EXHIBIT 2.3
SECOND AMENDMENT TO ACQUISITION AGREEMENT
This Second Amendment to Acquisition Agreement (this "Second
Amendment") is made as of this 25th day of October, 2002 by and among Peregrine
Systems, Inc., a Delaware corporation ("Stockholder"), Peregrine Remedy, Inc., a
Delaware corporation (the "Company"), and BMC Software, Inc., a Delaware
corporation (the "Purchaser"). This Second Amendment amends the Acquisition
Agreement dated as of September 20, 2002 among the Stockholder, the Company and
the Purchaser (the "Original Agreement") as amended by the First Amendment to
Acquisition Agreement, dated as of September 24, 2002, among the Stockholder,
the Company and the Purchaser (the "First Amendment") and incorporates by
reference the proposed Sale Order attached hereto as Exhibit A. The Original
Agreement as amended by the First Amendment is referred to herein as the
"Acquisition Agreement." Capitalized terms used in this Second Amendment that
are not otherwise defined herein shall have the meanings ascribed to them in the
Acquisition Agreement.
RECITALS:
WHEREAS, pursuant to Section 11.9 of the Acquisition Agreement, the
parties to the Acquisition Agreement desire to amend the Acquisition Agreement.
NOW THEREFORE, the parties hereto, in consideration of the premises and
of the mutual covenants herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
agree as follows:
ARTICLE I.
AMENDMENTS
1.1 Amendment of Section 1.1 of the Acquisition Agreement.
(a) The definition of "Excluded Contracts" contained in Section 1.1 is
hereby amended and restated to read in its entirety as follows:
"Excluded Contracts" means the following:
(i) any contracts or agreements between the
Stockholder or any of its Subsidiaries (other than the
Company or any of its Subsidiaries) and the Company or any
of its Subsidiaries, other than the Proprietary Rights
Agreement;
(ii) the Forbearance Agreement dated as of August 26,
2002, by and among the Stockholder, its Subsidiaries named
therein and Fleet National Bank and financial institutions
named therein as "Purchasers;"
(iii) the Loan and Security Agreement by and among the
Stockholder and certain of its Subsidiaries (including the
Company) as "Borrowers," the financial institutions named
therein as "Lenders" and Foothill Capital Corporation, as
"Arranger and Administrative Agent" dated as of June 12, 2002
(as amended from time to time);
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(iv) the Facility Funding Agreement dated September
20, 2002 between the Stockholder and Peregrine Systems
Operations Limited; and
(v) any Rejected Contracts.
(b) Section 1.1 is hereby amended to add the following definition of
"Potential Stockholder Contracts:"
"Potential Stockholder Contracts" means (x) all contracts and
agreements, existing as of the Closing Date, between the Stockholder or
any of its Subsidiaries (other than the Company or any of its
Subsidiaries) and any Third Party to the extent related to the sale,
license, distribution, maintenance, services or escrow of any Company
Products or Software Products, but excluding those portions of such
agreements that do not relate to the Company Products or the Software
Products, and (y) all of the Lease Agreements to which the Stockholder
or one of its Subsidiaries (other than the Company or one of its
Subsidiaries) is a party.
(c) Section 1.1 is hereby amended to add the following definition of
"Rejected Contracts:"
"Rejected Contracts" means all Potential Stockholder Contracts
and all contracts and agreements described in clause (vii) of the
definition of Purchased Assets, in each case that are specifically
designated as "Rejected Contracts" by the Purchaser in a written notice
delivered to the Stockholder prior to November 4, 2002.
