<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 17, 1998
REGISTRATION NO. 333-___
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________________
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
______________________________
SIEBEL SYSTEMS, INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C> <C>
DELAWARE 7372 94-3187233
(State or other jurisdiction of incorporation (Primary Standard Industrial (I.R.S. Employer Identification
or organization) Classification Code Number) Number)
</TABLE>
1855 SOUTH GRANT STREET
SAN MATEO, CALIFORNIA 94402
(650) 295-5000
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
______________________________
THOMAS M. SIEBEL
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
SIEBEL SYSTEMS, INC.
1855 SOUTH GRANT STREET
SAN MATEO, CALIFORNIA 94402
(650) 295-5000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
<TABLE>
<CAPTION>
COPIES TO:
<S> <C>
James C. Gaither, Esq. Howard S. Zeprun, Esq.
Patrick A. Pohlen, Esq. Martin W. Korman, Esq.
Cooley Godward LLP Wilson Sonsini Goodrich & Rosati
Five Palo Alto Square, 3000 El Camino Real Professional Corporation
Palo Alto, CA 94306 650 Page Mill Road, Palo Alto, CA 94304
(650) 843-5000 (650) 493-9300
--------------------------------------
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable following the effectiveness of this Registration
Statement and the effective time of the proposed merger of Syracuse Acquisition
Sub, Inc. with and into Scopus Technology, Inc., as described in the Agreement
and Plan of Merger and Reorganization, dated as of March 1, 1998, attached as
Appendix A to the Joint Proxy Statement/Prospectus forming a part of this
Registration Statement (the "Reorganization Agreement").
If the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(a) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
______________________________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED PROPOSED
TITLE OF EACH CLASS OF SECURITIES AMOUNT MAXIMUM OFFERING MAXIMUM AGGREGATE AMOUNT OF
TO BE REGISTERED TO BE REGISTERED(1)(2) PRICE PER SHARE(3) OFFERING PRICE(3) REGISTRATION FEE(3)
--------------------------------- --------------------- ----------------- ----------------- ------------------
<S> <C> <C> <C> <C>
Common Stock, $.001 par value 8,768,338 $52.13 $457,093,418 $134,843
</TABLE>
(1) Represents the number of shares of common stock of the Registrant which may
be issued to the former shareholders of Scopus Technology, Inc. ("Scopus")
pursuant to the merger described herein. Each share of common stock of
Scopus will be converted into the right to receive 0.36405 shares of common
stock of the Registrant (as adjusted for any stock split, stock dividend,
reverse stock split, reclassification, recapitalization or other similar
transaction) (the "Exchange Ratio") pursuant to the Merger described herein.
After giving effect to the 100% dividend to be paid on March 20, 1998 to the
Siebel stockholders, the Exchange Ratio will be 0.7281.
(2) The provisions of Rule 416 under the Securities Act of 1933, as amended,
shall apply to this registration statement and the number of shares
registered on this registration statement automatically shall increase or
decrease as a result of any future stock split, stock dividend, reverse
stock split, reclassification, recapitalization or other similar
transaction.
(3) Pursuant to Rule 457(f) under the Securities Act of 1933, as amended, the
registration fee has been calculated based on the average of the high and
low prices per share of the securities to be received by the Registrant as
reported on the Nasdaq National Market on March 10, 1998.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
<PAGE>
PRELIMINARY JOINT PROXY STATEMENT APRIL ____,1998
[SIEBEL SYSTEMS LOGO]
1855 GRANT STREET
SAN MATEO, CALIFORNIA 94402
DEAR STOCKHOLDER:
As you may be aware, Siebel Systems, Inc., a Delaware corporation
("Siebel"), and Scopus Technology, Inc., a California corporation ("Scopus"),
have entered into an Agreement and Plan of Merger and Reorganization (the
"Reorganization Agreement") providing for the acquisition of Scopus by Siebel as
described below. Pursuant to the Reorganization Agreement, a special meeting of
the stockholders of Siebel (the "Siebel Special Meeting") will be held at 1855
South Grant Street, San Mateo, California on May [__], 1998 at [______], local
time.
At the Siebel Special Meeting you will be asked to consider and vote
upon the issuance of shares of common stock, par value $0.001 per share, of
Siebel ("Siebel Common Stock") pursuant to the Reorganization Agreement.
Pursuant to the Reorganization Agreement, a wholly owned subsidiary of Siebel
will be merged with and into Scopus (the "Merger"), and Scopus will become a
wholly owned subsidiary of Siebel. In the Merger, each outstanding share of
common stock, par value $0.001 per share, of Scopus will be converted into the
right to receive 0.36405 shares of Siebel Common Stock (as adjusted for any
stock split, stock dividend, reverse stock split, reclassification,
recapitalization or similar transaction (the "Exchange Ratio")). After giving
effect to the 100% dividend paid to the Siebel stockholders on March 20, 1998,
the current Exchange Ratio is 0.7281. The Merger is described more fully in the
accompanying Joint Proxy Statement/Prospectus.
After careful consideration, the Board of Directors of Siebel (the
"Siebel Board of Directors") has unanimously approved the Reorganization
Agreement and the Merger, and has concluded they are fair to, and in the best
interests of, Siebel and its stockholders. The Siebel Board of Directors
unanimously recommends that you vote in favor of the issuance of shares of
Siebel Common Stock in connection with the Merger.
In the materials accompanying this letter you will find a Notice of
Special Meeting of Stockholders to the Siebel stockholders, a Joint Proxy
Statement/Prospectus relating to the proposal to be voted upon at the Siebel
Special Meeting and a Proxy Card. The Joint Proxy Statement/Prospectus more
fully describes the Merger and the proposal before the stockholders.
All Siebel stockholders are cordially invited to attend the Siebel
Special Meeting in person. If you attend the Siebel Special Meeting, you may
vote in person if you wish even though you have previously returned your
completed proxy. WHETHER OR NOT YOU PLAN TO ATTEND THE SIEBEL SPECIAL MEETING,
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AND VOTED, REGARDLESS OF HOW
MANY SHARES YOU HOLD. THEREFORE, PLEASE COMPLETE, SIGN, DATE AND RETURN YOUR
PROXY IN THE ENCLOSED ENVELOPE.
On behalf of the Siebel Board of Directors, I thank you for your
support and ask you to vote in favor of the issuance of shares.
Sincerely,
Thomas M. Siebel
Chairman and Chief Executive Officer
YOUR VOTE IS IMPORTANT--PLEASE RETURN YOUR PROXY PROMPTLY
<PAGE>
PRELIMINARY JOINT PROXY STATEMENT
[SIEBEL SYSTEMS LOGO]
1855 SOUTH GRANT STREET
SAN MATEO, CALIFORNIA 94402
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY [ ], 1998
TO THE STOCKHOLDERS OF SIEBEL SYSTEMS, INC.:
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders (the
"Siebel Special Meeting") of Siebel Systems, Inc., a Delaware corporation
("Siebel"), will be held on May [__], 1998 at [______] local time at 1855 South
Grant Street, San Mateo, California to consider and vote upon the following
proposal:
1. To approve the issuance of shares of common stock, $0.001 par value per
share, of Siebel ("Siebel Common Stock"), pursuant to the Agreement and
Plan of Merger and Reorganization, dated as of March 1, 1998, by and among
Siebel, Scopus Technology, Inc., a California corporation ("Scopus"), and
Syracuse Acquisition Sub, Inc., a California corporation and wholly owned
subsidiary of Siebel ("Merger Sub") (the "Reorganization Agreement").
Pursuant to the Reorganization Agreement, Merger Sub will be merged with
and into Scopus and Scopus will become a wholly owned subsidiary of Siebel
(the "Merger"). A copy of the Reorganization Agreement is attached as
Appendix A to the Joint Proxy Statement/Prospectus accompanying this
Notice.
2. To transact such other business as may properly come before the meeting or
any adjournment or postponement thereof.
The proposed Merger and other related matters are more fully described
in the attached Joint Proxy Statement/Prospectus.
Stockholders of record at the close of business on April [__], 1998
are entitled to notice of, and to vote at, the Siebel Special Meeting and any
adjournments or postponements thereof.
All stockholders are cordially invited to attend the Siebel Special
Meeting in person. Whether or not you expect to attend, WE URGE YOU TO SIGN AND
DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED.
By Order of the Board of Directors
James C. Gaither
Secretary
San Mateo, California
April ____, 1998
<PAGE>
PRELIMINARY JOINT PROXY STATEMENT APRIL ____,1998
[SCOPUS TECHNOLOGY LOGO]
1900 POWELL STREET
EMERYVILLE, CALIFORNIA 94608
DEAR SHAREHOLDER:
As you may be aware, Scopus Technology, Inc., a California corporation
("Scopus"), and Siebel Systems, Inc., a Delaware corporation ("Siebel"), have
entered into an Agreement and Plan of Merger and Reorganization (the
"Reorganization Agreement") providing for the acquisition of Scopus by Siebel as
described below. The combined company is expected to be named Siebel Systems,
Inc. Pursuant to the Reorganization Agreement, a special meeting of the
shareholders of Scopus (the "Scopus Special Meeting") will be held at the
Berkeley Radisson Hotel, 200 Marina Boulevard, Berkeley, California on May [__],
1998 at [______], local time.
At the Scopus Special Meeting you will be asked to consider and vote
upon a proposal to approve and adopt the Reorganization Agreement which provides
for the merger of a wholly owned subsidiary of Siebel with and into Scopus (the
"Merger"). Upon consummation of the Merger, Scopus will become a wholly owned
subsidiary of Siebel. As a result of the Merger, each outstanding share of
common stock, par value $0.001 per share, of Scopus ("Scopus Common Stock") will
be converted into the right to receive 0.36405 shares of common stock, par value
$0.001 per share, of Siebel (as adjusted for any stock split, stock dividend,
reverse stock split, reclassification, recapitalization or similar transaction
(the "Exchange Ratio")). After giving effect to the 100% dividend paid to the
Siebel stockholders on March 20, 1998, the current Exchange Ratio is 0.7281. The
Merger is described more fully in the accompanying Joint Proxy
Statement/Prospectus.
After careful consideration, the Board of Directors of Scopus (the
"Scopus Board of Directors") has unanimously approved the Reorganization
Agreement and the Merger, and has concluded they are fair to, and in the best
interests of, Scopus and its shareholders. The Scopus Board of Directors
unanimously recommends a vote in favor of the adoption and approval of the
Reorganization Agreement and approval of the Merger.
In the materials accompanying this letter you will find a Notice of
Special Meeting of Shareholders to the Scopus shareholders, a Joint Proxy
Statement/Prospectus relating to the proposal to be voted upon at the Scopus
Special Meeting and a Proxy Card. The Joint Proxy Statement/Prospectus more
fully describes the proposed transaction.
All Scopus shareholders are cordially invited to attend the Scopus
Special Meeting in person. If you attend the Scopus Special Meeting, you may
vote in person if you wish even though you have previously returned your
completed proxy. WHETHER OR NOT YOU PLAN TO ATTEND THE SCOPUS SPECIAL MEETING,
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AND VOTED, REGARDLESS OF THE
NUMBER OF SHARES YOU HOLD. APPROVAL OF THE MERGER REQUIRES THE AFFIRMATIVE VOTE
OF THE HOLDERS OF A MAJORITY OF THE OUTSTANDING SHARES OF SCOPUS COMMON STOCK.
THEREFORE, PLEASE COMPLETE, SIGN, DATE AND RETURN YOUR PROXY IN THE ENCLOSED
ENVELOPE. PLEASE DO NOT SEND THE STOCK CERTIFICATE(S) REPRESENTING YOUR SCOPUS
COMMON STOCK AT THIS TIME.
On behalf of the Scopus Board of Directors, we thank you for your
support and ask you to vote in favor of approval and adoption of the
Reorganization Agreement and approval of the Merger.
Sincerely,
Ori S. Sasson
President and Chief Executive Officer
YOUR VOTE IS IMPORTANT--PLEASE RETURN YOUR PROXY PROMPTLY
<PAGE>
PRELIMINARY JOINT PROXY STATEMENT
[SCOPUS TECHNOLOGY LOGO]
1900 POWELL ST.
EMERYVILLE, CALIFORNIA 94608
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY [__], 1998
TO THE SHAREHOLDERS OF SCOPUS TECHNOLOGY, INC.:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
"Scopus Special Meeting") of Scopus Technology, Inc., a California corporation
("Scopus"), will be held on May [__], 1998 at [______], local time, at the
Berkeley Radisson Hotel, 200 Marina Boulevard, Berkeley, California to consider
and vote upon the following proposal:
1. To approve and adopt the Agreement and Plan of Reorganization (the
"Reorganization Agreement"), dated as of March 1, 1998, among Scopus,
Siebel Systems, Inc., a Delaware corporation ("Siebel"), and Syracuse
Acquisition Sub, Inc., a California corporation and wholly owned subsidiary
of Siebel ("Merger Sub"), and to approve the merger of Merger Sub with and
into Scopus pursuant to which Scopus will become a wholly owned subsidiary
of Siebel. A copy of the Reorganization Agreement is attached as Appendix A
to the Joint Proxy Statement/Prospectus accompanying this Notice.
2. To transact such other business as may properly come before the meeting or
any adjournment or postponement thereof.
The proposed Merger and other related matters are more fully described
in the attached Joint Proxy Statement/Prospectus.
Shareholders of record at the close of business on April [__], 1998
are entitled to notice of, and to vote at, the Scopus Special Meeting and any
adjournments or postponements thereof.
All shareholders are cordially invited to attend the Scopus Special
Meeting in person. Whether or not you expect to attend, WE URGE YOU TO SIGN AND
DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED.
By Order of the Board of Directors
A. Aaron Omid
Secretary
Emeryville, California
April ____, 1998
<PAGE>
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such State.
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PRELIMINARY JOINT PROXY STATEMENT
[SIEBEL SYSTEMS LOGO] [SCOPUS TECHNOLOGY LOGO]
JOINT PROXY STATEMENT
FOR SPECIAL MEETINGS TO BE HELD ON MAY [__], 1998
[SIEBEL SYSTEMS LOGO]
PROSPECTUS
This Joint Proxy Statement/Prospectus is being furnished to holders of
common stock, $0.001 par value per share ("Siebel Common Stock"), of Siebel
Systems, Inc., a Delaware corporation ("Siebel" or "the Registrant"), in
connection with the solicitation of proxies by the Board of Directors of Siebel
(the "Siebel Board of Directors") for use at the Special Meeting of Stockholders
of Siebel or any adjournment or postponement thereof (the "Siebel Special
Meeting"). This Joint Proxy Statement/Prospectus is also being furnished to
holders of common stock, $0.001 par value per share ("Scopus Common Stock"), of
Scopus Technology, Inc., a California corporation ("Scopus"), in connection with
the solicitation of proxies by the Board of Directors of Scopus (the "Scopus
Board of Directors") for use at the Special Meeting of Shareholders of Scopus or
any adjournment or postponement thereof (the "Scopus Special Meeting"). The
Siebel Special Meeting is being called to consider and vote upon a proposal to
approve the issuance of shares of Siebel Common Stock to the shareholders of
Scopus pursuant to the Agreement and Plan of Reorganization, dated as of March
1, 1998, among Siebel, Syracuse Acquisition Sub, Inc., a California corporation
and a wholly owned subsidiary of Siebel ("Merger Sub"), and Scopus (the
"Reorganization Agreement"). The Scopus Special Meeting is being called to
consider and vote upon a proposal to adopt and approve the Reorganization
Agreement and approve the merger of Merger Sub with and into Scopus (the
"Merger").
Upon consummation of the proposed Merger, Scopus will become a wholly
owned subsidiary of Siebel and each outstanding share of Scopus Common Stock
will be converted into the right to receive 0.36405 shares of Siebel Common
Stock (as adjusted for any stock split, stock dividend, reverse stock split,
reclassification, recapitalization or similar transaction (the "Exchange
Ratio")). After giving effect to the 100% dividend paid to the Siebel
stockholders on March 20, 1998, the current Exchange Ratio is 0.7281.
The obligations of Siebel and Scopus to effect the Merger and
otherwise consummate the transactions contemplated by the Reorganization
Agreement are subject to the satisfaction or waiver of various conditions,
including the approval of the issuance of Siebel Common Stock in connection with
the Merger by holders of a majority of the outstanding shares of Siebel Common
Stock present in person or represented by proxy at the Siebel Special Meeting
and entitled to vote thereat, and the adoption and approval of the
Reorganization Agreement and approval of the Merger by holders of a majority
of the outstanding shares of Scopus Common Stock. The Merger is expected to be
consummated on a date agreed upon by Siebel and Scopus, which shall be no
later than the second business day after the conditions to the consummation of
the Merger are satisfied or waived. It is currently anticipated that the
Merger will be consummated on or before May 29, 1998.
All information contained or incorporated by reference herein
concerning Siebel has been furnished by Siebel, and all information contained or
incorporated by reference herein concerning Scopus has been furnished by Scopus.
This Joint Proxy Statement/Prospectus and the accompanying form of
proxy are first being mailed to stockholders of Siebel and shareholders of
Scopus on or about April [__], 1998.
THE ABOVE MATTERS ARE DISCUSSED IN DETAIL IN THIS JOINT PROXY STATEMENT/
PROSPECTUS. SHAREHOLDERS OF SCOPUS AND STOCKHOLDERS OF SIEBEL ARE
STRONGLY URGED TO READ AND CONSIDER CAREFULLY THIS JOINT PROXY
STATEMENT/PROSPECTUS IN ITS ENTIRETY, INCLUDING THE MATTERS
REFERRED TO UNDER "RISK FACTORS" BEGINNING AT PAGE 21.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION (THE "COMMISSION") NOR HAS THE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS JOINT PROXY STATEMENT/ PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Joint Proxy Statement/Prospectus is April [__], 1998.
<PAGE>
AVAILABLE INFORMATION
Siebel and Scopus are subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith each files reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). The reports,
proxy statements and other information filed by Siebel and Scopus with the
Commission may be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, as well as at the Commission's regional offices at 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661 and 7 World Trade Center, Suite
1300, New York, New York 10048. Copies of such material may also be obtained
from the Commission at prescribed rates by writing to the Public Reference
Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. The
Scopus Common Stock and the Siebel Common Stock are each quoted on the Nasdaq
National Market and reports and other information concerning Siebel and Scopus
may be inspected at the offices of the National Association of Securities
Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006.
Siebel has filed with the Commission a Registration Statement on Form
S-4 (herein, together with all amendments and exhibits thereto, referred to as
the "Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the Siebel Common Stock to be issued in the
Merger. This Joint Proxy Statement/Prospectus does not contain all of the
information set forth in the Registration Statement, certain portions of which
have been omitted pursuant to the rules and regulations of the Commission and to
which portions reference is hereby made. For further information with respect to
Siebel, Scopus, the Merger, the securities offered hereby and related matters,
reference is made to the Registration Statement. The Registration Statement and
the exhibits thereto may be inspected, without charge, at the offices of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and copies may be
obtained from the Commission at prescribed rates.
The Commission maintains a World Wide Web site that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission. The address of the site is
http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed with the Commission by Siebel
(Commission File Number 000-20725) pursuant to the Exchange Act are incorporated
by reference into this Joint Proxy Statement/Prospectus:
1. Siebel's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997;
2. Siebel's Current Reports on Form 8-K filed with the Commission on
March 3, 1998 and March 16, 1998; and
3. The description of the Siebel Common Stock contained in the
Registration Statement on Form 8-A filed with the Commission on
May 15, 1996.
The following documents previously filed with the Commission by Scopus
(Commission File Number 000-26948) pursuant to the Exchange Act are incorporated
by reference into this Joint Proxy Statement/Prospectus:
1. Scopus' Annual Report on Form 10-K for the fiscal year ended March
31, 1997;
2. Scopus' Quarterly Reports on Form 10-Q for the quarterly periods
ended June 30, 1997, September 30, 1997 and December 31, 1997;
3. Scopus' Current Report on Form 8-K filed with the Commission on
March 13, 1998; and
4. The description of the Scopus Common Stock contained in the
Registration Statement on Form 8-A filed with the Commission on
November 16, 1995.
1.
<PAGE>
The information relating to Siebel and Scopus contained in this Joint
Proxy Statement/Prospectus does not purport to be comprehensive and should be
read together with the information in the documents incorporated by reference
herein.
All documents filed by Siebel and Scopus pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this Joint Proxy
Statement/Prospectus and prior to the date of the Siebel Special Meeting and the
Scopus Special Meeting shall be deemed to be incorporated by reference into this
Joint Proxy Statement/Prospectus and to be a part hereof from the dates of
filing such documents or reports. Any statement contained herein or in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Joint Proxy
Statement/Prospectus to the extent that a statement contained herein or in any
other subsequently filed document which is also incorporated or is deemed to be
incorporated herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Joint Proxy Statement/Prospectus.
THIS JOINT PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY
REFERENCE WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS
ARE AVAILABLE WITHOUT CHARGE TO ANY PERSON TO WHOM A COPY OF THIS JOINT PROXY
STATEMENT/PROSPECTUS HAS BEEN DELIVERED UPON WRITTEN OR ORAL REQUEST TO SIEBEL
SYSTEMS, INC., 1855 SOUTH GRANT STREET, SAN MATEO, CALIFORNIA 94402, ATTENTION:
INVESTOR RELATIONS, TELEPHONE (650) 295-5000, WITH RESPECT TO DOCUMENTS RELATING
TO SIEBEL, OR TO SCOPUS TECHNOLOGY, INC., 1900 POWELL STREET, EMERYVILLE,
CALIFORNIA 94608, ATTENTION: INVESTOR RELATIONS, TELEPHONE (510) 597-5800, WITH
RESPECT TO DOCUMENTS RELATING TO SCOPUS. IN ORDER TO ENSURE DELIVERY PRIOR TO
THE SPECIAL MEETINGS, REQUESTS SHOULD BE RECEIVED BY MAY [__], 1998.
This Joint Proxy Statement/Prospectus is being furnished to Siebel's
stockholders in connection with the solicitation of proxies by the Siebel Board
of Directors for use at the Siebel Special Meeting and to Scopus' shareholders
in connection with the solicitation of proxies by the Scopus Board of Directors
for use at the Scopus Special Meeting. Each copy of this Joint Proxy
Statement/Prospectus mailed to the Siebel stockholders is accompanied by a form
of proxy for use at the Siebel Special Meeting, and each copy of this Joint
Proxy Statement/Prospectus mailed to the Scopus shareholders is accompanied by a
form of proxy for use at the Scopus Special Meeting. This Joint Proxy
Statement/Prospectus is also being furnished by Siebel to holders of Scopus
Common Stock as a prospectus in connection with the shares of the Siebel Common
Stock to be issued upon consummation of the Merger.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED OR INCORPORATED BY REFERENCE IN THIS JOINT PROXY
STATEMENT/PROSPECTUS IN CONNECTION WITH THE OFFERING AND THE SOLICITATION MADE
HEREBY AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY SIEBEL, MERGER SUB OR SCOPUS. THIS
JOINT PROXY STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO PURCHASE, ANY SECURITIES, OR THE SOLICITATION OF A
PROXY, IN ANY JURISDICTION IN WHICH, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO
MAKE SUCH AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS JOINT PROXY
STATEMENT/PROSPECTUS NOR ANY DISTRIBUTION OF SECURITIES MADE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE ANY INFERENCE THAT THERE HAS NOT BEEN ANY CHANGE
IN THE INFORMATION SET FORTH HEREIN OR IN THE AFFAIRS OF EITHER SIEBEL OR SCOPUS
SINCE THE DATE HEREOF.
This Joint Proxy Statement/Prospectus contains separate trademarks of
Siebel and Scopus as well as trademarks of other companies.
2.
<PAGE>
<TABLE>
<S> <C>
AVAILABLE INFORMATION
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
SUMMARY........................................................................ 1
THE COMPANIES.................................................................. 1
Siebel Systems, Inc.................................................. 1
Scopus Technology, Inc............................................... 1
Syracuse Acquisition Sub, Inc........................................ 1
THE SIEBEL SPECIAL MEETING..................................................... 2
Time, Date, Place and Purpose........................................ 2
Record Date and Vote Required........................................ 2
THE SCOPUS SPECIAL MEETING..................................................... 2
Time, Date, Place and Purpose........................................ 2
Record Date and Vote Required........................................ 2
THE MERGER..................................................................... 3
General.............................................................. 3
Effective Time of the Merger; Closing Date........................... 3
Stock Ownership Following the Merger................................. 3
Exchange of Scopus Stock Certificates................................ 3
Scopus' Reasons for the Merger....................................... 4
Recommendation of the Scopus Board of Directors...................... 4
Opinion of Financial Advisor to Scopus............................... 4
Siebel's Reasons For the Merger...................................... 4
Recommendation of the Siebel Board of Directors...................... 4
Opinion of Financial Advisor to Siebel............................... 4
Non-Solicitation..................................................... 5
Conduct of Business.................................................. 5
Conditions to the Merger............................................. 5
Termination.......................................................... 6
Expenses and Termination Fees........................................ 6
Interests of Certain Persons in the Merger........................... 6
Voting Agreements.................................................... 7
Affiliate Agreements................................................. 7
Stock Option Agreement............................................... 7
Noncompetition Agreements............................................ 8
Certain Federal Income Tax Consequences.............................. 8
Anticipated Accounting Treatment..................................... 8
Rights of Dissenting Shareholders of Scopus.......................... 9
Risk Factors......................................................... 9
Markets and Market Prices............................................ 9
SIEBEL SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION.................. 10
SCOPUS SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION.................. 11
UNAUDITED SELECTED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION.......... 12
COMPARATIVE PER SHARE DATA..................................................... 13
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS.................... 14
RISK FACTORS................................................................... 21
Risks Relating to the Merger......................................... 21
Risks Relating to the Business of Siebel............................. 22
Risks Relating to the Business of Scopus............................. 29
THE SIEBEL SPECIAL MEETING..................................................... 32
Purpose of the Siebel Special Meeting................................ 32
Proxies.............................................................. 32
Date, Time and Place of Meeting...................................... 32
Voting Rights and Outstanding Shares................................. 32
Solicitation......................................................... 32
Vote Required........................................................ 32
Revocability of Proxies.............................................. 33
</TABLE>
i.
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TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
<S> <C>
THE SCOPUS SPECIAL MEETING..................................................... 34
Purpose of the Scopus Special Meeting................................ 34
Proxies.............................................................. 34
Date, Time and Place of Meeting...................................... 34
Voting Rights and Outstanding Shares................................. 34
Solicitation......................................................... 34
Vote Required........................................................ 35
Revocability of Proxies.............................................. 35
COMPARATIVE PER SHARE MARKET PRICE DATA AND DIVIDEND POLICY.................... 36
APPROVAL OF THE MERGER AND RELATED TRANSACTIONS................................ 37
Background of the Merger............................................. 37
Joint Reasons For the Merger......................................... 38
Scopus' Reasons For the Merger....................................... 39
Siebel's Reasons For the Merger...................................... 40
Opinion of Financial Advisor to Scopus............................... 41
Opinion of Financial Advisor to Siebel............................... 44
Interests of Certain Persons in the Merger........................... 47
Voting Agreements.................................................... 47
Affiliate Agreements................................................. 48
Stock Option Agreement............................................... 49
Noncompetition Agreements............................................ 50
Certain Federal Income Tax Consequences.............................. 50
Anticipated Accounting Treatment..................................... 52
Regulatory Matters................................................... 52
Rights of Dissenting Shareholders of Scopus.......................... 52
No Siebel Appraisal Rights........................................... 54
Resale of Siebel Common Stock........................................ 54
THE REORGANIZATION AGREEMENT................................................... 56
General.............................................................. 56
Merger Consideration................................................. 56
Stock Options and Employee Stock Purchase Plan....................... 56
Stock Ownership Following the Merger................................. 57
Conversion of Shares; Procedures for Exchange of Certificates........ 57
Effect on Certificates............................................... 57
Corporate Matters.................................................... 57
Conditions to the Merger............................................. 58
Representations and Warranties....................................... 60
Covenants............................................................ 61
Termination.......................................................... 65
Expenses And Termination Fees........................................ 66
SCOPUS PRINCIPAL SHAREHOLDERS.................................................. 68
COMPARISON OF SHAREHOLDERS' RIGHTS............................................. 70
Size of the Board of Directors....................................... 70
Classified Board of Directors........................................ 70
Cumulative Voting.................................................... 70
Removal of Directors................................................. 70
Filling Vacancies on the Board of Directors.......................... 71
Interested Director Transactions..................................... 71
Indemnification of Directors and Officers............................ 71
Amendments to the Certificate of Incorporation
and Articles of Incorporation...................................... 72
Amendment of Bylaws.................................................. 72
Power to Call Special Shareholders' Meeting; Action by Consent....... 72
Inspection of Shareholders' List..................................... 73
Dividends and Repurchases of Shares.................................. 73
</TABLE>
ii
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TABLE OF CONTENTS
(CONTINUED)
<TABLE>
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Page
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<S> <C>
Approval of Certain Corporate Transactions........................... 73
Business Combination Following a Change of Control................... 73
Shareholder Derivative Suits......................................... 74
Appraisal Rights..................................................... 74
Dissolution.......................................................... 75
EXPERTS ....................................................................... 75
CERTAIN LITIGATION............................................................. 75
LEGAL MATTERS.................................................................. 75
</TABLE>
APPENDICES
Appendix A Agreement and Plan of Merger and Reorganization
Appendix B-1 Opinion of Morgan Stanley & Co., Incorporated
Appendix B-2 Opinion of NationsBanc Montgomery Securities LLC
Appendix C-1 Form of the Scopus Voting Agreement
Appendix C-2 Form of the Siebel Voting Agreement
Appendix D-1 Form of the Scopus Affiliate Agreement
Appendix D-2 Form of the Siebel Affiliate Agreement
Appendix E Form of the Option Agreement
Appendix F Pertinent Statutory Provisions of the California General
Corporation Law
iii
<PAGE>
SUMMARY
The following is a summary of certain information contained elsewhere
in this Joint Proxy Statement/Prospectus. This summary is not, and is not
intended to be, complete by itself. This Joint Proxy Statement/Prospectus
contains forward-looking statements that involve risks and uncertainties. The
actual results of Siebel, Scopus and the combined company (the "Combined
Company") following the Merger may differ materially from those anticipated in
these forward-looking statements as a result of certain factors, including those
set forth under "Risk Factors" and elsewhere in this Joint Proxy
Statement/Prospectus, and in the documents incorporated herein by reference.
This summary is qualified in its entirety by reference to the more detailed
information contained elsewhere in this Joint Proxy Statement/Prospectus, the
appendices attached hereto and the documents referred to or incorporated by
reference herein. Stockholders of Siebel and shareholders of Scopus are urged to
review carefully all of the information contained in this Joint Proxy
Statement/Prospectus, the Reorganization Agreement attached as Appendix A and
the other appendices attached hereto.
THE COMPANIES
SIEBEL SYSTEMS, INC.
Siebel is an industry leading provider of enterprise-class sales and
marketing information software systems. Siebel designs, develops, markets and
supports Siebel Enterprise Applications, a leading Internet-enabled, object
oriented client/server application software product family designed to meet the
sales, marketing and customer service information system requirements of even
the largest multi-national organizations.
Siebel was incorporated in California in 1993 and reincorporated in
Delaware in June 1996. The principal executive offices of Siebel are located at
1855 South Grant Street, San Mateo, California 94402 (the "Siebel Principal
Offices"). Siebel's telephone number is (650) 295-5000.
SCOPUS TECHNOLOGY, INC.
Scopus is a leading provider of client/server software solutions for
the customer information management market. Scopus' applications, Scopus
SupportTEAM, Scopus ServiceTEAM, Scopus QualityTEAM, Scopus SalesTEAM and Scopus
Voyager, automate external customer support, the product design change process,
sales and marketing activities and internal help desk support. Scopus
applications are designed to enable organizations to build a knowledge base of
customer information that can be accessed and used by individuals throughout the
enterprise to improve the effectiveness and efficiency of customer support and
increase customer satisfaction. Scopus' products are based on a modular, open
architecture and support a variety of client computing platforms, industry
standard relational databases and server operating systems, and operate over
local area networks, intranets and the Internet. Scopus' products offer
customers a unique combination of built-in functionality, customizability,
adaptability and scalability. Scopus also offers consulting, training and
maintenance services to facilitate the installation and use of Scopus' products.
Scopus was incorporated in California in March 1991. Scopus maintains
its executive offices at 1900 Powell Street, Suite 700, Emeryville, California
94608, (the "Scopus Principal Offices") and its telephone number is (510) 428-
0500.
SYRACUSE ACQUISITION SUB, INC.
Merger Sub is a corporation recently organized as a wholly owned
subsidiary of Siebel for the purpose of effecting the Merger. Merger Sub has no
material assets and has not engaged in any activities except in connection with
the Merger.
The principal executive offices of Merger Sub are located at 1855
South Grant Street, San Mateo, California 94402. Merger Sub's telephone number
is (650) 295-5000.
1.
<PAGE>
THE SIEBEL SPECIAL MEETING
TIME, DATE, PLACE AND PURPOSE
The Siebel Special Meeting will be held at the Siebel Principal
Offices on May [__], 1998 at [______] local time. The purpose of the Siebel
Special Meeting is to consider and vote upon a proposal to approve the issuance
of Siebel Common Stock in connection with the Merger pursuant to the
Reorganization Agreement. Holders of Siebel Common Stock may also consider and
vote upon such other matters as may be properly brought before the Siebel
Special Meeting or any postponements or adjournments thereof.
RECORD DATE AND VOTE REQUIRED
Only Siebel stockholders of record at the close of business on April
[__], 1998 (the "Siebel Record Date") are entitled to vote at the Siebel Special
Meeting. Approval of the proposal will require approval by the affirmative vote
of a majority of the shares present or represented by proxy and entitled to vote
at the Siebel Special Meeting. At the close of business on the Siebel Record
Date, there were ______ shares of Siebel Common Stock outstanding and entitled
to vote at the Siebel Special Meeting.
Mr. Thomas M. Siebel, the Chairman and Chief Executive Officer of
Siebel and certain affiliates of Mr. Siebel, who together hold approximately
____% of the Siebel Common Stock outstanding as of the Siebel Record Date, have
entered into voting agreements with Scopus pursuant to which such stockholders
have agreed to vote in favor of the proposal. See "Approval of the Merger and
Related Transactions - Voting Agreements."
This Joint Proxy Statement/Prospectus and accompanying Notice of
Special Meeting of Stockholders were mailed to all Siebel stockholders of record
as of the Siebel Record Date and constitute notice of the Siebel Special Meeting
in conformity with the requirements of the Delaware General Corporation Law (the
"DGCL").
THE SCOPUS SPECIAL MEETING
TIME, DATE, PLACE AND PURPOSE
The Scopus Special Meeting will be held at the Berkeley Radisson
Hotel, 200 Marina Boulevard, Berkeley, California, on May [__], 1998 at [______]
local time. The purpose of the Scopus Special Meeting is to consider and vote
upon a proposal to approve and adopt the Reorganization Agreement and approve
the Merger. Holders of Scopus Common Stock may also consider and vote upon such
other matters as may be properly brought before the Scopus Special Meeting or
any postponements or adjustments thereof.
RECORD DATE AND VOTE REQUIRED
Only Scopus shareholders of record at the close of business on April
[__], 1998 (the "Scopus Record Date") are entitled to vote at the Scopus Special
Meeting. The proposal will require approval by the affirmative vote of the
holders of a majority of the outstanding shares of Scopus Common Stock. At the
close of business on the Scopus Record Date, there were _____ shares of Scopus
Common Stock outstanding and entitled to vote at the Scopus Special Meeting.
Certain shareholders of Scopus, who together hold approximately _____%
of the Scopus Common Stock outstanding as of the Scopus Record Date, have
entered into voting agreements with Siebel pursuant to which such shareholders
of Scopus have agreed to vote in favor of the proposal and have granted Siebel
an irrevocable proxy to vote their shares of Scopus Common Stock in favor of the
proposal. See "Approval of the Merger and Related Transactions-Voting
Agreements."
This Joint Proxy Statement/Prospectus and accompanying Notice of
Special Meeting of Shareholders were mailed to all Scopus shareholders of record
as of the Scopus Record Date and constitute notice of the Scopus Special Meeting
in conformity with the requirements of the California General Corporation Law
("CGCL").
2.
<PAGE>
THE MERGER
GENERAL
At the "Effective Time" (as defined herein), Merger Sub will merge
with and into Scopus, the separate existence of Merger Sub will cease and Scopus
will continue as the surviving corporation of the Merger (the "Surviving
Corporation") and become a wholly owned subsidiary of Siebel. It is currently
anticipated that the Effective Time will occur on or before May 29, 1998. The
Reorganization Agreement provides that, subject to the terms and conditions
thereof, the following will occur at the Effective Time:
Conversion of Scopus Common Stock. Subject to the provisions
contained in the Reorganization Agreement relating to the payment of cash in
lieu of fractional shares and "Dissenter's Rights" (as defined herein), each
share of Scopus Common Stock then outstanding will be converted into the right
to receive that number of shares of Siebel Common Stock equal to the Exchange
Ratio.
Scopus Stock Options. All rights with respect to outstanding options
to purchase Scopus Common Stock under the Scopus 1991 Stock Option Plan and the
Scopus 1995 Director Stock Option Plan shall be converted into and become rights
with respect to outstanding options to purchase Siebel Common Stock based on the
Exchange Ratio, and Siebel shall assume each such option in accordance with the
terms of the stock option plan under which it was issued and the stock option
agreement by which it is evidenced. See "The Reorganization Agreement-Stock
Options and Employee Stock Purchase Plan."
Scopus Employee Stock Purchase Plan. Pursuant to the terms of the
Reorganization Agreement, Siebel and Scopus shall mutually agree as to the
treatment of outstanding rights under the Scopus Employee Stock Purchase Plan
prior to the Effective Time. See "The Reorganization Agreement-Stock Options
and Employee Stock Purchase Plan."
EFFECTIVE TIME OF THE MERGER; CLOSING DATE
The Merger will become effective upon the filing of an Agreement of
Merger with the Secretary of State of the State of California or at such later
time as may be specified in the Agreement of Merger (the "Effective Time"). The
consummation of the transactions contemplated by the Reorganization Agreement
will take place on a date to be agreed by Siebel and Scopus (the "Closing
Date"), which will be no later than the second business day after the
satisfaction or waiver of all of the conditions to closing set forth in the
Reorganization Agreement. Assuming that all of the conditions to the Merger are
satisfied or waived, it is anticipated that the Merger will be consummated on or
before May 29, 1998.
STOCK OWNERSHIP FOLLOWING THE MERGER
Based upon the number of shares of Scopus Common Stock issued and
outstanding as of March [__], 1998 (assuming no exercise of outstanding options
or other rights to purchase Scopus Common Stock), an aggregate of approximately
[__________] shares of Siebel Common Stock will be issued to holders of Scopus
Common Stock. Based upon the number of shares of Siebel Common Stock issued and
outstanding as of March [__], 1998 (assuming no exercise of outstanding options
or other rights to purchase Siebel Common Stock), and after giving effect to the
additional shares of Siebel Common Stock that are proposed to be issued in the
Merger under the same assumptions, the former holders of Scopus Common Stock
would hold approximately [_____]% of Siebel's total issued and outstanding
shares after consummation of the Merger. Based on the number of outstanding
options to purchase Scopus Common Stock as of April [__], 1998, the total number
of outstanding options to purchase Scopus Common Stock shall convert into and
become options to purchase an aggregate of [_____] shares of Siebel Common Stock
as of the Effective Time.
EXCHANGE OF SCOPUS STOCK CERTIFICATES
As soon as reasonably practicable after the Effective Time,
ChaseMellon Shareholder Services, L.L.C., as transfer agent and registrar for
Siebel Common Stock and as Exchange Agent for purposes of the Merger (the
"Exchange Agent"), will mail to the holders of Scopus Common Stock (i) a letter
of transmittal (the "Letter of Transmittal") with respect to the surrender of
valid certificates representing shares of Scopus Common Stock (the "Scopus Stock
Certificates") in exchange for certificates representing Siebel Common Stock and
(ii) instructions for
3.
<PAGE>
use of the Letter of Transmittal. SCOPUS SHAREHOLDERS SHOULD NOT SURRENDER THEIR
SCOPUS STOCK CERTIFICATES FOR EXCHANGE UNTIL THEY RECEIVE A LETTER OF
TRANSMITTAL. See "The Reorganization Agreement-Conversion of Shares; Procedures
for Exchange of Certificates."
SCOPUS' REASONS FOR THE MERGER
The Scopus Board of Directors considered a wide variety of information
and a number of factors in connection with its evaluation of the proposed Merger
and the Reorganization Agreement, and determined that the Merger provides an
opportunity that serves the best interests of Scopus and its shareholders. The
Scopus Board of Directors believes that the Merger may result in a number of
benefits to Scopus and its shareholders, including, among other benefits, the
following: (i) ability to achieve greater scale and presence in the customer
support software market; (ii) increased management expertise as the business of
Scopus and the Combined Company expands; (iii) broader distribution coverage and
more effective marketing of Scopus' products; (iv) expanded customer base for
Scopus' products; and (v) opportunity for Scopus shareholders to participate in
the potential for growth of the Combined Company after the Merger. See "Approval
of the Merger and Related Transactions--Scopus' Reasons for the Merger."
RECOMMENDATION OF THE SCOPUS BOARD OF DIRECTORS
THE SCOPUS BOARD OF DIRECTORS UNANIMOUSLY APPROVED THE REORGANIZATION
AGREEMENT AND THE MERGER, AND RECOMMENDS A VOTE FOR THE APPROVAL AND ADOPTION
---
AND APPROVAL OF THE REORGANIZATION AGREEMENT AND APPROVAL OF THE MERGER BY THE
SHAREHOLDERS OF SCOPUS.
OPINION OF FINANCIAL ADVISOR TO SCOPUS
Morgan Stanley & Co. Incorporated ("Morgan Stanley") delivered its
opinion dated March 1, 1998 (the "Morgan Stanley Opinion") to the Scopus Board
of Directors on March 1, 1998, to the effect that, as of the date of such
opinion and subject to various considerations set forth therein, the Exchange
Ratio was fair from a financial point of view to the holders of Scopus Common
Stock. The full text of the Morgan Stanley Opinion, which sets forth, among
other things, assumptions made, procedures followed, matters considered and
limitations on the scope of the review undertaken in connection with the Morgan
Stanley Opinion, is attached hereto as Appendix B-1 and is incorporated herein
by reference. Holders of Scopus Common Stock are urged to, and should, read the
Morgan Stanley Opinion in its entirety. See "Approval of the Merger and Related
Transactions-Opinion of Financial Advisor to Scopus."
SIEBEL'S REASONS FOR THE MERGER
The Siebel Board of Directors considered a wide variety of information
and a number of factors in connection with its evaluation of the proposed Merger
and the Reorganization Agreement, and determined that the Merger provides an
opportunity that serves the best interests of Siebel and its stockholders. The
Siebel Board of Directors believes that the Merger may result in a number of
benefits to Siebel and its stockholders, including, among other benefits, the
following: (i) ability to provide a more comprehensive product line to its
customers; (ii) ability to better compete in the market for customer support
systems; (iii) ability to more effectively compete in the enterprise automation
market as a whole; and (iv) expanded customer base for Siebel's products. See
"Approval of the Merger and Related Transactions-Siebel's Reasons For the
Merger."
RECOMMENDATION OF THE SIEBEL BOARD OF DIRECTORS
THE SIEBEL BOARD OF DIRECTORS UNANIMOUSLY APPROVED THE REORGANIZATION
AGREEMENT AND THE MERGER, AND RECOMMENDS A VOTE FOR APPROVAL OF THE ISSUANCE OF
---
SHARES OF SIEBEL COMMON STOCK PURSUANT TO THE REORGANIZATION AGREEMENT BY THE
STOCKHOLDERS OF SIEBEL.
OPINION OF FINANCIAL ADVISOR TO SIEBEL
NationsBanc Montgomery Securities LLC ("NMS") delivered its opinion
dated February 28, 1998 (the "NMS Opinion") to the Siebel Board of Directors on
February 28, 1998, to the effect that, as of the date of such opinion and
subject to the various considerations set forth therein, the consideration to be
paid by Siebel pursuant to the Merger was fair to Siebel from a financial point
of view. The full text of the NMS Opinion, which sets forth,
4.
<PAGE>
among other things, assumptions made, procedures followed, matters considered
and limitations on the scope of the review undertaken in connection with the NMS
Opinion, is attached hereto as Appendix B-2 and is incorporated herein by
reference. Holders of Siebel Common Stock are urged to, and should, read the NMS
Opinion in its entirety. See "Approval of the Merger and Related Transactions-
Opinion of Financial Advisor to Siebel."
NON-SOLICITATION
Pursuant to the Reorganization Agreement, Scopus has agreed not to
directly or indirectly take certain actions that may encourage an "Acquisition
Proposal" (as defined herein). However, Scopus may furnish information, enter
into a confidentiality agreement or enter into discussions or negotiations in
response to a "Superior Offer" (as defined herein), after consultation with its
outside counsel, if the Scopus Board of Directors determines that such action is
required in order for it to comply with its fiduciary obligations and certain
obligations with respect to informing Siebel are met. See "The Reorganization
Agreement-Covenants-Non-Solicitation."
CONDUCT OF BUSINESS
Pursuant to the Reorganization Agreement, Scopus has made certain
covenants regarding the conduct of its business during the period from the date
of the execution of the Reorganization Agreement through the Effective Time (the
"Pre-Closing Period"), including, without limitation, covenants: (i) to conduct
its business and operations (a) in the ordinary course and in accordance with
past practices, (b) in a commercially reasonable manner, and (c) in compliance
(in all material respects) with legal requirements; and (ii) cause its officers
to report regularly to Siebel concerning the status of the business of Scopus.
In addition, Scopus has agreed not to take or to agree to take certain actions
without the consent of Siebel. Siebel has also agreed not to take certain
actions during the Pre-Closing period without the consent of Scopus, although
its covenants related to such actions vary from those of Scopus. See "The
Reorganization Agreement-Covenants-Conduct of Scopus' Business" and "-Conduct of
Siebel's Business."
CONDITIONS TO THE MERGER
The obligations of Siebel and Merger Sub to effect the Merger and
otherwise to consummate the transactions contemplated by the Reorganization
Agreement are subject to the satisfaction or waiver of certain conditions
relating to, among other things: (i) the accuracy of the representations and
warranties of Scopus contained in the Reorganization Agreement (subject to
certain materiality limitations); (ii) the performance in all material respects
by Scopus of certain covenants and obligations contained in the Reorganization
Agreement; (iii) the effectiveness of the Registration Statement; (iv) the
approval of the Reorganization Agreement and Merger by the necessary vote of the
Scopus shareholders and the approval of the issuance of Siebel Common Stock in
the Merger by the necessary vote of the Siebel stockholders; (v) satisfaction of
the condition that fewer than 10% of the outstanding shares of Scopus Common
Stock shall have Dissenter's Rights as of the Effective Time; (vi) receipt of
"Scopus Affiliate Agreements" (as defined herein) from the affiliates of Scopus;
(vii) receipt of "Principal Noncompetition Agreements" (as defined herein) from
certain shareholders/employees of Scopus; (viii) receipt of certain letters from
the independent auditors of Siebel and Scopus relating to the ability of Siebel
to account for the Merger as a pooling of interests; (ix) receipt of certain
other certificates, letters and legal opinions; (x) the absence of any material
adverse change to the business, financial condition, operations or financial
performance of Scopus (other than changes in revenue generation due to the
public announcement or pendency of the Merger); (xi) the approval for listing of
the Siebel Common Stock to be issued in the Merger on the Nasdaq National Market
("Nasdaq"); (xii) the filing by Scopus with the Internal Revenue Service ("IRS")
of a notification required under 1.897-2(h)(2) of the United States Treasury
Regulations ("Treasury Regulations"); (xiii) the expiration or termination of
the waiting period applicable under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"); (xiv) the absence of restraining
orders, injunctions and other orders preventing the consummation of the Merger;
(xv) the absence of certain litigation or administrative actions or proceedings;
and (xvi) delivery by Scopus to Siebel of certain audited financial statements
for the Scopus fiscal year ended March 31, 1998.
The obligation of Scopus to effect the Merger and otherwise consummate
the transactions contemplated by the Reorganization Agreement is subject to the
satisfaction of certain conditions relating to: (i) the accuracy of the
representations and warranties of Siebel contained in the Reorganization
Agreement (subject to certain materiality limitations); (ii) the performance in
all material respects by Siebel of certain covenants and obligations contained
in the Reorganization Agreement; (iii) the effectiveness of the Registration
Statement; (iv) the approval of the Reorganization Agreement and Merger by the
necessary vote of the Scopus shareholders and the approval of the issuance of
Siebel Common Stock in the Merger by the necessary vote of the Siebel
stockholders; (v) receipt of
5.
<PAGE>
"Siebel Affiliate Agreements" (as defined herein) from the affiliates of Siebel;
(vi) receipt of certain letters from the independent auditors of Siebel and
Scopus relating to the ability of Siebel to account for the Merger as a pooling
of interests; (vii) receipt of certain other letters, legal opinions and a
certificate; (viii) the absence of any material adverse change to the business,
financial condition, operations or financial performance of Siebel (other than
changes in revenue generation relating to the public announcement or pendency of
the Merger); (ix) the expiration or termination of the waiting period applicable
under the HSR Act; (x) the approval for listing of Siebel's Common Stock to be
issued in the Merger on Nasdaq; and (xi) the absence of restraining orders,
injunctions and other orders preventing the consummation of the Merger. See "The
Reorganization Agreement-Conditions to the Merger."
TERMINATION
The Reorganization Agreement may be terminated prior to the Effective
Time, whether before or after approval of the Merger by the stockholders of
Siebel and the shareholders of Scopus: (i) by mutual written consent of the
Boards of Directors of Siebel and Scopus; (ii) subject to certain exceptions, by
either Siebel or Scopus if the Merger shall not have been consummated by
September 1, 1998; (iii) by either Siebel or Scopus in connection with certain
legal or governmental actions having the effect of permanently restraining,
enjoining or otherwise prohibiting the Merger; (iv) subject to certain
limitations, by Siebel or Scopus if the Scopus Special Meeting shall have been
held and the Reorganization Agreement and the Merger shall not have been
approved by the necessary vote of the Scopus shareholders; (v) by Siebel or
Scopus if (at any time prior to the adoption and approval of the Reorganization
Agreement and approval of the Merger by the Scopus shareholders) a "Triggering
Event" (as defined herein) shall have occurred (provided that Scopus shall not
have the right to terminate upon a Triggering Event until May 30, 1998); (vi) by
Siebel or Scopus if (at any time prior to the adoption and approval of the
Reorganization Agreement and approval of the Merger by the Scopus shareholders)
a "Termination Event" (as defined herein) shall have occurred (provided that
Scopus shall not have the right to terminate upon a Triggering Event until May
30, 1998); (vii) subject to certain limitations, by Siebel or Scopus if the
Siebel Special Meeting shall have been held and the issuance of Siebel Common
Stock in the Merger shall not have been approved by the necessary vote of the
Siebel stockholders; (viii) by Siebel, subject to certain limitations, if any of
the representations and warranties of Scopus contained in the Reorganization
Agreement shall be or have become materially inaccurate, or if any of Scopus'
covenants contained in the Reorganization Agreement shall have been breached
such that certain conditions precedent to Closing would not be satisfied as of
the time of such breach or as of the time such representation or warranty became
untrue; or (ix) by Scopus, subject to certain limitations, if any of the
representations and warranties of Siebel contained in the Reorganization
Agreement shall be or have become materially inaccurate, or if any of Siebel's
covenants contained in the Reorganization shall have been breached such that
certain conditions precedent to Closing would not be satisfied as of the time of
such breach or as of the time such representation or warranty became untrue. See
"The Reorganization Agreement-Termination."
EXPENSES AND TERMINATION FEES
Pursuant to the Reorganization Agreement, all fees and expenses
incurred in connection with the Reorganization Agreement and the transactions
contemplated by the Reorganization Agreement shall be paid by the party
incurring such expenses, whether or not the Merger is consummated; provided,
however, that Siebel and Scopus shall share equally all fees and expenses
incurred in connection with (i) the printing and filing of this Joint Proxy
Statement/Prospectus and the Registration Statement of which this Joint Proxy
Statement/Prospectus is a part and (ii) the filing of pre-merger notification
and report forms relating to the Merger under the HSR Act. Siebel has agreed
that if the Reorganization Agreement is terminated under certain circumstances,
it will pay to Scopus a non-refundable fee equal to $12.6 million. Scopus has
agreed that if the Reorganization Agreement is terminated under certain
circumstances, it will pay to Siebel a non-refundable fee determined in
accordance with a specified formula. See "The Reorganization Agreement-Expenses
and Termination Fees."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of Scopus' management and the Scopus Board of
Directors may be deemed to have certain interests in the Merger that are in
addition to their interests as shareholders of Scopus generally. See "Approval
of the Merger and Related Transactions-Interests of Certain Persons in the
Merger." The Scopus Board of Directors was aware of these interests and
considered them, among other matters, in approving the Reorganization Agreement
and the transactions contemplated thereby. See "Approval of the Merger and
Related Transactions-Interests of Certain Persons in the Merger."
6.
<PAGE>
The Reorganization Agreement provides that all rights to
indemnification existing in favor of the persons serving as directors and
officers of Scopus as of the date of the Reorganization Agreement for acts or
omissions occurring prior to the Effective Time, as provided in the amended and
restated articles of incorporation of Scopus (the "Scopus Articles of
Incorporation") or the bylaws of Scopus (the "Scopus Bylaws") and in any
indemnification agreements between Scopus and such directors and officers, will
survive the Merger, and that Siebel will cause the Surviving Corporation to
perform its obligations arising thereunder for at least eight years from the
Effective Time. Subject to certain limitations, Siebel has also agreed to cause
the Surviving Corporation to maintain in effect for three years after the
Effective Time a policy of directors' and officers' liability insurance in
existence at the date of the Reorganization Agreement for the benefit of persons
serving as directors and officers of Scopus as of such date. See "Approval of
the Merger and Related Transactions - Interests of Certain Persons in the
Merger."
VOTING AGREEMENTS
Pursuant to certain voting agreements dated March 1, 1998 (each a
"Scopus Voting Agreement" and collectively, the "Scopus Voting Agreements"), Ori
S. Sasson, A. Aaron Omid, GAP Coinvestment Partners, L.P., General Atlantic
Partners V, L.P., General Atlantic Partners 13, L.P. and General Atlantic
Partners 17, L.P. (each a "Scopus Voting Agreement Shareholder" and,
collectively, the "Scopus Voting Agreement Shareholders"), who, as of the Scopus
Record Date, beneficially owned in the aggregate approximately ___% of the
outstanding shares of Scopus Common Stock, have agreed that, subject to certain
exceptions, they will vote their shares of Scopus Common Stock in favor of: (i)
approval of the Merger; (ii) approval and adoption of the Reorganization
Agreement; and (iii) each of the other actions contemplated by the
Reorganization Agreement. The Scopus Voting Agreement Shareholders have also
delivered to Siebel irrevocable proxies with respect to such matters. A form of
the Scopus Voting Agreement and related irrevocable proxy is set forth as
Appendix C-1 to this Joint Proxy Statement/Prospectus.
Pursuant to certain voting agreements dated March 1, 1998 (each a
"Siebel Voting Agreement" and, collectively the "Siebel Voting Agreements"),
Thomas M. Siebel, Thomas M. Siebel as Trustee of the Siebel Living Trust u/a/d
7/29/93, Siebel Asset Management, L.P., the Thomas and Stacey Siebel Foundation
and First Virtual Capital, Inc. (each a "Siebel Voting Agreement Stockholder"
and, collectively, the "Siebel Voting Agreement Stockholders"), who, as of the
Siebel Record Date, beneficially owned in the aggregate approximately ___% of
the outstanding shares of Siebel Common Stock, have agreed that they will vote
their shares of Siebel Common Stock in favor of: (i) the issuance of Siebel
Common Stock in connection with the Merger; and (ii) each of the other actions
contemplated by the Reorganization Agreement. A form of the Siebel Voting
Agreement is set forth as Appendix C-2 to this Joint Proxy Statement/Prospectus.
See "Approval of the Merger and Related Transactions-Voting Agreements."
AFFILIATE AGREEMENTS
Scopus has agreed to deliver to Siebel prior to the mailing of this
Joint Proxy Statement/Prospectus to the shareholders of Scopus and stockholders
of Siebel executed agreements (each a "Scopus Affiliate Agreement") that: (i)
restrict the sale, transfer or other disposition of Siebel Common Stock received
in the Merger from certain individuals who may be deemed to be affiliates of
Scopus for purposes of Rule 145 under the Securities Act, in order to comply
with the requirements of certain federal securities laws; and (ii) restrict the
sale, transfer or other disposition of Scopus Common Stock held prior to the
Effective Time and Siebel Common Stock received in the Merger from certain
individuals who may be deemed affiliates of Scopus so as to help ensure that the
Merger will be treated as a pooling of interests for accounting and financial
reporting purposes. A form of the Scopus Affiliate Agreement is set forth as
Appendix D-1 to this Joint Proxy Statement/Prospectus.
Siebel has agreed to deliver to Scopus prior to the mailing of this
Joint Proxy Statement/Prospectus to the shareholders of Scopus and stockholders
of Siebel executed agreements (each a "Siebel Affiliate Agreement") that
restrict the sale, transfer or other disposition of Siebel Common Stock so as to
help ensure that the Merger will be accounted for as a pooling of interests. A
form of the Siebel Affiliate Agreement is set forth as Appendix D-2 to this
Joint Proxy Statement/Prospectus. See "Approval of the Merger and Related
Transactions-Affiliate Agreements" and "-Resale of Siebel Common Stock."
STOCK OPTION AGREEMENT
Siebel and Scopus have entered into a Stock Option Agreement dated
March 1, 1998 (the "Option Agreement"). The Option Agreement grants Siebel the
right, under certain conditions, to purchase up to 3,493,879 shares of Scopus
Common Stock (subject to certain adjustments, the "Option Shares") at a purchase
price of $20.00
7.
<PAGE>
per share. Siebel has agreed that in the event that the option granted pursuant
to the Option Agreement becomes exercisable and such option or the Scopus Common
Stock (or any rights therein) subject to such option are sold, transferred or
otherwise disposed of by Siebel at any time within the subsequent ten years, any
proceeds from such transfer in excess of the cost of the option or the Scopus
Common Stock so transferred, as applicable (and including interest on the
aggregate purchase price of the Scopus Common Stock if such Scopus Common Stock
is transferred) shall be paid to Scopus. In addition, during the 180 day period
commencing with the date 270 days following the acquisition by Siebel of any
shares of Scopus Common Stock issuable pursuant to the option granted in the
Option Agreement, Scopus may repurchase such shares of Scopus Common Stock at a
price equal to the aggregate exercise price plus interest from the date such
shares of Scopus Common Stock were acquired. Scopus has also granted Siebel
rights to register the shares of Scopus Common Stock acquired pursuant to the
option granted in the Option Agreement under the Securities Act under certain
circumstances. The form of the Option Agreement is set forth as Appendix E to
this Joint Proxy Statement/Prospectus. See "Approval of the Merger and Related
Transactions-Stock Option Agreement."
NONCOMPETITION AGREEMENTS
Mr. Ori Sasson, the Chief Executive Officer of Scopus, and Mr. A.
Aaron Omid, Scopus' Senior Vice President of Worldwide Operations (each a
"Principal") have entered into noncompetition agreements with Siebel and Scopus
dated as of March 1, 1998 (each a "Principal Noncompetition Agreement" and,
collectively, the "Principal Noncompetition Agreements"). The Principal
Noncompetition Agreements contain provisions restricting such employees from
owning a substantial interest or participating in or providing any service or
support (whether as an employee or consultant) to certain businesses competitive
with Siebel for a period of time lasting from the Effective Time until the later
of (i) the third anniversary of the Effective Time and (ii) the first
anniversary of such Principal's termination as an employee of Siebel.
In addition, Scopus has agreed to use its best efforts to obtain the
agreement of certain key Scopus employees (each a "Key Employee") to be
identified mutually by Scopus and Siebel to agree to enter into a noncompetition
agreement with Siebel and Scopus (each a "Key Employee Noncompetition Agreement"
and, collectively, the "Key Employee Noncompetition Agreements"). The Key
Employee Noncompetition Agreements contain provisions restricting such Key
Employee from owning a substantial interest or participating in or providing any
service or support (whether as an employee or consultant) to certain businesses
competitive with Siebel for a period of time lasting from the Effective Time
until the first anniversary of such Key Employee's termination as an employee of
Siebel. Both the Principal Noncompetition Agreements and the Key Employee
Noncompetition Agreements contain restrictions against (i) soliciting employees
of Siebel or any subsidiary of Siebel to leave his or her employment with such
company and (ii) interfering or attempting to interfere with any commercial
relationship or prospective commercial relationship of Siebel or its
subsidiaries.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The Merger is expected to be a tax-free reorganization for federal
income tax purposes, so that no gain or loss will be recognized by the Scopus
shareholders on the exchange of Scopus Common Stock for Siebel Common Stock,
except to the extent that Scopus shareholders receive cash in lieu of fractional
shares. The Reorganization Agreement does not require the parties to obtain a
ruling from the IRS as to the tax consequences of the Merger. As a condition to
the closing of the Merger, Scopus and Siebel are to receive opinions from their
respective counsel that, based on certain assumptions and certifications, the
Merger will be treated as a tax-free reorganization for federal income tax
purposes. SCOPUS SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO
THE SPECIFIC TAX CONSEQUENCES OF THE MERGER, INCLUDING THE APPLICABLE FEDERAL,
STATE, LOCAL AND FOREIGN TAX CONSEQUENCES. See "Approval of the Merger and
Related Transactions-Certain Federal Income Tax Consequences."
