EXHIBIT 99.2
STOCK PURCHASE AGREEMENT
DATED AS OF
APRIL 30, 2003
BY AND BETWEEN
NEWCASTLE PARTNERS, L.P.
AND
GEOWORKS CORPORATION
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT dated as of April 30, 2003 (this "Agreement") by
and between Geoworks Corporation, a Delaware corporation (the "Company"), and
Newcastle Partners, L.P. ("Newcastle") and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇", and
together with Newcastle, the "Purchasers").
WHEREAS,(i) the Company is a public company whose prospects for
success are currently very limited and whose resources are declining; (ii)
Purchasers are sophisticated investors with experience managing and acquiring
businesses; (iii) the Company desires to sell stock to Purchasers in the
interest of increasing the Company's resources to enable it to seek or develop
new business alternatives; and (iv) Purchasers desire to purchase from the
Company 7,377,905 newly issued shares (the "Shares") of the Company's common
stock , $.001 par value, of the Company ("Common Stock"), on the terms and
subject to the conditions set forth in this Agreement;
NOW, THEREFORE, the parties hereto hereby agree as follows:
Section 1. Sale of Shares.
1.1. Sale and Purchase of Shares. At the Closing (as defined below),
upon the terms and subject to the conditions contained in this Agreement, the
Company shall sell to Purchasers and Purchasers shall purchase from the Company,
all right, title and interest in and to the Shares (the "Stock Sale"), at an
aggregate purchase price of $325,000 (the "Purchase Price").
1.2. Closing.
(a) The closing of the Stock Sale shall take place
simultaneously with the execution and delivery of this Agreement at the offices
of the Company in Emeryville, California (the "Closing") at a time mutually
agreed upon by the parties hereto.
1.3 Closing Deliverables.
(a) Deliverables of Purchasers:
(i) At the Closing, Purchasers shall deliver the Purchase
Price to an account designated in writing by the Company by
wire transfer.
(ii) At the Closing, Purchasers shall deliver certificates
signed by each duly elected officer stating that all of the
representations and warranties contained in this Agreement are
true and correct as of the date hereof.
(iii) Such other documents and instruments as may be
reasonably requested by the Company's counsel.
(b) Deliverables of the Company.
(i) At the Closing, the Company shall deliver to the
Purchasers a certificate evidencing the Shares or irrevocable
instructions to the Company's transfer agent authorizing the
issuance of the certificate (the "Share Certificate").
(ii) At the Closing, Purchasers shall deliver certificates
signed by each duly elected officer stating that all of the
representations and warranties contained in this Agreement are
true and correct as of the date hereof.
(iii) Such other documents and instruments as may be
reasonably requested by Purchasers' counsel.
1.4 Directors. In connection with the Closing, all of the directors
of the Company shall resign except ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇"). Immediately
following the Closing, the Purchasers shall be allowed to designate ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ("Pully", and together with ▇▇▇▇▇▇▇, the "Nominees") for
appointment to the board of directors of the Company and the Company shall take
all appropriate action to effect the election of ▇▇▇▇▇▇▇ and Pully to the board
of directors of the Company to serve the remainder of the terms of the resigning
directors until the next annual meet of the Company's stockholders. Promptly
thereafter, ▇▇▇▇▇▇▇▇ will resign and the Nominees shall appoint a third
qualified director, who is independent of Company and Purchasers and is not a
member of either party's management. Until this third independent director is
appointed, the Company and the Nominees shall not enter into any business
transactions with each other and the Nominees shall not be compensated for any
services. The Purchasers have supplied to the Company information with respect
to the Nominees as is necessary in connection with the appointment of such
Nominees to the board of directors of the Company. In the event that the
Nominees are not appointed to the board of directors immediately following the
Closing, the Purchase Price shall be returned to the Purchasers immediately upon
the request of the Purchasers and the return of the Certificate (or cancellation
of the instructions to the transfer agent to issue same if the Certificate has
not yet issued) and the Purchasers shall have no continuing obligations under
this Agreement. The provisions of this paragraph are in addition to and will not
limit any rights that the Purchasers may have as a holder or beneficial owner of
Common Stock as a matter of law with respect to the election of directors or
otherwise.
