Beneficiaries, at their own expense, shall appoint one
representative from a "Big Six" accounting firm to resolve the dispute. If
the two appointed representatives are unable to agree on a resolution to
the dispute, the two representatives shall jointly agree on a third
representative from a third "Big Six" accounting firm to resolve the
dispute. The expense in connection with a third representative shall be
divided equally between the parties. The resolution reached by the
appointed representatives shall be final and binding on the parties.
Disputes relating to the option grants, other than disputes relating to
the computation of Synaptel's performance against the Targets, shall be
settled by binding arbitration to be held in Geneva, Switzerland. All
matters contained herein shall be governed by Texas law and all disputes
resolutions, including arbitration, shall be conducted in English.
5. The stock options for each period are to be divided as set forth in
Paragraph 6 below, such that 65% is dependent upon the achievement of
Revenue targets and 35% is dependent upon the achievement of Operating
Income targets. These are to be paid independently of each other to
reflect the view that while profitability of the Target is important,
growth is even more so.
6. The allocation of the stock options is to be spread among the periods as
follows:
Attributable to:
Period Total Revenue Operating Income
------ ----- ------- ----------------
3rd quarter-1996 27,000 18,000 9,000
4th quarter-1996 40,500 26,100 14,400
1997 157,500 102,600 54,900
1998 225,000 146,700 78,300
Grants are more heavily weighted to the later years to emphasize the longer term
success of the combined entities.
Stock Option Grant Page 2
7. The number of options will individually be increased or decreased if
performance is either more or less than the specific Target set for each
Revenue and Operating Income level on a period by period basis as follows:
Amount of targeted
Performance level stock options to be awarded
----------------- ---------------------------
less than 75% of target = zero
75% of target = 50% of the number of options
76% thru 99% of target = the number of options is decreased 2% for
every 1% below target
100% of target = 100% of the number of options
101% and more of target = the number of options is increased 2.5% for
every 1% performance is above target.
The potential upside from exceeding Targets is greater than the potential
downside from underachieving Targets.
8. Interphase shall have the right to buy out the remaining stock options if
Synaptel does not achieve at least 40% of any one Target for any one
period. For purposes of this provision, the 3rd and 4th quarters of 1996
shall be treated as one period. The buy-out shall be effectuated by
granting options equal to 25% of all remaining, eligible stock options
(determined by assuming future performance would have equaled 100% of
target performance). The buy-out right must be exercised by written notice
to the persons set forth in SCHEDULE 2.2. B and SCHEDULE 2.2 C within six
months after the end of the period of underachievement.
9. Interphase, in its sole judgment and discretion, shall have the right from
time to time to buy out any one individual, any combination of individuals
or all individuals covered in SCHEDULE 2.2. B and SCHEDULE 2.2 C by
granting options for the full remaining balance (determined by assuming
future performance would have equaled 100% of target performance) plus a
15% premium.
10. Interphase will cause the financial records to be maintained such that the
Revenue and Operating Income, as herein defined, for Synaptel and its
business will be determinable as if it had continued as a separate
business throughout the entire term of the earn-out period unless
Interphase shall have exercised its buy-out rights under paragraphs 8 or 9
herein.