EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
GENESYS TELECOMMUNICATIONS
LABORATORIES, INC.
GENPLA, INC.
AND
PLATO SOFTWARE CORPORATION
DATED AS OF DECEMBER 9, 1998
TABLE OF CONTENTS
PAGE
----
RECITALS........................................................................................... 1
ARTICLE I THE MERGER............................................................................... 2
1.1 The Merger......................................................................... 2
----------
1.2 Effective Time..................................................................... 2
--------------
1.3 Effect of the Merger............................................................... 2
--------------------
1.4 Certificate of Incorporation....................................................... 2
----------------------------
1.5 Directors and Officers............................................................. 2
----------------------
1.6 Shares to Be Issued; Effect on Common Stock........................................ 2
-------------------------------------------
1.7 Certificates....................................................................... 4
------------
1.8 No Further Ownership Rights in Company Common Stock................................ 5
---------------------------------------------------
1.9 Tax Consequences................................................................... 5
----------------
1.10 Taking of Necessary Action; Further Action......................................... 5
------------------------------------------
ARTICLE II representations and warranties of the company........................................... 6
2.1 Organization of the Company........................................................ 6
---------------------------
2.2 Company Capital Structure.......................................................... 6
-------------------------
2.3 Subsidiaries....................................................................... 6
------------
2.4 Authority.......................................................................... 7
---------
2.5 Company Balance Sheet.............................................................. 8
---------------------
2.6 Tax and Other Returns and Reports.................................................. 8
---------------------------------
2.7 Litigation......................................................................... 9
----------
2.8 AgentSoft Transaction.............................................................. 9
---------------------
2.9 Interested Party Transactions...................................................... 9
---------------------------
2.10 Compliance With Law................................................................ 9
-------------------
2.11 Employee Benefit Plans............................................................. 9
----------------------
2.12 Proprietary Information and Inventions Agreements.................................. 10
-------------------------------------------------
-i-
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB................................ 10
3.1 Organization, Standing and Power................................................... 10
-------------------------------
3.2 Authority.......................................................................... 10
---------
3.3 Parent Capital Structure........................................................... 10
------------------------
3.4 Issuance of Parent Common Shares................................................... 11
--------------------------------
3.5 SEC Documents; Parent Financial Statements......................................... 11
------------------------------------------
3.6 No Conflict........................................................................ 11
-----------
3.7 No Consents Required............................................................... 12
--------------------
ARTICLE IV ADDITIONAL AGREEMENTS................................................................... 12
4.1 Issuance of Parent Common Shares; Registration..................................... 12
----------------------------------------------
4.2 Access to Company Information...................................................... 12
-----------------------------
4.3 Confidentiality.................................................................... 13
---------------
4.4 Expenses........................................................................... 13
--------
4.5 Public Disclosure.................................................................. 13
-----------------
4.6 FIRPTA Compliance.................................................................. 13
-----------------
4.7 Reasonable Efforts................................................................. 13
------------------
4.8 Tax Free Reorganization............................................................ 14
-----------------------
4.9 Affiliate Agreement................................................................ 14
-------------------
4.10 Additional Documents and Further Assurances........................................ 14
-------------------------------------------
4.11 Securities Law Compliance.......................................................... 14
-------------------------
4.12 Directors' and Officers' Indemnification........................................... 14
----------------------------------------
4.13 Past Service Credit................................................................ 15
-------------------
ARTICLE V CONDITIONS TO THE MERGER................................................................. 15
5.1 Conditions to Obligations of Each Party to Effect the Merger....................... 15
------------------------------------------------------------
5.2 Additional Conditions to the Obligations of Parent and Merger Sub.................. 15
-----------------------------------------------------------------
5.3 Additional Conditions to Obligations of the Company................................ 16
---------------------------------------------------
ARTICLE VI SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ESCROW...................................... 17
6.1 Survival of Representations and Warranties......................................... 17
------------------------------------------
6.2 Escrow Arrangements................................................................ 17
-------------------
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER...................................................... 24
7.1 Termination........................................................................ 24
-----------
7.2 Effect of Termination.............................................................. 25
---------------------
7.3 Amendment.......................................................................... 25
---------
7.4 Extension; Waiver.................................................................. 25
-----------------
ARTICLE VIII GENERAL PROVISIONS.................................................................... 25
8.1 Notices............................................................................ 25
-------
8.2 Interpretation..................................................................... 27
--------------
-ii-
8.3 Counterparts....................................................................... 27
------------
8.4 Entire Agreement................................................................... 27
----------------
8.5 Severability....................................................................... 27
------------
8.6 Other Remedies..................................................................... 27
--------------
8.7 Governing Law...................................................................... 28
-------------
8.8 Rules of Construction.............................................................. 28
---------------------
8.9 Assignment......................................................................... 28
----------
8.10 Absence of Third Party Beneficiary Rights.......................................... 28
-----------------------------------------
8.11 Waiver of Jury Trial............................................................... 28
--------------------
-iii-
INDEX OF EXHIBITS
EXHIBIT DESCRIPTION
------- -----------
Exhibit A Form of Shareholder Agreement
Exhibit B Form of Company Affiliate Agreement
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made
---------
and entered into as of December 9, 1998 among Genesys Telecommunications
Laboratories, Inc., a California corporation ("Parent"), Genpla, Inc., a
------
Delaware corporation and which has been or is in the process of being formed and
is or, prior to closing will be, a wholly-owned subsidiary of Parent ("Merger
------
Sub"), and Plato Software Corporation, a Delaware corporation (the "Company").
--- -------
RECITALS
A. The Boards of Directors of each of the Company, Parent and Merger
Sub believe it is in the best interests of each company and their respective
shareholders that Parent acquire the Company through the statutory merger of
Merger Sub with and into the Company (the "Merger") and, in furtherance thereof,
------
have approved the Merger.
B. Pursuant to the Merger and subject to the terms and conditions of
this Agreement, (i) Parent shall acquire from the shareholders of the Company
all of the issued and outstanding Common Stock of the Company ("Company Common
--------------
Stock"), in exchange for shares of Common Stock of Parent ("Parent Common
----- -------------
Shares") and (ii) Parent shall assume all of the outstanding options to acquire
shares of Company Common Stock.
C. A portion of the Parent Common Shares issued by Parent in
connection with the Merger to the shareholders of the Company shall be placed in
escrow by Parent, the release of which shares shall be contingent upon certain
events and conditions, all as set forth in Article VI hereof.
D. The Company, Parent and Merger Sub desire to make certain
representations and warranties and other agreements in connection with the
Merger.
E. The parties intend, by executing this Agreement, to adopt a plan
of reorganization within the meaning of Section 368 of the Internal Revenue Code
of 1986, as amended (the "Code").
----
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
intending to be legally bound hereby the parties agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. At the Effective Time (as defined in Section 1.2), and
----------
subject to and upon the terms and conditions of this Agreement and the
applicable provisions of Delaware law ("Delaware Law"), Merger Sub shall be
------------
merged with and into the Company, the separate corporate existence of Merger Sub
shall cease and the Company shall continue as the surviving corporation and as a
wholly-owned subsidiary of Parent. The Company as the surviving corporation
after the Merger is hereinafter sometimes referred to as the "Surviving
---------
Corporation."
-----------
1.2 Effective Time. Unless this Agreement is earlier terminated pursuant
--------------
to Section 7.1, the closing of the Merger (the "Closing") will take place as
-------
promptly as practicable, but no later than five (5) business days, following
satisfaction or waiver of the conditions set forth in Article V, at the offices
of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
unless another place or time is agreed to by Parent and the Company. The date
upon which the Closing actually occurs is herein referred to as the "Closing
-------
Date". On the Closing Date, the parties hereto shall cause the Merger to be
----
consummated pursuant to the filing of a Certificate of Merger with the Delaware
Secretary of State (the time of acceptance of such filing being referred to
herein as the "Effective Time"). The parties currently intend that the Closing
--------------
Date will occur on or prior to December 15, 1998.
1.3 Effect of the Merger. At the Effective Time, the effect of the Merger
--------------------
shall be as provided in the applicable provisions of Delaware Law. Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time, all the property, rights, privileges, powers and franchises of the Company
and Merger Sub shall vest in the Surviving Corporation, and all debts,
liabilities and duties of the Company and Merger Sub shall become the debts,
liabilities and duties of the Surviving Corporation.
1.4 Certificate of Incorporation. Unless otherwise determined by Parent
----------------------------
prior to the Effective Time, at the Effective Time, the Certificate of
Incorporation of Merger Sub shall be the Certificate of Incorporation of the
Surviving Corporation until thereafter amended as provided by law and such
Certificate of Incorporation.
1.5 Directors and Officers. The directors of theSurviving Corporation
----------------------
following the Effective Time shall be ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇
Milisloavsky and the officers of the Surviving Corporation shall be the officers
of Merger Sub immediately prior to the Effective Time, each to hold office in
accordance with the Certificate of Incorporation and Bylaws of the Surviving
Corporation.
1.6 Shares to Be Issued; Effect on Common Stock. The number of Parent
-------------------------------------------
Common Shares to be issued pursuant to the Merger in exchange for (i) the
acquisition by Parent of all outstanding Company Common Stock and (ii) the
assumption by Parent of all outstanding options to acquire Company Common Stock
(collectively "Company Options") shall be 250,000 shares (the "Aggregate Parent
--------------- ----------------
Shares"). Subject to the terms and conditions of this Agreement, as
------
-2-
of the Effective Time, by virtue of the Merger and without any action on the
part of Merger Sub, the Company or the holder of any shares of the Company
Common Stock, the following shall occur:
(a) Company Common Stock. Pursuant to the Merger, each share of
--------------------
Company Common Stock issued and outstanding immediately prior to the Effective
Time will be automatically assigned and transferred to Parent at the Effective
Time, without any further action required on the part of the Company, the
shareholders of the Company or Parent. In exchange for each such share of
Company Common Stock the holder thereof shall be entitled to receive a number
of Parent Common Shares equal to the Exchange Ratio (as defined in
subparagraph (f) below).
(b) Company Options. At the Effective Time, each Company Option
---------------
shall be assumed by Parent in accordance with provisions described below.
(i) At the Effective Time, each Company Option, whether or
not vested and exercisable, shall be, in connection with the Merger, canceled
and in substitution therefor Parent shall issue a new option (a "Parent
------
Option"). Each Parent Option shall continue to be subject to the same terms
------
and conditions as the respective Company Option, including vesting, except
that (A) each Parent Option shall be exercisable for that number of whole
shares of Parent Common Shares equal to the product of (1) the number of
shares of Company Common Stock (on an as converted into Common Stock basis)
that were issuable upon exercise of such Company Option immediately prior to
the Effective Time multiplied by (2) the Exchange Ratio (rounded up to the
nearest whole number of Parent Common Shares), and (B) the exercise price per
share of Parent Common Shares under such Parent Option shall be equal to the
quotient determined by dividing (1) the exercise price per share of Company
Common Stock at which such Company Option was exercisable immediately prior to
the Effective Time (on an as converted into Common Stock basis), by (2) the
Exchange Ratio (rounded down to the nearest whole cent).
(ii) As promptly as practicable following the Effective
Time, Parent will issue, to each holder of an outstanding Company Option
immediately prior to the Effective Time, a new Parent Option in respect of the
canceled Company Option. In this regard, it is the intention of the parties
that if any Company Option qualified upon its grant as an incentive stock
option as defined in Section 422 of the U.S. Internal Revenue Code, then the
corresponding Parent Option issued by Parent in respect of such Company Option
also qualify following the Effective Time as an incentive stock option.
(c) Capital Stock of Merger Sub. Pursuant to the Merger, each
---------------------------
share of Common Stock of Merger Sub issued and outstanding immediately prior
to the Effective Time shall be converted into and exchanged for one validly
issued, fully paid and non-assessable share of Common Stock of the Surviving
Corporation. Each stock certificate of Merger Sub evidencing ownership of any
such shares shall continue to evidence ownership of such shares of capital
stock of the Surviving Corporation.
-3-
(d) Adjustments to Exchange Ratio. The Exchange Ratio shall be
-----------------------------
adjusted to reflect fully the effect of any stock split, reverse split, stock
dividend (including any dividend or distribution of securities convertible
into Parent Common Shares or Company Common Stock), recapitalization or other
like change without receipt of consideration with respect to Parent Common
Shares or Company Common Stock occurring after the date hereof and prior to
the Effective Time. Any such change for which a record date is established
shall be deemed for the purposes of this Section 1.6(d) to have occurred on
the record date.
(e) Fractional Shares. No fraction of a Parent Common Shares will
-----------------
be issued, but, in lieu thereof, each holder of shares of Company Common Stock
who would otherwise be entitled to a fraction of a share of Parent Common
Shares (after aggregating all fractional shares of Parent Common Shares to be
received by such holder) shall be entitled to receive from Parent an amount of
cash (rounded to the nearest whole cent) equal to the product of (i) such
fraction, multiplied by (ii) the average closing price of a share of Parent
Common Shares for the ten (10) consecutive trading days ending on the trading
day immediately prior to the Closing Date, as reported on the Nasdaq National
Market.
(f) Definitions.
-----------
(i) Aggregate Company Shares. The "Aggregate Company
------------------------ -----------------
Shares" shall mean the sum of (i) the aggregate number of shares of Company
------
Common Stock outstanding immediately prior to the Effective Time, plus (ii)
the aggregate number of shares of Company Common Stock issuable on exercise of
the aggregate Company Options outstanding immediately prior to the Effective
Time, on an as-converted-into-Company Common Stock basis.
(ii) Aggregate Parent Shares. The "Aggregate Parent Shares"
----------------------- -----------------------
shall be 250,000 shares of Parent Common Shares (as appropriately adjusted to
reflect the effect of any stock split, stock dividend, recapitalization or the
like with respect to the Parent Common Shares occurring after the date hereof
and prior to the Effective Time).
(iii) Escrow Amount. The "Escrow Amount" shall be a number
------------- -------------
of shares of Parent Common Shares obtained by multiplying (x) the aggregate
number of Parent Common Shares issuable upon the Merger in respect of Company
Common Stock by (y) 20%.
