STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT (this "Agreement"), dated February 6, 2000, by
and between INPRISE CORPORATION, a Delaware corporation ("Inprise") and
COREL CORPORATION, a corporation continued under the laws of Canada
("Corel").
WHEREAS, Inprise, Corel and Carleton Acquisition Co., a Delaware
corporation and a wholly-owned subsidiary of Corel ("Merger Sub") are
entering into a Merger Agreement of even date herewith (the "Merger
Agreement", terms defined therein and not otherwise defined herein having
the same meanings when used herein), which provides, among other things,
that upon the terms and subject to the conditions contained therein, Merger
Sub will be merged (the "Merger") with and into Inprise; and
WHEREAS, Inprise has agreed, to induce Corel and Merger Sub to enter
into the Merger Agreement, to grant the Option (as hereinafter defined);
NOW THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements set forth herein and
in the Merger Agreement, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties
hereto, intending to be legally bound hereby, agree as follows:
1. Grant of Option. Inprise hereby grants Corel an irrevocable option (the
"Option") to purchase, subject to the terms and conditions set forth
herein, up to 12,000,000 shares (the "Inprise Shares") of common stock of
Inprise (the "Inprise Common Stock"), together with the associated common
stock purchase rights (the "Inprise Rights") attached thereto issued
pursuant to the Rights Agreement, dated as of December 20, 1991, as
amended, between the predecessor to Inprise and Manufacturers Hanover
Trust Company of California, as Rights Agent (the "Inprise Rights
Agreement"), in the manner set forth below at a price of $14.94 per share
(the "Exercise Price"); provided, however, that in no event shall the
number of shares of Inprise Common Stock for which the Option is
exercisable exceed 19.9% of Inprise's issued and outstanding shares of
Inprise Common Stock. References herein to Inprise Shares shall also be
deemed to include the associated Inprise Rights.
2. Exercise of Option. The Option may be exercised by Corel, in whole or
in part, at any time or from time to time after the Merger Agreement
becomes terminable by Corel under circumstances which could entitle Corel
to payment of the Specified Amount under Article VIII of the Merger
Agreement; provided that if the Specified Amount is not payable at the
time that the Merger Agreement is terminated, the Option shall not be
exercisable until such time as the Specified Amount becomes payable
pursuant to the Merger Agreement. In the event Corel wishes to exercise
the Option, Corel shall deliver to Inprise a written notice (an "Exercise
Notice") specifying the total number of the Inprise Shares it wishes to
purchase and a date and time for the closing of such purchase (a
"Closing"), which date shall not be less than two nor more than 30 days
after the later of (i) the date such Exercise Notice is given and (ii) the
expiration or termination of any applicable waiting period under the HSR
Act. The Option shall terminate upon the earlier of: (i) the Effective
Time; (ii) the termination of the Merger Agreement pursuant to Section
8.01 thereof (other than a termination in connection with which Corel is
or may be entitled to the payment specified in Section 8.02 thereof); and
(iii) 5:00 p.m., California time, on the date that is the one year
anniversary of the termination of the Merger Agreement in connection with
which Corel is or may be entitled to the payment specified in Section 8.02
thereof (or if, at the expiration of such one year period, the Option
cannot be exercised by reason of any applicable judgment, decree, order,
law or regulation, ten business days after such impediment to exercise
shall have been removed or shall have become final and not subject to
appeal.
3. Conditions to Closing. The obligation of Inprise to issue the Inprise
Shares to Corel hereunder is subject to the conditions that (i) all
waiting periods, if any, under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder ("HSR Act") and the Competition Act (Canada)
applicable to the issuance of the Inprise Shares hereunder shall have
expired or have been terminated; (ii) all consents, approvals, orders or
authorizations of, or registrations, declarations or filings with, any
United States, Canadian, state, provincial or local administrative agency
or commission or other United States, Canadian, state, provincial or local
governmental authority or instrumentality or securities exchange, if any,
required in connection with the issuance of the Inprise Shares hereunder
shall have been obtained or made, as the case may be; and (iii) no
statute, rule or regulation shall be in effect, and no order, decree or
injunction entered by any court of competent jurisdiction or governmental
entity in the United States or Canada shall be in effect, that prohibits
or restrains the exercise of the Option or the acquisition or issuance of
Inprise Shares pursuant to the terms of this Agreement.
4. Closing. At any Closing, (a) upon receipt of the payment provided for
by this Section 4, Inprise will deliver to Corel a single certificate in
definitive form representing the number of the Inprise Shares designated
by Corel in its Exercise Notice, such certificate to be registered in the
name of Corel and to bear the legend set forth in Section 11 of this
Agreement, and (b) Corel will deliver to Inprise the aggregate price for
the Inprise Shares so designated and being purchased by wire transfer of
immediately available funds . At any Closing at which Corel is exercising
the Option in part, Corel shall present and surrender this Agreement to
Inprise, and Inprise shall deliver to Corel an executed new agreement with
the same terms as this Agreement evidencing the right to purchase the
balance of the shares of the Inprise Common Stock purchasable hereunder.
