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EXHIBIT 2.01
EXCHANGE AGREEMENT
BETWEEN
INTUIT INC.
AND
KABUSHIKI KAISHA MILKYWAY AND ITS STOCKHOLDERS
DECEMBER 26, 1995
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EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT (this "Agreement") is entered into as of
December 26, 1995, by and among Intuit Inc., a Delaware corporation ("Intuit"),
Kabushiki Kaisha Milkyway, a corporation organized and existing under the laws
of Japan ("Milkyway"), and the stockholders of Milkyway listed on Exhibit A
attached hereto (each individually a "Stockholder" and collectively the
"Stockholders").
RECITALS
A. Intuit is engaged in the business of designing, publishing,
distributing and providing financial software and related services. Milkyway is
engaged in the business of publishing and distributing packaged accounting,
financial and administrative software and related services for businesses.
B. The Boards of Directors of Intuit and Milkyway and the Stockholders
believe that the products and services of both companies are complementary, that
Milkyway will benefit from Intuit's stronger presence in the Windows market,
personal finance market and the electronic financial services market and that
Intuit will benefit by adding Milkyway's product line, technology, brand name
and distribution channels, and therefore have determined that it is in the best
interests of both companies that Intuit acquire all of the outstanding Common
Stock of Milkyway.
C. The parties intend that, subject to the terms and conditions
hereinafter set forth, Intuit will acquire 100% of the outstanding capital stock
of Milkyway from the Stockholders pursuant to the terms and conditions set forth
herein in exchange for shares of Intuit Common Stock.
D. The Exchange is intended to be treated as (i) a "qualified stock
purchase" described in Section 338 of the Code (as defined below), and (ii) a
"pooling of interests" for accounting purposes.
NOW, THEREFORE, the parties hereto agree as follows:
1. DEFINITIONS
1.1 "Balance Sheet Date" is defined in Section 3.8.
1.2 "Closing" is defined in Section 7.1.
1.3 "Closing Date" is defined in Section 7.1.
1.4 "Code" shall mean the Internal Revenue Code of 1986, as amended.
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1.5 "Confidentiality Agreement" means the Agreement for Use and
Non-Disclosure of Proprietary Information among Milkyway, Intuit, certain
Stockholders and The Kamakura Corporation dated December 13, 1995, and any
amendments thereto.
1.6 "Employee Plans" shall mean all pension, retirement,
disability, medical, dental or other health plans, life insurance or other death
benefit plans, profit sharing, deferred compensation agreements, stock, option,
bonus or other incentive plans, vacation, sick, holiday or other paid leave
plans, severance plans or other similar employee benefit plans maintained by
Milkyway.
1.7 "Employment Agreements" shall mean the agreements to be entered
into between Milkyway and each of Tohru Morii, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
and Mitsuya Yahagi in the form attached to this Agreement as Exhibit B-1, and
the agreement to be entered into between Milkyway and Masashi Miki in the form
of Exhibit B-2.
1.8 "Escrow Agreement" shall mean the agreement to be entered into
among Intuit, Milkyway and the Stockholders substantially in the form attached
to this Agreement as Exhibit C.
1.9 "Escrow Period" shall mean the period beginning with the
Closing Date and continuing until the issuance by Intuit's of its release of its
audited financial results for the fiscal year ending July 31, 1996.
1.10 "Escrow Shares" shall mean five percent (5%) of the Exchange
Shares, as set forth on Exhibit A.
1.11 The "Exchange" shall mean the exchange of the Milkyway Stock
for the Exchange Shares contemplated by Section 2.1 below.
1.12 "Exchange Shares" is defined in Section 2.1.
1.13 "Material Agreement" means an agreement described in Section
3.12.
1.14 "Major Stockholder" means each of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Masashi Miki
and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
1.15 "Intuit Affiliates Agreement" is defined in Section 6.5.
1.16 "Intuit Ancillary Agreements" shall mean the Escrow Agreement,
the Intuit Affiliates Agreements, the Nakamura Agreement and the Yoshii
Agreement.
1.17 "Intuit Common Stock" shall mean shares of Intuit's Common
Stock, $.01 par value per share.
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1.18 "Intuit Options" shall mean options to purchase Intuit Common
Stock issued pursuant to Intuit's 1993 Equity Incentive Plan.
1.19 "Milkyway Ancillary Agreements" shall mean the Escrow
Agreement, the Milkyway Affiliates Agreements, the Employment Agreements, the
Yoshii Agreement and the Nakamura Agreement.
1.20 "Milkyway Certificates" shall mean the certificates for the
Stockholders' shares of Milkyway Stock.
1.21 "Milkyway Intellectual Property" is defined in Section 3.13.
1.22 "Milkyway Stock" shall mean the 80,000 shares of issued and
outstanding Common Stock of Milkyway.
1.23 "Nakamura Agreement" shall mean the Non-Competition Agreement
by and among Intuit, Milkyway and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, dated of even date
herewith, in the form attached hereto as Exhibit D.
1.24 "Securities Act" shall mean the U.S. Securities Act of 1933, as
amended.
1.25 "SEC" shall mean the U.S. Securities and Exchange Commission.
1.26 "Stockholders Ancillary Agreements" shall mean the Escrow
Agreement, the Milkyway Affiliates Agreements, the Employment Agreements, the
Yoshii Agreement and the Nakamura Agreement.
1.27 "U.S. Person" is defined in Section 3.24.8.
1.28 "Yoshii Agreement" shall mean the Non-Competition Agreement by
and among Intuit, Milkyway and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, dated of even date herewith, in
the form attached hereto as Exhibit E.
2. THE EXCHANGE
2.1 The Exchange. Subject to the terms and conditions of this
Agreement, at the Closing, the Stockholders shall transfer to Intuit all of
their shares of Milkyway Stock, the amounts of which are set forth beside their
respective names on Exhibit A attached hereto, and in exchange therefor Intuit
shall issue to each Stockholder the number of Shares of Intuit Common Stock set
forth opposite each Stockholder's name on Exhibit A, for a total of 650,000
shares of Intuit Common Stock (the "Exchange Shares").
2.2 No Adjustments. There shall be no adjustments made to the number
of Exchange Shares regardless of any fluctuation of the market price per share
of Intuit Common
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Stock as quoted on the Nasdaq National Market except in connection with any
stock split, reverse stock split, stock dividend, recapitalization, split-up,
combination, reorganization or reclassification of Intuit Common Stock.
2.3 Escrow Agreement. Pursuant to an Escrow Agreement to be entered
into on or before the Closing Date, Intuit will withhold the Escrow Shares.
Intuit will deposit in an escrow pursuant to the Escrow Agreement (the "Escrow")
the stock certificates representing the Escrow Shares and related stock transfer
powers. The Escrow Shares and such stock transfer powers, and any other property
with respect thereto delivered to the Escrow Agent as provided in the Escrow
Agreement, will be held as collateral to secure the indemnification obligations
of the Stockholders under Section 11.2 hereof in accordance with the Escrow
Agreement.
2.4 Securities Law Issues. Intuit shall issue the Exchange Shares
pursuant to an exemption from registration under Regulation S ("Regulation S")
promulgated under the Securities Act. The Exchange Shares will not be subject to
any restriction on transferability other than compliance with the express
requirements of Regulation S specified in Section 3.24, Section 5.14, Section
7.3 and restrictions arising under the Milkyway Affiliates Agreement.
2.5 Qualified Stock Purchase. The parties intend that the Exchange
be treated as a "qualified stock purchase" described in Section 338 of the Code.
2.6 Pooling of Interests. The parties intend that the Exchange be
treated as a "pooling of interests" for accounting purposes. At the Closing,
Intuit shall have received a letter dated as of the Closing Date, from Ernst &
Young LLP, regarding such firm's concurrence with Intuit management's and
Milkyway management's conclusions as to the appropriateness of pooling of
interests accounting for the merger under Accounting Principles Board Opinion
No. 16 if the Exchange is closed and consummated in accordance with this
Agreement.
3. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS AND MILKYWAY
Each of the Stockholders and Milkyway jointly and severally hereby
represents and warrants to Intuit that, except as set forth in items 3.1 through
3.24 (referred to as "Items" below) in the Milkyway Disclosure Schedule,
attached as Exhibit N hereto:
3.1 Title. The Stockholder owns and holds good and valid title to
the Milkyway Stock being exchanged hereunder by such Stockholder, free and clear
of any liens, security interests, restrictions, options or encumbrances. The
Stockholder's shares of Milkyway Stock are not subject to any right of first
refusal or other restriction, no other person has any interest or right in such
shares of Milkyway Stock, and such shares of Milkyway Stock are being
transferred to Intuit in compliance with all applicable Japanese securities
laws. The Stockholder has no interest or right in Milkyway other than such
shares of Milkyway Stock.
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3.2 Organization. Milkyway is a corporation duly organized and
validly existing under the laws of Japan, has the corporate power and authority
to own, operate and lease its properties and to carry on its business as now
conducted. Milkyway does not own or lease any real property, has no employees
and does not maintain a place of business in any country other than Japan.
3.3 Power, Authorization and Validity.
3.3.1 The Stockholder has the right, power, legal capacity and
authority to enter into and perform its obligations under this Agreement and the
Stockholders Ancillary Agreements. No filing, authorization or approval,
governmental or otherwise, is necessary to enable the Stockholder to enter into,
and to perform its obligations under, this Agreement and the Stockholders
Ancillary Agreements executed by the Stockholder. This Agreement and the
Stockholders Ancillary Agreements are, or when executed by the Stockholder will
be, valid and binding obligations of the Stockholder enforceable in accordance
with their respective terms, except as to the effect, if any, of (a) applicable
bankruptcy and other similar laws affecting the rights of creditors generally
and (b) rules of law governing specific performance, injunctive relief and other
equitable remedies; provided, however, that the Stockholders Ancillary
Agreements (other than the Milkyway Affiliates Agreements) will not be effective
until the Closing.
3.3.2 Milkyway has the corporate right, power, legal capacity
and authority to enter into and perform its obligations under this Agreement and
the Milkyway Ancillary Agreements. This Agreement, the Milkyway Ancillary
Agreements and the transfer and exchange of Milkyway Stock pursuant to Section
2.1 have been duly and validly approved by the Milkyway Board of Directors and
each of the Stockholders, as required by applicable law. No filing,
authorization or approval, governmental or otherwise, is necessary to enable
Milkyway to enter into, and to perform its obligations under, this Agreement and
the Milkyway Ancillary Agreements, except for the prior notification under the
Japanese Foreign Exchange Control Regulations. This Agreement and the Milkyway
Ancillary Agreements are, or when executed and delivered by Milkyway and the
other parties thereto will be, valid and binding obligations of Milkyway
enforceable against Milkyway and the Milkyway Affiliates (as applicable) in
accordance with their respective terms, except as to the effect, if any, of (a)
applicable bankruptcy and other similar laws affecting the rights of creditors
generally and (b) rules of law governing specific performance, injunctive relief
and other equitable remedies; provided, however, that the Milkyway Ancillary
Agreements (other than the Milkyway Affiliates Agreements) will not be effective
until the Closing.
3.4 Capitalization.
(a) Authorized/Outstanding Capital Stock. The authorized
capital stock of Milkyway consists of Eighty Thousand (80,000) shares of
Milkyway Common Stock, with par value of 500 yen, of which Eighty Thousand
(80,000) shares are issued and outstanding as of this date and as of the Closing
Date, and all of which issued and outstanding shares are held of record and
owned by ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, Masashi Miki, Sadao Miki, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ in the respective amounts set forth on Exhibit
A.
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Milkyway has not authorized or issued any shares of Preferred Stock. All issued
and outstanding shares of Milkyway Common Stock have been duly authorized and
validly issued, are fully paid and nonassessable, are not subject to any right
of rescission and have been offered, issued, sold and delivered by Milkyway in
compliance with all registration or qualification requirements (or applicable
exemptions therefrom) of applicable securities laws.
(b) Options/Rights. There are no rights, options, warrants,
conversion privileges or preemptive or other rights or agreements outstanding to
purchase or otherwise acquire any of Milkyway's authorized but unissued capital
stock; there are no options, warrants, conversion privileges or preemptive or
other rights or agreements to which Milkyway is a party involving the purchase
or other acquisition of any shares of Milkyway capital stock; there is no
liability for dividends accrued but unpaid; and there are no voting agreements,
registration rights, rights of first refusal or other restrictions applicable to
any of Milkyway's outstanding securities.
3.5 Subsidiaries; Not a Subsidiary. Except for Milkyway Hanbai
Kabushiki Kaisha ("Milkyway Hanbai"), which is a wholly-owned subsidiary of
Milkyway, Milkyway does not have any subsidiaries or any equity interest, direct
or indirect, in any corporation, partnership, limited liability company, joint
venture or other business entity. Milkyway has never been a subsidiary of any
corporation, partnership, limited liability company, joint venture or other
business entity. Milkyway Hanbai currently is not engaged in any business, does
not have any outstanding liabilities, and, to the best knowledge of each
Stockholder, there are no facts indicating that Milkyway Hanbai has any
outstanding or potential liability of any kind.
