Exhibit 10.36

 

SETTLEMENT AGREEMENT

 

This Settlement Agreement (this “Agreement”) is made effective as of the 19th
day of January, 2003, between Peregrine Systems, Inc. (“Peregrine”) and
Peregrine Remedy, Inc. (“Remedy” and with Peregrine, collectively, the
“Debtors”), on the one hand, and Motive Communications, Inc. (“Motive”), on the
other hand. The parties agree as follows:

 

1.             Recitals.

 

1.1           On September 22, 2002  (the  “Petition Date”),  Debtors filed
petitions for relief under chapter 11 of the Bankruptcy Code, 11 U.S.C. §§ 101,
et seq. (the “Bankruptcy Code”), in the United States Bankruptcy Court for the
District of Delaware (the “Bankruptcy Court”), commencing the Debtors’
bankruptcy cases, jointly administered under Case No. 02-12740 (the “Cases”);

 

1.2           As of the Petition Date, Peregrine and Motive were parties to a
Software Source Code License Agreement (“License Agreement”);

 

1.3           As of the Petition Date, there was pending an action brought by
Motive against Peregrine and Remedy (and others) styled Motive Communications,
Inc. v Peregrine Systems, Inc., Peregrine Remedy, Inc., Stephen P. Gardner and
Malthew Glass, No. GN 203283 in 261st District Court for Travis County, Texas
(the “State Action”);

 

1.4           On October 23, 2002, Motive filed a Complaint against Debtors in
the Bankruptcy Court initiating an adversary proceeding (the “Adversary
Proceeding”) to impose a constructive trust on $27,000,000 of the proceeds of
the sale of assets of Remedy (the “Sale”);

 

1.5           On November 4, 2002, the Bankruptcy Court ordered $27,000,000 of
the proceeds of the Sale to be escrowed (the “Escrow”) pending the outcome of
the Adversary Proceeding;

 

1.6           Peregrine rejected the License Agreement;

 

1.7           On December 3, 2002, the State Action was removed by Defendant
Stephen P. Gardner to the United States Bankruptcy Court for the Western
District of Texas and Defendant Gardner filed a motion to transfer the State
Action to the Bankruptcy Court, and on January 2, 2003, Motive filed a motion to
remand the State Action to the state District Court in Texas;

 

1.8           On December 19, 2002, Motive filed proofs of claim against each of
the Debtors in the amount of $27,000,000; and filed an unrelated proof of claim
for $275,157.47 against Peregrine (the “Unrelated Claim”);

 

1.9           Debtors have filed a Motion to Dismiss the Adversary Proceeding
and Motive has filed Objections thereto;

 

--------------------------------------------------------------------------------

 

2.             Agreements.

 

2.1           The Effective Date (the “Effective Date”) of any plan of
reorganization filed or supported by Debtors shall be the eleventh (11th) day
following entry of an order confirming such plan and Debtors shall actively
oppose any other effective date in any plan of reorganization. On the Effective
Date of a Plan of Reorganization (the “Plan”) confirmed by the Bankruptcy Court
and providing for the actions and payments specified in this 2.1:

 

a.             Prior to payment in respect of any unsecured nonpriority claims,
Debtors (or one of them) shall pay Motive four million dollars ($4,000,000) in
cash out of the Escrow and re-transfer to Motive subject to no liens,
encumbrances and adverse interests (with full warranty of title) one million six
hundred sixty-six thousand six hundred sixty-seven (1,666,667) shares of common
stock of Motive currently registered in the name of Peregrine;

 

b.             Peregrine shall agree to pay to Motive, without interest, five
million dollars ($5,000,000) cash in regular, equal annual payments over the
period ending four years after the Effective Date, commencing on the end of the
first year after the Effective Date, and the Plan shall provide that this
obligation is general unsecured debt and has priority over payments with respect
to prepetition equity of either of the Debtors;

 

c.             The Plan will provide that the Escrow shall be terminated upon
the Effective Date after giving effect to the payment and re-transfer referred
to in § 2.1 (a) above;