Section 2. Representations and Warranties of the Company
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The Company represents and warrants to the Purchasers that:
2.1. Corporate Existence and Power. The Company and each of its
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, and has all
requisite corporate power and authority to own, lease and operate its properties
and assets and to carry on its business as presently being conducted. The
Company and each of its subsidiaries is duly qualified to do business as a
foreign corporation in the states listed on Exhibit 2.1 and is in good standing
in all jurisdictions in which it is required to be qualified to do intrastate
business as the Company's business is currently conducted and as presently
proposed to be conducted by the Company, except for jurisdictions in which
failure to so qualify could not reasonably be expected to have a material
adverse effect on the business and operations of the Company taken as a whole.
2.2. Corporate Authorization; Approvals.
(a) The execution, delivery and performance by the Company of
this Agreement and the consummation by the Company of the transactions
contemplated hereby are within the Company's corporate powers and have been duly
authorized by all necessary corporate action. Assuming that this Agreement
constitutes the valid and binding obligation of the Purchasers, this Agreement
constitutes a valid and binding agreement of the Company, enforceable in
accordance with its terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
similar laws of general applicability relating to or affecting creditors'
rights, or by general equity principles, including principles of commercial
reasonableness, good faith and fair dealing).
(b) The board of directors of the Company has taken all action
necessary so that the provisions of Section 203 of the Delaware Act applicable
to a "business combination" (as defined in Section 203 of the Delaware Act) will
not apply to the acquisition by the Purchasers of beneficial ownership of Shares
pursuant to this Agreement, or to the execution, delivery or performance of this
Agreement by virtue of authorizing this transaction.
(c) The board of directors of the Company has taken all action
necessary so that the provisions of the Company's rights plan dated March 9,
2001 (the "Rights Plan") is not triggered by this Agreement or the transactions
contemplated hereby.
2.3. Governmental Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation by the Company
of the transactions contemplated hereby do not require any filing or
registration with, notification to, or authorization, consent or approval of,
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any federal, state or local governmental authority, court, administrative or
regulatory agency or commission (each a "Governmental Entity") other than
compliance with any applicable requirements of the Securities Act of 1933, as
amended (the "Securities Act"), the Securities Exchange Act of 1934, as amended,
and applicable state securities laws, following the Closing.
2.4. Non-Contravention; Real Property. The execution, delivery and
performance by the Company of this Agreement and the consummation by the Company
of the transactions contemplated hereby:
(a) do not contravene or conflict with the Company's
certificate of incorporation or bylaws,
(b) to the Company's knowledge, violate, conflict with or
result in a breach of any law applicable to the Company or any of the properties
or assets of the Company, or
(c) violate, result in a breach of, constitute a default (or an
event which, with notice or lapse of time, or both, would constitute a default)
under, result in the termination of, accelerate the performance required by,
result in the creation or imposition of any lien upon any of the properties or
assets of the Company under, or require any consent, approval, notice or filing
under, any of the Company Contracts (as defined in SECTION 2.2(A)). Neither the
Company nor any of its subsidiaries owns any real property.
2.5. Capitalization.
(a) The authorized capital stock of the Company consists of
80,000,000 shares of Common Stock and 2,000,000 shares of the Company's
preferred stock, par value $0.01 per share (the "Preferred Stock"). Immediately
prior to the Closing and not taking into effect the transactions contemplated by
this Agreement, (i) 22,133,715 shares of Common Stock were issued and
outstanding and no Shares of Common Stock were held in treasury and (ii) no
shares of Preferred Stock were issued and outstanding or held in treasury.
Immediately prior to the Closing, options to acquire an aggregate of 1,910,000
shares of Common Stock were outstanding under the Company option plans, a list
of which exercisable options with an exercise price of $.10 or less (including
optionholder name and exercise price) is set forth as Exhibit 2.5. All
outstanding shares of the capital stock of the Company have been duly authorized
and validly issued, and are fully paid, non-assessable and free of preemptive
rights. All Common Stock is subject to the Rights Plan.
(b) Except as described in subsection (a) above, as of the date
hereof there are no outstanding:
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(i) shares of capital stock or other voting securities of
the Company or its subsidiaries;
(ii) securities of the Company or its subsidiaries
convertible into or exchangeable for shares of capital stock or
voting securities of the Company or its subsidiaries; or
(iii) options, warrants or other rights to acquire from
the Company or its subsidiaries, any capital stock, voting
securities or securities convertible into or exchangeable for
capital stock or voting securities of the Company or its
subsidiaries. There are no outstanding obligations of the
Company or its subsidiaries to repurchase, redeem or otherwise
acquire any shares of Common Stock.