3.6 No Violation of Existing Agreements. Neither the execution and
delivery of this Agreement or any Milkyway Ancillary Agreement, nor the
consummation of the transactions provided for herein or therein, will conflict
with, or (with or without notice or lapse of time, or both) result in a
termination, breach, impairment or violation of, (a) any provision of the
Articles of Incorporation or rules and regulations of Milkyway, as currently in
effect, (b) any Material Agreement or (c) any national, prefecture, local or
foreign judgment, writ, decree, order, statute, rule or regulation applicable to
and that would have a material adverse effect on Milkyway or its assets or
properties. The consummation of the Exchange will not require the consent of any
third party and will not have a material adverse effect upon any such rights,
licenses, franchises, leases or agreements pursuant to the terms of the Material
Agreements other than as set forth in Item 3.6.
3.7 Litigation. Except as set forth in Item 3.7, there is no action,
proceeding or investigation pending or, to Milkyway's knowledge, threatened
against Milkyway before any court or administrative agency that, if determined
adversely to Milkyway, may reasonably be expected to have a material adverse
effect on the present or future operations or financial condition of Milkyway or
in which the adverse party or parties seek to recover in excess of 5,000,000 yen
from Milkyway. Except as set forth on Item 3.7 and except for rights under this
Agreement and the Ancillary Agreements, there is no substantial basis for any
person, firm, corporation or entity to assert a claim against Milkyway or the
Stockholders (or Intuit after the Closing) based upon: (a) ownership or rights
to ownership of any shares of Milkyway Stock or
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(b) any rights as a Milkyway securities holder, including, without limitation,
any option or other right to acquire any Milkyway securities, any preemptive
rights or any rights to notice or to vote.
3.8 Milkyway Financial Statements. Milkyway has delivered to Intuit
Milkyway's unaudited balance sheet as of November 30, 1995 (the "Balance Sheet
Date"), Milkyway's unaudited income statement for the period from January 1,
1995 through November 30, 1995, Milkyway's unaudited balance sheets as of and
Milkyway's unaudited income statements for the fiscal years ended December 31,
1994, 1993, and 1992 (collectively, the "Milkyway Financial Statements"). The
Milkyway Financial Statements, in all material respects, (a) are in accordance
with the books and records of Milkyway, (b) fairly and accurately represent the
financial condition of Milkyway at the respective dates specified therein and
the results of operations for the respective periods specified therein in
conformity with all applicable laws subject to adjustments required with respect
to items (i) through (iv) below, and (c) except as set forth on Item 3.8, are in
accordance with the Japanese Commercial Code except for omission of required
footnotes. Except as set forth in Item 3.8, Milkyway has no material debt,
liability or obligation of any nature, whether accrued, absolute, contingent or
otherwise, and whether due or to become due, that is not reflected, reserved
against or disclosed in the Milkyway Financial Statements, except for (i)
employees' retirement benefit liability, (ii) directors' retirement benefit
liability, (iii) allowance for doubtful accounts, (iv) maintenance contract
obligations and (v) those that may have been incurred after the Balance Sheet
Date in the ordinary course of its business. Item 3.8 includes a brief
description (including size in yen) of items (i) through (iv) in the preceding
sentence.
3.9 Taxes. Except as set forth in Item 3.9, Milkyway has filed all
applicable tax and information returns required to be filed, has paid all taxes
required to be paid in respect of all periods for which returns have been filed,
has made all necessary estimated tax payments, and has no material liability for
taxes in excess of the amount so paid. True, correct and complete copies of all
such tax and information returns filed since fiscal year 1988 have been provided
or made available by Milkyway to Intuit. Milkyway is not delinquent in the
payment of any tax or in the filing of any tax returns, and no deficiencies for
any tax have been threatened, claimed, proposed or assessed which have not been
settled, paid or adequately provided for on Milkyway's financial statements,
books and records. Except as set forth in Item 3.9, no tax return of Milkyway
has ever been inspected by any taxing agency or authority. For the purposes of
this Agreement, the terms "tax" and "taxes" include all applicable Japanese and
foreign income, gains, franchise, excise, securities, property, sales, use,
employment, license, payroll, occupation, recording, value added or transfer
taxes, governmental charges, import, export and other fees, levies or
assessments (whether payable directly or by withholding), and, with respect to
such taxes, any estimated tax, interest and penalties or additions to tax and
interest on such penalties and additions to tax.
3.10 Title to Properties. Milkyway has good and marketable title to
all of its assets as shown on the balance sheet as of the Balance Sheet Date
included in the Milkyway Financial Statements, free and clear of all liens,
charges or encumbrances (other than for taxes not yet due and payable and
Permitted Liens as defined below), other than such material assets, set forth on
Item 3.10, as were sold by Milkyway in the ordinary course of business since the
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Balance Sheet Date or which are subject to capitalized leases. "Permitted Liens"
means any lien, mortgage, encumbrance or restriction which is reflected in the
Milkyway Financial Statements and which does not materially detract from the
value or materially interfere with the use, as currently utilized, of the
properties subject thereto or affected thereby or otherwise materially impair
the business operations being conducted thereon. There are no financing
statements or similar encumbrances of record with any governmental
administrative or judicial entity, naming Milkyway as debtor, except as set
forth in Item 3.10. The machinery and equipment included in such assets are in
all material respects in good condition and repair, normal wear and tear
excepted, and all leases of real or personal property to which Milkyway is a
party are fully effective and afford Milkyway peaceful and undisturbed
possession of the subject matter of the lease. To the best knowledge of each
Stockholder and Milkyway, Milkyway is not in violation of any material zoning,
building, safety or environmental ordinance, regulation or requirement or other
law or regulation applicable to the operation of owned or leased properties, and
Milkyway has not received any notice of such violation with which it has not
complied or had waived.
3.11 Absence of Certain Changes. Since the Balance Sheet Date,
except as set forth in Item 3.11, there has not been with respect to Milkyway:
(a) any change in the financial condition, properties, assets,
liabilities, business, results of operations or prospects of Milkyway, which
change by itself or in conjunction with all other such changes, whether or not
arising in the ordinary course of business, has had or can reasonably be
expected to have a material adverse effect on Milkyway or its ability to conduct
its operations as currently proposed by, and discussed between, Milkyway and
Intuit;
(b) any contingent liability incurred by Milkyway as guarantor
or surety with respect to the obligations of others;
(c) any material mortgage, encumbrance or lien placed on any of
the properties of Milkyway;
(d) any new Material Agreement;
(e) any purchase or sale or other disposition, or any agreement
or other arrangement for the purchase, sale or other disposition, of any of the
properties or assets of Milkyway other than in the ordinary course of business
or in nonmaterial amounts;
(f) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the properties, assets or business
of Milkyway;
(g) any declaration, setting aside or payment of any dividend
on, or the making of any other distribution in respect of, the capital stock of
Milkyway, any split, stock dividend, combination or recapitalization of the
capital stock of Milkyway or any direct or indirect redemption, purchase or
other acquisition by Milkyway of the capital stock of Milkyway;
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(h) any material labor dispute or claim of material unfair
labor practices, any change in the compensation payable or to become payable to
any of Milkyway's officers, employees or agents earning compensation at an
anticipated annual rate in excess of 5,000,000 yen (including any bonus payment
or arrangement made to or with any of such officers, employees or agents); or
any change in the compensation payable or to become payable to any of Milkyway's
other officers, employees or agents other than normal annual raises in
accordance with past practice or any bonus payment or arrangement made to or
with any of such officers, employees or agents other than normal bonuses or
compensation increases noted on Item 3.11(h) hereof or other arrangements made
in accordance with past practices;
(i) any planned departure of which Milkyway is aware by any
member of the management or key personnel of Milkyway (the management and other
key personnel of Milkyway are listed on Item 3.11(i) hereof);
(j) any payment or discharge of a material lien or liability
thereof, which lien or liability was not either (i) shown on the balance sheet
as of the Balance Sheet Date included in the Milkyway Financial Statements or
(ii) incurred in the ordinary course of business after the Balance Sheet Date;
or
(k) any obligation or material liability incurred by Milkyway
to any of its officers, directors or shareholders, or any loans or advances made
to any of its officers, directors, shareholders or affiliates, except normal
compensation and expense allowances payable to officers.
3.12 Agreements and Commitments. Except as set forth in Item 3.12
delivered by Milkyway to Intuit herewith, Milkyway is not a party or subject to
any oral or written executory agreement, obligation or commitment that is
described below (collectively, the "Material Agreements"):
(a) Any contract, commitment, letter agreement, quotation or
purchase order providing for payments by or to Milkyway in an aggregate amount
of (i) 10,000,000 yen or more in the ordinary course of business or (ii)
5,000,000 yen or more not in the ordinary course of business;
(b) Any license agreement as licensor or licensee (except for
any nonexclusive software license granted by Milkyway to end-user customers
where the form of the license, excluding standard immaterial deviations, has
been provided to Intuit's counsel);
(c) Any other agreement by Milkyway to encumber, transfer or
sell rights in or with respect to any Milkyway Intellectual Property;
(d) Any agreement for the sale, lease or encumbrance of real or
personal property involving more than 1,000,000 yen per year;
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(e) Any dealer, distributor, sales representative, original
equipment manufacturer, value added remarketer or other agreement for the
distribution of Milkyway's products;
(f) Any franchise agreement or financing statement;
(g) Any stock redemption or purchase agreement;
(h) Any joint venture agreement, merger agreement or agreement
to transfer or purchase all or substantially all of Milkyway's or a third
party's business or assets, or any other agreement that involves a sharing of
profits with, or lease or entrustment of business to, other persons;
(i) Any instrument evidencing indebtedness for borrowed money
by way of direct loan, sale of debt securities, purchase money obligation,
conditional sale, guarantee or otherwise, except for trade indebtedness or any
advance to any employee of Milkyway incurred or made in the ordinary course of
business, and except as disclosed in the Milkyway Financial Statements;
(j) Any contract containing covenants purporting to limit
Milkyway's freedom to compete in any line of business in any geographic area;
(k) Any other material agreement by which Milkyway has assigned
any rights under Milkyway Intellectual Property (as defined below) to any other
party, has waived any rights to prevent infringing use of Milkyway Intellectual
Property, or any other party has assigned any intellectual property rights of a
third party to Milkyway; or
(l) Any other agreement by which Milkyway, or another party to
a legal proceeding (including infringement claims) involving Milkyway, has
waived its rights in the legal proceeding.
Each Material Agreement listed in Item 3.12 is valid and in
full force and effect in all material respects, and except as expressly noted, a
true and complete copy of which has been delivered to Intuit or Intuit's
counsel. Except as noted on Item 3.12, neither Milkyway nor, to the knowledge of
Milkyway and the Stockholders, any other party is in breach of or default under
any material term of any Material Agreement. The Stockholders and Milkyway are
not a party to any contract or arrangement that they reasonably expect will have
a material adverse effect on Milkyway's business or prospects.
3.13 Intellectual Property and Products. Milkyway owns all right,
title and interest in, or has the right to use, all worldwide industrial and
intellectual property rights, including, without limitation, patent
applications, patents, patent rights, trademark applications, trademarks,
service marks, trade names, service ▇▇▇▇ applications, trade dress, moral
rights, copyright applications, copyrights, licenses, inventions, trade secrets,
know-how, customer lists, proprietary processes and formulae, software source
and object code, algorithms, architecture, structure, display screens, layouts,
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development tools, all documentation and media constituting, describing or
relating to the above, without limitation, manuals, memoranda and records and
other intellectual property and proprietary rights used in or reasonably
necessary to the conduct of its business as presently conducted and the business
of the development, production, marketing, licensing and sale of commercial
products using such intellectual property and proprietary rights ("Milkyway
Intellectual Property"). All Milkyway Intellectual Property developed by
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Masashi Miki, ▇▇▇▇ ▇▇▇▇▇▇▇ and Milkyway's
employees was developed by such persons in the course of Milkyway's business and
not by them in their individual capacity and such individuals do not have any
interest in or rights to any Milkyway Intellectual Property. Milkyway has taken
all reasonable measures to protect all Milkyway Intellectual Property, and,
except as set forth on Item 3.13, Milkyway is not aware of any infringement of
any Milkyway Intellectual Property by any third party. Set forth on Item 3.13
delivered to Intuit herewith is a true and complete list of all copyright, mask
work, trademark and service ▇▇▇▇ registrations and applications and all patents
and patent applications for Milkyway Intellectual Property owned by Milkyway.
Milkyway is not aware of any material loss, cancellation, termination or
expiration of any such registration or patent except as set forth on Item 3.13.
The business of Milkyway as conducted as of the date hereof does not, and its
Published Products (as defined below) do not, and, to the best knowledge of the
Stockholders and Milkyway, the business of the development, production,
marketing, licensing and sale of Products Under Development (as defined below)
after the Closing Date will not cause Milkyway to, infringe or violate any of
the patents, trademarks, service marks, trade names, mask works, copyrights,
trade secrets, proprietary rights or other intellectual property of any other
person, and Milkyway has not received any written or oral claim or notice of
infringement or potential infringement of the intellectual property of any other
person which could be expected to have a material adverse effect on Milkyway's
business. Milkyway has the right to manufacture all of its Products (as defined
below and set forth on Item 3.13) and the right to use all of its Development
Tools (as defined below and set forth on Item 3.13), and to its knowledge, is
not using any confidential information or trade secrets of any former employer
of any past or present employees. Item 3.13 contains a complete list and brief
description of (a) all of the software products published and/or distributed by
Milkyway (the "Published Products") and all products under development or
consideration by Milkyway with a scheduled public availability date on or prior
to December 31, 1996 (the "Products Under Development," collectively with the
Published Products referred to as the "Products") and (b) all of the software
development tools used or intended to be used by Milkyway in the development of
any of the Products, except for any such tools that are generally available and
are used in their generally available form (such as standard compilers) (the
"Development Tools").