5. Representations and Warranties of Inprise. Inprise represents and
warrants to Corel that (a) Inprise is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of
Delaware and has the corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder, (b) the execution
and delivery of this Agreement by Inprise and the consummation by Inprise
of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Inprise and no other corporate
proceedings on the part of Inprise are necessary to authorize this
Agreement or any of the transactions contemplated hereby, (c) this
Agreement has been duly executed and delivered by Inprise, constitutes a
valid and binding obligation of Inprise and, assuming this Agreement
constitutes a valid and binding obligation of Corel, is enforceable
against Inprise in accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights generally, the
availability of injunctive relief and other equitable remedies, and
limitations imposed by law on indemnification for liability under
applicable securities laws, (d) Inprise has taken all necessary corporate
action to authorize and reserve for issuance and to permit it to issue,
upon exercise of the Option, and at all times from the date hereof through
the expiration of the Option will have reserved, 12,000,000 unissued
Inprise Shares and such other shares of the Inprise Common Stock or other
securities which may be issued pursuant to Section 10 of this Agreement,
all of which, upon their issuance, payment and delivery in accordance with
the terms of this Agreement, will be validly issued, fully paid and
nonassessable, and free and clear of all claims, liens, charges,
encumbrances and security interests of any nature whatsoever (other than
those (i) created by or through Corel, or any of its respective
affiliates, (ii) which arise under this Agreement, or (iii) which arise
under the Securities Act of 1933, as amended (the "Securities Act"), the
Securities Act (Ontario) (the "Ontario Act") or any applicable state
securities laws, (e) the execution and delivery of this Agreement by
Inprise does not, and the performance of this Agreement by Inprise will
not, materially conflict with, or result in any material violation of, or
material default (with or without notice or lapse of time, or both) under,
or give rise to a right of termination, cancellation or acceleration of
any obligation or the loss of a material benefit under, or the creation of
a lien, pledge, security interest or other encumbrance on assets pursuant
to (any such conflict, violation, default, right of termination,
cancellation or acceleration, loss or creation, a "Violation"), (A) any
provision of the Certificate of Incorporation or By-laws of Inprise or (B)
any provisions of any loan or credit agreement, note, mortgage, indenture,
lease, benefit plan or other agreement, obligation, instrument, permit,
concession, franchise, license of or applicable to Inprise, or (C) any
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Inprise or its properties or assets, which Violation, in the
case of each of clauses (B) and (C), individually or in the aggregate
would prevent or materially delay the exercise by Corel of the Option or
any other right of Corel under this Agreement, (f) the Board of Directors
of Inprise has approved amendments to the Inprise Rights Plan to provide
that Corel will not become an "Acquiring Person" and that no "Distribution
Date" or "Triggering Event" under the Inprise Rights Agreement will occur
as a result of the execution and delivery of this Agreement or the Merger
Agreement or the consummation of the transactions contemplated hereby and
thereby, including the acquisition of the shares of Inprise Common Stock
pursuant to this Agreement, assuming such transactions are consummated in
accordance with the terms of the applicable agreement, (g) the Board of
Directors of Inprise having approved this Agreement and the consummation
of the transactions contemplated hereby, the restrictions on business
combinations contained in Section 203 of the DL will not apply to this
Agreement or the purchase of shares of Inprise Common Stock pursuant to
this Agreement, and (h) except as described in Section 3.04 of the Merger
Agreement or this Agreement, and other than the HSR Act and the
Competition Act (Canada) and, with respect to Section 9 hereof, compliance
with the provisions of the Securities Act , the Ontario Act and any
applicable state securities laws, the execution and delivery of this
Agreement by Inprise does not, and the performance of this Agreement by
Inprise will not, require any consent, approval, authorization or permit
of, or filing with or notification to, any governmental or regulatory
authority.
6. Representations and Warranties of Corel. Corel represents and warrants
to Inprise that (a) Corel is a corporation duly organized, validly
existing and in good standing under the laws of Canada and has the
corporate power and authority to enter into this Agreement and to carry
out its obligations hereunder, (b) the execution and delivery of this
Agreement by Corel and the consummation by Corel of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action on the part of Corel and no other corporate proceedings on the part
of Corel are necessary to authorize this Agreement or any of the
transactions contemplated hereby, (c) this Agreement has been duly
executed and delivered by Corel, constitutes a valid and binding
obligation of Corel and, assuming this Agreement constitutes a valid and
binding obligation of Inprise, is enforceable against Corel in accordance
with its terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and, the availability of
injunctive relief and other equitable remedies and limitations imposed by
law on indemnification for liability under applicable securities laws, (d)
the execution and delivery of this Agreement by Corel does not, and the
performance of this Agreement by Corel will not, result in any Violation
pursuant to, (A) any provision of the charter documents of Corel, (B) any
provisions of any loan or credit agreement, note, mortgage, indenture,
lease, or other agreement, obligation, instrument, permit, concession,
franchise, license of or applicable to it or (C) any judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to Corel or
its properties or assets, which Violation, in the case of each of clauses
(B) and (C), would, individually or in the aggregate have a material
adverse effect on Corel's ability to consummate the transactions
contemplated by this Agreement, (e) except as described in Section 4.04 of
the Merger Agreement, the execution and delivery of this Agreement by
Corel does not, and the performance of this Agreement by Corel will not,
require any consent, approval, authorization or permit of, or filing with
or notification to, any governmental or regulatory authority and (f) any
Inprise Shares acquired upon exercise of the Option will not be, and the
Option is not being, acquired by Corel with a view to public distribution
or resale in any manner which would be in violation of United States,
Canadian, state or provincial securities laws.