(iv) Exchange Ratio. The "Exchange Ratio" shall mean the
-------------- --------------
quotient obtained by dividing (x) the Aggregate Parent Shares by (y) the
Aggregate Company Shares.
1.7 Certificates.
------------
(a) Exchange Agent. Prior to the Effective Time, Parent shall
--------------
designate a bank or trust company reasonably acceptable to the Company to act as
exchange agent (the "Exchange Agent") in the Merger.
--------------
(b) Parent to Provide Common Stock. Promptly after the Effective
------------------------------
Time, Parent shall make available to the Exchange Agent for the benefit of the
Company's shareholders
-4-
the aggregate number of Parent Common Shares issuable to such holders pursuant
to Section 1.6; provided that, on behalf of the holders of Company Common Stock,
Parent shall deposit the Escrow Amount into an escrow account. The portion of
the Escrow Amount contributed on behalf of each holder of Company Common Stock
shall be in proportion to the aggregate number of Parent Common Shares which
such holder would otherwise be entitled to receive under Section 1.6 by virtue
of ownership of outstanding shares of Company Common Stock. It is understood
that the shares placed in the escrow account shall be constituted solely out of
the Parent Common Shares issuable in respect of Company Common Stock.
(c) Procedures. Promptly after the Effective Time, Parent shall
----------
cause to be issued to each shareholder of record of the Company as of
immediately prior to the Effective Time a certificate representing the number of
whole shares of Parent Common Shares (less the number of shares of Parent Common
Shares, if any, to be deposited in the Escrow Fund (as defined in Article VI
hereof) on such holder's behalf pursuant to Article VI hereof), as well as any
cash payable to such holder in lieu of fractional shares in accordance with
Section 1.6(e). As soon as practicable after the Effective Time, and subject to
and in accordance with the provisions of Article VI hereof, Parent shall cause
to be issued to the Escrow Agent (as defined in Article VI) a certificate or
certificates representing that number of shares of Parent Common Shares equal to
the Escrow Amount and registered in the name of the Escrow Agent. Such shares
shall be held by the Escrow Agent as nominee on behalf of the holder on whose
behalf the shares are deposited in the Escrow Fund; such shares shall be
beneficially owned (as defined under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) by the holders on whose behalf such shares were
------------
deposited in the Escrow Fund; and such shares shall be available to compensate
Parent as provided in Article VI.
1.8 No Further Ownership Rights in Company Common Stock. All Parent
---------------------------------------------------
Common Shares issued pursuant to the Merger in exchange for shares of Company
Common Stock in accordance with the terms hereof (including any cash paid in
respect thereof) shall be deemed to have been issued in full satisfaction of all
rights pertaining to such shares of Company Common Stock, and there shall be no
further registration of transfers on the records of the Company of shares of
Company Common Stock which were outstanding immediately prior to the Effective
Time.
1.9 Tax Consequences. It is intended by the parties hereto that the
----------------
Merger shall constitute a tax-free reorganization within the meaning of Section
368 the Code.
1.10 Taking of Necessary Action; Further Action. If, at any time after
------------------------------------------
the Effective Time, any such further action is necessary or desirable to carry
out the purposes of this Agreement and to vest the Surviving Corporation with
full right, title and possession to all assets, property, rights, privileges,
powers and franchises of the Company and Merger Sub, the officers and directors
of the Company and Merger Sub are fully authorized in the name of their
respective corporations or otherwise to take, and will take, all such lawful and
necessary action.
-5-
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Merger Sub,
subject to such exceptions as are clearly disclosed in the disclosure letter
supplied by the Company to Parent (the "Company Schedules") and dated as of the
-----------------
date hereof, as follows:
2.1 Organization of the Company. The Company is a corporation duly
---------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware. The Company has the corporate power to own its properties and to
carry on its business as now being conducted. The Company has delivered a true
and correct copy of its Certificate of Incorporation, as amended to date, to
Parent.
2.2 Company Capital Structure. The authorized stock of the Company
-------------------------
consists of 10,000,000 shares of Common Stock ("Company Common Stock"), of which
--------------------
an aggregate of 8,100,000 shares are issued and outstanding. There is no other
class of securities authorized on the part of the Company. A complete list of
the Company's shareholders and the number of shares of Company Common Stock held
by each such shareholder is attached hereto as Schedule 2.2. All outstanding
------------
shares of Company Common Stock are duly authorized, validly issued, fully paid
and non-assessable and not subject to preemptive rights created by statute, the
Certificate of Incorporation of the Company or any agreement to which the
Company is a party or by which it is bound. The Company has committed the grant
of Company Options to purchase an aggregate of 1,900,000 shares of Company
Common Stock, to the persons, for the numbers of shares of Company Common Stock
and subject to such vesting arrangements as is set forth on Schedule 2.2. There
are no other options, warrants, calls, rights, commitments or agreements of any
character to which the Company is a party or by which it is bound, obligating
the Company to issue, deliver, sell, repurchase or redeem, or cause to be
issued, delivered, sold, repurchased or redeemed, any shares of capital stock of
the Company or obligating the Company to grant, extend or enter into any such
option, warrant, call, right, commitment or agreement. The terms of the Company
Options permit or will permit the assumption or substitution of options to
purchase Parent Common Stock as provided in this Agreement, without the consent
or approval of the holders of the Company Options, the Company Shareholders or
otherwise and without any acceleration of the exercise schedule or vesting
provisions thereof and without any other payment with respect thereto, except as
set forth in Schedule 2.2.
2.3 Subsidiaries. Except for Plato Software, Ltd., an Israeli
------------
corporation ("Plato Israel"), the Company does not have any subsidiaries or
------------
affiliated companies and does not otherwise own any shares of capital stock or
any interest in, or control, directly or indirectly, any other corporation,
partnership, association, joint venture or other business entity. Plato Israel
is a corporation duly organized and validly existing under the laws of the State
of Israel. The authorized capital stock of Plato Israel consists of 13,600,000
Series A Preferred Shares, par value NIS0.01 per share, none of which is issued
and outstanding, and 6,400,000 Ordinary Shares, par value NIS 0.01 per share, of
which 10,000 shares are issued and outstanding. Such outstanding shares are held
9,900 shares by the Company and 100 shares by ▇▇▇▇▇ ▇▇▇▇▇▇.
-6-
There are no options, warrants, calls, rights, commitments or agreements of any
character to which Plato Israel is a party or by which it is bound obligating
Plato Israel to issue, deliver, sell, repurchase or redeem, or cause to be
issued, delivered, sold, repurchased or redeemed, any shares of capital stock of
Plato Israel or obligating Plato Israel to grant, extend or enter into any such
option, warrant, call, right, commitment or agreement; provided, that Plato
--------
Israel has committed to issue options to certain employees pursuant to their
employment agreements pursuant to which each such employee has been offered the
right to receive options representing no more than the percentage of the equity
of Plato Israel as the percentage of the equity of the Company allocated to the
respective employee as shown on Schedule 2.2. On or prior to the Closing each
employee shall deliver to Plato Israel written confirmation in a form acceptable
to Parent pursuant to which such employee shall acknowledge that the option
granted (or to be granted prior to the Closing) to such employee by the Company
satisfies in full the option obligation of Plato Israel (the "Plato Israel
Option Exchange Agreements"). The Plato Israel Option Exchange Agreements, upon
execution and delivery thereof, shall be valid and enforceable against such
employees in accordance with their terms under applicable law and no such
employee shall have any right or option to receive any stock or other securities
of Plato Israel. It is understood and agreed that in each and every
representation and warranty of the Company set forth in this Article II,
references to the "Company" shall include, collectively, the Company and Plato
Israel and their respective businesses, operations and finances, except only
where the context expressly indicates otherwise.
2.4 Authority. The Company has all requisite corporate power and
---------
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of the Company. This Agreement
has been duly executed and delivered by the Company and constitutes the valid
and binding obligation of the Company, enforceable in accordance with its terms
except (i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors' rights generally and (ii) as limited by laws relating to the
availability of specific performance, injunctive relief or other equitable
remedies. The execution and delivery of this Agreement by the Company does not,
and, as of the Effective Time, the consummation of the transactions contemplated
hereby will not, conflict with, or result in any violation of, or default under
(with or without notice or lapse of time, or both), or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of any
benefit under (any such event, a "Conflict") (i) any provision of the
--------
Certificate of Incorporation of the Company or (ii) any mortgage, indenture,
lease, contract or other agreement or instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to the Company or its properties or assets. No consent, waiver,
approval, order or authorization of, or registration, declaration or filing
with, any court, administrative agency or commission or other federal, state,
county, local or foreign governmental authority, instrumentality, agency or
commission ("Governmental Entity") or any third party (so as not to trigger any
-------------------
Conflict), is required by or with respect to the Company in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby, except for (i) the filing of a Certificate of Merger with
the Delaware Secretary of State, (ii) such consents, waivers, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
applicable federal and state securities laws, (iii) such other
-7-
consents, waivers, authorizations, filings, approvals and registrations as may
be set forth on Section 2.4 of the Company Schedules.
-----------
2.5 Company Balance Sheet. The Company was formed on August 20, 1998 and
---------------------
had no operations prior to the acquisition, through Plato Israel, of all of the
assets and certain of the liabilities of AgentSoft, Ltd. on September 14, 1998.
The Company has not prepared a statement of operations. The Company has had no
revenues since inception, and its aggregate losses (and accumulated deficit)
through November 25, 1998 were approximately $360,000. Schedule 2.5 sets forth
------------
the Company's unaudited balance sheet as of November 25, 1998 (the "Balance
-------
Sheet"). The Balance Sheet fairly depicts the financial position of the Company
-----
as of its date, it being noted, however, that the Balance Sheet has not been
prepared in accordance with generally accepted accounting principles. The
Company represents that it does not have any liability, indebtedness,
obligation, expense, claim, deficiency, guaranty or endorsement of any type
which would be required to be reflected on a balance sheet in accordance with
generally accepted accounting principles (a "Liability"), that is not reflected
---------
in the Balance Sheet, other than any such liabilities which (i) have arisen in
the ordinary course of the Company's business since the date of the Balance
Sheet, and (ii) do not exceed $100,000 in the aggregate. There has been no
material adverse change in the Company's operations or financial position since
the date of the Balance Sheet except as disclosed in the Company Schedules. The
Company does not have any other liabilities or obligations (contractual or
otherwise contingent) in excess of $100,000 except those reflected on the
Balance Sheet. Since the Company's formation, the Company has conducted its
business in the ordinary course consistent with past practice, and, except as
contemplated by this Agreement, there has not occurred: (i) any change, event
or change (whether or not covered by insurance) that has resulted in, or might
reasonably be expected to result in, a material adverse effect to the Company;
(ii) any acquisition, sale or transfer of any material asset of the Company;
(iii) any declaration, setting aside or payment of a dividend or other
distribution with respect to the capital stock of the Company Common Stock.
2.6 Tax and Other Returns and Reports.
---------------------------------
(a) Definition of Taxes. For the purposes of this Agreement, "Tax"
------------------- ---
or, collectively, "Taxes", means any and all federal, state, local and foreign
-----
taxes, assessments and other governmental charges, duties, impositions and
liabilities, including taxes based upon or measured by gross receipts, income,
profits, sales, use and occupation, and value added, ad valorem, transfer,
franchise, withholding, payroll, recapture, employment, excise and property
taxes, together with all interest, penalties and additions imposed with respect
to such amounts and any obligations under any agreements or arrangements with
any other person with respect to such amounts and including any liability for
taxes of a predecessor entity.
(b) The Company as of the Effective Time will have prepared and
filed all required federal, state, local and foreign returns, estimates,
information statements and reports due to be filed on or before the Effective
Time ("Returns") relating to any and all Taxes concerning or attributable to the
-------
Company or its operations and, to the Company's knowledge, such Returns are
complete and accurate in all material respects in accordance with applicable
law.
-8-
(c) The Company does not have any liabilities for unpaid federal,
state, local and foreign Taxes which have not been accrued or reserved against
on the Balance Sheet, whether asserted or unasserted, contingent or otherwise.
(d) The Company is not, and has not been at any time, a "United
States real property holding corporation" within the meaning of Section
897(c)(2) of the Code.
2.7 Litigation. There is no action, suit or proceeding of any nature
----------
pending or to the best of the Company's knowledge threatened against the
Company, its properties or any of its officers or directors, in their respective
capacities as such. To the best of the Company's knowledge there is no
investigation pending or threatened against the Company, its properties or any
of its officers or directors by or before any governmental entity.
2.8 AgentSoft Transaction. The Company previously acquired, through
---------------------
Plato Israel, all of the assets and assumed certain of the liabilities of
AgentSoft Ltd., an Israeli corporation, pursuant to an Asset Purchase Agreement
dated September 14, 1998, a true and correct copy of which agreement the Company
has provided to Parent. To the knowledge of the Company, the representations and
warranties given by AgentSoft pursuant to Section 3 of such agreement were true
and correct in all material respects when made, and to the knowledge of the
Company no facts or circumstances have arisen since the acquisition which would
render any of such representations and warranties, to the extent they relate to
the continuing operations and financial position of the Company, untrue or
incorrect in any material respect as if made as of the date of this Agreement
and as of the Closing relative to the business and financial position of the
Company as a whole.
2.9 Interested Party Transactions. The Company has had no material
-----------------------------
transactions and has no material agreements with any employee, officer, director
or shareholder of the Company except as described in Section 2.9 of the Company
Schedules. Except as described in Section 2.9 of the Company Schedules, the
Company is not indebted, directly or indirectly, to any of its employees,
officers or directors or to their respective spouses or children.
2.10 Compliance With Law. To its knowledge, the Company has conducted and
-------------------
continues to conduct its operations in accordance with all laws and regulations
and all governmental orders or decrees applicable to the Company or any of its
properties or assets, and to its knowledge the Company is not in violation of
any such laws, regulations orders or decrees.
