EXHIBIT 2.3
PARTICIPATION AGREEMENT
This Participation Agreement dated as of December 12, 1996 (the "Agreement")
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by and among SystemSoft Corporation, a Delaware corporation ("SystemSoft"),
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Black Acquisition Corporation, a Delaware corporation and a wholly owned
subsidiary of SystemSoft (the "Company"), Radish Communications Systems, Inc., a
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Delaware Corporation ("Radish"), and certain securityholders of Radish listed on
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the signature pages hereto (the "Major Stockholders"). Capitalized terms not
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defined herein have the meanings assigned to them in the Agreement and Plan of
Merger and Reorganization (the "Merger Agreement") dated the date hereof by and
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among SystemSoft, the Company and Radish.
WITNESSETH:
WHEREAS, pursuant to the Merger Agreement, SystemSoft, the Company and Radish
have agreed to merge (the "Merger") the Company with and into Radish on the
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terms and conditions set forth therein; and
WHEREAS, to induce SystemSoft to enter into the Merger Agreement, the Major
Stockholders, as the major stockholders of Radish, have agreed to enter into
this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual agreements,
provisions and covenants contained in this Agreement, the parties hereby agree
as follows:
ARTICLE I
COVENANTS
Each of the Major Stockholders hereby covenants and agrees with Radish,
SystemSoft and the Company as follows:
1.1 Cooperation. It shall cooperate fully with Radish, SystemSoft and the
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Company in furnishing any information or performing any action reasonably
requested by any such party, which information or action is necessary for the
successful consummation of the transactions contemplated by the Merger
Agreement. It shall use all reasonable efforts to cause the Closing to occur at
the earliest practical time.
1.2 Other Required Information. It shall furnish to Radish, SystemSoft and
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the Company all information concerning itself and its subsidiaries and
affiliates as is required to be set forth in any application or statement to be
filed with any Governmental Authority in connection with the transactions
contemplated by the Merger Agreement or otherwise.
1.3 Confidentiality. (i) All information furnished by one party (the
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"Disclosing Party") to any other party (the "Receiving Party") in connection
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with this Agreement and the Merger Agreement and the transactions contemplated
hereby and thereby shall be kept confidential by the Receiving Party (and shall
be used by it only in connection with this Agreement and the Merger Agreement
and the transactions contemplated hereby and thereby or, in the case of
Participation Agreement --Page 2
SystemSoft, as is necessary, appropriate or desirable for the corporate purposes
of SystemSoft; provided, however, that in the event the transactions
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contemplated by this Agreement and the Merger Agreement shall fail to be
consummated, SystemSoft shall keep all such information confidential), except to
the extent that such information (A) is or becomes generally available to the
public other than as a result of an act or omission by the Receiving Party (or
any of its directors, officers, employees, agents or advisors (the "Agents")),
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(B) was within the possession of the Receiving Party prior to its being
furnished to the Receiving Party by or on behalf of the Disclosing Party
provided that the source of such information is not known by the Receiving Party
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to be bound by a confidentiality agreement with or other contractual, legal or
fiduciary obligation of confidentiality to the Disclosing Party or any other
party with respect to such information, (C) becomes available to the Receiving
Party on a non-confidential basis from a source other than the Disclosing Party
or any of its Agents, provided that such source is not known by the Receiving
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Party to be bound by a confidentiality agreement with or other contractual,
legal or fiduciary obligation of confidentiality to the Disclosing Party with
respect to such information or (D) is required to be disclosed in any document
filed with the Commission or any other Governmental Authority.
(ii) If the Receiving Party or any of its Agents is requested or
required (by oral questions, interrogatories, requests for information or
documents in legal proceedings, subpoena, civil investigative demand or other
similar process) to disclose any of the confidential information, the Receiving
Party shall use all reasonable efforts to provide the Disclosing Party with
prompt written notice of any such request or requirement so that the Disclosing
Party may seek a protective order or other appropriate remedy and/or waive
compliance with the provisions of this Agreement. If, in the absence of a
protective order or other remedy or the receipt of a waiver by the Disclosing
Party, the Receiving Party or any of its Agents are nonetheless, based on the
advice of counsel, required to disclose confidential information to any tribunal
or else stand liable for contempt or suffer other censure or penalty, the
Receiving Party or its Agents may, without liability hereunder, disclose to such
tribunal only that portion of the confidential information which such counsel
advises the Receiving Party is legally required to be disclosed, provided that
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the Receiving Party exercise its best efforts to preserve the confidentiality of
the confidential information, including, without limitation, by cooperating with
the Disclosing Party to obtain an appropriate protective order or other reliable
assurance that confidential treatment will be accorded the confidential
information by such tribunal.