ANTICIPATED ACCOUNTING TREATMENT
The Merger is intended to be accounted for as a pooling of interests
for financial reporting purposes in accordance with U.S. generally accepted
accounting principles ("GAAP"). As a condition to the closing of the Merger,
Scopus and Siebel shall each receive a letter from their respective accounting
firms stating that, after reasonable investigation, such firm is not aware of
any fact that could preclude the Merger from being accounted for as a pooling of
interests. See "Approval of the Merger and Related Transactions-Anticipated
Accounting Treatment."
8.
<PAGE>
RIGHTS OF DISSENTING SHAREHOLDERS OF SCOPUS
Holders of Scopus Common Stock are generally entitled to dissenters'
rights with respect to the Merger under the CGCL, if, and only if, the holders
of 5% or more of the outstanding shares of Scopus Common Stock elect to exercise
dissenters' rights in respect of their shares. If the Merger is approved by the
affirmative vote of the holders of a majority of the outstanding Scopus Common
Stock and is not terminated in accordance with the Merger Agreement, Scopus'
shareholders who vote against the Merger and who have fully complied with all
applicable provisions of the CGCL and whose shares constitute "Dissenting
Shares" (as defined herein) of Scopus will have the right to require Scopus to
purchase their shares of Scopus Common Stock held by them for cash at the fair
market value thereof as of the date preceding the public announcement of the
Merger, excluding any appreciation or depreciation resulting from the Merger but
adjusted for any stock split, reverse stock split or share dividend which
becomes effective thereafter. Under the CGCL, no shareholder of Scopus who is
entitled to exercise dissenters' rights has any right at law or in equity to
contest the validity of the Merger or to have the Merger set aside or rescinded,
except in an action to test whether the number of shares required to authorize
or approve the Merger had legally been voted in favor of the Merger. For a more
detailed description the procedures applicable to the exercise of dissenters'
rights, see "Approval of the Merger and Related Transactions-Rights of
Dissenting Shareholders of Scopus." The full text of the pertinent statutory
provisions of the CGCL relating to the proper exercise of such dissenters'
rights is attached hereto as Appendix F and should be read carefully and in its
entirety.
Holders of Siebel Common Stock are not entitled to appraisal rights
under the DGCL because Siebel is not a constituent corporation to the Merger
under the DGCL.
RISK FACTORS
The Merger and an investment in securities of Siebel by the Scopus
shareholders involve certain risks and uncertainties, including risks related to
the integration of Siebel and Scopus, risks associated with a fixed Exchange
Ratio, risks relating to the respective businesses of Siebel and Scopus and
other risks and uncertainties discussed under "Risk Factors" beginning on page
21 and elsewhere in this Joint Proxy Statement/Prospectus and in the documents
incorporated herein by reference. See "Risk Factors."
MARKETS AND MARKET PRICES
Siebel Common Stock is quoted on Nasdaq under the symbol "SEBL." On
February 27, 1998, the last trading day before the announcement by Siebel and
Scopus of the Reorganization Agreement, the closing sale price of Siebel Common
Stock as reported by Nasdaq was $30.75 (after giving effect to the 100% dividend
paid to the Siebel stockholders on March 20, 1998). On March 12, 1998, the
closing sale price of Siebel Common Stock as reported by Nasdaq was $26 (after
giving effect to the 100% dividend paid to the Siebel stockholders on March 20,
1998). There can be no assurance as to the actual price of Siebel Common Stock
prior to, at or at any time following the Effective Time.
Scopus Common Stock is quoted on Nasdaq under the symbol "SCOP."
During the trading week preceding the announcement of the Reorganization
Agreement (February 23,1998 to 27, 1998), the average closing sales price of
Scopus Common Stock as reported by Nasdaq was $11.90 per share and on February
27, 1998, the last trading day before the announcement by Siebel and Scopus of
the Reorganization Agreement, the closing sale price of Scopus Common Stock as
reported by Nasdaq was $14.125 per share. On March 12, 1998, the closing sale
price of Scopus Common Stock as reported by Nasdaq was $18.25. There can be no
assurance as to the actual price of Scopus Common Stock prior to or at the
Effective Time. Following the consummation of the Merger, Scopus Common Stock
will cease to be quoted on Nasdaq. See "Risk Factors-Risks Relating to the
Merger-Risks Associated with Fixed Exchange Ratio" and "Comparative Per Share
Market Price Data and Dividend Policy."
9.
<PAGE>
SIEBEL SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
The following selected historical consolidated financial information
of Siebel as of December 31, 1996 and 1997 and for each of the years in the
three-year period ended December 31, 1997, has been derived from and should be
read in conjunction with the audited consolidated financial statements of Siebel
and related notes thereto incorporated by reference in this Joint Proxy
Statement/Prospectus. The selected historical consolidated financial
information of Siebel as of December 31, 1993, 1994 and 1995, and for the period
from September 13, 1993 (inception) to December 31, 1993, and the year ended
December 31, 1994 has been derived from and should be read in conjunction with
the audited consolidated financial statements of Siebel which are not included
or incorporated by reference herein.
<TABLE>
<CAPTION>
PERIOD FROM
SEPTEMBER YEAR ENDED DECEMBER 31,
13, 1993
(INCEPTION) TO -------------------------------------------------------------
DECEMBER 31, 1994 1995 1996 1997
1993 -------------- -------------- -------------- -------------
----------- (IN THOUSANDS EXCEPT PER SHARE DATA)
STATEMENT OF OPERATIONS DATA:
<S> <C> <C> <C> <C> <C>
Total revenues.............................. $ -- $ 50 $ 8,038 $39,152 $118,775
Write-off of acquired
research and development................... -- -- -- -- 22,740
Operating income (loss)..................... (114) (1,779) 372 6,714 7,132
Net income (loss)/(1)/...................... (114) (1,766) 317 5,025 (2,427)
Diluted net income (loss)
per share/(1)(2)/.......................... 0.01 0.07 (0.04)
Basic net income (loss) per
share/(1)(2)/.............................. 0.01 0.10 (0.04)
<CAPTION>
ENDED DECEMBER 31,
----------------------------------------------------------------------------
1993 1994 1995 1996 1997
-------------- ----------- -------------- -------------- --------------
(IN THOUSANDS)
<S>......................................... <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets................................ $750 $1,203 $16,091 $99,501 $149,312
Total stockholders' equity.................. $746 $1,189 $9,934 $81,191 $112,565
</TABLE>
- -------------
(1) Net loss and net loss per share information for the year ended December 31,
1997, includes the write-off of acquired research and development of
$22,740,000 in connection with the acquisitions of InterActive WorkPlace,
Inc. and Nomadic Systems, Inc. Net income and diluted net income per share
before the write-off of acquired research and development were $20,313,000
and $0.25, respectively.
(2) Gives effect to the 100% dividend on Siebel Common Stock to be paid on March
20, 1998.
10.
<PAGE>
SCOPUS SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
The following selected historical consolidated financial information
of Scopus as of March 31, 1996 and 1997 and for each of the years in the three-
year period ended March 31, 1997 has been derived from and should be read in
conjunction with the audited consolidated financial statements of Scopus and
related notes thereto incorporated by reference in this Joint Proxy
Statement/Prospectus. The selected historical consolidated financial
information of Scopus as of March 31, 1993, 1994 and 1995 and for each of the
years in the two-year period ended March 31, 1994 have been derived from and
should be read in conjunction with the audited consolidated financial statements
of Scopus not included or incorporated by reference in this Joint Proxy
Statement/Prospectus. The selected financial information of Scopus as of
December 31, 1997 and for each of the nine-month periods ended December 31, 1996
and 1997 have been derived from and should be read in conjunction with the
unaudited consolidated financial statements incorporated by reference in this
Joint Proxy Statement/Prospectus, which have been prepared on the same basis as
the audited consolidated financial statements and, in the opinion of management,
contain all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation of Scopus' financial position and results of
operations for such periods.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED MARCH 31, DECEMBER 31,
-------------------------------------------------------- --------------------
1993 1994 1995 1996 1997 1996 1997
-------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
STATEMENT OF INCOME DATA:
<S> <C> <C> <C> <C> <C> <C> <C>
Net revenues............................... $ 2,704 $ 6,535 $15,250 $28,596 $63,130 $41,627 $66,131
Merger termination expenses................ -- -- -- -- -- -- 3,298
Operating income........................... 314 676 1,486 2,691 11,632 6,944 2,146
Net income/(1)/............................ 201 567 973 1,990 8,416 5,009 2,706
Diluted net income per share/(1)/ /(2)/.... 0.02 0.05 0.07 0.12 0.42 0.26 0.12
Basic net income per share/(1)/ /(2)/...... 0.03 0.07 0.07 0.13 0.45 0.28 0.13
</TABLE>
<TABLE>
<CAPTION>
AS OF MARCH 31,
--------------------------------------------------------- AS OF DECEMBER 31,
1993 1994 1995 1996 1997 1997
-------- -------- -------- -------- -------- -------------------
BALANCE SHEET DATA: (IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Total assets............................... $2,385 $ 5,504 $11,424 $41,581 $108,529 $114,492
Mandatorily redeemable preferred stock..... 1,000 1,400 1,400 -- -- --
Total shareholders' equity................. 449 1,126 5,900 33,455 92,324 98,825
</TABLE>
- --------------------
(1) Net income and net income per share information for the nine months ended
December 31, 1997, includes merger termination expenses of $2,078,000, net
of tax effect. Net income and diluted net income per share before the
merger termination expenses were $4,784,000 and $0.22, respectively.
(2) In December 1997, Scopus implemented the provisions of Statement of
Financial Accounting Standards (SFAS) No. 128 "Earnings Per Share." Scopus'
earnings per share for the years ended March 31, 1993, 1994, 1995, 1996 and
1997 and the nine-month period ended December 31, 1996 have been restated,
as required, to conform to the computation provisions of SFAS No. 128.
11.
<PAGE>
SIEBEL SYSTEMS, INC. AND SCOPUS TECHNOLOGY, INC.
UNAUDITED SELECTED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
The unaudited pro forma combined condensed financial information set
forth below gives effect to the Merger as a pooling of interests, assuming that
0.7281 shares of Siebel Common Stock are issued in exchange for each share of
Scopus Common Stock (after giving effect to the 100% dividend on Siebel Common
Stock to be paid on March 20, 1998). The pro forma information combines
Siebel's consolidated statements of operations for each of the years in the
three-year period ended December 31, 1997 with Scopus' unaudited results of
operations for each of the twelve-month periods in the three-year period ended
December 31, 1997. This data should be read in conjunction with the selected
historical consolidated financial information, the unaudited pro forma combined
condensed financial statements and the separate historical consolidated
financial statements of Siebel and Scopus and the notes thereto incorporated or
included elsewhere in this Joint Proxy Statement/Prospectus. The unaudited pro
forma combined condensed financial statements are not necessarily indicative of
the operating results or financial position that would have been achieved had
the Merger been consummated at the beginning of the periods presented and should
not be construed as representative of future operations. Additionally, the pro
forma information assumes that for purposes of reporting combined information,
all historical consolidated financial information of Scopus will be restated to
conform Scopus' fiscal year-end of March 31 to Siebel's fiscal year-end of
December 31. Subsequent to the consummation of the Merger, actual historical
consolidated financial statements of the Combined Company may or may not conform
fiscal year-ends of Scopus and Siebel for all historical periods presented.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
------------------------------------------
1995 1996 1997
----------- ---------- ----------
PRO FORMA COMBINED CONDENSED STATEMENT OF (IN THOUSANDS, EXCEPT PER SHARE DATA)
OPERATIONS DATA/(1)/:
<S> <C> <C> <C>
Net revenues............................................. $33,342 $89,922 $206,409
Acquired in-process research and development
and merger termination expenses........................ -- -- 26,038
Operating income......................................... 1,827 15,291 13,966
Net income/(2)/.......................................... 1,361 11,250 3,686
Diluted net income per share/(2)//(3)/................... 0.02 0.14 0.04
Basic net income per share/(2)//(3)/..................... 0.03 0.18 0.04
</TABLE>
<TABLE>
<CAPTION>
AS OF
DECEMBER 31,
1997
------------
PRO FORMA COMBINED CONDENSED BALANCE SHEET DATA: (IN THOUSANDS)
<S> <C>
Total assets............................................. $263,804
Total stockholders' equity/(4)/.......................... 201,390
</TABLE>
- -------------------
(1) The unaudited selected pro forma combined condensed financial information
gives effect to the completion of the Merger as if it had occurred on
January 1, 1995.
(2) Net income and net income per share information for the year ended December
31, 1997 includes acquired in-process research and development and merger
termination expenses of $24,818,000, net of tax effect. Net income and
diluted net income per share before these expenses were $28,504,000 and
$0.30, respectively.
(3) Gives effect to the 100% dividend on Siebel Common Stock to be paid on March
20, 1998.
(4) Includes the effect of estimated expenses of approximately $10 million
expected to be incurred by the Combined Company in connection with the
Merger, consisting of transaction fees for investment bankers, attorneys,
accountants, financial printing and other related charges.
12.
<PAGE>
COMPARATIVE PER SHARE DATA
The following table sets forth certain historical per share data of
Siebel and Scopus and combined per share data on an unaudited pro forma basis
after giving effect to the Merger as a pooling of interests. This data should
be read in conjunction with the selected historical and unaudited pro forma
combined condensed financial information and the unaudited pro forma combined
condensed financial statements of Siebel and Scopus and notes thereto, included
elsewhere in this Joint Proxy Statement/Prospectus. The pro forma combined per
share data are not necessarily indicative of the operating results or financial
position that would have occurred if the Merger had been consummated at the
beginning of the periods indicated, nor is it necessarily indicative of future
operating results or financial position. Additionally, the pro forma
information assumes that for purposes of reporting combined information, all
historical financial information of Scopus will be restated to conform Scopus'
fiscal year-end of March 31 to Siebel's fiscal year-end of December 31.
Subsequent to the consummation of the Merger, actual historical financial
statements of the Combined Company may or may not conform fiscal year-ends of
Scopus and Siebel for all historical periods presented.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------
1995 1996 1997
--------- --------- -----------
<S> <C> <C> <C>
Historical - Siebel:/(1)/
Net income (loss) per diluted share........................ $0.01 $0.07 $(0.04)
Net income (loss) per basic share.......................... 0.01 0.10 (0.04)
<CAPTION>
YEAR ENDED MARCH 31, NINE MONTHS ENDED
----------------------------------- DECEMBER 31,
1995 1996 1997 1997
--------- --------- ----------- -----------------
<S> <C> <C> <C> <C>
Historical - Scopus:
Net income per diluted share.............................. $0.07 $0.12 $ 0.42 $0.12
Net income per basic share................................. 0.07 0.13 0.45 0.13
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------
1995 1996 1997
--------- --------- -----------
<S> <C> <C> <C>
Pro Forma Combined Net Income:/(1)//(2)/
Per Siebel share - diluted................................. $0.02 $0.14 $ 0.04
Per Siebel share - basic................................... 0.03 0.18 0.04
Equivalent per Scopus share - diluted/(4)/................. 0.02 0.10 0.03
Equivalent per Scopus share - basic/(4)/................... 0.02 0.13 0.03
<CAPTION>
AS OF AS OF
MARCH 31, DECEMBER 31,
1997 1997
----------- -------------
<S> <C> <C>
Book value per share:/(3)/
Historical - Siebel/(1)/................................... $1.59
Historical - Scopus........................................ $4.57 4.81
Pro forma combined per Siebel share/(1)/ /(2)/ /(4)/....... 2.35
Equivalent pro forma combined
per Scopus share/(1)//(2)//(4)/............................ 1.71
</TABLE>
- ----------------
(1) Gives effect to the 100% dividend on Siebel Common Stock to be paid on
March 20, 1998.
(2) Siebel and Scopus estimate they will incur direct transaction costs of
approximately $10 million associated with the Merger, which will be charged
to operations upon consummation of the Merger. The pro forma combined book
value per share data gives effect to the estimated direct transaction
costs, as if such costs had been incurred as of the respective balance
sheet date. The pro forma combined book value per share data does not
include additional costs, which costs are not currently estimable, expected
to be incurred relating to integrating the companies. The direct
transaction costs and integration-related charges are not included in the
pro forma combined net income per share data. See "Unaudited Pro Forma
Combined Condensed Financial Statements" and accompanying notes thereto.
(3) The historical book value per share is computed by dividing stockholders'
equity by the number of shares of common stock outstanding at the end of
each period. The pro forma combined book value per share is computed by
dividing pro forma stockholders' equity by the pro forma number of shares
of Common Stock outstanding as of December 31, 1997.
(4) The Scopus equivalent pro forma combined per share amounts are calculated
by multiplying the Siebel combined pro forma share amounts by the current
Exchange Ratio of 0.7281 (after giving effect to the 100% dividend to be
paid on Siebel Common Stock on March 20, 1998).
13.
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
The following unaudited pro forma combined condensed financial
statements have been prepared to give effect to the Merger, using the pooling of
interests method of accounting. These financial statements reflect certain
assumptions deemed probable by management regarding the Merger (e.g., that share
information used in the unaudited pro forma information approximates actual
share information at the effective date). No adjustments to the unaudited pro
forma combined condensed financial statements have been made to account for
different possible results in connection with the foregoing, as management
believes that the impact on such information of varying outcomes, individually
or in the aggregate, would not be material.
The unaudited pro forma combined condensed balance sheet as of
December 31, 1997 gives effect to the Merger as if it had occurred on December
31, 1997, and combines the historical consolidated balance sheet of Siebel and
the historical unaudited consolidated balance sheet of Scopus as of such date.
The unaudited pro forma combined condensed statements of operations
combine the historical consolidated statements of operations of Siebel and
Scopus as if the Merger had occurred at the beginning of the earliest period
presented. The unaudited pro forma combined condensed statements of operations
for each of the years in the three-year period ended December 31, 1997 combine
the historical consolidated statements of operations of Siebel for each of the
years in the three-year period ended December 31, 1997 with the unaudited
historical consolidated results of operations of Scopus for each of the twelve-
month periods in the three-year period ended December 31, 1997. The historical
pro forma information assumes that for purposes of reporting combined
information, all historical consolidated financial information of Scopus will be
restated to conform Scopus' fiscal year-end of March 31 to Siebel's fiscal year-
end of December 31. Subsequent to the consummation of the merger, actual
historical consolidated financial statements may or may not conform fiscal year-
ends of Scopus and Siebel for all historical periods presented.
Siebel and Scopus estimate that they will incur direct transaction
costs of approximately $10.0 million associated with the Merger, which will be
charged to operations upon consummation of the Merger. In addition, it is
expected that following the Merger, the Combined Company will incur additional
costs, which can not currently be estimated, associated with integrating the
operations of the two companies. Integration-related costs are not included in
the accompanying unaudited pro forma combined condensed financial statements.
Unaudited pro forma combined condensed financial information is
presented for illustrative purposes only and is not necessarily indicative of
the financial position or results of operations that would have actually been
reported had the Merger occurred at the beginning of the periods presented, nor
is it necessarily indicative of future financial position or results of
operations. These unaudited pro forma combined condensed financial statements
are based upon the respective historical consolidated financial statements of
Siebel and Scopus and notes thereto, incorporated by reference elsewhere in this
Joint Proxy Statement/Prospectus. These unaudited pro forma combined condensed
financial statements do not incorporate, nor do they assume, any benefits from
cost savings or synergies of operations of the Combined Company.
All of the Siebel share and per share information in the unaudited pro
forma combined condensed financial statements and related notes thereto give
effect to the 100% dividend on Siebel Common Stock to be paid on March 20, 1998.
14
<PAGE>
SIEBEL SYSTEMS, INC. AND SCOPUS TECHNOLOGY, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
DECEMBER 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS
PRO FORMA PRO FORMA
SIEBEL SCOPUS ADJUSTMENTS COMBINED
----------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents...................... $ 31,257 $ 34,805 $ -- $ 66,062
Short-term investments......................... 62,894 32,243 -- 95,137
Accounts receivable, net....................... 33,246 27,615 -- 60,861
Deferred income taxes.......................... 3,076 -- -- 3,076
Prepaid expenses and other current assets...... 4,954 3,966 -- 8,920
-------- -------- ---------- --------
Total current assets....................... 135,427 98,629 -- 234,056
Property and equipment, net...................... 11,129 12,773 -- 23,902
Other assets..................................... 2,756 3,090 -- 5,846
-------- -------- ---------- --------
Total assets............................... $149,312 $114,492 $ -- $263,804
======== ======== ========== ========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C> <C> <C>
Current liabilities:
Accounts payable............................... $ 1,702 $ 2,475 $ -- $ 4,177
Accrued expenses............................... 20,802 8,833 -- 29,635
Accrued transaction costs...................... -- -- 10,000/3//(a)/ 10,000
Income taxes payable........................... 1,178 511 -- 1,689
Deferred revenue............................... 12,903 3,848 -- 16,751
-------- -------- ---------- --------
Total current liabilities................... 36,585 15,667 10,000 62,252
Deferred income taxes............................ 162 -- -- 162
-------- -------- ---------- --------
Total liabilities........................... 36,747 15,667 10,000 62,414
Stockholders' equity:
Common stock.................................. 71 -- 15/3//(b)/ 86
Additional paid-in capital.................... 110,564 83,929 (15)/3//(b)/ 194,478
Notes receivable from stockholders............ (406) -- -- (406)
Deferred compensation......................... (578) -- -- (578)
Retained earnings............................. 2,914 14,896 (10,000)/3//(a)/ 7,810
-------- -------- ---------- --------
Total stockholders' equity................. 112,565 98,825 (10,000) 201,390
-------- -------- ---------- --------
Total liabilities and stockholders' equity. $149,312 $114,492 $ -- $263,804
======== ======== ========== ========
</TABLE>
See accompanying notes to unaudited pro forma combined condensed financial
statements.
15
<PAGE>
SIEBEL SYSTEMS, INC. AND SCOPUS TECHNOLOGY, INC.
UNAUDITED PRO FORMA
COMBINED CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
SIEBEL SCOPUS COMBINED
------ ------ ---------
<S> <C> <C> <C>
Revenues:
Software.................................. $ 7,636 $16,929 $24,565
Maintenance, consulting and other......... 402 8,375 8,777
------- ------- -------
Total revenues.......................... 8,038 25,304 33,342
------- ------- -------
Cost of revenues:
Software.................................. 41 1,162 1,203
Maintenance, consulting and other......... 385 7,227 7,612
------- ------- -------
Total cost of revenues.................. 426 8,389 8,815
------- ------- -------
Gross margin............................ 7,612 16,915 24,527
------- ------- -------
Operating expenses:
Product development....................... 2,816 4,764 7,580
Sales and marketing....................... 3,232 8,988 12,220
General and administrative................ 1,192 1,708 2,900
------- ------- -------
Total operating expenses................ 7,240 15,460 22,700
------- ------- -------
Operating income........................ 372 1,455 1,827
Other income, net........................... 156 201 357
------- ------- -------
Income before income taxes.............. 528 1,656 2,184
Income tax expense.......................... 211 612 823
------- ------- -------
Net income.............................. $ 317 $ 1,044 $ 1,361
======= ======= =======
Diluted net income per share................ $ 0.01 $ 0.07 $ 0.02
======= ======= =======
Shares used in diluted net income per
share computation....................... 50,102 15,194 61,165
======= ======= =======
Basic net income per share.................. $ 0.01 $ 0.10 $ 0.03
======= ======= =======
Shares used in basic net income per
share computation....................... 32,296 10,470 39,919
======= ======= =======
</TABLE>
See accompanying notes to unaudited pro forma combined condensed financial
statements.
16
<PAGE>
SIEBEL SYSTEMS, INC. AND SCOPUS TECHNOLOGY, INC.
UNAUDITED PRO FORMA
COMBINED CONDENSED STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
SIEBEL SCOPUS COMBINED
------- ------- ---------
<S> <C> <C> <C>
Revenues:
Software................................... $35,658 $37,272 $72,930
Maintenance, consulting and other.......... 3,494 13,498 16,992
------- ------- -------
Total revenues.......................... 39,152 50,770 89,922
------- ------- -------
Cost of revenues:
Software................................... 106 1,421 1,527
Maintenance, consulting and other.......... 2,113 8,731 10,844
------- ------- -------
Total cost of revenues.................. 2,219 10,152 12,371
------- ------- -------
Gross margin............................ 36,933 40,618 77,551
------- ------- -------
Operating expenses:
Product development........................ 5,894 7,691 13,585
Sales and marketing........................ 19,577 20,095 39,672
General and administrative................. 4,748 4,255 9,003
------- ------- -------
Total operating expenses................ 30,219 32,041 62,260
------- ------- -------
Operating income........................ 6,714 8,577 15,291
Other income, net............................ 1,391 1,306 2,697
------- ------- -------
Income before income taxes.............. 8,105 9,883 17,988
Income tax expense........................... 3,080 3,658 6,738
------- ------- -------
Net income.............................. $ 5,025 $ 6,225 $11,250
======= ======= =======
Diluted net income per share................. $ 0.07 $ 0.32 $ 0.14
======= ======= =======
Shares used in diluted net income per
share computation....................... 67,462 19,379 81,572
======= ======= =======
Basic net income per share................... $ 0.10 $ 0.35 $ 0.18
------- ------- -------
Shares used in basic net income per.......... 49,600 17,924 62,650
share computation ======= ======= =======
</TABLE>
See accompanying notes to unaudited pro forma combined condensed financial
statements.
17
<PAGE>
SIEBEL SYSTEMS, INC. AND SCOPUS TECHNOLOGY, INC.
UNAUDITED PRO FORMA
COMBINED CONDENSED STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
SIEBEL SCOPUS COMBINED
------- ------- ---------
<S> <C> <C> <C>
Revenues:
Software........................................... $100,700 $58,666 $159,366
Maintenance, consulting and other.................. 18,075 28,968 47,043
-------- ------- --------
Total revenues.................................. 118,775 87,634 206,409
-------- ------- --------
Cost of revenues:
Software.......................................... 2,272 2,464 4,736
Maintenance, consulting and other................. 7,617 18,600 26,217
-------- ------- --------
Total cost of revenues.......................... 9,889 21,064 30,953
-------- ------- --------
Gross margin.................................... 108,886 66,570 175,456
-------- ------- --------
Operating expenses:
Product development............................... 13,349 11,205 24,554
Sales and marketing............................... 55,983 38,364 94,347
General and administrative........................ 9,682 6,869 16,551
Write-off of acquired research and development.... 22,740 -- 22,740
Merger termination expenses....................... -- 3,298 3,298
-------- ------- --------
Total operating expenses........................ 101,754 59,736 161,490
-------- ------- --------
Operating income................................ 7,132 6,834 13,966
Other income, net.................................... 2,892 2,870 5,762
-------- ------- --------
Income before income taxes...................... 10,024 9,704 19,728
Income taxes expense................................. 12,451 3,591 16,042
-------- ------- --------
Net income (loss)............................... $ (2,427) $ 6,113 $ 3,686
======== ======= ========
Diluted net income (loss) per share.................. $ (0.04) $ 0.28 $ 0.04
-------- ------- --------
Shares used in diluted net income (loss) per
share computation............................... 68,856 21,605 96,351
======== ======= ========
Basic net income (loss) per share.................... $ (0.04) $ 0.30 $ 0.04
-------- ------- --------
Shares used in basic net income (loss) per
share computation............................... 68,856 20,347 83,671
======== ======= ========
</TABLE>
See accompanying notes to unaudited pro forma combined condensed financial
statements.
18
<PAGE>
SIEBEL SYSTEMS, INC. AND SCOPUS TECHNOLOGY, INC.
NOTES TO UNAUDITED PRO FORMA
COMBINED CONDENSED FINANCIAL STATEMENTS
1. PRO FORMA BASIS OF PRESENTATION
The pro forma information presented is not necessarily indicative of
the future consolidated results of operations of the Combined Company or the
consolidated results of operations which would have resulted had the Merger
taken place during the periods presented. The Unaudited Pro Forma Financial
Statements reflect the effects of the Merger, assuming the Merger and related
events occurred as of December 31, 1997 for the purposes of the unaudited pro
forma combined condensed balance sheet and as of January 1, 1995 for the
purposes of the unaudited pro forma combined condensed statements of operations.
The Siebel balance sheet as of December 31, 1997 and statements of
operations for each of the years in the three-year period ended December 31,
1997, have been combined with the Scopus balance sheet as of December 31, 1997
and statements of operations for each of the twelve-month periods in the three-
year period ended December 31, 1997.
2. UNAUDITED PRO FORMA COMBINED SHARES OUTSTANDING
These Unaudited Pro Forma Combined Condensed Financial Statements
reflect the issuance of 14,963,478 shares of Siebel Common Stock in exchange for
an aggregate of 20,551,405 shares of Scopus Common Stock (outstanding at
December 31, 1997) in connection with the Merger, based on the current Exchange
Ratio of .7281 (after giving effect to the 100% dividend to be paid on Siebel
Common Stock on March 20, 1998) set forth in the following table:
<TABLE>
<S> <C>
Scopus Common Stock outstanding as of December 31, 1997........................ 20,551,405
Exchange Ratio................................................................. 0.7281
----------
Number of shares of Siebel Common Stock exchanged.............................. 14,963,478
Number of shares of Siebel Common Stock outstanding as of December 31,
1997...................................................... ................... 70,894,314
----------
Number of shares of Combined Company common stock outstanding after
completion of the Merger...................................................... 85,857,792
==========
</TABLE>
Additionally, at the Effective Time, all outstanding options to
purchase Scopus Common Stock will be exchanged for options to purchase Siebel
Common Stock, based on the current Exchange Ratio of .7281 (after giving
effect to the 100% dividend to be paid on Siebel Common Stock on March 20,
1998). As of December 31, 1997, 3,189,742 options to purchase Scopus Common
Stock were outstanding. The actual number of shares of Siebel Common Stock and
Scopus Common Stock options to be exchanged will be determined at the
Effective Time based on the number of shares of Scopus Common Stock and Scopus
Common Stock options outstanding on that date.
3. UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
(a) Siebel and Scopus estimate they will incur direct transaction
costs of approximately $10 million associated with the Merger, consisting of
transaction fees for investment bankers, attorneys, accountants, financial
printing and other related charges. These nonrecurring transaction costs will
be charged to operations during the quarter in which the Merger is consummated.
The charge is a preliminary estimate only and is subject to change.
It is expected that following the Merger, the Combined Company will
incur additional costs associated with integrating the two companies. These
costs have not been reflected on the pro forma combined balance sheet.
(b) Reflects the reclassification of additional paid-in capital
associated with the Siebel Common Stock issued in the combination.
19
<PAGE>
4. UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF OPERATIONS
The direct transaction costs discussed in Note 3(a) are not reflected
in the pro forma combined condensed statements of operations because they are
non-recurring.
5. PRO FORMA NET INCOME (LOSS) PER SHARE
Share and per share information of Siebel gives effect to the 100%
dividend on Siebel Common Stock to be paid in March 20, 1998.
The following table reconciles the number of shares used in the pro
forma earnings per share computations to the numbers set forth in Siebel's and
Scopus' historical statements of operations (in thousands, except the Exchange
Ratio and per share amounts):
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------
1995 1996 1997
---------- ------------ ------------
<S> <C> <C> <C>
Shares used in diluted per share computation:
Historical Scopus/(1)/....................................... 15,194 19,379 21,605
Exchange Ratio............................................... 0.7281 0.7281 0.7281
------ ------ ------
11,063 14,110 15,731
Historical Siebel............................................ 50,102 67,462 68,856
Dilutive potential common shares excluded from historical
Siebel diluted per share computation/(2)/................. -- -- 11,764
------ ------ ------
Pro forma combined........................................... 61,165 81,572 96,351
------ ------ ------
Shares used in basic per share computation:
Historical Scopus/(1)/....................................... 10,470 17,924 20,347
Exchange Ratio............................................... 0.7281 0.7281 0.7281
------ ------ ------
7,623 13,050 14,815
Historical Siebel............................................ 32,296 49,600 68,856
------ ------ ------
Pro forma combined........................................... 39,919 62,650 83,671
---------------------------------------
</TABLE>
- ----------------------------
(1) Reflects twelve months ended December 31, 1995, 1996 and 1997 for Scopus.
(2) Potential common shares were excluded from the computation of historical
Siebel diluted net loss per share amounts for the year ended December 31,
1997 as the effect was anti-dilutive.
20
<PAGE>
RISK FACTORS
This Joint Proxy Statement/Prospectus contains forward-looking
statements that involve risks and uncertainties. The actual results of Scopus,
Siebel and the Combined Company may differ materially from those anticipated in
these forward-looking statements as a result of certain factors, including those
discussed under this section as well as those discussed elsewhere in this Joint
Proxy Statement/Prospectus and in the documents incorporated herein by
reference. In addition to the other information in this Joint Proxy
Statement/Prospectus, the following risk factors should be considered carefully
by Scopus shareholders in determining whether or not to vote in favor of the
adoption and the approval of the Reorganization Agreement and approval of the
Merger and by Siebel stockholders in determining whether or not to vote in favor
of the issuance of shares of Siebel Common Stock in the Merger.
RISKS RELATING TO THE MERGER
Uncertainty Relating to Integration. The Merger involves the
integration of two companies that have previously operated independently. The
successful combination of the two companies will require significant effort from
each company, including the coordination of their research and development,
integration of the companies' product offerings, coordination of their sales and
marketing efforts and business development efforts. Following the Merger, in
order to maintain and increase profitability, the Combined Company will need to
integrate and streamline overlapping functions successfully. Costs generally
associated with this type of integration that may be incurred by the Combined
Company include integration of product lines, sales force cross-training and
market positioning of the Combined Company's products. While these costs have
not been currently identified, any such costs may have an adverse effect on the
Combined Company's operating results in the periods in which they are incurred.
Each of Siebel and Scopus has different systems and procedures in many
operational areas that must be rationalized and integrated. Among other things,
the Combined Company must integrate product offerings, and coordinate research
and development and sales and marketing efforts. There may be substantial
difficulties associated with integrating two separate companies, and there can
be no assurance that such integration will be accomplished smoothly,
expeditiously or successfully. The integration of certain operations following
the Merger will require the dedication of management resources that may
temporarily distract attention from the normal operations of the Combined
Company. The business of the Combined Company may also be disrupted by employee
uncertainty and lack of focus during such integration. There can be no assurance
that the Combined Company will be able to retain key technical, managerial and
other employees. Failure to quickly and effectively accomplish the integration
of the operations of Siebel and Scopus could have a material adverse effect on
the Combined Company's business, financial condition and results of operations.
Moreover, uncertainty in the marketplace or customer concern regarding the
impact of the Merger and related transactions could have a material adverse
effect on the Combined Company's business, financial condition and results of
operations.
Risks Associated with Fixed Exchange Ratio. As a result of the
Merger, each outstanding share of Scopus Common Stock will be converted into the
right to receive that number of shares of Siebel Common Stock equal to the
Exchange Ratio. Because the Exchange Ratio is fixed and will not increase or
decrease due to fluctuations in the market price of either Siebel or Scopus
Common Stock, the specific value of the consideration to be received by Scopus
shareholders in the Merger will depend on the market price of Siebel Common
Stock at the Effective Time. In the event that the market price of Siebel Common
Stock decreases or increases prior to the Effective Time, the market value at
the Effective Time of Siebel Common Stock to be received by Scopus shareholders
in the Merger would correspondingly decrease or increase. The market prices of
Siebel Common Stock and Scopus Common Stock as of a recent date are set forth
herein under "Summary-Market Price and Data," and "Comparative Per Share Market
Price Data and Dividend Policy." Scopus shareholders are advised to obtain
recent market quotations for Siebel Common Stock and Scopus Common Stock. Siebel
Common Stock and Scopus Common Stock historically have been subject to price
volatility. No assurance can be given as to the market prices of Siebel Common
Stock or Scopus Common Stock at any time. See "Comparative Per Share Market
Price Data and Dividend Policy."
Effect of the Merger on Customers and Existing Agreements. Certain of
Scopus' and Siebel's existing customers may view the Merger as disadvantageous
to them. As a consequence, the Combined Company's relationship with these
customers could be adversely affected. The Merger will require the consent of
certain parties who have entered into contracts with Scopus. There can be no
assurance that such consents will be given and, if not given, that such
contracts will not terminate.
21
<PAGE>
Retention of Employees by the Combined Company. The success of the
Combined Company will be dependent in part on the retention and integration of
management, technical, marketing, sales and customer support personnel. There
can be no assurance that the Combined Company will be able to retain such
personnel or that the Combined Company will be able to attract, hire and retain
replacements for employees that leave in connection with or following
consummation of the Merger. The Combined Company's failure to attract, hire and
retain such skilled employees could have a material adverse effect on its
business, operating results and financial condition.
Rights of Holders of Scopus Common Stock Following the Merger.
Following the Merger, holders of Scopus Common Stock outstanding as of the
Effective Time will become holders of Siebel Common Stock. Certain material
differences exist between the rights of shareholders of Scopus under California
law, the Scopus Articles of Incorporation and the Scopus Bylaws, and the rights
of stockholders of Siebel under Delaware law, the amended and restated
certificate of incorporation, as amended, of Siebel (the "Siebel Certificate of
Incorporation") and the bylaws of Siebel (the "Siebel Bylaws"). See "Comparison
of Shareholders' Rights."
RISKS RELATING TO THE BUSINESS OF SIEBEL
Limited Operating History. Siebel commenced operations in July 1993
and shipped version 1.0 of Siebel Sales Enterprise in April 1995, version 2.2
in December 1996 and version 3.0 in February, 1997. The Company shipped
Siebel Service Enterprise version 2.2 in December 1996 and subsequently shipped
version 3.0 in February 1997. Siebel has only a limited operating history, and
its prospects must be evaluated in light of the risks and uncertainties
encountered by a company in its early stage of development.
Uncertainty of Future Operating Results; Fluctuations in Quarterly
Operating Results. Prior growth rates in Siebel's revenue and net income
should not be considered indicative of future operating results. Future
operating results will depend upon many factors, including the demand for
Siebel's products, the level of product and price competition, the length of
Siebel's sales cycle, the size and timing of individual license transactions,
the delay or deferral of customer implementations, Siebel's success in expanding
its customer support organization, direct sales force and indirect distribution
channels, the timing of new product introductions and product enhancements, the
mix of products and services sold, levels of international sales, activities of
and acquisitions by competitors, the timing of new hires, changes in foreign
currency exchange rates and the ability of Siebel to develop and market new
products and control costs. In addition, the decision to implement a sales and
marketing information system is discretionary, involves a significant commitment
of customer resources and is subject to the budget cycles of Siebel's customers.
Siebel's sales generally reflect a relatively high amount of revenue per order.
The loss or delay of individual orders, therefore, would have a significant
impact on the revenue and quarterly results of Siebel. The timing of license
revenue is difficult to predict because of the length and variability of
Siebel's sales cycle, which has ranged to date from two to eighteen months from
initial contact to the execution of a license agreement. Siebel's operating
expenses are based on anticipated revenue trends and, because a high percentage
of these expenses are relatively fixed, a delay in the recognition of revenue
from a limited number of license transactions could cause significant variations
in operating results from quarter to quarter and could result in operating
losses. To the extent such expenses precede, or are not subsequently followed
by, increased revenues, Siebel's operating results would be materially and
adversely affected. To date, Siebel has not experienced significant seasonality
of operating results. Siebel expects future revenues for any period may be
affected by the fiscal or quarterly budget cycles of its customers. As a result
of these and other factors, revenues for any period are subject to significant
variation, and Siebel believes that period-to-period comparisons of its results
of operations are not necessarily meaningful and should not be relied upon as
indications of future performance. It is likely that Siebel's future operating
results from time to time will not meet the expectations of market analysis or
investors, which would likely have an adverse effect on the price of Siebel
Common Stock. In addition, fluctuations in operating results may also result in
volatility in the price of Siebel Common Stock.
22
<PAGE>
Reliance on Andersen Consulting; Dependence on System Integrators.
Siebel has established strategic relationships with a number of organizations
that it believes are important to its worldwide sales, marketing and support
activities and the implementation of its products. Siebel believes that its
relationships with such organizations provide marketing and sales opportunities
for Siebel's direct sales force and expand the distribution of its products.
These relationships also assist Siebel in keeping pace with the technological
and marketing developments of major software vendors, and, in certain instances,
provide it with technical assistance for its product development efforts. In
particular, Siebel has established a non-exclusive strategic relationship with
Andersen Consulting, a principal stockholder of Siebel. In 1997 and 1996,
approximately 41% and 46%, respectively, of Siebel's revenues were derived from
customers for which Andersen Consulting had been engaged to provide system
integration services. Any deterioration of Siebel's relationship with Andersen
Consulting could have a material adverse effect on Siebel's business, financial
condition and results of operations.
23
<PAGE>
Limited Deployment. Many of Siebel's customers are in the pilot phase
of implementing Siebel's software. There can be no assurance that enterprise-
wide deployments by such customers will be successful. Siebel's customers
frequently contemplate the deployment of its products commercially to large
numbers of sales, marketing and customer service personnel, many of whom have
not previously used application software systems, and there can be no assurance
of such end-users' acceptance of the product. If any of Siebel's customers are
not able to customize and deploy Siebel Enterprise Applications successfully and
on a timely basis to the number of anticipated users, Siebel's reputation could
be significantly damaged, which could have a material adverse effect on Siebel's
business, operating results and financial condition.
Reliance on Single Product Family. Approximately 79% of Siebel's
license revenues in fiscal 1997 were attributable to sales of Siebel Sales
Enterprise. The remaining revenues were attributable to sales of Siebel Service
Enterprise. Siebel currently expects Siebel Sales Enterprise and related
maintenance and training services to continue to account for a substantial
majority of Siebel's future revenues. As a result, factors adversely affecting
the pricing of or demand for Siebel Sales Enterprise, such as competition or
technological change, could have a material adverse effect on Siebel's business,
operating results and financial condition.
Lengthy Sales and Implementation Cycles. The license of Siebel's
software products is often an enterprise-wide decision by prospective customers
and generally requires Siebel to provide a significant level of education to
prospective customers regarding the use and benefits of Siebel's products. In
addition, the implementation of Siebel's products involves a significant
commitment of resources by prospective customers and is commonly associated with
substantial reengineering efforts which may be performed by the customer or
third-party system integrators. The cost to the customer of Siebel's product is
typically only a portion of the related hardware, software, development,
training and integration costs of implementing a large-scale sales and marketing
information system. For these and other reasons, the period between initial
contact and the implementation of Siebel's products is often lengthy (ranging to
date from between two and twenty-four months) and is subject to a number of
significant delays over which Siebel has little or no control. Siebel's
implementation cycle could be lengthened by increases in the size and complexity
of its license transactions and by delays in its customers' implementation of
client/server computing environments. Delay in the sale or implementation of a
limited number of license transactions could have a material adverse effect on
Siebel's business and operations and cause Siebel's operating results to vary
significantly from period to period. Therefore, Siebel believes that its
operating results are likely to vary significantly in future periods.
Risks Associated with Expanding Distribution. To date, Siebel has
sold its products primarily through its direct sales force and has supported its
customers with its technical and customer support staff. Siebel's ability to
achieve significant revenue growth in the future will depend in large part on
its success in recruiting and training
24
<PAGE>
sufficient direct sales, technical and customer support personnel and
establishing and maintaining relationships with its strategic partners. Siebel
believes the complexity of its products and the large-scale deployment
anticipated by its customers will require a number of highly trained customer
support personnel. There can be no assurance that Siebel will successfully
expand its technical and customer support staff to meet customer demands. Any
failure by Siebel to expand its direct sales force or other distribution
channels, or to expand its technical and customer support staff, could
materially and adversely affect Siebel's business, operating results and
financial condition.
Dependence on Large License Fee Contracts and Customer Concentration.
A relatively small number of customers have accounted for a significant
percentage of Siebel's revenues. For 1997 and 1996, sales to Siebel's 10 largest
customers accounted for 46% and 59% of total revenues, respectively. For 1997,
one company accounted for 13% of total revenues. Siebel expects that sales of
its products to a limited number of customers will continue to account for a
significant percentage of revenue for the foreseeable future. The loss of any
major customer or any reduction or delay in orders by any such customer, or the
failure of Siebel to market successfully its products to new customers could
have a material adverse effect on Siebel's business, financial condition and
results of operations.
Risk Associated with New Versions and New Products; Rapid
Technological Change. The software market in which Siebel competes is
characterized by rapid technological change, frequent introductions of new
products, changes in customer demands and evolving industry standards. The
introduction of products embodying new technologies and the emergence of new
industry standards can render existing products obsolete and unmarketable. For
example, Siebel's customers have adopted a wide variety of hardware, software,
database and networking platforms, and as a result, to gain broad market
acceptance, Siebel must support Siebel Sales Enterprise and Siebel's other
products on a variety of such platforms. Siebel's future success will depend
upon its ability to address the increasingly sophisticated needs of its
customers by supporting existing and emerging hardware, software, database and
networking platforms and by developing and introducing enhancements to Siebel
Enterprise Applications and new products on a timely basis that keep pace with
technological developments, evolving industry standards and changing customer
requirements. There can be no assurance that Siebel will be successful in
developing and marketing enhancements that respond to technological
developments, evolving industry standards or changing customer requirements, or
that Siebel will not experience difficulties that could delay or prevent the
successful development, introduction and sale of such enhancements or that such
enhancements will adequately meet the requirements of the marketplace. If
release dates of any future product enhancements or new products are delayed or
if these products or enhancements fail to achieve market acceptance when
released, Siebel's business, operating results and financial condition could be
materially and adversely affected. In addition, the introduction or announcement
of new product offerings or enhancements by Siebel or Siebel's competitors or
major hardware, systems or software vendors may cause customers to defer or
forgo purchases of Siebel's products, which could have a material adverse effect
on Siebel's business, financial condition and results of operations.
Competition. The market for Siebel's products is intensely
competitive, subject to rapid change and significantly affected by new product
introductions and other market activities of industry participants. Siebel's
products are targeted at the emerging market for sales, marketing and customer
service information systems. The Company faces competition from customers'
internal development efforts, custom system integration products, as well as
other application software providers that offer a variety of products and
services designed to address this market. Many of Siebel's customers and
potential customers have in the past attempted to develop sales, marketing and
customer service information systems, in-house either alone or with the help of
systems
25
<PAGE>
integrators and there can be no assurance that Siebel will be able to compete
successfully against such internal development efforts.
Siebel relies on a number of systems consulting and systems
integration firms, particularly Andersen Consulting, for implementation and
other customer support services, as well as recommendations of its products
during the evaluation stage of the purchase process. Although Siebel seeks to
maintain close relationships with these service providers, many of them have
similar, and often more established, relationships with Siebel's competitors.
If Siebel is unable to develop and retain effective, long-term relationships
with these third parties, Siebel's competitive position could be materially and
adversely affected. Further, there can be no assurance that these third
parties, many of which have significantly greater resources than Siebel, will
not market software products in competition with Siebel in the future or will
not otherwise reduce or discontinue their relationships with, or support of,
Siebel and its products.
A large number of personal, departmental and other products exist in
the sales, marketing and customer service information systems market. Some of
Siebel's current and potential competitors and their products include Symantec
(ACT!), Borealis Corporation (Arsenal), Saratoga Systems (Avenue), Early Cloud &
Co. (CallFlow), Epiphany (Clarity, Momentum, Relevance), Clarify, Inc.
(ClearSales, ClearSupport), Sales Technologies (Cornerstone), Onyx (Customer
Center), IMA (EDGE), Applix (Enterprise), Dendrite International, Inc. (Force
One), Marketrieve Company (Marketrieve PLUS), Firstwave Technologies, Inc.
(Netgain), BroadVision, Inc. (One-To-One Application System), Oracle Corporation
(Oracle Sales and Marketing, Oracle Service and Oracle Call, Front Office
Application), Pivotal Software, Inc. (Relationship), SAP AG (Sales Force
Automation Solution), Software Artistry (SA Expert Sales), SalesKit Software
Corporation (SalesKit), SalesLogix (SalesLogix), Kieffer & Veittinger GMBH (K&V)
International (SALES Manager) (SAP AG has recently announced its intention to
acquire a 50% equity interest in K&V), Scopus Technology, Inc. (SalesTEAM,
ServiceTEAM, Voyager), Aurum Software, Inc. (SalesTrak) (recently acquired by
Baan Company N.V.), MEI (UniverSell) and The Vantive Corporation (Vantive
Enterprise). Some of these competitors have longer operating histories,
significantly greater financial, technical, marketing and other resources,
significantly greater name recognition and a larger installed base of customers
than Siebel. In addition, many competitors have well-established relationships
with current and potential customers of Siebel. As a result, these competitors
may be able to respond more quickly to new or emerging technologies and changes
in customer requirements, or to devote greater resources to the development,
promotion and sale of their products, than can Siebel.
It is also possible that new competitors or alliances among
competitors may emerge and rapidly acquire significant market share. Siebel
also expects that competition will increase as a result of consolidation in the
software industry. Increased competition may result in price reductions,
reduced gross margins and loss of market share, any of which could materially
adversely affect Siebel's business, operating results and financial condition.
There can be no assurance that Siebel will be able to compete successfully
against current and future competitors or that competitive pressures faced by
Siebel will not materially and adversely affect its business, operating results
and financial condition.
Risk of Product Defects. Software products as internally complex as
those offered by Siebel frequently contain errors or failures, especially when
first introduced or when new versions are released. Although Siebel conducts
extensive product testing during product development, Siebel has been forced to
delay commercial release of products until the correction of software problems
and, in some cases, has provided product enhancements to correct errors in
released products. Siebel could, in the future, lose revenues as a result of
software errors or defects. Siebel's products are intended for use in sales
applications that may be critical to a customer's business. As a result, Siebel
expects that its customers and potential customers have a greater sensitivity to
product defects than the
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market for software products generally. There can be no assurance that, despite
testing by Siebel and by current and potential customers, errors will not be
found in new products or releases after commencement of commercial shipments,
resulting in loss of revenue or delay in market acceptance, diversion of
development resources, damage to Siebel's reputation, or increased service and
warranty costs, any of which could have a material adverse effect upon Siebel's
business, operating results and financial condition.
Management of Growth; Dependence upon Key Personnel. In the event
that the significant growth of Siebel's revenues continues, such growth may
place a significant strain upon Siebel's management systems and resources.
Siebel's ability to compete effectively and to manage future growth, if any,
will require Siebel to continue to improve its financial and management
controls, reporting systems and procedures on a timely basis and expand, train
and manage its employee work force. There can be no assurance that Siebel will
be able to do so successfully. Siebel's failure to do so could have a material
adverse effect upon Siebel's business, operating results and financial
condition. Siebel's future performance depends in significant part upon the
continued service of its key technical, sales and senior management personnel,
particularly Thomas M. Siebel, Siebel's Chairman and Chief Executive Officer,
none of whom has entered into an employment agreement with Siebel. The loss of
the services of one or more of Siebel's executive officers could have a material
adverse effect on Siebel's business, operating results and financial condition.
Siebel's future success also depends on its continuing ability to attract and
retain highly qualified technical, customer support, sales and managerial
personnel. Competition for such personnel is intense, and there can be no
assurance that Siebel will be able to retain its key technical, sales and
managerial employees or that it can attract, assimilate or retain other highly
qualified technical, sales and managerial personnel in the future.
Proprietary Rights; Risks of Infringement. Siebel relies primarily
on a combination of patent, copyright, trade secret and trademark laws,
confidentiality procedures and contractual provisions to protect its proprietary
rights. Siebel also believes that factors such as the technological and creative
skills of its personnel, new product developments, frequent product
enhancements, name recognition and reliable product maintenance are essential to
establishing and maintaining a technology leadership position. Siebel seeks to
protect its software, documentation and other written materials under patent,
trade secret and copyright laws, which afford only limited protection. Siebel
currently has 10 patent applications pending in the United States, and one
issued patent. There can be no assurance that any patents issued to Siebel
will not be invalidated, circumvented or challenged, that the rights granted
thereunder will provide competitive advantages to Siebel or that any of
Siebel's pending or future patent applications, whether or not being currently
challenged by applicable governmental patent examiners, will be issued with
the scope of the claims sought by Siebel, if at all. Furthermore, there can be
no assurance that others will not develop technologies that are similar or
superior to Siebel's technology or design around any patents issued to Siebel.
Despite Siebel's efforts to protect its proprietary rights, unauthorized
parties may attempt to copy aspects of Siebel's products or to obtain and use
information that Siebel regards as proprietary. Policing unauthorized use of
Siebel's products is difficult, and while Siebel is unable to determine the
extent to which piracy of its software products exists, software piracy can be
expected to be a persistent problem. In addition, the laws of some foreign
countries do not protect Siebel's proprietary rights as fully as do the laws
of the United States. There can be no assurance that Siebel's means of
protecting its proprietary rights in the United States or abroad will be
adequate or that Siebel's competitors will not independently develop similar
technology. Siebel has entered into agreements with substantially all of its
customers which require Siebel to place Siebel Enterprise Applications source
code into escrow. Such agreements generally provide that such parties will
have a limited, non-exclusive right to use the source code in the event that
there is a bankruptcy proceeding by or against Siebel, if Siebel ceases to do
business or if Siebel fails to meet its support obligations. Entering into
such agreements may increase the likelihood of misappropriation by third
parties.
Siebel is not aware that it is infringing any proprietary rights of
third parties. There can be no assurance, however, that third parties will not
claim infringement by Siebel of their intellectual property rights. Siebel
expects that software product developers will increasingly be subject to
infringement claims as the number of products and competitors in Siebel's
industry segment grows and the functionality of products in different industry
segments overlaps. Furthermore, there can be no assurance that former employers
of Siebel's present and future employees will not assert claims that such
employees have improperly disclosed confidential or proprietary information to
Siebel. Any such claims, with or without merit, could be time consuming to
defend, result in costly litigation, divert management's attention and
resources, cause product shipment delays or require Siebel to pay money damages
or enter into royalty or licensing agreements. Such royalty or licensing
agreements, if required, may not be available on terms acceptable to Siebel, if
at all. In the event of a successful claim of product infringement against
Siebel and
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failure or inability of Siebel to license the infringed or similar technology,
Siebel's business, operating results and financial condition would be materially
and adversely affected.
Siebel relies upon certain software that it licenses from third
parties, including software that is integrated with Siebel's internally
developed software and used in Siebel Sales Enterprise and Siebel's other
products to perform key functions. There can be no assurance that these third-
party software licenses will continue to be available to Siebel on
commercially reasonable terms. In addition, Siebel is dependent, to a certain
extent, upon such third parties' ability to enhance their current products, to
develop new products on a timely and cost-effective basis and to respond to
emerging industry standards and other technological changes. There can be no
assurance that Siebel would be able to replace the functionality provided by
the third party software currently offered in connection with Siebel's
products in the event such software becomes obsolete or incompatible with
future versions of Siebel's products or is otherwise not adequately
maintained or updated. The loss of, or inability to maintain, any such
software licenses could result in shipment delays or reductions until
equivalent software could be developed, identified, licensed and integrated
which would materially adversely affect Siebel's business, operating results
and financial condition.
International Operations. Siebel's sales are primarily to large
multi-national companies. To service the needs of such companies, both
domestically and internationally, Siebel must provide worldwide product support
services. As a result, Siebel has expanded and intends to continue to expand its
international operations and enter additional international markets, which will
require significant management attention and financial resources and could
adversely affect Siebel's operating margins and earnings, if any. Revenues from
international sales accounted for approximately 28% and 11% of Siebel's total
revenues in fiscal 1997 and 1996, respectively. Siebel believes that in order to
increase sales opportunities and profitability it will be required to expand its
international operations. Siebel has committed and continues to commit
significant management time and financial resources to developing direct and
indirect international sales and support channels. There can be no assurance,
however, that Siebel will be able to maintain or increase international market
demand for its products. To the extent that Siebel is unable to do so in a
timely manner, Siebel's international sales will be limited, and Siebel's
business, operating results and financial condition could be materially and
adversely affected.
The growth in Siebel's revenues from international sales is expected
to continue to subject a portion of Siebel's revenues to the risks associated
with international sales, including foreign currency fluctuations, economic or
political instability, shipping delays and various trade restrictions, any of
which could have a significant impact on Siebel's ability to deliver products on
a competitive and timely basis. Future imposition of, or significant increases
in the level of, customs duties, export quotas or other trade restrictions,
could have an adverse effect on Siebel's business, financial condition and
results of operations. As Siebel develops an international sales force, it
expects to be more directly subject to foreign currency fluctuations. To the
extent such direct sales are denominated in foreign currency, any such
fluctuation may adversely affect Siebel's business, financial condition and
results of operations. Finally, the laws of certain foreign countries do not
protect Siebel's intellectual property rights to the same extent as do the laws
of the United States.
Product Liability. Siebel's license agreements with its customers
typically contain provisions designed to limit Siebel's exposure to potential
product liability claims. It is possible, however, that the limitation of
liability provisions contained in Siebel's license agreements may not be
effective under the laws of certain jurisdictions. Although Siebel has not
experienced any product liability claims to date, the sale and support of
products by Siebel may entail the risk of such claims, and there can be no
assurance that Siebel will not be subject to such claims in the future. A
successful product liability claim brought against Siebel could have a material
adverse effect upon Siebel's business, operating results and financial
condition.
Control by Existing Stockholders. Siebel's current officers,
directors and affiliated entities together beneficially owned approximately
41.5% of the outstanding shares of Siebel Common Stock as of December 31, 1997.
In particular, Thomas M. Siebel, Siebel's Chairman and Chief Executive Officer,
owned approximately 27.8% of the outstanding shares of Siebel Common Stock as of
December 31, 1997. As a result, these stockholders will be able to exercise
control over matters requiring stockholder approval, including the election of
directors, and the approval of mergers, consolidations and sales of all or
substantially all of the assets of Siebel. This may prevent or discourage tender
offers for Siebel Common Stock unless the terms are approved by such
stockholders.
Possible Volatility of Stock Price. Siebel's stock price has
fluctuated substantially since its initial public offering in June 1996. The
trading price of Siebel Common Stock is subject to significant fluctuations in
response to variations in quarterly operating results, the gain or loss of
significant orders, changes in earning estimates by analysts, announcements of
technological innovations or new products by Siebel or its competitors, general
conditions in the software and computer industries and other events or factors.
In addition, the stock market in
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general has experienced extreme price and volume fluctuations which have
affected the market price for many companies in industries similar or related to
that of Siebel and which have been unrelated to the operating performance of
these companies. These market fluctuations have adversely affected and may
continue to adversely affect the market price of Siebel Common Stock.
Effect of Certain Charter Provisions; Antitakeover Effects of the
Siebel Certificate of Incorporation, the Siebel Bylaws and the DCGL. The
Siebel Board of Directors has the authority to issue up to 2,000,000 shares of
preferred stock and to determine the price, rights, preferences, privileges and
restrictions, including voting rights, of those shares without any further vote
or action by the Siebel stockholders. The preferred stock could be issued with
voting, liquidation, dividend and other rights superior to those of the Siebel
Common Stock. The rights of the holders of Siebel Common Stock will be subject
to, and may be adversely affected by, the rights of the holders of any preferred
stock that may be issued in the future. The issuance of preferred stock, while
providing desirable flexibility in connection with possible acquisitions and
other corporate purposes, could have the effect of making it more difficult for
a third party to acquire a majority of the outstanding voting stock of Siebel.
Pursuant to the Siebel Certificate of Incorporation, Siebel has instituted a
classified board of directors. This and certain other provisions of Siebel's
Certificate of Incorporation and certain provisions of the Siebel Bylaws and of
the DCGL, could delay or make more difficult a merger, tender offer or proxy
contest involving Siebel.
Risks Relating to Acquisitions. In addition to the Merger, Siebel
has acquired in the past, and may acquire in the future, other products or
businesses which are complementary to Siebel's business. The integration of
products and personnel as a result of any such acquisitions has and will
continue to divert Siebel's management and other resources. There can be no
assurance that difficulties will not arise in integrating such operations,
products, personnel or businesses. The failure to successfully integrate such
products or operations would have a material adverse effect on Siebel's
business, financial condition and results of operations.