2.11 Employee Benefit Plans. The Company has no employee benefit plans
----------------------
(including without limitation bonus, stock option, stock purchase, restricted
stock, deferred compensation, medical or life insurance, termination severance
or other benefit plans, programs or arrangements) other than its intended stock
option plan. Each of the employees of the Company has an employment contract
with Plato Israel, a copy of which has been delivered to counsel to Parent. Each
employee is entitled to certain benefits upon any termination of employment as
provided by Israeli law and, in the case of certain employees, as may be set
forth in the respective employment agreements for such employees. The employment
of each officer and employee of the Company is terminable at the will of the
Company, subject to severance and related obligations provided under Israeli Law
and any employee's employment terms. To its
-9-
knowledge, the Company has complied in all material respects with all applicable
state, federal and foreign equal employment opportunity laws and with other laws
related to employment.
2.12 Proprietary Information and Inventions Agreements. Each employee,
-------------------------------------------------
consultant and officer of the Company has executed an agreement with the Company
or Plato Israel regarding confidentiality and proprietary information
substantially in the form or forms delivered to Parent. Except as set forth in
Section 2.12 of the Company Schedules, no current employee, officer or
consultant of the Company has excluded works or inventions made prior to his or
her employment with the Company from his or her assignment of inventions
pursuant to such employee, officer or consultant's confidential or proprietary
information and inventions agreement, such as would be material to the Company's
business as conducted or as proposed to be conducted. The Company, after
reasonable investigation, is not aware that any of its employees or consultants
is in violation thereof, and the Company will use its best efforts to prevent
any such violation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company as follows:
3.1 Organization, Standing and Power. Parent is a corporation duly
--------------------------------
organized, validly existing and in good standing under the laws of the State of
California. Merger Sub is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. Each of Parent and
Merger Sub has the corporate power to own its properties and to carry on its
business as now being conducted.
3.2 Authority. Parent and Merger Sub have all requisite corporate power
---------
and authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of Parent and Merger Sub. This
Agreement has been duly executed and delivered by Parent and Merger Sub and
constitutes the valid and binding obligations of Parent and Merger Sub,
enforceable in accordance with its terms except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors' rights generally and (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies.
3.3 Parent Capital Structure. Parent's Annual Report on Form 10-K for
------------------------
the year ended June 30, 1998 ("10-K") and Quarterly Report on Form 10-Q for the
quarter ended September 30, 1998 ("10-Q"), each as filed with the Securities and
Exchange Commission, accurately sets forth as of the respective dates thereof:
(i) the number of shares of each class and series of capital stock of Parent
authorized, (ii) the number of shares of each class and series of capital stock
of Parent issued and outstanding, and (iii) the number of shares of capital
stock of Parent issuable on exercise of all outstanding options, warrants and
other rights to acquire shares
-10-
of capital stock from the Company, as well as the number of additional shares of
capital stock of Parent authorized for issuance pursuant to future grants under
each employee stock plan of Parent. Since the date of the 10-Q, (i) there have
been no issuances of capital stock of Parent except for issuances of Parent
Common Shares upon exercise of options that were originally issued under
Parent's employee stock plans and were included in the outstanding options
described in the 10-Q, and (ii) there have been no grants of options, warrants
or other rights to acquire shares of capital stock from the Company other than
grants of employee stock options in the ordinary course of business.
3.4 Issuance of Parent Common Shares. The Parent Common Shares, when
--------------------------------
issued in accordance with the terms and provisions of this Agreement, will be
duly authorized, validly issued, fully paid and non-assessable. Assuming the
accuracy of the representations and warranties of the Company herein and of the
Company's shareholders as set forth in the Shareholder Agreement (as defined
below), such shares (when issued in accordance with the terms of this Agreement)
will have been issued in compliance with all applicable securities laws.
3.5 SEC Documents; Parent Financial Statements. Parent has timely filed
------------------------------------------
all SEC documents required to be filed by Parent under the Securities and the
Exchange Act. Parent has furnished or made available to the Company true and
correct copies of its 10-K and 10-Q (the foregoing being collectively referred
to as the "SEC Documents"). As of their respective filing dates, the SEC
-------------
Documents complied in all material respects with the requirements of the
Securities Act and the Exchange Act, and the applicable rules and regulations of
the SEC thereunder, as the case may be, and none of the SEC Documents contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances in which they were made, not misleading, except to
the extent corrected by a document subsequently filed with the SEC prior to the
date hereof. The financial statements of Parent, including the notes thereto,
included in the SEC Documents and any other financial statements filed with the
SEC after the date of this Agreement and until the Effective Date (the "Parent
------
Financial Statements") comply as to form in all material respects with
--------------------
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto, were prepared in accordance with generally
accepted accounting principles consistently applied (except as may be indicated
in the notes thereto or, in the case of unaudited statements, as permitted by
Form 10-Q of the SEC) and present fairly the consolidated financial position of
Parent at the dates thereof and of its operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal, recurring
audit adjustments which will not be material in amount or significance). There
has been no change in Parent accounting policies except as described in the
notes to the Parent Financial Statements.
3.6 No Conflict. Neither the execution and delivery of this Agreement by
-----------
Parent, nor the consummation by Parent of the transactions contemplated hereby,
nor compliance by Parent with any of the provisions hereof, will (i) conflict
with or result in a breach of any provision of Parent's Articles of
Incorporation, (ii) constitute or result in a default under, or require any
consent pursuant to, or result in the creation of any lien on any material asset
of any Parent under, any contract or permit of Parent, where such default or
lien, or any failure to obtain such
-11-
consent, is reasonably likely to have, individually or in the aggregate, a
material adverse effect on Parent and its subsidiaries, taken as a whole or
(iii) subject to receipt of the requisite consents referred to in Section 3.6,
constitute or result in a default under, or require any consent pursuant to, any
law or order applicable to Parent or any of its respective material assets.
3.7 No Consents Required. Other than in connection or compliance with
--------------------
the provisions of applicable U.S. federal and Israeli securities laws,
applicable state corporate and securities laws, and rules of the NASD, and other
than consents required from regulatory authorities, no notice to, filing with,
or consent of, any public body or authority is necessary for the consummation by
Parent of the Merger and the other transactions contemplated in this Agreement.
ARTICLE IV
ADDITIONAL AGREEMENTS
4.1 Issuance of Parent Common Shares; Registration.
----------------------------------------------
(a) The Parent Common Shares to be issued pursuant to the Merger
have not been registered under the Securities Act of 1933, as amended (the
"Securities Act"), in reliance upon exemptions from registration provided by
Rule 506 and/or Section 4(2) under the Securities Act. The certificates for
shares of Parent Common Shares to be issued pursuant to the Merger shall bear
appropriate legends to identify such shares as being "restricted securities"
within the meaning of Rule 144(a)(3) under the Securities Act and to comply with
applicable state securities laws.
(b) On or before April 30, 1999, Parent shall file a registration
statement on Form S-3 to register the Parent Common Shares issued pursuant to
the Merger. Parent will, at its expense (excluding any broker fees and
commissions), use its best efforts to have such registration statement become
effective as promptly as practicable after its filing and remain effective until
the second anniversary of the Closing Date. Such registration shall be subject
to the terms and conditions set forth in the Shareholder Agreement attached
hereto as Exhibit A.
---------
(c) The Parent Options issuable in respect of Company Options shall
be duly registered for sale on a registration statement on Form S-8, which
registration statement shall remain in effect so long as any such Parent Option
remains exercisable.
4.2 Access to Company Information. Subject to any applicable contractual
-----------------------------
confidentiality obligations (which the Company shall use its best efforts to
cause to be waived), the Company shall afford to Parent and its accountants,
counsel and other representatives, reasonable access during normal business
hours during the period prior to the Effective Time to (a) all of its
properties, books, contracts, agreements and records, and (b) all other
information concerning the business, properties and personnel (subject to
restrictions imposed by applicable law) of the Company as Parent may reasonably
request. No information or knowledge obtained in any investigation pursuant to
this Section 4.3 shall affect or be deemed to modify any
-12-
representation or warranty contained herein or the conditions to the obligations
of the parties to consummate the Merger.
4.3 Confidentiality. Parent hereby agrees to maintain the
---------------
confidentiality of the information obtained in any investigation pursuant to
Section 4.2, or pursuant to the negotiation of this Agreement. In this regard,
Parent shall make confidential information of the Company available only to
those employees and agents of Parent having a need to know in connection with
the proposed Merger and proposed relationship between Parent and the Company,
and Parent and such persons shall use the information only in connection with
the proposed Merger and proposed relationship. It is understood that the
confidential information of the Company shall not include information which (i)
is now or subsequently becomes generally known or available by publication,
commercial use or otherwise, through no fault of Parent, (ii) is known by Parent
at the time of disclosure, (iii) is independently developed by Parent without
the use of any Confidential Information, (iv) is lawfully obtained by Parent
from a third party without violation of a confidentiality obligation, or (v) the
Company agrees in writing may be disclosed by Parent. It is also understood that
Parent may disclose confidential information of the Company if and to the extent
required by law, provided that Parent shall use all commercially reasonable
efforts (i) to limit the information disclosed to the maximum limitation
practicable and (ii) to provide reasonable advance notice to the Company of any
required disclosure.
4.4 Expenses. If the Merger is not consummated, all fees and expenses
--------
incurred in connection with the Merger including, without limitation, all legal,
accounting, financial advisory, consulting and all other fees and expenses of
third parties ("Third-Party Expenses") incurred by a party in connection with
--------------------
the negotiation and effectuation of the terms and conditions of this Agreement
and the transactions contemplated hereby, shall be the obligation of the
respective party incurring such fees and expenses. If the Merger is consummated,
Parent shall pay all of the reasonable Third Party Expenses incurred by the
Company.
4.5 Public Disclosure. No disclosure (whether or not in response to an
-----------------
inquiry) of the existence or nature of this Agreement shall be made by any party
hereto unless approved by duly authorized officers of both Parent and the
Company prior to release, provided that such approval shall not be unreasonably
withheld and subject in any event to Parent's obligation to comply with
applicable securities law and stock exchange regulations.
4.6 FIRPTA Compliance. On the Closing Date, the Company shall deliver to
-----------------
Parent a properly executed statement in a form reasonably acceptable to Parent
for purposes of satisfying Parent's obligations under Treasury Regulation
Section 1.1445-2(c)(3).
4.7 Reasonable Efforts. Subject to the terms and conditions provided in
------------------
this Agreement, each of the parties hereto shall use its reasonable efforts to
take promptly, or cause to be taken, all actions, and to do promptly, or cause
to be done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated
hereby to obtain all necessary waivers, consents and approvals and to effect all
necessary registrations and filings and to remove any injunctions or other
impediments or delays, legal or otherwise, in order to consummate and make
effective the transactions
-13-
contemplated by this Agreement for the purpose of securing to the parties hereto
the benefits contemplated by this Agreement.
4.8 Tax Free Reorganization. Parent and the Company shall each use its
-----------------------
reasonable efforts to cause the business combination to be effected by the
Merger to be treated as a tax-free organization within the meaning of Section
368 of the Code. Each of Parent and the Company shall use its reasonable
efforts to cause its respective employees, directors, shareholders and
affiliates not to take any action that would adversely affect the ability of
Parent to treat the business combination to be effected by the Merger as a tax-
free reorganization. Neither Parent nor the Company shall take any action,
following the Merger which reasonably would be expected to jeopardize the tax-
free nature of the reorganization hereunder.
4.9 Affiliate Agreement. The Company has delivered or shall cause to be
-------------------
delivered to Parent, concurrently with the execution of this Agreement, from the
Company's "affiliates" within its meaning of Rule 145 promulgated under the
Securities Act, an executed Affiliate Agreement in the form attached hereto as
Exhibit B. Parent shall be entitled to place appropriate legends on the
---------
certificates evidencing any Parent Common Shares to be received by Affiliates of
the Company pursuant to the terms of this Agreement, and to issue appropriate
stop transfer instructions to the transfer agent for Parent Common Shares,
consistent with the terms of such Affiliate Agreement.
4.10 Additional Documents and Further Assurances. Each party hereto, at
-------------------------------------------
the request of the other party hereto, shall execute and deliver such other
instruments and do and perform such other acts and things as may be necessary or
desirable for effecting completely the consummation of this Agreement and the
transactions contemplated hereby.
4.11 Securities Law Compliance. Parent shall take such steps as may be
-------------------------
necessary to comply with the securities laws of all jurisdictions which are
applicable to the issuance of the Parent Common Shares pursuant hereto. The
Company shall use its best efforts to assist Parent as may be necessary to
comply with the securities laws of all jurisdictions which are applicable in
connection with the issuance of Parent Common Shares pursuant hereto.
4.12 Directors' and Officers' Indemnification.
----------------------------------------
(a) The Company shall, to the fullest extent permitted under law
and regardless of whether the Merger becomes effective, indemnify and hold
harmless, and, after the Effective Time, Parent and the Surviving Corporation
shall, to the fullest extent permitted under applicable law, indemnify and hold
harmless, each present and former director or officer of the Company and each
such person who served at the request of the Company as a director, officer,
trustee, partner, fiduciary, employee or agent of any other corporation,
partnership, joint venture, trust, pension or other employee benefit plan or
enterprise (collectively, the "Indemnified Parties") against all costs and
-------------------
expense (including reasonable attorney fees), judgments, fines, losses, claims,
damages, liabilities and settlement amounts paid in connection with any claim,
action, suit, proceeding or investigation arising out of or pertaining to any
action or omission in their capacity as an officer or director, in each case
occurring before the Effective Time.
-14-
(b) Parent shall pay the expenses (including attorney's fees)
incurred by a director or officer of the Company entitled to indemnification
hereunder in defending any action, suit or proceeding referred to in this
Section 4.12 in advance of its final disposition; provided, however, that
payment of expenses incurred by a director or officer of the Company in advance
of the final disposition of such action, suit or proceeding shall be made only
upon receipt of an undertaking by the director or officer to repay all amounts
advanced if it should ultimately be determined that the director or officer is
not entitled to be indemnified under this Section 4.12 or otherwise.
(c) The provisions of this Section 4.12 are intended to be for the
benefit of and shall be enforceable by, each Indemnified Party and their
respective heirs and representatives.
4.13 Past Service Credit. Parent shall grant the Company's employees past
-------------------
service credit for each employee's respective period of service with the Company
prior to the Effective Date for purposes of eligibility and vesting under each
of Parent's employee benefit plans.