(iii) If the transactions contemplated by this Agreement and the
Merger Agreement shall fail to be consummated, the Receiving Party shall
promptly cause all copies of documents or extracts thereof containing
information and data as to the Disclosing Party to be returned to the Disclosing
Party or destroyed.
1.4 Publicity. Except as otherwise required by applicable law or by any
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applicable rules of any securities exchange or market, it shall not issue any
press release or make any other public statement without obtaining the prior
approval of SystemSoft.
1.5 Certain Tax and Accounting Matters. It shall not, either before or
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after the consummation of the Merger, take any action that would prevent the
Merger from qualifying as a tax-free reorganization under Section 368 of the
Code.
1.6 Other Negotiations. It shall not, and shall not permit Radish or any
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of its Agents to, directly or indirectly, initiate, solicit, encourage
discussion with, provide information to, or
Participation Agreement --Page 3
approve a transaction with, any corporation, partnership, person or other entity
or group concerning any merger, purchase or sale of substantial assets, sale of
shares of capital stock (or securities convertible or exchangeable or otherwise
evidencing, or any agreement or instrument evidencing, the right to acquire
capital stock) or similar transaction involving Radish (all such transactions
being referred to herein as "Acquisition Transactions"). It shall promptly
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communicate to SystemSoft the terms of any proposal which it may receive in
respect of an Acquisition Transaction and any request by or indication of
interest on the part of any third party with respect to the initiation of any
Acquisition Transaction or discussions with respect thereto.
1.7 Compliance with the Securities Act; Legends. It acknowledges and
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understands that the shares of SystemSoft Common to be issued in the Merger are
being issued without registration under the Securities Act of 1933, as amended
(the "Securities Act"), based upon an exemption provided under the Securities
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Act and that its representations contained in this Agreement are a material
factor with respect to that exemption. The shares of SystemSoft Common to be
received in the Merger are "restricted securities" within the meaning of Rule
144 of the Securities and Exchange Commission and as such may not be sold or
disposed of other than pursuant to Rule 144 under the Securities Act, pursuant
to an exemption from registration provided by the Securities Act or pursuant to
an effective registration statement under the Securities Act. It consents to
having appropriate legends placed on the certificates representing the shares of
SystemSoft Common relating to such restrictions on transfer. It acknowledges
and understands that any stockholder of the Company who holds less than 10,000
shares of Radish Common shall receive, in lieu of shares of SystemSoft Common,
cash in an amount determined in accordance with Section 2.2(d) of the Merger
Agreement.
1.8 No Purchases or Sales of SystemSoft Shares. Neither it nor any of its
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affiliates will, directly or indirectly, purchase, sell, borrow, lend or
otherwise acquire or dispose of any shares of SystemSoft Common or other
securities of SystemSoft, or other securities convertible into or exercisable
for shares of SystemSoft Common or such other SystemSoft securities whenever
acquired, or make any offer, solicitation, recommendation or agreement relating
thereto at any time prior to the Expiration Date. "Expiration Date" shall mean
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the earlier of (i) such time as the Merger shall become effective in accordance
with the terms and provisions of the Merger Agreement and (ii) such time as the
Merger Agreement shall have been terminated pursuant to Article VIII thereof.
1.9 Agreement to Vote Shares. At every meeting of the stockholders of
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Radish called on or prior to the Expiration Date, and at every adjournment
thereof, and on every action or approval by written consent of the stockholders
of Radish, it shall vote all shares of Radish capital stock owned by it: (i) in
favor of approval and adoption of the Merger Agreement and the Merger and any
matter that could reasonably be expected to facilitate the Merger and (ii)
against approval of any proposal made in opposition to or competition with
consummation of the Merger (an "Opposing Proposal").