2.6. Subsidiaries.
(a) Exhibit 2.6 sets forth a list of all subsidiaries of the
Company and their respective jurisdictions of incorporation or organization. All
of the outstanding shares of capital stock of each subsidiary of the Company are
owned by the Company, directly or indirectly, free and clear of any liens and
free of any other limitation or restriction, including any limitation or
restriction on the right to vote, sell or otherwise dispose of such capital
stock or other ownership interest (other than any of the foregoing that may
exist under the Securities Act or any state securities laws).
(b) All outstanding shares of the capital stock of each
subsidiary of the Company have been duly authorized and validly issued, and are
fully paid, non-assessable and free of preemptive rights.
(c) None of the subsidiaries of the Company own or control
directly or indirectly, or have any direct or indirect equity participation in,
any corporation, partnership, limited liability company, joint venture or other
entity.
2.7. Company SEC Documents. The Company has filed all forms, reports
and documents with the SEC required to be filed by it after March 31, 1999 and
prior to the date of this Agreement (together with the amendments and
supplements to such filings filed prior to the date of this Agreement, the
"Company SEC Documents"). Each Company SEC Document, as of its filing date (or
if amended, as of the date of its last amendment) complied as to form in all
material respects with the applicable requirements of the Securities Act of
1993, as amended (the "Securities Act") and the Exchange Act, as the case may
be. No Company SEC Document filed pursuant to the Exchange Act, as of its filing
date (or if amended, as of the date of its last amendment), contained any untrue
statement of a material fact or omitted to state any material fact necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. No Company SEC Document filed
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pursuant to the Securities Act, as of the date such document or amendment became
effective (or if amended or supplemented, as of the date of its last amendment
or supplement), contained any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading. No subsidiary of the Company is required to
file any forms, reports, or other documents pursuant to the Securities Act or
the Exchange Act.
2.8. Financial Statements; Liabilities.
(a) Each of the consolidated balance sheets included in the
Company SEC Documents fairly presents in all material respects the consolidated
financial position of the Company and its subsidiaries as of the respective
dates thereof, and the other related consolidated financial statements
(including the notes thereto) included therein fairly present in all material
respects the results of operations and cash flows of the Company and its
subsidiaries for the respective periods or as of the respective dates set forth
therein (collectively, the "Company Financial Statements"). As of the respective
filing date for the applicable Company SEC Document in which it was included,
each of the Company Financial Statements (including the notes thereto) complied
in all material respects with the then applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto, and was
prepared in accordance with accounting principles generally accepted in the
United States ("GAAP") applied on a consistent basis during the periods or as of
the respective dates involved, except as otherwise noted therein and subject, in
the case of unaudited interim financial statements, to normal year-end
adjustments.
(b) Exhibit 2.8 (b) identifies all material assets and
liabilities of the Company in the form of a balance sheet as of March 31, 2003
and as of April 30, 2003.
(c) Exhibit 2.8(c) identifies all disbursements and receipts of
the Company from March 31, 2003 to just prior to Closing.
2.9. Absence of Certain Changes. Since March 31, 2002 the Company
and each of its subsidiaries have conducted their businesses in the ordinary
course consistent with past practice or as represented in the Company SEC
Documents, and there has not been to the Company's knowledge any undisclosed,
material damage, destruction or other casualty loss (whether or not covered by
insurance) affecting the business or assets of the Company or any of its
subsidiaries.
2.10. Litigation and Legal Compliance.
(a) As of the date hereof, the Company has no notice of any
claims, actions, suits, proceedings or investigations pending or threatened by
or against the Company or any of its subsidiaries Neither the Company nor any of
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its subsidiaries is subject to any outstanding judgment, injunction, order or
decree of any Governmental Entity, or any judicial or administrative actions,
proceedings or investigations pending, or threatened, which question the
validity of this Agreement or any action taken or to be taken by the Company in
connection with this Agreement.
(b) The Company and its subsidiaries are in compliance with, to
the extent material and applicable to the Company, any of its subsidiaries, or
any of their respective assets or properties, all federal, state and local laws,
statutes, rules, regulations, ordinances, permits, orders or writs.
(c) Each of the Company and its subsidiaries has all permits,
licenses, approvals, authorizations of, and registrations with and under all
laws, and from all Governmental Entities required for the Company and its
subsidiaries to carry on their respective businesses as currently conducted,
except where the failure to have any such permit, license, approval,
authorization or registration would not have a material adverse affect on the
Company.