ARTICLE V
CONDITIONS TO THE MERGER
5.1 Conditions to Obligations of Each Party to Effect the Merger. The
------------------------------------------------------------
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction at or prior to the Closing of the following
conditions:
(a) No Injunctions or Restraints; Illegality. No temporary
----------------------------------------
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal or regulatory restraint or
prohibition preventing the consummation of the Merger shall be in effect.
5.2 Additional Conditions to the Obligations of Parent and Merger Sub.
-----------------------------------------------------------------
The obligations of Parent and Merger Sub to consummate the Merger and the
transactions contemplated by this Agreement shall be subject to the satisfaction
at or prior to the Closing of each of the following conditions, any of which may
be waived, in writing, exclusively by Parent:
(a) Representations and Warranties. The representations and
------------------------------
warranties of the Company contained in this Agreement shall be true and correct
in all material respects on and as of the Closing, except for changes
contemplated by this Agreement (including the Company Schedules) and except for
those representations and warranties which address matters only as of a
particular date (which shall remain true and correct as of such date), with the
same force and effect as if made on and as of the Effective Time, except, in all
such cases, for such breaches, inaccuracies or omissions of such representations
and warranties which have neither had nor reasonably would be expected to have a
material adverse effect on the business or financial position of the Company,
and Parent and Merger Sub shall have received a certificate to such effect
signed on behalf of the Company by the Chief Executive Officer of the Company.
-15-
(b) Agreements and Covenants. The Company shall have performed or
------------------------
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it on or prior to the
Effective Time, and Parent and Merger Sub shall have received a certificate to
such effect signed by the Chief Executive Officer of the Company.
(c) Legal Opinion. Parent shall have received legal opinions from
-------------
U.S. and Israeli legal counsel to the Company, in form reasonably satisfactory
to Parent and its legal counsel.
(d) Affiliate Agreements. Each of the parties identified by the
--------------------
Company as being one of its Affiliates shall have delivered an executed
Affiliate Agreement which shall be in full force and effect.
(e) Plato Israel Stock. Upon the effectiveness of the Merger,
------------------
▇▇▇▇▇ ▇▇▇▇▇▇ shall have transferred to Parent or its designee, at no cost to
Parent, all shares of capital stock of Plato Israel held by ▇▇▇▇▇ ▇▇▇▇▇▇.
(f) Affiliate Debt. All indebtedness of the Company or Plato
--------------
Israel to ▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇ and other affiliates of the Company, for
funds advanced to the Company or Plato Software, shall have been discharged,
forgiven or otherwise extinguished so that it shall not remain an obligation of
the Surviving Corporation following the Merger.
(g) Escrow Agreement. The Escrow Agreement shall have been duly
----------------
executed and delivered by the appropriate parties thereto and shall be in full
force and effect.
(h) Plato Israel Option Exchange Agreements. Each holder or
---------------------------------------
former holder of an option or other right to purchase equity securities of Plato
Israel shall have executed and delivered to the Company a copy of the Plato
Israel Option Exchange Agreement, and the Company shall have delivered a copy
thereof to Parent.
5.3 Additional Conditions to Obligations of the Company. The obligations
---------------------------------------------------
of the Company to consummate the Merger and the transactions contemplated by
this Agreement shall be subject to the satisfaction at or prior to the Closing
of each of the following conditions, any of which may be waived, in writing,
exclusively by the Company:
(a) Representations and Warranties. The representations and
------------------------------
warranties of Parent and Merger Sub contained in this Agreement shall be true
and correct in all material respects on and as of the Closing, except for
changes contemplated by this Agreement and except for those representations and
warranties which address matters only as of a particular date (which shall
remain true and correct as of such date), with the same force and effect as if
made on and as of the Effective Time, except, in all such cases, for such
breaches, inaccuracies or omissions of such representations and warranties which
have neither had nor reasonably would be expected to have a Material Adverse
Effect on Parent; and the Company shall have received a certificate to such
effect signed on behalf of Parent by a duly authorized officer of Parent.
-16-
(b) Agreements and Covenants. Parent and Merger Sub shall have
------------------------
performed or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by them on or prior
to the Effective Time, and the Company shall have received a certificate to such
effect signed by a duly authorized officer of Parent.
(c) Legal Opinion. The Company shall have received a legal
-------------
opinion from ▇▇▇▇▇▇▇ Phleger & ▇▇▇▇▇▇▇▇, legal counsel to Parent, in form
reasonably satisfactory to the Company and its legal counsel.
(d) Shareholder Agreement. The Shareholder Agreement shall have
---------------------
been executed and delivered by Parent and shall be in full force and effect.
ARTICLE VI
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ESCROW
6.1 Survival of Representations and Warranties. All of the Company's
------------------------------------------
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement (each as modified by the Company Schedules) shall
survive the Merger and continue until 5:00 p.m. California time, on May 31,
1999 (the "Expiration Date").
---------------
6.2 Escrow Arrangements.
-------------------
(a) Escrow Fund. At the Effective Time the Company's shareholders
-----------
will be deemed to have received and consented to the deposit with the Escrow
Agent (as defined below) of the Escrow Amount (plus any additional shares as may
be issued upon any stock split, stock dividend or recapitalization effected by
Parent after the Effective Time) pursuant to an Escrow Agreement on customary
terms to be mutually agreed among Parent, the Company and the Escrow Agent (as
defined below), without any act required on the part of any shareholder. As soon
as practicable after the Effective Time, the Escrow Amount, without any act
required on the part of any shareholder, will be deposited with an escrow agent
acceptable to Parent and the Securityholder Agent (as defined in Section
6.2(i)(i) below) as Escrow Agent (the "Escrow Agent"), such deposit to
------------
constitute an escrow fund (the "Escrow Fund") to be governed by the terms set
-----------
forth herein and at Parent's cost and expense. The portion of the Escrow Amount
contributed on behalf of each shareholder of the Company shall be in proportion
to the aggregate Parent Common Shares which such holder would otherwise be
entitled under Section 1.6. The Escrow Amount shall be contributed entirely out
of the shares of Parent Common Shares issuable upon the Merger in respect of
Company Common Stock. The Escrow Fund shall be available to compensate Parent
and its affiliates for any claims, losses, liabilities, damages, deficiencies,
costs and expenses, including reasonable attorneys' fees and expenses, and
expenses of investigation and defense (hereinafter individually a "Loss" and
----
collectively "Losses") incurred by Parent, its officers, directors, or
------
affiliates (including the Surviving Corporation) directly or indirectly as a
result of any inaccuracy or breach of a representation or warranty of the
Company contained in Article II herein (as modified by the Company
-17-
Schedules), or any failure by the Company to perform or comply with any covenant
contained herein. Parent and the Company each acknowledge that such Losses, if
any, would relate to unasserted contingent liabilities existing at the Effective
Time, which if resolved at the Effective Time would have led to a reduction in
the aggregate Merger consideration. Parent may not receive any shares from the
Escrow Fund unless and until Officer's Certificates (as defined in paragraph (e)
below) identifying Losses, the aggregate amount of which exceed $100,000, have
been delivered to the Escrow Agent as provided in paragraph (f). In such case,
Parent may recover from the Escrow Fund its Losses in excess of the first
$100,000.
(b) Limitation on Amount of Loss. The amount of recovery
----------------------------
available to Parent and its affiliates for any Loss hereunder shall be reduced
by any insurance proceeds received as a result of any such Loss.
(c) Exclusive Remedy. Claims against the Escrow Fund pursuant to
----------------
this Article VI shall comprise the sole and exclusive means of recourse
available to Parent, Merger Sub and any of their respective affiliates,
successors and assigns (collectively, "ParentGroup") in respect of any breach
-----------
or alleged breach by the Company or any of its agents of any representation,
warranty or covenant contained in this Agreement, and in respect of any other
claim, damage or liability as to which ParentGroup may seek recovery or
recourse in connection with the transactions contemplated by this Agreement.
(d) Escrow Period; Distribution upon Termination of Escrow
-------------------------------------------------------
Periods. Subject to the following requirements, the Escrow Fund shall be in
-------
existence immediately following the Effective Time and shall terminate on the
Expiration Date (the "Escrow Period"); provided that the Escrow Period shall
--------------
not terminate with respect to such amount (or some portion thereof), that
together with the aggregate amount remaining in the Escrow Fund is necessary
to satisfy any unsatisfied claims concerning facts and circumstances existing
prior to the termination of such Escrow Period and to the extent specified in
any Officer's Certificate delivered to the Escrow Agent prior to termination
of such Escrow Period. As soon as all such claims have been resolved, the
Escrow Agent shall transfer to the shareholders of the Company, pursuant to
written instructions by Parent, the remaining portion of the Escrow Fund not
required to satisfy such claims subject to the restriction that, if any of the
shares in escrow are subject to a repurchase right in favor of the Company,
upon termination of services to the Company, then such shares shall not be
distributed to the shareholder but in lieu thereof shall (to the extent not
already repurchased in the event of prior termination of services) be
delivered to the appropriate escrow agent who is authorized to hold such
shares for the benefit of the Company in the event of a future termination of
services to the Company. Unless and until the Escrow Agent shall have received
from Parent written notice that some or all of the Escrow Shares are subject
to a repurchase right in favor of the Company, the Escrow Agent may assume
without inquiry that no repurchase rights exist. Deliveries of Escrow Amounts
to the shareholders of the Company pursuant to this Section 6.2(d) shall be
made in proportion to their respective original contributions to the Escrow
Fund.
(e) Protection of Escrow Fund.
-------------------------
-18-
(i) The Escrow Agent shall hold and safeguard the Escrow
Fund during the Escrow Period, shall treat such fund as a trust fund in
accordance with the terms of this Agreement and not as the property of Parent
and shall hold and dispose of the Escrow Fund only in accordance with the
terms hereof.
(ii) Any shares of Parent Common Shares or other equity
securities and any cash dividends issued or distributed by Parent (including
shares issued upon a stock split) ("New Shares") in respect of Parent Common
----------
Shares in the Escrow Fund which have not been released from the Escrow Fund as
of the time of such issuance or distribution by Parent shall be deemed
distributed to and received by the shareholders but such shareholders have
consented that such New Shares and cash dividends shall be added to the Escrow
Fund and become a part thereof. New Shares and cash dividends issued in
respect of shares of Parent Common Shares which have been released from the
Escrow Fund as of the time of such issuance or distribution by Parent shall
not be added to the Escrow Fund but shall be distributed to the recordholders
thereof.
(iii) Each shareholder shall be entitled to control the vote
of the shares of Parent Common Shares contributed to the Escrow Fund by such
shareholder (and on any voting securities added to the Escrow Fund in respect
of such shares of Parent Common Shares), and the Escrow Agent in whose name
the shares are held shall vote such shares on all matters as instructed in
writing by the Securityholder Agent.
(f) Claims Upon Escrow Fund.
-----------------------
(i) Upon receipt by the Escrow Agent at any time on or
before the last day of the Escrow Period of a certificate signed by any
officer of Parent (an "Officer's Certificate"): (A) stating that Parent has
---------------------
paid or properly accrued or reasonably anticipates that it will have to pay or
accrue Losses, and (B) specifying in reasonable detail the individual items of
Losses included in the amount so stated, the date each such item was paid or
properly accrued, or the basis for such anticipated liability, and the nature
of the misrepresentation, breach of warranty or covenant to which such item is
related, the Escrow Agent shall, subject to the provisions of Section 6.2(g)
hereof, cause the transfer agent of Parent Company Shares to transfer to
Parent out of the Escrow Fund, as promptly as practicable, Parent Common
Shares held in the Escrow Fund in an amount having a value equal to such
Losses.
(ii) For the purposes of determining the number of shares
of Parent Common Shares to be delivered to Parent out of the Escrow Fund
pursuant to Section 6.2(f)(i) hereof, the shares of Parent Common Shares shall
be valued at the average closing price of Parent's Common Stock for the ten
(10) consecutive trading days ending on the trading day immediately prior to
the Closing Date, as reported on the Nasdaq National Market. Parent and the
Securityholder Agent shall certify such fair market value in a certificate
signed by both Parent and the Securityholder Agent, and shall deliver such
certificate to the Escrow Agent, who may rely on it without inquiry.
(g) Objections to Claims. At the time of delivery of any Officer's
--------------------
Certificate to the Escrow Agent, a duplicate copy of such certificate shall be
delivered to the Securityholder
-19-
Agent and for a period of thirty (30) days after receipt of an Officer's
Certificate by the Escrow Agent, the Escrow Agent shall make no transfer to
Parent of any Escrow Amounts pursuant to Section 6.2(f) hereof unless the
Escrow Agent shall have received written authorization from the Securityholder
Agent to make such transfer. After the expiration of such thirty (30) day
period, the Escrow Agent shall cause the transfer agent of Parent Company
Stock to transfer shares of Parent Common Shares from the Escrow Fund in
accordance with Section 6.2(f) hereof, provided that no such transfer may be
made if the Securityholder Agent shall object in a written statement to the
claim made in the Officer's Certificate, and such statement shall have been
delivered to the Escrow Agent prior to the expiration of such thirty (30) day
period.
(h) Resolution of Conflicts; Arbitration.
------------------------------------
(i) In case the Securityholder Agent shall object in
writing to any claim or claims made in any Officer's Certificate as provided
in Section 6.2(g) hereof, the Securityholder Agent and Parent shall attempt in
good faith to agree upon the rights of the respective parties with respect to
each of such claims. If the Securityholder Agent and Parent should so agree, a
memorandum setting forth such agreement shall be prepared and signed by both
parties and shall be furnished to the Escrow Agent. The Escrow Agent shall be
entitled to rely on any such memorandum and distribute shares of Parent Common
Shares from the Escrow Fund in accordance with the terms thereof.