(d) The definition of "Retained Contracts" contained in Section 1.1 is
hereby amended and restated to read in its entirety as follows:
"Retained Contracts" means, other than any Excluded Contracts,
(i) any Material Contract, Lease Agreement or other contract,
agreement, purchase order or similar right or commitment to which the
Company or any of its Subsidiaries is a party and which was not entered
into or amended after the date hereof in violation of Section 6.1, (ii)
any contract or agreement, existing as of the Closing Date, between the
Stockholder or any of its Subsidiaries (other than the Company or any
of its Subsidiaries) and any Third Party related to the sale, license,
distribution, maintenance services or escrow of any Company Products or
Software Products, or (iii) any Lease Agreement to which the
Stockholder or one of its Subsidiaries (other than the Company or one
of its Subsidiaries) is a party, in each case in clauses (i), (ii) and
(iii) above, to the extent that (a) the counter-party's consent is
required for a valid assignment thereof, (b) the requirement for such
consent is not obviated by obtaining Bankruptcy Court authorization to
assume and assign such agreement pursuant to Section 365 of the
Bankruptcy Code and (c) such counter-party's consent is not obtained
prior to the Closing.
(e) The definition of "Stockholder Contracts" contained in Section 1.1
is hereby amended and restated to read in its entirety as follows:
"Stockholder Contracts" means (x) all contracts and agreements,
existing as of the Closing Date, between the Stockholder or any of its
Subsidiaries (other than the
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Company or any of its Subsidiaries) and any Third Party to the extent
related to the sale, license, distribution, maintenance, services or
escrow of any Company Products or Software Products, but excluding
those portions of such agreements that do not relate to the Company
Products or the Software Products, and (y) all of the Lease Agreements
to which the Stockholder or one of its Subsidiaries (other than the
Company or one of its Subsidiaries) is a party, other than any Rejected
Contracts.
1.2 Amendment of Section 2.5(a) of the Acquisition Agreement. Section
2.5(a) of the Acquisition Agreement is hereby amended and restated to read in
its entirety as follows:
(a) Upon approval of the Bid Procedures Motion and entry of
the Bid Procedures Order by the Bankruptcy Court, the Stockholder and
the Company shall be entitled to consider Acquisition Proposals from
Third Parties as required by their respective fiduciary obligations as
debtors-in-possession in the Bankruptcy Case; provided that the
Stockholder and the Company shall require that any such Acquisition
Proposal shall comply with the Bid Procedures Motion and the Bid
Procedures Order, have a cash value of at least Three Hundred
Sixty-Five Million Dollars ($365,000,000) (the "Upset Price") and that
each incremental bid from any Person other than the Purchaser after the
initial Qualified Bid equal to the Upset Price shall be at least One
Million Dollars ($1,000,000) more than each prior bid.
1.3 Amendment of Section 6.4 of the Acquisition Agreement. Section 6.4
of the Acquisition Agreement is hereby amended by adding the following clauses
(g), (h) and (i) to Section 6.4:
(g) The Stockholder and the Company shall, in their sole
discretion, either reject the Rejected Contracts in the Bankruptcy
Case, or retain the Rejected Contracts in the relevant bankruptcy
estate of the Stockholder or the Company; provided, however, that
neither the Stockholder nor the Company shall reject any of the
Rejected Contracts that are Lease Agreements ("Rejected Lease
Agreements") such that such rejection shall be effective prior to the
thirtieth (30th) day immediately following the Closing Date (such
thirty day period being referred to as the "Extension Period") without
the prior written consent of the Purchaser. Notwithstanding anything in
the definition of Excluded Liabilities to the contrary, the Purchaser
hereby agrees to pay to the Stockholder or the Company in accordance
with the terms of this clause (g) all administrative costs and expenses
incurred by the Stockholder or the Company pursuant to the Rejected
Contracts attributable to periods after the Closing Date and the amount
of rejection damages arising out of the rejection of the Rejected
Contracts (but excluding any such damages attributable to periods prior
to the Closing Date), in each case as ordered by a final and
non-appealable order (a "Final Rejection Order") of a court of
competent jurisdiction pursuant to applicable bankruptcy and
non-bankruptcy law, including, without limitation, Section 502 of the
Bankruptcy Code and state law mitigation requirements (collectively,
the "Rejection Damages Amount"). The Stockholder and the Company agree
that the Purchaser shall be a party in interest and shall have standing
to participate in all proceedings and matters involving the rejection
of such Rejected Contracts. Within five Business Days after entry of a
Final Rejection Order in respect of a Rejected Contract,
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the Purchaser shall pay the Rejection Damages Amount set forth in such
order, by wire transfer of immediately available funds.