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1.10 Irrevocable Proxy. For good and valuable consideration, the receipt
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and sufficiency of which is hereby acknowledged, it hereby makes, constitutes
and appoints SystemSoft, or such other designee of SystemSoft, to act as its
proxy and attorney-in-fact in respect of all voting shares of voting capital
stock of Radish presently owned or hereafter acquired by it, or over which it
has voting control, for the purpose of effectuating the transactions
contemplated by this Agreement and the Merger and authorizes SystemSoft or its
designee to vote all such shares of capital stock of Radish held by it in favor
of the approval and adoption of the Merger Agreement
Participation Agreement --Page 4
and the Merger and against any Opposing Proposal. This irrevocable proxy is
given to SystemSoft in consideration of, and in order to carry out the terms of
the Merger and shall expire on the earlier of six months from the date of this
Agreement or one day after the Effective Time. It also acknowledges that this
proxy applies only to shares of capital stock of Radish presently owned or
hereafter acquired by it and is coupled with an interest and shall not be
revocable or revoked by it.
1.11 No Proxy Solicitations. Except as required by law, it shall not, and
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will not permit any person under its control to: (i) solicit proxies or become
a "participant" in a "solicitation" (as such terms are defined in Regulation 14A
under the Exchange Act) with respect to an Opposing Proposal; or (ii) initiate a
stockholders' vote or action by consent of Radish stockholders with respect to
an Opposing Proposal.
1.12 Consent and Waiver. To the extent that it, together with the other
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Major Stockholders, has the power to do so, each Major Stockholder agrees and
hereby takes all necessary action to terminate all rights of all of the parties
(including their successors and assigns) named in the Series A Convertible
Preferred Stock Purchase Agreement dated March 31, 1992 by and among Radish and
the other parties named therein; the Registration Rights Agreement dated March
31, 1992 by and between Radish and the other parties names therein; the Founder
Stock Restriction Agreement dated March 31, 1992 by and between Radish, ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇ and the other parties named therein; the Founder Stock Restriction
Agreement dated March 31, 1992 by and between Radish, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and
the other parties named therein; the Series B Convertible Preferred Stock
Purchase Agreement dated February 15, 1994 by and between Radish and the other
parties named therein; the Amended and Restated Registration Rights Agreement
dated February 15, 1994 by and between Radish and the other parties named
therein; the Amended and Restated Founder Stock Restriction Agreement dated
February 15, 1994 by and between Radish, ▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇ and the other
parties named therein; the Amended and Restated Founder Stock Restriction
Agreement dated February 15, 1994 by and between Radish, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and
the other parties named therein; Side Letter Agreement granting a Right of First
Refusal dated June 17, 1994 by and between Radish and the other parties named
therein; the Series C Convertible Preferred Stock Purchase Agreement dated
February 17, 1995 by and between Radish and the other parties named therein; the
Amended and Restated Registration Rights Agreement dated February 17, 1995 by
and between Radish and the other parties named therein; the Participation
Agreement dated February 17, 1995 by and between Radish and the other parties
named therein; the Letter Agreement dated May 19, 1995 by and between Radish and
the other parties named therein; the Warrant Purchase Agreement dated August 31,
1995 by and between Radish and Packard ▇▇▇▇ Electronics, Inc.; the Series D
Convertible Preferred Stock and Warrant Purchase Agreement dated April 30, 1996
by and between Radish and the other parties named therein; the Amended and
Restated Registration Rights Agreement dated April 30, 1996 by and between
Radish and the other parties named therein; the Amended and Restated Founder
Stock Restriction Agreement dated April 30, 1996 by and between Radish, ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇ and the other parties named therein; and the Amended and Restated
Founder Stock Restriction Agreement dated April 30, 1996 by and between Radish,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and the other parties named therein and, to the extent any
such rights are not so terminated, it hereby irrevocably waives any rights it
may have under such agreements effective immediately prior to the Effective
Time. In addition, it hereby gives any consents or waivers (including, without
limitation, a waiver of any and all notice requirements) that are reasonably
required for the consummation of the Merger under the terms of any agreement to
which it is a party or pursuant to any other rights it may have.