3.14 Compliance with Laws. Except as set forth in Item 3.14 and
except where the failure to comply would not have a material adverse effect on
the business, operations or financial conditions of Milkyway, Milkyway has
complied, or prior to the Closing Date will have complied, and is or will be at
the Closing Date in full compliance, in all respects material to Milkyway, with
all applicable laws, ordinances, regulations and rules, and all orders, writs,
injunctions, awards, judgments and decrees, applicable to Milkyway or to the
assets, properties and business of Milkyway, including, without limitation: (a)
all applicable securities laws and regulations, (b) all applicable national,
prefecture and local laws, ordinances and regulations, and all orders, writs,
injunctions, awards, judgments and decrees, pertaining to (i) the sale,
licensing, leasing, ownership or management of Milkyway's owned, leased or
licensed real or personal property, products or technical data, (ii)
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employment or employment practices, terms and conditions of employment, or wages
and hours or (iii) safety, health, fire prevention, environmental protection,
building standards, zoning or other similar matters, (c) the Japanese export
regulations or (d) all applicable foreign exchange control laws. Milkyway has
received all material permits and approvals from, and has made all material
filings with, third parties, including government agencies and authorities, that
are necessary to the conduct of its business as presently conducted.
3.15 Certain Transactions and Agreements. Except as set forth in
Item 3.15, no person who is a Stockholder, officer or director of Milkyway, or a
member of any Stockholder's, officer's or director's immediate family, has any
direct or indirect ownership interest in or any employment or consulting
agreement with any firm or corporation that competes with Milkyway or Intuit
(except with respect to any interest in less than 1% of the outstanding voting
shares of any corporation whose stock is publicly traded). Except as set forth
in Item 3.15, no person who is a Stockholder, officer or director of Milkyway,
or any member of any Stockholder's, officer's or director's immediate family, is
directly or indirectly interested in any material contract or informal
arrangement with Milkyway, except for compensation for services as an officer,
director or employee of Milkyway and except for the normal rights of a
shareholder. Except as set forth in Item 3.15, none of such Stockholders,
officers or directors or family members has any interest in any property, real
or personal, tangible or intangible, including, without limitation, inventions,
patents, copyrights, trademarks, trade names or trade secrets used in the
business of Milkyway, except for the normal rights of a shareholder.
3.16 Employees.
3.16.1 Except as set forth in Item 3.16.1, Milkyway has no
employment contract or material consulting agreement currently in effect (other
than agreements with the sole purpose of providing for the confidentiality of
proprietary information or assignment of inventions).
3.16.2 Milkyway (a) has never been and is not now subject to a
union organizing effort, (b) is not subject to any collective bargaining
agreement with respect to any of its employees, (c) is not subject to any other
contract, written or oral, with any trade or labor union, employees' association
or similar organization, and (d) has no material current labor dispute. Milkyway
has no knowledge that any of its key development employees and its key officers
(each of whom is listed on Item 3.16.2) intends to leave its employ.
3.16.3 Item 3.16.3 delivered by Milkyway to Intuit herewith
contains a list of all Employee Plans. Milkyway has delivered true and complete
copies or descriptions of all the Employee Plans to Intuit. Except as set forth
in Item 3.16.3, each of the Employee Plans, and its operation and
administration, is, in all material respects, in compliance with all applicable,
national, federal, prefecture, local and other governmental laws and ordinances,
orders, rules and regulations.
3.16.4 To Milkyway's knowledge, no employee of Milkyway is in
material violation of (a) any term of any employment contract, patent disclosure
agreement or
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noncompetition agreement or (b) any other contract or agreement, or any
restrictive covenant, relating to the right of any such employee to be employed
by Milkyway or to use trade secrets or proprietary information of others. To
Milkyway's knowledge, the mere fact of employment of any employee of Milkyway
does not subject Milkyway to any liability to any third party.
3.16.5 Except as set forth in Item 3.16.5, Milkyway is not a
party to any (a) agreement with any executive officer or other employee of
Milkyway (i) the benefits of which are contingent, or the terms of which are
materially altered, upon the occurrence of a transaction involving Milkyway in
the nature of any of the transactions contemplated by this Agreement, (ii)
providing any term of employment or compensation guarantee or (iii) providing
severance benefits or other benefits after the termination of employment of such
employee regardless of the reason for such termination of employment (provided
that Milkyway's taishoku-kin plan described in Item 3.16.5 is not considered a
severance plan), or (b) agreement or plan, including, without limitation, any
stock option plan, stock appreciation rights plan or stock purchase plan, any of
the benefits of which will be materially increased, or the vesting of benefits
of which will be materially accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the value of any of the benefits
of which will be calculated on the basis of any of the transactions contemplated
by this Agreement.
3.16.6 A list of all employees, officers and development
consultants of Milkyway and their current compensation and benefits as of
November 30, 1995 is set forth on Item 3.16.6.
3.16.7 All contributions due from Milkyway with respect to any
of the Employee Plans have been made or accrued on the Milkyway Financial
Statements, and no further contributions will be due or will have accrued
thereunder as of the Closing Date.
3.17 Corporate Documents. Milkyway has made available to Intuit for
examination all documents and information listed in Items 3.1 through 3.24 or
other exhibits called for by this Agreement which have been requested by
Intuit's legal counsel, including, without limitation, the following: (a) copies
of Milkyway's Articles of Incorporation as currently in effect; (b) Milkyway's
minute book containing all records of all proceedings, consents, actions and
meetings of Milkyway's directors and shareholders since January 1, 1993; (c)
Milkyway's stock ledger, journal and other records reflecting all stock
issuances and transfers; and (d) all permits, orders and consents issued by any
regulatory agency with respect to Milkyway, or any securities of Milkyway, and
all applications for such permits, orders and consents. Milkyway does not
possess records of director or shareholder actions prior to 1993. Milkyway has
no corporate documents other than its Articles of Incorporation.
3.18 No Brokers. Except as otherwise described in Item 3.18,
Milkyway and the Stockholders are not obligated for the payment of fees or
expenses of any investment banker, broker or finder in connection with the
origin, negotiation or execution of this Agreement or in connection with any
transaction provided for herein or therein.
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3.19 Disclosure. This Agreement, its exhibits and any of the
certificates or documents to be delivered by Milkyway to Intuit under this
Agreement, taken together, do not contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
contained herein and therein, in light of the circumstances under which such
statements were made, not misleading.
3.20 Information Supplied. None of the information supplied or to be
supplied in writing by Milkyway or the Stockholders to Intuit, including the
statements in this Section 3 (as qualified by the Disclosure Schedule), contains
or will contain any untrue statement of a material fact or omits or will omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading.
3.21 Books and Records. The books, records and accounts of Milkyway
(a) are in all material respects true and complete, (b) have been maintained in
accordance with reasonable business practices on a basis consistent with prior
years, (c) are stated in reasonable detail and accurately and fairly reflect the
transactions and dispositions of the assets of Milkyway and (d) accurately and
fairly reflect the basis for the Milkyway Financial Statements.
3.22 Insurance. Milkyway maintains fire and casualty, workers
compensation and general liability insurance as listed on Item 3.22.
3.23 Environmental Matters.
3.23.1 During the period that Milkyway has leased the premises
currently occupied by it and those premises occupied by it since the date of its
incorporation, Milkyway has not caused any and to its actual knowledge, there
have been no disposals, releases or threatened releases of hazardous materials
from or any presence thereof on any such premises that would have a material
adverse effect upon the business or financial statements of Milkyway. Milkyway
has no knowledge of any presence, disposals, releases or threatened releases of
hazardous materials on or from any of such premises, which may have occurred
prior to Milkyway having taken possession of any of such premises that would
have a material adverse effect upon the business or financial statements of
Milkyway.
3.23.2 To its knowledge, none of the premises currently leased
by Milkyway or any premises previously occupied by Milkyway is in material
violation of any national, prefecture or local law, ordinance, regulation or
order relating to industrial hygiene or to the environmental conditions in such
premises.
3.23.3 During the time that Milkyway has leased the premises
currently occupied by it or any premises previously occupied by Milkyway,
neither Milkyway nor, to Milkyway's knowledge, any third party, has used,
generated, manufactured or stored in such premises or transported to or from
such premises any hazardous materials that would have a material adverse effect
upon the business or financial statements of Milkyway.
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3.23.4 During the time that Milkyway has leased the premises
currently occupied by it or any premises previously occupied by Milkyway, there
has been no litigation, proceeding or administrative action brought or
threatened in writing against Milkyway, or any settlement reached by Milkyway
with, any party or parties alleging the presence, disposal, release or
threatened release of any hazardous materials on, from or under any of such
premises.
3.24 Securities Matters.
3.24.1 Each Stockholder, together with the Stockholder's
advisors, is fully aware that the Exchange Shares he or she will receive will be
received under an exemption from registration provided for in Regulation S, that
he or she will acquire the Exchange Shares without being offered or furnished
any offering literature or prospectus other than the Intuit Disclosure Package,
that this transaction has not been approved or reviewed by the SEC or by any
administrative agency charged with the administration of the securities law of
any state.
3.24.2 Each Stockholder, together with the Stockholder's
advisors, has such knowledge and experience in financial and business matters
that he or she is capable of evaluating the merits and risks of the Exchange,
the Exchange Shares and the transactions related thereto.
3.24.3 Each Stockholder confirms that he or she understands and
has fully considered for purposes of this investment the risks of this
investment and that (i) this investment is suitable only for an investor who is
able to bear the economic consequences of losing his or her entire investment,
(ii) the Exchange Shares are a speculative investment which involves a high
degree of risk of loss by Stockholder of his or her investment therein, and
(iii) for a period of not less than forty (40) days from the issuance of the
Exchange Shares, there are substantial restrictions on the transferability of
the Exchange Shares, and accordingly, it may not be possible for any Stockholder
to liquidate his or her investment in the case of emergency.
3.24.4 Each Stockholder confirms that he or she is able (i) to
bear the economic risk of this investment and (ii) to hold the Exchange Shares
for a period of time, not less than forty (40) days from the issuance of the
Exchange Shares.
3.24.5 Each Stockholder confirms that his or her
representatives and advisors, including The Kamakura Corporation, have been
given the opportunity to ask questions of, and to receive answers from, persons
acting on behalf of Milkyway and Intuit concerning the terms and conditions of
the Exchange and the business prospects of Milkyway and Intuit, and to obtain
any additional information, to the extent such persons possess such information
or can acquire it without unreasonable effort or expense and without breach of
confidentiality obligations, necessary to verify the accuracy of the information
set forth or incorporated by reference in the Intuit Disclosure Package.
3.24.6 Each Stockholder understands that the Exchange Shares
have not been registered under the Securities Act and he or she agrees that the
Exchange Shares may not be sold, transferred, or otherwise disposed of except
pursuant to an exemption from registration under the Securities Act, including
Regulation S.
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3.24.7 Each Stockholder understands the effect of the
limitations on disposition and of its representation that the Exchange Shares
will not be sold, transferred or otherwise disposed of except pursuant to an
exemption from registration under the Securities Act.
3.24.8 Each Stockholder is not a U.S. Person as defined in Rule
902(o) of Regulation S under the Securities Act. That rule defines a "U.S.
Person" to mean (i) any natural person resident in the United States; (ii) any
partnership or corporation organized or incorporated under the laws of the
United States; (iii) any estate of which any executor or administrator is a U.S.
person; (iv) any trust of which any trustee is a U.S. person; (v) any agency or
branch of a foreign entity located in the United States; (vi) any
nondiscretionary account or similar account (other than an estate or trust)
held by a dealer or other fiduciary organized, incorporated or (if an
individual) resident in the United States; and (viii) any partnership or
corporation if: (A) organized or incorporated under the laws of any foreign
jurisdiction; and (B) formed by a U.S. person principally for the purpose of
investing in securities not registered under the Act, unless it is organized or
incorporated, and owned, by accredited investors (as defined in Rule 501(a)
under the Securities Act) who are not natural persons, estates or trusts.
3.24.9 Each Stockholder understands that the Exchange Shares
may not be sold or transferred to a U.S. Person for a period of forty (40) days
from the date of issuance of the Exchange Shares.
4. REPRESENTATIONS AND WARRANTIES OF INTUIT
Intuit hereby represents and warrants that:
4.1 Organization and Good Standing. Intuit is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the corporate power and authority to own, operate and lease its
properties and to carry on its business as now conducted.
4.2 Power, Authorization and Validity.
4.2.1 Intuit has full power and authority to enter into and
perform its obligations under this Agreement and the Intuit Ancillary
Agreements. The execution, delivery and performance of this Agreement and the
Intuit Ancillary Agreements have been duly and validly approved and authorized
by Intuit's Board of Directors. No vote of Intuit's shareholders is required
under applicable law or under the Certificate of Incorporation or Bylaws of
Intuit.