7. Put Right.
(a) Exercise of Put. At any time during which the Option is exercisable
pursuant to Section 2 or would be exercisable but for the circumstances
referred to in the parenthetical in Section 2(iii) of this Agreement (the
"Repurchase Period"), upon demand by Corel, Corel shall have the right to
sell to Inprise (or any successor entity thereof) and Inprise (or such
successor entity) shall be obligated to repurchase from Corel (the "Put"),
all or any portion of the Option, at the price set forth in clause (i)
below, or all or any portion of the Inprise Shares purchased by Corel
pursuant hereto, at a price set forth in clause (ii) below:
(i) the difference between the "Market/Tender Offer Price" for shares
of the Inprise Common Stock as of the date (the "Notice Date") notice
of exercise of the Put is given to Inprise (defined as the higher of
(A) the price per share offered as of the Notice Date pursuant to any
tender or exchange offer or other Alternative Proposal which was made
prior to the Notice Date and not terminated or withdrawn as of the
Notice Date (the "Tender Price") and (B) the average of the closing
prices of shares of the Inprise Common Stock on the Nasdaq Stock
Market for the five trading days immediately preceding the Notice Date
(the "Market Price") and the Exercise Price, multiplied by the number
of Inprise Shares purchasable pursuant to the Option (or portion
thereof with respect to which Corel is exercising its rights under
this Section 7),
(ii) the Exercise Price paid by Corel for the Inprise Shares acquired
pursuant to the Option plus the difference between the Market/Tender
Offer Price and the Exercise Price, multiplied by the number of
Inprise Shares so purchased. For purposes of this clause (ii), the
Tender Price shall be the highest price per share offered pursuant to
a tender or exchange offer or other Alternative Proposal made during
the Repurchase Period and not withdrawn or terminated.
In determining the Market-Tender Offer Price, the value of
consideration other than cash or stock as provided above shall be
determined by a nationally recognized investment banking firm selected by
Corel and reasonably acceptable to Inprise.
(b) Payment and Redelivery of Option or Shares. In the event Corel
exercises its rights under this Section 7, Inprise shall, within ten
business days of the Notice Date, pay the required amount to Corel by wire
transfer in immediately available funds to an account specified by Corel
two business days prior to the date that payment is due and Corel shall
surrender to Inprise the Option or the certificates evidencing the Inprise
Shares purchased by Corel pursuant hereto, and Corel shall warrant that it
owns such shares and that such shares are then free and clear of all
liens, claims, charges and encumbrances of any kind or nature whatsoever.
8. Restrictions on Certain Actions. Inprise shall not adopt any Rights
Agreement or shareholder rights plan or any amendment thereto in any
manner which would cause Corel, if Corel has complied with its obligations
under this Agreement, to become an "Acquiring Person" under such Rights
Agreement or shareholder rights plan solely by reason of the beneficial
ownership of the Inprise Shares acquired pursuant to this Agreement.