(ii) If no such agreement can be reached after good faith
negotiation, either Parent or the Securityholder Agent may demand arbitration
of the matter unless the amount of the damage or loss is at issue in pending
litigation with a third party, in which event arbitration shall not be
commenced until such amount is ascertained or both parties agree to
arbitration; and in either such event the matter shall be settled by
arbitration conducted by three arbitrators. Parent and the Securityholder
Agent shall each select one arbitrator, and the two arbitrators so selected
shall select a third arbitrator. The arbitrators shall set a limited time
period and establish procedures designed to reduce the cost and time for
discovery while allowing the parties an opportunity, adequate in the sole
judgment of the arbitrators, to discover relevant information from the
opposing parties about the subject matter of the dispute. The arbitrators
shall rule upon motions to compel or limit discovery and shall have the
authority to impose sanctions, including attorneys fees and costs, to the
extent as a court of competent law or equity, should the arbitrators determine
that discovery was sought without substantial justification or that discovery
was refused or objected to without substantial justification. The decision of
a majority of the three arbitrators as to the validity and amount of any claim
in such Officer's Certificate shall be binding and conclusive upon the parties
to this Agreement, and notwithstanding anything in Section 6.2(g) hereof, the
Escrow Agent shall be entitled to act in accordance with such decision and
make or withhold payments out of the Escrow Fund in accordance therewith. Such
decision shall be written and shall be supported by written findings of fact
and conclusions which shall set forth the award, judgment, decree or order
awarded by the arbitrators.
(iii) Judgment upon any award rendered by the arbitrators
may be entered in any court having jurisdiction. Any such arbitration shall be
held within the federal
-▇▇-
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ of California under the rules then in effect of the American
Arbitration Association. For purposes of this Section 6.2(h), in any
arbitration hereunder in which any claim or the amount thereof stated in the
Officer's Certificate is at issue, Parent shall be deemed to be the prevailing
party in the event that the arbitrators award Parent an amount equal to at
least the sum of one-half (1/2) of the disputed amount plus any amounts not in
dispute; otherwise, the shareholders of the Company as represented by the
Securityholder Agent shall be deemed to be the prevailing party. The non-
prevailing party to an arbitration shall pay its own expenses, the fees of
each arbitrator, the administrative costs of the arbitration, and the
expenses, including without limitation, reasonable attorneys' fees and costs,
incurred by the other party to the arbitration.
(i) Securityholder Agent of the Shareholders; Power of Attorney.
-----------------------------------------------------------
(i) In the event that the Merger is approved, effective
upon such vote, and without further act of any shareholder, ▇▇▇▇▇ ▇▇▇▇▇▇ shall
be appointed as agent and attorney-in-fact (the "Securityholder Agent") for
--------------------
each shareholder of the Company, for and on behalf of shareholders of the
Company, to give and receive notices and communications, to authorize delivery
to Parent of Parent Common Shares from the Escrow Fund in satisfaction of
claims by Parent, to object to such deliveries, to agree to, negotiate, enter
into settlements and compromises of, and demand arbitration and comply with
orders of courts and awards of arbitrators with respect to such claims, and to
take all actions necessary or appropriate in the judgment of Securityholder
Agent for the accomplishment of the foregoing. Such agency may be changed by
the shareholders of the Company from time to time upon not less than thirty
(30) days prior written notice to Parent; provided that the Securityholder
Agent may not be removed unless holders of a two-thirds interest of the Escrow
Fund agree to such removal and to the identity of the substituted agent. Any
vacancy in the position of Securityholder Agent may be filled by approval of
the holders of a majority in interest of the Escrow Fund. No bond shall be
required of the Securityholder Agent, and the Securityholder Agent shall not
receive compensation for his or her services. Notices or communications to or
from the Securityholder Agent shall constitute notice to or from each of the
shareholders of the Company.
(ii) The Securityholder Agent shall not be liable for any
act done or omitted hereunder as Securityholder Agent while acting in a manner
he believes in good faith to be in the best interests of the corporation. The
shareholders of the Company on whose behalf the Escrow Amount was contributed
to the Escrow Fund shall severally indemnify the Securityholder Agent and hold
the Securityholder Agent harmless against any loss, liability or expense
incurred without gross negligence or bad faith on the part of the
Securityholder Agent and arising out of or in connection with the acceptance
or administration of the Securityholder Agent's duties hereunder, including
the reasonable fees and expenses of any legal counsel retained by the
Securityholder Agent.
(j) Actions of the Securityholder Agent. A decision, act,
-----------------------------------
consent or instruction of the Securityholder Agent shall constitute a decision
of all the shareholders for whom a portion of the Escrow Amount otherwise
issuable to them are deposited in the Escrow Fund and shall be final, binding
and conclusive upon each of such shareholders, and the Escrow
-21-
Agent and Parent may rely upon any such decision, act, consent or instruction
of the Securityholder Agent as being the decision, act, consent or instruction
of each every such shareholder of the Company. The Escrow Agent and Parent are
hereby relieved from any liability to any person for any acts done by them in
accordance with such decision, act, consent or instruction of the
Securityholder Agent.
(k) Third-Party Claims. In the event Parent becomes aware of a
------------------
third-party claim which Parent believes may result in a demand against the
Escrow Fund, Parent shall promptly notify the Securityholder Agent of such
claim in accordance with Section 6.2(g), and the Securityholder Agent, as
representative for the shareholders of the Company, shall be entitled, at
their expense, to participate in any defense of such claim. Parent shall have
the right in its sole discretion to settle any such claim; provided, however,
that except with the consent of the Securityholder Agent, no settlement of any
such claim with third-party claimants shall permit any claim against the
Escrow Fund. In the event that the Securityholder Agent has consented to any
such settlement and acknowledged that the claim is a valid claim against the
Escrow Fund, the Securityholder Agent shall be deemed to have agreed to the
claim by Parent against the Escrow Fund in an amount equal to such settlement.
In the event, the claimed amount is less than the then available escrow, the
Securityholder Agent, as representative for the shareholders of the Company,
at his election, can control the litigation; provided, however, if such claim
-------- -------
relates to the business operations of the Company then Parent shall control
the litigation of such claim.
(l) Escrow Agent's Duties.
---------------------
(i) The Escrow Agent shall be obligated only for the
performance of such duties as are specifically set forth herein, and as set
forth in any additional written escrow instructions which the Escrow Agent may
receive after the date of this Agreement which are signed by an officer of
Parent and the Securityholder Agent, and may rely and shall be protected in
relying or refraining from acting on any instrument reasonably believed to be
genuine and to have been signed or presented by the proper party or parties.
The Escrow Agent shall not be liable for any act done or omitted hereunder as
Escrow Agent while acting in good faith and in the exercise of reasonable
judgment, and any act done or omitted pursuant to the advice of counsel shall
be conclusive evidence of such good faith.
(ii) The Escrow Agent is hereby expressly authorized to
disregard any and all warnings given by any of the parties hereto or by any
other person, excepting only orders or process of courts of law, and is hereby
expressly authorized to comply with and obey orders, judgments or decrees of
any court. In case the Escrow Agent obeys or complies with any such order,
judgment or decree of any court, the Escrow Agent shall not be liable to any
of the parties hereto or to any other person by reason of such compliance,
notwithstanding any such order, judgment or decree being subsequently
reversed, modified, annulled, set aside, vacated or found to have been entered
without jurisdiction.
-22-
(iii) The Escrow Agent shall not be liable in any respect on
account of the identity, authority or rights of the parties executing or
delivering or purporting to execute or deliver this Agreement or any documents
or papers deposited or called for hereunder.
(iv) The Escrow Agent shall not be liable for the
expiration of any rights under any statute of limitations with respect to this
Agreement or any documents deposited with the Escrow Agent.
(v) In performing any duties under the Agreement, the
Escrow Agent shall not be liable to any party for damages, losses, or
expenses, except for gross negligence or willful misconduct on the part of the
Escrow Agent. The Escrow Agent shall not incur any such liability for (A) any
act or failure to act made or omitted in good faith, or (B) any action taken
or omitted in reliance upon any instrument, including any written statement of
affidavit provided for in this Agreement that the Escrow Agent shall in good
faith believe to be genuine, nor will the Escrow Agent be liable or
responsible for forgeries, fraud, impersonations, or determining the scope of
any representative authority. In addition, the Escrow Agent may consult with
the legal counsel in connection with Escrow Agent's duties under this
Agreement and shall be fully protected in any act taken, suffered, or
permitted by him/her in good faith in accordance with the advice of counsel.
The Escrow Agent is not responsible for determining and verifying the
authority of any person acting or purporting to act on behalf of any party to
this Agreement.
(vi) If any controversy arises between the parties to this
Agreement, or with any other party, concerning the subject matter of this
Agreement, its terms or conditions, the Escrow Agent will not be required to
determine the controversy or to take any action regarding it. The Escrow Agent
may hold all documents and shares of Parent Common Shares and may wait for
settlement of any such controversy by final appropriate legal proceedings or
other means as, in the Escrow Agent's discretion, the Escrow Agent may be
required, despite what may be set forth elsewhere in this Agreement. In such
event, the Escrow Agent will not be liable for damage.
Furthermore, the Escrow Agent may at its option, file an
action of interpleader requiring the parties to answer and litigate any claims
and rights among themselves. The Escrow Agent is authorized to deposit with
the clerk of the court all documents and shares of Parent Common Shares held
in escrow, except all cost, expenses, charges and reasonable attorney fees
incurred by the Escrow Agent due to the interpleader action and which the
parties jointly and severally agree to pay. Upon initiating such action, the
Escrow Agent shall be fully released and discharged of and from all
obligations and liability imposed by the terms of this Agreement.
(vii) The parties and their respective successors and
assigns agree jointly and severally to indemnify and hold the Escrow Agent
harmless against any and all losses, claims, damages, liabilities, and
expenses, including reasonable costs of investigation, counsel fees, and
disbursements that may be imposed on the Escrow Agent or incurred by the
Escrow Agent in connection with the performance of the Escrow Agent's duties
under this
-23-
Agreement, including but not limited to any litigation arising from this
Agreement or involving its subject matter.
(viii) The Escrow Agent may resign at any time upon giving at
least thirty (30) days' written notice to the parties; provided, however, that
no such resignation shall become effective until the appointment of a
successor escrow agent which shall be accomplished as follows: the parties
shall use their best efforts to mutually agree on a successor escrow agent
within thirty (30) days after receiving such notice. If the parties fail to
agree upon a successor escrow agent within such time, the Escrow Agent shall
have the right to appoint a successor escrow agent authorized to do business
in the State of California. The successor escrow agent shall execute and
deliver an instrument accepting such appointment and it shall, without further
acts, be vested with all the estates, properties, rights, powers, and duties
of the predecessor escrow agent as if originally named as escrow agent. The
Escrow Agent shall be discharged from any further duties and liability under
this Agreement.
(m) Fees. All fees of the Escrow Agent for performance of its
----
duties hereunder shall be paid by Parent. It is understood that the fees and
usual charges agreed upon for services of the Escrow Agent shall be considered
compensation for ordinary services as contemplated by this Agreement. In the
event that the conditions of this Agreement are not promptly fulfilled, or if
the Escrow Agent renders any service not provided for in this Agreement, or if
the parties request a substantial modification of its terms, or if any
controversy arises, or if the Escrow Agent is made a party to, or intervenes
in, any litigation pertaining to this escrow or its subject matter, the Escrow
Agent shall be reasonably compensated by Parent for such extraordinary
services and reimbursed for all costs, attorney's fees, and expenses
occasioned by such default, delay, controversy or litigation.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. Except as provided in Section 7.2 below, this Agreement
-----------
may be terminated and the Merger abandoned at any time prior to the Effective
Time:
(a) by mutual consent of the Company and Parent; or
(b) by Parent or the Company if: (i) the Effective Time has not
occurred by April 30, 1999 (provided that the right to terminate this
Agreement under this clause 7.1(b)(i) shall not be available to any party
whose failure to fulfill any obligation hereunder has been the cause of, or
resulted in, the failure of the Effective Time to occur on or before such
date); (ii) there shall be a final nonappealable order of a federal or state
court in effect preventing consummation of the Merger; or (iii) there shall be
any statute, rule, regulation or order enacted, promulgated or issued or
deemed applicable to the Merger by any governmental entity that would make
consummation of the Merger illegal.
-24-
Where action is taken to terminate this Agreement pursuant to this
Section 7.1, it shall be sufficient for such action to be authorized by the
Board of Directors (as applicable) of the party taking such action.
7.2 Effect of Termination. In the event of termination of this Agreement
---------------------
as provided in Section 7.1, this Agreement shall forthwith become void and,
there shall be no liability or obligation on the part of Parent, Merger Sub or
the Company, or their respective officers, directors or shareholders, provided
that each party shall remain liable for any uncured, willful breaches of this
Agreement prior to its termination; and provided further that, the provisions of
Sections 4.3, 4.4 and 4.5 and Articles VII and VIII of this Agreement shall
remain in full force and effect and survive any termination of this Agreement.
7.3 Amendment. Except as is otherwise required by applicable law
---------
following the approval of this Agreement by shareholders of the Company, this
Agreement may be amended by the parties hereto at any time by execution of an
instrument in writing signed on behalf of each of the parties hereto.
7.4 Extension; Waiver. At any time prior to the Effective Time, Parent
-----------------
and Merger Sub, on the one hand, and the Company, on the other, may, to the
extent legally allowed, (i) extend the time for the performance of any of the
obligations of the other party hereto, (ii) waive any inaccuracies in the
representations and warranties made to such party contained herein or in any
document delivered pursuant hereto, and (iii) waive compliance with any of the
agreements or conditions for the benefit of such party contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Notices. All notices and other communications hereunder shall be in
-------
writing, shall be effective when received, and shall in any event be deemed to
have been received (i) when delivered, if delivered personally or by commercial
delivery service, (ii) five (5) business days after deposit with the government
postal service for domestic delivery, if mailed by registered or certified mail
(return receipt requested), (iii) one (1) business day after the business day of
deposit with Federal Express or similar overnight courier for next day domestic
delivery (or, two (2) business days after such deposit if deposited for next day
overseas delivery), if delivered by such means, or (iv) one (1) business day
after delivery by facsimile transmission with copy by postal service, if sent
via facsimile (with acknowledgment of complete transmission) plus postal copy,
to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):
(a) if to Parent or Merger Sub, to:
Genesys Telecommunications Laboratories, Inc.