RISKS RELATING TO THE BUSINESS OF SCOPUS
Variability of Operating Results; Uncertainty of Future Operating
Results. Scopus was incorporated in 1991 and introduced its first product in
1992. Although Scopus has been profitable each fiscal year since inception,
there can be no assurance that Scopus will be able to sustain profitability on a
quarterly or annual basis in the future. In addition, Scopus' revenues and
operating results have varied substantially in the past and are likely to vary
substantially in the future due to a variety of factors, including (i) the
timing and size of the Scopus' individual license transactions, and, in
particular, the fact that Scopus' revenues in any quarter can be largely
dependent on a limited number of large licenses, (ii) the fact that a
significant portion of Scopus' revenues in any given quarter are recognized in
the last month, weeks or even days of the quarter, (iii) the relatively long
sales cycle for Scopus' software products, which is typically six to nine
months, (iv) the relative proportion of total revenues derived from license
revenues and services and maintenance revenues, (v) the timing of the
introduction of new products or product enhancements by Scopus and its
competitors, (vi) the extent of customization required by any individual license
transaction, which can result in deferral of significant revenues until
completion or acceptance of certain customized portions of the software, (vii)
changes in customers budgets, (viii) seasonality of technology purchases by
customers and general economic conditions, (ix) the mix of revenues among
various distribution channels and between domestic and international customers,
(x) the relative proportion of implementation services performed by Scopus for
which Scopus engages independent contractors, which are typically more costly
than internal personnel and (xi) the relative proportion of license revenues
derived from third party products distributed by Scopus in conjunction with its
products. Therefore, Scopus believes that period to period comparisons of its
revenues and operating results are not necessarily meaningful and that such
comparison cannot be relied upon as indicators of future performance.
Estimating future revenues is difficult because Scopus ships its
products soon after an order is received and as such does not have a significant
backlog. Thus, quarterly license revenues are heavily dependent upon orders
received and shipped within the same quarter. Moreover, Scopus has generally
recorded a significant portion of its total quarterly revenues in the third
month of the quarter, with a concentration of these revenues in the last half of
that third month. This concentration of revenues is influenced by customer
tendencies to make significant capital expenditures at the end of a fiscal
quarter. Scopus expects these revenue patterns to continue for the foreseeable
future. In addition, quarterly license revenues are dependent on the timing of
revenue recognition, which can be affected by many factors, including the timing
of customer installations, a shift in the mix of license transactions
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towards larger transactions and a lengthening of the sales cycle with respect to
these larger transactions, completion of customization activity and the
fulfillment of acceptance criteria. Scopus has from time to time experienced
delays in recognizing revenues with respect to certain orders. Despite the
uncertainties in its revenue patterns, Scopus' operating expenses are based upon
anticipated revenue levels and such expenses are incurred on an approximately
ratable basis throughout the quarter. As a result, if expected revenues are
deferred or otherwise not realized in a quarter for any reason, Scopus'
business, operating results and financial condition would be materially
adversely affected.
Scopus intends to continue to increase its research and development
expenditures in order to pursue its strategy of developing applications tailored
to the requirements of specific additional vertical markets, and to continue to
increase sales and marketing expenditures significantly as Scopus expands its
domestic and international sales and marketing staff and develops indirect sales
and distribution channels. In addition, general and administrative expenses have
increased as Scopus invests in the infrastructure needed to support its growing
operations. Accordingly, to the extent that such expenses precede or are not
subsequently followed by increased revenues, Scopus' business, operating results
and financial condition will be materially adversely affected.
Dependence on Implementation Relationships. Scopus has historically
relied on internal resources and subcontracted consultants on an as-needed basis
to provide consulting and implementation services for Scopus' products. In
recent periods, Scopus has sought to increase the use of third party consultants
and system integrators to provide implementation, customization and consulting
services directly to Scopus' customers. Scopus' increasing reliance on such
third party consultants and systems integrators poses several risks that could
have a material adverse effect on Scopus' business, operating results or
financial condition. For example, there can be no assurance that these third
party providers, who will have direct obligations to Scopus' customers, will be
able to provide a level of quality of service required to meet the needs of such
customers. If Scopus is unable to develop further and to maintain effective,
long term relationships with these third parties, or if these third parties fail
to meet the needs of Scopus' customers in a timely fashion, Scopus' business,
operating results and financial condition will be materially and adversely
affected. Further, there can be no assurance that these third party providers,
many of whom have significantly greater financial, technical, personnel and
marketing resources than Scopus, will not market software products that compete
with Scopus' products, or will not otherwise reduce or discontinue their
relationship with or support of Scopus and its products. Finally, many of these
current and potential third party providers have existing relationships or may
undertake relationships with Scopus' direct competitors. The inability to
recruit, or the loss of, important third party systems integrators or
professional consulting firms would have a material adverse effect on Scopus'
business, operating results and financial condition.
Expansion of Distribution Channels. Scopus has historically sold its
products through its direct sales force and a limited number of distributors.
Scopus' ability to achieve significant revenue growth in the future will depend
in large part on its success in recruiting and training sufficient sales
personnel and establishing relationships with distributors, resellers and
systems integrators. Scopus is currently investing, and plans to continue to
invest, significant resources to expand its domestic and international direct
sales force and develop distribution relationships with certain third party
distributors, resellers and systems integrators. Scopus' existing distribution
relationships are generally non-exclusive and can be terminated by either party
without cause. Scopus' distributors also sell or can potentially sell products
offered by Scopus' competitors. There can be no assurance that Scopus will be
able to retain or attract a sufficient number of its existing or future third
party distribution partners or that such partners will recommend, or continue to
recommend, Scopus' products. The inability to establish or maintain successful
relationships with distributors, resellers or systems integrators could have a
material adverse effect on Scopus' business, operating results or financial
condition. In addition, there can be no assurance that Scopus will be able to
successfully expand its direct sales force or other distribution channels. Any
failure by Scopus to expand its direct sales force or other distribution
channels would materially adversely affect Scopus' business, operating results
and financial condition.
Expansion of International Operations; Foreign Currency Fluctuations.
An important element of Scopus' strategy is to expand its international
operations. Scopus has established subsidiaries in the United Kingdom, Canada
and France and is currently investing significant resources in its international
operations, including the development of certain third party distributor
relationships and the hiring of additional sales representatives. However,
international sales to date have been limited and there can be no assurance that
Scopus will be successful in expanding its international revenue base. If Scopus
is able to achieve a material increase in international revenues,
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Scopus' business, operating results or financial condition could be materially
adversely affected by risks inherent in conducting business internationally,
such as changes in currency exchange rates, longer payment cycles, difficulties
in staffing and managing international operations, problems in collecting
accounts receivable, seasonal reductions in business activity during the summer
months in Europe and certain other parts of the world, increases in tariffs,
duties, price controls or other restrictions on foreign currencies and trade
barriers imposed by foreign nationalities. In this regard, to the extent Scopus'
international operations expand, Scopus expects that an increasing portion of
its international license revenues will be denominated in foreign currencies. In
addition, Scopus has only limited experience in developing localized versions of
its products and marketing and distributing its products internationally. There
can be no assurance that Scopus will be able to successfully localize, market,
sell and deliver its products internationally. The inability of Scopus to
successfully expand its international operations in a timely manner could
materially adversely affect Scopus' business, operating results or financial
condition.
Management of Growth. Scopus' business has grown rapidly. The growth
of Scopus' business and expansion of its customer base has placed and is
expected to continue to place a significant strain on Scopus' management and
operations. Scopus' future operating results will depend on its ability to
continue to broaden Scopus' senior management group. From time to time, sales
personnel, engineers and other employees have left Scopus for various reasons,
and Scopus' future success will depend on its ability to attract, hire and
retain skilled employees and to hire replacements for employees that leave
Scopus. Scopus' expansion has also resulted in substantial growth in the number
of its employees and the burden placed upon its operating and financial systems,
resulting in increased responsibility for both existing and new management
personnel. Scopus has recently experienced some turnover of sales personnel and
understands that it is important to focus its efforts on continuing to maintain
and build a quality sales organization. In addition, Scopus' ability to
effectively manage and support its growth will be substantially dependent on its
ability to continue to build upon its financial and management controls,
reporting systems and procedures on a timely basis and to expand and maintain
highly trained internal and third party resources to provide product
customization, implementation, training and other support services. Scopus also
expects to increase its customer support operations to the extent the installed
base of Scopus' products continues to grow. Accordingly, Scopus' future
operating results will depend on the ability of its management and other key
employees to continue to implement and improve its systems for operations,
financial control and information management, to recruit, train and manage its
employee base, in particular, its direct sales force and customer support
organization, and to work effectively with third party consulting and
implementation service providers. It can be expected that the integration
challenges associated with the proposed Merger will place significant further
demands upon the management of Scopus. There can be no assurance that Scopus
will be able to manage or continue to manage its recent or any future growth
successfully, and any inability to do so would have a material adverse effect on
Scopus' business, operating results and financial condition. There also can be
no assurance that Scopus will be able to sustain the rates of revenue growth
that it has experienced in the past.
Product Concentration. Scopus currently markets five application
products, together with related application service modules and a customization
tool, which are licensed for use in conjunction with Scopus' applications.
Although Scopus' application service modules and customization tool are offered
separately from Scopus' applications, Scopus believes it is unlikely that any
significant revenues could be derived from such modules and such tool unless the
customer is using at least one of Scopus' applications. Accordingly, in the
event Scopus' applications are not accepted by the marketplace, Scopus'
business, operating results and financial condition would be materially
adversely affected.
Dependence on Key Personnel. Scopus' success depends to a significant
extent upon a limited number of members of senior management and other key
employees, including Ori Sasson, Scopus' Chairman, President and Chief Executive
Officer. Scopus does not maintain key man life insurance on any such persons.
The loss of the service of one or more key managers or other employees could
have a material adverse effect upon Scopus' business, operating results and
financial condition. In addition, Scopus believes that its future success will
depend in large part upon its ability to attract and retain additional highly
skilled technical, management, sales and marketing personnel. Competition for
such personnel in the computer software industry is intense. There can be no
assurance that Scopus will be successful in attracting and retaining such
personnel, and the failure to do so could have a material adverse effect on the
business, operating results or financial condition of Scopus.
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THE SIEBEL SPECIAL MEETING
PURPOSE OF THE SIEBEL SPECIAL MEETING
The purpose of the Siebel Special Meeting is to consider and vote upon
a proposal to approve the issuance of the Siebel Common Stock in connection with
the Merger pursuant to the Reorganization Agreement. Holders of Siebel Common
Stock may also consider and vote upon such other matters as may be properly
brought before the Siebel Special Meeting or any postponements or adjournments
thereof. The Merger will occur only if the proposal is approved.
THE SIEBEL BOARD OF DIRECTORS UNANIMOUSLY APPROVED THE REORGANIZATION
AGREEMENT AND THE MERGER, AND RECOMMENDS A VOTE FOR APPROVAL OF THE
---
ISSUANCE OF SHARES OF SIEBEL COMMON STOCK PURSUANT TO THE REORGANIZATION
AGREEMENT BY THE STOCKHOLDERS OF SIEBEL.
PROXIES
The Siebel Proxy accompanying this Joint Proxy Statement/Prospectus is
being solicited on behalf of the Siebel Board of Directors for use at the Siebel
Special Meeting.
DATE, TIME AND PLACE OF MEETING
The Siebel Special Meeting will be held at the Siebel Principal
Offices on May [__], 1998, at [______], local time.
VOTING RIGHTS AND OUTSTANDING SHARES
Only holders of record of Siebel Common Stock at the close of business
on the Siebel Record Date will be entitled to notice of and to vote at the
Siebel Special Meeting. At the close of business on the Siebel Record Date there
were [________] shares of Siebel Common Stock outstanding and entitled to vote.
Except for the stockholders identified as principal stockholders in the
information incorporated by reference herein, as of the Siebel Record Date, to
the knowledge of Siebel, no other person beneficially owns more than 5% of the
outstanding Siebel Common Stock.
Each holder of record of Siebel Common Stock on the Siebel Record Date
will be entitled to one vote for each share held on all matters to be voted upon
at the Siebel Special Meeting.
SOLICITATION
This Joint Proxy Statement/Prospectus was mailed to all Siebel
stockholders of record as of the Siebel Record Date and constitutes notice of
the Siebel Special Meeting in conformity with the requirements of the DGCL.
Regardless of whether the Merger is consummated, each of Siebel and
Scopus will pay its own costs and expenses incurred in connection with the
Reorganization Agreement and the transactions contemplated by the Reorganization
Agreement, except that fees and expenses (other than attorneys' fees) incurred
in connection with the printing, filing and mailing of the Registration
Statement and this Joint Proxy Statement/Prospectus will be shared equally by
Siebel and Scopus. See "The Reorganization Agreement -- Expenses and Termination
Fees."
Subject to the foregoing, the cost of the solicitation of proxies from
holders of Siebel Common Stock and all related costs will be borne by Siebel. In
addition, Siebel may reimburse brokerage firms and other persons representing
beneficial owners of shares for their expenses in forwarding solicitation
materials to such beneficial owners. Original solicitation of proxies by mail
may be supplemented by telephone, telegram or personal solicitation by
directors, officers or other regular employees of Siebel. No additional
compensation will be paid to directors, officers or other regular employees for
such services.
VOTE REQUIRED
The presence, in person or by properly executed proxy, of the holders
of a majority of the outstanding shares of Siebel Common Stock entitled to vote
at the Siebel Special Meeting is necessary to constitute a quorum.
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Approval of the proposal requires the approval of a majority of the
shares present in person or represented by proxy and entitled to vote at the
Siebel Special Meeting. All votes will be tabulated by the inspector of
election appointed for the meeting, who will separately tabulate affirmative and
negative votes, abstentions and broker non-votes. Abstentions will be counted
towards the tabulation of votes cast on proposals presented to the stockholders
and will have the same effect as negative votes on each proposal. Broker non-
votes are counted towards a quorum, but are not counted for any purpose in
determining whether a matter has been approved.
Pursuant to the Siebel Voting Agreements, the Siebel Voting Agreement
Stockholders have agreed that, prior to the earlier of the (i) Effective Time or
(ii) the termination of the Reorganization Agreement (the "Expiration Date"),
they will vote their shares of Siebel Common Stock in favor of the issuance of
Siebel Common Stock pursuant to the Merger and, in certain instances, to require
any party to whom shares of Siebel Common Stock (or securities convertible into
shares of Siebel Common Stock) held as of the date of the Reorganization
Agreement or acquired prior to the Expiration Date are sold, pledged, granted an
option to purchase, or otherwise transferred to execute a counterpart of the
Siebel Voting Agreement.
REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this solicitation has the power
to revoke it at any time before it is voted. It may be revoked by filing with
the corporate secretary of Siebel at Siebel's Principal Offices, a written
notice of revocation or a duly executed proxy bearing a later date, or it may be
revoked by attending the meeting and voting in person. Attendance at the meeting
will not, by itself, revoke a proxy.
33
<PAGE>
THE SCOPUS SPECIAL MEETING
PURPOSE OF THE SCOPUS SPECIAL MEETING
The purpose of the Scopus Special Meeting is to consider and vote upon
the approval and adoption of the Reorganization Agreement and approval of the
Merger. Holders of Scopus Common Stock may also consider and vote upon such
other matters as may be properly brought before the Scopus Special Meeting or
any postponements or adjustments thereof. The Merger will occur only if the
proposal is approved.
THE SCOPUS BOARD OF DIRECTORS UNANIMOUSLY APPROVED THE REORGANIZATION
AGREEMENT AND THE MERGER, AND RECOMMENDS A VOTE FOR ADOPTION AND APPROVAL OF THE
---
REORGANIZATION AGREEMENT AND FOR APPROVAL OF THE MERGER.
PROXIES
The Scopus Proxy accompanying this Joint Proxy Statement/Prospectus is
being solicited on behalf of the Scopus Board of Directors for use at the Scopus
Special Meeting.
DATE, TIME AND PLACE OF MEETING
The Scopus Special Meeting will be held at the Berkeley Radisson
Hotel, 200 Marina Boulevard, Berkeley, California on May [__], 1998, at
[______], local time.
VOTING RIGHTS AND OUTSTANDING SHARES
Only holders of record of Scopus Common Stock at the close of business
on the Scopus Record Date will be entitled to notice of and to vote at the
Scopus Special Meeting. At the close of business on the Scopus Record Date there
were [___] shares of Scopus Common Stock outstanding and entitled to vote. See
"Scopus Principal Shareholders." Except for the shareholders identified herein
under "Scopus Principal Shareholders," as of the Scopus Record Date, to the
knowledge of Scopus, no other person beneficially owns more than 5% of the
outstanding Scopus Common Stock.
Each holder of record of Scopus Common Stock on the Scopus Record Date
will be entitled to one vote for each share held on all matters to be voted upon
at the Scopus Special Meeting.
SOLICITATION
This Joint Proxy Statement/Prospectus was mailed to all Scopus
shareholders of record as of the Scopus Record Date and constitutes notice of
the Scopus Special Meeting in conformity with the requirements of the CGCL.
Regardless of whether the Merger is consummated, each of Siebel and
Scopus will pay its own costs and expenses incurred in connection with the
Reorganization Agreement and the transactions contemplated by the Reorganization
Agreement, except that fees and expenses (other than attorneys' fees) incurred
in connection with the printing, filing and mailing of the Registration
Statement and this Joint Proxy Statement/Prospectus and will be shared equally
by Siebel and Scopus. See "The Registration Agreement -- Expenses and
Termination Fees."
Subject to the foregoing, the cost of the solicitation of proxies from
holders of Scopus Common Stock and all related costs will be borne by Scopus. In
addition, Scopus may reimburse brokerage firms and other persons representing
beneficial owners of shares for their expenses in forwarding solicitation
materials to such beneficial owners. Original solicitation of proxies by mail
may be supplemented by telephone, telegram or personal solicitation by
directors, officers or other regular employees of Scopus. No additional
compensation will be paid to directors, officers or other regular employees for
such services.
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<PAGE>
VOTE REQUIRED
The presence, in person or by properly executed proxy, of the holders
of a majority of the outstanding shares of Scopus Common Stock entitled to vote
at the Scopus Special Meeting is necessary to constitute a quorum.
Approval of the proposal requires approval of a majority of the
outstanding shares of Scopus Common Stock as of the Scopus Record Date. All
votes will be tabulated by the inspector of election appointed for the meeting,
who will separately tabulate affirmative and negative votes, abstentions and
broker non-votes. Abstentions will be counted towards the tabulation of votes
cast on the proposal presented to the shareholders and will have the same effect
as negative votes. Broker non-votes are counted towards a quorum, but are not
counted for any purpose in determining whether the proposal has been approved.
Pursuant to the Scopus Voting Agreements, the Scopus Voting Agreement
Shareholders, who, as of the Scopus Record Date, beneficially owned in the
aggregate approximately [__] % of the outstanding shares of Scopus Common Stock
(based upon the number of shares of Scopus Common Stock issued and outstanding
as of the Scopus Record Date), have agreed that, prior to the Expiration Date,
they will vote their shares of Scopus Common Stock in favor of the adoption and
approval of the Reorganization Agreement and the approval of the Merger. The
Scopus Voting Agreement Shareholders have also delivered to Siebel irrevocable
proxies with respect to the matters covered by the Siebel Voting Agreements. In
addition, subject to certain exceptions, the Scopus Voting Agreement
Shareholders have agreed not to sell, contract to sell, pledge, grant any option
to purchase or otherwise dispose of or transfer ("Transfer") any of their shares
of Scopus Common Stock (or securities convertible into Scopus Common Stock) held
as of the date of the Reorganization Agreement or acquired prior to the
Expiration Date unless and until the other party to the Transfer shall have (i)
executed a counterpart of the Scopus Voting Agreement and the corresponding
irrevocable proxy and (ii) agreed to hold such Scopus securities subject to all
of the terms and provisions of the Scopus Voting Agreement. See "Approval of
the Merger and Related Transactions-Voting Agreements."
REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this solicitation has the power
to revoke it at any time before it is voted. It may be revoked by filing with
the corporate secretary of Scopus at Scopus' Principal Offices, a written notice
of revocation or a duly executed proxy bearing a later date, or it may be
revoked by attending the meeting and voting in person. Attendance at the meeting
will not, by itself, revoke a proxy.
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<PAGE>
COMPARATIVE PER SHARE MARKET PRICE DATA AND DIVIDEND POLICY
Since June 27, 1996, Siebel Common Stock has been quoted on Nasdaq
under the symbol "SEBL." Since November 16, 1995, the Scopus Common Stock has
been quoted on Nasdaq under the symbol "SCOP." The table below sets forth, for
the quarters indicated, the reported high and low sale prices of Siebel Common
Stock and Scopus Common Stock as reported on Nasdaq. The prices of Siebel
Common Stock have been adjusted to reflect the 100% dividend to be paid to the
Siebel stockholders on March 20, 1998.
<TABLE>
<CAPTION>
SIEBEL SCOPUS
COMMON STOCK COMMON STOCK
------------------------- ------------------------
HIGH LOW HIGH LOW
---------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
1995 CALENDAR YEAR
Fourth Quarter (for Scopus from
November 16, 1995)................................ $ 19.17 $ 11.17
1996 CALENDAR YEAR
First Quarter..................................... 16.83 9.25
Second Quarter (for Siebel from
June 27, 1996).................................... $ 8.780 $ 6.185 15.50 8.67
Third Quarter..................................... 11.97 5.56 21.33 9.50
Fourth Quarter.................................... 15.13 11.50 33.33 20.17
1997 CALENDAR YEAR
First Quarter..................................... 12.75 7.50 33.67 21.75
Second Quarter.................................... 16.125 6.625 37.750 19.000
Third Quarter..................................... 21.25 15.155 31.375 15.750
Fourth Quarter.................................... 24.50 16.375 16.875 8.938
1998 CALENDAR YEAR
First Quarter (through March 5, 1998)............. 31.750 18.375 20.000 10.675
</TABLE>
As of the Siebel Record Date, there were approximately [___] record
holders of Siebel Common Stock. As of the Scopus Record Date, there were
approximately [___] record holders of Scopus Common Stock. Neither Siebel nor
Scopus has ever paid cash dividends on their respective common stock. The
policies of Siebel and Scopus are to retain earnings for use in their respective
businesses.
The following table sets forth the closing sale price per share of
Siebel Common Stock as reported on Nasdaq and the equivalent per share price (as
explained below) of Scopus Common Stock during the week preceding the
announcement of the Merger (the average of the closing sales prices from
February 23, 1998 to 27, 1998), on February 27, 1998, the business day
preceding the announcement of the Merger, and on April [__], 1998:
<TABLE>
<CAPTION>
SIEBEL EQUIVALENT
COMMON STOCK SCOPUS
PER SHARE PRICE PER SHARE PRICE
--------------- ---------------
<S> <C> <C>
The week of February 23, 1998
to 27, 1998........................... $28.667 $11.90
February 27, 1998....................... 30.750 22.389
April [__] 1998.........................
</TABLE>
The equivalent per share price of a share of Scopus Common Stock
represents 0.7281 (the current Exchange Ratio) of the price of one share of
Siebel Common Stock.
SIEBEL STOCKHOLDERS AND SCOPUS SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET
QUOTATIONS FOR SIEBEL COMMON STOCK AND SCOPUS COMMON STOCK.
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<PAGE>
APPROVAL OF THE MERGER AND RELATED TRANSACTIONS
BACKGROUND OF THE MERGER
In evaluating its strategic direction in the second half of 1997,
Siebel determined that expansion of its enterprise-related software product line
would better position Siebel in its efforts to provide a single integrated
solution for its customers' needs with respect to enterprise automation. To
further the development of this strategy, on July 17, 1997, Siebel retained
NMS for general buy-side financial advisory services. Also in 1997, Scopus
engaged in a number of discussions during the course of the year with Morgan
Stanley & Co. Incorporated ("Morgan Stanley"), as financial advisor, to
consider long term strategies, potential strategic acquisitions, combinations
and other potential corporate opportunities. During the year, Scopus initiated
and received informal contacts with several potential strategic partners, both
through Morgan Stanley and through Scopus' management and Board of Directors.
These contacts generally did not lead to further discussions. In October 1997
Scopus did negotiate and enter into an agreement to acquire all of the
outstanding capital stock of Clear With Computers, Inc., a supplier of sales
configuration software. In January 1998, however, this agreement was
terminated by mutual agreement.
During the latter part of 1997, representatives of NMS suggested to
Thomas M. Siebel, Chairman and CEO of Siebel, that Mr. Siebel and Ori S.
Sasson, Chairman and CEO of Scopus, meet one another (having never done so
previously) to explore a potential combination of the two corporations. Such
meeting did not occur, however, and the parties had no further communication
until February 1998. In early February 1998, Mr. Siebel requested that NMS
arrange a meeting with Mr. Sasson to pursue strategic discussions. On February
19, 1998, Messrs. Siebel and Sasson and representatives of NMS met at NMS's
offices in San Francisco to discuss the feasibility of a combination of the
two corporations. At the conclusion of this meeting, Messrs. Siebel and Sasson
agreed that, subject to an agreement on valuation and other terms, a merger
was potentially in the best interests of both companies.
On February 20, 1998, representatives of NMS communicated to Mr.
Sasson a preliminary offer by Siebel for a stock-for-stock merger between
Siebel and Scopus. Mr. Sasson indicated that, while he supported the merger
from a strategic perspective, he believed that the valuation set forth in the
preliminary offer by Siebel was too low. On February 21, 1998 representatives
of NMS spoke with Mr. Sasson, agreed to a meeting on February 22, 1998 with
Morgan Stanley, as Scopus' financial advisor, to discuss the valuation of
Scopus, and scheduled a meeting between Messrs. Siebel and Sasson and the two
companies' respective advisors for February 23, 1998.
On the morning of February 23, 1998 Messrs. Siebel and Sasson and
their respective financial advisors met to discuss further the possible
combination of the two companies. They discussed an exchange ratio higher than
the previous preliminary offer by Siebel, and additional key terms. The
principals and their advisors met the evening of February 23, 1998 and
negotiated further the key terms under which an agreement could be reached. On
February 24, 1998, management of each company met with certain members
of their respective boards of directors to discuss the proposed transaction. On
February 25, 1998, Scopus and Siebel agreed in principle upon the Exchange
Ratio, subject to satisfactory resolution of other key terms, executed a mutual
non-disclosure agreement and a seven day "no-shop" agreement, and commenced
business due diligence.
On February 25, 1998, Cooley Godward, LLP ("Cooley Godward"), counsel
for Siebel, delivered a draft of the Reorganization Agreement to Wilson Sonsini
Goodrich & Rosati, P.C. ("WSGR"), counsel for Scopus. On February 27, 1998,
representatives of Cooley Godward and WSGR met at Cooley Godward's Palo Alto
offices to negotiate the terms of the Reorganization Agreement. These
negotiations continued on February 28 and March 1, 1998 at Cooley Godward's Palo
Alto offices and at the principal executive offices of Siebel. Messrs. Siebel
and Sasson participated in portions of these negotiations on February 28, and
March 1, 1998. In the course of these sessions, the terms of the transaction
were resolved and the definitive Reorganization Agreement was finalized.
Commencing on February 25, 1998 and continuing until March 1, 1998,
representatives of Siebel, Scopus, NMS and Morgan Stanley met at Cooley
Godward's offices in San Francisco to conduct due diligence with respect to
financial, technical and operational matters of the two companies. In addition,
an outside member of the Board of Directors of Scopus met with Mr. Siebel in
the evening of February 26, 1998 to discuss the proposed combination of the two
companies. Additional due diligence was conducted by legal counsel to the
respective companies at the offices of
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<PAGE>
WSGR and Cooley Godward beginning on February 26, 1998 and continuing through
the time of the execution of the Reorganization Agreement.
The Siebel Board of Directors met on the morning of February 28, 1998
to discuss the status of the negotiations and the principal unresolved issues
with respect to the Reorganization Agreement, and reviewed the opinion of NMS,
dated February 28, 1998, with respect to the fairness as of such date and from a
financial point of view of the Exchange Ratio to the Siebel stockholders. The
Siebel Board of Directors met again on the morning of March 1, 1998 to consider
the definitive Reorganization Agreement, and after due consideration, the Siebel
Board of Directors unanimously approved and adopted the Reorganization Agreement
and approved the Merger and the issuance of the Siebel Common Stock in
connection with the Merger.
During the period from February 19, 1998 through February 27, 1998,
Mr. Sasson contacted members of the Board of Directors of Scopus for individual
discussions regarding the proposed transaction. In addition, the Board of
Directors of Scopus met as a board on the evening of February 24, in the
afternoon of February 28 and in the morning of March 1, 1998, to discuss the
proposed transaction and advise management in its negotiations. In these
meetings, the Board of Directors considered, among other things, the potential
benefits of the proposed Merger as well as risks of the proposed Merger and
potential reasons not to undertake the Merger, as discussed in part below under
"Joint Reasons for the Merger" and "Scopus' Reasons for the Merger." Having
considered these and other factors, and after extensive discussions with Scopus
management and Scopus' legal and financial advisors, on March 1, 1998 the Scopus
Board of Directors unanimously approved the Reorganization Agreement and the
Merger.
Following approval by the Siebel Board of Directors and the Scopus
Board of Directors, the Reorganization Agreement in its definitive form was
executed and jointly announced in the early morning of March 2, 1998.
JOINT REASONS FOR THE MERGER
The Boards of Directors of Siebel and Scopus believe that the proposed
Merger will afford to each company the complementary strengths of the two
individual companies, will provide the Combined Company significant potential
advantages and potentially will enable the Combined Company to address
emerging strategic opportunities more quickly and effectively.
The potential benefits to the Combined Company include principally the
following:
. The combination of the two companies' product lines and expertise
would potentially allow the Combined Company to address a broader
range of customer needs and offer a comprehensive and integrated
customer interaction and customer care solution.
. The broadening and integration of the companies' product lines
provides the opportunity to cross-market the two companies' products
to a larger combined customer base.
. The combined experience, financial resources, size and breadth of
product offerings of the Combined Company would potentially enable
it to respond more quickly and effectively to technological
change, increased competition and market demands in an industry
experiencing rapid innovation and change.
. Combined technological resources may allow the Combined Company to
compete more effectively against larger competitors by providing the
Combined Company with an enhanced ability to develop new products
and extend the functionality of existing products.
. The creation of a combined customer service and technical support
system may permit the Combined Company to provide more efficient
support coverage to its customers.
Siebel and Scopus have each identified additional reasons for the
Merger, as discussed below. It should be noted, however, that the potential
benefits of the Merger may not be realized. See "Risk Factors."
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<PAGE>
SCOPUS' REASONS FOR THE MERGER
In addition to the anticipated joint benefits described above, the
Scopus Board believes that the following are additional reasons the Merger will
be beneficial to Scopus and recommends the shareholders of Scopus vote FOR
approval and adoption of the Reorganization Agreement and approval of the
Merger:
. Given the complementary nature of the product lines of Scopus and
Siebel, the Merger would enhance the opportunity for realization of
Scopus' strategic objective of achieving greater scale and presence
in the customer support software market.
. The combination of the two companies' management teams potentially
would provide broader and deeper management expertise as the
business of Scopus and the Combined Company expands.
. The combination of the two companies' sales forces and distribution
channels would potentially enable broader distribution coverage and
more effective marketing of Scopus' products.
. The combination with Siebel would provide an opportunity for
expanded distribution of Scopus' products to a larger combined
customer base.
. Scopus shareholders would have the opportunity to
participate in the potential for growth of the Combined Company
after the Merger.
In the course of its deliberations during Scopus' Board meetings held
on February __, February 28, and March 1, 1998, the Scopus Board of Directors
reviewed with Scopus management a number of additional factors relevant to the
Merger, including (i) information concerning Scopus' and Siebel's respective
businesses, historical financial performance and condition, operations,
technology, products, customers, competitive positions, prospects and
management; (ii) Scopus management's view as to the financial condition, results
of operations and business and financial potential of Scopus and Siebel before
and after giving effect to the Merger, based on management's due diligence;
(iii) current financial market conditions and historical market prices,
volatility and trading information with respect to Scopus Common Stock and
Siebel Common Stock; (iv) the consideration to be received by Scopus
shareholders in the Merger and the relationship between the market value of
Siebel Common Stock to be issued in exchange for each share of Scopus Common
Stock and a comparison of comparable merger transactions; (v) the belief that
the terms of the Reorganization Agreement, including the parties'
representations, warranties and covenants, and the conditions to their
respective obligations, are reasonable; (vi) reports from management, legal and
financial advisors as to the results of their due diligence investigation of
Siebel; (vii) the view of Scopus' management and the Scopus Board of Directors
as to the long term opportunities and prospects of Scopus as a standalone
company and of Scopus and Siebel as a combined company; (viii) the view of
Scopus' management and Board of Directors as to the potential for Scopus to
enter into strategic relationships with alternative companies, in light of
discussions held with other potential candidates over several prior months as
well as an assessment by the Scopus Board of Directors, management, and Scopus'
financial advisors as to market dynamics and strategic opportunities and the
likelihood of additional suitors, particularly as weighted against the proposed
terms of the Siebel offer; (ix) the potential impact of the Merger on customers
and employees of Scopus and Siebel; (x) the likely reaction to the Merger in the
financial markets; and (xi) detailed financial analysis and pro forma and other
information with respect to the companies presented by management and Morgan
Stanley in Board presentations, as well as Morgan Stanley's opinion that the
consideration to be paid pursuant to the Reorganization Agreement was fair from
a financial point of view to Scopus (a copy of which opinion is attached hereto
as Appendix B-1 and which opinion shareholders are urged to carefully review).
The Scopus Board also considered the terms of the proposed Reorganization
Agreement regarding Scopus' right to consider, negotiate and undertake other
acquisition proposals that might arise following announcement of the Merger. In
the course of these deliberations, legal counsel to Scopus advised the Scopus
Board as to its fiduciary obligations in the context of considering the proposed
transaction.
The Scopus Board also identified and considered a variety of
potentially negative factors in its deliberations concerning the Merger,
including, but not limited to: (i) the risk to Scopus shareholders that the
value to be received in the Merger could be significantly reduced in the event
of a decline in Siebel's stock price, due to the fixed Exchange Ratio in the
Merger; (ii) the impact of the loss of Scopus' status as an independent company
on
39
<PAGE>
shareholders, employees and customers of Scopus; (iii) the risk that the
potential benefits sought in the Merger might not be fully realized; (iv) the
impact of the proposed transaction on alternative potential strategic
transactions by Scopus; (v) the possibility that the Merger might not be
consummated and the potential adverse effect of public announcement of the
Merger on (a) Scopus' sales and operating results, (b) Scopus' ability to
attract and retain key management, marketing and technical personnel, (c)
progress of certain development projects; and (d) Scopus' overall competitive
position; (vi) the risk that despite the efforts of the Combined Company, key
technical and management personnel might not remain employees of the Combined
Company; and (vii) the other risks described under "Risk Factors" herein.
After due consideration, the Scopus Board concluded that the risks associated
with the proposed Merger were outweighed by the potential benefits of the
Merger.
The foregoing discussion of the factors considered by the Scopus Board
of Directors is not intended to be exhaustive but is intended to include all of
the material factors considered by the Scopus Board of Directors. In view of the
complexity and variety of factors considered by the Scopus Board of Directors,
the Scopus Board of Directors did not consider it practical to quantify or
otherwise attempt to assign any relative or specific weights to the specific
factors considered, and individual directors may have given differing weights to
different factors.
SIEBEL'S REASONS FOR THE MERGER
At meetings convened on February 28, 1998 and March 1, 1998, the
Siebel Board of Directors determined that the terms of the Reorganization
Agreement and the transactions contemplated thereby were in the best interests
of Siebel and its stockholders, approved and adopted the Reorganization
Agreement and the transactions contemplated thereby, and unanimously recommended
that the Siebel stockholders approve the issuance of Siebel Common Stock in
connection with the Merger pursuant to the Reorganization Agreement. In
reaching the foregoing conclusions and recommendations, the Siebel Board of
Directors considered a number of factors, including the following:
. The combination couples Siebel's concentration in sales force
automation software with Scopus' focus on customer support
software, thus providing a comprehensive and integrated set of
products to potential customers seeking a single source for
enterprise automation solutions.
. The combination of the two companies' product lines, sales forces
and distribution channels would immediately enhance Siebel's ability
to compete in the enterprise software solutions market.
. The combination of the two companies' financial resources,
management and product lines would enable the Combined Company to
compete more effectively against existing and potential competitors,
including competitors with significantly more resources than Siebel
currently possesses, in the enterprise automation market as a
whole.
. The combination with Scopus would provide an opportunity for
expanded distribution of Siebel's products to a larger combined
customer base.
In addition to the factors set forth above, in the course of its
meetings on February 27, 1998, February 28, 1998 and March 1, 1998, the Siebel
Board of Directors reviewed and considered a wide variety of information
relevant to the Merger including: (i) information concerning Siebel's and
Scopus' respective businesses, historical financial performance and condition,
operations, technology, products, customers, competitive positions, prospects
and management; (ii) Siebel's management's view as to the financial condition,
results of operations and business and financial potential of Siebel and
Scopus before and after giving effect to the Merger, based on management's due
diligence; (iii) current financial market conditions and historical market
prices, volatility and trading information with respect to Siebel Common Stock
and Scopus Common Stock; (iv) the consideration to be paid to the Scopus
shareholders in the Merger and the relationship between the market value of
Siebel Common Stock to be issued in exchange for each share of Scopus Common
Stock and a comparison of comparable merger transactions; (v) the belief that
the terms of the Reorganization Agreement, including the parties'
representations, warranties and covenants, and the conditions to their
respective obligations, are reasonable; (vi) reports from management, legal
and financial advisors as to the results of their due diligence investigation
of Scopus; (vii) the potential impact of the Merger on customers and employees
of Siebel and Scopus; (viii) the likely reaction to the Merger from the
financial markets; and (ix) detailed financial analysis and pro forma and
other information with respect to the companies presented by management and
NMS in presentations to the Siebel Board of Directors, as well as NMS' opinion
that the
40
<PAGE>
consideration to be paid pursuant to the Reorganization Agreement was fair from
a financial point of view to Siebel (a copy of which opinion is attached hereto
as Appendix B-2 and which opinion stockholders are urged to review carefully).
The Siebel Board of Directors also considered a number of potentially
negative factors in its deliberations concerning the Merger, including (i) the
possibility that the Merger would not be consummated; (ii) the potential
disruption to the business of both companies following announcement of the
Merger, including the effects of employee uncertainty, the possibility that key
employees may leave Siebel or Scopus, and the possibility that key customers may
not approve of the Merger or may determine to terminate their relationship with
the Combined Company, if their agreements permit termination as a result of the
Merger; (iii) the dilutive effects of the issuance of shares in the Merger and
the higher level of expenses that will be borne by the Combined Company; (iv)
additional potential problems and costs associated with the integration of both
companies into a single enterprise; and (v) the other risks described under
"Risk Factors" herein. After due consideration, the Siebel Board of Directors
concluded that the benefits of the transaction to Siebel and its stockholders
outweighed the risks associated with the foregoing factors.
The foregoing discussion of the factors considered by the Siebel Board
of Directors is not intended to be exhaustive but is intended to include all of
the material factors considered by the Siebel Board of Directors. In view of the
complexity and variety of factors considered by the Siebel Board of Directors,
the Siebel Board of Directors did not consider it practical to quantify or
otherwise attempt to assign any relative or specific weights to the specific
factors considered, and individual directors may have given differing weights to
different factors.
OPINION OF FINANCIAL ADVISOR TO SCOPUS
Pursuant to a letter agreement dated as of February 19, 1998 (the
"Morgan Stanley Engagement Letter"), Morgan Stanley provided financial advisory
services and a financial fairness opinion in connection with the Merger. Morgan
Stanley was selected by the Scopus Board to act as Scopus' financial advisor
based on Morgan Stanley's qualifications, expertise and reputation and its
knowledge of the business and affairs of Scopus. At the meeting of the Scopus
Board on February 28, 1998, Morgan Stanley rendered its oral opinion,
subsequently confirmed in writing, that as of March 1, 1998, based upon and
subject to the various considerations set forth in the opinion, the Exchange
Ratio pursuant to the Merger Agreement was fair from a financial point of view
to the holders of shares of Scopus Common Stock.
THE FULL TEXT OF THE WRITTEN OPINION OF MORGAN STANLEY DATED MARCH 1,
1998, WHICH SETS FORTH, AMONG OTHER THINGS, ASSUMPTIONS MADE, PROCEDURES
FOLLOWED, MATTERS CONSIDERED AND LIMITATIONS ON THE SCOPE OF THE REVIEW
UNDERTAKEN BY MORGAN STANLEY IN RENDERING ITS OPINION, IS ATTACHED AS APPENDIX
B-1 TO THIS JOINT PROXY STATEMENT/PROSPECTUS. SCOPUS SHAREHOLDERS ARE URGED TO,
AND SHOULD, READ THE OPINION CAREFULLY AND IN ITS ENTIRETY. MORGAN STANLEY'S
OPINION IS DIRECTED TO THE SCOPUS BOARD AND ADDRESSES ONLY THE FAIRNESS OF THE
EXCHANGE RATIO PURSUANT TO THE MERGER AGREEMENT FROM A FINANCIAL POINT OF VIEW
TO THE HOLDERS OF SHARES OF SCOPUS COMMON STOCK AS OF THE DATE OF THE OPINION,
AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY HOLDER OF SCOPUS COMMON STOCK AS
TO HOW TO VOTE AT THE SCOPUS SPECIAL MEETING. THE SUMMARY OF THE OPINION OF
MORGAN STANLEY SET FORTH IN THIS JOINT PROXY STATEMENT/PROSPECTUS IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF SUCH OPINION.
In connection with rendering its opinion, Morgan Stanley, among other
things: (i) reviewed certain publicly available financial statements and other
information of Siebel and Scopus, respectively; (ii) reviewed certain internal
financial statements and other financial and operating data concerning Scopus
prepared by the management of Scopus; (iii) discussed the past and current
operations and financial condition and the prospects of Siebel, including
information relating to certain strategic, financial and operational benefits
anticipated from the Merger, with senior executives of Siebel; (iv) discussed
the past and current operations and financial condition and the prospects of
Scopus, including information relating to certain strategic, financial and
operational benefits anticipated from the Merger, with senior executives of
Scopus; (v) reviewed the pro forma impact of the Merger on the earnings per
share of Siebel; (vi) reviewed the reported prices and trading activity for
Siebel Common Stock and Scopus Common Stock; (vii) compared the financial
performance of Siebel and Scopus and the prices and trading activity of Siebel
Common Stock and Scopus Common Stock with that of certain other publicly-traded
companies and their securities; (viii) reviewed the financial terms, to the
extent publicly available, of certain comparable merger and acquisition
transactions; (ix) reviewed and discussed with the senior managements of Siebel
and Scopus
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the strategic rationale for the Merger and certain alternatives to the Merger;
(x) participated in discussions and negotiations among representatives of Siebel
and Scopus and their financial and legal advisors; (xi) reviewed the Merger
Agreement and certain related agreements; and (xii) considered such other
factors as Morgan Stanley have deemed appropriate.
The following is a brief summary of the analysis performed by Morgan
Stanley in preparation of its opinion letter dated March 1, 1998.
COMPARATIVE STOCK PRICE PERFORMANCE Morgan Stanley reviewed the
recent stock price performance of Scopus and Siebel and compared such
performance with that of a group of enterprise software companies (the
"Enterprise Software Companies") and a group of customer information management
companies (the "CIM Software Companies"). Morgan Stanley observed that over the
period from January 1, 1997 to February 26, 1998, the market price of Scopus
Common Stock depreciated approximately 63% compared with an approximate
appreciation of 120% for Siebel Common Stock and 95% for an index of the
Enterprise Software Companies, and an approximate depreciation of 48% for an
index of the CIM Software Companies.
PEER GROUP COMPARISON Morgan Stanley compared certain financial
information of Scopus and Siebel with that of the Enterprise Software Companies
and the CIM Software Companies. Such information included, among other things,
market valuation and stock price as a multiple of earnings per share. Such
analysis showed that as of February 26, 1998, based on earnings per share
projections from securities research analysts, Scopus traded at 23.3 times
calendar year 1999 projected earnings per share, compared to a multiple of 55.7
times for Siebel and median multiples of 48.8 times for the Enterprise Software
Companies and 22.9 times for the CIM Software Companies. No company used in the
peer group comparison is identical to Scopus or Siebel.
ANALYSIS OF SELECTED PRECEDENT TRANSACTIONS Morgan Stanley reviewed
22 transactions (collectively, the "Software Transactions") and compared certain
statistics for the Software Transactions to the relevant financial statistics
for Scopus based on the value of Scopus implied by the Exchange Ratio and the
closing price for Siebel Common Stock as of February 26, 1998. Analysis of the
Software Transactions showed a median multiple of next twelve months' earnings
of 48.7 times and median premia over target closing prices of 26.0% based on one
day prior to announcement and 37.6% based on one month prior to announcement.
These statistics compared to a multiple of 64.9 times calendar year 1998
earnings and premiums of 88.6% and 66.8% over the closing prices of Scopus
Common Stock as of February 26, 1998 and 30 trading days prior to that date,
respectively, based on the value of Scopus implied by the merger. No
transaction used in the analysis of the Software Transactions is identical to
the Merger.
EXCHANGE RATIO ANALYSIS Morgan Stanley reviewed and analyzed the
average historical ratios of the closing prices per share of Scopus Common
Stock divided by the corresponding prices for the Siebel Common Stock during
the last 10 days, 20 days, 30 days, 60 days, 120 days and last twelve months
prior to February 26, 1998. The average exchange ratios over these periods
were 0.217,0.237, 0.260, 0.338 and 0.767, respectively, which corresponded to
premiums/(discounts) relative to the transaction exchange ratio of 67.8%,
53.7%, 40.1%, 7.7% and (52.5)%, respectively.
RELATIVE CONTRIBUTION ANALYSIS Morgan Stanley analyzed the pro forma
contribution of each of Scopus and Siebel to the Combined Company assuming
consummation of the Merger and based on securities research analyst forecasts
for both companies. The analysis showed, among other things, that in terms of
calendar year 1998 projected revenue and earnings and calendar year 1999
projected earnings, Scopus would contribute 42.5%, 20.0% and 20.4%,
respectively, to the Combined Company. These figures, adjusted as appropriate
to reflect each company's respective capital structure, were compared to the pro
forma fully-diluted ownership of the Combined Company by Scopus shareholders of
15.3% implied by the Merger. Morgan Stanley also noted that Siebel's
historical and projected revenue and earnings growth exceeded Scopus'
historical and projected revenue and earnings growth. In addition, Morgan
Stanley noted that Siebel's operating margins had improved to 19.7%, 23.6%,
26.0% and 27.9% over the quarters ended March 31, June 30, September 30 and
December 31, 1997, respectively. Scopus, however, experienced operating
margins that declined to 21.8%, 15.2%, 4.5% and 5.1% over the same period.
Siebel's operating margin of 25.2% also exceeded Scopus' operating margin of
11.6% for the twelve months ended December 31, 1997.
PRO FORMA MERGER ANALYSIS Morgan Stanley analyzed the pro forma
impact of the Merger on Siebel's projected earnings per share for the calendar
years 1998 and 1999. Such analysis was based on earnings projections by
securities research analysts for both companies. Morgan Stanley observed that,
assuming that the Merger was treated as a pooling transaction, the Merger would
result in earnings per share accretion for Siebel shareholders of 4.6% and 4.5%
for calendar years 1998 and 1999, respectively, before taking into account any
one-time charges or synergies. Morgan Stanley noted that, based on these
earnings projections and illustrative multiples of earnings per share ranging
from 30.0 times to 60.0 times, the implied value per equivalent share of
Scopus Common Stock would range from $12.21 to $24.42.
DISCOUNTED EQUITY VALUE Morgan Stanley performed an analysis of the
present value per share of the implied value of Scopus based on Siebel's future
trading price assuming consummation of the Merger and based on securities
research analyst earnings per share projections for both companies for calendar
years 2000 and 2001,
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illustrative multiples of earnings per share ranging from 35.0 times to 55.7
times and illustrative discount rates ranging from 13.0% to 17.0%. Based on this
analysis, Morgan Stanley estimated a present value per equivalent share of
Scopus Common Stock ranging from $17.83 to $38.01. Morgan Stanley compared this
range to the stand-alone discounted equity value of Scopus Common Stock. Morgan
Stanley observed that, based on securities research analyst earnings per share
projections for calendar years 2000 and 2001, illustrative multiples of earnings
per share ranging from 20.0 times to 25.0 times and illustrative discount rates
ranging from 15.6% to 17.0%, the present value per share of the Scopus Common
Stock on a stand-alone basis ranged from $11.68 to $17.69.
Morgan Stanley assumed and relied upon, without independent
verification, the accuracy and completeness of the information reviewed by it
for the purposes of its opinion. With respect to the internal financial
statements and/or other financial and operating data and discussions relating to
the strategic, financial and operational benefits anticipated from the Merger
provided by Scopus and Siebel, Morgan Stanley assumed that they were reasonably
prepared on bases reflecting the best then available estimates and judgments of
the future financial performance and prospects of Siebel and Scopus,
respectively. Morgan Stanley relied upon the assessment by the managements of
Siebel and Scopus of their ability to retain key employees of both Siebel and
Scopus. Morgan Stanley also relied upon, without independent verification, the
assessment by the managements of Siebel and Scopus of the strategic and other
benefits expected to result from the Merger. Morgan Stanley also relied upon,
without independent verification, the assessment by the managements of Siebel
and Scopus of Siebel's and Scopus' technologies and products, the timing and
risks associated with the integration of Scopus with Siebel, and the validity
of, and risks associated with, Siebel's and Scopus' existing and future products
and technologies. Morgan Stanley did not make any independent valuation or
appraisal of the assets, liabilities or technology of Siebel or Scopus,
respectively, nor was it furnished with any such appraisals. Morgan Stanley
assumed that the Merger would be accounted for as a "pooling-of-interests"
business combination in accordance with GAAP, would be treated as a tax-free
reorganization and/or exchange pursuant to the Internal Revenue Code of 1986
(the "Code"), as amended, and would be consummated in accordance with the terms
set forth in the Merger Agreement. Morgan Stanley's opinion is necessarily based
on economic, market and other conditions as in effect on, and the information
made available to it as of March 1, 1998
In connection with the review of the Merger by the Scopus Board of
Directors, Morgan Stanley performed a variety of financial and comparative
analyses for purposes of its opinion given in connection therewith. The
preparation of a fairness opinion is a complex process and is not necessarily
susceptible to partial analysis or summary description. In arriving at its
opinion, Morgan Stanley considered the results of all of its analyses as a whole
and did not attribute any particular weight to any analysis or factor considered
by it. Furthermore, selecting any portion of its analyses, without considering
all analyses, would create an incomplete view of the process underlying its
opinion. In addition, Morgan Stanley may have given various analyses and
factors more or less weight than other analyses and factors, and may have deemed
various assumptions more or less probable than other assumptions, so that the
ranges of valuation resulting from any particular analysis described above
should not be taken to be Morgan Stanley's view of the actual value of Scopus or
Siebel. In performing its analyses, Morgan Stanley made numerous assumptions
with respect to industry performance, general business and economic conditions
and other matters, many of which are beyond the control of Scopus and Siebel.
Any estimates contained in the fairness opinion are not necessarily indicative
of future results or actual values, which may be significantly more or less
favorable than those suggested by such estimates. The analyses performed were
prepared solely as part of Morgan Stanley's analysis of the fairness from a
financial point of view of the Merger to Scopus shareholders and were conducted
in connection with the delivery of Morgan Stanley's opinion. The analyses do
not purport to be appraisals or to reflect the prices at which Scopus Common
Stock or Siebel Common Stock might actually trade. The terms of the Merger were
determined through arm's-length negotiations between Scopus and Siebel and were
approved by the Scopus Board. Morgan Stanley did not recommend any specific
exchange ratio to Scopus or that any specific exchange ratio constituted the
only appropriate exchange ratio for the Merger.
The Scopus Board of Directors retained Morgan Stanley based upon
Morgan Stanley's qualifications, experience and expertise. Morgan Stanley is an
internationally recognized investment banking and advisory firm. Morgan
Stanley, as part of its investment banking business, is continuously engaged in
the valuation of businesses and securities in connection with mergers and
acquisitions, negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private placements and
valuations for corporate and other purposes. Morgan Stanley makes a market in
Scopus Common Stock. In the ordinary course of Morgan Stanley's trading and
brokerage activities, Morgan Stanley or its affiliates may at any time hold long
or short positions, may
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trade or otherwise effect transactions, for its own account for the accounts of
customers, in the equity securities of Scopus or Siebel.
Pursuant to the Morgan Stanley Engagement Letter, Morgan Stanley
provided financial advisory services and a financial opinion in connection with
the Merger, and Scopus agreed to pay Morgan Stanley a customary fee in
connection therewith. In addition, Scopus has also agreed to indemnify Morgan
Stanley and its affiliates, their respective directions, officers, agents and
employees and each person, if any, controlling Morgan Stanley or any of its
affiliates against certain liabilities and expenses, including certain
liabilities under the federal securities laws, related to Morgan Stanley's
engagement. In the past, Morgan Stanley and its affiliates have provided
financial advisory and financing services for Scopus and have received fees for
the rendering of these services
OPINION OF FINANCIAL ADVISOR TO SIEBEL
Pursuant to an engagement letter dated July 17, 1997 (the "NMS
Engagement Letter"), the Siebel Board of Directors retained NMS to act as its
financial advisor in connection with the Merger. NMS is a nationally recognized
investment banking firm and, as part of its activities, is regularly engaged in
the valuation of businesses and their securities in connection with mergers and
acquisitions, negotiated underwritings, secondary distributions of listed and
unlisted securities, private placements and valuations for corporate and other
purposes. Siebel selected NMS as its financial advisor on the basis of NMS's
experience and expertise in transactions similar to the Merger and its
reputation in the customer relationship management and enterprise resource
planning software industries and its historical investment banking relationship
with Siebel.
On February 28, 1998, NMS delivered to the Siebel Board of Directors
its oral opinion, subsequently confirmed in writing as of the same date, that
the consideration to be paid by Siebel pursuant to the Merger is fair to Siebel
from a financial point of view, as of that date. The amount of such
consideration was determined pursuant to negotiations between Siebel and Scopus
and not pursuant to recommendations from NMS. No limitations were imposed by
the Siebel Board of Directors on NMS with respect to the investigations made or
procedures followed in rendering its opinion.
THE FULL TEXT OF NMS'S WRITTEN OPINION TO THE SIEBEL BOARD OF DIRECTORS IS
ATTACHED HERETO AS APPENDIX B-2 AND IS INCORPORATED HEREIN BY REFERENCE AND
SHOULD BE READ CAREFULLY AND IN ITS ENTIRETY IN CONNECTION WITH THIS JOINT PROXY
STATEMENT/PROSPECTUS. THE FOLLOWING SUMMARY OF NMS'S OPINION IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE OPINION. NMS'S OPINION IS
DIRECTED TO THE SIEBEL BOARD OF DIRECTORS AND DOES NOT CONSTITUTE A
RECOMMENDATION TO ANY SIEBEL STOCKHOLDER AS TO HOW SUCH STOCKHOLDER SHOULD VOTE
WITH RESPECT TO THE ISSUANCE OF THE SIEBEL COMMON STOCK IN CONNECTION WITH THE
MERGER. NMS'S OPINION ADDRESSES ONLY THE FINANCIAL FAIRNESS OF THE
CONSIDERATION TO BE PAID BY SIEBEL PURSUANT TO THE MERGER AND DOES NOT ADDRESS
THE RELATIVE MERITS OF THE MERGER OR ANY ALTERNATIVES TO THE MERGER, THE
UNDERLYING DECISION OF THE SIEBEL BOARD OF DIRECTORS TO PROCEED WITH OR EFFECT
THE MERGER OR ANY OTHER ASPECT OF THE MERGER. IN FURNISHING ITS OPINION, NMS
DID NOT ADMIT THAT IT IS AN EXPERT WITHIN THE MEANING OF THE TERM "EXPERT" AS
USED IN THE SECURITIES ACT, NOR DID IT ADMIT THAT ITS OPINION CONSTITUTES A
REPORT OR VALUATION WITHIN THE MEANING OF THE SECURITIES ACT, AND STATEMENTS TO
SUCH EFFECT ARE INCLUDED IN THE NMS OPINION.
In connection with its opinion, NMS, among other things: (i) reviewed
publicly available financial and other data with respect to Scopus and Siebel,
including the consolidated financial statements for recent years and interim
periods to December 31, 1997 in the case of Scopus and September 30, 1997 in
the case of Siebel and certain other relevant financial and operating data
relating to Scopus and Siebel made available to NMS from published sources and
from the internal records of Scopus and Siebel; (ii) reviewed the financial
terms and conditions of the Reorganization Agreement; (iii) reviewed certain
publicly available information concerning the trading of, and the trading
market for, Scopus Common Stock and Siebel Common Stock; (iv) compared Scopus
and Siebel from a financial point of view with certain other companies in the
enterprise resource planning and customer relationship management software
industry which NMS deemed to be relevant; (v) considered the financial terms,
to the extent publicly available, of selected recent business combinations of
companies in the enterprise resource planning and customer relationship
management software industries which NMS deemed to be comparable, in whole or
in part, to the Merger; (vi) analyzed the effects of the Merger on Siebel's
pro forma earnings per share; (vii) reviewed and discussed with
representatives of the management of
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Scopus and Siebel certain information of a business and financial nature
regarding Scopus and Siebel, including financial forecasts for Siebel and Scopus
obtained by NMS from NMS and third party research reports; (viii) made inquiries
regarding and discussed the Merger and the Reorganization Agreement and other
matters related thereto with Siebel's counsel; and (ix) performed such other
analyses and examinations as NMS deemed appropriate.
In connection with its review, NMS has not assumed any obligation
independently to verify the foregoing information and has relied on its being
accurate and complete in all material respects. With respect to the financial
forecasts for Scopus and Siebel obtained by NMS from NMS and third party
research reports, NMS has prepared projections based on such financial
forecasts, provided them to Siebel and with Siebel's consent NMS has relied
solely upon such projections for its analysis. NMS has also assumed that there
have been no material changes in Scopus' or Siebel's assets, financial
condition, results of operations, business or prospects since the respective
dates of their last financial statements made available to NMS. NMS has relied
on advice of counsel and independent accountants to Siebel as to all legal and
financial reporting matters with respect to Siebel and Merger Sub, the Merger
and the Reorganization Agreement. NMS has assumed that the Merger will be
consummated in a manner that complies in all respects with the applicable
provisions of the Securities Act, the Exchange Act and all other applicable
federal and state statutes, rules and regulations. In addition, NMS has not
assumed responsibility for making an independent evaluation, appraisal or
physical inspection of any of the assets or liabilities (contingent or
otherwise) of Scopus or Siebel, nor has NMS been furnished with any such
appraisals. Siebel has informed NMS, and NMS has assumed, that the Merger will
be recorded as a pooling-of-interests under GAAP and will be treated as a tax
free reorganization pursuant to the Code. Finally, NMS's opinion is based on
economic, monetary and market and other conditions as in effect on, and the
information made available to NMS as of, the date of its opinion.
NMS has further assumed with Siebel's consent that the Merger will be
consummated in accordance with the terms described in the Reorganization
Agreement, without any further amendments thereto, and without waiver by Siebel
or Scopus of any of the conditions to its obligations thereunder.
The following is a brief summary of the analyses performed by NMS in
preparation of its opinion letter dated February 28, 1998.
COMPARABLE COMPANY ANALYSIS. Based on public and other available
information, NMS calculated the multiples of aggregate value (defined as equity
value plus debt less cash and cash equivalents) to (a) estimated calendar year
1998 revenues, estimated calendar year 1998 earnings before interest and taxes
("EBIT"), and equity value as to estimated calendar year 1998 net income
(derived from publicly available analysts' estimates) and (b) last twelve months
("LTM") revenues, LTM EBIT and LTM net income for seven companies in the
enterprise resource planning and customer relationship management software
industries. Such analysis indicated the following mean and median multiples,
respectively: (a) 5.6x and 4.1x calendar year 1998 revenue, 28.5x and 22.7x
calendar year 1998 EBIT and 48.4x and 42.1x calendar year 1998 net income and
(b) 9.4x and 6.4x LTM revenue, 46.7x and 46.4x LTM EBIT and 77.8x and 83.3x LTM
net income. NMS noted that applying median multiples to Scopus' estimated
calendar year 1998 and LTM revenues, EBIT and net income (as estimated by NMS
based upon NMS and third party research reports) yielded a range of implied
equity values of $13.32 to $32.76 per share price for Scopus Common Stock which
implies an equity value of $419.8 million to $505.3 million.
COMPARABLE TRANSACTIONS ANALYSIS. NMS reviewed the consideration paid
in 20 acquisitions of comparable technology companies that have been announced
since January 31, 1996. NMS analyzed the aggregate value of the consideration
paid in such transactions as a multiple of the target companies' LTM revenues
and EBIT and equity value as to net income. Such analysis yielded the following
mean and median multiples, respectively: 6.6x and 5.0x LTM revenue, 65.6x and
34.8x LTM EBIT and 83.9x and 55.7x LTM net income. NMS noted that applying
median multiples to Siebel's estimated LTM revenues, EBIT and net income yielded
a range of implied equity values of $20.40 to $24.55 per share for Scopus
Common Stock which implies an equity value of $274.2 million to $674.3 million.