 

d.             The Plan will provide that on the Effective Date, Debtors will
release, acquit, and forever discharge, both for themselves and their successors
and assigns, Motive and its subsidiaries and affiliates, and their present and
former agents, successors, employees, and attorneys from any and all claims, or
causes of action of any nature whatsoever, whether in contract or in tort, at
law or in equity, known or unknown, including all reasonable attorneys fees and
cost incurred relating thereto (other than such claims and matters as relate
solely to the Unrelated Claim); provided, however, that nothing herein shall be
deemed to release any covenants, obligations, or agreements undertaken under or
pursuant to this Agreement;

 

e.             The Plan will provide that on the Effective Date, Motive will
release, acquit, and forever discharge, both for itself and its subsidiaries and
affiliates, and their successors and assigns, the Debtors and their respective
present and former agents, successors, employees, and attorneys from any and all
claims, or causes of action of any nature whatsoever, whether in contract or in
tort, at law or in equity, known or unknown, including all reasonable attorneys
fees and cost incurred relating thereto (other than claims and matters as relate
solely to the Unrelated Claim); provided, however, that nothing herein shall be
deemed to release any covenants, obligations, or agreements undertaken under or
pursuant to this Agreement;

 

f.              Motive and Debtors shall dismiss with prejudice the State Action
and Motive shall dismiss with prejudice the Adversary Proceeding and withdraw or
modify its proofs of claim (other than the Unrelated Claim) to the extent that
those proofs of claim seek payment inconsistent with the provisions of § 2.1a
and b hereof; and

 

2

--------------------------------------------------------------------------------

 

g.             Motive will re-transfer to Peregrine, subject to no liens,
encumbrances and adverse interests (with full warranty of title) one million
(1,000,000) shares of common stock of Peregrine currently registered in the name
of Motive.

 

2.2           From the date of this Agreement until the earlier of (i) the
Effective Date or (ii) the earliest to occur of any of the Change of
Circumstances specified in 2.3 of this Agreement:

 

a.             Debtors and Motive shall seek a stay of ,and neither either of
Debtors nor Motive will pursue or schedule any hearing on, the State Action or
the Adversary Proceeding, nor will any of them file claims against any other
based on the facts alleged in either of the State Action or the Adversary
Proceeding.

 

b.             The Escrow will remain in full force and effect.

 

2.3           Debtors shall not file or support (and shall actively oppose) any
plan of reorganization that does not include the actions and payments specified
in 2.1 of this Agreement or that provides for installment payments on any
general unsecured nonpriority debt (other than unsecured debt in such classes as
may be established therein under §1122(b) of the Bankruptcy Code) more frequent
than the frequency of installments paid to Motive thereunder. If at any time a
plan of reorganization other than one providing for the actions and payments
specified in § 2.1 of this Agreement is confirmed or if either of the Cases is
converted to a proceeding under Chapter 7 of the Bankruptcy Code (each of which
being a “Change of Circumstances”):

 

a.             The Escrow shall be maintained on its terms and Debtors shall not
seek or support (and shall actively oppose) any modification thereof until the
claims of Motive against Debtors have been finally adjudicated, subject to any
intervening order(s) of the Bankruptcy Court.

 

b.             No further stay of action of the State Action and the Adversary
Proceeding will apply, and any of Debtors or Motive may file claims based on the
facts alleged in either of the State Action or the Adversary Proceeding.

 

c.             The Debtors and Motive shall cooperate to ensure to the best of
their abilities that the Debtors and Motive shall have all rights, remedies,
claims and defenses available to them, both procedural and substantive, that
they would have had but for 2.2.a. of this Agreement, such cooperation shall
include not asserting defenses based upon statute of limitations, laches or the
like, all of which are waived and abandoned.

 

2.4           Debtors shall cause to be filed with the Bankruptcy Court on
January 20, 2003 a plan of reorganization incorporating the provisions of § 2.1
above, and will promptly (but no later than January 23, 2003) seek and announce
an indefinite adjournment of the hearing on Debtors’ motion to dismiss the
Adversary Proceeding currently set for January 28, 2003 before the Bankruptcy
Court.