Participation Agreement --Page 5
1.13 Warrants. (a) As a condition of the Merger, all outstanding Radish
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Warrants must either be exercised, surrendered to Radish or otherwise
terminated prior to the Effective Time, with all rights to purchase Radish
Common under the Radish Warrants or any registration rights relating to the
shares of Radish Common issuable upon exercise of the Radish Warrants
relinquished in a manner satisfactory to SystemSoft. In furtherance of the
foregoing, each Major Stockholder hereby waives any right to advance notice of
the Merger or transactions contemplated thereby and agrees, by execution of this
Agreement, to either exercise, surrender to Radish or otherwise terminate the
Radish Warrants held by such Major Stockholder prior to the Effective Time and
to relinquish any registration rights relating to shares of Radish Common
issuable to the Major Stockholder upon exercise of any such Radish Warrants.
Each Major Stockholder which is a holder of a Radish Warrant further agrees that
any Radish Warrants not properly exercised prior to the Effective Time shall
terminate as of the Effective Time of the Merger and any rights theretofor
existing under or by virtue of the Radish Warrants shall be null and void and of
no further force and effect. For purposes of this Agreement, "Radish Warrants"
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means (a) the warrants to purchase an aggregate of 626,468 shares of Radish
Common with an exercise price of $.10 issued on February 15, 1994 and the
warrants to purchase an aggregate of 114,180 shares of Radish Common with an
exercise price of $.10 issued on June 17, 1994 (collectively, the "Series B
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Warrants"); (b) the warrants to purchase an aggregate of 1,409,091 shares of
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Radish Common with an exercise price of $.22 issued on April 30, 1996 (the
"Series D Warrants"); (c) the warrant to purchase 40,000 shares of Series B
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Preferred with an exercise price of $1.00 issued April 24, 1994 (the "Phoenix
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Warrant"); and (d) the warrants to purchase an aggregate of 1,200,000 shares of
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Radish Common with an exercise price of $2.00 issued August 31, 1995 and the
warrant to purchase 600,000 shares of Radish Common with an exercise price of
$.15 issued on August 31, 1995 (collectively, the "Packard ▇▇▇▇ Warrants").
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(b) Each Major Stockholder which is a holder of a Radish Warrant
hereby agrees that pursuant to Section 11 of the Series B Warrants, Series D
Warrants and the Packard ▇▇▇▇ Warrants and Section 8.12 of the Phoenix Warrant,
Sections 2(d) of the Series B Warrants, Series D Warrants and the Packard ▇▇▇▇
Warrants and Section 2.2 of the Phoenix Warrant be, and hereby are, amended by
deleting said Sections in their entirety.
1.14 Preferred Stock. By execution of this Agreement, each Major
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Stockholder which or who is an owner of shares of Radish Preferred Stock hereby
waives (i) any right to advance notice of the Merger or the transactions
contemplated thereby (including consummation of the Merger) to which such Major
Stockholder may have been entitled under the Certificate of Incorporation of
Radish or any agreement and (ii) any right to an appraisal to which such Major
Stockholder may have been entitled under the Certificate of Incorporation or any
agreement. It is further understood and agreed that Radish may renegotiate the
exercise price of certain warrants presently owned by Packard ▇▇▇▇ prior to the
Effective Time of the Merger. The Major Stockholders hereby waive any right to
adjustment of the conversion ratio applicable to such holder's shares of Radish
Preferred as a result of any modification of the exercise terms of the Packard
▇▇▇▇ Warrants. Each Major Stockholder elects to convert, on a one-for-one basis,
all shares of Series A Preferred, Series B Preferred and Series C Preferred and
74.35% of the shares of Series D Preferred held by such Major Stockholder
effective immediately prior to the Effective Time of the Merger. Radish hereby
agrees to take any and all actions necessary or appropriate to cause all
outstanding shares of Series A Preferred, Series B Preferred and Series C
Preferred and 74.35% percent of the outstanding shares of Series D Preferred to
convert on a one-for-one basis into shares of Radish Common effective
immediately prior to the Effective
Participation Agreement --Page 6
Time. SystemSoft and the Company agree that for purposes of exchanging
SystemSoft Common for Radish Common as a result of the Merger, a share
certificate of Radish Preferred (other than share certificates representing
shares of Series D Preferred issued and outstanding at the Effective Time) shall
be deemed to represent the like number of shares of Radish Common, it being
understood that no share certificates representing the Radish Common into which
the Series A Preferred, Series B Preferred and Series C Preferred has been
converted shall be issued by Radish. Furthermore, each Major Stockholder agrees
that the Merger will constitute a liquidation event under Red's Certificate of
Incorporation and that only those shares of Series D Preferred that have not
been converted into shares of Radish Common, as provided above, shall be
entitled to any preferred stock liquidation preference in connection with the
Merger.