2.11 Taxes.
(a) The Company and each of its subsidiaries has filed (after
taking into account any extensions) all material reports, returns, declarations
or other filings required by any taxing authority (collectively, the "Tax
Returns") relating to any federal, local and state income, sales, use, transfer,
real property, personal property, social security, unemployment, disability,
payroll, employee or other withholding or other tax ("Tax") required by any
applicable laws relating to Taxes. All such Tax Returns were correct and
complete when filed, and all Taxes shown to be owed by the Company or any of its
subsidiaries on such Tax Returns have been paid. Other than any reserve for
deferred Taxes established to reflect timing differences between book and Tax
treatment, the Company has made accruals for Taxes on the Company Financial
Statements that are adequate to cover, in all material respects, any Tax
liability of the Company and each of its subsidiaries determined in accordance
with GAAP through the date of the Company Financial Statements.
(b) The Company and each of its subsidiaries has withheld with
respect to its employees, creditors, independent contractors, stockholders or
other parties, all material federal and state income taxes, FICA, FUTA and other
Taxes required to be withheld.
(c) There is no Tax deficiency outstanding or assessed, against
the Company. Neither the Company nor any of its subsidiaries have executed or
requested any waiver of any statute of limitations on or extending the period
for the assessment or collection of any material federal or material state Tax
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that is still in effect. There are no liens for Taxes on the assets of the
Company or of any of its subsidiaries other than with respect to Taxes not yet
due and payable.
(d) The Company does not have notice of any claim by a
Governmental Entity in a jurisdiction where any of the Company and its
subsidiaries do not file Tax Returns that it is or may be subject to Taxes in
that jurisdiction in some material amount.
(e) No federal or state Tax audit or other examination of the
Company or any of its subsidiaries is presently in progress other than with
respect to Geoworks Ltd, the Company's subsidiary in the United Kingdom, nor has
the Company or any of its subsidiaries been notified either in writing or,
orally of any request for any such federal or state Tax audit or other
examination.
(f) Neither the Company nor any of its subsidiaries is a party
to any agreement with a party other than the Company or any of its subsidiaries
providing for the allocation or payment of Tax liabilities, or payment for Tax
benefits with respect to a consolidated, combined or unitary Tax Return, which
Tax Return includes or included the Company or any of its subsidiaries.
(g) Neither the Company nor any of its subsidiaries is a party
to any joint venture, partnership or other arrangement or contract that could be
treated as a partnership for federal income tax purposes.
(h) There is no contract, agreement, plan or arrangement
covering any individual or entity treated as an individual included in the
business or assets of the Company or its subsidiaries that, individually or
collectively, would give rise to the payment of any "excess parachute payments"
within the meaning of Section 280G of the Code by the Company, or any of its
subsidiaries, or any payment that would not be deductible by reason of Section
162(m) of the Code or similar provisions of laws relating to Taxes.
(i) There are no outstanding rulings of, or requests for
rulings with any Tax authority expressly addressed to the Company or its
subsidiaries that are, or if issued, would be binding on the Company or any of
its subsidiaries.
(j) The only representations and warranties given in respect of
Taxes and matters and agreements relating thereto are those contained in this
section and none of the other representations and warranties will be deemed to
constitute, directly or indirectly a representation and warranty in respect of
Taxes and matters or agreements relating thereto.
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2.12 Contracts.
