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EXHIBIT 99.1
STOCK EXCHANGE AGREEMENT
THIS STOCK EXCHANGE AGREEMENT (this "Agreement") dated August 27, 1999
is by and between CONTINUUS SOFTWARE CORPORATION (the "Company") and U.S.
BANCORP XXXXX XXXXXXX INC. (the "Stockholder").
RECITALS
A. The Stockholder owns in excess of 5% of the voting capital stock of
the Company (the "Common Stock").
B. The Stockholder desires to exchange 500,000 shares of Common Stock
(the "Common Shares") for 5,000 shares of Series A Non-Voting Convertible
Preferred Stock, $.001 par value per share, of the Company (the "Preferred
Shares").
C. The Company desires to issue the Preferred Shares in exchange for the
Common Shares.
NOW THEREFORE, in consideration of the mutual promises contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:
1. Effective upon execution of this Agreement, (a) the Company will
issue to the Stockholder the Preferred Shares in consideration of the transfer
by the Stockholder to the Company of the Common Shares, duly endorsed for
transfer or accompanied by a stock power duly executed in blank, and (b) the
Stockholder will acquire the Preferred Shares in exchange for the Common Shares.
2. The Stockholder represents and warrants to, and agrees with, the
Company that the following representations and warranties are, as of the date of
this Agreement, true, correct and complete:
(a) The execution, delivery and performance by the Stockholder of
this Agreement and the effectuation of the transactions contemplated hereby are
within its corporate power and have been duly authorized by all proceedings
required to be taken under its certificate of incorporation and the laws of the
State of Delaware.
(b) The Stockholder is the beneficial and record owner of the
Common Shares free and clear of all liens, pledges or other encumbrances.
(c) The Stockholder acknowledges that the Preferred Shares issued
to it and the shares of Common Stock into which the Preferred Shares are
convertible will not be registered under the Securities Act of 1933, as amended
(the "Securities Act"), and may not be sold, transferred or otherwise
distributed in the absence of such registration or an applicable exemption
therefrom. The Stockholder further acknowledges that the Company has not granted
it and does not hereby grant it any right to have the Preferred Shares or the
shares of Common
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Stock into which the Preferred Shares are convertible registered for sale in
accordance with the Securities Act.
3. The Company represents and warrants to, and agrees with, the
Stockholder that the following representations and warranties are, as of the
date of this Agreement, true, correct and complete:
(a) The execution, delivery and performance by the Company of
this Agreement and the effectuation of the transactions contemplated hereby are
within its corporate power and have been duly authorized by all proceedings
required to be taken under its certificate of incorporation and the laws of the
State of Delaware.
(b) The designations, rights and preferences of the Preferred
Shares are as set forth in the Certificate of Designation attached hereto as
Exhibit A.
(c) Upon execution of this Agreement and completion of the
transactions contemplated herein in accordance with the terms of this Agreement,
the Preferred Shares will be duly issued, fully paid and non-assessable.
4. (a) The Stockholder agrees to indemnify the Company and its
affiliated companies and its and their officers, directors, employees, agents
and representatives for and against all claims, actions, costs, expenses,
damages, reasonable attorneys fees and other losses ("Claims") made, arising or
paid with respect to (i) the issuance of the Preferred Shares or (ii) the
exchange of the Preferred Shares for the Common Shares to the extent said Claims
are not actually paid by the Company's liability and officers and directors
insurance policies, and except to the extent that such Claims arise from the
negligent or willful misconduct of the Company. Said indemnification shall,
without limiting the generality of the foregoing, include any deductibles or
retentions under said insurance policies and any increase in premiums charged to
the Company as a result of said Claims. The Company makes no representation or
warranty as to coverage, or the scope thereof, of any insurance policies it now
has or may in the future have.
(b) The Company agrees to, and to the extent it is reasonably
able, to cause its affiliated companies and its and their officers, directors,
employees, agents and representatives to first pursue recovery of any Claims
under the applicable insurance policies.
5. (a) All claims for indemnification under this Agreement shall be
asserted and resolved as follows in this Section 5.