No other company or transaction used in the comparable company or
comparable transactions analysis as a comparison is identical to Siebel, Scopus
or the Merger. Accordingly, an analysis of the results of the foregoing is not
mathematical; rather, it involves complex considerations and judgments
concerning differences in financial and
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operating characteristics of the companies and other factors that could affect
the public trading value of the companies to which Siebel and the Merger are
being compared.
PREMIUMS PAID ANALYSIS. NMS reviewed the consideration paid in 177
selected technology mergers and acquisitions of public companies. NMS
calculated the premiums paid or offered in these transactions over the
applicable stock price of the target company one day, one week and one month
prior to the announcement of the acquisition offer, and then calculated the
median and mean of those premiums. These calculations yielded median and mean
premiums paid of 32.2% and 29.5% at one day, 38.7% and 35.4% at one week and
46.8% and 43.6% at one month. The implied premiums for the Merger based on the
exchange ratio of 0.36405 and Siebel's closing stock price of $61.50 as of
February 27, 1998 were 58.5% for one day, 91.5% for one week and 87.5% for one
month.
PRO FORMA EARNINGS ANALYSIS. Using the financial forecasts for Scopus
and Siebel obtained by NMS from NMS and third party research reports, NMS
compared estimated earnings per share ("EPS") on a stand-alone basis for Siebel
to the estimated EPS of the Combined Company for calendar year 1998. NMS noted
that, based on such forecasts, the Merger would be accretive to EPS by 4.3% in
the calendar year 1998.
CONTRIBUTION ANALYSIS. Using the financial forecasts for Scopus and
Siebel obtained by NMS from NMS and third party research reports, NMS reviewed
the estimated contribution of each of Siebel and Scopus to estimated calendar
1998 revenue, EBIT and net income for the Combined Company. NMS then compared
such contributions to the pro forma share ownership of the Combined Company to
be contributed by each of Siebel and Scopus, assuming consummation of the Merger
as described in the Reorganization Agreement. Such analysis indicated that
Siebel stockholders would own approximately 84.7% of the Combined Company. Such
analysis also indicated that, based on such forecasts, Siebel would contribute
approximately 63.8%, 83.3% and 80.2% of the Combined Company's estimated 1998
revenue, EBIT and net income, respectively.
EXCHANGE RATIO ANALYSIS. NMS reviewed and analyzed the historical
ratio of the per share market closing price of Siebel Common Stock divided by
the corresponding price for Scopus Common Stock during the three month, six
month, nine month and twelve month periods prior to the Merger. The average
exchange ratio during these periods were 0.2620, 0.3610, 0.5284 and 0.7677,
respectively compared to the Exchange Ratio of 0.36405 (on the date of the
Reorganization Agreement).
While the foregoing summary describes all analyses and examinations
that NMS deems material to its opinion, it is not a comprehensive description of
all analyses and examinations actually conducted by NMS. The preparation of a
fairness opinion necessarily is not susceptible to partial analysis or summary
description. NMS believes that its analyses and the summary set forth above
must be considered as a whole and that selecting portions of its analyses and of
the factors considered, without considering all analyses and factors, would
create an incomplete view of the process underlying the analyses set forth in
its presentation to the Siebel Board of Directors. Accordingly, the ranges of
valuations resulting from any particular analysis described above should not be
taken to be NMS's view of the actual value of Siebel.
In performing its analyses, NMS made numerous assumptions with respect
to industry performance, general business and economic conditions and other
matters, many of which are beyond the control of Siebel and Scopus. The
analyses performed by NMS are not necessarily indicative of actual values or
actual future results, which may be significantly more or less favorable than
those suggested by such analyses. Such analyses were prepared solely as part of
NMS's analysis of the financial fairness of the consideration to be paid by
Siebel pursuant to the Merger and were provided to the Siebel Board of Directors
in connection with the delivery of NMS's opinion. The analyses do not purport
to be appraisals or to reflect the prices at which a company might actually be
sold or the prices at which any securities may trade at any time in the future.
As described above, NMS's opinion and presentation to the Siebel Board
of Directors were among the many factors taken into consideration by the Siebel
Board of Directors in making its determination to approve the Merger and to
recommend that the Siebel stockholders approve the issuance of shares of Siebel
Common Stock in connection with the Merger.
Pursuant to the NMS Engagement Letter, the Siebel Board of Directors
engaged NMS to act as its financial advisor in connection with an acquisition of
or investment in one or more businesses. Upon execution of the
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Engagement Letter, Siebel agreed to pay NMS a customary fee based on a
percentage of the consideration paid in such a Merger, subject to a minimum
fee of $500,000, upon the consummation of such a transaction. The NMS
Engagement Letter also calls for Siebel to reimburse NMS for its reasonable
out-of-pocket expenses. Pursuant to a separate letter agreement, Siebel has
agreed to indemnify NMS, its affiliates, and their respective partners,
directors, officers, agents, consultants, employees and controlling persons
against certain liabilities, including liabilities under the federal
securities laws.
In the ordinary course of its business, NMS actively trades the equity
securities of Siebel and Scopus for its own account and for the accounts of
customers and, accordingly, may at any time hold a long or short position in
such securities. NMS also acted as underwriter in connection with offerings of
the securities of Scopus and Siebel and has performed various investment banking
services for Siebel.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of Scopus' management and the Scopus Board of
Directors may be deemed to have certain interests in the Merger that are in
addition to their interests as shareholders of Scopus generally. The Scopus
Board of Directors was aware of these interests and considered them, among other
matters, in approving the Reorganization Agreement and the transactions
contemplated thereby.
Indemnification and Insurance. The Reorganization Agreement provides
that all rights to indemnification existing in favor of the persons serving as
directors and officers of Scopus as of the date of the Reorganization Agreement
for acts or omissions occurring prior to the Effective Time, as provided in the
Scopus Articles of Incorporation or Scopus Bylaws and in certain indemnification
agreements between Scopus and such directors and officers, will survive the
Merger, and that Siebel will cause the Surviving Corporation to perform its
obligations arising thereunder for at least eight years from the Effective Time.
Subject to certain limitations, Siebel has also agreed to cause the Surviving
Corporation to maintain in effect for three years after the Effective Time a
policy of directors' and officers' liability insurance for the benefit of
persons serving as directors and officers of Scopus as of the date of the
Reorganization Agreement. See "The Reorganization Agreement-Covenants-
Indemnification and Insurance."
Change of Control Arrangements.
Michelle Axelson. Pursuant to an offer letter delivered to Ms.
Axelson prior to the commencement of her employment with Scopus in July 1996,
Ms. Axelson, who serves as Scopus' Chief Financial Officer, is entitled to the
acceleration of options to purchase 239,000 shares of Scopus Common Stock
immediately upon a "change of control event." The Merger constitutes a "change
in control" event under such offer letter.
Jeffrey Bork. Pursuant to a letter agreement dated December 15, 1997,
Mr. Bork, who serves as Scopus' Senior Vice President of Marketing, is entitled
to acceleration of options to purchase 136,250 shares of Scopus Common Stock in
the event that Mr. Bork is terminated without cause within twelve months
following a "change in control event." The Merger constitutes a "change in
control" event under such letter agreement.
VOTING AGREEMENTS
Scopus Voting Agreements. Pursuant to the Scopus Voting Agreements,
the Scopus Voting Agreement Shareholders, who beneficially own an aggregate of
5,257,000 outstanding shares of Scopus Common Stock (representing approximately
25.36% of the shares of Scopus Common Stock as of December 31, 1997) have agreed
that, prior to the Expiration Date, they will vote their shares of Scopus Common
Stock in favor of: (i) approval of the Merger; (ii) approval and adoption of the
Reorganization Agreement; and (iii) each of the other actions contemplated by
the Reorganization Agreement. The Scopus Voting Agreement Shareholders have
also delivered to Siebel irrevocable proxies with respect to the matters covered
by the Scopus Voting Agreements. In addition, subject to certain de minimis
exceptions, the Scopus Voting Agreement Shareholders have agreed not to Transfer
any securities of Scopus owned by them unless and until the proposed transferee
of such Scopus securities shall have: (i) executed a counterpart of the Scopus
Voting Agreement and an irrevocable proxy and (ii) agreed to hold
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such Scopus securities subject to all of the terms and provisions of the Scopus
Voting Agreement. The form of the Scopus Voting Agreement is attached to this
Joint Proxy Statement/Prospectus as Appendix C-1.
Siebel Voting Agreements. Pursuant to the Siebel Voting Agreements,
the Siebel Voting Agreement Stockholders, who beneficially own an aggregate of
9,587,300 outstanding shares of Siebel Common Stock (representing approximately
26.32% of the shares of Siebel Common Stock as of February 4, 1998) have agreed
that, prior to the Expiration Date, they will vote their shares of Siebel Common
Stock in favor: (i) of the issuance of the shares of Siebel Common Stock to be
issued in the Merger and (ii) each of the other actions contemplated by the
Reorganization Agreement. They have also agreed, in certain instances, to
require any party to whom their shares of Siebel Common Stock may be sold,
pledged, granted an option to purchase, or otherwise transferred to execute a
counterpart of the Siebel Voting Agreement and agree to hold such Siebel
securities subject to all the terms and provisions of the Siebel Voting
Agreements. The form of the Siebel Voting Agreement is attached to this Joint
Proxy Statement/Prospectus as Appendix C-2.
AFFILIATE AGREEMENTS
Scopus Affiliate Agreements. Scopus has agreed to deliver to Siebel a
Scopus Affiliate Agreement executed by each person who is an "affiliate," as
such term is defined in Rule 145 promulgated under the Securities Act, of Scopus
(each a "Scopus Affiliate") whereby each Scopus Affiliate agrees not to effect
any sale, transfer or other disposition of the Siebel Common Stock received by
such Scopus Affiliate in the Merger unless: (i) such sale, transfer or other
disposition is made in conformity with the volume and other requirements of Rule
145 under the Securities Act, as evidenced by a broker's letter and a
representation letter executed by the Scopus Affiliate (reasonably satisfactory
in form and content to Siebel), each stating that such requirements have been
met; (ii) legal counsel reasonably satisfactory to Siebel shall have advised
Siebel in a written opinion letter (reasonably satisfactory in form and content
to Siebel), upon which Siebel may rely, that such sale, transfer or other
disposition will be exempt from registration under the Securities Act; (iii)
such sale, transfer or other disposition is effected pursuant to an effective
registration statement under the Securities Act; or (iv) an authorized
representative of the Commission shall have rendered written advice to such
Scopus Affiliate to the effect that the Commission would take no action, or that
the staff of the Commission would not recommend that the Commission take action,
with respect to such proposed sale, transfer or other disposition, and a copy of
such written advice and all other related communications with the Commission
shall have been delivered to Siebel.
In addition, so as to help ensure that the Merger will be treated as a
pooling of interests for accounting and financial reporting purposes, the Scopus
Affiliate Agreements provide that during the period contemplated by the
Commission's Staff Accounting Bulletin No. 65 until the earlier of: (i) Siebel's
public announcement of financial results covering at least 30 days of combined
operations of Siebel and Scopus or (ii) the Reorganization Agreement is
terminated in accordance with its terms, no Scopus Affiliate shall sell,
exchange, transfer, pledge, distribute or otherwise dispose of or grant any
option, establish any "short" or put-equivalent position with respect to or
enter into any similar transaction (through derivative's or otherwise) intended
or having the effect, directly or indirectly, to reduce such Scopus Affiliate's
risk relative to: (i) any Scopus Common Stock (except pursuant to and upon
consummation of the Merger); or (ii) any Siebel Common Stock received by such
Scopus Affiliate in the Merger or upon exercise of options assumed by Siebel in
the Merger. Provided certain conditions are met, the Scopus Affiliate
Agreements provide for certain exceptions to the foregoing restrictions on
transfer relating to: (i) certain de minimis transfers; (ii) transfers in
payment of the exercise price of options to purchase Scopus Common Stock or
Siebel Common Stock; (iii) charitable donations; or (iv) transfers to trusts
established for the benefit of members of such Scopus Affiliate's family or
gifts to members of such Scopus Affiliate's family. The form of the Scopus
Affiliate Agreement is attached to this Joint Proxy Statement/Prospectus as
Appendix D-1.
Siebel Affiliate Agreements. Also in connection with the
Reorganization Agreement, Siebel has agreed to deliver to Scopus a Siebel
Affiliate Agreement executed by each person who is an "affiliate" of Siebel
(each a "Siebel Affiliate") providing that, during the period contemplated by
the Commission's Staff Accounting Bulletin No. 65 until the earlier of: (i)
Siebel's public announcement of financial results covering at least 30 days of
combined operations of Siebel and Scopus or (ii) the Reorganization Agreement is
terminated in accordance with its terms, no Siebel Affiliate shall, subject to
certain exceptions, sell, exchange, transfer, pledge, distribute or otherwise
dispose of or grant any option, establish any "short" or put-equivalent position
with respect to or enter into any similar transaction (through derivative's or
otherwise) intended or having the effect, directly or indirectly, to reduce
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such Siebel Affiliate's risk relative to any Siebel Common Stock. Provided
---
certain conditions are met, the Siebel Affiliate Agreements provide for certain
exceptions to the foregoing restrictions on transfer relating to: (i) certain
de minimis transfers; (ii) transfers in payment of the exercise price of options
to purchase Siebel Common Stock; (iii) charitable donations; or (iv) transfers
to trusts established for the benefit of members of such Siebel Affiliate's
family or gifts to members of such Siebel Affiliate's family. The form of the
Siebel Affiliate Agreement is attached to this Joint Proxy Statement/Prospectus
as Appendix D-2.
STOCK OPTION AGREEMENT
Pursuant to the Reorganization Agreement, Siebel and Scopus entered
into the Option Agreement pursuant to which Scopus granted Siebel the right
under certain conditions to purchase up to 3,493,879 shares of Scopus Common
Stock (i.e., the Option Shares) at a purchase price of $20.00 per share (the
"Option"). Subject to certain conditions, the option granted in the Option
Agreement may be exercised, in whole or in part, on any one occasion, if a
Triggering Event has occurred; provided, however, that in the event the Option
becomes exercisable for this reason, the Option shall terminate upon the
earliest to occur of: (i) the Effective Time of the Merger; (ii) 270 days after
the first occurrence of a Triggering Event; and (iii) the valid termination of
the Reorganization Agreement in accordance with its terms prior to the
occurrence of a Triggering Event. In addition, if (i) the Scopus Special
Meeting shall have been held and the Merger and the Reorganization Agreement
shall not have been adopted and approved by the necessary vote of the Scopus
shareholders, (ii) following the date of the Reorganization Agreement and prior
to the Scopus Special Meeting, an Acquisition Proposal shall have been publicly
announced, and (iii) on or prior to the first anniversary of the termination of
the Reorganization Agreement, Siebel shall have entered into a definitive
agreement providing for a "Scopus Acquisition" (as defined herein), then the
Option may be exercised by Siebel, in whole or in part, on any one occasion and
at any time following the date of such definitive agreement relating to a Scopus
Acquisition (or the consummation of a Scopus Acquisition if there is no
definitive agreement) and prior to the date 180 days following the date of such
definitive agreement relating to a Scopus Acquisition (or 180 days after the
consummation of a Scopus Acquisition if there is no definitive agreement).
Siebel has agreed that in the event that the Option becomes
exercisable and the Option or the Scopus Common Stock (or any rights therein)
subject to the Option are sold, transferred or otherwise disposed of by Siebel
at any time within the subsequent ten years, Siebel shall pay to Scopus the
amount by which any "Proceeds" (as defined herein) from such transaction exceeds
the "Aggregate Cost Amount" (as defined herein) of the Option or the Scopus
Common Stock so transferred, as applicable (and including interest on the
aggregate purchase price of the Scopus Common Stock if Scopus Common Stock is
transferred). In addition, during the 180 day period commencing with the date
270 days following the acquisition by Siebel of any Scopus Common Stock issuable
pursuant to the Option, Scopus may repurchase such Scopus Common Stock at a
price equal to the aggregate exercise price plus interest from the date such
Scopus Common Stock was acquired. Scopus has also granted Siebel certain rights
to require Scopus to register the Scopus Common Stock acquired pursuant to the
Option under the Securities Act. The form of the Option Agreement is attached
to this Joint Proxy Statement/Prospectus as Appendix E.
The "Proceeds" of a sale, transfer or other disposition of the Option
or any of the Option Shares or any rights therein (a "Sale") shall mean the
aggregate amount of the proceeds (in cash or in kind) paid to Siebel or any of
its affiliates pursuant to such Sale (with any non-cash proceeds being valued at
the fair market value thereof).
The "Aggregate Cost Amount" with respect to the Option shall be equal
to the aggregate amount of all costs (including, without limitation, brokers
fees and commissions, filing fees, legal fees, accounting fees, any amounts paid
or payable by Siebel under Section 16(b) of the Exchange Act and any taxes) paid
or payable as a result of the Sale by Siebel of the Option. The "Aggregate Cost
Amount" with respect to any Option Shares shall be equal to the sum of (A) the
aggregate dollar amount paid by Siebel or its affiliate(s) for such Option
Shares, (B) the aggregate amount of all costs (including, without limitation,
brokers fees and commissions, filing fees, legal fees, accounting fees, any
amounts paid or payable by Siebel under Section 16(b) of the Exchange Act and
any taxes) paid or payable as a result of the acquisition or Sale of such Option
Shares, and (C) interest at the rate of 7% per annum on the dollar amount
referred to in clause "(A)" of this sentence (for the period commencing as of
the date such Option Shares were acquired by Siebel and ending on the date of
the Sale of such Option Shares).
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NONCOMPETITION AGREEMENTS
Mr. Ori Sasson, the Chief Executive Officer of Scopus, and Mr. A.
Aaron Omid, Scopus' Senior Vice President of Worldwide Operations, each has
entered into a Principal Noncompetition Agreement. The Principal Noncompetition
Agreements contain provisions restricting such employees from owning a
substantial interest or participating in or providing any service or support
(whether as an employee or consultant) to certain businesses competitive with
Siebel for a period of time lasting from the Effective Time until the later of
(i) the third anniversary of the Effective Time and (ii) the first anniversary
of such Principal's termination as an employee of Siebel.
In addition, Scopus has agreed to use its best efforts to obtain the
agreement of certain Key Employees to be identified mutually by Scopus and
Siebel to agree to enter into Key Employee Noncompetition Agreement. The Key
Employee Noncompetition Agreements contain provisions restricting such Key
Employee from owning a substantial interest or participating in or providing any
service or support (whether as an employee or consultant) to certain businesses
competitive with Siebel for a period of time lasting from the Effective Time
until the first anniversary of such Key Employee's termination as an employee of
Siebel. Both the Principal Noncompetition Agreements and the Key Employee
Noncompetition Agreements contain restrictions on (i) soliciting employees of
Siebel or any subsidiary of Siebel to leave his or her employment with such
company and (ii) interfering or attempting to interfere with any commercial
relationship or prospective commercial relationship of Siebel or its
subsidiaries.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizes the material federal income tax
considerations of the Merger that are generally applicable to holders of Scopus
Common Stock. This discussion is based on currently existing provisions of the
Code, existing and proposed Treasury Regulations thereunder and current
administrative rulings and court decisions, all of which are subject to change.
Any such change, which may or may not be retroactive, could alter the tax
consequences to Siebel, Scopus or the Scopus shareholders as described herein.
Scopus shareholders should be aware that this discussion does not deal
with all U.S. federal income tax considerations that may be relevant to
particular Scopus shareholders in light of their particular circumstances, such
as shareholders who are dealers in securities, banks, insurance companies or
tax-exempt organizations, who are subject to the alternative minimum tax
provisions of the Code, who are non-United States persons, who acquired their
shares in connection with stock option or stock purchase plans or in other
compensatory transactions or who hold their shares as a hedge or as part of a
hedging, straddle, conversion or other risk reduction transaction. In addition,
the following discussion does not address the tax consequences of the Merger
under foreign, state or local tax laws or the tax consequences of transactions
effectuated prior to or after the Merger (whether or not such transactions are
in connection with the Merger).
SCOPUS SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO
THE SPECIFIC CONSEQUENCES TO THEM OF THE MERGER IN THEIR PARTICULAR
CIRCUMSTANCES, INCLUDING THE APPLICABLE FEDERAL, STATE, LOCAL AND FOREIGN TAX
CONSEQUENCES.
Neither Siebel nor Scopus has requested or will request a ruling from
the IRS with regard to any of the U.S. federal income tax consequences of the
Merger. As a condition to consummation of the Merger, Wilson Sonsini Goodrich &
Rosati P.C., counsel to Scopus, and Cooley Godward LLP, counsel to Siebel, will
each render an opinion (collectively, the "Tax Opinions") to Scopus and Siebel,
respectively, that the Merger will constitute a reorganization under Section
368(a) of the Code (a "Reorganization"). Such Tax Opinions are, and will be,
based on certain assumptions as well as representations, and will be subject to
certain limitations. Moreover, such opinions will not be binding on the IRS nor
preclude the IRS from adopting a contrary position. The discussion below assumes
that the Merger will qualify as a reorganization, based upon the Tax Opinions.
Subject to the limitations and qualifications referred to herein, and
as a result of the Merger's qualifying as a Reorganization, the following U.S.
federal income tax consequences should result:
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(i) No gain or loss will be recognized for federal income tax purposes
by the holders of Scopus Common Stock upon the receipt of Siebel Common Stock
solely in exchange for such Scopus Common Stock in the Merger (except to the
extent, if any, of cash received in lieu of fractional shares);
(ii) The aggregate tax basis of the Siebel Common Stock so received by
Scopus shareholders in the Merger (including any fractional share of Siebel
Common Stock not actually received) will be the same as the aggregate tax basis
of Scopus Common Stock surrendered in exchange therefor;
(iii) The holding period of Siebel Common Stock so received by each
Scopus shareholder in the Merger will include the period for which Scopus Common
Stock surrendered in exchange therefor was considered to be held, provided that
Scopus Common Stock so surrendered is held as a capital asset at the Effective
Time;
(iv) Cash payments received by holders of Scopus Common Stock in lieu
of a fractional share will be treated as if such fractional share of Siebel
Common Stock had been issued in the Merger and then redeemed by Siebel. A Scopus
shareholder receiving such cash will recognize gain or loss upon such payment,
measured by the difference (if any) between the amount of cash received and the
basis in such fractional share. The gain or loss should be capital gain or loss
provided that each such fractional share of Scopus Common Stock was held as a
capital asset at the Effective Time; and
(v) A shareholder of Scopus who exercises dissenters' rights under any
applicable law with respect to a share of Scopus Common Stock and receives
payments for such stock in cash should recognize capital gain or loss (if such
stock was held as a capital asset at the Effective Time of the Merger) measured
by the difference between the amount of cash received and the shareholder's
basis in such share, provided such payment is neither essentially equivalent to
a dividend within the meaning of Section 302 of the Code nor has the effect of a
distribution of a dividend within the meaning of Section 356(a)(2) of the Code
(collectively, a "Dividend Equivalent Transaction"). A sale of Scopus shares
incident to an exercise of dissenters' rights will generally not be a Dividend
Equivalent Transaction if, as a result of such exercise, the dissenting
stockholder owns no shares of Siebel Common Stock (either actually or
constructively within the meaning of Section 318 of the Code) immediately after
the Merger; and
(vi) Neither Siebel nor Scopus will recognize gain solely as a result
of the Merger.
The Tax Opinions will be subject to certain assumptions and
qualifications and will be based on the truth and accuracy of certain
representations of Siebel, Merger Sub and Scopus including representations in
certain certificates delivered to counsel by the respective managements of
Siebel, Merger Sub and Scopus.
A successful IRS challenge to the Reorganization status of the Merger
would result in significant adverse tax consequences to the Scopus shareholders.
A Scopus shareholder would recognize gain or loss with respect to each share of
Scopus Common Stock surrendered equal to the difference between the
shareholder's basis in such share and the fair market value, as of the Effective
Time, of the Siebel Common Stock received in exchange therefor. In such event, a
shareholder's aggregate basis in the Siebel Common Stock so received would equal
its fair market value, and the stockholder's holding period for such stock would
begin the day after the Closing Date.
Certain noncorporate Scopus shareholders may be subject to backup
withholding at a rate of 31% on cash payments received in lieu of a fractional
share interest in Siebel Common Stock. Backup withholding will not apply,
however, to a stockholder who furnishes a correct taxpayer identification number
("TIN") and certifies that he, she or it is not subject to backup withholding on
the substitute Form W-9 included in the Transmittal Letter, who provides a
certificate of foreign status on Form W-8, or who is otherwise exempt from
backup withholding. A stockholder who fails to provide the correct TIN on Form
W-9 may be subject to a $50 penalty imposed by the IRS.
Each Scopus shareholder will be required to retain records and file
with such holder's U.S. federal income tax return a statement setting forth
certain facts relating to the Merger.
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ANTICIPATED ACCOUNTING TREATMENT
The Merger is intended to qualify as a pooling of interests for
financial reporting purposes in accordance with GAAP. This accounting method
would permit the recorded assets and liabilities of Scopus to be carried forward
to the consolidated financial statements of Siebel at their recorded historical
amounts. Consummation of the Merger is conditioned upon (i) the receipt by
Siebel of a letter from its independent accountants dated as of a date no
earlier than the date three days prior to the Closing Date to the effect that
such accountants concur with Siebel management's conclusion that pooling of
interests accounting for the Merger is appropriate, and (ii) receipt by Scopus
of a letter from its independent accountants dated as of a date no earlier than
the date three day prior to the Effective Time to the effect that such
accountants concur with Scopus management's conclusion that no conditions exist
relating to Scopus that would preclude Siebel from accounting for the Merger as
a pooling of interests.
REGULATORY MATTERS
Antitrust. Siebel and Scopus have each filed the required pre-merger
Notification and Report Forms pursuant to the HSR Act. To the extent required
under the HSR Act, certain shareholders of Scopus will also file a pre-merger
notification concerning their acquisition of Siebel Common Stock. In connection
with the Merger, the Federal Trade Commission or the Antitrust Division of the
U.S. Department of Justice could take such action under the antitrust laws as
either deems necessary or desirable in the public interest, including seeking to
enjoin consummation of the Merger or seeking to cause divestiture of significant
assets of Siebel or Scopus or their subsidiaries. There can be no assurance that
a challenge to the Merger on antitrust grounds will not be made, or, if such
challenge is made, of what the result would be. Consummation of the Merger is
conditioned upon, among other things, the expiration or termination of the
waiting period applicable to the consummation of the Merger under the HSR Act
and the absence of any temporary restraining order, preliminary or permanent
injunction, or other order issued by any federal or state court in the United
States which prevents the consummation of the Merger.
Filing with the California Secretary of State. An Agreement of Merger
must be filed with the Secretary of State of the State of California in order to
consummate the Merger.
Securities Laws. Siebel and Scopus must comply with the federal
securities laws and applicable securities laws of various states.
RIGHTS OF DISSENTING SHAREHOLDERS OF SCOPUS
Holders of Scopus Common Stock are generally entitled to dissenters'
rights with respect to the Merger under the CGCL if, and only if, the holders of
5% or more of the outstanding Scopus Common Stock elect to exercise dissenters'
rights in respect of their shares. A person having a beneficial interest in
shares of Scopus Common Stock held of record in the name of another person, such
as a broker or nominee, must act promptly to cause the record holder to follow
the steps summarized below properly and in a timely manner to perfect whatever
dissenters' rights the beneficial owner may have.
The following discussion is not a complete statement of the law
pertaining to dissenters' rights under the CGCL and is qualified in its entirety
by reference to the full text of Chapter 13 of the CGCL, sections of which are
reprinted in their entirety as Appendix F to this Joint Proxy
Statement/Prospectus and should be read carefully and in their entirety.
If the Merger is approved by the affirmative vote of the holders of a
majority of the outstanding Scopus Common Stock and is not terminated in
accordance with the Reorganization Agreement (including termination at the
election of Siebel if the aggregate number of Dissenting Shares is not less than
10% of the outstanding shares of Scopus Common Stock), Scopus' shareholders who
vote against the Reorganization and who have fully complied with all applicable
provisions of Chapter 13 of the CGCL and whose shares constitute Dissenting
Shares, will, to the extent that their shares collectively aggregate 5% or more
of the outstanding shares of Scopus Common Stock, have the right to require
Scopus to purchase the shares of Scopus Common Stock held by them for cash at
the fair market value thereof determined as of the date preceding the public
announcement of the Merger, excluding any
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appreciation or depreciation because of the Merger but adjusted for any stock
split, reverse stock split or share dividend which becomes effective thereafter.
To qualify as Dissenting Shares, such shareholders must not only vote against
the transaction but must also provide Scopus with a written demand (described
below) prior to the Scopus Special Meeting. Under the CGCL, no shareholder of
Scopus who is entitled to exercise dissenters' rights has any right at law or in
equity to contest the validity of the Merger or to have the Merger set aside or
rescinded, except in an action to test whether the number of shares required to
authorize or approve the Merger had legally been voted in favor of the Merger.
"Dissenting Shares" means those shares of Scopus Common Stock with respect to
which the holders have voted against the Merger and have perfected their
purchase demand in accordance with the CGCL, except that no such shares will
constitute Dissenting Shares unless either (i) holders of 5% or more of the
outstanding shares of Scopus Common Stock file demands for payment as dissenting
shares under the CGCL or (ii) the shares in question are subject to a
restriction on transfer imposed by Scopus or by any law or regulation.
Scopus is not aware of any restriction on transfer of any shares of
Scopus Common Stock except restrictions that may be imposed upon shareholders
who received shares in private transactions exempt from the registration
requirements of the Securities Act, restrictions on transfer imposed on certain
affiliates of Scopus in connection with the Merger and restrictions on transfer
imposed on the Scopus Voting Agreement Shareholders pursuant to the Scopus
Voting Agreements. Those shareholders who believe there is some such restriction
affecting their shares should consult with their own legal counsel as to the
nature and extent of any dissenters' rights they may have.
For a holder of Scopus Common Stock to exercise dissenters' rights,
the procedures to be followed under Chapter 13 of the CGCL include the following
requirements:
(1) The shareholder of record must have voted the shares against the
Merger. It is not sufficient to abstain from voting. However, the shareholder
may abstain as to part of his or her shares or vote part of those shares for the
Merger without losing the right to exercise dissenters' rights as to other
shares which were voted against the Merger.
(2) Any such shareholder who votes against the Merger, and who wishes
to have the shares that are being voted against the Merger purchased, must make
a written demand to have Scopus purchase those shares for cash at their fair
market value. The demand must include the information specified below and must
be received by Scopus not later than the date of the Meeting. Merely voting or
delivering a proxy directing a vote against the approval of the Merger does not
constitute a demand for purchase. A written demand is essential.
The written demand that the dissenting shareholder must deliver to
Scopus must:
(1) Be made by the person who was the shareholder of record on the
Scopus Record Date (or such shareholder's duly authorized representative) and
not by someone who is merely a beneficial owner of the shares and not by a
shareholder who acquired the shares subsequent to the Scopus Record Date;
(2) State the number and class of dissenting shares held of record by
the dissenting shareholder; and
(3) Include a demand that Scopus purchase the shares at the dollar
amount that the shareholder claims to be the fair market value of such shares on
the last trading day before the terms of the Merger were first announced,
excluding any appreciation or depreciation because of the proposed Merger but
adjusted for any stock split, reverse stock split or share dividend which
becomes effective thereafter. Scopus believes that this day is February 27,
1998. A shareholder may take the position in the written demand that a different
date is applicable. The shareholder's statement of fair market value constitutes
an offer by such dissenting shareholder to sell the shares to Scopus at such
price.
The written demand should be delivered to Scopus at the Scopus
Principal Offices, Attention: Chief Financial Officer.
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A shareholder may not withdraw a demand for payment without the
consent of Scopus. Under the terms of the CGCL, a demand by a shareholder is not
effective for any purpose unless it is received by Scopus (or any transfer agent
thereof).
Within ten days after the approval of the Merger by Scopus'
shareholders, Scopus must notify all holders of Dissenting Shares of the
approval and must offer all of such shareholders a cash price for their shares
which Scopus considers to be the fair market value of the shares. The notice
also must contain a brief description of the procedures to be followed under
Chapter 13 of the CGCL to dispute the price offered and attach a copy of the
relevant provisions of the CGCL in order for a shareholder to exercise the right
to have Scopus purchase his or her shares.
Within 30 days after the date on which the notice of the approval of
the Merger is mailed by Scopus to holders of Dissenting Shares, the
shareholder's certificates, representing any shares which the shareholder
demands be purchased, must be submitted to Scopus, at its principal office, or
at the office of any transfer agent, to be stamped or endorsed with a statement
that the shares are Dissenting Shares or to be exchanged for certificates of
appropriate denomination so stamped or endorsed. Upon subsequent transfer of
those shares, the new certificates will be similarly stamped, together with the
name of the original dissenting shareholder.
If Scopus and a holder of Dissenting Shares agree that the shares held
by such shareholder are eligible for dissenters' rights and agree upon the price
of such shares, such holder of Dissenting Shares is entitled to receive from
Scopus the agreed price with interest thereon at the legal rate on judgments
from the date of such agreement. Any agreement fixing the fair market value of
Dissenting Shares as between Scopus and the holders thereof must be filed with
the Secretary of Scopus at the address set forth below. Subject to certain
provisions of Section 1306 and Chapter 5 of the CGCL, payment of the fair market
value of the Dissenting Shares shall be made within 30 days after the amount has
been agreed upon or within 30 days after any statutory or contractual conditions
to the Merger are satisfied, whichever is later, subject to the surrender of the
certificate therefor, unless provided otherwise by agreement.
If Scopus and a holder of Dissenting Shares fail to agree on either
the fair market value of the shares or on the eligibility of the shares to be
purchased, then either such holder of Dissenting Shares or Scopus may file a
complaint for judicial resolution of the dispute in the superior court of the
proper county. The complaint must be filed within six months after the date on
which the respective notice of approval is mailed to Scopus shareholders. If a
complaint is not filed within six months, the shares will lose their status as
Dissenting Shares. Two or more holders of Dissenting Shares may join as
plaintiffs or be joined as defendants in such an action. If the eligibility of
the shares is at issue, the court must first decide that issue. If the fair
market value of the shares is in dispute, the court must determine, or shall
appoint one or more impartial appraisers to assist in its determination of, the
fair market value. The cost of the action will be assessed or apportioned as the
court considers equitable. If, however, the appraised value of the Dissenting
Shares exceeds the price offered by Scopus, Scopus must pay the costs.
Any demands, notices, certificates or other documents required to be
delivered to Scopus may be sent to the Scopus Principal Offices, Attention:
Chief Financial Officer.
NO SIEBEL APPRAISAL RIGHTS
Holders of Siebel Common Stock are not entitled to appraisal rights
under the DGCL because Siebel is not a constituent corporation to the Merger
under the DGCL.
RESALE OF SIEBEL COMMON STOCK
Siebel Common Stock issued in connection with the Merger will be
freely transferable, except that shares issued to any Scopus shareholder who is
a Scopus Affiliate or who becomes an affiliate of Siebel are subject to certain
restrictions on resale. An affiliate is defined generally as including, without
limitation, directors, certain executive officers and certain other persons who
control a company. Pursuant to the terms of the Reorganization Agreement,
Scopus has agreed that, prior to the date of the mailing of this Joint Proxy
Statement/Prospectus to the Scopus shareholders and the Siebel stockholders,
Scopus will deliver to Siebel Scopus Affiliate Agreements executed by the Scopus
Affiliates that prohibit the sale, transfer or other disposition of Siebel
Common Stock
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received by such Scopus Affiliates in the Merger, except under certain
circumstances, in order to comply with the requirements of certain federal
securities laws and to help ensure the Merger is treated as a pooling of
interest for accounting and financial reporting purposes. See "Approval of the
Merger and Related Transactions-Affiliate Agreements."
Pursuant to the terms of the Reorganization Agreement, Siebel has
agreed that, prior to the date of the mailing of this Joint Proxy
Statement/Prospectus to the Siebel stockholders and the Scopus shareholders,
Siebel will deliver to Scopus Siebel Affiliate Agreements executed by the Siebel
Affiliates that restrict the sale, transfer or other disposition of Siebel
Common Stock, except under certain circumstances, so as to help ensure that the
Merger will be accounted for as a pooling of interests. See "Approval of the
Merger and Related Transactions-Affiliate Agreements."
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THE REORGANIZATION AGREEMENT
GENERAL
The following is a summary of the material provisions of the
Reorganization Agreement, a copy of which is attached as Appendix A to this
Joint Proxy Statement/Prospectus and is incorporated herein by reference.
However, the following is not a complete statement of all provisions of the
Reorganization Agreement and related agreements. Statements made in this Joint
Proxy Statement/Prospectus with respect to the terms of the Reorganization
Agreement and such related agreements are qualified in their respective
entireties by reference to the more detailed information set forth in the
Reorganization Agreement and such related agreements. Capitalized terms used in
this summary but not defined in this Joint Proxy Statement/Prospectus shall have
the meaning ascribed to them in the Reorganization Agreement.
The Reorganization Agreement provides for the merger of Merger Sub
with and into Scopus. As a result of the Merger, Merger Sub will cease to exist,
Scopus will become a wholly owned subsidiary of Siebel and the former
shareholders of Scopus will become stockholders of Siebel. Scopus, as the
Surviving Corporation, will retain all of its separate corporate existence, with
all its purposes, objects, rights, privileges, powers and franchises unaffected
by the Merger. Merger Sub has been formed solely for the purpose of effecting
the Merger, and there will be no other activity in Merger Sub. The Merger will
become effective at the Effective Time, which shall be upon the filing of an
Agreement of Merger with the California Secretary of State or such later time as
may be specified in the Agreement of Merger. The Effective Time shall occur no
later than the second day after the satisfaction or waiver of all the conditions
to closing set forth in the Reorganization Agreement. It is currently
anticipated that the Effective Time will occur on or before May 29, 1998. There
can be no assurance, however, that the required regulatory approvals will be
obtained, that the other conditions to the Merger will be satisfied by such
date, or at all, or that the Reorganization Agreement will not be terminated.
See "-Conditions to the Merger."
MERGER CONSIDERATION
Scopus Common Stock. At the Effective Time, each share of Scopus
Common Stock then outstanding will be converted into the right to receive Siebel
Common Stock based on the Exchange Ratio. The Exchange Ratio is currently
0.7281 after having given effect to the 100% dividend paid to the Siebel
stockholders on March 20, 1998, and will be adjusted for any subsequent stock
split, stock dividend, reverse stock splits reclassification, recapitalization
or similar transaction.
No Fractional Shares. No fractional shares of Siebel Common Stock
will be issued in connection with the Merger, and no certificates for any such
fractional shares will be issued. In lieu of such fractional shares, any holder
of Scopus Common Stock (after aggregating all fractional shares of Siebel Common
Stock issuable to such holder) will, upon surrender of such holder's stock
certificate(s) representing Scopus Common Stock to the Exchange Agent, be paid
in cash the dollar amount (rounded to the nearest whole cent), without interest,
determined by multiplying such fraction by the closing price of a share of
Siebel Common Stock on Nasdaq on the "Closing Date" (as defined herein).
STOCK OPTIONS AND EMPLOYEE STOCK PURCHASE PLAN
Stock Options. At the Effective Time, all outstanding options with
respect to Scopus Common Stock under Scopus' 1991 Stock Option Plan and 1995
Directors Stock Option Plan (collectively, "Scopus Options") shall be converted
into and become rights with respect to Siebel Common Stock, and Siebel shall
assume each such option in accordance with the terms (as in effect as of the
date of the Reorganization Agreement) of the stock option plan under which it
was issued and the stock option agreement by which it is evidenced. From and
after the Effective Time, (i) each Scopus Option assumed by Siebel may be
exercised solely for shares of Siebel Common Stock, (ii) the number of shares of
Siebel Common Stock subject to each such Scopus Option shall be equal to the
number of shares of Scopus Common Stock subject to such Scopus Option
immediately prior to the Effective Time multiplied by the Exchange Ratio,
rounding down to the nearest whole share (with cash, less the applicable
exercise price, being payable for any fraction of a share), (iii) the per share
exercise price under each such Scopus Option shall be adjusted by dividing the
per share exercise price under such Scopus Option by the Exchange Ratio and
rounding up to the nearest cent and (iv) any restriction on the exercise of any
such Scopus Option shall continue in full force and
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effect and the term, exercisability, vesting schedule and other provisions of
such Scopus Option shall otherwise remain unchanged.
Employee Stock Purchase Plan. Pursuant to the terms of the
Reorganization Agreement, Siebel and Scopus shall mutually agree as to the
treatment of outstanding rights under Scopus Employee Stock Purchase Plan prior
to the Effective Time.
STOCK OWNERSHIP FOLLOWING THE MERGER
Based upon the number of shares of Scopus Common Stock issued and
outstanding as of the Scopus Record Date, an aggregate of approximately
_____________ shares of Siebel Common Stock will be issued to security holders
of Scopus. Based upon the number of shares of Siebel Common Stock issued and
outstanding as of the Siebel Record Date (assuming no exercise of outstanding
options or other rights to purchase Siebel Common Stock), the former holders of
Scopus Common Stock would hold and have voting power with respect to
approximately ____% of Siebel's total issued and outstanding shares after
consummation of the Merger.
CONVERSION OF SHARES; PROCEDURES FOR EXCHANGE OF CERTIFICATES
As soon as practicable after the Effective Time, the Exchange Agent
will mail to the registered holders of Scopus Common Stock (i) a letter of
transmittal and (ii) instructions for the use in effecting the surrender of the
Scopus Stock Certificates in exchange for certificates representing Siebel
Common Stock. Upon surrender of a Scopus Stock Certificate to the Exchange Agent
for exchange, together with a duly executed letter of transmittal and such other
documents as may reasonably be required by the Exchange Agent or Siebel, the
holder of such Scopus Stock Certificate shall be entitled to receive in exchange
therefor a certificate representing the whole number of shares of Siebel Common
Stock that such holder has the right to receive. No fractional shares of Siebel
Common Stock will be issued in connection with the Merger, and no certificates
for any such fractional shares will be issued. See "-Merger Consideration-No
Fractional Shares".
If any Scopus Stock Certificate has been lost, stolen or destroyed,
Siebel may require the owner of such lost, stolen or destroyed Scopus Stock
Certificate to provide an appropriate affidavit and to deliver a bond as
indemnity against any claim that may be made against the Exchange Agent, Siebel
or Scopus with respect to such Scopus Stock Certificate.
SCOPUS SHAREHOLDERS SHOULD NOT SURRENDER THEIR SCOPUS STOCK
CERTIFICATES FOR EXCHANGE UNTIL THEY RECEIVE A LETTER OF TRANSMITTAL FROM THE
EXCHANGE AGENT.
EFFECT ON CERTIFICATES
At the Effective Time, (i) all shares of Scopus Common Stock
outstanding immediately prior to the Effective Time will automatically be
canceled and retired and will cease to exist, and all holders of certificates
representing shares of Scopus Common Stock that were outstanding immediately
prior to the Effective Time will cease to have any rights as shareholders of
Scopus, and (ii) the stock transfer books of Scopus will be closed with respect
to all shares of Scopus Common Stock outstanding immediately prior to the
Effective Time. No further transfer of any such shares of Scopus Common Stock
will be made on such stock transfer books after the Effective Time. If, after
the Effective Time, a Scopus Stock Certificate is presented to the Exchange
Agent (or to Scopus or Siebel), such Scopus Stock Certificate will be canceled
and will be exchanged as provided above under the caption "-Conversion of
Shares; Procedure for Exchange of Certificates;" and "-Merger Consideration."
CORPORATE MATTERS
As of the Effective Time, the Articles of Incorporation of the
Surviving Corporation will be amended and restated to conform to the Articles of
Incorporation of Merger Sub as in effect immediately prior to the Effective Time
with the exception that the name of the Surviving Corporation shall be Scopus
Technology, Inc., and the Bylaws of the Surviving Corporation will be amended
and restated to conform to the Bylaws of the Merger Sub as in effect immediately
prior to the Effective Time. Immediately after the Effective Time, the directors
and officers of
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the Surviving Corporation shall be individuals to be mutually determined by
Siebel and Scopus prior to the Effective Time.
CONDITIONS TO THE MERGER
Siebel and Merger Sub. The obligations of Siebel and Merger Sub to
effect the Merger and otherwise consummate the transactions contemplated by the
Reorganization Agreement are subject to the satisfaction, at or prior to the
Closing of conditions, among others, to the following general effect:
(i) Each representation and warranty of Scopus contained in
Reorganization Agreement shall be true and correct on and as of the date of the
Reorganization Agreement and on and as of the Closing Date with the same force
and effect as if made on and as of the Closing Date except, (A) in each case, or
in the aggregate, as does not constitute a "Material Adverse Effect" (as defined
herein) on Scopus, (B) for changes contemplated by the Reorganization Agreement,
and (C) for those representations and warranties which address matters only as
of a particular date, which representations shall have been true and correct
except as does not constitute a Material Adverse Effect on Scopus as of such
particular date, (it being understood that, for purposes of determining the
accuracy of such representations and warranties, (i) subject to certain
exceptions, all "Material Adverse Effect" qualifications and other materiality
qualifications contained in such representations and warranties shall be
disregarded and (ii) any update of or modification to Scopus' disclosure
schedule delivered in connection with the Reorganization Agreement made or
purported to have been made after the date of the Reorganization Agreement shall
be disregarded).
(ii) Each covenant or obligation that Scopus is required to comply
with or to perform at or prior to the closing shall have been complied with and
performed in all material respects.
(iii) The Registration Statement shall have become effective in
accordance with the provisions of the Securities Act, and no stop order shall
have been issued by the Commission with respect to the Registration Statement.
(iv) The Reorganization Agreement and the Merger shall have been duly
approved by the necessary vote of the Scopus shareholders, and the issuance of
Siebel Common Stock in the Merger shall have been duly approved by the necessary
vote of the Siebel stockholders.
(v) Fewer than 10% of the outstanding shares of Scopus Common Stock
shall be Dissenting Shares.
(vi) Siebel shall have received the following agreements and
documents, each of which shall be in full force and effect: (A) Affiliate
Agreements from the Scopus Affiliates, except to the extent that any such
individual has died or has become incapacitated; (B) Principal Noncompetition
Agreements executed by certain Scopus shareholders, except to the extent that
any such individual has died or has become incapacitated; (C) a letter from
Coopers & Lybrand L.L.P., dated as of the Closing Date and addressed to Siebel,
updating a letter delivered to Siebel in connection with the filing of the
Registration Statement; (D) a statement from Scopus conforming to the
requirements of Section 1.897-2(h)(1)(i) of the United States Treasury
Regulations; (E) a letter from Coopers & Lybrand L.L.P., dated as of a date no
earlier than three days prior to the Closing Date, to the effect that Coopers &
Lybrand L.L.P. is not aware of any fact concerning Scopus that could preclude
Siebel from accounting for the Merger as a pooling of interests; (F) a letter
from KPMG Peat Marwick LLP, dated as of a date no earlier than three days prior
to the Closing Date, to the effect such firm concurs with the conclusion of
Siebel's management that Siebel may account for the Merger as a pooling of
interests; (G) a certificate executed on behalf of Scopus by its Chief Executive
Officer confirming that the conditions set forth in items (i), (ii), (iv) and
(vii) have been duly satisfied.
(vii) There shall have been no material adverse change in the
business, financial condition, operations or financial performance of Scopus or
any of its subsidiaries (the "Acquired Corporations") since the date of the
Reorganization Agreement other than any change in the generation of revenue (and
any corresponding change in the margins, profitability or financial condition of
the Acquired Corporations) resulting from the public announcement or pendency of
the Merger.
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(viii) Scopus shall have filed with the IRS a notification required
under Section 1.897-2(h)(2) of the United States Treasure Regulations.
(ix) The waiting period applicable to the consummation of the Merger
under the HSR Act shall have expired or been terminated.
(x) The shares of Siebel Common Stock to be issued in the Merger shall
have been authorized for listing on Nasdaq, subject to notice of issuance.
(xi) No temporary restraining order, preliminary or permanent
injunction or other order preventing the consummation of the Merger shall have
been issued by any court of competent jurisdiction and remain in effect, and
there shall not be any legislation or regulation enacted or deemed applicable to
the Merger that makes consummation of the Merger illegal.
(xii) There shall not be pending or threatened any action, suit or
litigation brought by the United States government or the European Community, or
any agency, commission, instrumentality, unit or body of the United States
Government or the European Community: (a) challenging or seeking to restrain or
prohibit the consummation of the Merger; (b) relating to the Merger and seeking
to obtain from Siebel or any of its subsidiaries any damages that may be
material to Siebel; (c) seeking to prohibit or limit in any material respect
Siebel's ability to vote, receive dividends with respect to or otherwise
exercise ownership rights with respect to the stock of the Surviving
Corporation; or (d) which would materially and adversely affect the right of
Siebel, the Surviving Corporation or any subsidiary of Siebel to own the assets
or operate the business of Scopus.
(xiii) Siebel shall have received certain audited financial
statements of Scopus for the year ended March 31, 1998 from the independent
auditors of Scopus.
Scopus. The obligations of Scopus to effect the Merger and otherwise
consummate the transactions contemplated by the Reorganization Agreement are
subject to the satisfaction, at or prior to the Closing of conditions, among
others, to the following general effect:
(i) Each representation and warranty of Siebel and Merger Sub
contained in Section 3 of the Reorganization Agreement shall be true and correct
on and as of the date of the Reorganization Agreement and on and as of the
Closing Date with the same force and effect as if made on and as of the Closing
Date, except, (A) in each case, or in the aggregate, as does not constitute a
Material Adverse Effect on Siebel and Merger Sub, (B) for changes contemplated
by the Reorganization Agreement and (C) for those representations and warranties
which address matters only as of a particular date, which representations shall
have been true and correct except as does not constitute a Material Adverse
Effect on Siebel and Merger Sub as of such particular date (it being understood
that, for purposes of determining the accuracy of such representations and
warranties, (A) subject to certain exceptions, all "Material Adverse Effect"
qualifications and other qualifications based on the word "material" or similar
phrases contained in such representations and warranties shall be and (ii) any
update of or modification to the Siebel disclosure schedule delivered in
connection with the Reorganization Agreement made or purported to have been made
after the date of the Reorganization Agreement shall be disregarded).
(ii) All of the covenants and obligations that Siebel and Merger Sub
are required to comply with or to perform at or prior to the Closing shall have
been complied with and performed in all material respects.
(iii) The Registration Statement shall have become effective in
accordance with the provisions of the Securities Act, and no stop order shall
have been issued by the Commission with respect to the Registration Statement.
(iv) This Agreement and the Merger shall have been duly approved by
the necessary vote of the Scopus shareholders, and the issuance of Siebel Common
Stock in the Merger shall have been duly approved by the necessary vote of the
Siebel stockholders.
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(v) Scopus shall have received the following agreements and documents,
each of which shall be in full force and effect: (A) Affiliate Agreements from
each of the affiliates of Siebel, except to the extent that any such individual
has died or has become incapacitated; (B) a legal opinion of Cooley Godward LLP,
dated as of the Closing Date and addressed to Siebel, to the effect that the
Merger will constitute a reorganization within the meaning of Section 368 of the
Code; (C) a legal opinion of Wilson Sonsini Goodrich & Rosati P.C., dated as of
the Closing Date, to the effect that the Merger will constitute a reorganization
within the meaning of Section 368 of the Code; (D) a letter from Coopers &
Lybrand L.L.P., dated as of a date no earlier than three days prior to the
Closing Date to the effect that Coopers & Lybrand L.L.P. is not aware of any
fact concerning Scopus that could preclude Siebel from accounting for the Merger
as a pooling of interests; (E) a letter from KPMG Peat Marwick LLP, dated as of
a date no earlier than three days prior to the Closing Date to the effect that
such firm concurs with Siebel's management's conclusion that Siebel may account
for the Merger as a pooling of interests; and (F) a certificate executed on
behalf of Siebel by an executive officer of Siebel, confirming that conditions
set forth in (i), (ii), (iii) and (vi) have been satisfied.
(vi) There shall have been no material adverse change in the business,
financial condition, operations or financial performance of Siebel since the
date of the Reorganization Agreement other than any change in the generation of
revenue (and any corresponding change in the margins, profitability or financial
condition of Siebel) resulting from the public announcement or pendency of the
Merger.
(vii) The waiting period applicable to the consummation of the Merger
under the HSR Act shall have expired or been terminated.
(viii) The shares of Siebel Common Stock to be issued in the Merger
shall have been authorized for listing on Nasdaq, subject to notice of issuance.
(ix) No temporary restraining order, preliminary or permanent
injunction or other order preventing the consummation of the Merger shall have
been issued by any court of competent jurisdiction and remain in effect, and
there shall not be any legislation or regulation enacted or deemed applicable to
the Merger that makes consummation of the Merger illegal.
For purposes of the Reorganization Agreement, an event, violation,
inaccuracy, circumstance or other matter will be deemed to have a Material
Adverse Effect on the Acquired Corporations if such event, violation,
inaccuracy, circumstance or other matter would have a material adverse effect on
(i) the business, financial condition, operations or financial performance of
the Acquired Corporations taken as a whole, or (ii) Siebel's ability to vote,
receive dividends with respect to or otherwise exercise ownership rights with
respect to the stock of the Surviving Corporation. An event, violation,
inaccuracy, circumstance or other matter will be deemed to have a "Material
Adverse Effect" on Siebel if such event, violation, inaccuracy, circumstance or
other matter would have a material adverse effect on the business, financial
condition, assets, liabilities, operations or financial performance of Siebel
and its subsidiaries taken as a whole.
REPRESENTATIONS AND WARRANTIES
The Reorganization Agreement contains certain representations and
warranties, including, without limitation, representations and warranties by
Scopus as to: (i) due organization and subsidiaries; (ii) the Scopus Articles of
Incorporation and the Scopus Bylaws; (iii) capitalization; (iv) filings with the
Commission and financial statements; (v) absence of certain changes; (vi) real
property, equipment and leaseholds; (vii) title to assets; (viii) receivables
and significant customers; (ix) proprietary assets; (x) material contracts; (xi)
year 2000 liabilities; (xii) compliance with legal requirements; (xiii)
governmental authorizations; (xiv) tax matters; (xv) employee and labor matters
and benefit plans; (xvi) environmental matters; (xvii) insurance; (xviii)
transactions with affiliates; (xix) legal proceedings and orders; (xx) the
authority and binding nature of the Reorganization Agreement and the
inapplicability of certain anti-takeover statutes; (xxi) the absence of existing
discussions or negotiations concerning other acquisition proposals; (xxii)
accounting matters; (xxiii) the vote required to approve the Merger and
Reorganization Agreement; (xxiv) non-contravention and consents; (xxv) the
receipt of a fairness opinion from Morgan Stanley; (xxvi) brokers, finders,
investment bankers or other fees or commissions; (xxvii) disclosure; and
(xxviii) customs policies.
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The Reorganization Agreement contains further representations and
warranties by Siebel and Merger Sub as to: (i) due organization, standing and
power to conduct business; (ii) Siebel's and Merger Sub's certificate and
articles of incorporation and bylaws; (iii) capitalization; (iv) filings with
the Commission and financial statements; (v) disclosure; (vi) absence of certain
changes; (vii) authority and binding nature of the Reorganization Agreement;
(viii) non-contravention and consents; (ix) proprietary assets; (x) material
contracts; (xi) compliance with legal requirements; (xii) tax matters; (xiii)
government authorizations (xiv) legal proceedings and orders; (xv) vote required
to approve the issuance of Siebel Common Stock pursuant to the Merger; (xvi)
valid issuance of the Siebel Common Stock to be issued pursuant to the Merger;
(xvii) accounting matters; and (xviii) receipt of a fairness opinion from NMS.
COVENANTS
Conduct of Scopus' Business. The Reorganization Agreement requires
that during the Pre-Closing Period, (i) Scopus shall use commercially reasonable
efforts to conduct its business and operations (A) in the ordinary course, (B)
in a commercially reasonable manner and (C) in compliance with all applicable
legislation and regulations, except to the extent that any failure to comply
with any applicable legislation or regulations would not have a Material Adverse
Effect on the Acquired Corporations; and (ii) Scopus shall (to the extent
requested by Siebel) cause its officers to report regularly to Siebel concerning
the status of Scopus' business.
During the Pre-Closing Period, Scopus shall not (without the prior
written consent of Siebel), and shall not permit any of the other Acquired
Corporations to:
(i) (A) declare, accrue, set aside or pay any dividend or make any
other distribution in respect of any shares of its capital stock, or (B)
repurchase, redeem or otherwise reacquire any shares of capital stock or other
securities other than the repurchase of unvested shares at cost and below the
then fair market value of Scopus Common Stock in connection with the termination
of an employee of an Acquired Corporation pursuant to any existing employee
plans and consistent with past practices;
(ii) sell, issue, grant or authorize the issuance or grant of (A)
any capital stock or other security, (B) any option, call, warrant or right to
acquire any capital stock or other security, or (C) any instrument convertible
into or exchangeable for any capital stock or other security (except that Scopus
may (i) issue Scopus Common Stock upon the valid exercise of Scopus Options
outstanding as of the date of this Agreement, (ii) grant Scopus Options to
employees hired after the date of this Agreement consistent with past practices
and subject to Siebel's consent not to be unreasonably withheld and (iii) grant
Scopus Options exercisable for an aggregate number of shares of Scopus Common
Stock not in excess of 200,000 shares, provided that such Scopus Options are
granted on an annual basis, at exercise prices not less than the fair market
value of Scopus Common Stock on the date of grant and in accordance with past
practices to employees who are employees of the Acquired Corporation as of the
date of this Agreement;
(iii) amend or waive any of its rights under, or accelerate the
vesting under, any provision of any of Scopus' stock option plans, any provision
of any agreement evidencing any outstanding stock option or any restricted stock
purchase agreement, or otherwise modify any of the terms of any outstanding
option, warrant or other security or any related contract;
(iv) amend or permit the adoption of any amendment to the Scopus
Articles of Incorporation or Scopus Bylaws or other charter or organizational
documents, or, subject to the other terms of the Reorganization Agreement,
effect or become a party to any merger, consolidation, share exchange, business
combination, recapitalization, reclassification of shares, stock split, reverse
stock split or similar transaction;
(v) form any subsidiary or acquire any equity interest or other
interest in any other entity (other than passive investments in equity interests
of publicly traded securities as part of Scopus' cash management program);
(vi) make any capital expenditures in excess of $1,500,000 in the
aggregate;
(vii) acquire the business of any entity;
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(viii) incur any indebtedness for borrowed money (other than: (A) in
connection with the financing of ordinary trade payables; (B) pursuant to
existing credit facilities; (C) in connection with leasing activities in the
ordinary course of business; or (D) for tax planning purposes in the ordinary
course of business) or guarantee any indebtedness of any person for borrowed
money, or issue or sell any debt securities or warrants or right to acquire debt
securities of any of the Acquired Corporations or guarantee any debt securities
of others.
(ix) establish, adopt or amend in any material respect any employee
benefit plan ("Plan"), pay any bonus except in accordance with the terms of
existing Plans or pursuant to commitments made prior to the date of this
Agreement, or make any profit-sharing or similar payment to, or increase the
amount of the wages, salary, commissions, fringe benefits or other compensation
or remuneration payable to, (A) any of its directors or executive officers, or
(B) with respect to non-executive officers and employees, other than normal
periodic increases consistent with past practices;
(x) grant any severance or termination pay to any officer or
employee except payments in amounts consistent with policies and past practices
or pursuant to written agreements outstanding, or policies existing, on the date
hereof and as previously disclosed in writing or made available to Siebel, or
adopt any new severance plan;
(xi) hire any new employee having an annual base salary in excess
of $100,000, or engage any consultant or independent contractor for the payment
of compensation in excess of $100,000 over the term of such engagement, provided
such term is at least for a period of one year;
(xii) transfer or license to any person or amend or modify in any
material adverse respect any rights (including without limitation distribution
rights) to the proprietary assets of the Acquired Corporations, or enter into
assignments of future patent rights, other than non-exclusive licenses and
distribution rights in the ordinary course of business and consistent with past
practice;
(xiii) sell, lease, license, encumber or otherwise dispose of any
properties or assets which are material, individually or in the aggregate, to
the business of Scopus, except in the ordinary course of business consistent
with past practice or lend funds to any third party (other than intracompany
loans and travel advances in the ordinary course of business);
(xiv) change any of its methods of accounting or accounting practices
in any respect other than as may be required under GAAP;
(xv) make any material election with respect to taxes adverse to the
Acquired Corporations;
(xvi) except in connection with the Reorganization Agreement or the
transactions contemplated hereby, file or settle any legal proceeding;
(xvii) enter into any agreement requiring the consent or approval of
any third party with respect to the Merger; or
(xviii) agree or commit to take any of the actions described in
clauses "(i)" through "(xvii)."
During the Pre-Closing Period, Scopus shall promptly notify Siebel in
writing of: (i) the discovery by Scopus of any event, condition, fact or
circumstance that has had or would reasonably be expected to have a Material
Adverse Effect on the Acquired Corporations. No notification so given to Siebel
shall limit or otherwise affect any representations, warranties, covenants or
obligations of Scopus contained in the Reorganization Agreement.