4.2.2 No filing, authorization or approval, governmental or
otherwise, is necessary to enable Intuit to enter into, and to perform its
obligations under, this Agreement and the Intuit Ancillary Agreements, except
for such filings as may be required to comply with federal and state securities
laws in the United States and securities laws and foreign exchange laws in
Japan, which will be completed as follows: (1) Intuit may file a post-effective
amendment to its registration statement for its 1993 Equity Incentive Plan, (2)
Intuit will file a
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security notification and a security registration statement under the Japanese
Security Exchange Law, and (3) Intuit may file a post facto report and a prior
notification under the Japanese Foreign Exchange Control Law.
4.2.3 This Agreement and the Intuit Ancillary Agreements are,
or when executed by Intuit will be, valid and binding obligations of Intuit,
enforceable against Intuit in accordance with their respective terms, except as
to the effect, if any, of (a) applicable bankruptcy and other similar laws
affecting the rights of creditors generally, and (b) rules of law governing
specific performance, injunctive relief and other equitable remedies.
4.3 Capitalization. The authorized capital stock of Intuit consists
of 60,000,000 shares of Intuit Common Stock, $0.01 par value, of which
approximately 44,347,470 shares were issued and outstanding and 4,377 shares
were held by Intuit in its treasury as of November 30, 1995, and 3,000,000
shares of Intuit Preferred Stock, $0.01 par value, of which no shares are issued
and outstanding. When the Exchange Shares are issued in accordance with this
Agreement, the Exchange Shares will be duly authorized and validly issued, fully
paid and nonassessable.
4.4 No Violation of Certificate or Laws. Neither the execution nor
delivery of this Agreement or any Intuit Ancillary Agreement, nor the
consummation of the transactions contemplated hereby or thereby, will conflict
with, or (with or without notice or lapse of time, or both) result in a
termination, breach, impairment or violation of (a) any provision of the
Certificate of Incorporation or Bylaws of Intuit, as currently in effect, or (b)
any federal, state, local or foreign judgment, writ, decree, order, statute or
regulation applicable to and that would have a material adverse effect on Intuit
or its assets or properties.
4.5 Disclosure. Intuit has furnished Milkyway with complete and
accurate copies of its quarterly reports on Form 10-Q for the fiscal quarters
ended October 31, 1994, January 31, 1995, April 30, 1995, and October 31, 1995,
its annual report on form 10-K for its fiscal year ended July 31, 1994, its
annual report on Form 10-K and Form 10-K/A for its fiscal year ended July 31,
1995, its Form 8-K and 8-K/A-1 filed for an event occurring on September 27,
1994, its proxy statement for its special shareholders meeting held on April 10,
1995, its proxy statement for its annual shareholders meeting held on June 20,
1995, its prospectus for a public offering of 1,100,000 (pre stock split) shares
of its Common Stock dated June 20, 1995, and all other reports or documents
required to be filed by Intuit pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended since the filing of the most recent
quarterly report on Form 10-Q (the "Intuit Disclosure Package"). All documents
contained in the Intuit Disclosure Package and filed with the SEC (including all
financial statements included therein) comply in all material respects with the
applicable SEC rules and regulations relating thereto, and as of the date of
this Agreement no additional filing or amendment to any previous filing is
required under such rules and regulations. The Intuit Disclosure Package, this
Agreement, the exhibits and schedules hereto, any certificates or documents to
be delivered to Milkyway pursuant to this Agreement, and any written materials
provided by Intuit to The Kamakura Corporation as agent for and advisor to the
Stockholders and Milkyway when taken together, do not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements contained herein and therein, in light of the
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circumstances under which such statements were made, not misleading at the time
the statement was made or at the Closing Date. The financial statements of
Intuit included in the Intuit Disclosure Package
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complied, at the time of filing with the SEC, as to form, in all material
respects, with applicable accounting requirements and published rules and
regulations of the SEC with respect thereto, were prepared in accordance with
generally accepted accounting principles, applied on a consistent basis during
the periods involved, and fairly presented, in all material respects (subject,
in the case of unaudited statements, to normal, recurring year-end audit
adjustments) the financial position of Intuit as of the dates thereof and the
results of its operations and changes in financial position for the periods then
ended.
4.6 No Brokers. Intuit is not obligated for the payment of fees or
expenses of any investment banker, broker or finder in connection with the
origin, negotiation or execution of this Agreement or in connection with any
transaction provided for herein or therein.
4.7 Pooling. Intuit is not aware of any fact now existing relating
to Intuit, or which may arise before the Closing as a result of facts now
existing relating to Intuit, which would make Ernst & Young unable to deliver
the letter described in Section 9.9.
5. STOCKHOLDER AND MILKYWAY COVENANTS
During the period from the date of this Agreement until the Closing
Date, the Stockholders and Milkyway each individually covenant to and agree with
Intuit as follows:
5.1 Advice of Changes. Milkyway will promptly advise Intuit in
writing (a) of any event occurring subsequent to the date of this Agreement that
would render any representation or warranty of the Stockholders or Milkyway
contained in this Agreement, if made on or as of the date of such event or the
Closing Date, untrue or inaccurate in any material respect and (b) of any
material adverse change in Milkyway's financial condition, properties, assets,
liabilities, business, results of operations or prospects.
5.2 Maintenance of Business. The Stockholders and Milkyway
understand and acknowledge that it is their intent to work closely together with
Intuit during the period from the date hereof until the Closing Date. If a
Stockholder or Milkyway becomes aware of a material deterioration in the
relationship with any material customer, supplier or key employee, it will
promptly bring such information to the attention of Intuit in writing and, if
requested by Intuit, will exert all reasonable efforts to restore the
relationship.
5.3 Conduct of Business. Except as provided otherwise herein or as
approved or recommended by Intuit, the Stockholders will cause Milkyway to, and
Milkyway agrees to, continue to conduct its business and maintain its business
relationships in the ordinary and usual course and the Stockholders will not
permit Milkyway to, and Milkyway agrees that it will not, without the prior
written consent of the President of Intuit, not to be unreasonably withheld:
(a) borrow any money except in the ordinary course of business
consistent with past practice;
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(b) enter into any transaction not in the ordinary course of
business or enter into any transaction or make any commitment involving an
expense of Milkyway or capital expenditure by Milkyway in excess of 2,500,000
yen;
(c) encumber or permit to be encumbered any of its assets except
in the ordinary course of its business consistent with past practice;
(d) dispose of any of its material assets except in the ordinary
course of business consistent with past practice and except as disclosed in Item
3.11;
(e) enter into any material lease or contract for the purchase
or sale of any property, real or personal, tangible or intangible, except in the
ordinary course of business consistent with past practice;
(f) fail to maintain its equipment and other assets in good
working condition and repair according to the standards it has maintained to the
date of this Agreement, subject only to ordinary wear and tear;
(g) pay any bonus, royalty, increased salary (except for annual
increases in the ordinary course of business consistent with past practice and
disclosed to Intuit in writing) or special remuneration to any officer, employee
or consultant (except pursuant to existing arrangements heretofore disclosed in
writing to Intuit) or enter into any new employment or consulting agreement with
any such person, or enter into any new agreement or plan of the type described
in Section 3.16.3;
(h) change accounting methods except as necessitated by changes
which Milkyway is required to make in order to prepare its applicable tax
returns;
(i) declare, set aside or pay any cash or stock dividend or
other distribution in respect of capital stock, or redeem or otherwise acquire
any of its capital stock (except pursuant to agreements disclosed herein to
Intuit);
(j) amend or terminate any contract, agreement or license to
which it is a party (except pursuant to arrangements previously disclosed to
Intuit in writing) except those amended or terminated in the ordinary course of
business, consistent with past practice, and which are not material in amount or
effect; provided, however, that, prior to the Closing Date (1) the consulting
agreement between Milkyway and Shiizu K.K., dated November 1, 1995, and the
consulting agreement between Milkyway and ▇▇▇▇▇ ▇▇▇▇▇▇▇, d/b/a/ Earth Themia,
shall be terminated no later than December 31, 1995 and no further payments by
Milkyway under such agreements will be due, and (2) the term of the agreement
between Milkyway and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ regarding accounting services shall be
renewed through December 31, 1996;
(k) lend any amount to any person or entity, other than advances
for travel and expenses which are incurred in the ordinary course of business
consistent with past practice, which travel and expenses shall be documented by
receipts for the claimed amounts;
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(l) guarantee or act as a surety for any obligation except for
the endorsement of checks and other negotiable instruments in the ordinary
course of business, consistent with past practice;
(m) waive or release any material right or claim except in the
ordinary course of business, consistent with past practice;
(n) issue or sell any shares of its capital stock of any class
or any other of its securities, or issue or create any warrants, obligations,
subscriptions, options, convertible securities, stock appreciation rights or
other commitments to issue shares of capital stock, or take any action other
than this transaction to accelerate the vesting of any outstanding option or
other security (except pursuant to existing arrangements disclosed in writing to
Intuit before the date of this Agreement);
(o) split or combine the outstanding shares of its capital stock
of any class or enter into any recapitalization affecting the number of
outstanding shares of its capital stock of any class or affecting any other of
its securities;
(p) merge, consolidate or reorganize with, or acquire any
entity;
(q) amend its Articles of Incorporation or rules and regulations
except as may be required by law;
(r) agree to any audit assessment by any tax authority or file
any applicable income or franchise tax return unless copies of such returns have
been delivered to Intuit for its review prior to filing;
(s) license any of Milkyway's technology or any Milkyway
Intellectual Property, except in the ordinary course of business consistent with
past practice;
(t) change any insurance coverage except in the ordinary course
of business consistent with past practice;
(u) terminate the employment of any key employee listed in Item
3.11(i); or
(v) agree to do any of the things described in the preceding
clauses 5.3(a) through 5.3(u).
5.4 Certain Agreements. The Stockholders and Milkyway will cause (i)
the Major Stockholders, all Milkyway Directors and all Milkyway employees of the
seniority of kacho and above engaged in development, engineering, programming
and/or related activities to execute a Japanese language version (titled
"Agreement") of the employee invention assignment and confidentiality agreement
with Milkyway attached hereto as Exhibit F to become effective at the Closing
(the "Invention Assignment Agreement"), and (ii) all present employees of and
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consultants to Milkyway engaged in development, engineering, programming and/or
related activities to execute the Invention Assignment Agreement no later than
January 19, 1996.
5.5 Regulatory Approvals. The Stockholders and Milkyway will execute
and file, or join in the execution and filing, of any application or other
document that may be necessary in order to obtain the authorization, approval or
consent of any governmental body, national, federal, prefecture, local or
foreign, which may be reasonably required, or which Intuit may reasonably
request, in connection with the consummation of the transactions provided for in
this Agreement. The Stockholders and Milkyway will use all reasonable efforts to
obtain or assist Intuit in obtaining all such authorizations, approvals and
consents.
5.6 Necessary Consents. The Stockholders and Milkyway will use all
reasonable efforts to obtain such written consents and take such other actions
as may be necessary or appropriate for them, in addition to those set forth in
Section 5.5, to facilitate and allow the consummation of the transactions
provided for herein.
5.7 Litigation. The Stockholders will cause Milkyway to, and
Milkyway agrees that it will notify Intuit in writing promptly after learning of
any action, suit, proceeding or investigation by or before any court, board or
governmental agency, initiated by or against Milkyway or threatened against it.
5.8 No Other Negotiations. From the date hereof until the
termination of this Agreement (provided such termination is not a breach by
Milkyway of this Agreement) or the consummation of the Exchange, the
Stockholders and Milkyway agree that they will not, and will not authorize any
officer, director, employee or affiliate of Milkyway, or any other person, on
their behalf, directly or indirectly, to (a) solicit, facilitate, discuss or
encourage any offer, inquiry or proposal received from any party other than
Intuit, concerning the possible disposition of all or any substantial portion of
Milkyway's business, assets or capital stock by exchange, sale or any other
means or to otherwise solicit, facilitate, discuss or encourage any such
disposition (other than the Exchange), or (b) provide any confidential
information to or negotiate with any third party other than Intuit in connection
with any offer, inquiry or proposal concerning any such disposition. The
Stockholders and Milkyway immediately will notify Intuit of any such offer,
inquiry or proposal, the identity of the person making the offer, inquiry or
proposal and the terms thereof.
5.9 Access to Information. Until the Closing Date and subject to the
terms and conditions of the Confidentiality Agreement, the Stockholders will
cause Milkyway to, and Milkyway agrees that it will provide Intuit and its
agents with reasonable access to the files, books, records and offices of
Milkyway, including, without limitation, any and all information relating to
Milkyway taxes, commitments, contracts, leases, licenses, real, personal and
intangible property, and financial condition, and specifically including,
without limitation, access to Milkyway object code reasonably necessary for
Intuit to complete its diligence review of the Milkyway products and technology.
The Stockholders will cause Milkyway to, and Milkyway agrees that it will cause
its accountants to cooperate with Intuit and its agents in making available
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all financial information reasonably requested, including without limitation the
right to examine all working papers pertaining to all financial statements
prepared by such accountants.