(a) Schedule 2.12(A) describe all of the following to which the
Company or any of its subsidiaries is a party as of the date of this Agreement
(i) that require active performance by the Company as of the date hereof, and
(ii) which are material, whether active or not, that were entered into after
January 1, 1999 and (iii) other material contracts of which the current officers
of the Company are aware (without checking files or SEC filings) ((i) and (ii)
are collectively, the "Company Contracts"):
(i) all agreements, contracts, leases or binding
commitments;
(ii) any indenture, mortgage, promissory note, loan
agreement or other agreement or commitment for the borrowing of
money by the Company or any of its subsidiaries;
(iii) any lease, sublease or other agreement pursuant to
which it is a lessee of or holds or operates any real or
personal property owned by any third party;
(iv) any option or other executory agreement or other
agreement with remaining obligations thereunder to purchase or
acquire any interest in assets or property;
(v) any option or other executory agreement or other
agreement with remaining obligations thereunder to sell or
dispose of any interest in assets or property other than stock
option agreements with employees, independent contractors and
directors pursuant to the Company's stock option plans;
(vi) any contract or agreement creating a joint venture or
similar arrangement by which the assets, properties, rights, or
business is materially affected;
(vii) any guaranty, keepwell, makewhole or similar
agreement of or with respect to the obligations of third
parties;
(viii) any agreement which restricts the Company from
doing business anywhere in the world or limits the business in
which it may engage;
(ix) any agreement or arrangement under which the Company
agrees to indemnify any person or to share Tax liability of any
person;
(x) any license of material Company Intellectual Property
(as defined in Section 2.14) (including use of the name of the
Company or any similar name) of or by the Company other than in
the ordinary course of business;
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(xi) any contracts for insurance; and
(xii) any contract or agreement under which the Company
has the obligation to issue or sell any security.
(b) Each Company Contract is a valid, binding and enforceable
obligation of the Company, and, of the other party or parties thereto (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights, or by general equity
principles, including principles of commercial reasonableness, good faith and
fair dealing), and each Company Contract is in full force and effect.
(c) Neither the Company nor, to the Company's knowledge, any
other party thereto, is in breach of or default under any term of any Company
Contract or has repudiated any term of any Company Contract except as set forth
in Schedule 2.12(A).
(d) The Company has not received any written notice of
termination or cancellation with respect to any Company Contract, and no other
party to a Company Contract plans to terminate or cancel any such agreement.
2.13 Employee Benefit Plans.
(a) Exhibit 2.13(A) contains (unless previously filed as a
material exhibit to the Company's filings with the Securities and Exchange
Commission) an accurate and complete list of each material "employee benefit
plan," as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), each employment, severance or similar contract,
plan, arrangement or policy and each other plan or arrangement providing for
compensation, bonuses, profit-sharing, stock option or other stock related
rights or other forms of incentive or deferred compensation, health or medical
benefits, disability benefits, workers' compensation, supplemental unemployment
benefits and post-employment or retirement benefits (each, an "Employee Plan")
which is maintained or contributed to by the Company or any of its subsidiaries
and covers any employee or former employee of the Company or any Company
subsidiary (a "Company Employee Plan").
(b) Neither the Company nor any of its subsidiaries is a party
to a collective bargaining agreement or other labor union agreement, and
(c) Each Company Employee Plan that is intended to be qualified
within the meaning of Section 401(a) of the Code and each trust which forms a
part of any such Company Employee Plan has received (or is not required to
receive) a determination from the United States Internal Revenue Service (the
"IRS") that such Company Employee Plan is qualified under Section 401(a) of the
Code and that such related trust is exempt from taxation under Section 501(a) of
the Code, and nothing has occurred since the date of any such determination that
could reasonably adversely affect the qualification of such Company Employee
Plan or the exemption from taxation of such related trust.
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(d) No Company Employee Plan is a "defined benefit plan" (as
such term is defined in Section 3(35) of ERISA).
(e) No Company Employee Plan will obligate the Company or any
of its subsidiaries to pay any separation, severance, termination or similar
benefit as a result of any transaction contemplated by this Agreement or as a
result of a change in control or ownership within the meaning of Section 280G of
the Code.
(f)
(i) Each Company Employee Plan and any related trust,
insurance contract or fund has been maintained, funded and
administered in compliance in all material respects with its
respective terms and applicable law;
(ii) neither the Company nor any of its subsidiaries has
incurred any liability under Title IV of ERISA (other than for
contributions not yet due) or to the Pension Benefit Guaranty
Corporation (other than for payment of premiums not yet due);
and
(iii) there are no pending or threatened actions, suits,
investigations or claims with respect to any Company Employee
Plan (other than routine claims for benefits) which could
result in any material liability to the Company or any of its
subsidiaries (whether direct or indirect), and there are no
facts which could reasonably give rise to (or be expected to
give rise to) any such actions, suits, investigations or
claims.
(g) The Company and each of its subsidiaries has complied in
all material respects with the health care continuation requirements of Part 6
of Title I of ERISA ("COBRA"), and the Company and its subsidiaries have no
obligation under any Company Employee Plan or otherwise to provide health
benefits to former employees of the Company or any of its subsidiaries or any
other person, except as specifically required by COBRA.