(h) Notwithstanding anything contained in clause (g) above to
the contrary, if the Stockholder and the Company shall not have filed a
motion to reject a Rejected Contract within 10 Business Days after the
Closing Date, the Purchaser shall have no obligation or liability for
any amount of the Rejection Damages Amount in respect of such Rejected
Contract.
(i) During the Extension Period, the Stockholder or the Company,
as applicable, shall afford the Purchaser reasonable access to any real
property subject to a Rejected Lease Agreement.
1.4 Amendment of Section 6.13 of the Acquisition Agreement. Section
6.13 of the Acquisition Agreement is hereby amended and restated to read in its
entirety as follows:
6.13 Bankruptcy Release. Except for rights granted under and
claims pursuant to any of the Acquisition Documents, the
Confidentiality Agreement, the Financing Agreement or any other
agreement between the Purchaser or its Subsidiaries on the one hand and
the Stockholder or Company or their Subsidiaries on the other hand, the
Stockholder and the Company, on behalf of themselves and each of their
Subsidiaries and Affiliates (the "Releasing Parties"), effective as of
the Closing, hereby releases, acquits, and forever discharges the
Purchaser and each of its Subsidiaries and Affiliates and each of their
respective present or former representatives, directors, officers,
employees, attorneys and agents (excluding any present or former
representatives, directors, officers employees, attorneys and agents of
the Stockholder, the Company or their Subsidiaries), and their
successors and assigns (the "Released Parties"), from any and all
claims, causes of action, demands, costs, debts, damages, obligations
and liabilities, whether known or unknown, which the Releasing Parties
have or may come to have against the Released Parties, whether
directly, indirectly or derivatively, including, but not limited to,
negligence or gross negligence, in connection with or related to their
ownership or operation of the Business (the "Released Claims"). The
Releasing Parties covenant not to sue the Released Parties on account
of any Released Claim. The Sale Order shall provide that (i) the
release of the Released Claims shall be final upon entry of the Sale
Order and such release shall forever release, discharge and expunge
such Released Claims, (ii) no order shall be entered in the bankruptcy
case which in any way waives, limits or modifies the release or any
rights of the Released Parties under the release or this agreement, and
(iii) the release shall survive any dismissal of the bankruptcy case.
1.5 Amendment of Section 10.1 of the Acquisition Agreement. Sections
10.1(h)(iii) and (iv) of the Acquisition Agreement are hereby amended and
restated to read in their entirety as follows:
(iii) the Bankruptcy Case is dismissed, is converted to Chapter 7
of the Bankruptcy Code or, prior to the time that a Sale Order entered
by the Bankruptcy Court becomes final and nonappealable, a Trustee in
respect of the Stockholder or the Company is appointed;
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(iv) the Bid Procedures Order is not approved by the Bankruptcy
Court by October 16, 2002, provided that, for purposes of this
subclause (iv), the parties agree that the Bankruptcy Court approved
the Bid Procedures Order on October 15, 2002, subject to entry of the
Bid Procedures Order;
1.6 Amendment of Section 10.2 of the Acquisition Agreement. Sections
10.2(b) and (c) of the Acquisition Agreement are hereby amended and restated to
read in their entirety as follows:
(b) Notwithstanding the provisions of Section 10.2(a), (x)(A)
upon any termination pursuant to Section 10.1(f) as a result of any
knowing misrepresentation by the Stockholder or the Company or any
willful breach or non-performance by the Stockholder or the Company of
any of its covenants, representations, warranties, conditions or
agreements under this Agreement, the Stockholder or the Company will
within three Business Days following notice of such termination pay to
the Purchaser by wire transfer in immediately available funds to an
account designated by the Purchaser $7,500,000 (the "Breach Payment"),
or (B) upon any other termination of this Agreement (other than
pursuant to Section 10.1(g)), the Stockholder or the Company will, in
the case of termination by the Purchaser, within three Business Days
following notice of such termination or, in the case of termination by