Conduct of Siebel's Business. During the Pre-Closing Period, Siebel
shall not (without the prior written consent of Scopus) (i) declare, accrue, set
aside or pay any extraordinary dividend or any other extraordinary distribution
in respect of any shares of its capital stock, (ii) repurchase, redeem or
otherwise reacquire any shares of its capital stock or other securities in an
extraordinary manner, (iii) amend or permit the adoption of any amendments to
the Siebel Certificate of Incorporation, (iv) become a party to any
recapitalization or (v) take any
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other action, if in such case the action would be materially adverse to the
shareholders of Scopus compared to the stockholders of Siebel.
Non-Solicitation. Pursuant to the Reorganization Agreement, Scopus
has agreed that it will not, directly or indirectly, and will not authorize or
permit any of the other Acquired Corporations or any representative of the
Acquired Corporations to, (i) solicit, initiate, encourage or induce the making,
submission or announcement of any Acquisition Proposal or take any action that
could be reasonably expected to lead to an Acquisition Proposal, (ii) furnish
any non-public information regarding any of the Acquired Corporations to any
person in connection with or in response to an Acquisition Proposal, (iii)
engage in discussions or negotiations with any person with respect to any
Acquisition Proposal, (iv) subject to certain exceptions, approve, endorse or
recommend any Acquisition Proposal or (v) enter into any letter of intent or
similar document or any contract contemplating or otherwise relating to any
Acquisition Transaction. Scopus is not prevented, however, from furnishing non-
public information regarding any of the Acquired Corporations to, entering into
a confidentiality agreement with or entering into discussions with any person in
response to a Superior Offer or engaging in discussions or negotiations with
respect thereto if (A) the Scopus Board of Directors determines in good faith,
after consultation with its outside counsel that such action is required in
order for the Scopus Board of Directors to comply with its fiduciary duties
under applicable law, (B) neither Scopus nor any representative of the Acquired
Corporations has breached its obligations concerning non-solicitation, (C) prior
to furnishing any nonpublic information to, or entering discussions with any
person, Scopus gives Siebel written notice of the identity of such person and of
Scopus' intention to furnish nonpublic information to, or enter into discussions
with such person and Scopus receives from such person an executed
confidentiality agreement containing customary limitation on the use and
disclosure of all nonpublic written and oral information furnished to such
person by Scopus, and (D) contemporaneously with furnishing any such nonpublic
information to such person, Scopus furnishes such nonpublic information to
Siebel (to the extent such nonpublic information has not been previously
furnished by Scopus to Siebel). In addition to the foregoing, Scopus shall (a)
provide Siebel with at least 24 hours prior notice (or such lesser prior notice
as provided to the members of the Scopus Board of Directors but in no event less
than eight hours) of any meeting of Scopus' Board of Directors at which Scopus'
Board of Directors is reasonably expected to consider a Superior Offer and (b)
provide Siebel with at least two business days or 48 hours prior written notice
of a meeting of Scopus' Board of Directors at which the Scopus Board of
Directors is reasonably expected to recommend a Superior Offer to its
shareholders and together with such notice, a copy of such Superior Offer.
Notwithstanding the foregoing, the Scopus Board of Directors may make a
statement of position to its shareholders as contemplated by rules 14-d-9 and
14e-2(a) promulgated under the Exchange Act or make any disclosure to the Scopus
shareholders if, in the good faith judgment of the majority of the members of
the Scopus Board of Directors, after consultation with independent legal
counsel, failure to so disclose would be inconsistent with applicable laws.
An "Acquisition Proposal" is any offer or proposal contemplating or
otherwise relating to any "Acquisition Transaction." An "Acquisition
Transaction" is any transaction or series of related transactions involving: (i)
any acquisition or purchase from Scopus by any person or "group" (as defined
under Section 13(d) of the Exchange Act and the rules and regulations
thereunder) of more than a 20% interest in the total outstanding voting
securities of Scopus or any of its material subsidiaries or any tender offer or
exchange offer that if consummated would result in any person or "group" (as
defined under Section 13(d) of the Exchange Act and the rules and regulations
thereunder) beneficially owning 20% or more of the total outstanding voting
securities of Scopus or any of its material subsidiaries or any merger,
consolidation, business combination or similar transaction involving Scopus
pursuant to which the shareholders of Scopus immediately preceding such
transaction hold less than 80% of the equity interests in the surviving or
resulting entity of such transaction; (ii) any sale, lease, exchange, transfer,
license, acquisition or disposition of more than 50% of the assets of Scopus; or
(iii) any liquidation or dissolution of Scopus.
A "Superior Offer" is an unsolicited, bona fide written offer made by
a third party to consummate any of the following transactions: (i) a merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving Scopus pursuant to which the shareholders of
Scopus immediately preceding such transaction hold less than 50% of the equity
interests in the surviving or resulting entity of such transaction; (ii) a sale
or other disposition by Scopus of assets (excluding inventory and used equipment
sold in the ordinary course of business) representing in excess of 50% of the
fair market value of Scopus' business immediately prior to such sale, or (iii)
the acquisition by any person or group (including by way of a tender offer or an
exchange offer or issuance by Scopus), directly or indirectly, of beneficial
ownership or a right to acquire beneficial ownership
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of shares representing in excess of 50% of the voting power of the then
outstanding shares of capital stock of Scopus, on terms that the Scopus Board of
Directors determines, in its reasonable judgment, after consultation with its
financial advisor, to be, if such offer is consummated, more favorable to the
Scopus' shareholders than the terms of the Merger; provided, however, that any
such offer shall not be deemed to be a Superior Offer if any financing required
to consummate the transaction contemplated by such offer is not committed and is
not likely in the judgment of the Scopus Board of Directors to be obtained by
such third party on a timely basis.
Meetings of Shareholders and Stockholders. Pursuant to the
Reorganization Agreement, Scopus will take all action necessary in accordance
with applicable law to convene and hold the Scopus Special Meeting to vote upon
the approval of the Reorganization Agreement and the Merger. Scopus' obligation
to call, give notice of, convene and hold the Scopus Special Meeting will not be
limited or otherwise affected by the commencement, disclosure announcement or
submission to Scopus of an Acquisition Proposal or the withdrawal, amendment or
modification of the recommendation of the Scopus Board of Directors with respect
to the Merger, except as is required by applicable law. Pursuant to the
Reorganization Agreement, Siebel will take all action necessary in accordance
with applicable law to convert and hold the Siebel Special Meeting to vote upon
the issuance of Siebel Common Stock in the Merger.
Neither the board of directors of Scopus or Siebel nor any committee
thereof is permitted to withdraw, amend or modify, or propose or resolve to
withdraw, amend or modify, in a manner adverse to the other party, its
recommendations in favor of the Reorganization Agreement and the Merger in the
case of Scopus, and the issuance of Siebel Common Stock in the care of Siebel.
However, notwithstanding the foregoing, the Scopus Board of Directors will not
be prevented from withholding, withdrawing, amending or modifying its unanimous
recommendation in favor of the Merger if (i) a Superior Offer is made to Scopus
and is not withdrawn, (ii) neither Scopus nor any of its representatives has
violated the covenants given by them concerning non-solicitation and (iii) the
Scopus Board of Directors concludes in good faith after consultation with
outside counsel, including a discussion of applicable legal standards, that, in
light of such Superior Offer, the withholding, withdrawal, amendment or
modification of such recommendation is required in order for the Scopus Board of
Directors to comply with its fiduciary obligations.
Conditions Relating to Stock Options and Employee Stock Purchase Plan.
For a description of the treatment of stock options to purchase Scopus Common
Stock and Scopus' Employee Stock Purchase Plan, see the caption above entitled
"-Stock Options and Employee Stock Purchase Plan."
Form S-8. Pursuant to the Reorganization Agreement, Siebel has agreed
to file a registration statement on Form S-8 for the shares of Siebel Common
Stock issuable with respect to assumed Scopus Options as soon as reasonably
practical after the Effective Time.
Accounting Treatment; Tax Free Reorganization. Each of Scopus and
Siebel has agreed (i) not to take any action during the Pre-Closing Period that
would adversely affect the ability of Siebel to account for the Merger as a
pooling of interests, (ii) to use all reasonable efforts to attempt to ensure
that none of its affiliates (as that term is used in Rule 145 promulgated under
the Securities Act) takes any action that could adversely affect the ability of
Siebel to account for the Merger as a pooling of interests and (iii) not to take
any action either prior to or after the Effective Time that would reasonably be
expected to cause the Merger to fail to qualify as a "reorganization" under
Section 368(a) of the Code.
Indemnification and Insurance. Pursuant to the Reorganization
Agreement, all rights to indemnification existing in favor of the persons
serving as directors or officers of Scopus as of the date of the Reorganization
Agreement for acts and omissions occurring prior to the Effective Time, as
provided in the Scopus Articles of Incorporation or Scopus Bylaws and as
provided in any indemnification agreements between Scopus and said directors and
officers, shall survive the Merger and Siebel shall cause the Surviving
Corporation to perform all of its obligations arising thereunder for a period of
not less than eight years from the Effective Time. The Reorganization Agreement
also provides that from the Effective Time until the third anniversary of the
date on which the Reorganization Agreement occurs, Siebel will cause the
Surviving Corporation to maintain in effect, for the benefit of the person
serving as directors and officers of Scopus as of the date of the Reorganization
Agreement with respect to acts or omissions occurring prior to the Effective
Time, the existing policy of directors' and officers' liability insurance
maintained by Scopus as of the date of the Reorganization Agreement (the
"Existing Policy"); provided,
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however, that (i) the Surviving Corporation may substitute for the Existing
Policy a policy or policies of comparable coverage, and (ii) the Surviving
Corporation shall not be required to pay an annual premium for the Existing
Policy (or for any substitute policies) in excess of 150% of the last annual
premium paid by Scopus for such insurance and shall be entitled to reduce the
coverage of the Existing Policy to the amount of coverage that can be obtained
for a premium equal to 150% of the last annual premium paid by Scopus.
Certain Other Covenants. The Reorganization Agreement contains
certain other covenants including covenants relating to: (i) information and
access; (ii) preparation and filing of the Registration Statement; (iii)
obtaining regulatory approvals; (iv) public announcements; (v) tax qualification
and opinion back-up certificates; (vi) accountants' letters; (vii) FIRPTA;
(viii) affiliate agreements; (ix) Key Employee Noncompetition Agreements; (x)
further action; and (xi) listing of the Siebel Common Stock to be issued
pursuant to the Merger on Nasdaq.
TERMINATION
The Reorganization Agreement may be terminated prior to the Effective
Time (whether before or after approval of the Reorganization Agreement and the
Merger by the Scopus shareholders);
(i) by mutual written consent duly authorized by the Boards of
Directors of the Siebel and Scopus;
(ii) by either Siebel or Scopus if the Merger shall not have been
consummated by September 1, 1998 (unless the failure to consummate the Merger is
substantially attributable to an action or failure to act on the part of the
party seeking to terminate the Reorganization Agreement and such action or
failure to act constitutes a material breach of the Reorganization Agreement);
(iii) by either Siebel or Scopus if a court of competent jurisdiction
or other governmental body shall have issued a final and non-appealable order,
decree or ruling, or shall have taken any other action, having the effect of
permanently restraining, enjoining or otherwise prohibiting the Merger;
(iv) by either Siebel or Scopus if (i) the Scopus Special Meeting
shall have been held (either on the date for which such Meeting was originally
scheduled or pursuant to any permissible adjournment or postponement) and (ii)
the Reorganization Agreement and the Merger shall not have been adopted and
approved at such meeting by the necessary vote of the Scopus shareholders
(provided that the right to terminate the Reorganization Agreement on this basis
shall not be available to Scopus where the failure to obtain shareholder
approval shall have been caused by the action or failure to act of Scopus and
such action or failure to act constitutes a material breach by Scopus of the
Reorganization Agreement);
(v) by Siebel or Scopus (at any time prior to the adoption and
approval of the Reorganization Agreement and the Merger by the necessary vote of
the Scopus shareholders) if a Triggering Event shall have occurred, provided
that the right of Scopus to terminate the Reorganization Agreement on this basis
shall not be exercisable until May 30, 1998;
(vi) by Siebel or Scopus (at any time prior to the adoption and
approval of the Reorganization Agreement and the Merger by the necessary vote of
the Scopus shareholders) if a Termination Event shall have occurred, provided
that the right of Scopus to terminate the Reorganization Agreement on this basis
shall not be exercisable until May 30, 1998;
(vii) by either Siebel or Scopus if (i) the Siebel Special Meeting
shall have been held (either on the date for which such meeting was originally
scheduled or pursuant to any permissible adjournment or postponement) and (ii)
issuance of the Siebel Common Stock in the Merger shall not have been approved
at such meeting by the necessary vote of the Siebel stockholders (provided that
the right to terminate the Reorganization Agreement on this basis shall not be
available to Siebel where the failure to obtain Siebel stockholder approval
shall have been caused by the action or failure to act of the Siebel and such
action or failure to act constitutes a material breach by the Siebel of the
Reorganization Agreement);
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(viii) by Siebel if any of Scopus' representations and warranties
contained in the Reorganization Agreement shall be or shall have become
materially inaccurate, or if any of Scopus' covenants contained in the
Reorganization Agreement shall have been breached, in either case such that
certain of the conditions precedent to Closing would not be satisfied as of the
time of such breach or as of the time such representation or warranty shall have
become untrue; provided, however, that if an inaccuracy in Scopus'
representations and warranties or a breach of a covenant by Scopus is curable by
Scopus prior to September 1, 1998 and Scopus is continuing to exercise all
reasonable efforts to cure such inaccuracy or breach, then Siebel may not
terminate the Agreement on this basis on account of such inaccuracy or breach;
or
(ix) by Scopus if any of Siebel's representations and warranties
contained in the Reorganization Agreement shall be or shall have become
materially inaccurate, or if any of Siebel's covenants contained in the
Reorganization Agreement shall have been breached, in either case such that that
certain of the conditions precedent to Closing would not be satisfied as of the
time of such breach or as of the time such representation or warranty shall have
become untrue; provided, however, that if an inaccuracy in Siebel's
representations and warranties or a breach of a covenant by Siebel is curable by
Siebel prior to September 1, 1998 and Siebel is continuing to exercise all
reasonable efforts to cure such inaccuracy or breach, then Scopus may not
terminate the Reorganization Agreement on this basis on account of such
inaccuracy or breach.
A "Triggering Event" shall be deemed to have occurred if: (i) Scopus
Board of Directors shall for any reason have withdrawn or shall have amended or
modified in a manner adverse to Siebel its unanimous recommendation in favor of,
the adoption and approval of the Reorganization Agreement or the approval of the
Merger; (ii) Scopus shall have failed to include in this Joint Proxy
Statement/Prospectus the unanimous recommendation of the Scopus Board of
Directors in favor of the adoption and approval of the Agreement and the
approval of the Merger; (iii) the Scopus Board of Directors fails to reaffirm
its unanimous recommendation in favor of the adoption and approval of the
Agreement and the approval of the Merger within ten business days after Siebel
requests in writing that such recommendation be reaffirmed at any time following
the public announcement of an Acquisition Proposal; (iv) the Scopus Board of
Directors shall have approved or publicly recommended any Acquisition Proposal;
(v) Scopus shall have entered into any letter of intent of similar document or
any contract accepting any Acquisition Proposal; or (vi) a tender or exchange
offer relating to securities of Scopus shall have been commenced by a person
unaffiliated with Siebel and Scopus shall not have sent to its securityholders
pursuant to Rule 14e-2 promulgated under the Securities Act, within ten business
days after such tender or exchange offer is first published sent or given, a
statement disclosing that Scopus recommends rejection of such tender or exchange
offer.
A "Termination Event" shall be deemed to occur if Scopus shall not
have used reasonable efforts to hold the Scopus Special Meeting as promptly as
practicable and in any event within the later of (i) 45 days after the
Registration Statement is declared effective under the Securities Act or (ii)
ten days after any amendments or supplement to this Joint Proxy
Statement/Prospectus are mailed to shareholders of Scopus.
EXPENSES AND TERMINATION FEES
Pursuant to the Reorganization Agreement, all fees and expenses
incurred in connection with the Reorganization Agreement and the transactions
contemplated by the Reorganization Agreement shall be paid by the party
incurring such expenses, whether or not the Merger is consummated; provided,
however, that Siebel and Scopus shall share equally all fees and expenses, other
than attorneys' fees, incurred in connection with the filing, printing and
mailing of the Registration Statement and this Joint Proxy Statement/Prospectus
and any amendments or supplements thereto.
If the Reorganization Agreement is terminated by Siebel or Scopus
pursuant to item (v) under the caption "-Termination" above, then Scopus shall
pay to Siebel, in cash, a nonrefundable fee (the "Termination Fee") equal to the
product of (i) the "Termination Fee Per Share" (as defined herein) and (ii) the
"Fully Diluted Share Amount" (as defined herein), within three days of such
termination. The "Termination Fee Per Share" shall be equal to the product of
(i) 0.025 multiplied by the Exchange Ratio and (ii) the average of the closing
sales prices of a share of Siebel Common Stock as reported on Nasdaq for the ten
trading days ending on and including the second trading day prior to the date of
termination. The "Fully Diluted Share Amount" shall be equal to the sum of (i)
the aggregate number of shares of Scopus Common Stock outstanding as of February
27, 1998 and (ii) the aggregate
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number of shares of Scopus Common Stock issuable upon exercise of all
outstanding Scopus Options (based on the treasury method) as of February 27,
1998.
If the Reorganization Agreement is terminated by Scopus or Siebel
pursuant to item (iv) under the caption "-Termination" above and (i) a Scopus
Acquisition is consummated or (ii) Scopus shall enter into a definitive
agreement providing for a Scopus Acquisition, in either case at any time prior
to the first anniversary of the date of the Reorganization Agreement, Scopus
shall pay to Siebel the Termination Fee contemporaneously with the earlier of
(i) the consummation of such Scopus Acquisition and (ii) the public announcement
by Scopus of its entry into a definitive agreement providing for a Scopus
Acquisition.
A "Scopus Acquisition" shall mean any of the following transactions
(other than the transactions contemplated by the Reorganization Agreement): (i)
a merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving Scopus pursuant to which the
shareholders of Scopus immediately preceding such transaction hold less than 50%
of the aggregate equity interests in the surviving or resulting entity of such
transaction or (ii) a sale or other disposition by Scopus of assets (excluding
inventory and used equipment sold in the ordinary course of business)
representing in excess of 50% of the aggregate fair market value of Scopus'
business immediately prior to such sale.
If the Reorganization Agreement is terminated by Siebel or Scopus
pursuant to item (vii) under the caption "-Termination" above, then Siebel shall
pay to Scopus $12,600,000 in cash within three days of such termination.
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SCOPUS PRINCIPAL SHAREHOLDERS
The following table sets forth certain information, based on review of
information on file with the Commission and Scopus stock records, with respect
to beneficial ownership of Scopus' voting stock as of December 31, 1997, (i)
by each person (or group of affiliated persons) who is known by Scopus to own
beneficially more than five percent of Scopus' voting stock, (ii) by each of
Scopus' directors, (iii) by the Chief Executive Officer of Scopus and the
three other most highly compensated executive officers of Scopus whose total
annual salary and bonus exceeds $100,000 (based on compensation for the fiscal
year ending March 31, 1998), and (iv) by all directors and executive officers
as a group. Except as indicated in the footnotes to this table, the persons
named in the table have sole voting and investment power with respect to all
shares of Scopus Common Stock shown as beneficially owned by them, subject to
community property laws where applicable.
<TABLE>
<CAPTION>
NUMBER OF
BENEFICIAL OWNER SHARES PERCENT OWNERSHIP
- ------------------------------------------------------------------------------ ------------ -----------------
<S> <C> <C>
Ori Sasson (1)(2)............................................................. 1,799,062 8.74%
Michele L. Axelson (1)........................................................ 72,658 0.35%
A. Aaron Omid (1)(3).......................................................... 1,170,750 5.69%
Jeffrey G. Bork (1)........................................................... 69,296 0.34%
Sharam Sasson (4)(5).......................................................... 1,201,500 5.84%
Bahram Nour-Omid (1)(6)....................................................... 1,194,118 5.80%
General Atlantic Partners, LLC (7)............................................ 3,224,211 15.66%
3 Pickwick Plaza...........................................................
Greenwich, CT 06830........................................................
J. Michael Cline...........................................................
Christopher R. Gibbons (8).................................................... -- *
Ronald Abelmann (9)........................................................... -- *
Max D. Hopper (10)(11)........................................................ 19,218 0.09%
Massachusetts Financial Services.............................................. 2,070,800 10.10%
All executive officers and directors as a group (13 persons) (12)............. 5,582,810 27.12%
</TABLE>
- -------------------
* Represents less than 1%.
(1) The shareholder's address is c/o Scopus Technology, Inc., Suite 700, 1900
Powell Street, Emeryville, CA 94608.
(2) Includes 435,000 shares subject to options held by General Atlantic
Partners, LLC ("GAP LLC") or affiliates thereof and 170,312 shares issuable
upon the exercise of options held by Mr. Ori Sasson which are exercisable
within 60 days of March 31, 1998. Also includes 1,102,500 shares held by
Mr. Ori Sasson and Ms. Susan Sasson as trustees of their own benefit and
525,000 shares held in trust by Mr. Ori Sasson as trustee for the benefit
of Mr. Sharam Sasson's minor children. Excludes 525,000 shares held in
trust for the benefit of Mr. Ori Sasson's minor children. Mr. Sharam Sasson
is the trustee of such trust and Mr. Ori Sasson disclaims beneficial
ownership of such shares.
(3) Includes 435,000 shares subject to options held by GAP LLC or affiliates
thereof.
(4) The shareholder's address is c/o Extensity, Inc., 2200 Powell St., Suite
400, Emeryville, CA 94608.
(5) Includes 435,000 shares subject to options held by GAP LLC or affiliates
thereof. Also includes 676,500 shares held in trust by Mr. Sharam Sasson
and Ms. Fariba Sasson as trustees of their own benefit and 525,000 shares
held in trust by Mr. Sharam Sasson as trustee for the benefit of Mr. Ori
Sasson's minor children. Excludes 525,000 shares held in trust for the
benefit of Mr. Sharam Sasson's minor children. Mr. Ori Sasson is the
trustee of such trust and Mr. Sharam Sasson disclaims beneficial ownership
of such shares.
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(6) Includes 435,000 shares subject to options held by GAP LLC or affiliates
thereof. Excludes 675,000 shares held in trust for the benefit of Dr.
Nour-Omid's minor children. Mr. Iraj Barkohani is the trustee of such
trust and Dr. Nour-Omid disclaims beneficial ownership of such shares.
(7) Includes 1,291,069 shares held by General Atlantic Partners 13, L.P. and
121,429 shares held by GAP Coinvestment Partners, L.P. Includes 1,800,000
shares transferable to GAP LLC or affiliates thereof upon the exercise of
options held by partnerships affiliated with GAP LLC. The general partner
of General Atlantic Partners 13, L.P. is GAP LLC, a Delaware limited
liability company. The managing members of GAP LLC are Steven A. Denning,
David C. Hodgson, Stephen P. Reynolds, J. Michael Cline, William O. Grabe
and William E. Ford. The same individuals are the general partners of GAP
Coinvestment Partners, L.P. Mr. Cline disclaims beneficial ownership of
shares owned by General Atlantic Partners 13, L.P., GAP Coinvestment
Partners, L.P. and the other GAP partnerships affiliated with GAP LLC
except to the extent of his pecuniary interest therein.
(8) The shareholder's address is c/o Microsoft, 1 Microsoft Way, Redmond, WA
98052.
(9) The shareholder's address is c/o WindRiver Systems, 1010 Atlantic Avenue,
Alameda, CA 94501.
(10) The shareholder's address is 1950 Stemmons Freeway, Suite 5001, Dallas, TX
75207.
(11) Includes 11,718 shares issuable upon the exercise of options held by Mr.
Hopper which are exercisable within 60 days of March 31, 1997.
(12) Includes 299,216 shares issuable upon the exercise of options which are
exercisable within 60 days of March 31, 1997 and 930,000 shares
transferable to GAP LLC or affiliates thereof from shareholders of Scopus
who are not officers or directors upon the exercise of options held by
partnerships affiliated with GAP LLC.
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COMPARISON OF SHAREHOLDERS' RIGHTS
In connection with the Merger, the Scopus shareholders will be
converting their shares of Scopus Common Stock into shares of Siebel Common
Stock. Siebel is a Delaware corporation and Scopus is a California corporation,
and the Siebel Certificate of Incorporation and the Siebel Bylaws differ from
the Scopus Articles of Incorporation and the Scopus Bylaws in several
significant respects. Because of the differences between the DGCL and the CGCL,
and the differences in the charter documents of Siebel and Scopus, the rights of
a holder of Siebel Common Stock differ from the rights of a holder of Scopus
Common Stock.
Below is a summary of some of the important differences between the
DGCL and the CGCL and the charter documents of Siebel and Scopus. It is not
practical to summarize all of such differences in this Joint Proxy
Statement/Prospectus, but some of the principal differences which could
materially affect the rights of shareholders include the following:
SIZE OF THE BOARD OF DIRECTORS
In accordance with the DCGL, the Siebel Certificate of Incorporation
states that the number of directors will be set exclusively by the Siebel Board
of Directors and authorizes the Siebel Board of Directors to change the number
by resolution. The number of directors of Siebel is currently fixed at six.
The Siebel Board of Directors acting without stockholder approval may change
such number.
Under the CGCL, although changes in the number of directors must in
general be approved by the shareholders, the board of directors may fix the
exact number of directors within a stated range set forth in the articles of
incorporation or bylaws, if the stated range has been approved by the
shareholders. The Scopus Bylaws, permit the Scopus Board of Directors to adjust
the size of the Board from a minimum of five directors to a maximum of eight.
The current number of directors is five.
CLASSIFIED BOARD OF DIRECTORS
A classified board is one in which a certain number, but not all, of
the directors are elected on a rotating basis each year. The DGCL permits, but
does not require, a classified board of directors, pursuant to which the
directors can be divided into as many as three classes with staggered terms of
office, with only one class of directors standing for election each year. The
Siebel Certificate of Incorporation provides for a classified board of directors
with three classes of directors.
Under the CGCL, directors generally must be elected annually; however,
as a "listed corporation" (shares of Scopus Common Stock are traded on Nasdaq)
Scopus is permitted to adopt a classified board. However, the Scopus Bylaws do
not provide for a classified board of directors. The Scopus Articles of
Incorporation provide that directors shall be elected at each annual
shareholders meeting for a term of one year.
CUMULATIVE VOTING
In an election of directors under cumulative voting, each share of
stock normally having one vote is entitled to a number of votes equal to the
number of directors to be elected. A shareholder may then cast all such votes
for a single candidate or may allocate them among as many candidates as the
shareholder may choose. Under the DGCL, cumulative voting in the election of
directors is not available unless specifically provided in the certificate of
incorporation. The Siebel Certificate of Incorporation does not provide for
cumulative voting.
In contrast, under the CGCL and the Scopus Bylaws, any shareholder is
entitled to cumulate his or her votes in the election of directors upon proper
notice of his or her intention to do so.
REMOVAL OF DIRECTORS
Under the DGCL, if a corporation has a classified board, the
stockholders may remove a director only for cause, unless the certificate of
incorporation provides otherwise. The Siebel Certificate of Incorporation and
the
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Siebel Bylaws provide that any and all directors may only be removed with cause
by a majority vote of the stockholders entitled to vote.
Under the CGCL, any director or the entire board of directors may be
removed, with or without cause, if the removal is approved by the affirmative
vote of a majority of the outstanding shares entitled to vote; however, no
director of a corporation may be removed if the number of votes cast against
removal would be sufficient to elect the director under cumulative voting at an
election at which the same total number of votes were cast and the entire number
of directors authorized at the time of the director's most recent election were
then being elected.
FILLING VACANCIES ON THE BOARD OF DIRECTORS
Under the DCGL, vacancies and newly created directorships may be
filled by a majority of the directors then in office (even though less than a
quorum) unless otherwise provided in the certificate of incorporation or bylaws
(and unless the certificate of incorporation directs that a particular class of
stock is to elect such director, in which case any other directors elected by
such class, or a sole remaining director so elected, may fill such vacancy.
Under the Siebel Certificate of Incorporation and Siebel Bylaws, only a majority
of directors then in offices (even though less than a quorum) may fill any newly
created directorship on the Siebel Board of Directors (unless the Siebel Board
of Directors determines by resolution that the newly created directorship shall
be filled by the stockholders).
Under the CGCL, any vacancy on the board of directors (other than one
created by removal of a director) may be filled by the unanimous written consent
of the directors then in office, by the affirmative vote of a majority of the
directors at a meeting held pursuant to notice or waivers of notice or by a sole
remaining director. A vacancy created by removal of a director may be filled by
the board only if the board is so authorized. The Scopus Bylaws allow a vacancy
(other than one created by removal of a director) to be filled by the remaining
members of the Scopus Board of Directors.
INTERESTED DIRECTOR TRANSACTIONS
Under both the DGCL and CGCL, certain contracts or transactions in
which one or more of a corporation's directors has an interest are not void or
voidable because of such interest, provided that certain conditions, such as
obtaining the required approval and fulfilling the requirements of good faith
and full disclosure are met. Under the DGCL and CGCL the conditions are similar
in that either (i) the shareholders or the disinterested directors must approve
any such contract or transaction after the full disclosure of material facts,
and in California in the case of board approval, the contract or transaction
must have been "just and reasonable" to the corporation, or (ii) the contract or
transaction must have been just and reasonable (in California) or fair (in
Delaware) as to the corporation at the time it was approved.
Under the CGCL, if shareholder approval is sought, the interested
director is not entitled to vote his shares with respect to any action regarding
such contract or transaction. If board approval is sought, the contract or
transaction must be approved by a majority vote of a quorum of the directors,
without counting the vote of any interested directors (except that uninterested
directors may be counted for purposes of establishing a quorum).
Under the DGCL, if board approval is sought, the contract or
transactions must be approved by a majority of the disinterested directors (even
though less than a quorum).
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Siebel and Scopus provide for similar indemnification of directors,
officers and employees. Siebel's Certificate of Incorporation, the Scopus
Articles of Incorporation and both companies' Bylaws provide that such
corporation shall, to the maximum extent and in the manner permitted by the law,
indemnify each of its directors, officers and employees against expenses,
judgments, fines, settlements, and other amounts actually and reasonably
incurred in connection with any proceeding, arising by reason of the fact that
such person is or was an agent of the corporation.
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Under both the DGCL and the CGCL, other than an action brought by or
in the right of the corporation, such indemnification is available if it is
determined that the proposed indemnitee acted in good faith and in a manner he
or she reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceedings, had no
reasonable cause to believe his or her conduct was unlawful. In actions brought
by or in the right of the corporation, such indemnification is limited to
expenses actually and reasonably incurred and permitted only if the indemnitee
acted in good faith and in a manner he or she reasonably believed to be in or
not opposed to the best interests of the company, except that no indemnification
may be made in respect of any claim, issue or matter as to which such person is
adjudged to be liable to the corporation, unless and only to the extent that the
court in which the action was brought determines that, despite the adjudication
of liability but in view of all the circumstances of the case, the person is
fairly and reasonably entitled to indemnity for such expenses which the court
deems proper. To the extent that the proposed indemnitee has been successful in
defense of any action, suit or proceeding, he must be indemnified against
expenses actually and reasonably incurred by him in connection with the action.
AMENDMENTS TO THE CERTIFICATE OF INCORPORATION AND ARTICLES OF INCORPORATION
Under the DGCL, a corporation's certificate of incorporation can be
amended by the affirmative vote of the board of directors and approved by the
affirmative vote of the holders of a majority of the outstanding shares entitled
to vote thereon, unless the certificate of incorporation requires the vote of a
larger portion of the shares. The Siebel Certificate of Incorporation requires
approval by 66 2/3% of the outstanding shares entitled to vote in order to amend
certain provisions of the Siebel Certificate of Incorporation relating to the
election and removal of directors, amendment of the Siebel Bylaws or Siebel
Certificate of Incorporation, actions by stockholders, the calling of special
meetings and indemnification of directors.
Under the CGCL, a corporation's articles of incorporation can be
amended by the affirmative vote of the majority of the board of directors of the
corporation and of the holders of a majority of the outstanding shares entitled
to vote, unless the corporation's articles of incorporation require the vote of
a larger portion of the shares. The Scopus Articles of Incorporation do not
require a larger percentage affirmative vote than a majority of the shares
entitled to vote thereon.
AMENDMENT OF BYLAWS
Under the Siebel Certificate of Incorporation and Siebel Bylaws, the
stockholders of Siebel may alter, amend or repeal the Siebel Bylaws by a vote of
at least 66 2/3% of the outstanding shares entitled to vote thereon. Under the
Siebel Certificate of Incorporation and Siebel Bylaws, the Siebel Board of
Directors may amend the Siebel Bylaws or enact other bylaws by a majority vote.
Under the Scopus Bylaws, the shareholders of Scopus may alter, amend
or repeal the Scopus Bylaws by a majority vote of the outstanding shares
entitled to vote. The Scopus Bylaws also authorize the Scopus Board of Directors
to alter, amend or repeal the Scopus Bylaws. Under the CGCL, an amendment to the
bylaws reducing the minimum number of directors below five cannot be adopted if
the votes against the amendment exceed 16 2/3% of the outstanding shares
entitled to vote thereon.
POWER TO CALL SPECIAL SHAREHOLDERS' MEETING; ACTION BY CONSENT
Under the DGCL, a special meeting of stockholders may be called by the
board of directors or by any other person authorized to do so in the certificate
of incorporation or the bylaws. The Siebel Certificate of Incorporation and the
Siebel Bylaws provide that special meetings of stockholders may be called only
by the Chairman of the Siebel Board of Directors, the Chief Executive Officer,
or by a majority of the Siebel Board of Directors. The Siebel Certificate of
Incorporation provides that any action taken by stockholders must be effected at
an annual or special meeting and may not be effected by written consent without
a meeting.
Under the CGCL, a special meeting of shareholders may be called by the
board of directors, the Chairman of the board of directors, the President, or by
one or more shareholders holding ten percent or more of the votes entitled to
vote thereon. In addition, the Scopus Bylaws provide that any action which may
be taken at any annual or
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special meeting of shareholders may be taken without a meeting if a consent in
writing is signed by the holders of the requisite number of outstanding shares
entitled to vote thereon. In the case of the election of Scopus directors (other
than an election to fill a vacancy that has not been filled by the directors),
however, such consent shall be effective only if signed by the holders of all
outstanding shares entitled to vote for the election of directors.
INSPECTION OF SHAREHOLDERS' LIST
Both the DGCL and the CGCL allow any shareholder to inspect the
shareholders' list for a purpose reasonably related to such person's interest as
a shareholder. The CGCL provides, in addition, an absolute right to inspect and
copy the corporation's shareholders' list by a person or persons holding 5% or
more of a corporation's outstanding voting shares, or any shareholder or
shareholders holding one percent 1% or more of such shares who has filed certain
documents with the Commission relating to the election of directors. The DGCL
does not provide for any such absolute right of inspection.
DIVIDENDS AND REPURCHASES OF SHARES
The DGCL permits a corporation, unless otherwise restricted by its
certificate of incorporation, to declare and pay dividends out of its surplus
or, if there is no surplus, out of net profits for the fiscal year in which the
dividend is declared or for the preceding fiscal year as long as the amount of
capital of the corporation is not less than the aggregate amount of the capital
represented by the issued and outstanding stock of all classes having a
preference upon the distribution of assets. The Siebel Certificate of
Incorporation does not contain any such restrictions on Siebel's ability to
declare and pay dividends. In addition, the DGCL generally provides that a
corporation may redeem or repurchase its shares only if such redemption or
repurchase would not impair the capital of the corporation. The ability of a
Delaware corporation to pay dividends on, or to make repurchases or redemptions
of, its shares is dependent on the financial status of the corporation standing
alone and not on a consolidated basis. In determining the amount of surplus of a
Delaware corporation, the assets of the corporation, including stock of
subsidiaries owned by the corporation, must be valued at their fair market value
as determined by the board of directors, regardless of their historical book
value.
Under the CGCL, a corporation may not make any distribution (including
dividends, whether in cash or other property, and repurchases of its shares)
unless either the corporation's retained earnings immediately prior to the
proposed distribution equal or exceed the amount of the proposed distribution
or, immediately after giving effect to such distribution, the corporation's
assets (exclusive of goodwill, capitalized research and development expenses and
deferred charges) would be at least equal to 1 1/4 times its liabilities (not
including deferred taxes, deferred income and other deferred credits), and the
corporation's current assets, as defined, would be at least equal to its current
liabilities or (1 1/4 times its current liabilities if the average pre-tax and
pre-interest earnings for the preceding two fiscal years were less than the
average interest expenses for such years). Such tests are applied to California
corporations on a consolidated basis. Under the CGCL, there are certain
exceptions to the foregoing rules for repurchases of shares including in
connection with certain rescission actions or pursuant to certain employee stock
plans.
APPROVAL OF CERTAIN CORPORATE TRANSACTIONS
Under both the DGCL and the CGCL, with certain exceptions, any merger,
consolidation or sale, lease or exchange of all or substantially all of the
assets must be approved by the board of directors and by the affirmative vote of
a majority of the outstanding shares entitled to vote. Under the CGCL, similar
board and shareholder approval is also required in connection with certain
additional acquisition transactions.
BUSINESS COMBINATION FOLLOWING A CHANGE OF CONTROL
The DGCL prohibits certain business combinations between a Delaware
corporation, the shares of which are listed on a national securities exchange,
and an "interested shareholder" for a period of three years following the time
that such person became an "interested shareholder," without board approval,
unless certain conditions are met and unless the certificate of incorporation of
the corporation contains a provision expressly electing not to be governed by
such provisions. The Siebel Certificate of Incorporation does not contain such
an election.
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The CGCL does not contain an analogous law. However, the CGCL does
provide that (i) in connection with a sale of all or substantially all of the
assets of a corporation where the buyer is in control of or under common control
with the seller (control being ownership of shares possessing more than fifty
percent of the voting power), the principal terms of the sale must be approved
by at least 90% of the voting power unless the sale is in consideration of
nonredeemable common shares of the purchasing corporation or its parent and (ii)
in connection with a merger where one constituent corporation or its parent owns
more than 50% of the voting power of another constituent corporation (but less
than 90% of the voting power of each class) the common stock of a disappearing
corporation may be converted only into nonredeemable common shares of the
surviving corporation or parent unless all of the shareholders of the class
consent or the transaction is determined to be fair by the California
Commissioner of Corporations.
SHAREHOLDER DERIVATIVE SUITS
Under the DCGL, a stockholder may only bring a derivative action on
behalf of the corporation if the stockholder was a stockholder of the
corporation at the time of the transaction in question or his or her stock
thereafter devolved upon him or her by operation of law. The CGCL provides that
a shareholder bringing a derivative action on behalf of a corporation need not
have been a shareholder at the time of the transaction in question, provided
that certain tests are met. The CGCL also provides that the corporation or the
defendant in a derivative suit may make a motion to the court for an order
requiring the plaintiff shareholder to furnish a security bond. Delaware does
not have a similar bonding requirement.
APPRAISAL RIGHTS
Under the DGCL and the CGCL, a shareholder of a corporation
participating in certain major corporate transactions may, under varying
circumstances, be entitled to appraisal rights pursuant to which such
shareholder may receive cash in the amount of the fair market value of the
shares held by such shareholder (as determined by a court or by agreement of the
corporation and the shareholder) in lieu of the consideration such shareholder
may otherwise receive in the transaction. The limitations on the availability of
appraisal rights under the DGCL are different from those under the CGCL.
Under the DGCL, appraisal rights are not available to: (i)
stockholders with respect to a merger or consolidation by a corporation, the
shares of which are either listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or are held of
record by more than 2,000 holders if such stockholders receive only shares of
the surviving corporation or shares of any other corporation which are either
listed on a national securities exchange or designated as a national market
system security on an interdealer quotation system by the National Association
of Securities Dealers, Inc. or are held of record by more than 2,000 holders; or
(ii) stockholders of a corporation surviving a merger if no vote of the
stockholders of the surviving corporation is required to approve the merger
because, among other things, the number of shares to be issued in the merger
does not exceed 20% of the shares of the surviving corporation outstanding
immediately prior to the merger, and if certain other conditions are met.
Shareholders of a California corporation whose shares are listed on a
national securities exchange or on a list of over-the-counter margin stocks
issued by the Board of Governors of the Federal Reserve System generally do not
have appraisal rights unless the holders of at least 5% of the class of
outstanding shares claim the right. See "Rights of Scopus Dissenting
Shareholders." Appraisal rights are unavailable, however, if the shareholders of
a corporation or the corporation itself, or both, immediately prior to a
reorganization shall own (immediately after the reorganization) more than five-
sixths of the voting power of the surviving or acquiring corporation or its
parent.
The DGCL also does not provide stockholders of a corporation with
appraisal rights when the corporation acquires another business through the
issuance of its capital stock: (i) in exchange for all or substantially all of
the assets of the business to be acquired, (ii) in exchange for more than fifty
percent of the outstanding shares of the corporation to be acquired, or (iii) in
a merger of the corporation to be acquired with a subsidiary of the acquiring
corporation. The CGCL treats these kinds of acquisitions in the same manner as a
direct merger of the acquiring corporation with the corporation to be acquired.
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DISSENTERS' RIGHTS MAY BE AVAILABLE TO SHAREHOLDERS OF SCOPUS WITH
RESPECT TO THE MERGER. SEE "RIGHTS OF DISSENTING SHARES OF SCOPUS."
DISSOLUTION
Under the DGCL, unless approved by stockholders holding 100% of the
total voting power of the corporation, a dissolution must be initiated by the
Siebel Board of Directors and approved by the affirmative vote of the holders of
a majority of the outstanding stock of the corporation entitled to vote thereon.
Under the CGCL, shareholders holding 50% or more of the voting power
may authorize a corporation's dissolution, with or without the approval of the
corporation's board of directors, and this right may not be modified by the
corporations' articles of incorporation.
EXPERTS
The consolidated financial statements and schedule of Siebel as of
December 31, 1996 and 1997, and for each of the years in the three year period
ended December 31, 1997, have been incorporated by reference in reliance upon
the report of KPMG Peat Marwick LLP, independent auditors, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing.
The consolidated balance sheets of Scopus as of March 31, 1996 and
1997, and the consolidated statements of operations, shareholders' equity and
cash flows for each of the years in the three-year period ended March 31, 1997,
incorporated by reference in this Proxy Statement/Prospectus by reference to the
Annual Report on Form 10-K, of Scopus have been incorporated herein in reliance
on the report of Coopers & Lybrand L.L.P., independent accountants, given upon
the authority of that firm as experts in accounting and auditing.
CERTAIN LITIGATION
On March 2, 1998, a purported class action complaint was filed in the
Superior Court of the State of California for the County of Alameda by a person
claiming to be a Scopus stockholder. The complaint names both Scopus and Siebel
as defendants, as well as the Scopus Board of Directors, and alleges that the
Scopus Board of Directors breached its fiduciary duties in connection with its
approval of the Merger. The complaint further alleges that Siebel aided and
abetted the alleged breach of fiduciary duty. The complaint seeks monetary and
other relief. Siebel and Scopus believe the lawsuit is without merit and intend
to contest the matter vigorously.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be
passed upon for Siebel by Cooley Godward LLP ("Cooley Godward"), Palo Alto,
California. Cooley Godward and certain members and associates in such firm own
an aggregate of approximately 111,249 shares of, and 94,000 options exercisable
for shares of, Siebel Common Stock. James C. Gaither, a partner of Cooley
Godward, is a director and the Secretary of Siebel.
Certain legal matters in connection with the Merger will be passed
upon for Scopus by Wilson Sonsini Goodrich & Rosati, Palo Alto, California.
Certain attorneys is such firm own an aggregate of approximately 1,000 shares
of Scopus Common Stock.
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APPENDIX A
CONFORMED COPY
--------------
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
AND
REORGANIZATION
AMONG
SIEBEL SYSTEMS, INC.,
A DELAWARE CORPORATION;
SYRACUSE ACQUISITION SUB, INC.,
A CALIFORNIA CORPORATION;
AND
SCOPUS TECHNOLOGY, INC.
A CALIFORNIA CORPORATION
------------------------------------------
DATED AS OF MARCH 1, 1998
------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<C> <S> <C>
Section 1. DESCRIPTION OF TRANSACTION................................................ 2
1.1 Merger of Merger Sub into the Company..................................... 2
1.2 Effect of the Merger...................................................... 2
1.3 Closing; Effective Time................................................... 2
1.4 Certificate of Incorporation and Bylaws; Directors and Officers........... 2
1.5 Conversion of Shares...................................................... 3
1.6 Stock Options............................................................. 4
1.7 Closing of the Company's Transfer Books................................... 4
1.8 Exchange of Certificates.................................................. 4
1.9 Dissenting Shares......................................................... 5
1.10 Tax Consequences.......................................................... 6
1.11 Accounting Consequences................................................... 6
1.12 Further Action............................................................ 6
Section 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................. 6
2.1 Due Organization; Subsidiaries; Etc....................................... 6
2.2 Articles of Incorporation and Bylaws...................................... 7
2.3 Capitalization, Etc....................................................... 7
2.4 SEC Filings; Financial Statements......................................... 8
2.5 Absence of Changes Since the Date of the Company Balance Sheet............ 9
2.6 Absence of Changes Since the Date of the Unaudited Interim Balance Sheet.. 9
2.7 Leasehold; Equipment...................................................... 11
2.8 Title to Assets........................................................... 11
2.9 Receivables; Significant Customers........................................ 12
2.10 Proprietary Assets........................................................ 12
2.11 Contracts................................................................. 15
2.12 Year 2000 Liabilities..................................................... 17
2.13 Compliance with Legal Requirements........................................ 17
2.14 Governmental Authorizations............................................... 18
2.15 Tax Matters............................................................... 18
</TABLE>
i.
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<C> <S> <C>
2.16 Employee and Labor Matters; Benefit Plans.......................................... 19
2.17 Environmental Matters.............................................................. 21
2.18 Insurance.......................................................................... 22
2.19 Transactions with Affiliates....................................................... 22
2.20 Legal Proceedings; Orders.......................................................... 22
2.21 Authority; Inapplicability of Anti-takeover Statutes; Binding Nature of Agreement.. 23
2.22 No Existing Discussions............................................................ 23
2.23 Accounting Matters................................................................. 23
2.24 Vote Required...................................................................... 23
2.25 Non-Contravention; Consents........................................................ 23
2.26 Fairness Opinion................................................................... 24
2.27 Financial Advisor.................................................................. 24
2.28 Disclosure......................................................................... 25
2.29 Customs............................................................................ 25
Section 3. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB............................ 25
3.1 Organization, Standing and Power................................................... 26
3.2 Certificate of Incorporation and Bylaws............................................ 26
3.3 Capitalization, Etc................................................................ 26
3.4 SEC Filings; Financial Statements.................................................. 26
3.5 Disclosure......................................................................... 27
3.6 Absence of Certain Changes or Events............................................... 27
3.7 Authority; Binding Nature of Agreement............................................. 28
3.8 Non-Contravention; Consents........................................................ 28
3.9 Proprietary Assets................................................................. 28
3.10 Contracts.......................................................................... 29
3.11 Compliance with Legal Requirements................................................. 29
3.12 Tax Matters........................................................................ 29
3.13 Governmental Authorizations........................................................ 30
3.14 Legal Proceedings.................................................................. 30
</TABLE>
ii.
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<C> <S> <C>
3.15 Vote Required....................................... 30
3.16 Valid Issuance...................................... 31
3.17 Accounting Matters.................................. 31
3.18 Fairness Opinion.................................... 31
Section 4. CERTAIN COVENANTS OF THE COMPANY.................... 31
4.1 Access and Investigation............................ 31
4.2 Operation of the Company's Business................. 31
4.3 Operation of the Parent's Business.................. 34
4.4 No Solicitation..................................... 34
4.5 Financial Statements................................ 35
Section 5. ADDITIONAL COVENANTS OF THE PARTIES................. 35
5.1 Registration Statement; Prospectus/Proxy Statement.. 35
5.2 Company Shareholders' Meeting....................... 36
5.3 Parent Stockholders' Meeting........................ 37
5.4 Regulatory Approvals................................ 38
5.5 Stock Options....................................... 39
5.6 Form S-8............................................ 39
5.7 Indemnification of Officers and Directors........... 40
5.8 Pooling of Interests; Tax Free Reorganization....... 40
5.9 Additional Agreements............................... 40
5.10 Confidentiality..................................... 41
5.11 Disclosure.......................................... 41
5.12 Affiliate Agreements................................ 41
5.13 Tax Matters......................................... 41
5.14 Letter of the Company's Accountants................. 42
5.15 Noncompetition Agreements........................... 42
5.16 Nasdaq Listing...................................... 42
5.17 FIRPTA Matters...................................... 42
Section 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND
MERGER SUB.......................................... 42
</TABLE>
iii.
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<C> <S> <C>
6.1 Accuracy of Representations................................... 42
6.2 Performance of Covenants...................................... 43
6.3 Effectiveness of Registration Statement....................... 43
6.4 Stockholder Approval.......................................... 43
6.5 Agreements and Documents...................................... 43
6.6 No Material Adverse Change.................................... 44
6.7 FIRPTA Compliance............................................. 44
6.8 HSR Act....................................................... 44
6.9 Listing....................................................... 44
6.10 No Restraints................................................. 44
6.11 No Governmental Litigation.................................... 44
6.12 1998 Audited Financial Statements............................. 44
Section 7. CONDITIONS PRECEDENT TO OBLIGATION OF THE COMPANY............. 44
7.1 Accuracy of Representations................................... 45
7.2 Performance of Covenants...................................... 45
7.3 Effectiveness of Registration Statement....................... 45
7.4 Stockholder Approval.......................................... 45
7.5 Agreements and Documents...................................... 45
7.6 No Material Adverse Change.................................... 46
7.7 HSR Act....................................................... 46
7.8 Listing....................................................... 46
7.9 No Restraints................................................. 46
Section 8. TERMINATION................................................... 46
8.1 Termination................................................... 46
8.2 Notice of Termination; Effect of Termination.................. 48
8.3 Expenses; Termination Fees.................................... 48
Section 9. MISCELLANEOUS PROVISIONS...................................... 49
9.1 Amendment..................................................... 49
9.2 Waiver........................................................ 49
9.3 No Survival of Representations and Warranties................. 49
</TABLE>
iv.
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<C> <S> <C>
9.4 Entire Agreement; Counterparts................. 50
9.5 Applicable Law; Jurisdiction................... 50
9.6 Disclosure Schedules........................... 50
9.7 Attorneys' Fees................................ 50
9.8 Assignability; Third Party Beneficiaries....... 50
9.9 Notices........................................ 50
9.10 Cooperation.................................... 51
9.11 Liability...................................... 51
9.12 Construction................................... 51
</TABLE>
v.
<PAGE>
AGREEMENT AND PLAN
OF
MERGER AND REORGANIZATION
THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION ("AGREEMENT") is made
and entered into as of March 1, 1998, by and among: SIEBEL SYSTEMS, INC., a
Delaware corporation ("PARENT"); SYRACUSE ACQUISITION SUB, INC., a California
corporation and a wholly owned subsidiary of Parent ("MERGER SUB"); and SCOPUS
TECHNOLOGY, INC., a California corporation (the "COMPANY"). Certain capitalized
terms used in this Agreement are defined in Exhibit A.
RECITALS
A. Parent, Merger Sub and the Company intend to effect a merger (the
"MERGER") of Merger Sub with and into the Company in accordance with this
Agreement and the California General Corporation Law (the "CGCL"). Upon
consummation of the Merger, Merger Sub will cease to exist, and the Company will
become a wholly owned subsidiary of Parent.
B. It is intended that the Merger qualify as a tax-free reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "CODE"). For accounting purposes, it is intended that the Merger
be treated as a "pooling of interests."
C. The Board of Directors of the Company has (i) determined that the
Merger is consistent with and in furtherance of the long-term strategy of the
Company and fair to, and in the best interests of, the Company and its
shareholders, (ii) approved this Agreement, the Merger and the other
transactions contemplated by this Agreement and (iii) determined to recommend
that the shareholders of the Company adopt and approve this Agreement and
approve the Merger.
D. The respective Boards of Directors of Parent and Merger Sub have
approved this Agreement and the Merger.
E. Concurrently with the execution of this Agreement, and as a condition
and inducement to Parent's willingness to enter into this Agreement, each of the
affiliate shareholders of the Company listed on Exhibit B-1 hereto is entering
into a Voting Agreement substantially in the form attached hereto as Exhibit C-
1; and as a condition and inducement to the Company's willingness to enter into
this Agreement, the affiliate stockholder of Parent listed on Exhibit B-2 hereto
is entering into a Voting Agreement substantially in the form attached hereto as
Exhibit C-2.
F. Concurrently with the execution of this Agreement, and as a condition
and inducement to Parent's willingness to enter into this Agreement, the Company
is entering into an Option Agreement substantially in the form attached hereto
as Exhibit D.
1.
<PAGE>
AGREEMENT
The parties to this Agreement, intending to be legally bound, agree as
follows:
SECTION 1. DESCRIPTION OF TRANSACTION.
1.1 MERGER OF MERGER SUB INTO THE COMPANY. Upon the terms and subject
to the conditions set forth in this Agreement, at the Effective Time (as defined
in Section 1.3), Merger Sub shall be merged with and into the Company, and the
separate existence of Merger Sub shall cease. The Company will continue as the
surviving corporation in the Merger (the "SURVIVING CORPORATION").
1.2 EFFECT OF THE MERGER. The Merger shall have the effects set forth in
this Agreement and in the applicable provisions of the CGCL.
1.3 CLOSING; EFFECTIVE TIME. The consummation of the transactions
contemplated by this Agreement (the "CLOSING") shall take place at the offices
of Cooley Godward llp, Five Palo Alto Square, 3000 El Camino Real, Palo Alto,
California, at 10:00 a.m. on a date to be designated by Parent (the "CLOSING
DATE"), which shall be no later than the second business day after satisfaction
or waiver of the conditions set forth in Sections 6 and 7. Contemporaneously
with or as promptly as practicable after the Closing, a properly executed
agreement of merger conforming to the requirements of the CGCL (the "AGREEMENT
OF MERGER") shall be filed with the Secretary of State of the State of
California. The Merger shall take effect at (a) the time the Agreement of Merger
is filed with the Secretary of State of the State of California or (b) at such
later time as may be as agreed by the parties and as may be specified in the
Agreement of Merger (the "EFFECTIVE TIME").
1.4 CERTIFICATE OF INCORPORATION AND BYLAWS; DIRECTORS AND OFFICERS.
Unless otherwise determined by Parent prior to the Effective Time:
(a) the Articles of Incorporation of the Surviving Corporation shall
be amended and restated as of the Effective Time to conform to the Articles of
Incorporation of Merger Sub as in effect immediately prior to the Effective
Time; provided, however, that at the Effective Time the Articles of
Incorporation of the Surviving Corporation shall be amended so that the name of
the Surviving Corporation shall be Scopus Technology, Inc.;
(b) the Bylaws of the Surviving Corporation shall be amended and
restated as of the Effective Time to conform to the Bylaws of Merger Sub as in
effect immediately prior to the Effective Time; and
(c) the directors and officers of the Surviving Corporation
immediately after the Effective Time shall be as mutually determined by Parent
and Company prior to the Effective Time, and shall serve until their respective
successors are elected and qualified or duly appointed, as the case may be.
2.
<PAGE>
1.5 CONVERSION OF SHARES.
(a) Subject to Section 1.5(d), at the Effective Time, by virtue of the
Merger and without any further action on the part of Parent, Merger Sub, the
Company or any shareholder of the Company:
(i) any shares of Company Common Stock then held by the Company
or any subsidiary of the Company (or held in the Company's treasury) shall be
canceled;
(ii) any shares of Company Common Stock then held by Parent,
Merger Sub or any other subsidiary of Parent shall be canceled;
(iii) except as provided in clauses "(i)" and "(ii)" above and
subject to Section 1.5(b), each share of Company Common Stock then outstanding
shall be converted into the right to receive 0.36405 of a share of Parent Common
Stock; and
(iv) each share of the common stock, no par value per share, of
Merger Sub then outstanding shall be converted into one share of common stock of
the Surviving Corporation.
(b) The fraction of a share of Parent Common Stock into which each
outstanding share of Company Common Stock is to be converted pursuant to Section
1.5(a)(iii) (as such fraction may be adjusted in accordance with this Section
1.5(b)) is referred to as the "EXCHANGE RATIO." If, between the date of this
Agreement and the Effective Time, the outstanding shares of Company Common Stock
or Parent Common Stock are changed into a different number or class of shares by
reason of any stock split, stock dividend, reverse stock split,
reclassification, recapitalization or other similar transaction, then the
Exchange Ratio shall be appropriately adjusted.
(c) If any shares of Company Common Stock outstanding immediately
prior to the Effective Time are unvested or are subject to a repurchase option,
risk of forfeiture or other condition under any applicable restricted stock
purchase agreement or other agreement with the Company, then the shares of
Parent Common Stock issued in exchange for such shares of Company Common Stock
will also be unvested and subject to the same repurchase option, risk of
forfeiture or other condition, and the certificates representing such shares of
Parent Common Stock may accordingly be marked with appropriate legends. The
Company shall take all action that may be necessary to ensure that, from and
after the Effective Time, Parent is entitled to exercise any such repurchase
option or other right set forth in any such restricted stock purchase agreement
or other agreement.
(d) No fractional shares of Parent Common Stock shall be issued in
connection with the Merger, and no certificates for any such fractional shares
shall be issued. In lieu of such fractional shares, any holder of Company
Common Stock who would otherwise be entitled to receive a fraction of a share of
Parent Common Stock (after aggregating all fractional shares of Parent Common
Stock issuable to such holder) shall, upon surrender of such holder's Company
Stock Certificate(s) (as defined in Section 1.7), be paid in cash the dollar
amount (rounded to the nearest whole cent), without interest, determined by
multiplying such fraction by the closing price of a share of Parent Common Stock
on Nasdaq on the Closing Date.
3.
<PAGE>
1.6 STOCK OPTIONS. At the Effective Time, all Company Options (as defined
in Section 2.3(b)) and rights to acquire shares of Company Common Stock under
the Purchase Plan (as defined in Section 2.3(b)) shall be assumed by Parent in
accordance with Section 5.5.
1.7 CLOSING OF THE COMPANY'S TRANSFER BOOKS. At the Effective Time: (a)
all shares of Company Common Stock outstanding immediately prior to the
Effective Time shall automatically be canceled and retired and shall cease to
exist, and all holders of certificates representing shares of Company Common
Stock that were outstanding immediately prior to the Effective Time shall cease
to have any rights as shareholders of the Company; and (b) the stock transfer
books of the Company shall be closed with respect to all shares of Company
Common Stock outstanding immediately prior to the Effective Time. No further
transfer of any such shares of Company Common Stock shall be made on such stock
transfer books after the Effective Time. If, after the Effective Time, a valid
certificate previously representing any of such shares of Company Common Stock
(a "COMPANY STOCK CERTIFICATE") is presented to the Exchange Agent (as defined
in Section 1.8) or to the Surviving Corporation or Parent, such Company Stock
Certificate shall be canceled and shall be exchanged as provided in Section 1.8.
1.8 EXCHANGE OF CERTIFICATES.
(a) Prior to the Closing Date, Parent shall select a reputable bank or
trust company to act as exchange agent in the Merger (the "EXCHANGE AGENT").
Promptly after the Effective Time, Parent shall deposit with the Exchange Agent
(i) certificates representing the shares of Parent Common Stock issuable
pursuant to this Section 1 and (ii) cash sufficient to make payments in lieu of
fractional shares in accordance with Section 1.5(d). The shares of Parent
Common Stock and cash amounts so deposited with the Exchange Agent, together
with any dividends or distributions received by the Exchange Agent with respect
to such shares, are referred to collectively as the "EXCHANGE FUND."
(b) As soon as practicable after the Effective Time, the Exchange
Agent will mail to the registered holders of Company Stock Certificates (i) a
letter of transmittal in customary form and containing customary provisions
(including a provision confirming that delivery of Company Stock Certificates
shall be effected, and risk of loss and title to Company Stock Certificates
shall pass, only upon delivery of such Company Stock Certificates to the
Exchange Agent), and (ii) instructions for use in effecting the surrender of
Company Stock Certificates in exchange for certificates representing Parent
Common Stock. Subject to Section 1.5(d), upon surrender of a Company Stock
Certificate to the Exchange Agent for exchange, together with a duly executed
letter of transmittal and such other documents as may be reasonably required by
the Exchange Agent or Parent, (A) the holder of such Company Stock Certificate
shall be entitled to receive in exchange therefor a certificate representing the
number of shares of Parent Common Stock that such holder has the right to
receive pursuant to the provisions of Section 1.5(a)(iii) together with any cash
in lieu of fractional share(s) pursuant to the provisions of Section 1.5(d), and
(B) the Company Stock Certificate so surrendered shall be canceled. Until
surrendered as contemplated by this Section 1.8(b), each Company Stock
Certificate shall be deemed, from and after the Effective Time, to represent
only the right to receive shares of Parent Common Stock (and cash in lieu of any
fractional share of Parent Common Stock) as contemplated by Section 1.5. If any
Company Stock Certificate shall have been lost, stolen or destroyed, Parent may,
in its discretion and as a condition precedent to the
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issuance of any certificate representing Parent Common Stock, require the owner
of such lost, stolen or destroyed Company Stock Certificate to provide an
appropriate affidavit and to deliver a bond (in such sum as Parent may
reasonably direct) as indemnity against any claim that may be made against the
Exchange Agent, Parent or the Surviving Corporation with respect to such Company
Stock Certificate.