5.10 Satisfaction of Conditions Precedent. The Stockholders and
Milkyway will use all reasonable efforts to satisfy or cause to be satisfied all
the conditions precedent which are set forth in Section 8, and the Stockholders
and Milkyway will use all reasonable efforts to cause the transactions provided
for in this Agreement to be consummated, and, without limiting the generality of
the foregoing, to obtain all consents and authorizations of third parties and to
make all filings with, and give all notices to, third parties that may be
necessary or reasonably required on its part in order to effect the transactions
provided for herein.
5.11 Securities Laws. The Stockholders and Milkyway shall use all
reasonable efforts to assist Intuit to the extent requested by Intuit in writing
necessary to comply with the securities laws of all jurisdictions applicable in
connection with the Exchange.
5.12 Milkyway Affiliates Agreements. Concurrently with the execution
of this Agreement Milkyway shall deliver a letter to Intuit identifying all
Milkyway directors, officers, ten percent or greater shareholders and all other
persons who are "affiliates" of Milkyway within the meaning of Rule 145 or Rule
405 promulgated under the 1933 Act at the time this agreement is executed (the
"Milkyway Affiliates"), and a list of all Milkyway Affiliates will be delivered
by Milkyway to Intuit at the Closing. The Stockholders and Milkyway shall cause
each of the Milkyway Affiliates to execute and deliver to Intuit, on or prior to
Closing, a written agreement (the "Milkyway Affiliates Agreement") in
substantially the form of Exhibit G. In addition, the Stockholders and Milkyway
shall cause each person who may become a Milkyway Affiliate after the date of
this Agreement and before the Closing Date to execute and deliver to Intuit a
Milkyway Affiliates Agreement.
5.13 Pooling. Following the Closing Date, the Stockholders and
Milkyway shall not take (a) any of the actions described in Exhibit H or
(b) any other action if, prior to taking such action, the Stockholders and
Milkyway have been informed by Intuit or its accountants that, in the reasonable
opinion of Intuit or Intuit's accountants, taking such action may preclude
Intuit from accounting for the Exchange as a "pooling of interests" for
accounting purposes and Intuit or its accountants promptly give the Stockholders
and Milkyway a writing that states in reasonable detail the action that Intuit
or its accountants request the Stockholders and Milkyway not to take. The
Stockholders may borrow from a lending institution on a full recourse basis up
to One Million U.S. dollars (US$1,000,000) secured by their Exchange Shares (but
not the Escrow Shares). The Stockholders and Milkyway shall cooperate with
Intuit to cause the Exchange to be accounted for as a pooling of interests for
accounting purposes.
5.14 Assignment of Copyrights. Each of (i) ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, and Masashi Miki, and (ii) ▇▇▇▇ ▇▇▇▇▇▇▇ shall execute an
Assignment of Copyright in the forms attached hereto as Exhibit I-1 and Exhibit
I-2, respectively (collectively, the "Assignment of Copyright"), and such
assignments shall have been duly registered pursuant to the Copyright Law of
Japan prior to the Closing Date.
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5.15 Resale of Exchange Shares. Each Stockholder has read and
understood the legends regarding resale restrictions as set forth in Section
7.3, agrees to abide by such restrictions and understands that the Company may
issue "stop transfer" instructions to its transfer agent to prevent any
transfers of the Exchange Shares received by the undersigned in violation of
such restrictions and investors' representations set forth in Section 3.24.
5.16 Shareholder Resolution. Prior to December 31, 1995, the
Stockholders shall convene an extraordinary general meeting and adopt
resolutions in the form attached hereto as Exhibit 0.
5.17 Miki Agreement. Masashi Miki shall have executed an agreement
(the "Miki Agreement") with Intuit in the form attached hereto as Exhibit P.
6. INTUIT COVENANTS
During the period from the date of this Agreement until the Closing,
Intuit covenants to and agrees with the Stockholders and Milkyway as follows:
6.1 Access to Information. Until the Closing Date, Intuit's senior
executives will meet with the Milkyway management team, discuss strategy and
present publicly available financial community projections for Intuit's future
performance, but will not provide material nonpublic information of Intuit which
would inhibit trading by Milkyway management. Intuit will provide material
nonpublic information, including internal projections, solely to The Kamakura
Corporation in its role as agent for and advisor to the Stockholders and
pursuant to the Confidentiality Agreement.
6.2 Advice of Changes. Intuit will promptly advise the Stockholders
and Milkyway in writing (a) of any event occurring subsequent to the date of
this Agreement that would render any representation or warranty of Intuit
contained in this Agreement, if made on or as of the date of such event and the
Closing Date, untrue or inaccurate in any material respect and (b) of any
material adverse change in Intuit's business, results of operations or financial
condition. In addition, Intuit will promptly deliver to the Stockholders' and
Milkyway's legal counsel a copy of each filing made with the SEC prior to the
Closing.
6.3 Satisfaction of Conditions Precedent. Intuit will use all
reasonable efforts to satisfy or cause to be satisfied all the conditions
precedent which are set forth in Section 9, and Intuit will use all reasonable
efforts to cause the transactions provided for in this Agreement to be
consummated, and, without limiting the generality of the foregoing, to obtain
all consents and authorizations of third parties and to make all filings with,
and give all notices to, third parties that may be necessary or reasonably
required on its part in order to effect the transactions provided for herein.
6.4 Regulatory Approvals. Intuit will execute and file, or join in
the execution and filing, of any application or other document that may be
necessary in order to obtain the authorization, approval or consent of any
governmental body, national, federal, state, local or foreign, which may be
reasonably required, or which the Stockholders and Milkyway may
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reasonably request, in connection with the consummation of the transactions
provided for in this Agreement. Intuit will use all reasonable efforts to obtain
all such authorizations, approvals and consents.
6.5 Intuit Affiliates Agreements. To facilitate the treatment of the
Exchange for accounting purposes as a "pooling of interests," Intuit will use
all reasonable efforts to cause each of its affiliates to execute and deliver to
Intuit, a written agreement (the "Intuit Affiliates Agreement") in substantially
the form of Exhibit J.
6.6 Litigation. Intuit will notify the Stockholders and Milkyway in
writing promptly after learning of any material action, suit, proceeding or
investigation by or before any court, board or governmental agency, initiated by
or against Intuit or threatened against it.
6.7 Securities Laws. Intuit shall use all reasonable efforts to
assist Milkyway and the Stockholders to the extent requested by them in writing
necessary to comply with the securities of all jurisdictions applicable in
connection with the Exchange.
7. CLOSING MATTERS
7.1 The Closing. Subject to the termination of this Agreement as
provided in Section 10 below, the closing of the transactions provided for
herein (the "Closing") will take place at the offices of Fenwick & West, Two
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ at 4:30 p.m., local
time, on January 2, 1996, or, if all conditions to Closing have not been
satisfied or waived by such date, such other time and date as Milkyway, Intuit
and the Stockholders may mutually select (the "Closing Date").
7.2 Exchanges at Closing.
7.2.1 At the Closing, each Stockholder (a) will deliver to
Intuit: (i) the Milkyway Certificate(s) representing the shares of Milkyway
Stock held of record or beneficially owned by such Stockholder for the transfer
to Intuit, (ii) written stock transfer forms separate from the Milkyway
Certificate(s), duly executed by such Stockholder and assigning and transferring
all such shares to Intuit, and (iii) a completed and executed form W-8; and (b)
will deliver to Chemical Mellon Shareholder Services LLC (the "Escrow Agent") a
duly endorsed stock power for the Escrow Shares in the form of Attachment B to
the Escrow Agreement.
7.2.2 Upon receipt of the documents described in Section 7.2.1,
Intuit will direct the Escrow Agent: (a) to issue (and deliver to the Citibank,
N.A. account specified on Exhibit A) a share certificate registered in the name
of such Stockholder for the number of Exchange Shares to be issued to such
Stockholder pursuant to Section 2.1, less the Escrow Shares, as set forth on
Exhibit A, and (b) to issue (and deliver to the Escrow Agent as provided in the
Escrow Agreement) a share certificate registered in the name of such Stockholder
for the Escrow Shares. From the time of the Closing the Stockholders shall be
deemed to be beneficial owners and owners of record of all of the Exchange
Shares listed opposite their names on Exhibit A, and shall be entitled to vote
such shares, receive dividends and distributions on such shares,
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and all other rights pertaining to a holder of such shares as set forth in
Section 2(b) of the Escrow Agreement.
7.2.3 At the Closing, Intuit, Milkyway and the individuals who
are parties to each of the following agreements shall execute and deliver
counterparts of each such agreement: Employment Agreements, Miki Agreement,
Escrow Agreement, Nakamura Agreement, Yoshii Agreement, Milkyway Affiliates
Agreement and Invention Assignment Agreements executed by the Major
Stockholders, all Milkyway Directors and all Milkyway employees of the seniority
of kacho and above engaged in development, engineering, programming and/or
related activities, the Assignment of Copyright and evidence that the actions
required by Section 5.3(j) have been taken. Milkyway also will deliver to Intuit
a certified copy of the minutes of the extraordinary shareholders meeting in the
form of Exhibit O.
7.2.4 At the Closing, Intuit will cause Fenwick & West to
deliver its opinion, and Ernst & Young to deliver its letter pursuant to Section
9.9. At the Closing, Milkyway will cause Mitsui, Yasuda, Wani & Maeda to deliver
its opinion.
7.3 Each Stockholder understands and agrees that stop transfer
instructions will be given to Intuit's transfer agent with respect to
certificates evidencing the Exchange Shares to assure compliance with the
provisions of the Milkyway Affiliates Agreements and Regulation S promulgated
and that there will be placed on the certificates evidencing such Exchange
Shares legends stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED, SOLD,
PLEDGED, EXCHANGED, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN
ACCORDANCE WITH THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND THE OTHER CONDITIONS SPECIFIED IN THAT CERTAIN
MILKYWAY ("MILKYWAY") AFFILIATES AGREEMENT DATED AS OF JANUARY __, 1996
AMONG INTUIT INC., MILKYWAY AND THE HOLDER OF SUCH SHARES, A COPY OF
WHICH AFFILIATES AGREEMENT MAY BE INSPECTED BY THE HOLDER OF THIS
CERTIFICATE AT THE OFFICES OF INTUIT INC. INTUIT INC. WILL FURNISH,
WITHOUT CHARGE, A COPY THEREOF TO THE HOLDER OF THIS CERTIFICATE, UPON
WRITTEN REQUEST THEREFOR. INTUIT INC. MAY REQUIRE AN OPINION OF U.S.
LEGAL COUNSEL, IN FORM AND SUBSTANCE SATISFACTORY TO INTUIT INC., TO
THE EFFECT THAT SUCH REQUIREMENTS AND CONDITIONS HAVE BEEN MET."
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE ACT WITH THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION, AND THE COMPANY DOES NOT INTEND TO REGISTER THEM. PRIOR TO
_______, 1996 [END OF 40-DAY RESTRICTED PERIOD], THE SHARES MAY NOT BE
OFFERED OR SOLD (INCLUDING OPENING
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A SHORT POSITION IN SUCH SECURITIES) IN THE UNITED STATES OR TO U.S.
PERSONS AS DEFINED BY RULE 902(O) ADOPTED UNDER THE ACT, OTHER THAN TO
DISTRIBUTORS, UNLESS THE SHARES ARE REGISTERED UNDER THE ACT, OR AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT IS AVAILABLE.
PURCHASERS OF SHARES PRIOR TO ________, 1996 [END OF 40-DAY RESTRICTED
PERIOD], MAY RESELL SUCH SECURITIES ONLY PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE ACT, OR IN TRANSACTIONS EFFECTED OUTSIDE OF THE
UNITED STATES PROVIDED THEY DO NOT SOLICIT (AND NO ONE ACTING ON THEIR
BEHALF SOLICITS) PURCHASERS IN THE UNITED STATES OR OTHERWISE ENGAGE(S)
IN SELLING EFFORTS IN THE UNITED STATES. A HOLDER OF THE SECURITIES WHO
IS A DISTRIBUTOR, DEALER, SUB-UNDERWRITER OR OTHER SECURITIES
PROFESSIONAL, IN ADDITION, CANNOT PRIOR TO ___________, 1996 [END OF
40-DAY RESTRICTED PERIOD] RESELL THE SECURITIES TO A U.S. PERSON AS
DEFINED BY RULE 902(O) OF REGULATION S UNLESS THE SECURITIES ARE
REGISTERED UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION UNDER THE
ACT IS AVAILABLE."
8. CONDITIONS TO OBLIGATIONS OF THE STOCKHOLDERS
The Stockholders' obligations hereunder are subject to the fulfillment
or satisfaction, on and as of the Closing, of each of the following conditions
(any one or more of which may be waived by the Stockholders, but only in a
writing signed by Stockholders holding at least seventy percent (70%) of the
Milkyway Stock):
8.1 Accuracy of Representations and Warranties. The representations
and warranties of Intuit set forth in Section 4 shall be true and accurate in
every material respect on and as of the Closing Date with the same force and
effect as if they had been made at the Closing, and the Stockholders and
Milkyway shall have received a certificate to such effect executed on behalf of
Intuit by its Chief Financial Officer.
8.2 Covenants. Intuit shall have performed and complied in all
material respects with all of its covenants contained in Section 6 on or before
the Closing Date, except to the extent the terms of such covenants require
compliance after the Closing Date, and the Stockholders and Milkyway shall have
received a certificate to such effect executed on behalf of Intuit by its Chief
Financial Officer or a Vice President.