1.15 Phoenix Consent and Waiver. By execution of this Agreement, Phoenix
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Leasing Incorporated ("Phoenix") hereby consents to the Merger and irrevocably
waives any rights Phoenix may have solely as a result of the consummation of the
Merger to declare an event of default under Section 11 of that certain Senior
Loan and Security Agreement dated as of May 24, 1994 by and between Radish and
Phoenix.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Each of the Major Stockholders hereby represents and warrants severally
and not jointly to SystemSoft and the Company as follows:
2.1 Existence and Power. If such Major Stockholder is a corporation,
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partnership or trust, it is duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization.
2.2 Authorization; Binding Agreement. The execution, delivery and
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performance by such Major Stockholder, if it is a corporation, partnership or
trust, of this Agreement are within its corporate, partnership or trust power
and authority and have been duly authorized by all necessary corporate,
partnership or trust action on the part of such Major Stockholder. This
Agreement has been duly executed and delivered by such Major Stockholder and
constitutes a valid and binding agreement of such Major Stockholder, enforceable
against such Major Stockholder in accordance with its terms.
2.3 Governmental Authorization. The execution, delivery and performance by
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it of this Agreement and receipt by it of SystemSoft Common pursuant to the
Merger Agreement does not require any action by or in respect of, or
declaration, filing or registration with, any Governmental Authority, including
compliance with any applicable requirements of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended.
2.4 Non-Contravention. The execution, delivery and performance by it of
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this Agreement does not and will not (i) if it is a corporation, partnership or
trust, contravene or conflict with its organizational documents, or (ii)
contravene or conflict with or constitute a violation of any provision of any
law, regulation, judgment, injunction, order or decree binding upon or
applicable to it.
Participation Agreement --Page 7
2.5 Litigation. There is no action, suit, investigation or proceeding (or
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any basis therefor) pending against or, to the knowledge of such Major
Stockholder, threatened against or affecting, such Major Stockholder or any of
its respective properties before any court or arbitrator or any governmental
body, agency, official or authority that in any manner challenges or seeks to
prevent, enjoin, alter or materially delay the transactions contemplated by this
Agreement or the Merger Agreement.
2.6 Finders' Fees. There is no investment banker, broker, finder or other
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intermediary that has been retained by or is authorized to act on behalf of such
Major Stockholder who might be entitled to any fee or commission from
SystemSoft, Radish or any of their affiliates upon consummation of the
transactions contemplated by this Agreement or the Merger Agreement.
2.7 Ownership of Stock. Such Major Stockholder is the record and
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beneficial owner of the shares of capital stock of Radish set forth after such
Major Stockholder's name on Schedule 2.7, and owns all such shares free and
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clear of any and all Liens or any rights of first refusal, voting trusts,
proxies or other arrangements or understandings, whether written or oral, and
such Major Stockholder has the sole and exclusive right and power to exercise
all voting rights and other rights with respect to such shares.