-25-
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (phone)
(▇▇▇) ▇▇▇-▇▇▇▇ (fax)
with a copy to:
▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ Phleger & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (phone)
(▇▇▇) ▇▇▇-▇▇▇▇ (fax)
(b) if to the Company, to:
Plato Software Corporation
c/o ▇▇▇▇▇ ▇▇▇▇▇▇
Tradiant Corp.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (phone)
(▇▇▇) ▇▇▇-▇▇▇▇ (fax)
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
(▇▇▇) ▇▇▇-▇▇▇▇ (phone)
(▇▇▇) ▇▇▇-▇▇▇▇ (fax)
and a copy to:
▇▇▇ ▇▇▇▇▇▇
Genesys Telecommunications Laboratories, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (phone)
(▇▇▇) ▇▇▇-▇▇▇▇ (fax)
-26-
(c) if to the Securityholder Agent:
▇▇▇▇▇ ▇▇▇▇▇▇
Tradiant Corp.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (phone)
(▇▇▇) ▇▇▇-▇▇▇▇ (fax)
8.2 Interpretation. The words "include" "includes" and "including" when
--------------
used herein shall be deemed in each case to be followed by the words "without
limitation." The word "agreement" when used herein shall be deemed in each case
to mean any contract, commitment or other agreement, whether oral or written,
that is legally binding. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. When reference is made herein to
"the business of" an entity, such reference shall be deemed to include the
business of all direct and indirect subsidiaries of such entity. Reference to
the subsidiaries of an entity shall be deemed to include all direct and indirect
subsidiaries of such entity.
8.3 Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
8.4 Entire Agreement. This Agreement, the schedules and Exhibits hereto,
----------------
and the documents and instruments and other agreements among the parties hereto
referenced herein: (a) constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof; and (b) are not intended to confer upon any other person
any rights or remedies hereunder.
8.5 Severability. In the event that any provision of this Agreement or
------------
the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further
agree to replace such void or unenforceable provision of this Agreement with a
valid and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of such void or unenforceable provision.
8.6 Other Remedies. Except as otherwise provided herein, any and all
--------------
remedies herein expressly conferred upon a party will be deemed cumulative with
and not exclusive of any other remedy conferred hereby, or by law or equity upon
such party, and the exercise by a party of any one remedy will not preclude the
exercise of any other remedy.
-27-
8.7 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of California, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof;
provided that issues involving the corporate governance or relating to the issue
and/or transfer of shares of any of the parties hereto shall be governed by
their respective jurisdictions of incorporation.
8.8 Rules of Construction. The parties hereto agree that they have been
---------------------
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.
8.9 Assignment. No party may assign either this Agreement or any of its
----------
rights, interests, or obligations hereunder without the prior written approval
of the of the other party. Subject to the preceding sentence, this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and permitted assigns.
8.10 Absence of Third Party Beneficiary Rights. No provisions of this
-----------------------------------------
Agreement are intended, nor shall be interpreted, to provide or create any third
party beneficiary rights or any other rights of any kind in any client,
customer, affiliate, partner of any party hereto or any other person or entity
unless specifically provided otherwise herein.
8.11 Waiver of Jury Trial. Each of Parent, Company and Merger Sub hereby
--------------------
irrevocably waives all right to trial by jury in any action, proceeding or
counterclaim (whether based on contract, tort or otherwise) arising out of or
relating to this Agreement or the actions of Parent, Company or Merger Sub in
the negotiation, administration, performance and enforcement hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
-28-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their duly authorized respective officers, all as of the date first
written above.
GENESYS TELECOMMUNICATIONS
LABORATORIES, INC.
By: ___________________________________
Title: ________________________________
GENPLA, INC.
By: ___________________________________
Title: ________________________________
PLATO SOFTWARE CORPORATION
By: ___________________________________
Title: ________________________________
SECURITYHOLDER AGENT
_______________________________________
▇▇▇▇▇ ▇▇▇▇▇▇
-29-
Company Schedules
-----------------
The representations and warranties of Plato Software Corporation, a
Delaware corporation (the "Company") as set forth in Article II of the
-------
Agreement and Plan of Reorganization (the "Agreement") by and among Genesys
---------
Telecommunications Laboratories, Inc., a California corporation ("Parent"),
------
Genpla, Inc., a Delaware corporation and a wholly-owned subsidiary of Parent
("Merger Sub"), and the Company, are hereby qualified by the following
----------
disclosures. For convenience, section numbers herein relate to section numbers
in the Agreement, it being understood however that any disclosure herein which
clearly qualifies a representation of the Company in another section the
Agreement shall also be deemed to qualify such other representation.
2.5 Company Balance Sheet; 2.8 AgentSoft Transaction: The Company
--------------------- ---------------------
continues to lose money, as it has no revenues and continues to
incur operating expenses of approximately $75,000 per month. The
Company expects to terminate two of its principal employees in the
near future, and expects that a number of additional employees will
also leave or be terminated. The Company has had no revenues to
date; its technology is still under development, and has yet to be
proven commercially viable.
The Company's $30,000 of accrued legal fees included on the Balance
Sheet consist of approximately $10,000 payable to Israeli counsel
and approximately $20,000 payable to US counsel. The Company has
incurred (and will continue to incur) additional legal fees in
connection with the transactions contemplated by the Agreement.
These additional legal fees are estimated at approximately $25,000
in the aggregate.
2.9 Interested Party Transactions: (i) initial capitalization of the
-----------------------------
Company by means of loans from Ori and ▇▇▇▇▇ ▇▇▇▇▇▇ in the
aggregate amount of $250,000; (ii) additional loans in the
aggregate amount of approximately $100,000 by ▇▇▇▇▇ ▇▇▇▇▇▇; (iii)
initial issuance of 10,000 shares of Common Stock to family members
and family trusts related to Ori and ▇▇▇▇▇ ▇▇▇▇▇▇.
-30-
EXHIBIT A
---------
SHAREHOLDER AGREEMENT
THIS AGREEMENT is made and entered into as of December 23, 1998, between
Genesys Telecommunications Laboratories, Inc, a California corporation
("Parent"), and the undersigned Shareholders (each, a "Shareholder" and
------ -----------
collectively, the "Shareholders") of Plato Software Corporation, a Delaware
------------
corporation (the "Company"). All capitalized terms used and not otherwise
-------
defined herein shall have the meanings given them in the Agreement and Plan of
Reorganization dated December 9, 1998 entered into by and among Parent, the
Company and the Merger Sub referred to therein (the "Merger Agreement"). Each
----------------
Shareholder of the Company is entering into this Agreement.
RECITALS:
Pursuant to the Merger Agreement, Parent will acquire from the Shareholders
all of the issued and outstanding Company Common Stock and assume all
outstanding Company Options in exchange for an aggregate of 250,000 shares of
Parent Common Shares. The Parent Common Shares to be so issued in respect of
shares of Company Common Stock ("Parent Shares") have not been registered under
-------------
the Securities Act of 1933, as amended (the "Securities Act"), in reliance upon
--------------
the exemptions from registration provided by Rule 506 and/or Section 4(2) of the
Securities Act, and accordingly such shares constitute "restricted securities"
within the meaning of Rule 144(a)(3) under the Securities Act.
In consideration of the premises and the mutual representations, warranties
and covenants herein contained, the parties hereto have agreed and do hereby
agree as follows:
1. Restricted Shares; Legend.
-------------------------
1.1 Parent Common Stock Restrictions. No Shareholder will make
--------------------------------
any sale, transfer or other disposition of the Parent Shares, unless (i) there
is in effect a registration statement under the Securities Act covering the
proposed transfer; (ii) such proposed transfer is within the limitations of
and in compliance with the terms and provisions of Rule 144 under the
Securities Act; or (iii) Parent receives an unqualified written opinion of
legal counsel addressed to Parent and in form and substance reasonably
satisfactory to Parent's counsel, to the effect that the proposed transfer of
Parent Shares may be effected without registration under the Securities Act.
1.2 Each certificate for Parent Shares shall be stamped or
otherwise imprinted with a legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH
SHARES MAY NOT BE
SOLD, OFFERED FOR SALE, TRANSFERRED, ASSIGNED, OR OTHERWISE
DISPOSED OF, DIRECTLY OR INDIRECTLY, EXCEPT (I) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO, (II) IN
COMPLIANCE WITH RULE 144 OR (III) PURSUANT TO AN OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE U.S. SECURITIES ACT OF 1933."
1.3 In connection with the limitations on disposition with
respect to the Parent Shares contained in this Agreement, Parent will issue
stop transfer instructions to its transfer agent with respect to such shares.
1.4 Each Shareholder understands that Parent is under no
obligation to register the sale, transfer or other disposition of the Parent
Shares, except as specifically provided in this Agreement.
1.5 In connection with any sales by a Shareholder of Parent
Shares in compliance with the limitations on disposition set forth in this
Agreement, Parent agrees to notify its transfer agent that the legend set
forth in Section 1.2 may be removed from such Parent Shares being sold by the
Shareholder at the time of such sales.
2. Shareholder's Representations. Each Shareholder severally
-----------------------------
represents, warrants and covenants to Parent with respect to such Shareholder
that:
2.1 The Shareholder understands that the Parent Shares to be
issued under the Merger Agreement have not been registered under the
Securities Act on the basis that the sale and issuance of securities
thereunder is exempt from such registration pursuant to the provisions of Rule
506 and/or Section 4(2) under the Securities Act, and that Parent's reliance
on such exemptions is based on Shareholder's representations set forth herein.
2.2 The Parent Shares to be acquired by the Shareholder will be
acquired for investment for the Shareholder's own account, not as a nominee or
agent, and not with a view to the resale or distribution of any part thereof,
and that the Shareholder has no present intention of selling, granting any
participation in, or otherwise distributing the same. By executing this
Agreement, the Shareholder further represents that the Shareholder does not
have any contract, undertaking, agreement or arrangement with any person to
sell, transfer or grant participation to such person or to any third person,
with respect to any of the Parent Shares to be issued under the Merger
Agreement.
2.3 The Shareholder understands that the Parent Shares are
"restricted securities" within the meaning of Rule 144(a)(3) and that such
shares may not be sold, transferred or otherwise disposed of without
registration under the Securities Act or an exemption therefrom, and that in
the absence of an effective registration statement covering such shares or an
available exemption from registration under the Securities Act, such shares
must be held indefinitely.
-2-
2.4 The Shareholder acknowledges that he is aware of Rule 144
under the Securities Act, which permits limited public resales of "restricted
securities" subject to the satisfaction of certain conditions. The Shareholder
understands that under Rule 144, except as otherwise provided by section (k)
of that Rule, the conditions include, among other things: the availability of
certain current public information about the issuer, the resale occurring not
less than one year after the party has purchased and paid for the securities
to be sold and limitations on the amount of securities to be sold and the
manner of sale. The Shareholder acknowledges that in the event all of the
requirements of Rule 144 are not met, registration under the Securities Act,
or an exemption from registration will be required for any disposition of the
Parent Shares. The Shareholder understands that although Rule 144 is not
exclusive, the Commission has expressed its opinion that persons proposing to
sell restricted securities received other than in a registered offering or
pursuant to Rule 144 will have a substantial burden of proof in establishing
that an exemption from registration is available for such offers or sales and
that such persons and the brokers who participate in the transactions do so at
their own risk.
2.5 The Shareholder has consulted his own legal and tax advisors
regarding the consequences of the transaction contemplated by the Merger
Agreement and acknowledges that he is not relying upon, nor has he received,
any legal or tax advice from Parent or its legal counsel or accountants.
2.6 The Shareholder is aware of Parent's business and financial
condition and has sufficient information about Parent to reach an informed and
knowledgeable decision to acquire the Parent Shares in the transaction
contemplated by the Merger Agreement. Shareholder acknowledges he has
previously received copies of Parent's Annual Report on Form 10-K for the
fiscal year ended June 30, 1997, and its Quarterly Report on Form 10-Q for the
three month period ending September 30, 1998, and that he has had the
opportunity to receive additional information concerning Parent. The
Shareholder further represents that he has had an opportunity to ask questions
and receive answers from Parent regarding the business and financial condition
of Parent.
2.7 The Shareholder agrees to complete and execute the
Questionnaire attached hereto as Exhibit A as promptly as possible after
---------
receipt from Parent of the draft of the Form S-3 registration statement
contemplated to be filed as set forth in Section 4 of this Agreement, and in
any case, prior to Parent's filing of such Form S-3.
3. Transfers of Parent Shares. With respect to any disposition or
--------------------------
attempted disposition of any Parent Shares, each Shareholder will comply with
the following procedure:
3.1 With respect to any sale of Parent Shares made pursuant to
Rule 144, the Shareholder will provide Parent with copies of appropriate
documentation evidencing compliance with Rule 144.
3.2 With respect to a proposed disposition of Parent Shares not
registered under the Securities Act and other than pursuant to Rule 144, the
Shareholder will give prior written notice to Parent describing the manner and
circumstances of the proposed disposition in sufficient detail to enable
Parent to evaluate whether the proposed disposition of such shares
-3-
satisfies the requirements of the Securities Act and this Agreement. Upon
receipt of such written notice, Parent shall promptly notify the Shareholder
either (i) that the Parent Shares may be disposed of in the manner and under
the circumstances described, or (ii) that on the basis of the information
provided the Parent Shares may not be disposed of prior to the receipt by
Parent of an opinion of counsel reasonably satisfactory to Parent and its
counsel to the effect that the proposed disposition of Parent Shares may be
effected without registration under the Securities Act.
3.3 With respect to a disposition of Parent Shares registered
under the Securities Act, each Shareholder will dispose of such Common Shares
as provided in the Form S-3 registration statement.
4. Registration Rights.
4.1 Certain Definitions. As used in this Agreement, the following
-------------------
terms shall have the following meanings:
(a) The term "Commission" means the Securities and Exchange
----------
Commission;
(b) The term "Exchange Act" means the Securities Exchange
------------
Act of 1934, as amended;
(c) The term "Form S-3" means such form under the Securities
--------
Act as in effect on the date hereof or any registration form under the
Securities Act subsequently adopted by the Commission which similarly permits
inclusion or incorporation of substantial information by reference to other
documents filed by Parent with the Commission;
(d) The terms "register" "registered" and "registration"
-------- ---------- ------------
refer to preparing and filing a registration statement covering the resale of
the Parent Shares in compliance with the Securities Act and the declaration or
ordering of the effectiveness of such registration statement;
(e) The term "Registrable Securities" means the Parent
----------------------
Shares issued to the Shareholders pursuant to the Merger Agreement, and any
other Parent Shares issued in respect thereof by way of a stock dividend,
stock split, recapitalization or similar distribution; provided, however, that
-------- -------
such Parent Shares shall only be treated as Registrable Securities if and so
long as they have not been (A) sold to or through a broker or dealer or
underwriter in a public distribution or a public securities transaction, or
(B) sold in a transaction exempt from the registration and prospectus delivery
requirements of the Securities Act under Section 4(1) thereof so that all
transfer restrictions and restrictive legends with respect thereto are removed
upon the consummation of such sale;
(f) The term "Restricted Securities" means the Parent
---------------------
Shares required to bear the legend set forth in Section 1.2 hereof; and
-4-
(g) The term "Securities Act" means the Securities Act of
--------------
1933, as amended.