(c) No dividends or other distributions declared or made with
respect to Parent Common Stock with a record date after the Effective Time shall
be paid to the holder of any unsurrendered Company Stock Certificate with
respect to the shares of Parent Common Stock represented thereby, until such
holder surrenders such Company Stock Certificate in accordance with this Section
1.8 (at which time such holder shall be entitled to receive all such dividends
and distributions, without interest).
(d) Any portion of the Exchange Fund that remains undistributed to
holders of Company Stock Certificates as of the date 180 days after the date on
which the Merger becomes effective shall be delivered to Parent upon demand, and
any holders of Company Stock Certificates who have not theretofore surrendered
their Company Stock Certificates in accordance with this Section 1.8 shall
thereafter look only to Parent (or its successor, if any) for satisfaction of
their claims for Parent Common Stock, cash in lieu of fractional shares of
Parent Common Stock and any dividends or distributions with respect to Parent
Common Stock.
(e) Each of the Exchange Agent, Parent and the Surviving Corporation
shall be entitled to deduct and withhold from any consideration payable or
otherwise deliverable pursuant to this Agreement to any holder or former holder
of Company Common Stock such amounts as may be required to be deducted or
withheld therefrom under the Code or under any provision of state, local or
foreign tax law or under any other applicable Legal Requirement. To the extent
such amounts are so deducted or withheld, such amounts shall be treated for all
purposes under this Agreement as having been paid to the Person to whom such
amounts would otherwise have been paid.
(f) Neither Parent nor the Surviving Corporation shall be liable to
any holder or former holder of Company Common Stock with respect to any shares
of Parent Common Stock (or dividends or distributions with respect thereto), or
for any cash amounts, delivered to any public official pursuant to any
applicable abandoned property, escheat or similar Legal Requirement.
1.9 DISSENTING SHARES. Notwithstanding anything to the contrary
contained in this Agreement, any shares of Company Common Stock outstanding
immediately prior to the Effective Time that are or may become "dissenting
shares" within the meaning of Section 1300(b) of the CGCL ("DISSENTING SHARES")
shall not be converted into or represent the right to receive Parent Common
Stock in accordance with Section 1.5(a)(iii) (or cash in lieu of fractional
shares in accordance with Section 1.5(d)), and each holder of Dissenting Shares
shall be entitled only to such rights as may be granted to such holder under
Chapter 13 of the CGCL. From and after the Effective Time, a holder of
Dissenting Shares shall not be entitled to exercise any of the voting rights or
other rights of a shareholder of the Surviving Corporation. If any holder of
Dissenting Shares shall fail to assert or perfect, or shall waive, rescind,
withdraw or otherwise lose, such holder's right to dissent and obtain payment
under Chapter 13 of the CGCL, then such
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shares shall automatically be converted into and shall represent only the right
to receive (upon the surrender of Company Stock Certificate(s) previously
representing such shares) Parent Common Stock in accordance with Section
1.5(a)(iii) (and cash in lieu of any fractional share in accordance with Section
1.5(d)) and any dividends or other distributions to which such holder is
entitled in accordance with Section 1.8.
1.10 TAX CONSEQUENCES. For federal income tax purposes, the Merger is
intended to constitute a reorganization within the meaning of Section 368 of the
Code. The parties to this Agreement hereby adopt this Agreement as a "plan of
reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the
United States Treasury Regulations.
1.11 ACCOUNTING CONSEQUENCES. For accounting purposes, the Merger is
intended to be treated as a "pooling of interests."
1.12 FURTHER ACTION. If, at any time after the Effective Time, any
further action is determined by Parent to be necessary or desirable to carry out
the purposes of this Agreement or to vest the Surviving Corporation with full
right, title and possession of and to all rights and property of Merger Sub and
the Company, the officers and directors of the Surviving Corporation and Parent
shall be fully authorized (in the name of Merger Sub, in the name of the Company
and otherwise) to take such action.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to Parent and Merger Sub that, except
as set forth in the disclosure schedule that has been prepared by the Company in
accordance with the requirements of Section 9.6 and that has been delivered by
the Company to Parent on the date of this Agreement and signed on behalf of the
Company by the President of the Company (the "COMPANY DISCLOSURE SCHEDULE"):
2.1 DUE ORGANIZATION; SUBSIDIARIES; ETC.
(a) The Company has no Subsidiaries, except for the corporations
identified in Part 2.1(a)(i) of the Company Disclosure Schedule; and neither the
Company nor any of the other corporations identified in Part 2.1(a)(i) of the
Company Disclosure Schedule owns any capital stock of, or any equity interest of
any nature in, any other Entity, other than the Entities identified in Part
2.1(a)(ii) of the Company Disclosure Schedule, except for passive investments in
equity interests of public companies as part of the cash management program of
the Company. (The Company and each of its Subsidiaries are referred to
collectively in this Agreement as the "ACQUIRED CORPORATIONS".) None of the
Acquired Corporations has agreed or is obligated to make, or is bound by any
Contract under which it may become obligated to make, any future investment in
or capital contribution to any other Entity. None of the Acquired Corporations
has, at any time, been a general partner of any general partnership, limited
partnership or other Entity.
(b) Each of the Acquired Corporations is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and has all necessary power and authority: (i) to conduct its
business in the manner in which its business is
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currently being conducted; (ii) to own and use its assets in the manner in which
its assets are currently owned and used; and (iii) to perform its obligations
under all Contracts by which it is bound.
(c) Each of the Acquired Corporations is qualified to do business as a
foreign corporation, and is in good standing, under the laws of all
jurisdictions where the nature of its business requires such qualification and
where the failure to so qualify would have a Material Adverse Effect on the
Acquired Corporations.
2.2 ARTICLES OF INCORPORATION AND BYLAWS. The Company has delivered to
Parent accurate and complete copies of the articles of incorporation, bylaws and
other charter and organizational documents of the respective Acquired
Corporations, including all amendments thereto. None of the Acquired
Corporations is in violation of any of the provisions of its articles of
incorporation or bylaws or equivalent governing instruments.
2.3 CAPITALIZATION, ETC.
(a) The authorized capital stock of the Company consists of: (i)
50,000,000 shares of Company Common Stock, $0.001 par value, of which, as of
February 27, 1998, 20,601,838 shares have been issued and are outstanding as of
the date of this Agreement; and (ii) 2,500,000 shares of preferred stock, $0.01
par value per share, of which no shares are outstanding as of the date of this
Agreement. All of the outstanding shares of Company Common Stock have been duly
authorized and validly issued, and are fully paid and nonassessable. As of the
date of this Agreement, there are no shares of Company Common Stock held in
treasury by the Company or by any of the other Acquired Corporations. Except as
set forth in Part 2.3(a) of the Company Disclosure Schedule: (i) none of the
outstanding shares of Company Common Stock is entitled or subject to any
preemptive right, right of participation, right of maintenance or any similar
right; (ii) none of the outstanding shares of Company Common Stock is subject to
any right of first refusal in favor of the Company; and (iii) there is no
Acquired Corporation Contract to which the Company is a party relating to the
voting or registration of, or restricting any Person from purchasing, selling,
pledging or otherwise disposing of (or granting any option or similar right with
respect to), any shares of Company Common Stock. Upon consummation of the
Merger, (A) the shares of Parent Common Stock issued in exchange for any shares
of Company Common Stock that are subject to a Contract pursuant to which the
Company has the right to repurchase, redeem or otherwise reacquire any shares of
Company Common Stock will, without any further act of Parent, the Company or any
other Person, become subject to the restrictions, conditions and other
provisions contained in such Contract, and (B) Parent will automatically succeed
to and become entitled to exercise the Company's rights and remedies under any
such Contract. None of the Acquired Companies is under any obligation to
repurchase, redeem or otherwise acquire any outstanding shares of Company Common
Stock.
(b) As of February 27, 1998: (i) 3,283,613 shares of Company Common
Stock are subject to issuance pursuant to outstanding options to purchase
Company Common Stock; and (ii) 77,079 shares of Company Common Stock are
reserved for future issuance under the Company's Employee Stock Purchase Plan
(the "PURCHASE PLAN"). (Stock options granted by the Company pursuant to the
Company's stock option plans are referred to in this Agreement as
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"COMPANY OPTIONS.") Part 2.3(b) of the Company Disclosure Schedule sets forth
the following information with respect to each Company Option outstanding as of
the date of this Agreement: (i) the particular plan pursuant to which such
Company Option was granted; (ii) the name of the optionee; (iii) the number of
shares of Company Common Stock subject to such Company Option; (iv) the exercise
price of such Company Option; (v) the date on which such Company Option was
granted; (vi) the applicable vesting schedule; and (vii) the date on which such
Company Option expires. The Company has made available to Parent accurate and
complete copies of all stock option plans pursuant to which the Company has
granted stock options that are currently outstanding and the form of all stock
option agreements evidencing such options. Except as set forth in Part 2.3(b) of
the Company Disclosure Schedule, there are no commitments or agreements of any
character to which the Company is bound obligating the Company to accelerate the
vesting of any Company Option as a result of the Merger.
(c) Except as set forth in Part 2.3(b) of the Company Disclosure
Schedule there is no: (i) outstanding subscription, option, call, warrant or
right (whether or not currently exercisable) to acquire any shares of the
capital stock or other securities of the Company; (ii) outstanding security,
instrument or obligation that is or may become convertible into or exchangeable
for any shares of the capital stock or other securities of the Company; or (iii)
shareholder rights plan (or similar plan commonly referred to as a "poison
pill") or Contract or circumstance under which the Company is or may become
obligated to sell or otherwise issue any shares of its capital stock or any
other securities other than shares of Company Common Stock which may be issued
pursuant to Company Options outstanding under any Plan.
(d) All outstanding shares of Company Common Stock, all outstanding
Company Options, and all outstanding shares of capital stock of each Subsidiary
of the Company have been issued and granted in compliance with (i) all
applicable securities laws and other applicable Legal Requirements, and (ii) all
requirements set forth in applicable Contracts.
(e) All of the outstanding shares of capital stock of each of the
Entities identified in Part 2.1(a)(i) of the Company Disclosure Schedule are
validly issued, fully paid and nonassessable and are owned beneficially and of
record by the Company, free and clear of any Encumbrances other than as would
not have a Material Adverse Effect on the Acquired Corporations.
2.4 SEC FILINGS; FINANCIAL STATEMENTS.
(a) The Company has made available to Parent accurate and complete
copies of all registration statements, proxy statements and other statements,
reports, schedules, forms and other documents filed by the Company with the SEC
since January 1, 1997 and will make available to Parent accurate and complete
copies of all such registration statements, proxy statements and other
statements, reports, schedules, forms and other documents filed after the date
of this Agreement and prior to the Effective Time (collectively, the "COMPANY
SEC DOCUMENTS"). All statements, reports, schedules, forms and other documents
required to have been filed by the Company with the SEC have been so filed. As
of the time it was filed with the SEC (or, if amended or superseded by a later
filing, then on the date of such filing): (i) each of the Company SEC Documents
filed with the SEC complied in all material respects with the applicable
requirements of the Securities Act or the Exchange Act (as the case may be) as
of the
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date of such filing and any Company SEC Documents filed after the date hereof
will so comply; and (ii) none of the Company SEC Documents contained any untrue
statement of material fact or omitted to state a material fact required to be
state therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(b) The consolidated financial statements (including any related
notes) contained in the Company SEC Documents filed with the SEC (the "COMPANY
FINANCIAL STATEMENTS"): (i) complied as to form in all material respects with
the published rules and regulations of the SEC applicable thereto; (ii) were
prepared in accordance with generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods covered (except as may be
indicated in the notes to such financial statements or, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC, and except that the unaudited
financial statements may not contain footnotes and are subject to normal and
recurring year-end adjustments which in the case of the Company's SEC Documents
already filed as of the date hereof are not reasonably expected to be,
individually or in the aggregate, material in amount); and (iii) fairly present
the consolidated financial position of the Company and its Subsidiaries as of
the respective dates thereof and the consolidated results of operations of the
Company and its Subsidiaries for the periods covered thereby. The audited
consolidated balance sheet of the Company and its Subsidiaries included in the
Company's Annual Report on Form 10-K for the year ended March 31, 1997 is
sometimes referred to herein as the "COMPANY BALANCE SHEET" and the unaudited
consolidated balance sheet of the Company and its Subsidiaries as of December
31, 1997 included in the Company's Quarterly Report on Form 10-Q for the quarter
ended December 31, 1997 is sometimes referred to herein as the "UNAUDITED
INTERIM BALANCE SHEET." All financial statements (including any related notes)
contained in Company SEC Documents filed after the date hereof shall meet the
conditions set forth in (i), (ii) and (iii) of this Section 2.4(b).
(c) The Company has recognized revenues in accordance with GAAP and
Statement of Position 91-1 entitled "Software Revenue Recognition," dated
December 12, 1991 ("91-1"), issued by the American Institute of Certified Public
Accountants. The Company has recognized (i) initial license fee revenues only
after delivery of software products and upon satisfaction of all significant
post-delivery obligations; (ii) revenues associated with the grant of additional
licenses to the Company's existing customers upon shipment and upon satisfaction
of all significant post-delivery obligations; (iii) maintenance revenues ratably
over the term of the maintenance period; and (iv) consulting and training
revenues when the services were performed.
2.5 ABSENCE OF CHANGES SINCE THE DATE OF THE COMPANY BALANCE SHEET. Since
the date of the Company's Financial Statements and until the date of this
Agreement, there has not been any Material Adverse Effect on the Acquired
Corporations.
2.6 ABSENCE OF CHANGES SINCE THE DATE OF THE UNAUDITED INTERIM BALANCE
SHEET. Since the date of the Unaudited Interim Balance Sheet and until the date
of this Agreement:
(a) there has not been any material loss, damage or destruction to, or
any material interruption in the use of, any of the assets of any of the
Acquired Corporations (whether or not covered by insurance);
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(b) none of the Acquired Corporations has (i) declared, accrued, set
aside or paid any dividend or made any other distribution in respect of any
shares of capital stock, or (ii) other than pursuant to existing Plans
repurchased, redeemed or otherwise reacquired any shares of capital stock or
other securities;
(c) none of the Acquired Corporations has sold, issued, granted or
authorized the issuance or grant of (i) any capital stock or other security
(except for Company Common Stock issued upon the exercise of outstanding Company
Options), (ii) any option, call, warrant or right to acquire any capital stock
or any other security (except for Company Options described in Part 2.3(b) of
the Company Disclosure Schedule and except for Company Options that have
expired), or (iii) any instrument convertible into or exchangeable for any
capital stock or other security of the Acquired Corporations;
(d) the Company has not amended or waived any of its material rights
under, or permitted the acceleration of vesting under, (i) any provision of any
of the Company's stock option plans, (ii) any provision of any agreement
evidencing any outstanding Company Option, or (iii) any restricted stock
purchase agreement;
(e) there has been no amendment to the articles of incorporation,
bylaws or other charter or organizational documents of any of the Acquired
Corporations, and none of the Acquired Corporations has effected or been a party
to any merger, consolidation, share exchange, business combination,
recapitalization, reclassification of shares, stock split, reverse stock split
or similar transaction;
(f) none of the Acquired Corporations has formed any subsidiary or
acquired any equity interest or other interest in any other Entity;
(g) none of the Acquired Corporations has made any capital
expenditures which exceed $5,000,000 in the aggregate;
(h) except in the ordinary course of business and consistent with past
practices or as would not have a Material Adverse Effect on the Acquired
Corporations, none of the Acquired Corporations has (i) entered into or
permitted any of the assets owned or used by it to become bound by any Major
Contract (as defined in Section 2.11), or (ii) amended or prematurely
terminated, or waived any material right or remedy under, any Major Contract;
(i) none of the Acquired Corporations has written off as
uncollectible, or established any extraordinary reserve with respect to, any
account receivable or other indebtedness in excess of $100,000 with respect to
any single matter, or in excess of $500,000 in the aggregate;
(j) none of the Acquired Corporations has made any pledge of any of
its assets or otherwise permitted any of its assets to become subject to any
Encumbrance, except as would not have a Material Adverse Effect on the Acquired
Corporations;
(k) other than routine travel or relocation advances made to employees
in the ordinary course of business, none of the Acquired Corporations has (i)
lent money to any Person, or (ii) incurred or guaranteed any indebtedness for
borrowed money;
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(l) none of the Acquired Corporations has (i) established or adopted
any Plan (as defined in Section 2.16(a)), (ii) caused or permitted any Plan to
be amended in any material respect, or (iii) paid any bonus or made any profit-
sharing or similar payment to, or increased the amount of the wages, salary,
commissions, fringe benefits or other compensation or remuneration payable to,
either (A) its directors and executive officers in any material respect or (B),
except in the ordinary course of business consistent with past practice, its
employees (taken as a whole);
(m) none of the Acquired Corporations has changed any of its methods
of accounting or accounting practices in any respect unless required by GAAP;
(n) none of the Acquired Corporations has made any material election
with respect to Taxes;
(o) none of the Acquired Corporations has commenced or settled any
Legal Proceeding;
(p) none of the Acquired Corporations has entered into any material
transaction or taken any other material action that has had, or would reasonably
be expected to have, a Material Adverse Effect on the Acquired Corporations; and
(q) none of the Acquired Corporations has agreed or legally committed
to take any of the actions referred to in clauses "(c)" through "(p)" above.
2.7 LEASEHOLD; EQUIPMENT. None of the Acquired Corporations owns any real
property or any interest in real property, except for the leaseholds created
under the real property leases identified in Part 2.7 of the Company Disclosure
Schedule. All such real property is being leased pursuant to lease agreements
that are in full force and effect, are valid and effective in accordance with
their respective terms, and there is not, under any of such leases, any existing
default or event of default (or event which with notice or lapse of time, or
both, would constitute a default) that would result in a Material Adverse Effect
on the Acquired Corporations. All material items of equipment and other tangible
assets owned by or leased to the Acquired Corporations are adequate for the uses
to which they are being put, are in good condition and repair (ordinary wear and
tear excepted) and are adequate for the conduct of the business of the Acquired
Corporations in the manner in which such business is currently being conducted.
2.8 TITLE TO ASSETS. The Acquired Corporations own, and have good, valid
and marketable title to, or in the case of leased properties and assets, valid
leasehold interests in, all of their respective tangible properties and assets,
real, personal and mixed, necessary to enable the Acquisition Corporations to
conduct their business in the manner in which such business has been and is
being conducted, including: (i) all assets reflected on the Unaudited Interim
Balance Sheet; and (ii) all other tangible assets reflected in the books and
records of the Acquired Corporations as being owned or leased by the Acquired
Corporations. All of said assets are owned or leased by the Acquired
Corporations free and clear of any Encumbrances, except for (x) any lien for
current taxes not yet due and payable, and (y) Encumbrances that have arisen in
the ordinary course of business and that do not (in any case or in the
aggregate) materially detract from the value of the assets subject thereto or
materially impair the operations of any of
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the Acquired Corporations. It is understood that no representation is being made
in this Section 2.8 regarding Proprietary Assets or rights therein.
2.9 RECEIVABLES; SIGNIFICANT CUSTOMERS.
(a) Part 2.9(a) of the Company Disclosure Schedule provides a schedule
and aging of all accounts receivable of the Acquired Corporations as of the date
of the Unaudited Interim Balance Sheet. All existing accounts receivable of the
Acquired Corporations (including those accounts receivable reflected on the
Unaudited Interim Balance Sheet that have not yet been collected and those
accounts receivable that have arisen since the date of the Unaudited Interim
Balance Sheet and have not yet been collected) represent valid obligations of
customers of the Acquired Corporations arising from bona fide transactions.
(b) Part 2.9(b) of the Company Disclosure Schedule contains a list as
of the date of this Agreement of all loans and advances made by any of the
Acquired Corporations to any employee, director, consultant or independent
contractor of such Acquired Corporation, other than routine travel or relocation
advances made to employees in the ordinary course of business.
(c) Part 2.9(c) of the Company Disclosure Schedule sets forth a list
of all Significant Customers. For purposes of this Agreement, "SIGNIFICANT
CUSTOMERS" are the forty (40) largest customers of the Company that have
effected the most purchases, as measured in terms of fees payable under
Contracts to which an Acquired Corporation is a party as of the date hereof and
pursuant to which an Acquired Corporation has licensed or transferred any right
(whether or not currently exercisable) to use, license or otherwise exploit any
Acquired Corporation Proprietary Asset to any Person during the period of the
past seven (7) fiscal quarters None of the Company's Significant Customers has
canceled, returned or substantially reduced or, to the knowledge of the Company,
is currently attempting or threatening to cancel, return or substantially
reduce, any legally binding commitments (which commitments exist as of the date
hereof) with respect to any material purchases from, orders to or services
provided by the Company, which cancellation, return or substantial reduction or
attempt or threat to cancel, return or substantially reduce would have a
Material Adverse Effect on the Acquired Corporations. The Company has not
experienced any pattern of material customer complaints concerning the Acquired
Corporations' products and/or services, nor have any of the Acquired
Corporations' products returned by a customer or is aware that any customer may
return any products, except for returns for which adequate reserves have been
made and which would not result in a reversal of any material revenue.
2.10 PROPRIETARY ASSETS.
(a) Part 2.10(a) of the Company Disclosure Schedule sets forth, with
respect to each Proprietary Asset owned by the Acquired Corporations and
registered with any Governmental Body or for which an application has been
registered or filed with any Governmental Body, (i) a brief description of such
Proprietary Asset, and (ii) the names of the jurisdictions covered by the
applicable registration or application. Part 2.10(a) of the Company Disclosure
Schedule identifies Contracts providing for any ongoing royalty or payment
obligations payable by an Acquired Corporation in excess of $100,000 annually
with respect to,
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each Proprietary Asset that is licensed or otherwise made available to the
Acquired Corporations by any Person and is material to the business of the
Acquired Corporations. The Acquired Corporations have good, valid and marketable
title to all of the Acquired Corporation Proprietary Assets identified in Part
2.10(a) of the Company Disclosure Schedule, and all other Proprietary Assets
owned by the Acquired Corporations that are material to the business of the
Acquired Corporations taken as a whole, free and clear of all Encumbrances,
except for (i) any lien for current taxes not yet due and payable, (ii) any
Encumbrances that have arisen in the ordinary course of business and that do not
(individually or in the aggregate) materially detract from the value of the
assets subject thereto or materially impair the operations of the Acquired
Corporations and (iii) any Contract to which an Acquired Corporation is a party
and pursuant to which an Acquired Corporation has licensed or transferred any
right (whether or not currently exercisable) to use, license or otherwise
exploit any Acquired Corporation Proprietary Asset to any Person. The Acquired
Corporations have a valid right to use, license and otherwise exploit all
Proprietary Assets identified in Part 2.10(a) of the Company Disclosure Schedule
to the extent necessary to the conduct of the business of the Acquired
Corporations as currently conducted. Part 2.10(a) of the Company Disclosure
Schedule sets forth a list of each Contract providing for the joint development
of any Acquired Corporation Proprietary Asset.
(b) Part 2.10(b)(i) of the Company Disclosure Schedule sets forth a
complete copy of the Company's standard form of license agreement (the
"COMPANY'S STANDARD LICENSE AGREEMENT"). Part 2.10(b)(ii) of the Company
Disclosure Schedule identifies (i) each Contract to which an Acquired
Corporation is a party as of the date hereof and pursuant to which an Acquired
Corporation has licensed or transferred any material right (whether or not
currently exercisable) to use, license or otherwise exploit any Acquired
Corporation Proprietary Asset to any Person (other than those Contracts entered
into in the ordinary course of business on terms that do not deviate in any
material respects from the Company's Standard License Agreement (except as
provided in (ii) below)) and (ii) each Contract which deviates from the
Company's Standard License Agreement with respect to (A) continuing obligations,
including, without limitation, service or post-contract customer support
transactions, (B) delivery of additional product (including, without limitation,
additional versions, features, functions and language) and separate rights to
upgrade and (C) amendments, arrangements, agreements or side deals not described
in such Contract, in a manner which individually or in the aggregate is
materially adverse to the business of the Acquired Corporations.
(c) The Acquired Corporations have taken reasonable measures and
precautions to protect and maintain the confidentiality and secrecy of all
material Acquired Corporation Proprietary Assets (except Acquired Corporation
Proprietary Assets whose value would be unimpaired in any material respect by
disclosure). Without limiting the generality of the foregoing, (i) all current
employees of the Acquired Corporations who are or were involved in, or who have
contributed to, the creation or development of any material Acquired Corporation
Proprietary Asset have executed and delivered to the Acquired Corporations an
agreement that at the time of execution was in the form of the Company's then
existing Confidential Information and Invention Assignment Agreement, and (ii)
all current consultants and independent contractors to the Acquired Corporations
who are or were involved in, or who have contributed to, the creation or
development of any material Acquired Corporation Proprietary Asset have executed
and delivered to the Company an agreement that at the time of execution was in
the form of the Company's then existing Consultant Confidential Information
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and Invention Assignment Agreement. The Company has made available to Parent the
current forms of the Company's Confidential Information and Inventions
Agreements for employees and consultants. No current or former employee,
officer, director, shareholder, consultant or independent contractor has any
right, claim or interest, including, without limitation, any moral rights, in or
with respect to any Acquired Corporation Proprietary Asset.
(d) Except as set forth in Part 2.10 (d) of the Company Disclosure
Schedule, to the knowledge of the Company: (i) all patents, trademarks,
tradenames, service marks, maskwork rights, copyrights and trade secrets held by
any of the Acquired Corporations are valid, enforceable and subsisting; (ii)
none of the Acquired Corporation Proprietary Assets and no Proprietary Asset
that is currently being developed by any of the Acquired Corporations (either by
itself or with any other Person) infringes, misappropriates or conflicts with
any Proprietary Asset owned or used by any other Person; (iii) none of the
products that are or have been designed, created, developed, assembled,
manufactured or sold by any of the Acquired Corporations is infringing,
misappropriating or making any unlawful or unauthorized use of any Proprietary
Asset owned or used by any other Person, and none of such products has at any
time infringed, misappropriated or made any unlawful or unauthorized use of, and
none of the Acquired Corporations or any of their Representatives has received
any notice or other communication (in writing or otherwise) of any actual,
alleged, possible or potential infringement, misappropriation or unlawful or
unauthorized use of, any Proprietary Asset owned or used by any other Person;
and (iv) no other Person is infringing, misappropriating or making any unlawful
or unauthorized use of, and no Proprietary Asset owned or used by any other
Person infringes or conflicts with, any material Acquired Corporation
Proprietary Asset.
(e) The Acquired Corporation Proprietary Assets constitute all the
Proprietary Assets necessary to enable the Acquired Corporations to conduct
their business in the manner in which such business has been and is being
conducted. Except as set forth in Part 2.10(e) of the company disclosure
Schedule, none of the Acquired Corporations has (i) licensed any of the Acquired
Corporation Proprietary Assets to any Person on an exclusive basis, (ii) entered
into any covenant not to compete or (iii) entered into any Contract limiting its
ability to transact business in any market or geographical area or with any
Person.
(f) Part 2.10(f)(i) of the Company Disclosure Schedule sets forth a
complete copy of the Company's standard form of source code escrow agreement
(the "COMPANY'S STANDARD SOURCE CODE ESCROW AGREEMENT"). Part 2.10(f)(ii) of the
Company Disclosure Schedule identifies each Contract to which an Acquired
Corporation is a party as of the date hereof and pursuant to which an Acquired
Corporation has disclosed or delivered to any Person, or permitted the
disclosure or delivery to any escrow agent or other Person, of the source code,
or any portion of the source code of any Acquired Corporation Proprietary Asset
(other than those Contracts entered into in the ordinary course of business on
terms that do not deviate in any material respect from the Company's Standard
Source Code Escrow Agreement). No event has occurred, and no circumstance or
condition exists, that (with or without notice or lapse of time) will, or would
reasonably be expected to, result in the required disclosure or delivery by the
Acquired Corporations or any of their escrow agents to any Person of the source
code, or any portion or aspect of the source code, or any proprietary
information or algorithm contained in any source code, of any Acquired
Corporation Proprietary Asset. Neither the execution of this Agreement nor the
consummation of any of the transactions contemplated hereby would
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reasonably be expected to result in the required release or disclosure by the
Acquired Corporations or any of their escrow agents of the source code, or any
portion or aspect of the source code, or any proprietary information or
algorithm contained in or relating to any source code, of any Acquired
Corporation Proprietary Asset.
(g) All software (and related Acquired Corporation Proprietary Assets)
that is sold, licensed or transferred by any Acquired Corporation to any Person
("PRODUCTS") are designed to be used prior to, during and after the year 2000
("YEAR 2000"), and are Year 2000 Compliant (as defined below). To the knowledge
of the Company, each of the Acquired Corporations has taken adequate steps to
ensure that all software (and related Proprietary Assets) used in its operations
are Year 2000 Compliant (as defined below). For purposes of this Agreement,
"YEAR 2000 COMPLIANT" shall mean that the Products can, individually, and in
combination and in conjunction with all other systems, products or processes
with which they are required or designed to interface, continue to be used
normally and to operate successfully (both in functionality and performance in
all material respects) over the transition into the twenty first century when
used in accordance with the documentation relating to the Products, including
being able to, before, on and after January 1, 2000 substantially conform to the
following: (i) use logic pertaining to dates which allow users to identify
and/or use the century portion of any date fields without special processing;
and (ii) respond to all date elements and date input so as to resolve any
ambiguity as to century in a disclosed, defined and pre-determined manner and
provide date information in ways which are unambiguous as to century, either by
permitting or requiring the century to be specified or where the data element is
represented without a century, the correct century is unambiguous for all
manipulations involving that element.
2.11 CONTRACTS.
(a) Part 2.11 of the Company Disclosure Schedule identifies each
Acquired Corporation Contract as of the date of this Agreement that constitutes
a "Major Contract." For purposes of this Agreement, each of the following shall
be deemed to constitute a "MAJOR CONTRACT":
(i) (A) any written Contract relating to the employment of, or
the performance of services by, any employee other than at will employment or a
Contract required solely on the basis of any Legal Requirement, (B) any Contract
pursuant to which any of the Acquired Corporations is required to make any
severance, termination or similar payment, bonus or relocation payment or any
other payment (other than payments in respect of salary or bonus paid in the
ordinary course consistent with past practices) to any current or former
employee or director of any of the Acquired Corporations and (C) any Contract or
Plan (including, without limitation, any stock option plan, stock appreciation
plan or stock purchase plan), any of the benefits of which may be increased, or
the vesting of benefits of which would be accelerated as a result of the Merger;
(ii) any material written Contract (A) providing for the
acquisition, transfer, development, sharing, license (to or by any of the
Acquired Corporations), use or other exploitation of any Proprietary Asset
(except for any Contract pursuant to which any Proprietary Asset is licensed to
the Acquired Corporations under any third party software license generally
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available to the public); or (B) with respect to the distribution or marketing
of any products of the Acquired Corporations;
(iii) any Contract which provides for indemnification of any officer,
director, employee or agent of any of the Acquired Corporations;
(iv) any Contract (not otherwise disclosed in Part 2.11 of the
Company Disclosure Schedule) imposing any restriction on the right or ability of
any Acquired Corporation (A) to license any of the Acquired Corporation
Proprietary Assets to any Person, (B) to compete or (C) to transact business in
any market or geographic area or with any Person;
(v) any Contract (A) relating to the acquisition, issuance, voting,
registration, sale or transfer of any securities (other than the issuance of
Company Common Stock upon the valid exercise of Company Options outstanding as
of the date of this Agreement), (B) providing any Person with any preemptive
right, right of participation, right of maintenance or any similar right with
respect to any securities, or (C) providing the Company with any right of first
refusal with respect to, or right to repurchase or redeem, any securities (other
than under any Plan);
(vi) any Contract requiring that the Company give any notice or
provide any information to any Person prior to accepting any Acquisition
Proposal;
(vii) any Contract (not otherwise identified in Part 2.11 of the
Company Disclosure Schedule) that contemplates or involves payment or delivery
of cash or other consideration by or to the Company for goods or services in an
aggregate amount in excess of $250,000 in any one year or $500,000 over the term
of such Contract;
(viii) any Contract or Plan (including, without limitation, any stock
option plan, stock appreciation plan or stock purchase plan), any of the
benefits of which will be increased, or the vesting of benefits of which will be
accelerated, by the execution of this Agreement or the consummation 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;
(ix) any joint marketing or development Contract currently in force
under which an Acquired Corporation has continuing material obligations to
jointly market any product, technology or service and which may not be canceled
without penalty upon notice of thirty (30) days or less, or any Major Contract
pursuant to which an Acquired Corporation has continuing material obligations to
jointly develop any Proprietary Asset that will not be owned, in whole or in
part, by an Acquired Corporation and which may not be canceled without penalty
upon notice of ninety (90) days or less; and
(x) any Contract currently in force to disclose or deliver to any
Person, or permit the disclosure or delivery to any escrow agent or other
Person, of the source code, or any portion of the source code of any Acquired
Corporation Proprietary that is material to the Acquired Corporations taken as a
whole, except for any Contract that does not differ from the Company's Standard
Source Code Escrow Agreement in any material respect.
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(b) Each Major Contract, to the knowledge of the Company, is valid and
in full force and effect, and is enforceable by an Acquired Corporation in
accordance with its terms, subject to (i) laws of general application relating
to bankruptcy, insolvency and the relief of debtors, and (ii) rules of law
governing specific performance, injunctive relief and other equitable remedies.
(c) Except as set forth in Part 2.11 of the Company Disclosure
Schedule and except as would not individually or in the aggregate have a
Material Adverse Effect on the Acquired Corporations: (i) none of the Acquired
Corporations has violated or breached, or committed any default under, any
Acquired Corporation Contract, and, to the knowledge of the Company, no other
Person has violated or breached, or committed any default under, any Acquired
Corporation Contract; (ii) to the knowledge of the Company, no event has
occurred, and no circumstance or condition exists, that (with or without notice
or lapse of time) will, or would reasonably be expected to, (A) result in a
violation or breach by the Acquired Corporations of any of the provisions of any
Acquired Corporation Contract, (B) give any Person the right to declare a
default or exercise any remedy under any Acquired Corporation Contract, (C) give
any Person the right to a rebate, chargeback, penalty or change in delivery
schedule under any Acquired Corporation Contract, (D) give any Person the right
to accelerate the maturity or performance of any Acquired Corporation Contract,
or (E) give any Person the right to cancel, terminate or modify any Acquired
Corporation Contract; (iii) none of the Acquired Corporations or any of their
Representatives has received any written notice regarding any actual or possible
violation or breach by the Acquired Corporations of, or default under, any
Acquired Corporation Contract; and (iv) each of the Acquired Corporations has
obtained all necessary export licenses related to the export of its products.
(d) There is no Acquired Corporation Contract to which any
Governmental Body is a party or under which any Governmental Body has any rights
or obligations.
2.12 YEAR 2000 LIABILITIES. Except as would not have a Material Adverse
Effect on the Acquired Corporations, none of the Acquired Corporations has any
accrued, contingent or other liabilities of any nature, either matured or
unmatured, relating to costs associated with insuring that the computer systems,
or any software utilized by the Acquired Corporations or other components of the
Acquired Corporations' information technology infrastructure are Year 2000
Compliant (whether or not required to be reflected in financial statements in
accordance with GAAP, and whether due or to become due), except for: (a)
liabilities identified as such in the "liabilities" column of the Unaudited
Interim Balance Sheet; and (b) normal and recurring liabilities that have been
incurred by the Acquired Corporations since the date of the Unaudited Interim
Balance Sheet in the ordinary course of business and consistent with past
practices.
2.13 COMPLIANCE WITH LEGAL REQUIREMENTS. Each of the Acquired Corporations
is, and has at all times since March 31, 1995 been, in compliance with all
applicable Legal Requirements, except where the failure to comply with such
Legal Requirements has not had and will not have a Material Adverse Effect on
the Acquired Corporations. Since March 31, 1995, none of the Acquired
Corporations has received any notice or other communication from any
Governmental Body regarding any actual or possible violation of, or failure to
comply with, any Legal Requirement, except where the failure to comply with such
Legal Requirements has not had and will not have a Material Adverse Effect on
the Acquired Corporations.
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2.14 GOVERNMENTAL AUTHORIZATIONS. The Acquired Corporations hold all
Governmental Authorizations necessary to enable the Acquired Corporations to
conduct their respective businesses in the manner in which such businesses are
currently being conducted. All such Governmental Authorizations are valid and
in full force and effect.
2.15 TAX MATTERS.
(a) All Tax Returns required to be filed by or on behalf of the
respective Acquired Corporations with any Governmental Body with respect to any
taxable period ending on or before the Closing Date (the "ACQUIRED CORPORATION
RETURNS") if due on or before the Closing Date (i) have been or will be filed on
or before the applicable due date (including any extensions of such due date if
properly obtained), and (ii) have been, or will be when filed, prepared in all
material respects in compliance with all applicable Legal Requirements. All
amounts shown on the Acquired Corporation Returns to be due on or before the
Closing Date have been or will be paid on or before the Closing Date.
(b) The Company Financial Statements fully accrue all actual and
contingent liabilities for Taxes with respect to all periods through the dates
thereof in accordance with GAAP. Each Acquired Corporation will establish, in
the ordinary course of business and consistent with its past practices, reserves
adequate for the payment of all Taxes for the period from the date of this
Agreement through the Closing Date.
(c) Since March 31, 1995, no Acquired Corporation Return has been
examined or audited by any Governmental Body. No extension or waiver (other
than the normal extension occurring by reason of an extension of time to file a
Return) of the limitation period applicable to any of the Acquired Corporation
Returns has been granted (by the Company or any other Person), and no such
extension or waiver has been requested from any Acquired Corporation.
(d) No claim or Legal Proceeding is pending or, to the best of the
knowledge of the Company, has been threatened against or with respect to any
Acquired Corporation in respect of any material Tax. There are no unsatisfied
liabilities for material Taxes (including liabilities for interest, additions to
tax and penalties thereon and related expenses) with respect to any notice of
deficiency or similar document received by any Acquired Corporation with respect
to any material Tax (other than liabilities for Taxes asserted under any such
notice of deficiency or similar document which are being contested in good faith
by the Acquired Corporations and with respect to which adequate reserves for
payment have been established). There are no liens for material Taxes upon any
of the assets of any of the Acquired Corporations except liens for current Taxes
not yet due and payable. None of the Acquired Corporations has entered into or
become bound by any agreement or consent pursuant to Section 341(f) of the Code.
None of the Acquired Corporations has been, and none of the Acquired
Corporations will be, required to include any adjustment in taxable income for
any tax period (or portion thereof) pursuant to Section 481 or 263A of the Code
or any comparable provision under state or foreign Tax laws as a result of
transactions or events occurring, or accounting methods employed, prior to the
Closing.
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(e) There is no agreement, plan, arrangement or other Contract
covering any employee or independent contractor or former employee or
independent contractor of any of the Acquired Corporations that, considered
individually or considered collectively with any other such Contracts, will, or
could reasonably be expected to, give rise directly or indirectly to the payment
of any amount that would not be deductible pursuant to Section 280G or Section
162 of the Code. None of the Acquired Corporations is, or has ever been, a
party to or bound by any tax indemnity agreement, tax sharing agreement, tax
allocation agreement or similar Contract.
2.16 EMPLOYEE AND LABOR MATTERS; BENEFIT PLANS.
(a) Part 2.16 of the Company Disclosure Schedule identifies each
salary, bonus, deferred compensation, incentive compensation, stock purchase,
stock option, severance pay, termination pay, hospitalization, medical, life or
other insurance, supplemental unemployment benefits, profit-sharing, pension or
retirement plan, program or agreement (collectively, the "PLANS") sponsored,
maintained, contributed to or required to be contributed to by any of the
Acquired Corporations for the benefit of any current or former employee of any
of the Acquired Corporations.
(b) Except as set forth in Part 2.16of the Company Disclosure
Schedule, none of the Acquired Corporations maintains, sponsors or contributes
to, and none of the Acquired Corporations has at any time in the past
maintained, sponsored or contributed to, any employee pension benefit plan (as
defined in Section 3(2) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), whether or not excluded from coverage under specific
Titles or Subtitles of ERISA) for the benefit of employees or former employees
of any of the Acquired Corporations (a "PENSION PLAN"). None of the Plans
identified in Part 2.16 of the Company Disclosure Schedule is subject to Title
IV of ERISA or Section 412 of the Code.
(c) Except as set forth in Part 2.16 of the Company Disclosure
Schedule, none of the Acquired Corporations maintains, sponsors or contributes
to any: (i) employee welfare benefit plan (as defined in Section 3(1) of ERISA,
whether or not excluded from coverage under specific Titles or Subtitles of
ERISA) for the benefit of any employees or former employees of any of the
Acquired Corporations (a "WELFARE PLAN"), or (ii) self-funded medical, dental or
other similar Plan. None of the Plans identified in Section 2.16 of the Company
Disclosure Schedule is a multi-employer plan (within the meaning of Section
3(37) of ERISA).
(d) With respect to each Plan, the Company has made available to
Parent: (i) a copy of such Plan (including all amendments thereto); (ii) a copy
of the annual report, if required under ERISA, with respect to such Plan for the
last two years; (iii) a copy of the most recent summary plan description,
together with each Summary of Material Modifications thereto, if required under
ERISA, with respect to such Plan; (iv) if such Plan is funded through a trust or
any third party funding vehicle, a copy of the trust or other funding agreement
(including all amendments thereto) and accurate and complete copies the most
recent financial statements thereof; (v) copies of all material Contracts
relating to such Plan, including service provider agreements, insurance
contracts, minimum premium contracts, stop-loss agreements, investment
management agreements, subscription and participation agreements and
recordkeeping agreements; and (vi) a copy of the most recent determination
letter received from the Internal
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Revenue Service with respect to such Plan (if such Plan is intended to be
qualified under Section 401(a) of the Code).
(e) None of the Acquired Corporations is or has ever been required to
be treated as a single employer with any other Person under Section 4001(b)(1)
of ERISA or Section 414(b), (c), (m) or (o) of the Code. None of the Acquired
Corporations has ever been a member of an "affiliated service group" within the
meaning of Section 414(m) of the Code. None of the Acquired Corporations has
ever made a complete or partial withdrawal from a multi-employer plan, as such
term is defined in Section 3(37) of ERISA, resulting in "withdrawal liability,"
as such term is defined in Section 4201 of ERISA (without regard to subsequent
reduction or waiver of such liability under either Section 4207 or 4208 of
ERISA).
(f) None of the Acquired Corporations has any commitment to create any
Welfare Plan or any Pension Plan, or to modify or change any existing Pension
Plan (other than to comply with applicable law) in a manner that would affect
any employee of any of the Acquired Corporations.
(g) No Plan provides death, medical or health benefits (whether or not
insured) with respect to any current or former employee of any of the Acquired
Corporations after any such employee's termination of service (other than (i)
benefit coverage mandated by applicable law, including coverage provided
pursuant to Section 4980B of the Code, (ii) deferred compensation benefits
accrued as liabilities on the Company Balance Sheet, (iii) benefits the full
cost of which are borne by current or former employees of any of the Acquired
Corporations (or the employees' beneficiaries), (iv) death or retirement
benefits under any Pension Plan, (v) disability benefits under any Welfare Plan,
(vi) benefits arising in connection with a separation or severance program, plan
or arrangement and (vii) life insurance benefits for employees who died while in
service).
(h) With respect to any Plan constituting a group health plan within
the meaning of Section 4980B(g)(2) of the Code, the provisions of Section 4980B
of the Code ("COBRA") have been complied with in all material respects.
(i) To the knowledge of the Company, each of the Plans has been
operated and administered in all material respects in accordance with applicable
Legal Requirements, including but not limited to ERISA and the Code.
(j) Each of the Plans intended to be qualified under Section 401(a) of
the Code has received a favorable determination, opinion, advisory or
notification letter from the Internal Revenue Service or has an application
currently pending, and the Company is not aware of any material reason why any
such letter should be revoked.
(k) Neither the execution, delivery or performance of this Agreement,
nor the consummation of the Merger or any of the other transactions contemplated
by this Agreement, will result in any payment (including any bonus, golden
parachute or severance payment) to any current or former employee or director of
any of the Acquired Corporations (whether or not under any Plan), or materially
increase the benefits payable under any Plan, or result in any
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acceleration of the time of payment or vesting of any such benefits (unless the
Parent causes a partial or full termination to occur under a Pension Plan).
(l) Part 2.16 of the Company Disclosure Schedule contains a list of
all salaried employees of each of the Acquired Corporations as of the date of
this Agreement, and correctly reflects, in all material respects, their base
salaries, their targeted annual bonus amounts, their dates of employment and
their positions. None of the Acquired Corporations is a party to any collective
bargaining contract or other Contract with a labor union involving any of its
employees. All of the employees of the Acquired Corporations are "at will"
employees.
(m) Each Plan complies in all material respects with all applicable
Legal Requirements. Each of the Acquired Corporations is in compliance in all
material respects with all Contracts relating to employment, employment
practices, wages, bonuses and terms and conditions of employment, including
employee compensation matters.
(n) Each of the Plans in effect as of the Closing Date shall be
maintained in effect with respect to current employees, consultants, directors,
officers and other individuals who are covered by any such Plan immediately
prior to the Closing Date (the "AFFILIATED EMPLOYEES") until Parent otherwise
determines after the Closing Date; provided, however, that Parent or its
Subsidiary shall provide benefits to the Affiliated Employees for a period of
not less than one (1) year following the Closing Date which are no less
favorable in the aggregate than those provided under the Company's Pension Plans
and Welfare Plans. Without limitation of the foregoing, each employee of the
Company or Merger Sub immediately prior to the Closing Date who is participating
in any Plan shall receive credit for pre-Closing service with the Company and
its Subsidiaries or predecessor entities for all purposes under the Company's
Pension Plans and Welfare Plans or any successor plans to such plans offered by
Parent or its Subsidiaries or affiliates including (without limitation)
eligibility to participate, vesting and waiting periods under any benefit plan
of Parent or any of its Subsidiaries or affiliates.
2.17 ENVIRONMENTAL MATTERS. Except as would not have a Material Adverse
Effect on the Acquired Corporations: each of the Acquired Corporations is in
compliance in all material respects with all applicable Environmental Laws,
which compliance includes the possession by each of the Acquired Corporations of
all permits and other Governmental Authorizations required under applicable
Environmental Laws, and compliance with the terms and conditions thereof; none
of the Acquired Corporations has received any notice whether from a Governmental
Body, citizens group, employee or otherwise, that alleges that any of the
Acquired Corporations is not in compliance with any Environmental Law, and, to
the knowledge of the Company, there are no circumstances that will prevent or
interfere with the compliance by any of the Acquired Corporations with any
Environmental Law in the future; to the best of the knowledge of the Company, no
current or prior owner of any property leased or controlled by any of the
Acquired Corporations has received any written notice whether from a Government
Body, citizens group, employee or otherwise, that alleges that such current or
prior owner or any of the Acquired Corporations is not in compliance with any
Environmental Law; to the knowledge of the Company, all property that is leased
to, controlled by or used by the Company, and all surface water, groundwater and
soil associated with or adjacent to such property is in clean and healthful
condition and is free of any material illegal environmental contamination. (For
purposes of this Section 2.17: (i) "ENVIRONMENTAL LAW" means any federal, state,
local or
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foreign Legal Requirement relating to pollution or protection of human health or
the environment (including ambient air, surface water, ground water, land
surface or subsurface strata), including any law or regulation relating to
emissions, discharges, releases or threatened releases of Materials of
Environmental Concern, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Materials of Environmental Concern; and (ii) "MATERIALS OF ENVIRONMENTAL
CONCERN" include chemicals, pollutants, contaminants, wastes, toxic substances,
petroleum and petroleum products and any other substance that is now or
hereafter regulated by any Environmental Law or that is otherwise a danger to
health, reproduction or the environment.)
2.18 INSURANCE. The Company has delivered to Parent a copy of each
insurance policy and each self insurance program relating to the business,
assets or operations of any of the Acquired Corporations. Each such insurance
policy is in full force and effect as of the date of this Agreement. Since
December 31, 1997, except as set forth in Part 2.18 of the Company Disclosure
Schedule and except as would not have a Material Adverse Effect on the Acquired
Corporations, none of the Acquired Corporations has received any written notice
regarding any actual or possible (a) cancellation or invalidation of any
insurance policy, (b) refusal of any coverage or rejection of any material claim
under any insurance policy, or (c) material adjustment in the amount of the
premiums payable with respect to any insurance policy.
2.19 TRANSACTIONS WITH AFFILIATES. Except as set forth in the Company SEC
Documents, since the date of the Company's last proxy statement filed with the
SEC, no event has occurred as of the date of this Agreement that would be
required to be reported by the Company pursuant to Item 404 of Regulation S-K
promulgated by the SEC. Part 2.19 of the Company Disclosure Schedule identifies
each person who is an "affiliate" (as that term is used in Rule 145 promulgated
under the Securities Act) of the Company as of the date of this Agreement.
2.20 LEGAL PROCEEDINGS; ORDERS.
(a) As of the date hereof, except as set forth in Part 2.20 of the
Company Disclosure Schedule, there is no pending Legal Proceeding, and no Person
has, to the knowledge of the Company, overtly threatened in writing to commence
any Legal Proceeding: (i) that involves any of the Acquired Corporations or any
of the assets owned or used by any of the Acquired Corporations, including,
without limitation, any Acquired Company Proprietary Asset; or (ii) that
challenges, or that may have the effect of preventing, delaying, making illegal
or otherwise interfering with, the Merger or any of the other transactions
contemplated by this Agreement. As of the date hereof, to the knowledge of the
Company, no event has occurred, and no claim, dispute or other condition or
circumstance exists, that will, or that would reasonably be expected to, cause
or provide a bona fide basis for a director or executive officer of any of the
Acquired Corporations to seek indemnification from any of the Acquired
Corporations.
(b) There is no order, writ, injunction, judgment or decree to which
any of the Acquired Corporations, or any of the assets material to the business
of the Acquired Corporations, is subject. To the knowledge of the Company, no
officer or other employee of any of the Acquired Corporations is subject to any
order, writ, injunction, judgment or decree that
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prohibits such officer or other employee from engaging in or continuing any
conduct, activity or practice relating to the business of any of the Acquired
Corporations.
2.21 AUTHORITY; INAPPLICABILITY OF ANTI-TAKEOVER STATUTES; BINDING NATURE
OF AGREEMENT. The Company has the corporate power and authority to enter into
and, subject to obtaining shareholder approval, to perform its obligations under
this Agreement. The Board of Directors of the Company (at a meeting duly called
and held) (a) unanimously determined that the Merger is fair and in the best
interests of the Company and its shareholders, (b) unanimously approved the
execution, delivery and performance of this Agreement by the Company and has
unanimously approved the Merger and (c) unanimously recommended the adoption and
approval of this Agreement and the Merger by the holders of Company Common Stock
and directed that this Agreement and the Merger be submitted for consideration
by the Company's shareholders at the Company Shareholders' Meeting (as defined
in Section 5.2). This Agreement constitutes the legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, subject to (i) laws of general application relating to bankruptcy,
insolvency and the relief of debtors, and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies.
2.22 NO EXISTING DISCUSSIONS. As of the date of this Agreement, none of
the Acquired Corporations, and no Representative of any of the Acquired
Corporations, is engaged, directly or indirectly, in any discussions or
negotiations with any other Person relating to any Acquisition Proposal other
than the Merger.
2.23 ACCOUNTING MATTERS. To the knowledge of the Company, neither the
Company nor any of its affiliates has taken or agreed to, or plans to, take any
action that would prevent Parent from accounting for the Merger as a "pooling of
interests."
2.24 VOTE REQUIRED. The affirmative vote of the holders of a majority of
the shares of Company Common Stock outstanding on the record date for the
Company Shareholder Meeting (the "REQUIRED COMPANY SHAREHOLDER VOTE") is the
only vote of the holders of any class or series of the Company's capital stock
necessary to adopt and approve this Agreement and the Merger.
2.25 NON-CONTRAVENTION; CONSENTS. Except as set forth in Part 2.25 of
the Company's Disclosure Schedule, neither (1) the Company's execution, delivery
or performance of this Agreement or any of the other agreements referred to in
this Agreement, nor (2) the consummation of the Merger will directly or
indirectly (with or without notice or lapse of time):
(a) contravene, conflict with or result in a violation of (i) any of
the provisions of the articles of incorporation, bylaws or other charter or
organizational documents of any of the Acquired Corporations, or (ii) any
resolution adopted by the shareholders, the board of directors or any committee
of the board of directors of any of the Acquired Corporations;
(b) contravene, conflict with or result in a violation of any order,
writ, injunction, judgment or decree to which any of the Acquired Corporations,
or any of the assets material to the business the Acquired Corporations, is
subject;
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(c) contravene, conflict with or result in a violation of any of the
material terms or requirements of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate or modify, any Governmental
Authorization that is held by and is material to any of the Acquired
Corporations or that otherwise relates to and is material to the business of any
of the Acquired Corporations or to any of the assets owned or used by any of the
Acquired Corporations;
(d) contravene, conflict with or result in a violation or breach of
or result in a default under, any provision of any Acquired Corporation Contract
that is or would constitute a Major Contract, or give any Person the right to
(i) declare a default or exercise any remedy under any such Acquired Corporation
Contract, (ii) a rebate, chargeback, penalty or change in delivery schedule
under any such Acquired Corporation Contract, (iii) accelerate the maturity or
performance of any such Acquired Corporation Contract, or (iv) cancel, terminate
or modify any term of such Acquired Corporation Contract;
(e) result in the imposition or creation of any Encumbrance upon or
with respect to any asset owned or used by any of the Acquired Corporations
(except for Encumbrances that will not, in any case or in the aggregate,
materially detract from the value of the assets subject thereto or materially
impair the operations of any of the Acquired Corporations); or
(f) result in the disclosure or delivery to any escrow holder or
other Person (other than Parent or Merger Sub) of the source code, or any
portion or aspect of the source code, or any proprietary information or
algorithm contained in or relating to any source code, of any material Acquired
Corporation Proprietary Asset, or the transfer of any material asset of any of
the Acquired Corporations to any Person (other than Parent or Merger Sub).
Except as may be required by the Exchange Act, the CGCL, the HSR Act and the
rules of the National Association of Securities Dealers, Inc. ("NASD") (as they
relate to the S-4 Registration Statement and the Prospectus/Proxy Statement, as
defined in Section 2.28(b)), none of the Acquired Corporations was, is or will
be required to make any filing with or give any notice to, or to obtain any
Consent from, any Governmental Body or any industry regulatory body in
connection with (x) the execution, delivery or performance of this Agreement or
any of the other agreements referred to in this Agreement, or (y) the
consummation of the Merger or any of the other transactions contemplated by this
Agreement.
2.26 FAIRNESS OPINION. The Company's Board of Directors has received the
opinion of Morgan Stanley & Co. Incorporated, financial advisor to the Company,
dated at or about the date of this Agreement, to the effect that the Exchange
Ratio is fair to the shareholders of the Company from a financial point of view.
The Company will provide a copy of the written opinion to Parent upon its
request.
2.27 FINANCIAL ADVISOR. Except for Morgan Stanley & Co. Incorporated, no
broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the Merger or any of the other
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of any of the Acquired Corporations. The total of all fees,
commissions and other amounts that have been paid by the Company to Morgan
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Stanley & Co. Incorporated and all fees, commissions and other amounts that may
become payable to Morgan Stanley & Co. Incorporated by the Company if the Merger
is consummated have been communicated to Parent and the amounts to be paid shall
not exceed the amounts so communicated. Upon the request of Parent, the Company
will deliver to Parent copies of all written agreements under which any such
fees, commissions or other amounts have been paid or may become payable and all
indemnification and other agreements relating to the engagement of Morgan
Stanley & Co. Incorporated.
2.28 DISCLOSURE. None of the information supplied or to be supplied by or
on behalf of the Company for inclusion or incorporation by reference in the
registration statement on Form S-4 to be filed with the SEC by Parent in
connection with the issuance of Parent Common Stock in the Merger (the "S-4
REGISTRATION STATEMENT") will, at the time the S-4 Registration Statement is
filed with the SEC or at the time it becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading. None of the information supplied or to be supplied by or on behalf
of the Company for inclusion or incorporation by reference in the
Prospectus/Proxy Statement to be filed with the SEC as part of the S-4
Registration Statement (the "PROSPECTUS/PROXY STATEMENT"), will, at the time the
Prospectus/Proxy Statement is mailed to the shareholders of the Company or
Parent, at the time of the Company Shareholders' Meeting or Parent Shareholders'
Meeting or as of the Effective Time, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading. The Prospectus/Proxy
Statement will comply as to form in all material respects with the provisions of
the Exchange Act and the rules and regulations promulgated by the SEC
thereunder.
2.29 CUSTOMS. The Acquired Corporations have acted with reasonable care
to properly value and classify, in accordance with applicable tariff laws, rules
and regulations, all goods that the Acquired Corporations import into the United
States or any other country (the "IMPORTED GOODS"). To the Company's knowledge,
there are currently no claims for material amounts pending against any of the
Acquired Corporations by the U.S. Customs Service (or other foreign customs
authorities) relating to the valuation, classification or marking of the
Imported Goods. To the Company's knowledge, since January 1, 1995 there have
not been any material penalties assessed or claimed by the U.S. Customs Service
or foreign customs authorities with respect to the Imported Goods. To the
Company's knowledge, the Acquired Corporations have paid to the U.S. Customs
Service and relevant foreign customs authorities, with such exceptions as are
not material, all duties, tariffs and excise taxes assessed, due and payable
with such exceptions as would not result, in any individual case or series of
related cases in a Material Adverse Effect on the Acquired Corporations.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB.
Parent and Merger Sub represent and warrant to the Company that,
except as set forth in the disclosure schedule that has been prepared by Parent
in accordance with the requirements of
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Section 9.6 and that has been delivered to the Company on the date of this
Agreement and signed on behalf of Parent by the President of Parent (the "PARENT
DISCLOSURE SCHEDULE"):
3.1 ORGANIZATION, STANDING AND POWER. Parent is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Merger Sub is a corporation duly organized, validly existing and in
good standing under the laws of the State of California. Each of Parent and
Merger Sub has the corporate power to own its properties and to carry on its
business as now being conducted and is duly qualified to do business and is in
good standing in each jurisdiction in which the failure to be so qualified would
have a Material Adverse Effect on Parent and its Subsidiaries, taken as a whole.
3.2 CERTIFICATE OF INCORPORATION AND BYLAWS. Parent has delivered to
the Company accurate and complete copies of the certificate of incorporation,
bylaws and other charter and organizational documents of Parent, including all
amendments thereto. Parent is not in violation of any of the provisions of its
certificate of incorporation or bylaws. Parent has delivered to the Company
accurate and complete copies of the articles of incorporation, bylaws and other
charter and organizational documents of Merger Sub, including all amendments
thereto. Merger Sub is not in violation of any of the provisions of its articles
of incorporation or bylaws.
3.3 CAPITALIZATION, ETC.
(a) The authorized capital stock of Parent consists of: (i)
200,000,000 shares of Parent Common Stock, $0.001 par value, of which, as of
February 4, 1998, 35,522,785 shares were issued and outstanding (which amount
does not materially differ from the amount issued and outstanding as of the date
hereof); and (ii) 2,000,000 shares of preferred stock, $0.001 par value per
share, of which no shares are outstanding as of the date of this Agreement. As
of the date of this Agreement, there are no outstanding subscriptions, options,
calls, warrants or rights to acquire shares of Parent Common Stock other than
pursuant to stock issuance or stock option plans or other arrangements disclosed
in the Parent SEC Documents. The authorized capital stock of Merger Sub
consists of 100 shares of Common Stock ("Merger Sub Common Stock"), no par
value, all of which have been issued and are outstanding as of the date of this
Agreement and are held by Parent. As of the date of this Agreement, there are
no shares of Parent Common Stock held in treasury by Parent. None of the
outstanding shares of Company Common Stock is entitled or subject to any
preemptive right, right of participation, right of maintenance or any similar
right.