2.8 Certain Tax Matters. Such Major Stockholder has no present plan or
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intention to engage in a direct or indirect sale, exchange, redemption,
disposition or conveyance or any transaction that would have the effect of
reducing in any way such Major Stockholder's risk of ownership (by short sale or
otherwise) including, but not limited to, distributions by a partnership to its
partners and by a corporation to its shareholders (a "sale"), of the shares of
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SystemSoft Common to be received by such Major Stockholder in the Merger. Such
Major Stockholder acknowledges that he is giving this representation and
covenant to enable Ireland, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇, P.C. to opine that the
Merger constitutes a reorganization within the meaning of Section 368 of the
Code and further recognizes that significant adverse tax consequences might
result if such representation is not true. Such Major Stockholder understands
and agrees that, in connection with the Merger, such Major Stockholder will be
required to restate the foregoing representation on or about the Effective Time
of the Merger. Such Major Stockholders will not engage in a sale prior to the
Effective Time of the Merger of any of the Radish Common held by the
undersigned. Such Major Stockholder has no plan to exercise dissenter's rights
in connection with the Merger. Such Major Stockholder is not aware of, or
participating in, any plan on the part of the Radish Stockholders to engage in a
sale or sales of the SystemSoft Common to be received in the Merger.
2.9 Investment. Such Major Stockholder is acquiring the shares of
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SystemSoft Common to be issued in the Merger for investment for such Major
Stockholder's own account, and not with a view to, or for resale in connection
with, any distribution of the shares of SystemSoft Common and such shares of
SystemSoft Common can not be resold without registration under the Securities
Act or an exemption therefrom. The Major Stockholder is not a party to any
contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participation to any such person or any third party with
respect to the shares of SystemSoft Common to be issued in the Merger.
2.10 Investor Qualifications. Such Major Stockholder is an "accredited
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investor" as defined in Rule 501(a) of Regulation D of the Rules and Regulation
under the Securities Act and
Participation Agreement --Page 8
has such knowledge and experience in financial and business matters that such
Major Stockholder is capable of evaluating the merits and risks of the
prospective investment.
2.11 Access to Information. The Major Stockholder acknowledges receipt of
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the SystemSoft SEC Documents (as defined in the Merger Agreement). Such Major
Stockholder further acknowledges that such Major Stockholder has had the
opportunity to ask questions of and receive answers from officers and employees
of SystemSoft about SystemSoft and the terms and conditions of the Merger, and
to receive and review such documents concerning SystemSoft as such Major
Stockholder has requested.
2.12 Tax Advice. Such Major Stockholder acknowledges and understands that
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SystemSoft has not rendered any tax advice to such Major Stockholder and makes
no representation or warranties that the Merger qualifies as a reorganization
under Section 368(a) of the Internal Revenue Code of 1986. Such Major
Stockholder is relying on the opinion of Ireland, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇,
P.C. regarding certain tax matters relating to the Merger.
ARTICLE III
MISCELLANEOUS
3.1 Survival; Termination. (a) All of the representations and warranties
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contained in this Agreement shall survive the Closing. Any investigation or
other examination that may have been made or may be made at any time by or on
behalf of the party to whom representations and warranties are made shall not
limit, diminish or in any way affect the representations and warranties in this
Agreement, and the parties may rely on the representations and warranties in
this Agreement irrespective of any information obtained by them by any
investigation, examination or otherwise.
(b) The covenants contained in Sections 1.1, 1.2, 1.6, 1.8, 1.9, 1.10
and 1.11 (but not any liability for breach thereof) shall terminate at the
Effective Time. All other covenants contained in this Agreement shall survive
the Merger.
(c) This Agreement (but not any liability for any breach hereof) shall
terminate in all respects upon termination of the Merger Agreement.
3.2 Specific Performance. Each of the parties to this Agreement hereby
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acknowledges that the other party will have no adequate remedy at law if it
fails to perform any of its obligations under this Agreement. In such event,
each of the parties agrees that the other party shall have the right, in
addition to any other rights it may have (whether at law or in equity), to
specific performance of this Agreement.
3.3 Expenses. All fees and expenses incurred by SystemSoft and the Company
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in connection with this Agreement and the Merger Agreement and the transactions
contemplated hereby and thereby (including without limitation the fees and
expenses of their financial, legal and accounting advisers) will be borne by
SystemSoft. All fees and expenses incurred by Radish in connection with this
Agreement and the Merger Agreement and the transactions contemplated hereby and
thereby (including without limitation the fees and expenses of its financial,
legal and accounting advisers) will be borne by Radish.