the Stockholder or the Company, prior to such termination, pay to the
Purchaser by wire transfer in immediately available funds to an account
designated by the Purchaser on account of all of the Purchaser's costs
and expenses $4,200,000.00 or if the Purchaser's actual costs and
expenses shall exceed such amount, the actual amount of such costs and
expenses up to $6,000,000.00 (the "Expense Payment") and (y) if within
eight months after the date of any termination of this Agreement (other
than pursuant to Section 10.1(g)), the Stockholder or the Company
consummates a transaction that constitutes a Competing Proposal, the
Stockholder or the Company will, prior to the consummation of such
transaction, pay to the Purchaser by wire transfer in immediately
available funds to an account designated by the Purchaser the Break-Up
Fee less the Breach Payment or the Expense Payment in each case to the
extent previously paid. The Purchaser shall not be permitted to credit
bid the Break-Up Fee. However, if, at the auction of the assets
provided for in the Bid Procedures Order, the Purchaser is the
Successful Bidder (as such term is defined in the Bid Procedures Order)
and another Qualified Bid (as such term is defined in the Bid
Procedures Order) was submitted, then at the closing of the sale of
such assets, the purchase price payable by the Purchaser pursuant to
such Successful Bid (as such term is defined in the Bid Procedures
Order) shall be reduced by $10,000,000.00 as credit for the Break-Up
Fee. If the Stockholder or the Company shall fail to pay the Breach
Payment, the Expense Payment or the Break-Up Fee due hereunder, the
Stockholder or the Company shall pay the costs and expenses of the
Purchaser in connection with any action, including the filing of any
lawsuit or other legal Action, taken to collect payment, together with
interest on the amount unpaid at the Specified Rate from the date such
amounts were required to be paid until payment in full. The Stockholder
and the Company shall be jointly and severally liable for the payment
of any Breach Payment, Expense Payment or Break-Up Fee and other
amounts due under this Section 10.2(b). The Stockholder and the Company
agree and acknowledge that the provisions in this Agreement for the
payments contemplated by this Section 10.2(b) and the procedures
embodied in Sections 6.4 and
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6.5 hereof were material inducements for, and conditions, of the
Purchaser's entry into this Agreement. The Stockholder and the Company
agree and acknowledge that the Purchaser has, in reliance on the
availability of the payment, reimbursement and procedures as set forth
in this Agreement, researched the value of the Purchased Assets, has
expended and will expend substantial resources and funds in connection
with the purchase of the Purchased Assets, and is willing to enter into
the Financing Agreement and to serve as a "stalking horse" in
connection with the proposed sale of the Purchased Assets or the
Business for purposes of promoting competitive bidding that otherwise
would not have been made. The Stockholder and the Company acknowledge
that the Purchaser has, by submitting the bid embodied in this
Agreement, provided a benefit to the Stockholder's and the Company's
estate by increasing the likelihood that the price at which the
Purchased Assets or the Business is sold or otherwise disposed will
reflect their true worth and that absent authorization of the payments
contemplated by this Section 10.2(b), the Stockholder and the Company
may lose the opportunity to obtain the highest and best available offer
in respect of the Purchased Assets or the Business.
(c) The Purchaser's right to payment of the Breach Payment,
the Expense Payment and the Break-Up Fee and costs and expenses
described in Section 10.2(b) shall have priority administrative claim
status in the Bankruptcy Case pursuant to Section 507(b) of the
Bankruptcy Code and shall be deemed to be an authorized draw under the
Financing Agreement and the Purchaser shall be afforded all protection
thereunder.
ARTICLE II.
GENERAL PROVISIONS
2.1 Effectiveness and Ratification. All of the provisions of this
Second Amendment shall be effective as of the date hereof. Except as
specifically provided for in this Second Amendment, the terms of the Acquisition
Agreement are hereby ratified and confirmed and remain in full force and effect.