8.3 Compliance with Law. There shall be no order, decree, or ruling
by any court or governmental agency or threat thereof, or any other fact or
circumstance, which would prohibit or render illegal the transactions
contemplated by this Agreement.
8.4 Government Consents. There shall have been obtained at or prior
to the Closing Date such permits or authorizations, and there shall have been
taken such other actions, as may be required to consummate the Exchange by any
regulatory authority having jurisdiction over the parties and the actions herein
proposed to be taken, including but not limited to any notices to or consents
from the Bank of Japan and/or the Ministry of Finance, satisfaction of all
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requirements under applicable federal and state securities laws in the United
States and applicable securities laws in Japan.
8.5 Documents. Milkyway shall have received all written consents,
assignments, waivers, authorizations or other certificates deemed reasonably
necessary by Milkyway's legal counsel to consummate the transactions provided
for herein.
8.6 No Litigation. No litigation or proceeding shall be pending
which will have the probable effect of enjoining or preventing the consummation
of any of the transactions provided for in this Agreement. No litigation or
proceeding shall be pending which could reasonably be expected to have a
material adverse effect on the financial condition or results of operations of
Intuit that has not been previously disclosed to the Stockholders and Milkyway
in the Intuit Disclosure Package.
8.7 Opinion of Intuit's Counsel. The Stockholders and Milkyway shall
have received from Fenwick & West, counsel to Intuit, an opinion substantially
in the form of Exhibit L.
8.8 No Changes. There shall have been no (i) amendment of Intuit's
Certificate of Incorporation, issuance of Intuit Preferred Stock or other such
event which would materially affect the rights of holders of Intuit Common Stock
or (ii) agreement of Intuit to be acquired by another person.
9. CONDITIONS TO OBLIGATIONS OF INTUIT
The obligations of Intuit hereunder are subject to the fulfillment
or satisfaction on, and as of the Closing, of each of the following conditions
(any one or more of which may be waived by Intuit, but only in a writing signed
on behalf of Intuit by its President or Chief Financial Officer):
9.1 Accuracy of Representations and Warranties. The representations
and warranties of the Stockholders and Milkyway set forth in Section 3 shall be
true and complete in all material respects as of the Closing Date with the same
force and effect as if they had been made at the Closing, and Intuit shall have
received a certificate to such effect executed by each Major Stockholder, the
attorney-in-fact for the other Stockholders, and on behalf of Milkyway by its
Representative Director. Counsel for Intuit also shall not have received any
evidence that an assignment has been registered or filed pursuant to the
Copyright Law of Japan which (i) pertains to any software program which has been
or is being sold or otherwise marketed by Milkyway and (ii) precedes an
application for registration pursuant to Section 5.14 above.
9.2 Covenants. Each Stockholder and Milkyway shall have performed
and complied in all material respects with all of its covenants contained in
Section 5 on or before the Closing Date and Intuit shall have received a
certificate to such effect signed by each Stockholder and on behalf of Milkyway
by its President or Chief Financial Officer.
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9.3 Compliance with Law. There shall be no order, decree, or ruling
by any court or governmental agency or threat thereof, or any other fact or
circumstance, which would prohibit or render illegal the transactions provided
for in this Agreement.
9.4 Government Consents. There shall have been obtained at or prior
to the Closing Date such permits or authorizations and there shall have been
taken such other action, as may be required to consummate the Exchange by any
regulatory authority having jurisdiction over the parties and the actions herein
proposed to be taken, including but not limited to any notices to or consents
from the Bank of Japan and/or the Ministry of Finance, satisfaction of all
requirements under applicable federal and state securities laws in the United
States and applicable securities laws in Japan.
9.5 Opinions of the Stockholders' and Milkyway's Counsel. Intuit
shall have received from Mitsui, Yasuda, Wani & Maeda counsel to the
Stockholders and Milkyway, an opinion substantially in the form of Exhibit M.
Wilson, Sonsini, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, U.S. counsel to Milkyway and the
Stockholders, will not be required to issue an opinion in connection with this
Agreement.
9.6 Requisite Approvals. The principal terms of this Agreement and
the transfer and exchange of Milkyway Stock pursuant to Section 2.1 shall have
been unanimously approved and adopted by the Board of Directors of Milkyway, and
a certified copy of the minutes containing the resolutions for such action(s)
shall be provided to Intuit at the Closing.
9.7 No Litigation. No litigation or proceeding shall be pending
which will have the probable effect of enjoining or preventing the consummation
of any of the transactions provided for in this Agreement. No litigation or
proceeding shall be pending which could reasonably be expected to have a
material adverse effect on the financial condition or results of operations of
Milkyway that has not been previously disclosed to Intuit herein.
9.8 Documents. Intuit shall have received all written consents,
assignments, waivers, authorizations or other certificates reasonably deemed
necessary by Intuit's legal counsel to provide for the continuation in full
force and effect of any and all material contracts and leases of Milkyway and
for Intuit to consummate the transactions contemplated hereby.
9.9 Pooling Letter. Intuit shall have received a letter from Ernst &
Young LLP, dated as of the Closing Date, regarding the appropriateness of
pooling of interests accounting for the Exchange under Accounting Principles
Board Opinion No. 16 if closed and consummated in accordance with this
Agreement; provided that the failure of Ernst & Young to deliver such a letter
shall not constitute a failure of this condition if Ernst & Young shall refuse
to issue such a letter because of either (a) actions taken by Intuit (unless
with Milkyway's consent after being informed by Intuit of the potential impact
of the proposed Intuit action on the prospects for obtaining such opinion)
between the signing of this Agreement and the Closing Date, or (b) facts
regarding Intuit that were not disclosed to Ernst & Young in writing prior to
the date hereof, or (c) documents regarding Intuit that were not provided by
Intuit to Ernst & Young in writing, prior to the signing of this Agreement or
(d) actions taken by Milkyway with the consent of Intuit or contemplated by this
Agreement.
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9.10 Certain Agreements. The Major Stockholders, all Milkyway
Directors and all Milkyway employees of the seniority of kacho and above engaged
in development, engineering, programming and/or related activities shall have
executed the Invention Assignment Agreement.
9.11 Escrow. Intuit shall have received the Escrow Agreement
executed by Milkyway and the Stockholders.
9.12 Employment and Other Agreements. Intuit shall have received
the Employment Agreements, the Miki Agreement, the Yoshii Agreement and the
Nakamura Agreement executed by all parties thereto.
9.13 Milkyway Affiliates Agreement. Intuit shall have received the
Milkyway Affiliates Agreements executed by each Milkyway Affiliate.
9.14 Modification of Certain Agreements. The agreements between
Milkyway and Shiizu K.K., ▇▇▇▇▇ ▇▇▇▇▇▇▇ d/b/a Earth Themia and ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, respectively, shall have been terminated or modified as described in
Section 5.3(j). Milkyway shall provide Intuit with evidence of such
modifications.
9.15 Stockholder Resolution. Intuit shall have received at the
Closing a certified copy of the minutes of an extraordinary shareholders meeting
in the form of Exhibit O.
10. TERMINATION OF AGREEMENT
10.1 Termination. This Agreement may be terminated at any time
prior to the Closing:
(a) By the mutual written consent of Intuit and Milkyway;
(b) Unless otherwise specifically provided herein or agreed in
writing by Intuit, Milkyway and the Stockholders holding at least seventy
percent (70%) of the Milkyway Stock, this Agreement will be terminated if all
the conditions to Closing have not been satisfied or waived on or before January
15, 1996 (the "Final Date") other than as a result of a breach of this Agreement
or any Milkyway Ancillary Agreement by the terminating party, or a breach by any
of the Milkyway Affiliates of the Milkyway Affiliates Agreements;
(c) By Milkyway or Stockholders holding at least seventy
percent (70%) of the Milkyway Stock, if there has been a breach by Intuit of any
representation, warranty, covenant or agreement set forth in this Agreement on
the part of Intuit, or if any representation of Intuit will have become untrue,
in either case which has or can reasonably be expected to have a material
adverse effect on Intuit and which Intuit fails to cure within a reasonable
time, not to exceed twenty (20) days, after written notice thereof (except that
no cure period will be provided for a breach by Intuit which by its nature
cannot be cured);
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(d) By Intuit, if there has been a breach by Milkyway or a
Stockholder of any representation, warranty, covenant or agreement set forth in
this Agreement on the part of Milkyway or any Stockholder, or if any
representation of any Stockholder will have become untrue, in either case which
has or can reasonably be expected to have a material adverse effect on Milkyway
and which Milkyway and/or such Stockholder fails to cure within a reasonable
time not to exceed twenty (20) days after written notice thereof (except that no
cure period will be provided for a breach by Milkyway or any Stockholder which
by its nature cannot be cured); or
(e) By either Intuit or Milkyway, if a permanent injunction or
other order by any U.S. or Japanese court which would make illegal or otherwise
restrain or prohibit the consummation of the Exchange will have been issued and
will have become final and nonappealable.
Any termination of this Agreement under this Section 10.1 will be
effective by the delivery of written notice of the terminating party to the
other party hereto.
10.2 Certain Continuing Obligations. Following any termination of
this Agreement pursuant to this Section 10, the parties hereto will continue to
perform their respective obligations under Section 11 but will not be required
to continue to perform their other covenants under this Agreement.
11. SURVIVAL OF REPRESENTATIONS, INDEMNIFICATION AND REMEDIES,
CONTINUING COVENANTS
11.1 Survival of Representations.
11.1.1 Stockholders' and Milkyway's Representations. Each
Stockholder's representations and warranties, except those specified in Section
3.1, shall become effective as of the Closing. The Stockholders' representations
and warranties in Section 3.1 are effective as of the date of this Agreement.
Milkyway's representations and warranties are effective as of the date of this
Agreement. Unless otherwise specified herein, all representations, warranties
and covenants of each Stockholder and Milkyway contained in this Agreement will
remain operative and in full force and effect (but only as of the date they were
made and as of the Closing Date) regardless of any investigation made by or on
behalf of the parties to this Agreement, until the earlier of the termination of
this Agreement in accordance with its terms or the end of the Escrow Period,
whereupon such representations, warranties, and covenants (except for (i) the
representations and warranties in Section 3.1 and (ii) intentional fraud or
willful misconduct with respect to any representations, warranties and
covenants) shall expire.
11.1.2 Intuit's Representations. Intuit's representations,
warranties and covenants contained in this Agreement will remain operative and
in full force and effect (but only as of the date they were made and as of the
Closing Date) regardless of any investigation made by or on behalf of the
parties to this Agreement, until the earlier of the termination of this
Agreement in accordance with its terms or the end of the Escrow Period,
whereupon such representations, warranties, and covenants shall expire. Any
judgment or settlement of a claim
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against Intuit for a breach of its obligations hereunder brought after the
Closing will be settled in Intuit Common Stock, valued at the average of the
closing prices per share of Intuit Common Stock as quoted on the Nasdaq National
Market System and reported in The Wall Street Journal for the ten (10) trading
days ending on (and inclusive of) the Closing Date (or if the Closing Date is
not a trading day, the trading day immediately preceding the Closing Date).
11.2 Stockholders Agreement to Indemnify.
Subject to the limitations set forth in this Section 11.2,
each Stockholder jointly and severally will indemnify and hold harmless Intuit
and its respective officers, directors, agents and employees, and each person,
if any, who controls or may control Intuit within the meaning of the Securities
Act (hereinafter in this Section 11.2 referred to individually as an
"Indemnified Person" and collectively as "Indemnified Persons") from and against
any and all claims, demands, actions, causes of action, losses, costs, damages,
liabilities and expenses including, without limitation, reasonable legal fees,
net of any recoveries under insurance policies or tax savings (hereafter in this
Section 11.2 referred to as "Intuit Damages"):
(a) arising out of any misrepresentation or breach of or
default in connection with any of the representations, warranties and covenants
given or made by the Stockholders or Milkyway in this Agreement or any
certificate, document or instrument delivered by the Stockholders or on behalf
of Milkyway or by any other Stockholder pursuant hereto; or
(b) resulting from any failure of any Stockholder to
have good, valid and marketable title to the issued and outstanding Milkyway
Stock held by such Stockholder, free and clear of all liens, claims, pledges,
options, adverse claims, assessments or charges of any nature whatsoever, or to
have full right, capacity and authority to vote such Milkyway Stock in favor of
the transactions contemplated by this Agreement and the Stockholders Ancillary
Agreements.
In seeking indemnification for Intuit Damages under this Section
following the Closing, the Indemnified Persons shall first exercise their
remedies with respect to the Escrow Shares and any other assets deposited in
escrow pursuant to the Escrow Agreement; provided, however, that no such claim
for Intuit Damages under Section 11.2(a) will be asserted after the end of the
Escrow Period. Except for (i) intentional fraud or willful misconduct and (ii)
any damages of the type described in 11.2(b) above, no Stockholder shall have
any liability to an Indemnified Person under this Agreement except to the extent
of such Stockholder's Escrow Shares and any other assets deposited under the
Escrow Agreement, and the remedies set forth in this Section 11.2 shall be the
exclusive remedies of the Indemnified Persons hereunder against any Stockholder.