Participation Agreement --Page 9
3.4 Acknowledgment. The Major Stockholders acknowledge and agree that they
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are the only Radish stockholders that will be required to escrow a certain
percentage of the shares of SystemSoft Common they receive in the Merger and
become subject to the terms and conditions of a certain Escrow Agreement. In
addition, the Major Stockholders acknowledge and agree that they are the only
Radish stockholders that will be subject to certain resale limitations and other
transfer restrictions under that certain Registration Rights Agreement of even
date.
3.5 Further Assurances. If at any time after the Effective Time,
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SystemSoft or the Company shall consider it advisable that any further
conveyance, agreements, documents, instruments and assurances of law or any
other things are necessary or desirable to best, perfect, confirm or record in
the Company the title to any property, rights, privileges, powers and franchises
of Radish, the officers of Radish last in office and such other persons, if any,
as the Board of Directors of Radish last in office may authorize shall execute
and deliver, upon SystemSoft or the Company's request, any and all proper
conveyances, agreements, documents, instruments and assurances of law, and do al
things necessary or proper to vest, perfect, confirm or record title to such
property, rights, privileges, powers and franchises in the Company, and
otherwise to carry out the provisions of this Agreement.
3.6 Parties in Interest. All the terms and provisions of this Agreement
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shall be binding upon, shall inure to the benefit of and shall be enforceable by
the respective successors and permitted assigns of the parties hereto. Nothing
expressed or implied in this Agreement is intended or shall be construed to
confer upon or give any person, firm or corporation other than the parties
hereto, their permitted successors or assigns, and their respective stockholders
any rights or remedies under or by reason of this Agreement or any transaction
contemplated hereby.
3.7 Entire Agreement. This Agreement, the Merger Agreement, the
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Registration Rights Agreement and the Escrow Agreement together with the
Schedules and Exhibits hereto and thereto, which are incorporated into this
Agreement and the Merger Agreement by this reference, supersede any other
agreement, whether written or oral, that may have been made or entered into by
SystemSoft, the Company, Radish and the Major Stockholders (or by any officers,
directors or stockholders of any of such parties) relating to the matters
contemplated hereby. This Agreement, the Merger Agreement, the Registration
Rights Agreement and the Escrow Agreement together with the Schedules and
Exhibits hereto and thereto, constitute the entire agreement by the parties, and
there are no agreements or commitments except as set forth herein or therein.
3.8 Amendment or Modification. At any time before or after the adoption of
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this Agreement by the Major Stockholders or the approval of the Merger by the
stockholders of Radish, this Agreement may be amended or supplemented only by
the written agreement of SystemSoft and the Major Stockholders who hold at least
eighty (80%) in interest of the total number of shares of SystemSoft Common held
by the Major Stockholders.
3.9 No Waiver. The failure of any party hereto to enforce at any time any
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of the provisions of this Agreement shall in no way be construed to be a waiver
of any such provision, nor in any way to affect the validity of this Agreement
or any part hereof or the right of such party thereafter to enforce each and
every such provision. No waiver of any breach of or non-compliance with this
Agreement shall be held to be a waiver of any other or subsequent breach or non-
compliance.
Participation Agreement --Page 10
3.10 Assignability. This Agreement shall not be assignable by Radish or the
-------------
Major Stockholders, on the one hand, or SystemSoft or the Company, on the other
hand, without the prior written consent of SystemSoft or the Company, on the one
hand, or Radish or the Major Stockholders, on the other hand.
3.11 Headings and Interpretation. The headings contained in this Agreement
---------------------------
are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement. Terms such as "herein", "hereof",
"hereinafter" refer to this Agreement as a whole and not to the particular
sentence or paragraph where they appear, unless the context otherwise requires.
Unless the context otherwise requires, (i) terms used in the plural include the
singular, and vice versa, and (ii) words in the masculine gender include the
feminine, and vice versa.
3.12 Notices. All notices, requests, claims, demands and other
-------
communications under this Agreement shall be in writing and shall be deemed to
have been duly given when received at the addresses set forth in the Merger
Agreement, in the case of SystemSoft, the Company and Radish, and the books and
records of Radish, in the case of the Major Stockholders, or to such other
address as any party may have furnished to the others in writing in accordance
herewith, except that notices of change of address shall only be effective upon
receipt.