2.2 Headings. The headings contained in this Second Amendment are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Second Amendment.
2.3 Severability. In the event that any provision of this Second
Amendment or the application thereof becomes, or is declared by a court of
competent jurisdiction to be, illegal, void or unenforceable, the remainder of
this Second Amendment will continue in full force and effect and the application
of such provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further agree
to replace such void or unenforceable provision of this Second Amendment with a
valid and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of such void or unenforceable provision.
2.4 Amendment; Entire Agreement. Whenever the Acquisition Agreement is
referred to in the Original Agreement, the First Amendment or in any other
agreements, documents and instruments, such reference shall be deemed to be to
the Original Agreement as amended by the First Amendment and this Second
Amendment. The Acquisition Agreement and any schedules
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or exhibits thereto, together with this Second Amendment, constitute the entire
agreement of the parties hereto with respect to the subject matter hereof and
supersede all prior agreements and undertakings, both written and oral, other
than the Confidentiality Agreement, by and between, the parties with respect to
the subject matter hereof and except as otherwise expressly provided herein.
2.5 Governing Law. This Second Amendment shall be governed by, and
construed in accordance with, the laws of the State of Delaware applicable to
contracts executed in and to be performed in that State without regard to any
conflict or choice of law principles that would apply the substantive law of
some other jurisdiction. All actions and proceedings arising out of or relating
to this Second Amendment shall be heard and determined in a Delaware state or
federal court sitting in the City of Wilmington, and the parties hereto hereby
irrevocable submit to the exclusive jurisdiction of such courts in any such
action or proceeding and irrevocably waive and agree not to assert any defense
of an inconvenient forum to the maintenance of any such action or proceeding.
Notwithstanding the foregoing, upon filing the Bankruptcy Case, the Bankruptcy
Court shall have exclusive jurisdiction over all disputes arising under or in
connection with the Acquisition Agreement, this Second Amendment, the
Confidentiality Agreement or any Acquisition Document, and each party hereto
hereby irrevocably submits and consents to the exclusive jurisdiction of the
Bankruptcy Court for such purposes.
2.6 Rules of Construction. The parties hereto agree that they have
been represented by counsel during the negotiation and execution of this Second
Amendment and, therefore, waive the application of any law regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.
2.7 Counterparts. This Second Amendment may be executed by facsimile
signature and in one or more counterparts, and by the different parties hereto
in separate counterparts, each of which when executed shall be deemed to be an
original but all of which taken together shall constitute one and the same
agreement.
2.8 Specific Performance. The parties hereby acknowledge and agree
that the failure of any party to this Second Amendment to perform its agreements
and covenants hereunder, including its failure to take all actions as are
necessary on its part to the consummation of the transactions contemplated
hereby, will cause irreparable injury to the other parties to this Second
Amendment for which monetary damages, even if available, will not be an adequate
remedy. Accordingly, each of the parties hereto hereby consents to the granting
of equitable relief (including specific performance and injunctive relief) by
any Court of competent jurisdiction to enforce any party's obligations
hereunder. The parties further agree to waive any requirement for the securing
or posting of any bond in connection with the obtaining of any such equitable
relief and that this Section 2.8 is without prejudice to any other rights that
the parties hereto may have for any failure to perform this Second Amendment.
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IN WITNESS WHEREOF, the Company, the Stockholder and the Purchaser have
caused this Second Amendment to be executed as of the date first written above
by their respective officers thereunto duly authorized.
BMC SOFTWARE, INC.
By /s/ Robert H. Whilden, Jr.
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Name: Robert H. Whilden, Jr.
Title: Senior Vice President and
General Counsel
PEREGRINE SYSTEMS, INC.
By /s/ Ken Sexton
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Name: Ken Sexton
Title: Chief Financial Officer
PEREGRINE REMEDY, INC.
By /s/ Ken Sexton
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Name: Ken Sexton
Title: Chief Financial Officer
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