9. Registration Rights. (a) Inprise will, if requested in writing (a
"Registration Notice") by Corel at any time and from time to time within
two years of the exercise of the Option, as expeditiously as possible
prepare and file up to two registration statements under the Securities
Act or prospectuses under the Ontario Act if such registration or the
obtaining of a receipt for a prospectus is necessary in order to permit
the sale or other disposition of any or all shares or other securities
that have been acquired by or are issuable to Corel upon exercise of the
Option ("Registrable Securities") in accordance with the intended method
of sale or other disposition stated by Corel. Any such Registration Notice
must relate to a number of Registrable Securities equal to at least twenty
percent (20%) of Inprise Shares, unless the remaining number of
Registrable Securities is less than such amount, in which case Corel shall
be entitled to exercise its rights hereunder but only for all of the
remaining Registrable Securities. Corel's rights hereunder shall terminate
at such time as Corel shall be entitled to sell all of the remaining
Registrable Securities pursuant to Rule 144(k) under the Act. Inprise will
use its reasonable best efforts to qualify such shares or other securities
under any applicable state or other provincial securities laws; provided,
however, that Inprise shall not be required to qualify to do business,
consent to general service of process or submit to taxation in any
jurisdiction by reason of this provision. Inprise will use reasonable
efforts to cause each such registration statement to become effective and
to obtain a (final) receipt for each such prospectus, to obtain all
consents or waivers of other parties which are required therefor, and to
keep such registration statement or prospectus effective for such period
not in excess of 120 calendar days from the day such registration
statement first becomes effective or the date of the (final) receipt for
such prospectus as may be reasonably necessary to effect such sale or
other disposition. The obligations of Inprise hereunder to file a
registration statement or prospectus and to maintain its effectiveness may
be suspended for up to 90 calendar days in the aggregate if the Board of
Directors of Inprise shall have determined that the filing of such
registration statement or prospectus or the maintenance of its
effectiveness would require premature disclosure of nonpublic information
that would materially and adversely affect Inprise or otherwise interfere
with or adversely affect any pending or proposed offering of securities of
Inprise or any other material transaction involving Inprise, or Inprise
would be required under the Securities Act to include audited financial
statements for any period in such registration statement or prospectus and
such financial statements are not yet available for inclusion in such
registration statement or prospectus. Subject to applicable law, the
expenses associated with the preparation and filing of any registration
statement or prospectus prepared and filed under this Section 9, and any
sale covered thereby ("Registration Expenses"), will be paid by Inprise
except for underwriting discounts or commissions, brokers' fees and the
fees and disbursements of Corel's counsel related thereto; provided,
however, that Inprise will not be required to pay for any Registration
Expenses with respect to such registration if the registration request is
subsequently withdrawn at the request of Corel unless Corel agrees to
forfeit its right to request one registration. In connection with any
registration statement or prospectus pursuant to this Section 9, Corel
shall furnish, or cause any holder of the Option or Inprise Shares (a
"Holder") to furnish, Inprise with such information concerning itself and
the proposed sale or distribution as shall reasonably be required in order
to ensure compliance with the requirements of the Securities Act or the
Ontario Act and to provide representations and warranties customary for
selling stockholders who are unaffiliated with Inprise. In addition, Corel
shall, and Corel shall cause each Holder to contractually agree to,
indemnify and hold Inprise, its underwriters and each of their respective
affiliates harmless against any and all losses, claims, damages,
liabilities and expenses (including, without limitation, investigation
expenses and fees and disbursement of counsel and accountants), joint or
several, to which Inprise, its underwriters and each of their respective
affiliates may become subject under the Securities Act or the Ontario Act
or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained
in written information furnished by any Holder to Inprise expressly for
use in such registration statement. If, during the time periods referred
to in the first sentence of this Section 9, Inprise effects a registration
under the Securities Act of, or qualifies a prospectus under the Ontario
Act in respect of, the Inprise Common Stock for its own account or for any
other stockholders of Inprise pursuant to a firm commitment underwriting
(other than on Form S-4 or Form S-8, or any successor form), it will allow
Corel the right to participate in such registration or qualification as
long as Corel participates in such underwriting on terms reasonably
satisfactory to the managing underwriters of such offering, and such
participation will not affect the obligation of Inprise to effect demand
registration statements or prospectuses for Corel under this Section 9,
provided that, if the managing underwriters of such offering advise
Inprise in writing that in their opinion the number of shares of the
Inprise Common Stock requested to be included in such registration or
qualification exceeds the number that it would be in the best interests of
Inprise to sell in such offering. Inprise will , after fully including
therein all shares of Inprise Common Stock to be sold by Inprise, include
the shares of Inprise Common Stock requested to be included therein by
Corel pro rata (based on the number of shares of Inprise Common Stock
requested to be included therein) with the shares of Inprise Common Stock
requested to be included therein by persons other than Inprise and persons
to whom Inprise owes a contractual obligation (other than any director,
officer or employee of Inprise to the extent any such person is not
currently owed such contractual obligation). In connection with any
registration or qualification pursuant to this Section 9, Inprise and
Corel will provide each other and any underwriter of the offering with
customary representations, warranties, covenants, indemnification, and
contribution in connection with such registration or qualification.
Inprise shall provide to any underwriters such documentation including
certificates, opinions of counsel and "comfort" letters from auditors) as
are customary in connection with underwritten public offerings as such
underwriters may reasonably require.
(b) If Inprise's securities of the same type as the Inprise Common Stock
beneficially owned by Corel are then authorized for quotation or trading or
listing on the NYSE, Nasdaq National Market System or any other securities
exchange or automated quotations system, Inprise, upon the request of
Corel, shall promptly file an application, if required, to authorize for
quotation, trading or listing such shares of the Inprise Common Stock on
such exchange or system and will use its reasonable efforts to obtain
approval, if required, of such quotation, trading or listing as soon as
practicable.