 

2.5           Motive agrees to support the Plan, provided that the Plan
incorporates the provisions of § 2.1, above and no “Change of Circumstances”
specified in § 2.3,

 

3

--------------------------------------------------------------------------------

 

above, has occurred, and neither of the Debtors has violated § 2.2, above.
Subject to (x) the Bankruptcy Court’s determination that the Debtors have
provided adequate information in respect of the Plan of the provisions described
in § 2.1 above to be included therein, and (y) the Debtors’ subsequent
solicitation of Motive’s vote in respect of the Plan pursuant to section 1125 of
the Bankruptcy Code through the dissemination to Motive of the Plan and a
disclosure statement describing such Plan approved by the Bankruptcy Court,
Motive shall express such support by voting all of its claims against either of
the Debtors in favor of confirmation of the Plan.

 

2.6           Motive and Debtors will cooperate in good faith with each other to
resolve customer support issues regarding Motive products as sold by Peregrine
to third-party customers under the Distribution Agreement and License Agreement,
it being understood that in connection with such cooperation Motive will receive
such reasonable compensation as is consistent with undertakings by Motive
hereunder, and that the undertakings of Motive and the Debtors in this § 2.6 do
not affect the undertakings set out in § 2.1 above.

 

3.             Representations.

 

3.1           Each party represents that, subject to the Bankruptcy Court’s
confirmation of the Plan, it is authorized to enter into, deliver and perform
its undertakings set out in this Agreement and is not under any impediment,
legal or otherwise, that would impair the effectiveness of this Agreement and
the enforceability of any covenant or duty contained in it. Any agent signing
this Agreement on behalf of any party hereby binds himself/herself personally to
this specific section and its representations and warranties.

 

3.2           Each party represents to the other that this Agreement constitutes
its legally valid and binding obligation, enforceable in accordance with its
terms.

 

3.3           Each party represents that before executing this Agreement, it has
been informed of the terms, contents, conditions, and effect of this Agreement. 
Each party further represents that, in making this settlement, it has had the
benefit and advice of counsel of its own choosing.

 

3.4           Motive represents and warrants that it has not heretofore assigned
or transferred, or purported to assign or transfer, to any person, firm, or
corporation any claim herein treated or released.  Motive agrees to indemnify
and hold harmless the Debtors against any claim based on, arising out of or in
connection with any such transfer or assignment or proposed transfer or
assignment.

 

4.             General Provisions.

 

4.1           Each party understands and acknowledges that the consideration
described in this Agreement is all that is to be received in satisfaction of any
claims under this Agreement.

 

4

--------------------------------------------------------------------------------

 

4.2           This Agreement constitutes the entire understanding and agreement
between the parties hereto with respect to the subject matter hereof, and shall
not be modified except by a written agreement signed by the party against which
an additional understanding or agreement is asserted. No party, nor any party’s
representative or attorney shall be deemed the drafter of this Agreement for the
purpose of construing or interpreting its provisions in any judicial proceeding.

 

4.3           This Agreement is to be construed, interpreted and enforced under
the laws of the State of Delaware and of the United States, without regard to
conflict of laws jurisprudence.

 

4.4           The parties agree that the Bankruptcy Court shall have exclusive
jurisdiction regarding any dispute relating to this Agreement or the
interpretation of any provision hereof. The parties further agree not to contest
such exclusive jurisdiction.

 

4.5           This Agreement is binding upon and inures to the benefit of the
parties to this Agreement and their respective representatives, successors and
assigns.

 

4.6           This Agreement may be executed in multiple counterparts, each of
which shall be deemed to be an original and all of which, when taken together,
shall constitute one instrument, and is effective as of the date first mentioned
above, and copies containing facsimile signatures shall be deemed to be
originals.

 

PEREGRINE SYSTEMS, INC.

MOTIVE COMMUNICATIONS, INC.

 

 

By:

/s/ Gary G.  Greenfield

 

By:

/s/ [ILLEGIBLE]

 

 

 

 

 

Name:

Gary G.  Greenfield

 

Name:

/s/ [ILLEGIBLE]

 

 

 

 

 

Title:

Chief Executive Officer

 

Title:

Chief Operating Officer

 

 

 

 

 

PEREGRINE REMEDY, INC.

 

 

 

By:

/s/ Gary G.  Greenfield

 

 

 

 

 

Name:

Gary G.  Greenfield

 

 

 

 

 

Title:

Chief Executive Officer

 

 

 

5

--------------------------------------------------------------------------------