4.2 Registration on Form S-3. Parent hereby agrees that, subject
------------------------
to Section 4.6 below, on or before April 30, 1998, Parent will file a
registration statement to register all of the Parent Shares issued to the
Shareholders (including the Escrow Shares) pursuant to the Merger Agreement,
and use its best efforts to have such registration statement become effective
as promptly as practicable after such filing and remain effective until the
second anniversary of the Closing Date or until all Shareholders have informed
Parent in writing that the distribution of all such securities has been
completed; provided, however, that, each Shareholder agrees, by acquisition of
-------- ------- ----
the Parent Shares, that:
(a) Upon receipt of any notice from Parent of (i) the
happening of any event which makes any statements made in the registration
statement or related prospectus filed pursuant to this Section 4, or any
documents incorporated or deemed to be incorporated therein by reference,
untrue in any material respect or which requires the making of any changes in
such registration statement or prospectus so that, in the case of such
registration statement it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and that in the case
of the prospectus, it will not contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading or (ii) that, in the judgment of Parent's Board of Directors, it is
advisable to suspend use of the prospectus for a discrete period of time due
to pending corporate developments, public filings with the Commission or that
there exists material nonpublic information about Parent that the Board of
Directors, acting in good faith, determines not to disclose in a registration
statement, then Shareholder will forthwith discontinue, for a period not to
exceed forty-five (45) days (and not to exceed ninety (90) days in the
aggregate), disposition of such Parent Shares covered by such registration
statement or prospectus until it is advised in writing by Parent that use of
the applicable prospectus may be resumed, and has received copies of any
additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such prospectus. Parent shall use its reasonable
efforts to insure that the use of the prospectus may be resumed as soon as
practicable.
(b) The Shareholder shall provide all such information and
materials to Parent and take all such action as may be required in order to
permit Parent to comply with all applicable requirements of the Commission and
to obtain any desired acceleration of the effective date of such registration
statement. Such provision of information and materials is a condition
precedent to the obligations of Parent pursuant to this Agreement. The
offerings made pursuant to such registration shall not be underwritten.
(c) The Shareholder shall abide by Parent's internal ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ policy as in effect from time to time, if and to the extent the
Shareholder is an employee or consultant of Parent or the Company and subject
to such policy at the time of any securities transaction by the Shareholder,
including (if applicable) the restrictions under such policy against a
transaction in Parent Shares during Parent's customary quarterly "blackout"
period.
-5-
(d) Each Shareholder shall be entitled to indemnification
from Parent for any liability that may result from any misstatement or
omission to state a material fact set forth in the registration statement, as
well as advancement of any litigation expenses associated with any such
claims.
4.3 Registration and Selling Expenses. For purposes of this
---------------------------------
Section 4, "Registration Expenses" means all expenses incurred in connection
---------------------
with the registration or qualification of the Parent Shares pursuant to this
Section 4, including, without limitation, all registration, filing and
qualification fees, printing expenses, transfer agent and registration fees,
and fees and disbursements of counsel for Parent and the Shareholders.
"Selling Expenses" means all underwriting discounts and commissions or broker
----------------
fees and commissions applicable to the sale of Registrable Securities, and any
fees and disbursements of special counsel to an individual Shareholder in
connection with the registration and sale of such securities. All Registration
Expenses incurred in connection with the registration of the Parent Shares
pursuant to Section 4.2 will be borne by Parent, and all Selling Expenses will
be borne by the Shareholders.
4.4 Information by Shareholder. Each Shareholder will furnish to
--------------------------
Parent such information regarding such Shareholder and the distribution of the
Parent Shares as Parent may reasonably request in connection with the
registration referred to in this Section 4.
4.5 Transfer of Registration Rights. The registration rights
-------------------------------
granted to a Shareholder under this Section 4 are solely for the benefit of
the Shareholder and are not transferable to any other person or entity, except
a transfer by gift to family members or any trust for family members, or a
transfer by operation of law to beneficiaries, heirs or successors.
4.6 Termination of Registration Rights. The rights granted to the
----------------------------------
Shareholders pursuant to Section 4.2 hereof shall terminate as to each
Shareholder on the date that all Registrable Securities held by such
Shareholder may be sold under Rule 144 during any 90-day period.
5. Obligations of Parent.
---------------------
5.1 Subject to the limitations of Sections 2, 3 and 4 above,
Parent shall (i) prepare and file with the Commission the Form S-3
registration statement in accordance with Section 4.2 hereof with respect to
the shares of Registrable Securities; (ii) prepare and file with the
Commission such amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary, and to comply
with the provisions of the Securities Act with respect to the sale or other
disposition of all securities proposed to be registered in each such
registration statement as promptly as practicable following the Closing Date
until the second anniversary of the Closing Date; (iii) furnish to each
Shareholder such number of copies of any prospectus (including any preliminary
prospectus and any amended or supplemented prospectus) in conformity with the
requirements of the Securities Act, and such other documents as the
Shareholder may reasonably request in order to effect the offering and sale of
the Registrable Securities to be offered and sold, but only while Parent shall
be required under the provisions hereof to cause the registration statement to
remain current; and (iv) use its
-6-
commercially reasonable efforts to register or qualify the shares of the
Registrable Securities covered by such registration statement under the
securities or blue sky laws of such jurisdictions as a Shareholder shall
reasonably request (provided that Parent shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such jurisdiction where it has
not been qualified).
5.2 Parent shall notify each Shareholder, (A) when a prospectus or any
prospectus supplement or post-effective amendment has been filed, and, with
respect to the registration statement or any post-effective amendment, when
the same has become effective; (B) of any request by the Commission or any
other federal or state governmental authority during the period of
effectiveness of the registration statement for amendments or supplements to
the registration statement or related prospectus or for additional information
relating to the registration statement, (C) of the issuance by the Commission
or any other federal or state governmental authority of any stop order
suspending the effectiveness of the registration statement or the initiation
of any proceedings for that purpose, (D) of the receipt by Parent of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose; or (E) of the happening of any event which makes any statement made
in the registration statement or related prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in any
material respect or which requires the making of any changes in the
registration statement or prospectus so that, in the case of the registration
statement, it will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading, and that in the case of the prospectus,
it will not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. Parent may, upon the happening of any event (i) of the
kind described in clauses B, C, D, or E hereof, or (ii) that, in the good
faith judgment of Parent's Board of Directors, renders it advisable to suspend
use of the prospectus for no more than forty-five (45) days due to pending
corporate developments, public filings with the Commission or similar events,
suspend use of the prospectus on written notice to each Shareholder, in which
case each Shareholder shall discontinue disposition of Registrable Securities
covered by the registration statement or prospectus until copies of a
supplemented or amended prospectus are distributed to Shareholder or until the
Shareholder is advised in writing by Parent that the use of the applicable
prospectus may be resumed. Parent shall use its reasonable efforts to ensure
that the use of the prospectus may be resumed as soon as practicable. Parent
shall use every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of the registration statement, or the lifting of
any suspension of the qualification (or exemption from qualification) of any
of the securities for sale in any jurisdiction, at the earliest practicable
time. Parent shall, upon the occurrence of any event contemplated by clause E
above, prepare a supplement or post-effective amendment to the registration
statement or a supplement to the related prospectus or any document
incorporated therein by reference or file any other required document so that,
as thereafter delivered to the purchasers of the Registrable Securities being
sold thereunder, such prospectus will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein
-7-
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
5.3 In connection with any offering of shares of Registrable
Securities registered on Form S-3 pursuant to this Agreement, Parent shall
instruct the transfer agent and registrar of the Parent Shares to remove the
restrictive legend and release any stop transfer orders with respect to the
shares of Registrable Securities being sold.
5.4 Parent shall apply for listing on the Nasdaq National Market
(or on such market as Parent Shares are currently trading) the shares of
Registrable Securities registered on Form S-3 pursuant to this Agreement.
5.5 Rule 144 Reporting. With a view to making available the
------------------
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of the Restricted Securities to the public without
registration, Parent agrees to use its reasonable efforts to:
(a) Make and keep public information available, as those
terms are understood and defined in Rule 144 under the Securities Act;
(b) File with the Commission in a timely manner all reports
and other documents required of Parent under the Securities Act and the
Exchange Act; and
(c) So long as any of the Shareholders owns any Restricted
Securities, to furnish to the Shareholders upon request a written statement by
Parent as to its compliance with the reporting requirements of said Rule 144.
6. Availability of Form S-3. Parent represents that it is currently
------------------------
eligible to utilize Form S-3 for registration of the Parent Shares.
7. Notices. All notices and other communications hereunder shall be in
-------
writing, shall be effective when received, and shall in any event be deemed to
have been received (i) when delivered, if delivered personally or by commercial
delivery service, (ii) five (5) business days after deposit with the government
postal service for domestic delivery, if mailed by registered or certified mail
(return receipt requested), (iii) one (1) business day after the business day of
deposit with Federal Express or similar overnight courier for next day domestic
delivery (or, two (2) business days after such deposit if deposited for next day
overseas delivery), if delivered by such means, or (iv) one (1) business day
after delivery by facsimile transmission with copy by postal service, if sent
via facsimile (with acknowledgment of complete transmission) plus postal copy,
to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):
-8-
(a) if to Parent, to:
Genesys Telecommunications Laboratories, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (phone)
(▇▇▇) ▇▇▇-▇▇▇▇ (fax)
with a copy to:
▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (phone)
(▇▇▇) ▇▇▇-▇▇▇▇ (fax)
(b) if to a Shareholder, to the Shareholder's respective
address as set forth on the signature pages hereto,
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
(▇▇▇) ▇▇▇-▇▇▇▇ (phone)
(▇▇▇) ▇▇▇-▇▇▇▇ (fax)
and a copy to:
▇▇▇▇▇ ▇▇▇▇▇▇
c/o Tradiant Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ (phone)
(▇▇▇) ▇▇▇-▇▇▇▇ (fax)
-9-
8. Miscellaneous.
-------------
8.1 This Agreement shall be binding upon and shall inure to the
benefit of Parent, the Shareholders and their respective successors in
interest.
8.2 This Agreement shall be governed by and construed in
accordance with the laws of the State of California, regardless of the laws
that might otherwise govern under applicable principles of conflict laws
thereof.
8.3 This Agreement may be executed in counterparts, and all of
such counterparts, taken together, shall constitute a single instrument.
8.4 This Agreement constitutes the full and entire understanding
and agreement between the parties with regard to the subject hereof. This
Agreement or any term hereof may only be amended, waived or discharged by a
written instrument signed by Parent and each Shareholder.
8.5 By their execution of this Agreement, each of the Shareholders
hereby accepts and approves of the designation of the Securityholder Agent (as
defined in the Merger Agreement) and to the provisions set forth in Section
6.2 of the Merger Agreement regarding indemnification and whereby the
liability of the Securityholder Agent is limited for any act done or omitted
hereunder as Securityholder Agent while acting in a manner he believes in good
faith to be in the best interests of the corporation.
IN WITNESS WHEREOF, Parent and the Shareholders named below have executed
this Agreement as of the day and year first above written.
GENESYS TELECOMMUNICATIONS
LABORATORIES, INC.
By: ____________________________________
Name: __________________________________
Title: _________________________________
SHAREHOLDERS
▇▇▇▇▇▇ ▇▇▇▇▇▇, TRUSTEE OF EIS
TRUST UTA
DATED SEPTEMBER 24, 1998
________________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇, Trustee
-10-
[SIGNATURE PAGE TO SHAREHOLDER AGREEMENT]
▇▇▇▇▇▇ ▇▇▇▇▇▇, TRUSTEE OF DAS
TRUST UTA DATED SEPTEMBER 24,
1998
________________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇, Trustee
▇▇▇▇▇▇ ▇▇▇▇▇▇, TRUSTEE OF EYS
TRUST UTA
DATED MAY 19, 1997
________________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇, Trustee
SAMSON AND ▇▇▇▇▇▇▇ ▇▇▇▇-▇▇▇▇
________________________________________
▇▇▇▇▇▇▇ AND ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
________________________________________
▇▇▇ ▇▇▇▇▇▇
________________________________________
ARAM ▇▇▇▇▇ ▇▇▇▇▇▇
________________________________________
EXHIBIT A
GENESYS TELECOMMUNICATIONS LABORATORIES, INC.
S-3 REGISTRATION STATEMENT
SELLING SHAREHOLDER QUESTIONNAIRE
---------------------------------
______________, 1999
PLEASE COMPLETE AND SIGN THE QUESTIONNAIRE AND RETURN IT TO
________________________ AT ▇▇▇▇▇▇▇, PHLEGER & ▇▇▇▇▇▇▇▇,
____________________________________. WHERE SUPPLEMENTARY INFORMATION IS
REQUESTED, KINDLY ANNEX THE SAME TO THIS QUESTIONNAIRE. IF ANY QUESTION IS
INAPPLICABLE, SO INDICATE, BUT PLEASE RESPOND TO ALL QUESTIONS. IF YOU HAVE ANY
QUESTIONS, PLEASE CONTACT _______________ AT (___)____-______.
A. General Information.
1. The numbers of shares shown in the Registration Statement represent
the total number of Parent Common Shares held by each Shareholder. Are the
numbers of Parent Common Shares listed opposite your name in the Prospectus
correctly stated?
Yes ____
No ____, the correct number(s) should be:
2. Do you intend to include in the Registration Statement, for potential
sale, the total number of Parent Common Shares set forth after your name on page
__ of the Prospectus?
Yes ____
No, the number to be included should be _______
3. Are all Parent Common Shares to be included in the Registration
Statement on your behalf to be offered for your account?