11.3 Option Registration. To the extent required by applicable law,
Intuit shall register, before June 30, 1996, the options granted to Milkyway's
employees to allow for the legal issuance and exercise in Japan of the options
(subject to the terms of the 1993 Equity Incentive Plan and related documents)
and unrestricted resale in the U.S. markets of the shares
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issued upon exercise of such options (provided Intuit Common Stock continues to
be listed on the Nasdaq National Market).
11.4 Announcement of Results. Intuit intends to announce results
for the fiscal quarter ending January 31, 1996 on or about March 1, 1996 but in
no event later than March 15, 1996, which shall include thirty (30) days
combined operations of Milkyway and Intuit if the Closing has occurred on
January 2, 1996. If the Closing occurs after January 2, 1996, then Intuit shall
use its best efforts to announce results for the subsequent fiscal quarter on or
about June 1, 1996, but in no event later than June 15, 1996.
11.5 Incentive Benefits. Intuit shall provide all details about the
incentive benefits described in Section 6.7 above as soon as practicable.
11.6 Work Rules. The Stockholders and Milkyway shall take all
actions necessary such that Milkyway's work rules be will changed as soon as
possible to provide for specific rules to protect Milkyway's confidential
information and Milkyway Intellectual Property, including (i) the safekeeping of
source code, and (ii) specific rules requiring all employees, consultants,
advisors and any other persons who participate in the development of Milkyway
Intellectual Property to be bound by terms substantially similar to those in the
Invention Assignment Agreement.
11.7 Financial Statements. Milkyway will provide all required
assistance to Intuit and its representatives, to enable the Milkyway Financial
Statements to be "recast" on a U.S. generally accepted accounting principles
("GAAP") basis to Intuit's fiscal periods (including fiscal quarters for fiscal
year ended 1995 and subsequent quarters) ended July 31, 1995, July 31, 1994,
September 30, 1993 and September 30, 1992.
11.8 Proxy. Each Stockholder hereby grants, conditional only on the
Closing, to Intuit such Stockholder's irrevocable proxy to vote on any matter
relating to the declaration of Milkyway dividends in 1996, to the extent such
Stockholder is entitled to vote thereon due to ownership of record of Milkyway
stock in 1995.
11.9 Issuance of Intuit Options. Intuit will grant an aggregate of
Two Hundred Thousand (200,000) Intuit Options to all Milkyway employees (i) in
the amounts set forth beside their respective levels of seniority on Exhibit K
(the "Option Pool"), (ii) pursuant to a vesting schedule whereby one-fourth
(1/4) of the options granted to each employee will become exercisable on the
first anniversary of the Vesting Commencement Date (as defined below) and
thereafter, at the end of each full succeeding month the options shall become
exercisable as to an additional one forty-eighth (1/48) of the number of shares
until such time as the options become exercisable as to all of the shares, (iii)
whereby the "Vesting Commencement Date" will be the Closing Date, (iv) at an
exercise price equal to the closing price per share of Intuit Common Stock as
quoted on the Nasdaq National Market and reported in The Wall Street Journal for
the date such Intuit Options are granted (or, if the Intuit Options are not
granted on a trading day, the trading day immediately preceding the date of
grant), and (v) to the extent permitted by Japanese law, pursuant to the terms
and conditions of Intuit's 1993 Equity Incentive Plan. Intuit will grant
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all Intuit Options from the Option Pool immediately after the Intuit Options and
Intuit Common Stock underlying the Intuit Options have been effectively
registered under Japanese securities laws. Intuit will use all reasonable
efforts to cause the security registration statement under Japanese securities
laws to be filed and declared effective as soon after the Closing as possible,
but in no event will the registration statement be filed later than June 30,
1996.
11.10 Management Incentive Plan. Intuit will offer to certain
Milkyway Employees the following incentive benefits:
(a) Intuit Options. Subject to Section 11.9, each Milkyway
employee will be granted options to purchase the number of shares set forth
beside his or her employment level as described in Exhibit K pursuant to Section
11.9.
(b) Profit Sharing. Each of Masashi Miki, Tohru Morii, ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and Mitsuya Yahagi will be eligible to participate in
annual profit sharing compensation pursuant to the terms and conditions of
Milkyway's profit sharing plan adopted in February 1995 (the "Yakuin Shoyo
Plan"). Details of the Yakuin Shoyo Plan are included as Attachment A to the
Employment Agreement. Each of Masashi Miki, Tohru Morii, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ and Mitsuya Yahagi will receive profit sharing pursuant to the Yakuin
Shoyo Plan for Milkyway's fiscal year ending December 31, 1996, unless such
person elects, prior to February 1, 1996, to receive profit sharing pursuant to
the Intuit profit sharing plan. If a person elects to participate in the Intuit
profit sharing plan, such person will not receive any profit sharing pursuant to
the Yakuin Shoyo Plan. The Yakuin Shoyo Plan will terminate on December 31,
1996. If such person received profit sharing pursuant to the Yakuin Shoyo Plan
with respect to Milkyway's fiscal year ending December 31, 1996, such person
will not be eligible to participate in the Intuit profit sharing plan until
February 1, 1997.
(c) Performance Bonus. Each General Manager (bucho), Deputy
Division Manager (jicho), Section Manager (kacho) and the President will be
eligible to receive from Intuit an annual performance bonus pursuant to Intuit's
AVP Plan, with participation commencing on the Closing Date. The bonus shall be
determined based on a payment goal of ten percent (10%) of such person's Base
Salary (defined below) (other than the President, for whom such payment goal
will be 20% of his base remuneration) for achievement of personal "target"
goals, with greater or lesser percentage payments for achievement above and
below the "target" in accordance with the terms and conditions of the AVP Plan.
"Base Salary" shall include the following: (i) the age based salary and the job
based salary (kihon-kyu), (ii) the manager allowance (yakushoku-▇▇▇▇▇) and (iii)
semi-annual bonuses (excluding the performance based portion of such bonuses).
The Base Salary will be equal to the amount calculated in accordance with the
salary payment rules which are in effect immediately prior to the Effective
Date. The bonus under the AVP Plan shall be determined at the end of Intuit's
fiscal year (July 31) and paid at the same time paid to other AVP Plan
participants. The amount such person receives under the AVP Plan will be
reduced, yen-for-yen, by the amount such person received as the performance
based portion of the winter bonus such person received prior to the payment of
the AVP Plan bonus, to the extent permitted under Japanese law. Payments under
the Yakuin Shoyo Plan or Intuit's profit sharing plan will not reduce AVP Plan
payments.
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(d) Other Incentives. Intuit will establish other incentive
plans, based on Intuit's incentive plans for its engineering and/or development
personnel, as applicable, for Milkyway's Assistant Section Managers (kakaricho).
12. MISCELLANEOUS
12.1 Governing Language and Law; Dispute Resolution. This
Agreement is written in English (except for the Japanese language version of the
Invention Assignment Agreement) and entered into in Palo Alto, California and
the English language shall govern. The internal laws of the State of Delaware
(irrespective of its choice of law principles) will govern the validity of this
Agreement, the construction of its terms, and the interpretation and enforcement
of the rights and duties of the parties hereto. Any dispute hereunder
("Dispute") shall be settled by arbitration in San Francisco, California, and,
except as herein specifically stated, in accordance with the commercial
arbitration rules of the American Arbitration Association ("AAA Rules") then in
effect. However, in all events, these arbitration provisions shall govern over
any conflicting rules which may now or hereafter be contained in the AAA Rules.
Any judgment upon the award rendered by the arbitrator may be entered in any
court having jurisdiction over the subject matter thereof. The arbitrator shall
have the authority to grant any equitable and legal remedies that would be
available in any judicial proceeding instituted to resolve a Dispute.
12.1.1 Compensation of Arbitrator. Any such arbitration will
be conducted before a single arbitrator who will be compensated for his or her
services at a rate to be determined by the parties or by the American
Arbitration Association, but based upon reasonable hourly or daily consulting
rates for the arbitrator in the event the parties are not able to agree upon his
or her rate of compensation.
12.1.2 Selection of Arbitrator. The American Arbitration
Association will have the authority to select an arbitrator from a list of
arbitrators who are lawyers familiar with contract law; provided, however, that
such lawyers cannot work for a firm then performing services for either party,
that each party will have the opportunity to make such reasonable objection to
any of the arbitrators listed as such party may wish and that the American
Arbitration Association will select the arbitrator from the list of arbitrators
as to whom neither party makes any such objection. In the event that the
foregoing procedure is not followed, each party will choose one person from the
list of arbitrators provided by the American Arbitration Association (provided
that such person does not have a conflict of interest), and the two persons so
selected will select from the list provided by the American Arbitration
Association the person who will act as the arbitrator.
12.1.3 Payment of Costs. Intuit and the Stockholders will
bear the expense of deposits and advances required by the arbitrator in equal
proportions, but either party may advance such amounts, subject to recovery as
an addition or offset to any award. The arbitrator will award to the prevailing
party, as determined by the arbitrator, all costs, fees and
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expenses related to the arbitration, including reasonable fees and expenses of
attorneys, accountants and other professionals incurred by the prevailing party.
If such an award would result in manifest injustice, however, the arbitrator may
apportion such costs, fees and expenses between the parties as such arbitrator
deems just and equitable.
12.1.4 Burden of Proof. For any Dispute submitted to
arbitration, the burden of proof will be as it would be if the claim were
litigated in a judicial proceeding.
12.1.5 Award. Upon the conclusion of any arbitration
proceedings hereunder, the arbitrator will render findings of fact and
conclusions of law and a written opinion setting forth the basis and reasons for
any decision reached and will deliver such documents to each party to this
Agreement along with a signed copy of the award.
12.1.6 Terms of Arbitration. The arbitrator chosen in
accordance with these provisions will not have the power to alter, amend or
otherwise affect the terms of these arbitration provisions or the provisions of
this Agreement.
12.1.7 Exclusive Remedy. Except as specifically otherwise
provided in this Agreement, arbitration will be the sole and exclusive remedy of
the parties for any Dispute arising out of this Agreement.
12.2 Assignment; Binding Upon Successors and Assigns. No party
hereto may assign any of its rights or obligations hereunder without the prior
written consent of all the other parties hereto. This Agreement will be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
12.3 Severability. If any provision of this Agreement, or the
application thereof, is for any reason held to any extent to be invalid or
unenforceable, the remainder of this Agreement and 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
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 the void or unenforceable provision.
12.4 Counterparts. This Agreement may be executed in counterparts,
each of which will be an original as regards any party whose name appears
thereon and all of which together will constitute one and the same instrument.
This Agreement will become binding when one or more counterparts hereof,
individually or taken together, bear the signatures of all parties reflected
hereon as signatories.
12.5 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 on such
party, and the exercise of any one remedy will not preclude the exercise of any
other.
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12.6 Amendment and Waivers. Any term or provision of this Agreement
may be amended, and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only by a writing signed by the party to be bound thereby
(except as otherwise provided herein). The waiver by a party of any breach
hereof or default in the performance hereof will not be deemed to constitute a
waiver of any other default or any succeeding breach or default.
12.7 No Waiver. The failure of any party to enforce any of the
provisions hereof will not be construed to be a waiver of the right of such
party thereafter to enforce such provisions. The waiver by any party of the
right to enforce any of the provisions hereof on any occasion will not be
construed to be a waiver of the right of such party to enforce such provision on
any other occasion.
12.8 Expenses. Intuit will bear its own expenses and the expenses
and fees of its own accountants, attorneys, investment bankers and other
professionals incurred with respect to this Agreement and the transactions
contemplated hereby. The Stockholders jointly and severally will bear (i) their
own expenses and the expenses and fees of their own accountants, attorneys,
investment bankers and other professionals (including any broker's or finder's
fees) and (ii) Milkyway's expenses and the expenses and fees of Milkyway's
accountants, attorneys, investment bankers and other professionals (including
any broker's or finder's fees) incurred with respect to this Agreement and the
transactions contemplated hereby.
12.9 Notices. Any notice or other communication required or
permitted to be given under this Agreement will be in writing, will be delivered
personally or by mail or express delivery, postage prepaid, and will be deemed
given upon actual delivery or, if mailed by registered or certified mail, on the
third business day following deposit in the mails, addressed as follows:
(i) If to Intuit:
Intuit Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Fenwick & ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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(ii) If to Milkyway:
Kabushiki Kaisha Milkyway
▇-▇▇-▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇-▇▇
▇▇▇▇▇, ▇▇▇▇▇
Attention: President
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with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(iii) If to the Stockholders:
at the address listed below their respective names on the signature pages below
or to such other address as the party in question may have furnished to the
other party by written notice given in accordance with this Section 12.9.
12.10 Construction of Agreement. The language hereof will not be
construed for or against either party. A reference to an article, section or
exhibit will mean an article or section in, or an exhibit to, this Agreement,
unless otherwise explicitly set forth. The titles and headings in this Agreement
are for reference purposes only and will not in any manner limit the
construction of this Agreement. For the purposes of such construction, this
Agreement will be considered as a whole.