(h) Neither the Company nor any of its subsidiaries has
incurred any liability on account of a "partial withdrawal" or a "complete
withdrawal" (within the meaning of Sections 4205 and 4203, respectively, of
ERISA) from any Company Employee Plan subject to Title IV of ERISA which is a
"multiemployer plan" (as such term is defined in Section 3(37) of ERISA) (a
"Multiemployer Plan"), no such liability has been asserted, and there are no
events or circumstances which would reasonably be expected to result in any such
partial or complete withdrawal, and neither the Company nor any of its
subsidiaries is bound by any contract or agreement or has any obligation or
liability described in Section 4204 of ERISA.
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2.14. Intellectual Property. Exhibit 2.14 lists all intellectual
property of the Company currently in use and the Company and its subsidiaries
own all right, title and interest in and to its trademarks, service marks and
trade names, including any registrations therefore and the goodwill associated
therewith and considers same adequate to carry on the business of the Company.
Section 3. Representations and Warranties of the Purchasers
The Purchasers represent and warrant to the Company that:
3.1. Corporate Existence and Power. Newcastle is a Texas limited
partnership and has all requisite corporate power and authority to own, lease
and operate its properties and assets and to carry on its business as presently
being conducted.
3.2. Corporate Authorization; Approvals. The execution, delivery and
performance by the Purchasers of this Agreement and the consummation by the
Purchasers of the transactions contemplated hereby are within the Purchaser's
corporate powers and have been duly authorized by all necessary corporate
action. Assuming that this Agreement constitutes the valid and binding
obligation of the Company, this Agreement constitutes a valid and binding
agreement of the Purchasers, enforceable in accordance with its terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights, or by general equity
principles, including principles of commercial reasonableness, good faith and
fair dealing).
3.3. Governmental Authorization. The execution, delivery and
performance by the Purchasers of this Agreement and the consummation by the
Purchasers of the transactions contemplated hereby do not require any filing or
registration with, notification to, or authorization, consent or approval of any
Governmental Entity, other than compliance with any applicable requirements of
the Exchange Act following the Closing.
3.4 Purchase for Own Account. Any Shares acquired or to be acquired
by the Purchasers hereunder will be acquired for investment for such Purchasers'
own account, not as a nominee or agent, and not with a view to the public resale
or distribution thereof within the meaning of the Securities Act, and such
Purchasers have no present intention of selling, granting any participation in,
or otherwise distributing the same.
3.5 Disclosure of Information. Without in any way limiting
Purchasers' rights and remedies under the Agreement, the Purchasers acknowledge
that they have received or have had full access to all the information it
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considers necessary or appropriate to make an informed investment decision with
respect to the Shares to be purchased by Purchasers under this Agreement. Such
Purchasers further has had an opportunity to ask questions and receive answers
from the Company regarding the terms and conditions of the offering of such
securities and to obtain additional information (to the extent the Company
possessed such information or could acquire it without unreasonable effort or
expense) necessary to verify any information furnished to such Purchasers or to
which such Purchasers had access.
3.6 Investment Experience. Without in any way limiting Purchasers'
rights and remedies under the Agreement, the Purchasers understands that the
purchase of the Shares involves substantial risk and has experience as an
investor and acknowledges that such Purchasers are able to fend for itself, can
bear the economic risk of such Purchaser's investment in such securities and
have such knowledge and experience in financial or business matters that such
Purchasers are capable of evaluating the merits and risks of this investment in
such securities and protecting its own interests in connection with this
investment.
3.7 Accredited Purchasers Status. Purchasers are "accredited
investors" within the meaning of Regulation D promulgated under the Securities
Act.
3.8 Restricted Securities. Purchasers understand that the Shares are
characterized as "restricted securities" under the Securities Act inasmuch as
they are being acquired from the Company in a transaction not involving a public
offering and that under the Securities Act and applicable regulations thereunder
such securities may be resold without registration under the Securities Act only
in certain limited circumstances. In this connection, Purchasers represent that
they are familiar with Rule 144 promulgated under the Securities Act, as
presently in effect, and understands the resale limitations imposed thereby and
by the Securities Act. Such Purchasers understand that the Company is under no
obligation to register any of the Shares.