3.4 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Parent has made available to the Company accurate and complete
copies (excluding copies of exhibits) of each report, registration statement (on
a form other than Form S-8) and definitive proxy statement filed by Parent with
the SEC between January 1, 1997 and the date of this Agreement and will make
available to the Company accurate and complete copies of all such registration
statements, proxy statements and other statements, reports, schedules, forms and
other documents filed after the date of this Agreement and prior to the
Effective Date (the "PARENT SEC DOCUMENTS"). As of the time it was filed with
the SEC (or, if amended or superseded by a later filing, then on the date of
such filing): (i) each of the Parent SEC Documents filed with the SEC complied
in all material respects with the applicable
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requirements of the Securities Act or the Exchange Act (as the case may be) as
of the date of such filing and any company SEC Documents filed after the date
hereof and prior to the Effective Time will so comply; and (ii) none of the
Parent SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(b) The consolidated financial statements contained in the Parent SEC
Documents: (i) complied as to form in all material respects with the published
rules and regulations of the SEC applicable thereto; (ii) were prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered (except as may be indicated in the notes to such financial statements
and, in the case of unaudited statements, as permitted by Form 10-Q of the SEC,
and except that unaudited financial statements may not contain footnotes and are
subject to normal and recurring year-end audit adjustments which in the case of
the Parent's SEC Documents already filed as of the date hereof are not
reasonably expected to be, individually or in the aggregate, material in
amount); and (iii) fairly present the consolidated financial position of Parent
and its subsidiaries as of the respective dates thereof and the consolidated
results of operations of Parent and its subsidiaries for the periods covered
thereby. The audited consolidated balance sheet of Parent and its subsidiaries
included in the Company's Annual Report on Form 10-K for the year ended December
31, 1996 is sometimes referred to herein as the "PARENT BALANCE SHEET." All
financial statements (including any related notes) contained in Company SEC
Documents filed after the date hereof shall meet the conditions set forth in
(i), (ii) and (iii) of this Section 3.4(b).
(c) The Company has recognized revenues in accordance with 91-1.
3.5 DISCLOSURE. None of the information to be supplied by or on behalf of
Parent for inclusion in the S-4 Registration Statement will, at the time the S-4
Registration Statement becomes effective under the Securities Act, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they are made, not misleading. None
of the information to be supplied by or on behalf of Parent for inclusion or
incorporation by reference in the Prospectus/Proxy Statement will, at the time
the Prospectus/Proxy Statement is mailed to the shareholders of the Company or
Parent, at the time of the Company Shareholders' Meeting or the Parent
Stockholders' Meeting or as of the Effective Time, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they are made, not misleading. The S-4
Registration Statement will comply as to form in all material respects with the
provisions of the Securities Act and the rules and regulations promulgated by
the SEC thereunder, except that no representation or warranty is made by Parent
with respect to statements made or incorporated by reference therein based on
information supplied by the Company for inclusion or incorporation by reference
in the Prospectus/Proxy Statement.
3.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in Part 3.6
of the Parent Disclosure Schedule between the date of the Parent Balance Sheet
and the date of this Agreement: (i) there has not been any event that has had or
would reasonably be expected to
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have a Material Adverse Effect on Parent; (ii) Parent has not declared, accrued,
set aside or paid any dividend; and (iii) the Company has not incurred any
liabilities other than in the ordinary course of business and consistent with
past practices.
3.7 AUTHORITY; BINDING NATURE OF AGREEMENT. Parent and Merger Sub have
the absolute and unrestricted right, power and authority to perform their
obligations under this Agreement; and the execution, delivery and performance by
Parent and Merger Sub of this Agreement have been duly authorized by all
necessary action on the part of Parent and Merger Sub and their respective
boards of directors. This Agreement constitutes the legal, valid and binding
obligation of Parent and Merger Sub, enforceable against them in accordance with
its terms, subject to (i) laws of general application relating to bankruptcy,
insolvency and the relief of debtors, and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies.
3.8 NON-CONTRAVENTION; CONSENTS. Neither (i) Parent or Merger Sub's
execution, delivery or performance of this Agreement or any of the other
agreements contemplated by this Agreement nor (ii) the consummation of the
Merger will directly or indirectly (with or without the lapse of time) (a)
conflict with or result in any breach of any provision of the certificate of
incorporation or bylaws of Parent or the articles of incorporation or bylaws of
Merger Sub, or (b) result in a default by Parent or Merger Sub under any
Contract to which Parent or Merger Sub is a party, except for any default which
has not had and will not have a Material Adverse Effect on Parent, or (c) result
in a violation by Parent or Merger Sub of any order, writ, injunction, judgment
or decree to which Parent or Merger Sub is subject, except for any violation
which has not had and will not have a Material Adverse Effect on Parent. Except
as may be required by the Securities Act, the Exchange Act, state securities or
"blue sky" laws, the CGCL, the HSR Act and the rules of the NASD (as they relate
to the S-4 Registration Statement and the Prospectus/Proxy Statement), Parent is
not and will not be required to make any filing with or give any notice to, or
to obtain any Consent from, any Person in connection with the execution and
delivery of this Agreement, or the consummation of the Merger.
3.9 PROPRIETARY ASSETS.
(a) Parent has good, valid and marketable title to all Proprietary
Assets owned by Parent that are material to the business of the Parent taken as
a whole, free and clear of all Encumbrances, except for (i) any lien for current
taxes not yet due and payable, (ii) any Encumbrances that have arisen in the
ordinary course of business and that do not (individually or in the aggregate)
materially detract from the value of the assets subject thereto or materially
impair the operations of Parent and (iii) any Contract to which Parent is a
party and pursuant to which Parent has licensed or transferred any right
(whether or not currently exercisable) to use, license or otherwise exploit any
Parent Proprietary Asset to any Person. Parent has a valid right to use,
license and otherwise exploit all Proprietary Assets of Parent to the extent
necessary to the conduct of the business of Parent as currently conducted.
(b) To the knowledge of Parent: (i) all patents, trademarks,
tradenames, service marks, maskwork rights, copyrights and trade secrets held by
any of Parent are valid, enforceable and subsisting; (ii) none of Parent
Proprietary Assets and no Proprietary Asset that is currently being developed by
Parent (either by itself or with any other Person) infringes,
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misappropriates or conflicts with any Proprietary Asset owned or used by any
other Person; (iii) none of the products that are or have been designed,
created, developed, assembled, manufactured or sold by Parent is infringing,
misappropriating or making any unlawful or unauthorized use of any Proprietary
Asset owned or used by any other Person, and none of such products has at any
time infringed, misappropriated or made any unlawful or unauthorized use of, and
neither Parent nor any of its Representatives has received any notice or other
communication (in writing or otherwise) of any actual, alleged, possible or
potential infringement, misappropriation or unlawful or unauthorized use of, any
Proprietary Asset owned or used by any other Person; and (iv) no other Person is
infringing, misappropriating or making any unlawful or unauthorized use of, and
no Proprietary Asset owned or used by any other Person infringes or conflicts
with, any material Parent Proprietary Asset.
3.10 CONTRACTS. Except as would not have a Material Adverse Effect on
Parent: (i) Parent has not violated or breached, or committed any default under,
any Contract to which the Parent is a party and which is material to the conduct
of the Parent's business as currently conducted, and, to the knowledge of
Parent, no other Person has violated or breached, or committed any default
under, any such Contract; (ii) to the knowledge of Parent, no event has
occurred, and no circumstance or condition exists, that (with or without notice
or lapse of time) will, or would reasonably be expected to, (A) result in a
violation or breach by Parent of any of the provisions of any such Contract, (B)
give any Person the right to declare a default or exercise any remedy under any
such Contract, (C) give any Person the right to a rebate, chargeback, penalty or
change in delivery schedule under any such Contract, (D) give any Person the
right to accelerate the maturity or performance of any such Contract, or (E)
give any Person the right to cancel, terminate or modify any such Contract;
(iii) neither Parent nor its Representatives has received any written notice or
other communication regarding any actual or possible violation or breach by
Parent of, or default under, any such Contract; and (iv) Parent has obtained all
necessary export licenses related to the export of its products.
3.11 COMPLIANCE WITH LEGAL REQUIREMENTS. Parent is, and has at all times
since December 31, 1996 been, in compliance with all applicable Legal
Requirements, except where the failure to comply with such Legal Requirements
has not had and will not have a Material Adverse Effect on Parent. Since
December 31, 1996, Parent has not received any notice or other communication
from any Governmental Body regarding any actual or possible violation of, or
failure to comply with, any Legal Requirement, which failure to comply has had a
Material Adverse Effect on Parent.
3.12 TAX MATTERS.
(a) All Tax Returns required to be filed by or on behalf of Parent
with any Governmental Body with respect to any taxable period ending on or
before the Closing Date (the "PARENT RETURNS") if due on or before the Closing
Date (i) have been or will be filed on or before the applicable due date
(including any extensions of such due date if properly obtained), and (ii) have
been, or will be when filed, prepared in all material respects in compliance
with all applicable Legal Requirements. All amounts shown on Parent Returns to
be due on or before the Closing Date have been or will be paid on or before the
Closing Date.
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(b) Parent Financial Statements fully accrue all actual and contingent
liabilities for Taxes with respect to all periods through the dates thereof in
accordance with GAAP. Parent will establish, in the ordinary course of business
and consistent with its past practices, reserves adequate for the payment of all
Taxes for the period from the date of this Agreement through the Closing Date.
(c) Since December 31, 1996, no Parent Return has ever been examined
or audited by any Governmental Body. No extension or waiver (other than the
normal extension occurring by reason of an extension of time to file a Return)
of the limitation period applicable to any of Parent Returns has been granted
(by Parent or any other Person), and no such extension or waiver has been
requested from Parent.
(d) No claim or Legal Proceeding is pending or, to the best of the
knowledge of Parent, has been threatened against or with respect to Parent in
respect of any material Tax. There are no unsatisfied liabilities for material
Taxes (including liabilities for interest, additions to tax and penalties
thereon and related expenses) with respect to any notice of deficiency or
similar document received by Parent with respect to any material Tax (other than
liabilities for Taxes asserted under any such notice of deficiency or similar
document which are being contested in good faith by Parent and with respect to
which adequate reserves for payment have been established). There are no liens
for material Taxes upon any of the assets of Parent except liens for current
Taxes not yet due and payable. Parent has not entered into or become bound by
any agreement or consent pursuant to Section 341(f) of the Code. Parent has not
been, nor will it be, required to include any adjustment in taxable income for
any tax period (or portion thereof) pursuant to Section 481 or 263A of the Code
or any comparable provision under state or foreign Tax laws as a result of
transactions or events occurring, or accounting methods employed, prior to the
Closing.
(e) There is no agreement, plan, arrangement or other Contract
covering any employee or independent contractor or former employee or
independent contractor of Parent that, considered individually or considered
collectively with any other such Contracts, will, or could reasonably be
expected to, give rise directly or indirectly to the payment of any amount that
would not be deductible pursuant to Section 280G or Section 162 of the Code.
Parent is not, nor has it ever been, a party to or bound by any tax indemnity
agreement, tax sharing agreement, tax allocation agreement or similar Contract.
3.13 GOVERNMENTAL AUTHORIZATIONS. Parent holds all Governmental
Authorizations necessary to enable Parent to conduct its business in the manner
in which such business is currently being conducted. All such Governmental
Authorizations are valid and in full force and effect.
3.14 LEGAL PROCEEDINGS. As of the date of this Agreement, there is no
pending Legal Proceeding, and no Person has, to the knowledge of Parent, overtly
threatened in writing to commence any Legal Proceeding that would have a
Material Adverse Effect on Parent.
3.15 VOTE REQUIRED. The only vote of Parent's stockholders required to
approve the issuance of Parent Common Stock in the Merger is the vote prescribed
by rules of the NASD (the "REQUIRED PARENT STOCKHOLDER VOTE").
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3.16 VALID ISSUANCE. The Parent Common Stock to be issued by virtue of
the Merger will, when issued in accordance with the provisions of this
Agreement, be validly issued, fully paid and nonassessable.
3.17 ACCOUNTING MATTERS. To the best of the knowledge of Parent, Parent
has not taken and has not agreed, and does not plan, to take any action that
would prevent Parent from accounting for the Merger as a "pooling of interests."
3.18 FAIRNESS OPINION. Parent's Board of Directors has received the
opinion of NationsBanc Montgomery Securities LLC, financial advisor to Parent,
dated at or about the date of this Agreement, to the effect that the Exchange
Ratio is fair to Parent from a financial point of view. Upon request of the
Company, Parent will deliver a copy of the written opinion to the Company.
SECTION 4. CERTAIN COVENANTS OF THE COMPANY.
4.1 ACCESS AND INVESTIGATION. During the period from the date of this
Agreement through the earlier of the Effective Time and the termination of this
Agreement (the "PRE-CLOSING PERIOD"), the Company shall, and shall cause the
respective Representatives of the Acquired Corporations to: (a) provide Parent
and Parent's Representatives with reasonable access to the Acquired
Corporations' Representatives, personnel and assets and to all existing books,
records, Tax Returns, work papers and other documents and information relating
to the Acquired Corporations; and (b) provide Parent and Parent's
Representatives with such copies of the existing books, records, Tax Returns,
work papers and other documents and information relating to the Acquired
Corporations, and with such additional financial, operating and other data and
information regarding the Acquired Corporations, as Parent may reasonably
request.
4.2 OPERATION OF THE COMPANY'S BUSINESS.
(a) During the Pre-Closing Period: (i) the Company shall use
commercially reasonable efforts to conduct its business and operations (A) in
the ordinary course, (B) in a commercially reasonable manner and (C) in
compliance with all applicable Legal Requirements, except to the extent that any
failure to comply with any applicable Legal Requirements would not have a
Material Adverse Effect on the Acquired Corporations; and (ii) the Company shall
(to the extent requested by Parent) cause its officers to report regularly to
Parent concerning the status of the Company's business.
(b) During the Pre-Closing Period, the Company shall not (without the
prior written consent of Parent), and shall not permit any of the other Acquired
Corporations to:
(i) (A) declare, accrue, set aside or pay any dividend or make any
other distribution in respect of any shares of its capital stock, or (B)
repurchase, redeem or otherwise reacquire any shares of capital stock or other
securities other than the repurchase of unvested shares at cost and below the
then fair market value of the Company Common Stock in connection with the
termination of an employee of an Acquired Corporation pursuant to any Plan and
consistent with past practices;
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(ii) sell, issue, grant or authorize the issuance or grant of
(i) any capital stock or other security, (ii) any option, call, warrant or right
to acquire any capital stock or other security, or (iii) any instrument
convertible into or exchangeable for any capital stock or other security (except
that the Company may (A) issue Company Common Stock upon the valid exercise of
Company Options outstanding as of the date of this Agreement, (B) grant Company
Options to employees hired after the date of this Agreement consistent with past
practices and subject to Parent's consent not to be unreasonably withheld and
(C) grant Company Options exercisable for an aggregate number of shares of
Company Common Stock not in excess of 200,000 shares, provided that such Company
Options are granted on an annual basis, at exercise prices not less than the
fair market value of the Company Common Stock on the date of grant and in
accordance with past practices to employees who are employees of the Acquired
Corporation as of the date of this Agreement;
(iii) amend or waive any of its rights under, or accelerate the
vesting under, any provision of any of the Company's stock option plans, any
provision of any agreement evidencing any outstanding stock option or any
restricted stock purchase agreement, or otherwise modify any of the terms of any
outstanding option, warrant or other security or any related Contract;
(iv) amend or permit the adoption of any amendment to its
articles of incorporation or bylaws or other charter or organizational
documents, or, subject to the other terms of this Agreement, effect or become a
party to any merger, consolidation, share exchange, business combination,
recapitalization, reclassification of shares, stock split, reverse stock split
or similar transaction;
(v) form any subsidiary or acquire any equity interest or other
interest in any other Entity (other than passive investments in equity interests
of publicly traded securities as part of the Company's cash management program);
(vi) make any capital expenditures in excess of $1,500,000 in
the aggregate;
(vii) acquire the business of any Entity;
(viii) incur any indebtedness for borrowed money (other than: (i)
in connection with the financing of ordinary trade payables; (ii) pursuant to
existing credit facilities; (iii) in connection with leasing activities in the
ordinary course of business; or (iv) for tax planning purposes in the ordinary
course of business) or guarantee any indebtedness of any person for borrowed
money, or issue or sell any debt securities or warrants or right to acquire debt
securities of any of the Acquired Corporations or guarantee any debt securities
of others.
(ix) establish, adopt or amend in any material respect any Plan,
pay any bonus except in accordance with the terms of existing Plans or pursuant
to commitments made prior to the date of this Agreement, or make any profit-
sharing or similar payment to, or increase the amount of the wages, salary,
commissions, fringe benefits or other compensation or remuneration payable to,
(A) any of its directors or executive officers, or (B) with respect to non-
executive officers and employees, other than normal periodic increases
consistent with past
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practices (it being understood that Company Options shall not be included in
compensation for purposes of this Section 4.2(b)(ix));
(x) grant any severance or termination pay to any officer or
employee except payments in amounts consistent with policies and past practices
or pursuant to written agreements outstanding, or policies existing, on the date
hereof and as previously disclosed in writing or made available to Parent, or
adopt any new severance plan;
(xi) hire any new employee having an annual base salary in excess of
$100,000, or engage any consultant or independent contractor for the payment of
compensation in excess of $100,000 over the term of such engagement, provided
such term is at least for a period of one year;
(xii) transfer or license to any Person or amend or modify in any
material adverse respect any rights (including without limitation distribution
rights) to the Proprietary Assets of the Acquired Corporations, or enter into
assignments of future patent rights, other than non-exclusive licenses and
distribution rights in the ordinary course of business and consistent with past
practice;
(xiii) sell, lease, license, encumber or otherwise dispose of any
properties or assets which are material, individually or in the aggregate, to
the business of the Company, except in the ordinary course of business
consistent with past practice or lend funds to any third party (other than
intracompany loans and travel advances in the ordinary course of business);
(xiv) change any of its methods of accounting or accounting practices
in any respect other than as may be required under GAAP;
(xv) make any material election with respect to Taxes adverse to
the Acquired Corporations;
(xvi) except in connection with this Agreement or the transactions
contemplated hereby, file or settle any Legal Proceeding;
(xvii) enter into any agreement requiring the consent or approval of
any third party with respect to the Merger; or
(xviii) agree or commit to take any of the actions described in
clauses "(i)" through "(xvii)" of this Section 4.2(b).
(c) During the Pre-Closing Period, the Company shall promptly notify
Parent in writing of: (i) the discovery by the Company of any event, condition,
fact or circumstance that has had or would reasonably be expected to have a
Material Adverse Effect on the Acquired Corporations. No notification given to
Parent pursuant to this Section 4.2(c) shall limit or otherwise affect any
representations, warranties, covenants or obligations of the Company contained
in this Agreement.
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4.3 OPERATION OF THE PARENT'S BUSINESS. During the Pre-Closing Period,
Parent shall not (without the prior written consent of the Company) (i) declare,
accrue, set aside or pay any extraordinary dividend or any other extraordinary
distribution in respect of any shares of its capital stock, (ii) repurchase,
redeem or otherwise reacquire any shares of as capital stock or other securities
in an extraordinary manner, (iii) amend or permit the adoption of any amendments
to its certificate of incorporation, (iv) become a party to any recapitalization
or (v) take any other action, if in such case the action would be materially
adverse to the shareholders of the Company compared to the stockholders of the
Parent.
4.4 NO SOLICITATION.
(a) From the date of this Agreement until the earlier of the Effective
Time or termination of this Agreement pursuant to Section 8, the Company shall
not, and shall not authorize or permit any Subsidiary of the Company or any
Representative of any of the Acquired Corporations (including for purposes of
this Section 4.4(a) each of the affiliate shareholders of the Company listed on
Exhibit B-1) to, (i) solicit, initiate, encourage or induce the making,
submission or announcement of any Acquisition Proposal or take any action that
could reasonably be expected to lead to an Acquisition Proposal, (ii) furnish
any information regarding any of the Acquired Corporations to any Person in
connection with or in response to an Acquisition Proposal, (iii) engage in
discussions with any Person with respect to any Acquisition Proposal, except as
to the existence of these provisions, (iv) subject to Section 5.2(c), approve,
endorse or recommend any Acquisition Proposal or (v) enter into any letter of
intent or similar document or any Contract contemplating or otherwise relating
to any Acquisition Transaction; provided, however, that prior to the approval of
this Agreement by the Required Company Shareholder Vote, this Section 4.4(a)
shall not prohibit the Company from furnishing nonpublic information regarding
the Acquired Corporations to, entering into a confidentiality agreement with or
entering into discussions with, any Person in response to a Superior Offer
submitted by such Person (and not withdrawn) if (1) neither the Company nor any
Representative of any of the Acquired Corporations shall have violated any of
the restrictions set forth in this Section 4.4 with respect to such Superior
Offer, (2) the Board of Directors of the Company concludes in good faith, after
consultation with its outside legal counsel, that such action is required in
order for the Board of Directors of the Company to comply with its fiduciary
obligations to the Company's shareholders under applicable law, (3) prior to
furnishing any such nonpublic information to, or entering into discussions with,
such Person, the Company gives Parent written notice of the identity of such
Person and of the Company's intention to furnish nonpublic information to, or
enter into discussions with, such Person, and the Company receives from such
Person an executed confidentiality agreement containing customary limitations on
the use and disclosure of all nonpublic written and oral information furnished
to such Person by or on behalf of the Company, and (4) contemporaneously with
furnishing any such nonpublic information to such Person, the Company furnishes
such nonpublic information to Parent (to the extent such nonpublic information
has not been previously furnished by the Company to Parent). Without limiting
the generality of the foregoing, the Company acknowledges and agrees that any
violation of any of the restrictions set forth in the preceding sentence by any
Representative of any of the Acquired Corporations, whether or not such
Representative is purporting to act on behalf of any of the Acquired
Corporations, shall be deemed to constitute a breach of this Section 4.4 by the
Company. In addition to the foregoing, the Company shall (i) provide Parent
with at least 24 hours prior notice (or such lesser prior notice as provided to
the members of the
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Company's Board of Directors but in no event less than eight hours) of any
meeting of the Company's Board of Directors at which the Company's Board of
Directors is reasonably expected to consider a Superior Offer and (ii) provide
Parent with at least two (2) business days or forty-eight (48) hours prior
written notice of a meeting of the Company's Board of Directors at which the
Company's Board of Directors is reasonably expected to recommend a Superior
Offer to its shareholders and together with such notice a copy of such Superior
Offer (pursuant to Section 4.4(b) below).
(b) The Company shall promptly notify Parent of any Acquisition
Proposal (including the identity of the Person making or submitting such
Acquisition Proposal and the material terms thereof) that is made or submitted
by any Person during the Pre-Closing Period. The Company shall keep Parent
informed with respect to the status of any such Acquisition Proposal and any
material modification thereto.
(c) The Company shall immediately cease and cause to be terminated any
existing discussions with any Person that relate to any Acquisition Proposal.
(d) Nothing contained in this Section 4.4 or elsewhere in this
Agreement shall prohibit the Company from (i) taking and disclosing to its
shareholders a position contemplated by Rules 14d-9 and 14e-2(a) promulgated
under the Exchange Act or (ii) making any disclosure to the Company's
shareholders if, in the good faith judgment of the majority of the members of
the Board of Directors of the Company, after consultation with independent legal
counsel, failure to so disclose would be inconsistent with applicable laws.
4.5 FINANCIAL STATEMENTS. The Company shall use commercially reasonable
efforts to cause its independent auditors to deliver to Parent on or prior to
April 30, 1998 the audited consolidated balance sheet of the Company and its
subsidiaries at March 31, 1998 and its audited consolidated statement of results
of operations for the fiscal year ended March 31, 1998, except that such balance
sheet and statement of operations need not contain footnotes (collectively, the
"1998 AUDITED FINANCIAL STATEMENTS"). The Company shall use commercially
reasonable efforts to cause its independent auditors to deliver to Parent on or
prior to May 31, 1998 the Company's Annual Report on Form 10-K for the fiscal
year ended March 31, 1998.
SECTION 5. ADDITIONAL COVENANTS OF THE PARTIES.
5.1 REGISTRATION STATEMENT; PROSPECTUS/PROXY STATEMENT.
(a) As promptly as practicable after the date of this Agreement, the
Company and Parent shall prepare and cause to be filed with the SEC the S-4
Registration Statement, together with the Prospectus/Proxy Statement and any
other documents required by the Securities Act, the Exchange Act or any other
Federal, foreign or Blue Sky or related laws in connection with the Merger and
the transactions contemplated by this Agreement ("OTHER FILINGS"). Each of
Parent and the Company will notify the other promptly upon the receipt of any
comments from the SEC or its staff or any other government officials and of any
request by the SEC or its staff or any other government officials for amendments
or supplements to the S-4 Registration Statement, the Prospectus/Proxy Statement
or any Other Filings or for additional information and will supply the other
with copies of all correspondence between such party or
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any of its representatives, on the one hand, and the SEC, or its staff or any
other government officials, on the other hand, with respect to the S-4
Registration Statement, the Prospectus/Proxy Statement, any Other Filings or the
Merger. Each of Parent and the Company shall use all reasonable efforts to cause
the S-4 Registration Statement (including the Prospectus/Proxy Statement) and
any Other Filings to comply with the rules and regulations promulgated by the
SEC, to respond promptly to any comments of the SEC or its staff and to have the
S-4 Registration Statement declared effective under the Securities Act as
promptly as practicable after it is filed with the SEC. Parent will use all
reasonable efforts to cause the Prospectus/Proxy Statement to be mailed to
Parent's stockholders and the Company will use all reasonable efforts to cause
the Prospectus/Proxy Statement to be mailed to the Company's shareholders, as
promptly as practicable after the Form S-4 Registration Statement is declared
effective under the Securities Act. The Company shall promptly furnish to Parent
all information concerning the Acquired Corporations and the Company's
shareholders that may be required or reasonably requested in connection with any
action contemplated by this Section 5.1. If any event relating to any of the
Acquired Corporations occurs, or if the Company becomes aware of any
information, that should be set forth in an amendment or supplement to the S-4
Registration Statement or the Prospectus/Proxy Statement, then the Company shall
promptly inform Parent thereof and shall cooperate with Parent in filing such
amendment or supplement with the SEC and, if appropriate, in mailing such
amendment or supplement to the shareholders of the Company and the stockholders
of Parent.
(b) Prior to the Effective Time, Parent shall use reasonable efforts
to obtain all regulatory approvals needed to ensure that the Parent Common Stock
to be issued in the Merger will be registered or qualified under the securities
law of every jurisdiction of the United States in which any registered holder of
Company Common Stock has an address of record on the record date for determining
the shareholders entitled to notice of and to vote at the Company Shareholders'
Meeting; provided, however, that Parent shall not be required (i) to qualify to
do business as a foreign corporation in any jurisdiction in which it is not now
qualified or (ii) file a general consent to service of process in any
jurisdiction.
5.2 COMPANY SHAREHOLDERS' MEETING.
(a) The Company shall take all action necessary and permitted under
all applicable Legal Requirements to call, give notice of, convene and hold a
meeting of the holders of Company Common Stock (the "COMPANY SHAREHOLDERS'
MEETING") to consider, act upon and vote upon the adoption of this Agreement and
approval of the Merger. The Company Shareholders' Meeting will be held as
promptly as practicable and in any event, if permitted under applicable law,
within forty-five (45) days after the S-4 Registration Statement is declared
effective under the Securities Act; provided, however, that notwithstanding the
anything to the contrary contained in this Agreement, the Company may adjourn or
postpone the Company Shareholders' Meeting to the extent necessary to ensure
that any necessary supplement or amendment to the Prospectus/Proxy Statement is
provided to the Company's shareholders in advance of a vote on the Merger and
this Agreement or, if as of the time for which Company Shareholders' Meeting is
originally scheduled (as set forth in the Prospectus/Proxy Statement) there are
insufficient shares of Company Common Stock represented (either in person or by
proxy) to constitute a quorum necessary to conduct the business of the Company's
Shareholders' Meeting. The Company shall ensure that the Company Shareholders'
Meeting is called, noticed,
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convened, held and conducted, and subject to Section 5.2(c) that all proxies
solicited by the Company in connection with the Company Shareholders' Meeting
are solicited, in compliance with all applicable Legal Requirements. The
Company's obligation to call, give notice of, convene and hold the Company
Shareholders' Meeting in accordance with this Section 5.2(a) shall not be
limited or otherwise affected by the commencement, disclosure, announcement or
submission to the Company of any Acquisition Proposal, or by any withdrawal,
amendment or modification of the recommendation of the Board of Directors of the
Company with respect to the Merger.
(b) Subject to Section 5.2(c): (i) the Board of Directors of the
Company shall unanimously recommend that the Company's shareholders vote in
favor of and adopt and approve this Agreement and the Merger at the Company
Shareholders' Meeting; (ii) the Prospectus/Proxy Statement shall include a
statement to the effect that the Board of Directors of the Company has
unanimously recommended that the Company's shareholders vote in favor of and
adopt and approve this Agreement and the Merger at the Company Shareholders'
Meeting; and (iii) neither the Board of Directors of the Company nor any
committee thereof shall withdraw, amend or modify, or propose or resolve to
withdraw, amend or modify, in a manner adverse to Parent, the unanimous
recommendation of the Board of Directors of the Company that the Company's
shareholders vote in favor of and adopt and approve this Agreement and the
Merger. For purposes of this Agreement, said recommendation of the Board of
Directors shall be deemed to have been modified in a manner adverse to Parent if
said recommendation shall no longer be unanimous.
(c) Nothing in this Agreement shall prevent the Board of Directors of
the Company from withholding, withdrawing, amending or modifying its unanimous
recommendation in favor of the Merger if (i) a Superior Offer is made to the
Company and is not withdrawn, (ii) neither the Company nor any of its
Representatives shall have violated any of the restrictions set forth in Section
4.4, and (iii) the Board of Directors of the Company concludes in good faith,
after consultation with its outside counsel, that, in light of such Superior
Offer, the withholding, withdrawal, amendment or modification of such
recommendation is required in order for the Board of Directors of the Company to
comply with its fiduciary obligations to the Company's shareholders under
applicable law (and, in any such case, to the extent it does so, the Company may
refrain from soliciting proxies to secure the vote of its shareholders as may
otherwise be required hereby). Subject to applicable laws, nothing contained in
this Section 5.2 shall limit the Company's obligation to hold and convene the
Company Shareholders' Meeting (regardless of whether the unanimous
recommendation of the Board of Directors of the Company shall have been
withdrawn, amended or modified).
5.3 PARENT STOCKHOLDERS' MEETING.
(a) Parent shall take all action necessary and permitted under all
applicable Legal Requirements to call, give notice of, convene and hold a
meeting of the holders of Parent Common Stock to consider and vote upon the
issuance of Parent Common Stock in the Merger (the "PARENT STOCKHOLDERS'
MEETING"). The Parent Stockholders' Meeting will be held as promptly as
practicable and in any event, if permitted under applicable law, within forty-
five (45) days after the S-4 Registration Statement is declared effective under
the Securities Act; provided, however, that notwithstanding the anything to the
contrary contained in this
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Agreement, Parent may adjourn or postpone the Parent Stockholders' Meeting to
the extent necessary to ensure that any necessary supplement or amendment to the
Prospectus/Proxy Statement is provided to Parent's stockholders in advance of a
vote on the issuance of Parent Common Stock in the Merger or, if as of the time
for which the Parent Stockholders' Meeting is originally scheduled (as set forth
in the Prospectus/Proxy Statement) there are insufficient shares of Parent
Common Stock represented (either in person or by proxy) to constitute a quorum
necessary to conduct the business of the Parent's Stockholders' Meeting.
(b) (i) The board of directors of Parent shall unanimously recommend
that Parent's stockholders vote in favor of the issuance of Parent Common Stock
in the Merger; (ii) the Prospectus/Proxy Statement shall include a statement to
the effect that the board of directors of Parent has unanimously recommend that
Parent's stockholders vote in favor of the issuance of Parent Common Stock in
the Merger; and (iii) neither the board of directors of Parent nor any committee
thereof shall withdraw, amend or modify, or propose or resolve to withdraw,
amend or modify, in a manner adverse to the Company, the unanimous
recommendation of the board of directors of Parent that Parent's stockholders
vote in favor of the issuance of Parent Common Stock in the Merger. For
purposes of this Agreement, said recommendation of Parent's board of directors
shall be deemed to have been modified in a manner adverse to the Company if said
recommendation shall no longer be unanimous.
5.4 REGULATORY APPROVALS. The Company and Parent shall use all reasonable
efforts to file, as soon as practicable after the date of this Agreement, all
notices, reports and other documents required to be filed with any Governmental
Body with respect to the Merger and the other transactions contemplated by this
Agreement, and to submit promptly any additional information requested by any
such Governmental Body. Without limiting the generality of the foregoing, the
Company and Parent shall, promptly after the date of this Agreement, prepare and
file the notifications required under the HSR Act in connection with the Merger.
The Company and Parent shall respond as promptly as practicable to (i) any
inquiries or requests received from the Federal Trade Commission or the
Department of Justice for additional information or documentation and (ii) any
inquiries or requests received from any state attorney general or other
Governmental Body in connection with antitrust or related matters. Each of the
Company and Parent shall (1) give the other party prompt notice of the
commencement of any Legal Proceeding by or before any Governmental Body with
respect to the Merger or any of the other transactions contemplated by this
Agreement, (2) keep the other party informed as to the status of any such Legal
Proceeding, and (3) promptly inform the other party of any communication to or
from the Federal Trade Commission, the Department of Justice or any other
Governmental Body regarding the Merger. The Company and Parent will consult and
cooperate with one another, and will consider in good faith the views of one
another, in connection with any analysis, appearance, presentation, memorandum,
brief, argument, opinion or proposal made or submitted in connection with any
Legal Proceeding under or relating to the HSR Act or any other federal or state
antitrust or fair trade law. In addition, except as may be prohibited by any
Governmental Body or by any Legal Requirement, in connection with any Legal
Proceeding under or relating to the HSR Act or any other federal or state
antitrust or fair trade law or any other similar Legal Proceeding, each of the
Company and Parent agrees to permit authorized Representatives of the other
party to be present at each meeting or conference relating to any such Legal
Proceeding and to have access to and be consulted in connection with any
document,
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opinion or proposal made or submitted to any Governmental Body in connection
with any such Legal Proceeding.
5.5 STOCK OPTIONS.
(a) At the Effective Time, all rights with respect to Company Common
Stock under each Company Option then outstanding shall be converted into and
become rights with respect to Parent Common Stock, and Parent shall assume each
such Company Option in accordance with the terms (as in effect as of the date of
this Agreement) of the stock option plan under which it was issued and the stock
option agreement by which it is evidenced. From and after the Effective Time,
(i) each Company Option assumed by Parent may be exercised solely for shares of
Parent Common Stock, (ii) the number of shares of Parent Common Stock subject to
each such Company Option shall be equal to the number of shares of Company
Common Stock subject to such Company Option immediately prior to the Effective
Time multiplied by the Exchange Ratio, rounding down to the nearest whole share
(with cash, less the applicable exercise price, being payable for any fraction
of a share), (iii) the per share exercise price under each such Company Option
shall be adjusted by dividing the per share exercise price under such Company
Option by the Exchange Ratio and rounding up to the nearest cent and (iv) any
restriction on the exercise of any such Company Option shall continue in full
force and effect and the term, exercisability, vesting schedule and other
provisions of such Company Option shall otherwise remain unchanged; provided,
however, that each Company Option assumed by Parent in accordance with this
Section 5.5(a) shall, in accordance with its terms, be subject to further
adjustment as appropriate to reflect any stock split, stock dividend, reverse
stock split, reclassification, recapitalization or other similar transaction
subsequent to the Effective Time. It is the intention of the parties that
Company Options assumed by Purchaser qualify following the Effective Time as
incentive stock options as defined in Section 422 of the Code to the extent such
Company Options qualified as incentive stock options immediately prior to the
Effective Date.
(b) The Company shall take all action that, subject to pooling
restrictions, may be necessary (under the plans pursuant to which Company
Options are outstanding and otherwise) to effectuate the provisions of this
Section 5.5 and to ensure that, from and after the Effective Time, holders of
Company Options have no rights with respect thereto other than those
specifically provided in this Section 5.5.
(c) Promptly following the Effective Date, Parent will issue to each
holder of an assumed or replaced Company Option a document evidencing the
foregoing assumption or replacement of such Company Option by Parent.
(d) The Parent and the Company shall mutually agree as to the
treatment of the Purchase Plan.
5.6 FORM S-8. Parent agrees to file a registration statement on Form S-
8 for the shares of Parent Common Stock issuable with respect to assumed Company
Options, as soon as reasonably practical after the Effective Time.
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5.7 INDEMNIFICATION OF OFFICERS AND DIRECTORS.
(a) All rights to indemnification existing in favor of the directors
and officers of the Company for acts and omissions occurring prior to the
Effective Time, as provided in the Company's Articles of Incorporation or Bylaws
(as in effect as of the date of this Agreement) and as provided in any
indemnification agreements between the Company and said officers and directors
(as in effect at the Effective Time), shall survive the Merger and shall be the
obligation of and observed by Parent and the Surviving Corporation for a period
of not less than eight (8) years from and after the Effective Time.
(b) From the Effective Time until the third anniversary of the date on
which the Merger becomes effective, the Surviving Corporation shall maintain in
effect, for the benefit of the current directors and officers of the Company
with respect to acts or omissions occurring prior to the Effective Time, the
existing policy of directors' and officers' liability insurance maintained by
the Company as of the date of this Agreement (the "EXISTING POLICY"); provided,
however, that (i) the Surviving Corporation may substitute for the Existing
Policy a policy or policies of comparable coverage, and (ii) the Surviving
Corporation shall not be required to pay an annual premium for the Existing
Policy (or for any substitute policies) in excess of 150% of the amount of the
last annual premium paid by the Company prior to the date of this Agreement for
the Existing Policy (the "PAST PREMIUM AMOUNT"). In the event any future annual
premium for the Existing Policy (or any substitute policies) exceeds 150% of the
Past Premium Amount, the Surviving Corporation shall be entitled to reduce the
amount of coverage of the Existing Policy (or any substitute policies) to the
amount of coverage that can be obtained for a premium equal to 150% of the Past
Premium Amount.
(c) This Section 5.7 shall survive the consummation of the Merger at
the Effective Time, is intended to be for the benefit of, and enforceable by,
each person entitled to indemnification pursuant hereto and each such person's
or entity's heirs and representatives, and shall be binding on all successors
and assigns of Parent and the Surviving Corporation.
5.8 POOLING OF INTERESTS; TAX FREE REORGANIZATION. Each of the Company
and Parent agrees (a) not to take any action during the Pre-Closing Period that
would adversely affect the ability of Parent to account for the Merger as a
"pooling of interests," (b) to use all reasonable efforts to attempt to ensure
that none of its "affiliates" (as that term is used in Rule 145 promulgated
under the Securities Act) takes any action that could adversely affect the
ability of Parent to account for the Merger as a "pooling of interests" and (c)
not to take any action either prior to or after the Effective Time that would
reasonably be expected to cause the Merger to fail to qualify as a
"reorganization" under Section 368(a) of the Code. The Company and Parent each
agrees to provide Coopers & Lybrand L.L.P. and KPMG Peat Marwick L.L.P. such
letters as may be reasonably requested by either of them with respect to the
letters referred to in Sections 6.5(e) and 6.5(f) or any other letters relating
to such matters and delivered to the Company and Parent prior to the letters
referred to in Sections 6.5(e) and 6.5(e).
5.9 ADDITIONAL AGREEMENTS.
(a) Subject to the terms hereof, Parent and the Company shall use all
reasonable efforts to take, or cause to be taken, all actions necessary to
consummate the Merger
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and make effective the other transactions contemplated by this Agreement as
expeditiously as reasonably practicable. Without limiting the generality of the
foregoing, but subject to the terms hereof, each party to this Agreement (i)
shall make all filings (if any) and give all notices (if any) required to be
made and given by such party in connection with the Merger and the other
transactions contemplated by this Agreement, (ii) shall use all reasonable
efforts to obtain each Consent (if any) required to be obtained (pursuant to any
applicable Legal Requirement or Contract, or otherwise) by such party in
connection with the Merger or any of the other transactions contemplated by this
Agreement, and (iii) shall use all reasonable efforts to lift any restraint,
injunction or other legal bar to the Merger.
(b) Notwithstanding anything to the contrary contained in this
Agreement, neither Parent nor the Company shall have any obligation under this
Agreement (i) to dispose or cause any of its Subsidiaries to dispose of any
material assets, or to commit to cause any of the Acquired Corporations to
dispose of any material assets; (ii) to discontinue or cause any of its
subsidiaries to discontinue offering any material product, or to commit to cause
any of the Acquired Corporations to discontinue offering any material product;
(iii) to license or otherwise make available, or cause any of its Subsidiaries
to license or otherwise make available, to any Person, any material technology
or software or other material Proprietary Asset, or to commit to cause any of
the Acquired Corporations to license or otherwise make available to any Person
any material technology or software or other material Proprietary Asset; (iv) to
hold separate or cause any of its Subsidiaries to hold separate any material
assets or operations (either before or after the Closing Date), or to commit to
cause any of the Acquired Corporations to hold separate any material assets or
operations; or (v) to make or cause any of its Subsidiaries make any material
commitment (to any Governmental Body or otherwise) regarding its future
operations or the future operations of any of the Acquired Corporations.
5.10 CONFIDENTIALITY. The parties acknowledge that the Company and
Parent have previously executed a Mutual Non-Disclosure Agreement, dated as of
February 25, 1998 (the "CONFIDENTIALITY AGREEMENT"), which Confidentiality
Agreement will continue in full force and effect in accordance with its terms.
5.11 DISCLOSURE. The parties have agreed to the text of a joint press
release announcing the signing of this Agreement. To the extent reasonably
practicable, Parent and the Company shall consult with each other before issuing
any further press release and shall confer with each other promptly after the
date hereof regarding a plan with respect to public statements made with respect
to the Merger.
5.12 AFFILIATE AGREEMENTS. The Company shall use all reasonable efforts to
cause each Person identified in Exhibit F-1 to execute and deliver to Parent,
prior to the date of the mailing of the Prospectus/Proxy Statement to the
Company's shareholders and Parent's Stockholders, Affiliate Agreements in the
form of Exhibit E-1. Parent shall use all reasonable efforts to cause each
Person identified on Exhibit F-2 to execute and deliver to Parent and the
Company, prior to the date of the mailing of the Prospectus/Proxy Statement to
the Company's shareholders and Parent's stockholders, Affiliate Agreements in
the form of Exhibit E-2.
5.13 TAX MATTERS. At or prior to the Closing, the Company, Parent and
Merger Sub shall execute and deliver to Cooley Godward LLP and to Wilson Sonsini
Goodrich & Rosati tax
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representation letters in substantially the forms attached as Exhibit G-1 or G-
2, as applicable, or any other letter reasonably requested by such law firms.
Parent, Merger Sub and the Company shall use all reasonable efforts to cause the
Merger to qualify as a tax free reorganization under Section 368(a)(1) of the
Code.
5.14 LETTER OF THE COMPANY'S ACCOUNTANTS. The Company shall use all
reasonable efforts to cause to be delivered to Parent a letter of Coopers &
Lybrand L.L.P., dated no more than two (2) business days before the date on
which the S-4 Registration Statement becomes effective (and reasonably
satisfactory in form and substance to Parent), that is customary in scope and
substance for letters delivered by independent public accountants in connection
with registration statements similar to the S-4 Registration Statement.
5.15 NONCOMPETITION AGREEMENTS. The Company shall use all reasonable
efforts to obtain and deliver to Parent at the Closing the Noncompetition
Agreements in the form of Exhibit H, executed by the individuals identified on
Exhibit I.
5.16 NASDAQ LISTING. Parent shall use all reasonable efforts to have
the shares of Parent Common Stock issuable to the shareholders of the Company
pursuant to the Agreement and such other shares required to be reserved for
issuance in connection with the Merger authorized for listing on Nasdaq upon
official notice of issuance.
5.17 FIRPTA MATTERS. At the Closing, (a) the Company shall deliver to
Parent a statement (in such form as may be reasonably requested by counsel to
Parent) conforming to the requirements of Section 1.897 - 2(h)(1)(i) of the
United States Treasury Regulations, and (b) the Company shall deliver to the
Internal Revenue Service the notification required under Section 1.897 - 2(h)(2)
of the United States Treasury Regulations.
SECTION 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MERGER SUB.
The obligations of Parent and Merger Sub to effect the Merger and otherwise
consummate the transactions contemplated by this Agreement are subject to the
satisfaction, at or prior to the Closing, of each of the following conditions,
and upon consummation of the Closing, all conditions herein shall be deemed
satisfied and any liability for failure to satisfy any condition herein shall be
precluded:
6.1 ACCURACY OF REPRESENTATIONS. Each representation and warranty of the
Company contained in Section 2 of this Agreement shall be true and correct on
and as of the date of this Agreement and on and as of the Closing Date with the
same force and effect as if made on and as of the Closing Date except, (A) in
each case, or in the aggregate, as does not constitute a Material Adverse Effect
on the Acquired Corporations, (B) for changes contemplated by this Agreement,
and (C) for those representations and warranties which address matters only as
of a particular date (which representations shall have been true and correct
except as does not constitute a Material Adverse Effect on the Company as of
such particular date) (it being understood that, for purposes of determining the
accuracy of such representations and warranties, (i) all "Material Adverse
Effect" qualifications and other qualifications based on the word "material" or
similar phrases contained in such representations and warranties shall be
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disregarded except with respect to Section 2.4(a) and 2.4(b), the second
sentence of Section 2.9(c), Section 2.10(a) and 2.10(b) and Section 2.12, and
(ii) any update of or modification to the Company Disclosure Schedule made or
purported to have been made after the date of this Agreement shall be
disregarded).
6.2 PERFORMANCE OF COVENANTS. Each covenant or obligation that the
Company is required to comply with or to perform at or prior to the Closing
shall have been complied with and performed in all material respects.
6.3 EFFECTIVENESS OF REGISTRATION STATEMENT. The S-4 Registration
Statement shall have become effective in accordance with the provisions of the
Securities Act, and no stop order shall have been issued by the SEC with respect
to the S-4 Registration Statement.
6.4 STOCKHOLDER APPROVAL. This Agreement and the Merger shall have been
duly approved by the Required Company Shareholder Vote, and the issuance of
Parent Common Stock in the Merger shall have been duly approved by the Required
Parent Stockholder Vote. Fewer than 10% of the outstanding shares of Company
Common Stock shall be Dissenting Shares.
6.5 AGREEMENTS AND DOCUMENTS. Parent shall have received the following
agreements and documents, each of which shall be in full force and effect:
(a) Affiliate Agreements in the form of Exhibit E-1, executed by each
individual identified on Exhibit F-1, except to the extent that any such
individual has died or has become incapacitated;
(b) Noncompetition Agreements in the form of Exhibit J, executed by
the individuals listed in Exhibit K, except to the extent that any such
individual has died or has become incapacitated;
(c) a letter from Coopers & Lybrand L.L.P., dated as of the Closing
Date and addressed to Parent, reasonably satisfactory in form and substance to
Parent, updating the letter referred to in Section 5.14;
(d) the statement referred to in Section 5.17(a), executed by the
Company; and
(e) a letter from Coopers & Lybrand L.L.P., dated as of a date no
earlier than three (3) days prior to the Closing Date and addressed to Parent,
the Company and KPMG Peat Marwick L.L.P., reasonably satisfactory in form and
substance to Parent and KPMG Peat Marwick L.L.P., to the effect that, after
reasonable investigation, Coopers & Lybrand L.L.P. is not aware of any fact
concerning the Company or any of the Company's shareholders or affiliates that
could preclude Parent from accounting for the Merger as a "pooling of interests"
in accordance with GAAP, Accounting Principles Board Opinion No. 16 and all
published rules, regulations and policies of the SEC;
(f) a letter from KPMG Peat Marwick L.L.P., dated as of a date no
earlier than three (3) days prior to the Closing Date and addressed to Parent
and the Company,
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reasonably satisfactory in form and substance to Parent, to the effect such firm
concurs with the conclusion of Parent's management that Parent may account for
the Merger as a "pooling of interests" in accordance with GAAP, Accounting
Principles Board Opinion No. 16 and all published rules, regulations and
policies of the SEC; and
(g) a certificate executed on behalf of the Company by its Chief
Executive Officer confirming that the conditions set forth in Sections 6.1, 6.2,
6.4 (with respect to the Required Company Shareholder Vote) and 6.6 have been
duly satisfied.
6.6 NO MATERIAL ADVERSE CHANGE. There shall have been no material adverse
change in the business, financial condition, operations or financial performance
of the Acquired Corporations since the date of this Agreement other than any
change in the generation of revenue (and any corresponding change in the
margins, profitability or financial condition of the Acquired Corporations)
resulting from the public announcement or pendency of the Merger.
6.7 FIRPTA COMPLIANCE. The Company shall have filed with the Internal
Revenue Service the notification referred to in Section 5.17.
6.8 HSR ACT. The waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated.
6.9 LISTING. The shares of Parent Common Stock to be issued in the Merger
shall have been authorized for listing on Nasdaq, subject to notice of issuance.
6.10 NO RESTRAINTS. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any Legal Requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger illegal.
6.11 NO GOVERNMENTAL LITIGATION. There shall not be pending or threatened
any action, suit or litigation brought by the United States government or the
European Community, or any agency, commission, instrumentality, unit or body of
the United States Government or the European Community: (a) challenging or
seeking to restrain or prohibit the consummation of the Merger; (b) relating to
the Merger and seeking to obtain from Parent or any of its subsidiaries any
damages that may be material to Parent; (c) seeking to prohibit or limit in any
material respect Parent's ability to vote, receive dividends with respect to or
otherwise exercise ownership rights with respect to the stock of the Surviving
Corporation; or (d) which would materially and adversely affect the right of
Parent, the Surviving Corporation or any subsidiary of Parent to own the assets
or operate the business of the Company.
6.12 1998 AUDITED FINANCIAL STATEMENTS. Parent shall have received the
1998 Audited Financial Statements.
SECTION 7. CONDITIONS PRECEDENT TO OBLIGATION OF THE COMPANY.
The obligation of the Company to effect the Merger and otherwise consummate
the transactions contemplated by this Agreement are subject to the satisfaction,
at or prior to the
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Closing, of the following conditions, and upon consummation of the Closing, all
conditions herein shall be deemed satisfied and any liability for failure to
satisfy any condition herein shall be precluded:
7.1 ACCURACY OF REPRESENTATIONS. Each representation and warranty of
Parent and Merger Sub contained in Section 3 of this Agreement shall be true and
correct on and as of the date of this Agreement and on and as of the Closing
Date with the same force and effect as if made on and as of the Closing Date,
except, (A) in each case, or in the aggregate, as does not constitute a Material
Adverse Effect on Parent and Merger Sub, (B) for changes contemplated by this
Agreement and (C) for those representations and warranties which address matters
only as of a particular date (which representations shall have been true and
correct except as does not constitute a Material Adverse Effect on Parent and
Merger Sub as of such particular date) (it being understood that, for purposes
of determining the accuracy of such representations and warranties, (i) all
"Material Adverse Effect" qualifications and other qualifications based on the
word "material" or similar phrases contained in such representations and
warranties shall be disregarded except with respect to Sections 3.4(a) and (b)
and 3.9(a) and (ii) any update of or modification to the Parent Disclosure
Schedule made or purported to have been made after the date of this Agreement
shall be disregarded).
7.2 PERFORMANCE OF COVENANTS. All of the covenants and obligations that
Parent and Merger Sub are required to comply with or to perform at or prior to
the Closing shall have been complied with and performed in all material
respects.
7.3 EFFECTIVENESS OF REGISTRATION STATEMENT. The S-4 Registration
Statement shall have become effective in accordance with the provisions of the
Securities Act, and no stop order shall have been issued by the SEC with respect
to the S-4 Registration Statement.
7.4 STOCKHOLDER APPROVAL. This Agreement and the Merger shall have been
duly approved by the Required Company Shareholder Vote, and the issuance of
Parent Common Stock in the Merger shall have been duly approved by the Required
Parent Stockholder Vote.
7.5 AGREEMENTS AND DOCUMENTS. The Company shall have received the
following documents:
(a) Affiliate Agreements in the form of Exhibit E-2, executed by each
individual identified on Exhibit F-2, except to the extent that any such
individual has died or has become incapacitated;
(b) a legal opinion of Cooley Godward LLP, dated as of the Closing
Date and addressed to Parent, to the effect that the Merger will constitute a
reorganization within the meaning of Section 368 of the Code (it being
understood that, in rendering such opinion, Cooley Godward LLP may rely upon the
tax representation letters referred to in Section 5.13);
(c) a legal opinion of Wilson Sonsini Goodrich & Rosati, dated as of
the Closing Date, to the effect that the Merger will constitute a reorganization
within the meaning of Section 368 of the Code (it being understood that, in
rendering such opinion, Wilson Sonsini
45.
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Goodrich & Rosati may rely upon tax representation letters including those
referred to in Section 5.13);
(d) a letter from Coopers & Lybrand L.L.P., dated as of a date no
earlier than three (3) days prior to the Closing Date and addressed to Parent,
the Company and KPMG Peat Marwick L.L.P., reasonably satisfactory in form and
substance to the Company, to the effect that, after reasonable investigation,
Coopers & Lybrand L.L.P. is not aware of any fact concerning the Company or any
of the Company's shareholders or affiliates that could preclude Parent from
accounting for the Merger as a "pooling of interests" in accordance with GAAP,
Accounting Principles Board Opinion No. 16 and all published rules, regulations
and policies of the SEC;
(e) a letter from KPMG Peat Marwick L.L.P., dated as of a date no
earlier than three (3) days prior to the Closing Date and addressed to Parent
and the Company, reasonably satisfactory in form and substance to the Company,
to the effect that such firm concurs with Parent's management's conclusion that
Parent may account for the Merger as a "pooling of interests" in accordance with
GAAP, Accounting Principles Board Opinion No. 16 and all published rules,
regulations and policies of the SEC; and
(f) a certificate executed on behalf of Parent by an executive officer
of Parent, confirming that conditions set forth in Sections 7.1, 7.2, 7.3 and
7.6 have been duly satisfied.
7.6 NO MATERIAL ADVERSE CHANGE. There shall have been no material
adverse change in the business, financial condition, operations or financial
performance of Parent since the date of this Agreement other than any change in
the generation of revenue (and any corresponding change in the margins,
profitability or financial condition of Parent) resulting from the public
announcement or pendency of the Merger.
7.7 HSR ACT. The waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated.
7.8 LISTING. The shares of Parent Common Stock to be issued in the
Merger shall have been authorized for listing on Nasdaq, subject to notice of
issuance.
7.9 NO RESTRAINTS. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any Legal Requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger illegal.
SECTION 8. TERMINATION.
8.1 TERMINATION. This Agreement may be terminated prior to the Effective
Time, whether before or after approval of the Merger by the shareholders of the
Company:
(a) by mutual written consent duly authorized by the Boards of
Directors of the Parent and the Company;
46.
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(b) by either Parent or the Company if the Merger shall not have been
consummated by September 1, 1998 (unless the failure to consummate the Merger is
substantially attributable to an action or failure to act on the part of the
party seeking to terminate this Agreement and such action or failure to act
constitutes a material breach of this Agreement;
(c) by either Parent or the Company if a court of competent
jurisdiction or other Governmental Body shall have issued a final and non-
appealable order, decree or ruling, or shall have taken any other action, having
the effect of permanently restraining, enjoining or otherwise prohibiting the
Merger;
(d) by either Parent or the Company if (i) the Company Shareholders'
Meeting shall have been held (either on the date for which such Meeting was
originally scheduled or pursuant to any permissible adjournment or postponement)
and (ii) this Agreement and the Merger shall not have been adopted and approved
at such meeting by the Required Company Shareholder Vote (provided that the
right to terminate this Agreement under this Section 8.1(d) shall not be
available to the Company where the failure to obtain Company shareholder
approval shall have been caused by the action or failure to act of the Company
and such action or failure to act constitutes a material breach by the Company
of this Agreement);
(e) by Parent or the Company (at any time prior to the adoption and
approval of this Agreement and the Merger by the Company Required Shareholder
Vote) if a Triggering Event shall have occurred, provided that the right of the
Company under this Section 8.1(e) shall not be exercisable until May 30, 1998;
(f) by Parent or the Company (at any time prior to the adoption and
approval of this Agreement and the Merger by the Company Required Shareholder
Vote) if a Termination Event shall have occurred, provided that the right of the
Company under this Section 8.1(f) shall not be exercisable until May 30, 1998;
(g) by either Parent or the Company if (i) the Parent Stockholders'
Meeting shall have been held (either on the date for which such Meeting was
originally scheduled or pursuant to any permissible adjournment or postponement)
and (ii) issuance of the Parent Common Stock in the Merger shall not have been
approved at such meeting by the Required Parent Stockholder Vote (provided that
the right to terminate this Agreement under this Section 8.1(g) shall not be
available to the Parent where the failure to obtain Parent shareholder approval
shall have been caused by the action or failure to act of the Parent and such
action or failure to act constitutes a material breach by the Parent of this
Agreement);
(h) by Parent if any of the Company's representations and warranties
contained in this Agreement shall be or shall have become materially inaccurate,
or if any of the Company's covenants contained in this Agreement shall have been
breached, in either case such that the conditions set forth in Section 6.1 or
6.2 would not be satisfied as of the time of such breach or as of the time such
representation or warranty shall have become untrue; provided, however, that if
an inaccuracy in the Company's representations and warranties or a breach of a
covenant by the Company is curable by the Company prior to September 1, 1998 and
the Company is continuing to exercise all reasonable efforts to cure such
inaccuracy or breach, then
47.
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Parent may not terminate this Agreement under this Section 8.1(h) on account of
such inaccuracy or breach; or
(i) by the Company if any of Parent's representations and warranties
contained in this Agreement shall be or shall have become materially inaccurate,
or if any of Parent's covenants contained in this Agreement shall have been
breached, in either case such that the conditions set forth in Section 7.1 or
7.2 would not be satisfied as of the time of such breach or as of the time such
representation or warranty shall have become untrue; provided, however, that if
an inaccuracy in Parent's representations and warranties or a breach of a
covenant by Parent is curable by Parent prior to September 1, 1998 and Parent is
continuing to exercise all reasonable efforts to cure such inaccuracy or breach,
then the Company may not terminate this Agreement under this Section 8.1(i) on
account of such inaccuracy or breach.
8.2 NOTICE OF TERMINATION; EFFECT OF TERMINATION. Any termination under
Section 8.1 above will be effective immediately upon the delivery of written
notice of the terminating party to the other parties hereto. In the event of the
termination of this Agreement as provided in Section 8.1, this Agreement shall
be of no further force or effect; provided, however, that (i) this Section 8.2,
Section 8.3 and Section 9 shall survive the termination of this Agreement and
shall remain in full force and effect, (ii) the termination of this Agreement
shall not relieve any party from any liability for any willful breach of this
Agreement and (iii) no termination of this Agreement shall affect the
obligations of the parties contained in the Confidentiality Agreement, all of
which obligations shall survive termination of this Agreement in accordance with
their terms.
8.3 EXPENSES; TERMINATION FEES.
(a) Except as set forth in this Section 8.3, all fees and expenses
incurred in connection with this Agreement and the transactions contemplated by
this Agreement shall be paid by the party incurring such expenses, whether or
not the Merger is consummated; provided, however, that Parent and the Company
shall share equally all fees and expenses, other than attorneys' and
accountants' fees, incurred in connection with (i) the printing and filing of
the S-4 Registration Statement and the Prospectus/Proxy Statement and any
amendments or supplements thereto and (ii) the filing of the premerger
notification and report forms relating to the Merger under the HSR Act.
(b) If this Agreement is terminated by Parent or the Company pursuant
to Section 8.1(e), then the Company shall pay to Parent, in cash, a
nonrefundable fee equal to the product of (i) the "TERMINATION FEE PER SHARE"
(as defined below) and (ii) the "FULLY DILUTED COMPANY SHARE AMOUNT" (the
"TERMINATION FEE"), within three (3) days of such termination. The "TERMINATION
FEE PER SHARE" shall be equal to the product of (A) 0.025 multiplied by the
Exchange Ratio and (B) the average of the closing sales prices of a share of
Parent Common Stock as reported on Nasdaq for the ten (10) trading days ending
on and including the second trading day prior to the date of termination
specified in the termination notice provided for in Section 8.1(e) (or, for
purposes of using this definition in calculating the Termination Fee due under
Section 8.3(c) below, as provided for in Section 8.1(d)). The "FULLY DILUTED
COMPANY SHARE AMOUNT" shall be equal to the sum of (x) the aggregate number of
shares of Company Common Stock outstanding as of February 27, 1998 and (y) the
aggregate number of shares of
48.
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Company Common Stock issuable upon exercise of all outstanding Company Options
(based on the treasury method) as of February 27, 1998.
(c) If this Agreement is terminated by Company or Parent pursuant to
Section 8.1(d) and (i) a Company Acquisition is consummated or (ii) the Company
shall enter into a definitive agreement providing for a Company Acquisition, in
either case at any time prior to the first anniversary of the date of this
Agreement, Company shall pay to Parent the Termination Fee contemporaneously
with the earlier of (i) the consummation of such Company Acquisition and (ii)
the public announcement by the Company of its entry into a definitive agreement
providing for a Company Acquisition.