10. Adjustment Upon Changes in Capitalization.
(a) In the event of any change in the Inprise Common Stock by reason of
stock dividends, split-ups, mergers, recapitalizations, combinations,
exchange of shares or the like, the type and number of shares or securities
subject to the Option, and the purchase price per share provided in Section
1 of this Agreement, shall be adjusted appropriately, and proper provision
shall be made in the agreements governing such transaction so that Corel
shall receive, upon exercise of the Option, the number and class of shares
or other securities or property that Corel would have received in respect
of the Inprise Common Stock if the Option had been exercised immediately
prior to such event or the record date therefor, as applicable. In the
event that any additional shares of Inprise Common Stock otherwise become
outstanding after the date of this Agreement (other than pursuant hereto),
the number of shares of Inprise Common Stock subject to the Option shall be
increased to equal 19.9% of the number of shares of Inprise Common Stock
then issued and outstanding.
(b) In the event that Inprise shall enter in an agreement: (i) to
consolidate with or merge into any person, other than Corel or another
direct or indirect wholly-owned subsidiary of Corel, and shall not be the
continuing or surviving corporation of such consolidation or merger; (ii)
to permit any person, other than Corel or another direct or indirect
wholly-owned subsidiary of Corel, to merge into Inprise and Inprise shall
be the continuing or surviving corporation, but, in connection with such
merger, the then-outstanding shares of the Inprise Common Stock shall be
changed into or exchanged for stock or other securities of Inprise or any
other person or cash or any other property or the outstanding shares of the
Inprise Common Stock immediately prior to such merger shall after such
merger represent less than 50% of the outstanding shares and share
equivalents of the merged company; or (iii) to sell or otherwise transfer
all or substantially all of its assets to any person, other than Corel or
another direct or indirect wholly-owned subsidiary of Corel, then, and in
each such case, Inprise shall immediately so notify Corel, and the
agreement governing such transaction shall make proper provisions so that
upon the consummation of any such transaction and upon the terms and
conditions set forth herein, Corel shall, upon exercise of the Option,
receive for each Inprise Share with respect to which the Option has not
been exercised an amount of consideration in the form of and equal to the
per share amount of consideration that would be received by the holder of
one share of the Inprise Common Stock less the Exercise Price (and, in the
event of an election or similar arrangement with respect to the type of
consideration to be received by the holders of the Inprise Common Stock,
subject to the foregoing, proper provision shall be made so that the holder
of the Option would have the same election or similar rights as would the
holder of the number of shares of the Inprise Common Stock for which the
Option is then exercisable.
11. Profit Limitation.
(a) Notwithstanding any other provision of this Agreement, in no event
shall the Total Profit (as hereinafter defined) received by Corel and its
affiliates exceed $30 million and, if it otherwise would exceed such
amount, Corel, at its sole election, shall either (i) reduce the number of
shares of Inprise Common Stock subject to the Option, (ii) deliver to
Inprise for cancellation Inprise Shares previously purchased by Corel
(valued, for the purposes of this Section 11(a) at the average closing
sales price per share of Inprise Common Stock (or if there is no sale on
such date then the average between the closing bid and ask prices on any
such day) as reported by the Nasdaq Stock Market for the twenty consecutive
trading days preceding the day on which the Total Profit exceeds $30
million, (iii) pay cash to Inprise, or (iv) any combination thereof, so
that the actually realized Total Profit shall not exceed $30 million after
taking into account the foregoing actions.
(b) As used herein, the term "Total Profit" shall mean the amount (before
taxes) of the following: (a) the aggregate amount of (i)(x) the net cash
amounts received by Corel and its affiliates pursuant to the sale of
Inprise Shares (or any securities into which such Inprise Shares are
converted or exchanged) to any unaffiliated party or to Inprise pursuant to
this Agreement, less (y) Corel's purchase price of such Inprise Shares,
(ii) any amounts received by Corel and its affiliates on the transfer of
the Option (or any portion thereof) to any unaffiliated party, if permitted
hereunder or to Inprise pursuant to this Agreement, and (iii) the amount
received by Corel pursuant to Section 8.02(b) of the Merger Agreement;
minus (b) the amount of cash theretofore paid to Inprise pursuant to this
Section 11 plus the value of the Inprise Shares theretofore delivered to
Inprise for cancellation pursuant to this Section 11.
(c) Notwithstanding any other provision of this Agreement, nothing in this
Agreement shall affect the ability of Corel to receive nor relieve
Inprise's obligation to pay a fee pursuant to Section 8.02(b) of the Merger
Agreement; provided that if the Total Profit received by Corel would exceed
$30 million following the receipt of such fee, Corel shall be obligated to
comply with terms of Section 11(a) within 5 days of the later of (i) the
date of receipt of such fee and (ii) the date of receipt of the net cash by
Corel pursuant to the sale of Inprise Shares (or, any other securities into
which such Inprise Shares are converted or exchanged) to any unaffiliated
party or to Inprise pursuant to this Agreement.