12.11 No Joint Venture. Nothing contained in this Agreement will be
deemed or construed as creating a joint venture or partnership between the
parties hereto. No party is by virtue of this Agreement authorized as an agent,
employee or legal representative of any other party. No party will have the
power to control the activities and operations of any other, and the parties'
status is, and at all times, will continue to be, that of independent
contractors with respect to each other. No party will have any power or
authority to bind or commit any other. No party will hold itself out as having
any authority or relationship in contravention of this Section 12.11.
12.12 Further Assurances. Each party agrees to cooperate fully with
the other party and to execute such further instruments, documents and
agreements and to give such further written assurances as may be reasonably
requested by the other party to evidence and reflect the transactions provided
for herein and to carry into effect the intent of this Agreement.
12.13 Absence of Third Party Beneficiary Rights. No provisions of
this Agreement are intended, nor will be interpreted, to provide or create any
third party beneficiary rights or any other rights of any kind in any client,
customer, affiliate, partner or employee of any party hereto or any other person
or entity, unless specifically provided otherwise herein, and, except as so
provided, all provisions hereof will be personal solely between the parties to
this Agreement.
12.14 Public Announcement. Intuit and Milkyway will issue a press
release approved by both parties announcing the Exchange as soon as practicable
following the execution of this Agreement. Intuit may issue such press releases,
and make such other
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disclosures regarding the Exchange, as it determines to be required or
appropriate under applicable securities laws or National Association of
Securities Dealers, Inc. rules after reasonable consultation, where possible,
with Milkyway. Milkyway will take all reasonable precautions to prevent any
trading in the securities of Intuit by officers, directors, employees and agents
of Milkyway (a) having knowledge of any material information regarding Intuit
provided hereunder until the information in question has been publicly disclosed
or (b) to the extent that such trading would adversely affect the treatment of
the Exchange as a "pooling of interests" for accounting purposes.
12.15 Time is of the Essence. The parties hereto acknowledge and
agree that time is of the essence in connection with the execution, delivery and
performance of this Agreement, and that they will each utilize their best
efforts to satisfy all the conditions to Closing on or before January 1, 1996.
12.16 Entire Agreement. This Agreement, the exhibits hereto and the
Confidentiality Agreement constitute the entire understanding and agreement of
the parties hereto with respect to the subject matter hereof and supersede all
prior agreements or understandings, inducements or conditions, express or
implied, written or oral, between the parties with respect to the subject matter
hereof. The express terms hereof control and supersede any course of performance
or usage of trade inconsistent with any of the terms hereof. The December 1995
Letter of Intent between Milkyway and Intuit is hereby terminated.
12.17 Delivery. Delivery of any document, financial statement, tax
or information return, list or other item required to be delivered to any party
pursuant to this Agreement (each individually, a "Document") shall be deemed to
have occurred if such Document is delivered directly to the party to receive
such Document or directly to any advisor to or agent for such party, provided,
however, that such Document must be delivered in the form and language required
pursuant to this Agreement. Documents delivered by Milkyway in response to
Intuit's due diligence request were delivered in Japanese and/or English.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
INTUIT INC. KABUSHIKI KAISHA MILKYWAY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ By: /s/ MASASHI MIKI
--------------------------- ---------------------------
Masashi Miki
Its: President
---------------------------
STOCKHOLDERS
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇▇ ▇▇▇▇▇▇
------------------------------- -------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
3-11-12 Mukaibara 3-11-12 Mukaibara
Asao-ku, Kawasaki-▇▇▇ ▇▇▇▇-ku, Kawasaki-shi
Kanagawa-▇▇▇, Japan Kanagawa-▇▇▇, Japan
/s/ MASASHI MIKI /s/ SADAO MIKI
------------------------------- -------------------------------
Masashi Miki Sadao Miki
▇-▇-▇-▇▇▇ ▇▇▇▇ ▇-▇▇-▇▇ ▇▇▇▇▇▇▇-▇▇▇▇▇
▇▇▇▇▇-▇▇▇, ▇▇▇▇▇▇▇-▇▇▇, ▇▇▇▇▇ Kawagoe-shi, Saitama-▇▇▇, Japan
/s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------- -------------------------------
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
2-205-1 Sengen-cho ▇-▇▇ ▇▇▇▇-▇▇▇
▇▇▇▇▇-▇▇▇, ▇▇▇▇▇▇▇-▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇, ▇▇▇▇▇▇▇-▇▇▇, ▇▇▇▇▇
SIGNATURE PAGE TO EXCHANGE AGREEMENT
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TABLE OF CONTENTS
Page
----
1. DEFINITIONS........................................................ 1
1.1 Balance Sheet Date............................................ 1
1.2 Closing ...................................................... 1
1.3 Closing Date.................................................. 1
1.4 Code ......................................................... 1
1.5 Confidentiality Agreement..................................... 2
1.6 Employee Plans................................................ 2
1.7 Employment Agreements......................................... 2
1.8 Escrow Agreement.............................................. 2
1.9 Escrow Period................................................. 2
1.10 Escrow Shares................................................. 2
1.11 The Exchange.................................................. 2
1.12 Exchange Shares............................................... 2
1.13 Material Agreement............................................ 2
1.14 Major Stockholder............................................. 2
1.15 Intuit Affiliates Agreement................................... 2
1.16 Intuit Ancillary Agreements................................... 2
1.17 Intuit Common Stock........................................... 2
1.18 Intuit Options................................................ 3
1.19 Milkyway Ancillary Agreements................................. 3
1.20 Milkyway Certificates......................................... 3
1.21 Milkyway Intellectual Property................................ 3
1.22 Milkyway Stock................................................ 3
1.23 Nakamura Agreement............................................ 3
1.24 Securities Act................................................ 3
1.25 SEC........................................................... 3
1.26 Stockholders Ancillary Agreements............................. 3
1.27 U.S. Person................................................... 3
1.28 Yoshii Agreement.............................................. 3
2. THE EXCHANGE ...................................................... 3
2.1 The Exchange.................................................. 3
2.2 No Adjustments................................................ 3
2.3 Escrow Agreement.............................................. 4
2.4 Securities Law Issues......................................... 4
2.5 Qualified Stock Purchase...................................... 4
2.6 Pooling of Interests.......................................... 4
44
TABLE OF CONTENTS
Page
----
3. REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDERS ............................................... 4
3.1 Title ........................................................ 4
3.2 Organization ................................................. 5
3.3 Power, Authorization and Validity............................. 5
3.4 Capitalization ............................................... 5
3.5 Subsidiaries; Not a Subsidiary................................ 6
3.6 No Violation of Existing Agreements........................... 6
3.7 Litigation ................................................... 6
3.8 Milkyway Financial Statements................................. 7
3.9 Taxes ........................................................ 7
3.10 Title to Properties........................................... 7
3.11 Absence of Certain Changes.................................... 8
3.12 Agreements and Commitments.................................... 9
3.13 Intellectual Property and Products............................ 10
3.14 Compliance with Laws.......................................... 11
3.15 Certain Transactions and Agreements........................... 12
3.16 Employees .................................................... 12
3.17 Corporate Documents........................................... 13
3.18 No Brokers.................................................... 13
3.19 Disclosure.................................................... 13
3.20 Information Supplied.......................................... 14
3.21 Books and Records............................................. 14
3.22 Insurance .................................................... 14
3.23 Environmental Matters......................................... 14
3.24 Securities Matters............................................ 15
4. REPRESENTATIONS AND WARRANTIES OF INTUIT........................... 16
4.1 Organization and Good Standing ............................... 16
4.2 Power, Authorization and Validity ............................ 16
4.3 Capitalization ............................................... 17
4.4 No Violation of Certificate or Laws........................... 17
4.5 Disclosure ................................................... 17
4.6 No Brokers ................................................... 18
4.7 Pooling ...................................................... 18
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TABLE OF CONTENTS
Page
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5. STOCKHOLDER AND MILKYWAY COVENANTS................................. 18
5.1 Advice of Changes ............................................ 18
5.2 Maintenance of Business ...................................... 18
5.3 Conduct of Business .......................................... 18
5.4 Certain Agreements ........................................... 20
5.5 Regulatory Approvals ......................................... 21
5.6 Necessary Consents ........................................... 21
5.7 Litigation ................................................... 21
5.8 No Other Negotiations ........................................ 21
5.9 Access to Information ........................................ 21
5.10 Satisfaction of Conditions Precedent.......................... 21
5.11 Securities Laws .............................................. 22
5.12 Milkyway Affiliates Agreements................................ 22
5.13 Pooling ...................................................... 22
5.14 Assignment of Copyrights...................................... 22
5.15 Resale of Exchange Shares..................................... 22
5.16 Shareholder Resolution........................................ 23
5.17 Miki Agreement................................................ 23
6. INTUIT COVENANTS .................................................. 23
6.1 Access to Information ........................................ 23
6.2 Advice of Changes ............................................ 23
6.3 Satisfaction of Conditions Precedent.......................... 23
6.4 Regulatory Approvals ......................................... 23
6.5 Intuit Affiliates Agreements.................................. 23
6.6 Litigation ................................................... 24
6.7 Securities Laws .............................................. 24
7. CLOSING MATTERS ................................................... 24
7.1 The Closing .................................................. 24
7.2 Exchanges at Closing ......................................... 24
7.3 Legend Restrictions .......................................... 25
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TABLE OF CONTENTS
Page
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8. CONDITIONS TO OBLIGATIONS OF THE STOCKHOLDERS...................... 26
8.1 Accuracy of Representations and Warranties.................... 26
8.2 Covenants .................................................... 26
8.3 Compliance with Law........................................... 26
8.4 Government Consents........................................... 26
8.5 Documents .................................................... 26
8.6 No Litigation ................................................ 27
8.7 Opinion of Intuit's Counsel .................................. 27
8.8 No Changes ................................................... 27
9. CONDITIONS TO OBLIGATIONS OF INTUIT................................ 27
9.1 Accuracy of Representations and Warranties.................... 27
9.2 Covenants .................................................... 27
9.3 Compliance with Law .......................................... 27
9.4 Government Consents .......................................... 27
9.5 Opinion of the Stockholders' and Milkyway's Counsel........... 28
9.6 Requisite Approvals .......................................... 28
9.7 No Litigation ................................................ 28
9.8 Documents .................................................... 28
9.9 Pooling Letter ............................................... 28
9.10 Certain Agreements............................................ 28
9.11 Escrow ....................................................... 28
9.12 Employment and Other Agreements............................... 29
9.13 Milkyway Affiliates Agreements ............................... 29
9.14 Modification of Certain Agreements............................ 29
9.15 Stockholder Resolution ....................................... 29
10. TERMINATION OF AGREEMENT .......................................... 29
10.1 Termination................................................... 29
10.2 Certain Continuing Obligations................................ 30
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TABLE OF CONTENTS
Page
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11. SURVIVAL OF REPRESENTATIONS, INDEMNIFICATION AND
REMEDIES, CONTINUING COVENANTS................................... 30
11.1 Survival of Representations.................................. 30
11.2 Stockholders Agreement to Indemnify.......................... 30
11.3 Option Registration ......................................... 31
11.4 Announcement of Results...................................... 31
11.5 Incentive Benefits .......................................... 31
11.6 Work Rules .................................................. 32
11.7 Financial Statements ........................................ 32
11.8 Proxy ....................................................... 32
11.9 Issuance of Intuit Options................................... 32
11.10 Management Incentive Plan.................................... 32
12. MISCELLANEOUS ..................................................... 33
12.1 Governing Language and Law; Dispute Resolution............... 33
12.2 Assignment; Binding upon Successors and Assigns.............. 35
12.3 Severability ................................................ 35
12.4 Counterparts ................................................ 35
12.5 Other Remedies .............................................. 35
12.6 Amendment and Waivers........................................ 35
12.7 No Waiver ................................................... 35
12.8 Expenses .................................................... 36
12.9 Notices ..................................................... 36
12.10 Construction of Agreement ................................... 37
12.11 No Joint Venture ............................................ 37
12.12 Further Assurances .......................................... 37
12.13 Absence of Third Party Beneficiary Rights.................... 37
12.14 Public Announcement ......................................... 37
12.15 Time is of the Essence ...................................... 38
12.16 Entire Agreement ............................................ 38
12.17 Delivery .................................................... 38
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LIST OF EXHIBITS
Exhibit A Milkyway Stockholders
Exhibit B-1 Form of Employment Agreements
Exhibit B-2 Form of Representative Director Agreement
Exhibit C Form of Escrow Agreement
Exhibit D Form of Agreement with ▇▇. ▇▇▇▇▇▇▇▇
Exhibit E Form of Agreement with ▇▇. ▇▇▇▇▇▇
Exhibit F Form of Invention Assignment Agreement
Exhibit G Form of Milkyway Affiliates Agreement
Exhibit H Pooling Compliance Actions
Exhibit I-1 Form of Assignment of Copyright (Major Stockholders)
Exhibit I-2 Form of Assignment of Copyright (Okazaki)
Exhibit J Form of Intuit Affiliates Agreement
Exhibit K Employee Stock Options
Exhibit L Form of Fenwick & West Opinion
Exhibit M Form of Mitsui, Yasuda, Wani & Maeda Opinion
Exhibit N Milkyway Disclosure Schedule
Exhibit O Resolutions to be Adopted at an Extraordinary Shareholder Meeting
Exhibit P Form of Miki Agreement
The exhibits listed above will be furnished to the Commission upon
request.
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