3.13 Law Governing. This Agreement shall be governed by and construed and
-------------
enforced in accordance with the laws of the State of Delaware, without giving
effect to the principles of conflicts of law thereof.
3.14 Invalidity of Provisions. Each of the provisions contained in this
------------------------
Agreement is distinct and severable and a declaration of invalidity or
unenforceability of any such provision or part thereof by a court of competent
jurisdiction shall not affect the validity or enforceability of any other
provision hereof.
3.15 Counterparts. This Agreement may be executed simultaneously in one or
------------
more counterparts, each of which shall be deemed to be an original but all of
which together shall constitute one and the same instrument.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
Participation Agreement --Page 11
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the parties on the date first above written.
SYSTEMSOFT CORPORATION
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------
Vice President Finance & CFO
BLACK ACQUISITION CORPORATION
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------
Vice President Finance & CFO
RADISH COMMUNICATIONS SYSTEMS, INC.
By:/s/ ▇▇▇▇▇ ▇▇▇▇▇
---------------------------
Title:President & CEO
Participation Agreement --Page 12
MAJOR STOCKHOLDERS:
THE HILL PARTNERSHIP III
By: ▇▇▇▇, ▇▇▇▇▇▇ Ventures,,
A limited partnership,
Its General Partner
By:/s/ ▇▇▇▇ ▇▇▇▇▇▇
---------------------------
Its General Partner
Address:
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
FRONTENAC VENTURE V
LIMITED PARTNERSHIP
By: Frontenac Company,
Its General Partner
By:/s/ ▇▇▇▇▇ ▇▇▇▇▇
---------------------------
Its:
Address:
▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
STF II, L.P.
By:/s/ ▇▇▇ ▇▇▇▇▇▇
---------------------------
Its:
Address:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Participation Agreement --Page 13
AMERITECH DEVELOPMENT
CORPORATION
By:/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-------------------------------------
Its:Vice President and Managing Director
Address:
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
CROSSOVER FUND II, L.P.
By: Crossover Investment Management,
L.L.C., Its General Partner
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Its: Managing Member
Address:
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
CROSSOVER FUND IIA, L.P.
By: Crossover Investment Management,
L.L.C., Its General Partner
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------
Its: Managing Member
Address:
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Participation Agreement --Page 14
SEA ISLAND VENTURES, LLC
By:/s/ ▇▇▇ ▇▇▇▇▇▇
---------------------------
Its:General Manager
Address:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
(except for the provision set forth in
Section 2.10)
OMEGA VENTURES II CAYMAN, L.P.
By: Omega Ventures II Management,
L.L.C., Its Investment General
Partner
By:/s/ ▇▇ ▇▇▇▇▇▇▇
---------------------------
Its: Managing Director
Address:
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
BAYVIEW INVESTORS, LTD.
By: ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Company
Private Equity Group, L.L.C.,
Its General Partner
By:/s/ ▇▇ ▇▇▇▇▇▇▇
---------------------------
Its: Authorized Signatory
Address:
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Participation Agreement --Page 15
INTEL CORPORATION
By:/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------
Its:Assistant Treasurer
Address:
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
OMEGA VENTURES II, L.P.
By: Omega Ventures II Management,
L.L.C., Its General Partner
By:/s/ ▇▇ ▇▇▇▇▇▇▇
---------------------------
Its: Managing Director
Address:
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
RS & CO. IV, L.P.
By: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Venture
Capital, L.L.C., Its General Partner
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------
Its: Authorized Signatory
Address:
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
Address:
▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Participation Agreement --Page 16
PACKARD ▇▇▇▇ NEC, INC.
By:/s/ ▇▇▇▇ ▇▇▇▇▇▇
---------------------------
Its:Vice President
Address:
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇ #▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
PHOENIX LEASING INCORPORATED
By:/s/ ▇▇▇▇ ▇▇▇▇▇▇
---------------------------
Its:Vice President
Address:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Address:
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Participation Agreement --Page 17
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Address:
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇
------------------------------
▇▇▇▇ ▇▇▇▇▇▇
Address:
c/o Multi-Sorb Technologies
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
SCHEDULE 2.7
------------
Ownership of Radish Capital Stock
---------------------------------