(d) Notwithstanding any other provision of this Agreement, the Option may
not be exercised for a number of Inprise Shares that would, as of the
Notice Date, result in a Notional Total Profit (as defined below) of more
than $30 million. "Notional Total Profit" shall mean, with respect to any
number of Inprise Shares as to which Corel may propose to exercise the
Option, the Total Profit determined as of the Notice Date assuming that the
Option was exercised on such date for such number of Inprise Shares and
assuming such Inprise Shares, together with all other Inprise Shares held
by Corel and its affiliates as of such date, were sold for cash at the
closing sales price for Inprise Common Stock as of the close of business
on the preceding trading day.
12. Restrictive Legends. Each certificate representing shares of the
Inprise Common Stock issued to Corel hereunder shall include a legend in
substantially the following form:
"THE TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO CERTAIN PROVISIONS OF AN AGREEMENT BETWEEN THE
REGISTERED HOLDER HEREOF
AND THE COMPANY AND TO RESALE RESTRICTIONS ARISING
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. A COPY
OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE
OF THE COMPANY AND WILL BE PROVIDED TO THE HOLDER
HEREOF WITHOUT CHARGE UPON RECEIPT BY THE COMPANY
OF A WRITTEN REQUEST THEREFOR."
Inprise shall, upon written request of the holder thereof, issue such
holder a new certificate evidencing such Inprise Shares without such legend
in the event (i) the sale of such Inprise Shares has been registered
pursuant to the Securities Act, or (ii) such holder shall have delivered to
Inprise an opinion of counsel, which opinion shall, in Inprise's reasonable
judgment, be satisfactory in form and substance to Inprise, to the effect
that subsequent transfers of such Inprise Shares may be effected without
registration under the Securities Act.
13. Listing and HSR Filing. Inprise, upon request of Corel, shall as
promptly as practicable file an application to list Inprise Shares to be
acquired upon exercise of the Option for listing or quotation on the Nasdaq
Stock Market and shall use its reasonable efforts to obtain approval for
such quotation as promptly as practicable. Promptly after the date hereof,
each of the parties hereto shall promptly file all required pre-merger
notification and report forms and other documents and exhibits required to
be filed under the HSR Act or the Competition Act (Canada) to permit the
acquisition of Inprise Shares subject to the Option at the earliest
practicable date.
14. Binding Effect; No Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Except as expressly provided for in this
Agreement and except for any assignment by Corel in whole or in part, to a
wholly-owned, direct or indirect, subsidiary of Corel (provided that any
such subsidiary agrees in writing to be bound by and liable for all of the
terms, conditions and provisions contained herein that would otherwise be
applicable to Corel, and provided further that Corel shall remain liable
for all of its duties and obligations hereunder in the event such
subsidiary shall fail to perform hereunder), neither this Agreement nor the
rights or the obligations of either party hereto are assignable in whole or
in part (whether by operation of law or otherwise), without the written
consent of the other party and any attempt to do so in contravention of
this Section 14 will be void. Nothing contained in this Agreement, express
or implied, is intended to confer upon any person other than the parties
hereto and their respective permitted assigns any rights or remedies of any
nature whatsoever by reason of this Agreement.
15. Specific Performance. The parties recognize and agree that if for any
reason any of the provisions of this Agreement are not performed in
accordance with their specific terms or are otherwise breached, immediate
and irreparable harm or injury would be caused for which money damages
would not be an adequate remedy. Accordingly, each party agrees that, in
addition to other remedies, the other party shall be entitled to an
injunction or injunctions restraining any violation or threatened violation
of the provisions of this Agreement and to enforce specifically the terms
and provisions hereof in the Courts of the State of New York located in the
County of New York or of the State of Delaware located in the County of New
Castle (or, if such court lacks subject matter jurisdiction, any
appropriate federal court in the State of New York or the State of
Delaware) (collectively, the "Courts") or any of the appeals courts
thereof. In the event that any action should be brought in equity to
enforce the provisions of this Agreement, neither party will allege, and
each party hereby waives the defense that there is adequate remedy at law.
16. Entire Agreement. This Agreement and the Merger Agreement (including
the Exhibits and Schedules thereto) constitute the entire agreement among
the parties with respect to the subject matter hereof and supersede all
other prior discussions, representations and warranties, agreements and
understandings, both written and oral, among the parties or any of them
with respect to the subject matter hereof. No prior drafts of this
Agreement and no words or phrases from any such prior drafts shall be
admissible into evidence in any action, suit or other proceeding involving
this Agreement.
17. Further Assurances. Subject to the terms and conditions hereof, if
Corel exercises the Option, or any portion thereof, in accordance with the
terms of this Agreement, each party will execute and deliver all such
further documents and instruments and take all such further action
including obtaining necessary regulatory approvals and making necessary
filings (including, without limitation, filings under the HSR Act and the
Competition Act (Canada)) as may be necessary in order to consummate the
transactions contemplated hereby (including the issuance, registration and
listing of the Inprise Shares). To the extent that the Option becomes
exercisable, Inprise will not take any actions which would frustrate the
exercise of the Option.
18. Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of to this Agreement unless
otherwise indicated. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed
by the words "without limitation." The words "hereof," "herein" and
"herewith" and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement as a whole and not to any particular
provision of this Agreement. All terms defined in this Agreement shall
have the defined meaning contained herein when used in any certificate or
other document made or delivered pursuant hereto unless otherwise defined
therein. The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as
well as to the gender and neuter genders of such term. Any agreement or
instrument defined or referred to herein or in any agreement or instrument
that is referred to herein means such agreement or instrument as from time
to time amended, modified or supplemented and attachments thereto and
instruments incorporated therein. References to a person are also to its
permitted successors and assigns. The parties have participated jointly in
the negotiation and drafting of this Agreement. In the event an ambiguity
or question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the parties and no presumption or burden
of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any of the provisions of this Agreement. Any reference to
any federal, state, local or foreign statute or law shall be deemed to also
to refer to any amendments thereto and all rules and regulations
promulgated thereunder, unless the context requires otherwise.
19. Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of the other
provisions of this Agreement, which shall remain in full force and effect.
In the event any court or other competent authority holds any provision of
this Agreement to be null, void or unenforceable, under any present or
future law, public policy or order, and if the rights or obligations of any
party hereto under this Agreement or the Merger Agreement, and the economic
or legal substance of the transactions contemplated hereby and thereby,
will not be materially and adversely affected thereby, (i) such provision
will be fully severable and (ii) this Agreement will be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part hereof. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith the execution and delivery of an
amendment to this Agreement in order to the maximum extent possible to
effectuate, to the extent permitted by law, the intent of the parties
hereto with respect to such provision. Each party agrees that, should any
court or other competent authority hold any provision of this Agreement or
part hereof to be null, void or unenforceable, or order any party to take
any action inconsistent herewith, or not take any action required herein,
the other party shall not be entitled to specific performance of such
provision or part hereof or to any other remedy, including but not limited
to money damages, for breach hereof or of any other provision of this
Agreement or part hereof as the result of such holding or order.
20. Notices. Any notice, request, claim, demand or communication required
or permitted hereunder shall be in writing and either delivered personally,
telegraphed or telecopied or sent by certified or registered mail, postage
prepaid, and shall be deemed to be given, dated and received (a) on the
date of delivery if delivered personally, including by courier, (b) upon
receipt if delivered by registered or certified mail, return receipt
requested, postage prepaid or (c) upon receipt if sent by facsimile
transmission, provided that any notice received by telecopy or otherwise at
the addressee's location on any business day after 5:00 p.m. (addressee's
local time) shall be deemed to have been received at 9:00 a.m. (addressee's
local time) on the next business day. Any party to this Agreement may
notify any other party of any changes to the address or any of the other
details specified in this paragraph, provided that such notification shall
only be effective on the date specified in such notice or five business
days after the notice is given, whichever is later. Rejection or other
refusal to accept or the inability to deliver because of changed address of
which no notice was given shall be deemed to be receipt of the notice as of
the date of such rejection, refusal or inability to deliver. All notices
hereunder shall be delivered to the parties to the addresses or facsimile
numbers set forth below, or pursuant to such other instructions as may be
designated in writing by the party to receive such notice:
If to Inprise:
Inprise Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
with a copy to (which shall not constitute notice):
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
If to Corel to:
Corel Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Corporate Secretary
with a copy to (which shall not constitute notice):
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
The ▇▇▇▇▇▇▇▇
Suite 1400, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Facsimile No: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
21. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts
executed and to be performed entirely within such State without giving
effect to the principles of conflicts or choice of law thereof or of any
other jurisdiction (except to the extent that mandatory provisions of
United States federal law applies to indemnification provisions).
22. Descriptive Headings. The descriptive headings herein are inserted
for convenience of reference only and are not intended to be part of or, in
any way, to affect the meaning or interpretation of this Agreement.
23. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of
which, taken together, shall constitute one and the same instrument and
shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
24. Expenses. Except as otherwise expressly provided herein or in the
Merger Agreement, all costs and expenses incurred by a party in connection
with the transactions contemplated by this Agreement, including fees and
expenses of its own financial consultants, investment bankers, accountants
and counsel, shall be paid by the party incurring such expenses.
25. Amendments; Waiver. This Agreement may be amended by the parties
hereto and the terms and conditions hereof may be waived only by an
instrument in writing signed on behalf of each of the parties hereto, or,
in the case of a waiver, by an instrument in writing signed on behalf of
the party waiving compliance.