3.9 Further Limitations on Disposition. Without in any way limiting
the representations set forth above, such Purchasers further agree not to make
any disposition of all or any portion of the Shares unless and until:
(a) there is then in effect a registration statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with such registration statement; or
(b) such Purchasers shall have notified the Company of the
proposed disposition, shall have furnished the Company with a statement of the
circumstances surrounding the proposed disposition, and, at the expense of such
Purchasers or its transferee, shall have furnished the Company with an opinion
of counsel, reasonably satisfactory to the Company, that such disposition will
not require registration of such securities under the Securities Act.
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Notwithstanding the provisions of paragraphs (a) and (b) above, no such
registration statement or opinion of counsel shall be required: (i) for any
transfer of any Shares in compliance with SEC Rule 144 or Rule 144A; or (ii) for
any transfer of any Shares, if the Purchasers are a partnership or a
corporation, to (A) a partner of such partnership or a shareholder of such
corporation, (B) a retired partner of such partnership who retires after the
date hereof, (C) the estate of any such partner or shareholder; or (iii) for the
transfer by gift, will or intestate succession by any Purchasers to his or her
spouse or lineal descendants or ancestors or any trust for any of the foregoing;
provided that in each of the foregoing cases the transferee agrees in writing to
be subject to the terms of this Agreement to the same extent as if the
transferee were the original Purchasers hereunder.
3.10 Legends. It is understood that the certificate evidencing the
Shares will bear, as applicable, the legends set forth below:
(a) General Securities Act legend.
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES
ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND
MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE
ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM. PURCHASERS SHOULD BE AWARE
THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS
INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF
THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY
PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND
ANY APPLICABLE STATE SECURITIES LAWS.
(b) Any legend required by the laws of the State of California,
including any legend required by the California Department of Corporations and
Sections 417 and 418 if the California Corporations Code or any other state
securities laws.
The legend set forth above shall be removed by the Company from any certificate
evidencing the Shares upon delivery to the Company of an opinion by counsel,
reasonably satisfactory to the Company, that a registration statement under the
Securities Act is at that time in effect with respect to the legended security
or that such security can be freely transferred in a public sale without such a
registration statement being in effect and that such transfer will not
jeopardize the exemption or exemptions from registration pursuant to which the
Company issued the Shares.
Section 4. Covenants
4.1. Commercially Reasonable Efforts. (a) Subject to the terms and
conditions hereof, each party will use their respective commercially reasonable
efforts to take, or cause to be taken, all actions and to do, or cause to be
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done, all things necessary, proper or advisable under applicable laws to
consummate the transactions contemplated by this Agreement as promptly as
reasonably practicable, provided that nothing in this section will require the
Company to take any action which would be inconsistent with the fiduciary duties
of its Board of Directors as such duties would exist under applicable Law in the
absence of this section.
4.2. Access to Information. The Company covenants and agrees that it
will afford to the Purchasers and their representatives full access during
normal business hours throughout the period prior to the Closing to all of its
properties upon reasonable prior notice and shall use commercially reasonable
efforts to make its directors, management, other employees and authorized
representatives (including counsel and independent public accountants) available
to confer with the Purchasers and their authorized representatives; provided,
however, that as a condition precedent to providing any such access or
information to the Purchasers, the Purchasers must enter into a confidentiality
agreement with the Company in a form that would satisfy the requirements of
Regulation FD under the Securities Act.
4.3. Further Assurances. Following the Closing Date, the Company
will:
(a) give all required notices to, and make required filings
with, third parties and Governmental Entities and will use commercially
reasonable efforts to obtain all third party and governmental consents and
approvals that it is required to obtain in connection the consummation of the
transactions contemplated by this Agreement and
(b) retain one employee on the Company's health plans until
December 31, 2003 in order to facilitate the continuation of COBRA benefits to
previously terminated employees and
(c) retain funds pursuant to the escrow agreement attached as
Exhibit 4.3, not take any affirmative steps intended to discontinue or
abbreviate insurance coverage currently in effect for which premiums have been
paid and reasonably cooperate with the request of such insurance carriers to
accommodate coverage through the term of such insurance; and furthermore,
(d) the Company shall make the same insurance, indemnification
and defense undertakings to all current and former board members and officers of
the Company serving since 1999 as are made to the Nominees and future officers
and directors through December 31, 2004 and in the event that Newcastle provides
or arranges any type of indemnity or other insurance coverage for a director of
the Company that is independent from Newcastle, Newcastle shall also provide
similar indemnity and coverage to any board members or officers of the Company
serving immediately prior to the closing for any matters related to this
Agreement arising after the Closing.