(b) A party claiming indemnification under this Agreement (an
"Indemnified Party") shall promptly (i) notify the Stockholder of any Claim that
could give rise to a right of indemnification under this Agreement and (ii)
transmit to the Stockholder a written notice ("Claim Notice") describing in
reasonable detail the nature of the Claim, a copy of all papers served with
respect to that Claim (if any), an estimate of the amount of damages
attributable to the Claim to the extent feasible (which estimate shall not be
conclusive of the final amount of such Claim) and the basis for the Indemnified
Party's request for indemnification under this Agreement. The failure to
promptly deliver a Claim Notice shall not relieve the Stockholder of its
obligations to the Indemnified Party with respect to the related Claim except to
the extent that the resulting delay is materially prejudicial to the defense of
that Claim.
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(c) The Indemnified Party, and/or its insurance carrier(s)
pursuant to the terms of any relevant insurance policy, shall have full control
of such defense. Notwithstanding the foregoing, if the Stockholder has delivered
a written notice to the Indemnified Party to the effect that the Stockholder
disputes its potential liability to the Indemnified Party under Sections 4 and 5
and if such dispute is resolved in favor of the Stockholder, the Stockholder
shall not be required to bear the costs and expenses of the Indemnified Party's
defense pursuant to this Section 5 or of the Stockholder's participation therein
at the Indemnified Party's request. The Stockholder may participate in, but not
control, any defense or settlement controlled by the Indemnified Party pursuant
to this Section 5(c), and the Stockholder shall bear its own costs and expenses
with respect to such participation.
(d) Payments of all amounts owing by the Stockholder pursuant to
any Claim under Sections 4 and 5 shall be made (i) with respect to reasonable
attorneys fees and other expenses of defense, as incurred and (ii) with respect
to other Claims, within 30 days after the latest of (A) the settlement of that
Claim, (B) the expiration of the period for appeal of a final adjudication of
that Claim or (C) the expiration of the period for appeal of a final
adjudication of the Stockholder's liability to the Indemnified Party under this
Agreement.
6. Execution of this Agreement shall be deemed to be the Stockholder's
written consent, to the extent required by the Underwriting Agreement between
the Company and the Stockholder and CIBC World Markets Corp. as representatives
of the several underwriters named in Schedule I thereto, dated July 28, 1999,
for the Company to issue the Preferred Shares.
7. Each party represents and warrants to the other that such person has
not directly or indirectly employed or become obligated to pay any broker,
finder or similar agent in connection with the transactions contemplated hereby
and agrees to indemnify the other party against all claims arising for fees and
commissions of brokers or similar agents employed or promised payment by such
person.
8. This Agreement constitutes the entire agreement and understanding
between the parties on the subject matter hereof and supersedes all prior
agreements and understandings, both written and oral, relating to the subject
matter of this Agreement.
9. Each party will pay all fees, costs and expenses incurred by it
connection with the transactions contemplated herein, including, without
limitation, the fees and expenses of attorneys, accountants and other persons,
and no portion thereof shall be paid by the other party hereto, except if
otherwise specifically provided herein.
10. This Agreement, and the rights and obligations of the parties
hereto, shall be governed and construed and enforced accordance with the
substantive laws of the State of California without regard to the conflicts of
laws provisions thereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
U.S. BANCORP XXXXX XXXXXXX INC.
By: /s/ Xxxxxxx X. Xxxxx
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Print Name: Xxxxxxx X. Xxxxx
Title: General Counsel and Managing
Director
CONTINUUS SOFTWARE CORPORATION
By: /s/ Xxxx X. Xxxx
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Xxxx X. Xxxx
President and Chief Executive Officer
With regard to Section 4(a)(x) of the
Underwriting Agreement dated July 28,
1999, as Representatives of the several
Underwriters listed on Schedule I of
such Underwriting Agreement (as each of
such terms are used therein)
U.S. BANCORP XXXXX XXXXXXX INC.
CIBC WORLD MARKETS CORP.
BY: U.S. BANCORP XXXXX XXXXXXX INC.
By: /s/ Xxxxxxx X. Xxxxx
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Print Name: Xxxxxxx X. Xxxxx
Title: General Counsel and Managing
Director
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EXHIBIT A
CERTIFICATE OF DESIGNATION