26. Jurisdiction. Each of the parties hereto irrevocably agrees that any
action, suit, claim or other legal proceeding with respect to this
Agreement or in respect of the transactions contemplated hereby brought by
any other party hereto or its successors or assigns shall be brought and
determined in any federal court located in the County of New York in the
State of New York or the County of New Castle in the State of Delaware or
the courts of the State of New York located in the County of New York or of
the State of Delaware located in the County of New Castle (or any appeals
courts thereof). The foregoing New York courts are hereinafter referred to
as the "New York Courts" and the foregoing Delaware Courts are hereinafter
referred to as the "Delaware Courts". Each of the parties hereto
irrevocably submits with regard to any such proceeding for itself and in
respect to its property, generally and unconditionally, to the exclusive
jurisdiction of the aforesaid courts. Each of the parties hereto
irrevocably waives, and agrees not to assert, by way of motion, as a
defense, counterclaim or otherwise, in any action or proceeding with
respect to this Agreement, (a) any claim that it is not personally subject
to the jurisdiction of the above-named courts for any reason, (b) that it
or its property is exempt or immune from jurisdiction of any such court or
from any legal process commenced in such courts (whether through service of
notice, attachment before judgment, attachment in aid of execution of
judgment, execution of judgment or otherwise) and (c) to the fullest extent
permitted by applicable law, that (i) the proceeding in any such court is
brought in an inconvenient forum, (ii) the venue of such proceeding is
improper or (iii) this Agreement, or the subject matter hereof, may not be
enforced in or by such court. Notwithstanding the foregoing, each of the
parties hereto agrees that each of the other parties shall have the right
to bring any action or proceeding for enforcement of a judgment entered by
the aforesaid New York Courts or Delaware Courts in any other court or
jurisdiction.
27. Waiver of Trial by Jury. Each of the parties hereto acknowledges and
agrees that any controversy which may arise under this Agreement is likely
to involve complicated and difficult issues, and therefore each such party
hereby irrevocably and unconditionally waives, to the fullest extent
permitted by applicable law, any right such party may have to a trial by
jury in respect of any action, suit, claim or other proceeding directly or
indirectly arising out of or relating to this Agreement or the transactions
contemplated by this Agreement. Each party certifies and acknowledges that
(i) no representative of such party has been authorized by such party to
represent or, to the knowledge or such party, has represented, expressly or
otherwise, that such other Party would not, in the event of litigation,
seek to enforce the foregoing waiver, (ii) each such party understands and
has considered the implications of this waiver, (iii) each such party
makes this waiver voluntarily and (iv) each such party has been induced to
enter into this Agreement by, among other things, the mutual waivers and
certifications in this Section 27.
28. Service of Process.
(a) The parties agree that the delivery of process or other papers in
connection with any such action or proceeding in the manner provided in
Section 20 hereof, or in such other manner as may be permitted by law,
shall be valid and sufficient service thereof.
(b) Each of Corel and Inprise hereby designates each of the New York
City, N.Y. and Wilmington, Delaware offices of CT Corporation as its
respective agent for service of process in the State of New York and the
State of Delaware, solely with respect to any dispute or controversy
arising out of this Agreement, and service upon Corel or Inprise for such
purposes shall be deemed to be effective upon service of CT Corporation, as
aforesaid or of its successor designated in accordance with the following
sentence in the appropriate State. Any party may designate another
corporate agent or law firm reasonably acceptable to the other party and
located in the State of New York or the State of Delaware, as applicable,
as successor agent for service of process upon 30 days' prior written
notice to such party. Each party further covenants and agrees to execute,
upon the request of the other party, such documents and agreements as are
reasonably necessary to confirm such designations.
29. Remedies Cumulative. Except as otherwise herein provided, the rights
and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by applicable law.
30. No Third Party Beneficiaries. The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto and
their respective successors or permitted assigns, and except as otherwise
expressly provided for herein, it is not the intention of the parties to
confer third-party beneficiary rights upon any other person.
31. Limitations on Warranties.
(a) Except for the representations and warranties contained in this
Agreement and the Merger Agreement, Inprise makes no other express or
implied representation or warranty to Corel. Corel acknowledges that, in
entering into this Agreement, it has not relied on any representations or
warranties of Inprise or any other person other than the representations
and warranties of Inprise set forth in this Agreement or the Merger
Agreement.
(b) Except for the representations and warranties contained in this
Agreement and the Merger Agreement, Corel makes no other express or implied
representation or warranty to Inprise. Inprise acknowledges that, in
entering into this Agreement, it has not relied on any representations or
warranties of Corel any other person other than the representations and
warranties of Corel set forth in this Agreement and the Merger Agreement.
32. Execution. This Agreement may be executed by facsimile signatures by
any party and such signature shall be deemed binding for all purposes
hereof, without delivery of an original signature being thereafter
required.
33. Currency. Unless otherwise specified, all references in this
Agreement to "dollars" or "$" shall mean United States dollars.
34. Date for Any Action. In the event that any date on which any action
is required to be taken hereunder by any of the parties hereto is not a
business day, such action shall be required to be taken on the next
succeeding day which is a business day.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective duly authorized officers as of the date
first above written.
INPRISE CORPORATION
By: /s/ ▇▇▇▇ ▇▇▇▇
------------------------
Name: ▇▇▇▇ ▇▇▇▇
Title: Chief Financial Officer
COREL CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Corporate Secretary
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President and Chief Executive Officer