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All current and past directors and officers of the Company are
intended third party beneficiaries of these further assurances by the Company.
4.4 The Purchasers exculpate the past and current officers and
directors of the Company from any claim that they might have in connection with
this Agreement, except for claims involving willful misconduct for personal gain
by any of such officers or directors.
Section 5. Miscellaneous
5.1. Survival of Representations. The representations and warranties
and covenants contained in this Agreement or in any certificate, instrument or
other writing delivered pursuant to this Agreement will survive until December
31, 2004. Despite any provision of this Agreement, no breach of any
representation or warranty by either party shall be actionable unless (i)
brought prior to December 31, 2004 and (ii) the damage caused by such loss
exceeds $50,000.
5.2. Successors and Assigns. Neither this Agreement nor any of the
rights, interests or obligations provided by this Agreement will be assigned by
any of the parties (whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement will be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns.
5.3. Amendment. This Agreement may be amended in accordance with its
terms by the execution and delivery of a written instrument by or on behalf of
the Purchasers and the Company
5.4. Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
5.5. Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, but all such
counterparts taken together will constitute one and the same Agreement.
5.6. Descriptive Headings. The descriptive headings of this
Agreement are inserted for convenience only and will not constitute a part of
this Agreement.
5.7. Notices. Any notice, request, instruction or other document to
be given hereunder will be in writing and delivered personally or sent by
registered or certified mail (postage prepaid) or by facsimile, according to the
instructions set forth below. Such notices will be deemed given: at the time
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delivered by hand, if personally delivered; three business days after being sent
by registered or certified mail; and at the time when receipt is confirmed by
the receiving facsimile machine if sent by facsimile:
if to the Purchasers, to:
Newcastle Partners, L.P.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
if to the Company, to:
Geoworks Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with a copy (which will not constitute
notice) to:
Messrs ▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn. ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
or to such other address or to the attention of such other party that the
recipient party has specified by prior written notice to the sending party in
accordance with the preceding.
5.8. Entire Agreement. This Agreement, and the other documents
referred to herein collectively constitute the entire agreement among the
parties and supersede any prior and contemporaneous understandings, agreements
or representations by or among the parties, written or oral, that may have
related in any way to the subject matter hereof.
5.9. Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent
and no rule of strict construction will be applied against any party. The use of
the word "including" in this Agreement means "including without limitation" and
is intended by the parties to be by way of example rather than limitation.
5.10. Consent to Jurisdiction. EACH OF THE PARTIES TO THIS AGREEMENT
CONSENTS TO SUBMIT TO THE PERSONAL JURISDICTION OF ANY STATE OR FEDERAL COURT
SITTING IN THE STATE OF CALIFORNIA, IN ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT, AGREES THAT ALL CLAIMS IN RESPECT OF THE ACTION
OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT, AND AGREES NOT TO
BRING ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT IN
ANY OTHER COURT. EACH OF THE PARTIES TO THIS AGREEMENT AGREES NOT TO ASSERT IN
17
ANY ACTION OR PROCEEDING ARISING OUT OF RELATING TO THIS AGREEMENT THAT THE
VENUE IS IMPROPER, AND WAIVES ANY DEFENSE OF INCONVENIENT FORUM TO THE
MAINTENANCE OF ANY ACTION OR PROCEEDING SO BROUGHT AND WAIVES ANY BOND, SURETY
OR OTHER SECURITY THAT MIGHT BE REQUIRED OF ANY OTHER PARTY WITH RESPECT
THERETO.
5.11. Governing Law. THIS AGREEMENT WILL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING
EFFECT TO ANY LAW OR RULE THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER
THAN THE STATE OF DELAWARE TO BE APPLIED.
5.12 Publicity. The Company shall publicize this transaction
promptly after Closing by publishing the press release in the form attached as
Exhibit 5.12, which will also constitute the substance of a current report on
Form 8-K to be filed with the SEC at the same time.
5.13 Exhibits. The representations and warranties of the Company set
forth in this Agreement are made and given subject to the disclosures contained
in the Exhibits.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.
GEOWORKS CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------
Its: President and CEO
----------------------
NEWCASTLE PARTNERS, L.P.
By NEWCASTLE CAPITAL MANAGEMENT, L.P., its general partner
By NEWCASTLE CAPITAL MANAGEMENT, L.L.C., its general partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Managing Member
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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