Yes ____ No ____
4. If the answer to Question 3 was "No," please described below the
number of Parent Shares to be offered by you for the account of another person
or organization, the name and address of such person or organization, and the
reasons for such proposed action:
5. Describe any discounts or commissions, other than usual broker's
commissions, to be allowed or paid to dealers, including all cash, securities,
contracts or other consideration to be received by any dealer in connection with
any sales by you of Parent Common Shares pursuant to the Registration Statement:
6. Please indicate the proposed method(s) by which Parent Common Shares
to be sold pursuant to the Registration Statement will be sold by you (more than
one may be checked):
____ In the over-the-counter market at prices prevailing at the time of
sale
____ Directly through privately negotiated transactions
____ Privately negotiated transactions through brokers
____ Other, as described below
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
-2-
B. Representations and Covenants of Shareholder.
The Shareholder hereby represents, warrants, covenants, and agrees with
Parent that:
(1) The Shareholder has not taken and will not take, directly or
indirectly, any action designed to constitute or which has constituted or which
might reasonably be expected to cause or result in stabilization or manipulation
of the price of any security issued by Parent to facilitate the sale or resale
of any of Parent's securities in violation of Regulation M under the Securities
Exchange Act of 1934, a copy of which is attached hereto. The Shareholder will
effect transactions in Parent's securities only within the confines of such
rules and such other federal or state securities laws as may be applicable. The
Shareholder has not, and will not without the prior written consent of Parent,
during the period any securities are being offered for the account of the
Shareholder under the Registration Statement filed by Parent including any
amendments thereto, directly or indirectly, purchase, bid for or induce (or
attempt to induce) any other person to purchase any Parent Common Shares or
other securities convertible into Parent Common Shares unless such action by the
Shareholder is specifically permitted under any of the exemptions set forth in
Regulation M, and the Shareholder has not and will not pay or offer to pay any
person any compensation for soliciting purchases of Parent Common Shares except
for ordinary brokerage commissions to be paid to any broker or dealer effecting
the sale of securities being offered for its account under the Registration
Statement.
(2) Until all securities being offered for its account under the
Registration Statement are sold, the Shareholder will not disseminate any
information concerning Parent other than through the most recent Prospectus
included in the most recent Registration Statement filed with the Securities and
Exchange Commission. The Shareholder is aware of its duty to deliver a
Prospectus in connection with each sale by it of Parent Common Shares under the
Registration Statement. The Shareholder will inform any broker or dealer
requested by the Shareholder to effect the sale of any securities being offered
for its account under the Registration Statement, that such securities are part
of a distribution of Parent's securities which is covered by that Prospectus,
and that such broker or dealer may be subject to the provisions of Regulation M
during the period the Shareholder sells or offers to sell such securities. In
addition, the Shareholder will furnish any such broker or dealer with such
number of copies of the Prospectus as such broker or dealer may reasonably
require.
(3) The Shareholder will not make any sales other than within the
conditions set forth herein and will notify Parent upon the completion of any
and all sales of its securities covered by the Registration Statement.
(4) The Shareholder has received a copy of the Registration Statement and
has reviewed the Registration Statement and will review any amendments thereto
promptly after receipt thereof and agrees to inform Parent of any material
facts, trends, or pending or existing conditions known to the Shareholder that
relate to the Shareholder and his distribution of Parent Common Shares and not
fully disclosed in the Registration Statement or any such amendments which would
adversely affect the business of Parent.
-3-
The above information is supplied by the Shareholder, and the Shareholder
understands that such information has been furnished specifically for use in a
Registration Statement and may be submitted by Parent to the Securities and
Exchange Commission and the NASD. The Shareholder will immediately notify
Parent of any changes in the above information from the date of signature until
the conclusion of the offering of securities to be made under the Registration
Statement.
SHAREHOLDER
___________________________________
-4-
EXHIBIT B
AFFILIATE AGREEMENT
This AFFILIATE AGREEMENT ("Agreement") dated as of December 23, 1998, is
entered into between Genesys Telecommunications Laboratories, Inc., a California
corporation ("Parent") and the undersigned affiliate ("Affiliate") of Plato
---------
Software Corporation, a Delaware corporation (the "Company").
-------
WHEREAS, Parent and the Company have entered into an Agreement and Plan of
Reorganization dated December 9, 1998 ("Merger Agreement") pursuant to which the
----------------
Company will merge with and into a subsidiary of Parent ("Merger Sub"), and the
----------
Company will become a subsidiary of Parent (the "Merger") (capitalized terms not
------
otherwise defined herein shall have the meanings ascribed to them in the Merger
Agreement);
WHEREAS, pursuant to the Merger, at the Effective Time outstanding shares
of Company Common Stock, including all shares owned by Affiliate, will be
converted into the right to receive Parent Common Shares;
WHEREAS, it is intended that the Merger will constitute a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986 as
amended (the "Code"); and
----
WHEREAS, the execution and delivery of this Agreement by Affiliate is a
material inducement to Parent to enter into the Merger Agreement; and
WHEREAS, Affiliate has been advised that Affiliate may be deemed to be an
"affiliate" of Company, as the term "affiliate" is used (i) for purposes of
paragraphs (c) and (d) of Rule 145 of the Rules and Regulations (the "Rules and
---------
Regulations") of the Securities and Exchange Commission (the "Commission").
----------- ----------
NOW, THEREFORE, intending to be legally bound, the parties hereby agree
as follows:
1. Acknowledgments by Affiliate. Affiliate acknowledges and
----------------------------
understands that the representations, warranties and covenants by Affiliate set
forth herein will be relied upon by Parent, the Company, and their respective
"affiliates", counsel and accountants, and that substantial losses and damages
may be incurred by these persons if Affiliate's representations, warranties or
covenants are not true when given or are breached by Affiliate. Affiliate has
carefully read this Agreement and the Merger Agreement and has had the
opportunity to discuss the requirements of this Agreement with his professional
advisors who are qualified to advise him with regard to such matters.
2. Compliance with the Securities Act.
----------------------------------
(a) Affiliate has been advised that (i) the issuance of shares of
Parent Common Stock ("Parent Common Shares") in connection with the Merger
--------------------
will be effected pursuant to a private placement exemption from the
registration requirements of the Securities Act of 1933 as amended (the
"Securities Act") and as such will be deemed "restricted securities" within
--------------
the meaning of Rule 144 promulgated thereunder and resale of such shares will
be subject to certain restrictions as set forth in Rule 144 and 145 of the
Securities Act unless otherwise transferred pursuant to an effective
registration statement under the Securities Act or an appropriate exemption
from registration, (ii) Affiliate may be
deemed to be an affiliate of Company, (iii) no sale, transfer or other
disposition by Affiliate of any Parent Common Shares received by Affiliate will
be registered under the Securities Act, except as provided in that certain
Shareholder Agreement entered into by and among Parent, Affiliate and certain
other shareholders of the Company. Affiliate accordingly agrees not to sell,
transfer or otherwise dispose of any Parent Common Shares issued to Affiliate in
the Merger unless (i) such sale, transfer or other disposition is made in
conformity with the requirements of Rule 144 and Rule 145(d) promulgated under
the Securities Act, (ii) Affiliate delivers to Parent a written opinion of
counsel, reasonably acceptable to Parent in form and substance, that such sale,
transfer or other disposition is otherwise exempt from registration under the
Securities Act, or (iii) such shares are registered under the Securities Act.
(b) Parent will give stop transfer instructions to its transfer
agent with respect to any Parent Common Shares received by Affiliate pursuant to
the Merger and there will be placed on the certificates representing such Parent
Common Shares, or any substitutions therefor, a legend stating in substance:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Securities Act")
and may not be offered, sold or pledged, transferred or otherwise
disposed of except (1) pursuant to an effective registration statement
under the Securities Act, (2) pursuant to Rule 144, or (3) pursuant to
a written opinion of counsel, reasonably acceptable to this
corporation in form and substance, that such transfer is exempt from
registration under the Securities Act."
The legend set forth above shall be removed (by delivery of a substitute
certificate without such legend) and Parent shall so instruct its transfer
agent, if Affiliate delivers to Parent satisfactory written evidence that (i)
the shares have been sold in compliance with Rule 144 (in which case, the
substitute certificate will be issued in the name of the transferee), or (ii)
any of the other conditions specified in Section 2(a) hereof have been
satisfied.
3. Representations and Warranties of Affiliate.
-------------------------------------------
(a) Affiliate has full power and authority to execute this
Agreement, to make the representations and warranties herein contained and to
perform Affiliate's obligations hereunder.
(b) Affiliate is the beneficial owner of the shares of Company
Common Stock (including any shares issuable upon exercise of granted options)
set forth on page 3 below.
4. Miscellaneous.
-------------
(a) For the convenience of the parties hereto, this Agreement may
be executed in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same document.
(b) This Agreement shall be enforceable by, and shall inure to the
benefit of and be binding upon, the parties hereto and their respective
successors and assigns. As used herein, the term "successors and assigns" shall
mean, where the context so permits, heirs, executors, administrators, trustees
and successor trustees, and personal and other representatives.
-2-
(c) This Agreement shall be governed by and construed, interpreted
and enforced in accordance with the internal laws of the State of California as
they apply to contracts entered into and wholly to be performed within such
state by residents thereof.
(d) If a court of competent jurisdiction determines that any
provision of this Agreement is not enforceable or enforceable only if limited in
time or scope, this Agreement shall continue in full force and effect with such
provision stricken or so limited.
(e) Counsel to the parties and the independent accountants of
Parent and the Company shall be entitled to rely upon this Agreement as
appropriate.
(f) This Agreement shall not be modified or amended, or any right
hereunder waived or any obligation excused, except by a written agreement
signed by both parties.
(g) This Affiliate Agreement shall be terminated and of no further
force and effect upon termination of the Merger Agreement pursuant to its terms.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
set forth on the first page of this Agreement.
GENESYS TELECOMMUNICATIONS
LABORATORIES, INC.
By:
---------------------------------------
Title:
------------------------------------
AFFILIATE
------------------------------------------
Name:
Company shares beneficially owned:
shares of Common Stock
----------------
-3-
SCHEDULE 2.2
PLATO SOFTWARE CORPORATION
CAPITALIZATION
OPTIONS TO TOTAL % OF FULLY NO. OF SHARES
COMMON PURCHASE FULLY-DILUTED DILUTED GENESYS VESTED AT TO
SHARE/OPTION HOLDER STOCK COMMON STOCK SHARES SHARES* SHARES 12/15/1998* ESCROW
------------------- --------- ------------ ------------- ---------- -------- ----------- ------
DAS Trust UTA 9-24-98
(▇. ▇▇▇▇▇▇, trustee) (▇▇▇▇▇▇) 1,600,000 1,600,000 16.00% 40,000 40,000 8000
EIS Trust UTA 9-24-98
(▇. ▇▇▇▇▇▇, trustee) (Emilie) 1,600,000 1,600,000 16.00% 40,000 40,000 8000
Nour-Omid, Samson & ▇▇▇▇▇▇▇ 1,600,000 1,600,000 16.00% 40,000 40,000 ▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇-▇▇-▇▇
(▇. ▇▇▇▇▇▇, trustee) (▇▇▇▇▇) 3,120,000 3,120,000 31.20% 78,000 78,000 15600
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 80,000 80,000 0.80% 2,000 2,000 400
▇▇▇ ▇▇▇▇▇▇ 50,000 50,000 0.50% 1,250 1,250 250
▇▇▇▇▇ ▇▇▇▇▇▇ 50,000 50,000 0.50% 1,250 1,250 250
▇▇▇▇ Rosenchein (1) 900,000 900,000 9.00% 22,500 10,350
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (2) 500,000 500,000 5.00% 12,500 2,500
WS Investment Company 98B (3) 200,000 200,000 2.00% 5,000 5,000
▇▇▇▇ ▇▇▇▇▇▇ (4) 180,000 180,000 1.80% 4,500 0
▇▇▇▇▇ ▇▇▇▇▇ (4) 35,000 35,000 0.35% 875 0
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (4) 20,000 20,000 0.20% 500 0
▇▇▇▇▇ ▇▇▇▇▇▇▇ (4) 20,000 20,000 0.20% 500 0
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (4) 15,000 15,000 0.15% 375 0
▇▇▇ ▇▇▇▇▇▇ (4) 15,000 15,000 0.15% 375 0
▇▇▇▇▇ ▇▇▇▇▇▇▇ (4) 10,000 10,000 0.10% 250 0
Ido Carmel (4) 5,000 5,000 0.05% 125 0
TOTALS 8,100,000 1,900,000 10,000,000 100.00% 250,000 220,350 40,500
------------------------- --------- --------- ---------- ------- ------- ------- ------
*Assuming closing of transaction with Genesys
1) 20% vested up front. Balance vests monthly over four years. 20% vests upon
a change in control.
2) 1/4 of the shares vest on the one year anniversary. 1/36th of the balance
of the shares vests each month thereafter. 20% vests on a change in control.
3) 100% vests upon a change in control.
4) 1/4 of the shares vest on the one year anniversary. 1/36th of the balance
of the shares vests each month thereafter.
SCHEDULE 2.5
PLATO SOFTWARE CORPORATION
Unaudited, Non-GAAP Balance Sheet
11/30/98
ASSETS LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------------ --------------------------------------------------
Liabilities:
Cash: $11,950 Consulting fees payable $35,700
Property, plant, equipment, Expense reimbursements payable $10,000
intangibles and goodwill: $250,000
Loans repayable to insiders $350,000
Legal fees payable $30,000
Taxes payable $25,000
Insurance premiums payable $15,000
Utilities due 11/30 $2,000
Internet due 11/30 $2,500
==========
TOTAL LIABILITIES: $470,200
=========
TOTAL ASSETS: $261,950 SHAREHOLDERS' EQUITY:
------------------------------------------
Paid in capital*: $0
Accumulated deficit: ($208,250)
TOTAL LIABILITIES AND ==========
SHAREHOLDERS' EQUITY: $261,950
--------------------------------------------------
*Paid in capital to date is nominal. Balance sheet to be revised based on proper
amount for paid in capital