(d) If this Agreement is terminated by Parent or the Company pursuant
to Section 8.1(g), then Parent shall pay to the Company $12,600,000 in cash
within three (3) days of such termination.
SECTION 9. MISCELLANEOUS PROVISIONS.
9.1 AMENDMENT. This Agreement may be amended with the approval of the
respective boards of directors of the Company and Parent at any time (whether
before or after approval of this Agreement and the Merger by the shareholders of
the Company; and whether before or after approval of the issuance of Parent
Common Stock in the Merger by Parent's stockholders); provided, however, that
(i) after any such approval of this Agreement and the Merger by the Company's
shareholders, no amendment shall be made which by law requires further approval
of the shareholders of the Company without the further approval of such
shareholders, and (ii) after any such approval of the issuance of Parent Company
Stock in the Merger by Parent's stockholders, no amendment shall be made which
by law or NASD regulation requires further approval of Parent's stockholders
without the further approval of such stockholders. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
9.2 WAIVER.
(a) No failure on the part of any party to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of any
party in exercising any power, right, privilege or remedy under this Agreement,
shall operate as a waiver of such power, right, privilege or remedy; and no
single or partial exercise of any such power, right, privilege or remedy shall
preclude any other or further exercise thereof or of any other power, right,
privilege or remedy.
(b) No party shall be deemed to have waived any claim arising out of
this Agreement, or any power, right, privilege or remedy under this Agreement,
unless the waiver of such claim, power, right, privilege or remedy is expressly
set forth in a written instrument duly executed and delivered on behalf of such
party; and any such waiver shall not be applicable or have any effect except in
the specific instance in which it is given.
9.3 NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties contained in this Agreement or in any certificate
delivered pursuant to this Agreement shall survive the Merger.
49.
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9.4 ENTIRE AGREEMENT; COUNTERPARTS. This Agreement and the other
agreements referred to herein constitute the entire agreement and supersede all
prior agreements and understandings, both written and oral, among or between any
of the parties with respect to the subject matter hereof and thereof. This
Agreement may be executed in several counterparts, each of which shall be deemed
an original and all of which shall constitute one and the same instrument.
9.5 APPLICABLE LAW; JURISDICTION. THIS AGREEMENT IS MADE UNDER, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
CALIFORNIA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED SOLELY THEREIN,
WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW. In any action between
or among any of the parties, whether arising out of this Agreement or otherwise,
(a) each of the parties irrevocably and unconditionally consent in the State of
California; (b) if any such action is commenced in a state court, then, subject
to applicable law, no party shall object to the removal of such action to any
federal court located in the law, no party shall object to the removal of such
action to any federal court located in the State of California; (c) each of the
parties irrevocably waivers the right to trial by jury; and (d) each of the
parties irrevocably consents to service of process by first class certified
mail, return receipt requested, postage prepaid, to the address at which such
party is to receive notice in accordance with Section 9.9.
9.6 DISCLOSURE SCHEDULES. The Company Disclosure Schedule and Parent's
Disclosure Schedule shall each be arranged in separate parts corresponding to
the numbered and lettered sections contained in Section 2 or 3 as the case may
be, and the information disclosed in any numbered or lettered part shall be
deemed to relate to and to qualify the particular representation or warranty set
forth in the corresponding numbered or lettered section in Section 2 or 3 as the
case may be, as well as other sections of this Agreement to which any such
disclosures are clearly appropriate.
9.7 ATTORNEYS' FEES. In any action at law or suit in equity to enforce
this Agreement or the rights of any of the parties hereunder, the prevailing
party in such action or suit shall be entitled to receive a reasonable sum for
its attorneys' fees and all other reasonable costs and expenses incurred in such
action or suit.
9.8 ASSIGNABILITY; THIRD PARTY BENEFICIARIES. This Agreement shall be
binding upon, and shall be enforceable by and inure solely to the benefit of,
the parties hereto and their respective successors and assigns; provided,
however, that neither this Agreement nor any of the Company's rights hereunder
may be assigned by the Company without the prior written consent of Parent, and
any attempted assignment of this Agreement or any of such rights by the Company
without such consent shall be void and of no effect. Except as set forth in
Sections 5.5 and 5.7 with respect to the directors and officers of the Company,
nothing in this Agreement, express or implied, is intended to or shall confer
upon any Person any right, benefit or remedy of any nature whatsoever under or
by reason of this Agreement.
9.9 NOTICES. Any notice or other communication required or permitted to
be delivered to any party under this Agreement shall be in writing and shall be
deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or express
50.
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delivery service or by facsimile (confirmation obtained)) to the address or
facsimile telephone number set forth beneath the name of such party below (or to
such other address or facsimile telephone number as such party shall have
specified in a written notice given to the other parties hereto):
if to Parent: Siebel Systems, Inc.
1855 South Grant Street
San Mateo, CA 94402
Fax: (650) 295-5117
if to Merger Sub: Syracuse Acquisition Sub, Inc.
1855 South Grant Street
San Mateo, CA 94402
Fax: (650) 295-5117
if to the Company: Scopus Technology, Inc.
1900 Powell Street
Emeryville, CA 94608
Fax: (510) 397-5964
9.10 COOPERATION. Subject to the terms of this Agreement, the Company
agrees to cooperate fully with Parent and to execute and deliver such further
documents, certificates, agreements and instruments and to take such other
actions as may be reasonably requested by Parent to evidence or reflect the
transactions contemplated by this Agreement and to carry out the intent and
purposes of this Agreement.
9.11 LIABILITY. Notwithstanding anything to the contrary in this
Agreement or any of the agreements attached hereto as exhibits (collectively,
the "MERGER AGREEMENTS"), the parties hereto agree that no officer, director or
shareholder of any of the parties hereto shall be personally liable with respect
to any of the Merger Agreements or any of the transactions contemplated thereby,
other than with respect to their personal obligations under the Merger
Agreements.
9.12 CONSTRUCTION.
(a) For purposes of this Agreement, whenever the context requires:
the singular number shall include the plural, and vice versa; the masculine
gender shall include the feminine and neuter genders; the feminine gender shall
include the masculine and neuter genders; and the neuter gender shall include
masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to the
effect that ambiguities are to be resolved against the drafting party shall not
be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and "including,"
and variations thereof, shall not be deemed to be terms of limitation, but
rather shall be deemed to be followed by the words "without limitation."
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(d) Except as otherwise indicated, all references in this Agreement to
"Sections" and "Exhibits" are intended to refer to Sections of this Agreement
and Exhibits to this Agreement.
52.
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IN WITNESS WHEREOF, the parties have caused this AGREEMENT AND PLAN OF
MERGER AND REORGANIZATION to be executed as of the date first above written.
SIEBEL SYSTEMS, INC.
By: /s/ Howard H. Graham
________________________________________
Title: Senior Vice President, Finance and
Administration and Chief Financial
Officer
_____________________________________
SYRACUSE ACQUISITION SUB, INC.
By: /s/ Howard H. Graham
________________________________________
Title: President and Chief Financial Officer
_____________________________________
SCOPUS TECHNOLOGY, INC.
By: /s/ Michelle Axelson
________________________________________
Title: Senior Vice President and Chief
Financial Officer
_____________________________________
<PAGE>
EXHIBITS INDEX
Exhibit A...... Certain Definitions
Exhibit B-1.... Company Shareholders who have executed Voting Agreements
Exhibit B-2.... Parent Stockholder who has executed Voting Agreement
Exhibit C-1.... Form of Voting Agreement for Company Shareholders
Exhibit C-2.... Form of Voting Agreement for Parent Stockholder
Exhibit D...... Form of Option Agreement
Exhibit E-1.... Form of Affiliate Agreement for Company Affiliates
Exhibit E-2.... Form of Affiliate Agreement for Parent Affiliates
Exhibit F-1.... Individuals executing Affiliate Agreement in Form of Exhibit E-1
Exhibit F-2.... Individuals executing Affiliate Agreement in Form of Exhibit E-2
Exhibit G-1.... Form of Tax Representation Letter to be delivered by Parent and
Merger Sub
Exhibit G-2.... Form of Tax Representation Letter to be delivered by Company
Exhibit H...... Form of Noncompetition Agreement
Exhibit I...... Individuals to execute Noncompetition Agreement in Form of
Exhibit H
Exhibit J...... Form of Noncompetition Agreement
Exhibit K...... Individuals to execute Noncompetition Agreement in Form of
Exhibit J
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EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit A):
ACQUIRED CORPORATION CONTRACT. "ACQUIRED CORPORATION CONTRACT" shall
mean any Contract: (a) to which any of the Acquired Corporations is a party;
(b) by which any of the Acquired Corporations or any asset of any of the
Acquired Corporations is or may become bound or under which any of the Acquired
Corporations has, or may become subject to, any obligation; or (c) under which
any of the Acquired Corporations has or may acquire any right or interest.
ACQUIRED CORPORATION PROPRIETARY ASSET. "ACQUIRED CORPORATION
PROPRIETARY ASSET" shall mean any Proprietary Asset owned by or licensed to any
of the Acquired Corporations or otherwise used by any of the Acquired
Corporations.
ACQUISITION PROPOSAL. "ACQUISITION PROPOSAL" shall mean any offer or
proposal (other than an offer or proposal by Parent) relating to any Acquisition
Transaction.
ACQUISITION TRANSACTION. "ACQUISITION TRANSACTION" shall mean any
transaction or series of related transactions other than the transactions
contemplated by this Agreement involving:
(a) any acquisition or purchase from the Company by any Person or
"group" (as defined under Section 13(d) of the Exchange Act and the rules and
regulations thereunder) of more than a 20% interest in the total outstanding
voting securities of the Company or any of its material Subsidiaries or any
tender offer or exchange offer that if consummated would result in any Person or
"group" (as defined under Section 13(d) of the Exchange Act and the rules and
regulations thereunder) beneficially owning 20% or more of the total outstanding
voting securities of the Company or any of its material Subsidiaries or any
merger, consolidation, business combination or similar transaction involving the
Company pursuant to which the stockholders of the Company immediately preceding
such transaction hold less than 80% of the equity interests in the surviving or
resulting entity of such transaction;
(b) any sale, lease (other than in the ordinary course of business),
exchange, transfer, license (other than in the ordinary course of business),
acquisition or disposition of more than 50% of the assets of the Company; or
(c) Any liquidation or dissolution of the Company.
AGREEMENT. "AGREEMENT" shall mean the Agreement and Plan of Merger
and Reorganization to which this Exhibit A is attached, as it may be amended
from time to time.
COMPANY ACQUISITION. "COMPANY ACQUISITION" shall mean any of the following
transactions (other than the transactions contemplated by this Agreement); (i) a
merger,
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consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction involving the Company pursuant to which the shareholders
of the Company immediately preceding such transaction hold less than 50% of the
aggregate equity interests in the surviving or resulting entity of such
transaction or (ii) a sale or other disposition by the Company of assets
(excluding inventory and used equipment sold in the ordinary course of business)
representing in excess of 50% of the aggregate fair market value of the
Company's business immediately prior to such sale.
COMPANY COMMON STOCK. "COMPANY COMMON STOCK" shall mean the Common
Stock, $0.001 par value per share, of the Company.
CONSENT. "CONSENT" shall mean any approval, consent, ratification,
permission, waiver or authorization (including any Governmental Authorization).
CONTRACT. "CONTRACT" shall mean any written, oral or other agreement,
contract, subcontract, lease, binding understanding, instrument, note, option,
warranty, purchase order, license, sublicense, insurance policy, benefit plan or
legally binding commitment or undertaking of any nature, as in effect as of the
date hereof or as may hereinafter be in effect.
ENCUMBRANCE. "ENCUMBRANCE" shall mean any lien, pledge,
hypothecation, charge, mortgage, security interest, encumbrance, claim,
infringement, interference, option, right of first refusal, preemptive right,
community property interest or restriction of any nature (including any
restriction on the voting of any security, any restriction on the transfer of
any security or other asset, any restriction on the receipt of any income
derived from any asset, any restriction on the use of any asset and any
restriction on the possession, exercise or transfer of any other attribute of
ownership of any asset).
ENTITY. "ENTITY" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any limited
liability company or joint stock company), firm or other enterprise,
association, organization or entity.
EXCHANGE ACT. "EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended.
GOVERNMENTAL AUTHORIZATION. "GOVERNMENTAL AUTHORIZATION" shall mean
any: (a) permit, license, certificate, franchise, permission, clearance,
registration, qualification or authorization issued, granted, given or otherwise
made available by or under the authority of any Governmental Body or pursuant to
any Legal Requirement; or (b) right under any Contract with any Governmental
Body.
GOVERNMENTAL BODY. "GOVERNMENTAL BODY" shall mean any: (a) nation,
state, commonwealth, province, territory, county, municipality, district or
other jurisdiction of any nature; (b) federal, state, local, municipal, foreign
or other government; or (c) governmental or quasi-governmental authority of any
nature (including any governmental division, department, agency, commission,
instrumentality, official, organization, unit or body and any court or other
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tribunal), in each case with jurisdiction over Parent, the Acquired Corporations
or the material assets of the Acquired Corporations.
HSR ACT. "HSR ACT" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
LEGAL PROCEEDING. "LEGAL PROCEEDING" shall mean any action, suit,
litigation, arbitration, proceeding (including any civil, criminal,
administrative, investigative or appellate proceeding), hearing, inquiry, audit,
examination or investigation commenced, brought, conducted or heard by or
before, or otherwise involving, any court or other Governmental Body or any
arbitrator or arbitration panel.
LEGAL REQUIREMENT. "LEGAL REQUIREMENT" shall mean any federal, state,
local, municipal, foreign or other law, statute, constitution, principle of
common law, resolution, ordinance, code, edict, decree, rule, regulation, ruling
or requirement issued, enacted, adopted, promulgated, implemented or otherwise
put into effect by or under the authority of any Governmental Body.
MATERIAL ADVERSE EFFECT. An event, violation, inaccuracy,
circumstance or other matter will be deemed to have a "Material Adverse Effect"
on the Acquired Corporations if such event, violation, inaccuracy, circumstance
or other matter would have a material adverse effect on (i) the business,
financial condition, operations or financial performance of the Acquired
Corporations taken as a whole or (ii) Parent's ability to vote, receive
dividends with respect to or otherwise exercise ownership rights with respect to
the stock of the Surviving Corporation. An event, violation, inaccuracy,
circumstance or other matter will be deemed to have a "Material Adverse Effect"
on Parent if such event, violation, inaccuracy, circumstance or other matter
would have a material adverse effect on the business, financial condition,
operations or financial performance of Parent and its Subsidiaries taken as a
whole.
NASDAQ. "NASDAQ" shall mean the Nasdaq National Market.
PARENT COMMON STOCK. "PARENT COMMON STOCK" shall mean the Common
Stock, $.001 par value per share, of Parent.
PERSON. "PERSON" shall mean any individual, Entity or Governmental
Body.
PROPRIETARY ASSET. "PROPRIETARY ASSET" shall mean any: (a) patent,
patent application, trademark (whether registered or unregistered), trademark
application, trade name, fictitious business name, service mark (whether
registered or unregistered), service mark application, copyright (whether
registered or unregistered), copyright application, maskwork, maskwork
application, trade secret, know-how, customer list, franchise, system, computer
software, computer program (in source and executable form), algorithm,
invention, design, blueprint, engineering drawing, proprietary product,
technology, proprietary right or other intellectual property right or intangible
asset in any jurisdiction in the world; or (b) right to use or exploit any of
the foregoing in any jurisdiction in the world.
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REPRESENTATIVES. "REPRESENTATIVES" shall mean officers, directors,
employees, agents, attorneys, accountants, advisors and representatives.
SEC. "SEC" shall mean the United States Securities and Exchange
Commission.
SECURITIES ACT. "SECURITIES ACT" shall mean the Securities Act
of 1933, as amended.
SUBSIDIARY. An entity shall be deemed to be a "Subsidiary" of another
Person if such Person directly or indirectly owns, beneficially or of record, an
amount of voting securities of other interests in such Entity that is sufficient
to enable such Person to elect at leased a majority of the members of such
Entity's board of directors or other governing body.
SUPERIOR OFFER. "SUPERIOR OFFER" shall mean an unsolicited, bona fide
written offer made by a third party to consummate any of the following
transactions: (i) a merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving the
Company pursuant to which the stockholders of the Company immediately preceding
such transaction hold less than 50% of the equity interests in the surviving or
resulting entity of such transaction; (ii) a sale or other disposition by the
Company of assets (excluding inventory and used equipment sold in the ordinary
course of business) representing in excess of 50% of the fair market value of
the Company's business immediately prior to such sale, or (iii) the acquisition
by any Person or group (including by way of a tender offer or an exchange offer
or issuance by the Company), directly or indirectly, of beneficial ownership or
a right to acquire beneficial ownership of shares representing in excess of 50%
of the voting power of the then outstanding shares of capital stock of the
Company, on terms that the board of directors of the Company determines, in its
reasonable judgment, after consultation with its financial advisor, to be, if
such officer is consummated, more favorable to the Company's shareholders than
the terms of the Merger; provided, however, that any such offer shall not be
deemed to be a "Superior Offer" if any financing required to consummate the
transaction contemplated by such offer is not committed and is not likely in the
judgment of the Company's board of directors to be obtained by such third party
on a timely basis.
TAX. "TAX" shall mean any tax (including any income tax, franchise
tax, capital gains tax, gross receipts tax, value-added tax, surtax, excise tax,
ad valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax,
business tax, withholding tax or payroll tax), levy, assessment, tariff, duty
(including any customs duty), deficiency or fee, and any related charge or
amount (including any fine, penalty or interest), imposed, assessed or collected
by or under the authority of any Governmental Body.
TAX RETURN. "TAX RETURN" shall mean any return (including any
information return), report, statement, declaration, estimate, schedule, notice,
notification, form, election, certificate or other document or information filed
with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection
or payment of any Tax or in connection with the administration, implementation
or enforcement of or compliance with any Legal Requirement relating to any Tax.
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TERMINATION EVENT. A "TERMINATION EVENT" shall be deemed to occur if
the Company shall not have used reasonable efforts to hold the Company
Shareholders' Meeting as promptly as practicable and in any event within the
later of (A) forty-five (45) days after the Form S-4 Registration Statement is
declared effective under the Securities Act or (B) ten (10) days after any
amendments or supplement to the Prospectus/Proxy Statement are mailed to
shareholders of the Company.
TRIGGERING EVENT. A "TRIGGERING EVENT" shall be deemed to have
occurred if: (i) the Board of Directors of the Company shall for any reason
have withdrawn or shall have amended or modified in a manner adverse to Parent
its unanimous recommendation in favor of, the adoption and approval of the
Agreement or the approval of the Merger; (ii) the Company shall have failed to
include in the Prospectus/Proxy Statement the unanimous recommendation of the
board of directors of the Company in favor of the adoption and approval of the
Agreement and the approval of the Merger; (iii) the board of directors of the
Company fails to reaffirm its unanimous recommendation in favor of the adoption
and approval of the Agreement and the approval of the Merger within ten (10)
business days after Parent requests in writing that such recommendation be
reaffirmed at any time following the public announcement of an Acquisition
Proposal; (iv) the board of directors of the Company shall have approved or
publicly recommended any Acquisition Proposal; (v) the Company shall have
entered into any letter of intent of similar document or any Contract accepting
any Acquisition Proposal; or (vi) a tender or exchange offer relating to
securities of the Company shall have been commenced by a Person unaffiliated
with Parent and the Company shall not have sent to its securityholders pursuant
to Rule 14e-2 promulgated under the Securities Act, within ten (10) business
days after such tender or exchange offer is first published sent or given, a
statement disclosing that the Company recommends rejection of such tender or
exchange offer.
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APPENDIX B-1
March 1, 1998
Board of Directors
Scopus Technology, Inc.
1900 Powell St., 7th Floor
Emeryville, California 94608
Members of the Board:
We understand that Siebel Systems, Inc. ("Siebel"), Scopus Technology, Inc.
("Scopus") and Syracuse Acquisition Sub, Inc. ("Merger Sub"), a wholly-owned
subsidiary of Siebel, have entered into an Agreement and Plan of Merger and
Reorganization, dated as of March 1, 1998 (the "Merger Agreement"), which
provides, among other things, for the merger (the "Merger") of Merger Sub with
and into Scopus. Pursuant to the Merger, Scopus will become a wholly-owned
subsidiary of Siebel and each issued and outstanding share of common stock,
par value $0.001 per share (the "Scopus Common Stock"), of Scopus, other than
shares held in treasury or held by Siebel or any subsidiary of Siebel or
Scopus, shall be converted into the right to receive 0.36405 shares (the
"Exchange Ratio") of common stock, par value $0.001 per share (the "Siebel
Common Stock"), of Siebel. The terms and conditions of the Merger are more
fully set forth in the Merger Agreement.
You have asked for our opinion as to whether the Exchange Ratio pursuant to
the Merger Agreement is fair from a financial point of view to the holders of
shares of Scopus Common Stock.
For purposes of the opinion set forth herein, we have:
(i) reviewed certain publicly available financial statements and other
information of Siebel and Scopus, respectively;
(ii) reviewed certain internal financial statements and other financial
and operating data concerning Scopus prepared by the management of Scopus;
(iii) discussed the past and current operations and financial condition
and the prospects of Siebel, including information relating to certain
strategic, financial and operational benefits anticipated from the Merger,
with senior executives of Siebel;
(iv) discussed the past and current operations and financial condition
and the prospects of Scopus, including information relating to certain
strategic, financial and operational benefits anticipated from the Merger,
with senior executives of Scopus;
(v) reviewed the pro forma impact of the Merger on the earnings per share
of Siebel;
(vi) reviewed the reported prices and trading activity for the Siebel
Common Stock and the Scopus Common Stock;
(vii) compared the financial performance of Siebel and Scopus and the
prices and trading activity of the Siebel Common Stock and the Scopus
Common Stock with that of certain other publicly-traded companies and their
securities;
(viii) reviewed the financial terms, to the extent publicly available, of
certain comparable merger and acquisition transactions;
(ix) reviewed and discussed with the senior managements of Siebel and
Scopus the strategic rationale for the Merger and certain alternatives to
the Merger;
(x) participated in discussions and negotiations among representatives of
Siebel and Scopus and their financial and legal advisors;
(xi) reviewed the Merger Agreement and certain related agreements; and
(xii) considered such other factors as we have deemed appropriate.
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We have assumed and relied upon, without independent verification, the
accuracy and completeness of the information reviewed by us for the purposes
of this opinion. With respect to the internal financial statements and/or
other financial and operating data and discussions relating to the strategic,
financial and operational benefits anticipated from the Merger provided by
Scopus and Siebel, we have assumed that they have been reasonably prepared on
bases reflecting the best currently available estimates and judgments of the
future financial performance and prospects of Siebel and Scopus, respectively.
We have relied upon the assessment by the managements of Siebel and Scopus of
their ability to retain key employees of both Siebel and Scopus. We have also
relied upon, without independent verification, the assessment by the
managements of Siebel and Scopus of the strategic and other benefits expected
to result from the Merger. We have also relied upon, without independent
verification, the assessment by the managements of Siebel and Scopus of
Siebel's and Scopus' technologies and products, the timing and risks
associated with the integration of Scopus with Siebel, and the validity of,
and risks associated with, Siebel's and Scopus' existing and future products
and technologies. We have not made any independent valuation or appraisal of
the assets, liabilities or technology of Siebel or Scopus, respectively, nor
have we been furnished with any such appraisals. We have assumed that the
Merger will be accounted for as a "pooling-of-interests" business combination
in accordance with U.S. Generally Accepted Accounting Principles, will be
treated as a tax-free reorganization and/or exchange pursuant to the Internal
Revenue Code of 1986, as amended, and will be consummated in accordance with
the terms set forth in the Merger Agreement. Our opinion is necessarily based
on economic, market and other conditions as in effect on, and the information
made available to us as of, the date hereof.
We have acted as financial advisor to the Board of Directors of Scopus in
connection with this transaction and will receive a fee for our services. In
the past, Morgan Stanley & Co. Incorporated and its affiliates have provided
financial advisory and financing services for Scopus and have received fees
for the rendering of these services.
In arriving at our opinion, we were not authorized to solicit, and did not
solicit, interest from any party with respect to an acquisition, business
combination or other extraordinary transaction involving the Scopus.
It is understood that this letter is for the information of the Board of
Directors of Scopus and may not be used for any other purpose without our
prior written consent, except that this opinion may be included in its
entirety in any filing made by Scopus with respect to the Merger with the
Securities and Exchange Commission. In addition, this opinion does not in any
manner address the prices at which the Siebel Common Stock will actually trade
at any time and we express no recommendation or opinion as to how the holders
of Scopus Common Stock should vote at the shareholders' meeting held in
connection with the Merger.
Based upon and subject to the foregoing, we are of the opinion on the date
hereof that the Exchange Ratio pursuant to the Merger Agreement is fair from a
financial point of view to the holders of shares of Scopus Common Stock.
Very truly yours,
Morgan Stanley & Co. Incorporated
/s/ Charles R. Cory
By:__________________________________
Charles R. Cory
Managing Director
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APPENDIX B-2
February 28, 1998
Board of Directors
Siebel Systems, Inc.
1855 South Grant Street
San Mateo, CA 94402
Gentlemen:
We understand that Scopus Technology, a California corporation ("Seller"),
Siebel Systems, Inc., a Delaware corporation ("Parent") and Syracuse
Acquisition Sub, Inc., a Delaware corporation and wholly owned subsidiary of
Parent ("Acquisition Sub"), propose to enter into an Agreement and Plan of
Merger and Reorganization, a draft of which has been provided to us by
management of Parent dated February 26, 1998 (the "Merger Agreement") pursuant
to which Acquisition Sub will be merged with and into Seller, which will be
the surviving entity (the "Merger"). Pursuant to the Merger, as more fully
described in the Merger Agreement and as further described to us by management
of Parent, we understand that each outstanding share of the common stock,
$0.001 par value per share ("Seller Common Stock"), of Seller other than
shares held in Treasury or held by Parent, Syracuse Acquisition Sub or any
other subsidiary of Parent or as to which dissenters' rights have been
perfected will be converted into and exchangeable for 0.36405 shares of the
common stock $0.001 par value per share ("Parent Common Stock"), of Parent,
subject to certain adjustments (the "Consideration"). The terms and conditions
of the Merger are set forth in more detail in the Merger Agreement.
You have asked for our opinion as investment bankers as to whether the
Consideration to be paid by Parent pursuant to the Merger is fair to Parent
from a financial point of view, as of the date hereof.
In connection with our opinion, we have, among other things: (i) reviewed
publicly available financial and other data with respect to Seller and Parent,
including the consolidated financial statements for recent years and interim
periods to December 31, 1997 in the case of Seller and September 30, 1997 in
the case of Parent and certain other relevant financial and operating data
relating to Seller and Parent made available to us from published sources and
from the internal records of Seller and Parent; (ii) reviewed the financial
terms and conditions of the Merger Agreement; (iii) reviewed certain publicly
available information concerning the trading of, and the trading market for,
Seller Common Stock and Parent Common Stock, (iv) compared Seller and Parent
from a financial point of view with certain other companies in the enterprise
resource planning and customer relationship management software industry which
we deemed to be relevant; (v) considered the financial terms, to the extent
publicly available, of selected recent business combinations of companies in
the customer relationship management and enterprise resource planning software
industries which we deemed to be comparable, in whole or in part, to the
Merger; (vi) analyzed the effects of the Merger on the Parent's pro forma
earnings per share; (vii) reviewed and discussed with representatives of the
management of Seller and Parent certain information of a business and
financial nature regarding Seller and Parent, including financial forecasts
for Parent and Seller obtained by us from NationsBanc Montgomery Securities
LLC and third party research reports; (viii) made inquiries regarding and
discussed the Merger and the Merger Agreement and other matters related
thereto with Parent's counsel; and (ix) performed such other analyses and
examinations as we have deemed appropriate.
In connection with our review, we have not assumed any obligation
independently to verify the foregoing information and have relied on its being
accurate and complete in all material respects. With respect to the financial
forecasts for Parent and Seller obtained by us from NationsBanc Montgomery
Securities LLC and third party research reports, we have prepared projections
based on such financial forecasts, provided them to you and with your consent
we have relied solely upon such projections for our analysis. We have also
assumed that there have been no material changes in Seller's or Parent's
assets, financial condition, results of operations, business or prospects
since the respective dates of their last financial statements made available
to us. We have relied on
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advice of counsel and independent accountants to Parent as to all legal and
financial reporting matters with respect to Parent and Acquisition Sub, the
Merger and the Merger Agreement. We have assumed that the Merger will be
consummated in a manner that complies in all respects with the applicable
provisions of the Securities Act of 1933, as amended (the "Securities Act"),
the Securities Exchange Act of 1934 and all other applicable federal and state
statutes, rules and regulations. In addition, we have not assumed
responsibility for making an independent evaluation, appraisal or physical
inspection of any of the assets or liabilities (contingent or otherwise) of
Seller or Parent, nor have we been furnished with any such appraisals. You
have informed us, and we have assumed, that the Merger will be recorded as a
pooling-of-interests under generally accepted accounting principles and will
be treated as a tax free reorganization pursuant to the Internal Revenue Code
of 1986, as amended. Finally, our opinion is based on economic, monetary and
market and other conditions as in effect on, and the information made
available to us as of, the date hereof.
We have further assumed with your consent that the Merger will be
consummated in accordance with the terms described in the Merger Agreement,
without any further amendments thereto, and without waiver by Parent of any of
the conditions to its obligations thereunder.
We have acted as financial advisor to Parent in connection with the Merger
and will receive a fee for our services, including rendering this opinion, a
significant portion of which is contingent upon the consummation of the
Merger. In the ordinary course of our business, we actively trade the equity
securities of Seller and Parent for our own account and for the accounts of
customers and, accordingly, may at any time hold a long or short position in
such securities. We have also acted as an underwriter in connection with
offerings of securities of Seller and Parent and performed various investment
banking services for Parent.
Based upon the foregoing and in reliance thereon, it is our opinion as
investment bankers that the Consideration to be paid by Parent pursuant to the
Merger is fair to Parent from a financial point of view, as of the date
hereof.
This opinion is directed to the board of directors of Parent in its
consideration of the Merger and is not a recommendation to any shareholder as
to how such shareholder should vote with respect to the Merger. Further, this
opinion addresses only the financial fairness of the Consideration to Parent
and does not address the relative merits of the Merger and any alternatives to
the Merger, Parent's underlying decision to proceed with or affect the Merger
or any other aspect of the Merger. This opinion may not be used or referred to
by Parent, or quoted or disclosed to any person in any manner, without our
prior written consent, which consent is hereby given to the inclusion of this
opinion in any proxy statement or prospectus filed with the Securities and
Exchange Commission in connection with the Merger. In furnishing this opinion,
we do not admit that we are experts within the meaning of the term "experts"
as used in the Securities Act and the rules and regulations promulgated
thereunder, nor do we admit that this opinion constitutes a report or
valuation within the meaning of Section 11 of the Securities Act.
Very truly yours,
/s/ NationsBanc Montgomery Securities LLC
NATIONSBANC MONTGOMERY SECURITIES LLC
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APPENDIX C-1
VOTING AGREEMENT
THIS VOTING AGREEMENT is entered into as of March _, 1998, by and between
SIEBEL SYSTEMS, INC., a Delaware corporation ("PARENT") and __________________
("SHAREHOLDER").
RECITALS
WHEREAS, Shareholder is a shareholder of SCOPUS TECHNOLOGY, INC., a
California corporation. (the "COMPANY").
WHEREAS, Parent, Syracuse Acquisition Sub, Inc., a California corporation
and a wholly-owned subsidiary of Parent ("MERGER SUB"), and the Company, are
entering into an Agreement and Plan of Merger and Reorganization of even date
herewith (the "MERGER AGREEMENT") which provides (subject to the conditions set
forth therein) for the merger of Merger Sub with and into the Company (the
"MERGER").
NOW, THEREFORE, in order to induce Parent and Merger Sub to enter into the
Merger Agreement and consummate the transactions contemplated thereby, and for
other valuable consideration (the receipt and sufficiency of which are hereby
acknowledged by Shareholder), Shareholder hereby covenants and agrees as
follows:
AGREEMENT
The parties to this Agreement, intending to be legally bound, agree as
follows:
1. CERTAIN DEFINITIONS.
For purposes of this Agreement:
(a) "COMPANY COMMON STOCK" shall mean the common stock, par value
$.001 per share, of the Company.
(b) "EXPIRATION DATE" shall mean the earlier of (i) the date upon
which the Merger Agreement is validly terminated pursuant to Section 8 thereof,
or (ii) the date upon which the Merger becomes effective in accordance with the
terms and provisions of the Merger Agreement.
(c) Shareholder shall be deemed to "OWN" or to have acquired
"OWNERSHIP" of a security if Shareholder is the "beneficial owner" (within the
meaning of Rule 13d-3 under the Securities Exchange Act of 1934) of such
security by virtue of Shareholder, directly or indirectly, having or sharing
voting power over such security.
(d) "PERSON" shall mean any (i) individual, (ii) corporation, limited
liability company, partnership or other entity, or (iii) governmental authority.
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(e) "SUBJECT SECURITIES" shall mean: (i) all securities of the
Company (including all shares of Company Common Stock and all options, warrants
and other rights to acquire shares of Company Common Stock) Owned by Shareholder
as of the date of this Agreement; and (ii) all additional securities of the
Company (including all additional shares of Company Common Stock and all
additional options, warrants and other rights to acquire shares of Company
Common Stock) of which Shareholder acquires Ownership during the period from the
date of this Agreement through the Expiration Date.
(f) A Person shall be deemed to have a effected a "TRANSFER" of a
security if such Person directly or indirectly: (i) sells, pledges, encumbers,
grants an option with respect to, transfers or disposes of such security or any
interest in such security; or (ii) enters into an agreement or commitment
providing for the sale of, pledge of, encumbrance of, grant of an option with
respect to, transfer of or disposition of such security or any interest therein.
2. TRANSFER OF SUBJECT SECURITIES.
2.1 TRANSFEREE OF SUBJECT SECURITIES TO BE BOUND BY THIS AGREEMENT.
Shareholder agrees that, during the period from the date of this Agreement
through the Expiration Date, Shareholder shall not cause or permit any Transfer
of any of the Subject Securities to be effected unless such Transfer is in
accordance with any affiliate agreement between Shareholder and Parent
contemplated by the Merger Agreement ("AFFILIATE AGREEMENT") to which
Shareholder is bound and each Person to which any of such Subject Securities, or
any interest in any of such Subject Securities, is or may be transferred shall
have: (a) executed a counterpart of this Agreement and a proxy in the form
attached hereto as Exhibit A (with such modifications as Parent may reasonably
request); and (b) agreed in writing to hold such Subject Securities (or interest
in such Subject Securities) subject to all of the terms and provisions of this
Agreement. Notwithstanding the foregoing, during the period from the date of
this Agreement through the Expiration Date, Shareholder may effect a Transfer or
Transfers of no more than an aggregate of 75,000 shares of Company Common Stock
without fulfilling the obligations set forth in (a) or (b) above, provided that
such Transfer or Transfers are in accordance with any Affiliate Agreement to
which Shareholder is bound.
2.2 TRANSFER OF VOTING RIGHTS. Shareholder agrees that, during the period
from the date of this Agreement through the Expiration Date, Shareholder shall
not deposit (or permit the deposit of) any Subject Securities in a voting trust
or grant any proxy or enter into any voting agreement or similar agreement in
contravention of the obligations of Shareholder under this Agreement with
respect to any of the Subject Securities.
3. VOTING OF SHARES.
3.1 VOTING AGREEMENT. Shareholder agrees that, during the period from the
date of this Agreement through the Expiration Date:
(a) at any meeting of shareholders of the Company, however called, and
at every adjournment thereof, Shareholder shall (unless otherwise directed in
writing by Parent) cause all outstanding shares of Company Common Stock that are
Owned by Shareholder as of the record date fixed for such meeting to be voted in
favor of the approval and adoption of the
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Merger Agreement and the approval of the Merger, and in favor of each of the
other actions contemplated by the Merger Agreement; and
(b) in the event written consents are solicited or otherwise sought
from shareholders of the Company with respect to the approval or adoption of the
Merger Agreement, with respect to the approval of the Merger or with respect to
any of the other actions contemplated by the Merger Agreement, Shareholder shall
(unless otherwise directed in writing by Parent) cause to be executed, with
respect to all shares of Company Common Stock that are Owned by Shareholder as
of the record date fixed for the consent to the proposed action, a written
consent or written consents to such proposed action.
3.2 PROXY; FURTHER ASSURANCES.
(a) Contemporaneously with the execution of this Agreement: (i)
Shareholder shall deliver to Parent a proxy executed by Shareholder in the form
attached to this Agreement as Exhibit A, which shall be irrevocable to the
fullest extent permitted by law, with respect to the shares referred to therein
(the "PROXY"); and (ii) Shareholder shall cause to be delivered to Parent an
additional proxy (in the form attached hereto as Exhibit A) executed on behalf
of the record owner of any outstanding shares of Company Common Stock that are
Owned by Shareholder.
(b) From time to time and without additional consideration,
Shareholder shall execute and deliver, or cause to be executed and delivered,
such additional transfers, assignments, endorsements, proxies, consents and
other instruments (at Parent's expense, except with respect to any act that may
be required of Shareholder by Parent as the result of a Transfer), and shall (at
Shareholder's sole expense) take such further actions, as Parent may reasonably
request for the purpose of carrying out and furthering the intent of this
Agreement.
4. WAIVER OF DISSENTERS' RIGHTS.
Shareholder hereby irrevocably and unconditionally waives, and agrees to
cause to be waived and to prevent the exercise of, any rights of appraisal, any
dissenters' rights and any similar rights relating to the Merger that
Shareholder may have by virtue of the ownership of any outstanding shares of
Company Common Stock Owned by Shareholder
5. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER.
Shareholder hereby represents and warrants to Parent as follows:
5.1 AUTHORIZATION, ETC. Shareholder has the absolute and unrestricted
right, power, authority and capacity to execute and deliver this Agreement and
the Proxy and to perform his obligations hereunder and thereunder. This
Agreement and the Proxy have been duly executed and delivered by Shareholder and
constitute legal, valid and binding obligations of Shareholder, enforceable
against Shareholder in accordance with their terms, subject to (i) laws of
general application relating to bankruptcy, insolvency and the relief of
debtors, and (ii) rules of law governing specific performance, injunctive relief
and other equitable remedies.
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5.2 NO CONFLICTS OR CONSENTS.
(a) The execution and delivery of this Agreement and the Proxy by
Shareholder do not, and the performance of this Agreement and the Proxy by
Shareholder will not: (i) conflict with or violate any order, decree or judgment
applicable to Shareholder or by which he or any of his properties is or may be
bound or affected; or (ii) result in or constitute (with or without notice or
lapse of time) any breach of or default under, or give to any other Person (with
or without notice or lapse of time) any right of termination, amendment,
acceleration or cancellation of, or result (with or without notice or lapse of
time) in the creation of any encumbrance or restriction on any of the Subject
Securities pursuant to, any contract to which Shareholder is a party or by which
Shareholder or any of his affiliates or properties is or may be bound or
affected.
(b) The execution and delivery of this Agreement and the Proxy by
Shareholder do not, and the performance of this Agreement and the Proxy by
Shareholder will not, require any consent or approval of any Person.
5.3 TITLE TO SECURITIES. As of the date of this Agreement: (a)
Shareholder holds of record (free and clear of any encumbrances or restrictions
that will restrict or interfere in any way with the actions contemplated hereby
or Shareholder's obligations hereunder) the number of outstanding shares of
Company Common Stock set forth under the heading "Shares Held of Record" on the
signature page hereof; (b) Shareholder holds (free and clear of any encumbrances
or restrictions that will restrict or interfere in any way with the actions
contemplated hereby or Shareholder's obligations hereunder) the options,
warrants and other rights to acquire shares of Company Common Stock set forth
under the heading "Options and Other Rights" on the signature page hereof; (c)
Shareholder Owns the additional securities of the Company set forth under the
heading "Additional Securities Beneficially Owned" on the signature page hereof;
and (d) Shareholder does not directly or indirectly Own any shares of capital
stock or other securities of the Company, or any option, warrant or other right
to acquire (by purchase, conversion or otherwise) any shares of capital stock or
other securities of the Company, other than the shares and options, warrants and
other rights set forth on the signature page hereof.
5.4 ACCURACY OF REPRESENTATIONS. The representations and warranties
contained in this Agreement are accurate in all respects as of the date of this
Agreement, will be accurate in all respects at all times through the Expiration
Date and will be accurate in all respects as of the date of the consummation of
the Merger as if made on that date except that Shareholder's beneficial or
record ownership of securities as represented in Section 5.3 hereof may differ
as of the Expiration Date in the event of acquisitions or Transfers of
securities not prohibited by the terms of this Agreement.
6. MISCELLANEOUS.
6.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. All
representations, warranties, covenants and agreements made by Shareholder in
this Agreement shall survive the Expiration Date.
4
<PAGE>
6.2 INDEMNIFICATION. Shareholder shall hold harmless and indemnify Parent
and Parent's affiliates from and against, and shall compensate and reimburse
Parent and Parent's affiliates for, any loss, damage, claim, liability, fee
(including reasonable attorneys' fees), demand, cost or expense (regardless of
whether or not such loss, damage, claim, liability, fee, demand, cost or expense
relates to a third-party claim) that is directly or indirectly suffered or
incurred by Parent or any of Parent's affiliates, or to which Parent or any of
Parent's affiliates otherwise becomes subject, and that arises directly or
indirectly from, or relates directly or indirectly to any inaccuracy in or
breach of any representation, warranty, covenant or obligation of Shareholder
contained in this Agreement or in the Proxy.
6.3 EXPENSES. All costs and expenses incurred in connection with the
transactions contemplated by this Agreement shall be paid by the party incurring
such costs and expenses.
6.4 NOTICES. Any notice or other communication required or permitted to
be delivered to Parent or Shareholder under this Agreement shall be in writing
and shall be deemed properly delivered, given and received when delivered (by
hand, by registered mail, by courier or express delivery service or by facsimile
confirmation obtained) to the address or facsimile telephone number set forth
beneath the name of such party below (or to such other address or facsimile
telephone number as such party shall have specified in a written notice given to
the other party):
IF TO SHAREHOLDER:
at the address or facsimile phone number set forth below Shareholder's
signature on the signature page hereof
WITH A COPY TO:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304
Attention: Howard Zeprun, Esq.
Fax: (650) 493-6811
IF TO PARENT:
Siebel Systems, Inc.
1885 South Grant Street
San Mateo, CA 94402
Attn: Vice President Legal Affairs
Fax: (650) 295-5116
WITH A COPY TO:
Cooley Godward LLP
3000 Sand Hill Road
Building 3, Suite 230
Menlo Park, CA 94025
Attention: Eric C. Jensen
Fax: (650) 854-2691
5
<PAGE>
6.5 SEVERABILITY. If any provision of this Agreement or any part of any
such provision is held under any circumstances to be invalid or unenforceable in
any jurisdiction, then (a) such provision or part thereof shall, with respect to
such circumstances and in such jurisdiction, be deemed amended to conform to
applicable laws so as to be valid and enforceable to the fullest possible
extent, (b) the invalidity or unenforceability of such provision or part thereof
under such circumstances and in such jurisdiction shall not affect the validity
or enforceability of such provision or part thereof under any other
circumstances or in any other jurisdiction, and (c) the invalidity or
unenforceability of such provision or part thereof shall not affect the validity
or enforceability of the remainder of such provision or the validity or
enforceability of any other provision of this Agreement. Each provision of this
Agreement is separable from every other provision of this Agreement, and each
part of each provision of this Agreement is separable from every other part of
such provision.
6.6 ENTIRE AGREEMENT. This Agreement, the Proxy, and any other documents
delivered by the parties in connection herewith constitute the entire agreement
between the parties with respect to the subject matter hereof and thereof and
supersede all prior agreements and understandings between the parties with
respect thereto.
6.7 ASSIGNMENT; BINDING EFFECT. Except as provided herein, neither this
Agreement nor any of the interests or obligations hereunder may be assigned or
delegated by Shareholder and any attempted or purported assignment or delegation
of any of such interests or obligations shall be void. Subject to the preceding
sentence, this Agreement shall be binding upon Shareholder and his heirs,
estate, executors, personal representatives, successors and assigns, and shall
inure to the benefit of Parent and its successors and assigns. This Agreement
shall be binding upon any Person to whom any Subject Securities are transferred
to the extent provided in Section 2 hereof. Nothing in this Agreement is
intended to confer on any Person (other than Parent, the Company and their
successors and assigns) any rights or remedies of any nature.
6.8 SPECIFIC PERFORMANCE. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement or the Proxy was
not performed in accordance with its specific terms or was otherwise breached.
Shareholder agrees that, in the event of any breach or threatened breach by
Shareholder of any covenant or obligation contained in this Agreement or in the
Proxy, Parent shall be entitled (in addition to any other remedy that may be
available to it, including monetary damages) to seek and obtain (a) a decree or
order of specific performance to enforce the observance and performance of such
covenant or obligation, and (b) an injunction restraining such breach or
threatened breach.
6.9 NON-EXCLUSIVITY. The rights and remedies of Parent under this
Agreement are not exclusive of or limited by any other rights or remedies which
it may have, whether at law, in equity, by contract or otherwise, all of which
shall be cumulative (and not alternative). Nothing in this Agreement shall limit
any of Shareholder's obligations, or the rights or remedies of Parent, under any
Affiliate Agreement between Parent and Shareholder; and nothing in any such
Affiliate Agreement shall limit any of Shareholder's obligations, or any of the
rights or remedies of Parent, under this Agreement.
6
<PAGE>
6.10 GOVERNING LAW. This Agreement and the Proxy shall be construed in
accordance with, and governed in all respects by, the laws of the State of
California (without giving effect to principles of conflicts of laws).
6.11 COUNTERPARTS. This Agreement may be executed by the parties in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument.
6.12 CAPTIONS. The captions contained in this Agreement are for
convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
6.13 ATTORNEYS' FEES. If any legal action or other legal proceeding
relating to this Agreement or the enforcement of any provision of this Agreement
is brought against Shareholder, the prevailing party shall be entitled to
recover reasonable attorneys' fees, costs and disbursements (in addition to any
other relief to which the prevailing party may be entitled).
6.14 WAIVER. No failure on the part of Parent to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of
Parent in exercising any power, right, privilege or remedy under this Agreement,
shall operate as a waiver of such power, right, privilege or remedy; and no
single or partial exercise of any such power, right, privilege or remedy shall
preclude any other or further exercise thereof or of any other power, right,
privilege or remedy. Parent shall not be deemed to have waived any claim
available to Parent arising out of this Agreement, or any power, right,
privilege or remedy of Parent under this Agreement, unless the waiver of such
claim, power, right, privilege or remedy is expressly set forth in a written
instrument duly executed and delivered on behalf of Parent; and any such waiver
shall not be applicable or have any effect except in the specific instance in
which it is given.
[THIS SPACE INTENTIONALLY LEFT BLANK]
7
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this VOTING AGREEMENT to
be executed as of the date first written above.
SIEBEL SYSTEMS, INC.
By:_____________________________________
Title:__________________________________
SHAREHOLDER
________________________________________
Name:
Address:________________________________
________________________________________
________________________________________
Facsimile:______________________________
Additional Securities
Shares Held of Record Options and Other Rights Beneficially Owned
- --------------------- ------------------------ ---------------------
SIGNATURE PAGE
<PAGE>
EXHIBIT A
FORM OF IRREVOCABLE PROXY
The undersigned shareholder of SCOPUS TECHNOLOGY, INC., a California
corporation (the "COMPANY"), hereby irrevocably (to the fullest extent permitted
by law) appoints and constitutes Thomas M. Siebel, Howard H. Graham and SIEBEL
SYSTEMS, INC., a Delaware corporation ("Parent"), and each of them, the
attorneys and proxies of the undersigned with full power of substitution and
resubstitution, to the full extent of the undersigned's rights with respect to
(i) the outstanding shares of capital stock of the Company owned of record by
the undersigned as of the date of this proxy, which shares are specified on the
final page of this proxy, and (ii) any and all other shares of capital stock of
the Company which the undersigned may acquire on or after the date hereof. (The
shares of the capital stock of the Company referred to in clauses "(i)" and
"(ii)" of the immediately preceding sentence are collectively referred to as the
"SHARES," and capitalized terms used but not defined herein shall have the
meanings set forth in the Voting Agreement, dated as of the date hereof, between
Parent and Shareholder (the "VOTING AGREEMENT").) Upon the execution hereof,
all prior proxies given by the undersigned with respect to any of the Shares are
hereby revoked, and the undersigned agrees that the undersigned shall not grant
any subsequent proxy at any time prior to the Expiration Date.
This proxy is irrevocable, is coupled with an interest and is granted
in connection with the Voting Agreement, and is granted in consideration of
Parent entering into the Agreement and Plan of Merger and Reorganization, dated
as of the date hereof, among Parent, Syracuse Acquisition Sub, Inc. and the
Company (the "MERGER AGREEMENT").
The attorneys and proxies named above will be empowered, and may
exercise this proxy, to vote the Shares at any time until the Expiration Date at
any meeting of the shareholders of the Company, however called, or in connection
with any solicitation of written consents from shareholders of the Company, in
favor of the approval and adoption of the Merger Agreement and the approval of
the Merger, and in favor of each of the other actions contemplated by the Merger
Agreement.
The undersigned may vote the Shares on all other matters.
This proxy shall be binding upon the heirs, estate, executors,
personal representatives, successors and assigns of the undersigned (including
any transferee of any of the Shares).
If any provision of this proxy or any part of any such provision is
held under any circumstances to be invalid or unenforceable in any jurisdiction,
then (a) such provision or part thereof shall, with respect to such
circumstances and in such jurisdiction, be deemed amended to conform to
applicable laws so as to be valid and enforceable to the fullest possible
extent, (b) the invalidity or unenforceability of such provision or part thereof
under such circumstances and in such jurisdiction shall not affect the validity
or enforceability of such provision or part thereof under any other
circumstances or in any other jurisdiction, and (c) the invalidity or
unenforceability of such provision or part thereof shall not affect the validity
or enforceability of the remainder of such provision or the validity or
enforceability of any other provision of this
VOTING AGREEMENT
A-1
<PAGE>
proxy. Each provision of this proxy is separable from every
other provision of this proxy, and each part of each provision of this proxy is
separable from every other part of such provision.
This proxy shall terminate upon the Expiration Date.
Dated: March 1, 1998
_________________________________________
Name:
Number of shares of common stock of the
Company owned of record as of the date of
this proxy:
_________________________________________
2
<PAGE>
APPENDIX C-2
VOTING AGREEMENT
THIS VOTING AGREEMENT is entered into as of March 1, 1998, by and between
SCOPUS TECHNOLOGY, INC. a California corporation ("COMPANY"), SIEBEL SYSTEMS,
INC., a Delaware corporation, and ___________________________ ("SHAREHOLDER").
RECITALS
WHEREAS, Shareholder is a stockholder of Parent.
WHEREAS, Parent, Syracuse Acquisition Sub, Inc., a California corporation
and a wholly-owned subsidiary of Parent ("MERGER SUB"), and the Company, are
entering into an Agreement and Plan of Merger and Reorganization of even date
herewith (the "MERGER AGREEMENT") which provides (subject to the conditions set
forth therein) for the merger of Merger Sub with and into the Company (the
"MERGER").
NOW, THEREFORE, in order to induce Company to enter into the Merger
Agreement and consummate the transactions contemplated thereby, and for other
valuable consideration (the receipt and sufficiency of which are hereby
acknowledged by Shareholder), Shareholder hereby covenants and agrees as
follows:
AGREEMENT
The parties to this Agreement, intending to be legally bound, agree as
follows:
1. CERTAIN DEFINITIONS.
For purposes of this Agreement:
(a) "PARENT COMMON STOCK" shall mean the common stock, par value $.001
per share, of Parent.
(b) "EXPIRATION DATE" shall mean the earlier of (i) the date upon
which the Merger Agreement is validly terminated pursuant to Section 8 thereof,
or (ii) the date upon which the Merger becomes effective in accordance with the
terms and provisions of the Merger Agreement.
(c) Shareholder shall be deemed to "OWN" or to have acquired
"OWNERSHIP" of a security if Shareholder is the "beneficial owner" (within the
meaning of Rule 13d-3 under the Securities Exchange Act of 1934) of such
security by virtue of Shareholder, directly or indirectly, having or sharing
voting power over such security.
(d) "PERSON" shall mean any (i) individual, (ii) corporation, limited
liability company, partnership or other entity, or (iii) governmental authority.
1.
<PAGE>
(e) "SUBJECT SECURITIES" shall mean: (i) all securities of Parent
(including all shares of Parent Common Stock and all options, warrants and other
rights to acquire shares of Parent Common Stock) Owned by Shareholder as of the
date of this Agreement; and (ii) all additional securities of Parent (including
all additional shares of Parent Common Stock and all additional options,
warrants and other rights to acquire shares of Parent Common Stock) of which
Shareholder acquires Ownership during the period from the date of this Agreement
through the Expiration Date.
(f) A Person shall be deemed to have a effected a "TRANSFER" of a
security if such Person directly or indirectly: (i) sells, pledges, encumbers,
grants an option with respect to, transfers or disposes of such security or any
interest in such security; or (ii) enters into an agreement or commitment
providing for the sale of, pledge of, encumbrance of, grant of an option with
respect to, transfer of or disposition of such security or any interest therein.
2. TRANSFER OF SUBJECT SECURITIES.
2.1 TRANSFEREE OF SUBJECT SECURITIES TO BE BOUND BY THIS AGREEMENT.
Shareholder agrees that, during the period from the date of this Agreement
through the Expiration Date, Shareholder shall not cause or permit any Transfer
of any of the Subject Securities to be effected unless (i) such Transfer is in
accordance with any affiliate agreement between Shareholder of even date
herewith to which such Shareholder is bound ("AFFILIATE AGREEMENT") and (ii) in
the case of any transfer, directly or indirectly, to any member of Shareholder's
family, trust for the benefit of Shareholder or any member of Shareholder's
family or and any entity beneficially owned by any such Persons, each Person to
which any of such Subject Securities, or any interest in any of such Subject
Securities, is or may be transferred shall have: (a) executed a counterpart of
this Agreement (with such modifications as Company may reasonably request); and
(b) agreed in writing to hold such Subject Securities (or interest in such
Subject Securities) subject to all of the terms and provisions of this
Agreement.
2.2 TRANSFER OF VOTING RIGHTS. Shareholder agrees that, during the period
from the date of this Agreement through the Expiration Date, Shareholder shall
not deposit (or permit the deposit of) any Subject Securities in a voting trust
or grant any proxy or enter into any voting agreement or similar agreement in
contravention of the obligations of Shareholder under this Agreement with
respect to any of the Subject Securities.
3. VOTING OF SHARES.
3.1 VOTING AGREEMENT. Shareholder agrees that, during the period from the
date of this Agreement through the Expiration Date:
(a) at any meeting of shareholders of Parent, however called, and at
every adjournment thereof, Shareholder shall (unless otherwise directed in
writing by Company) cause all outstanding shares of Parent Common Stock that are
Owned by Shareholder as of the record date fixed for such meeting to be voted in
favor of the issuance of Parent Common Stock in connection with the Merger, and
in favor of each of the other actions contemplated by the Merger Agreement; and
2.
<PAGE>
(b) in the event written consents are solicited or otherwise sought
from shareholders of Parent with respect to the approval or adoption of the
Merger Agreement, with respect to the approval of the Merger or with respect to
any of the other actions contemplated by the Merger Agreement, Shareholder shall
(unless otherwise directed in writing by Company) cause to be executed, with
respect to all shares of Parent Common Stock that are Owned by Shareholder as of
the record date fixed for the consent to the proposed action, a written consent
or written consents to such proposed action.
4. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER.
Shareholder hereby represents and warrants to Company as follows:
4.1 AUTHORIZATION, ETC. Shareholder has the absolute and unrestricted
right, power, authority and capacity to execute and deliver this Agreement and
the Proxy and to perform his obligations hereunder and thereunder. This
Agreement and the Proxy have been duly executed and delivered by Shareholder and
constitute legal, valid and binding obligations of Shareholder, enforceable
against Shareholder in accordance with their terms, subject to (i) laws of
general application relating to bankruptcy, insolvency and the relief of
debtors, and (ii) rules of law governing specific performance, injunctive relief
and other equitable remedies.
4.2 NO CONFLICTS OR CONSENTS.
(a) The execution and delivery of this Agreement and the Proxy by
Shareholder do not, and the performance of this Agreement and the Proxy by
Shareholder will not: (i) conflict with or violate any order, decree or judgment
applicable to Shareholder or by which he or any of his properties is or may be
bound or affected; or (ii) result in or constitute (with or without notice or
lapse of time) any breach of or default under, or give to any other Person (with
or without notice or lapse of time) any right of termination, amendment,
acceleration or cancellation of, or result (with or without notice or lapse of
time) in the creation of any encumbrance or restriction on any of the Subject
Securities pursuant to, any contract to which Shareholder is a party or by which
Shareholder or any of his affiliates or properties is or may be bound or
affected.
(b) The execution and delivery of this Agreement and the Proxy by
Shareholder do not, and the performance of this Agreement and the Proxy by
Shareholder will not, require any consent or approval of any Person.
4.3 TITLE TO SECURITIES. As of the date of this Agreement: (a)
Shareholder holds of record (free and clear of any encumbrances or restrictions
that will restrict or interfere in any way with the actions contemplated hereby
or Shareholder's obligations hereunder) the number of outstanding shares of
Parent Common Stock set forth under the heading "Shares Held of Record" on the
signature page hereof; (b) Shareholder holds (free and clear of any encumbrances
or restrictions that will restrict or interfere in any way with the actions
contemplated hereby or Shareholder's obligations hereunder) the options,
warrants and other rights to acquire shares of Parent Common Stock set forth
under the heading "Options and Other Rights" on the signature page hereof; (c)
Shareholder Owns the additional securities of Parent set forth under the heading
"Additional Securities Beneficially Owned" on the signature page hereof; and (d)
Shareholder
3.
<PAGE>
does not directly or indirectly Own any shares of capital stock or other
securities of Parent, or any option, warrant or other right to acquire (by
purchase, conversion or otherwise) any shares of capital stock or other
securities of Parent, other than the shares and options, warrants and other
rights set forth on the signature page hereof.
4.4 ACCURACY OF REPRESENTATIONS. The representations and warranties
contained in this Agreement are accurate in all respects as of the date of this
Agreement, will be accurate in all respects at all times through the Expiration
Date and will be accurate in all respects as of the date of the consummation of
the Merger as if made on that date except that Shareholder's beneficial or
record ownership of securities as represented in Section 6.3 hereof may differ
as of the Expiration Date in the event of acquisitions or Transfers of
securities not prohibited by the terms of this Agreement.
5. MISCELLANEOUS.
5.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. All
representations, warranties, covenants and agreements made by Shareholder in
this Agreement shall survive the Expiration Date.
5.2 INDEMNIFICATION. Parent shall hold harmless and indemnify Company and
Company's affiliates from and against, and shall compensate and reimburse
Company and Company's affiliates for, any loss, damage, claim, liability, fee
(including reasonable attorneys' fees), demand, cost or expense (regardless of
whether or not such loss, damage, claim, liability, fee, demand, cost or expense
relates to a third-party claim) that is directly or indirectly suffered or
incurred by Company or any of Company's affiliates, or to which Company or any
of Company's affiliates otherwise becomes subject, and that arises directly or
indirectly from, or relates directly or indirectly to any inaccuracy in or
breach of any representation, warranty, covenant or obligation of Shareholder
contained in this Agreement or in the Proxy.
5.3 EXPENSES. All costs and expenses incurred in connection with the
transactions contemplated by this Agreement shall be paid by the party incurring
such costs and expenses.
5.4 NOTICES. Any notice or other communication required or permitted to
be delivered under this Agreement shall be in writing and shall be deemed
properly delivered, given and received when delivered (by hand, by registered
mail, by courier or express delivery service or by facsimile confirmation
obtained) to the address or facsimile telephone number set forth beneath the
name of such party below (or to such other address or facsimile telephone number
as such party shall have specified in a written notice given to the other
party):
IF TO SHAREHOLDER:
at the address or facsimile phone number set forth below Shareholder's
signature on the signature page hereof
WITH A COPY TO:
Cooley Godward LLP
4.
<PAGE>
3000 Sand Hill Road
Building 3, Suite 230
Menlo Park, CA 94025
Attention: Eric C. Jensen
Fax: (650) 854-2691
IF TO COMPANY:
SCOPUS TECHNOLOGY, INC.
1900 Powell Street
Emeryville, CA 94608
Attn: Ori Sasson
Fax: (510) 597-8821
WITH A COPY TO:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304
Attention: Howard Zeprun, Esq.
Fax: (650) 493-6811
5.5 SEVERABILITY. If any provision of this Agreement or any part of any
such provision is held under any circumstances to be invalid or unenforceable in
any jurisdiction, then (a) such provision or part thereof shall, with respect to
such circumstances and in such jurisdiction, be deemed amended to conform to
applicable laws so as to be valid and enforceable to the fullest possible
extent, (b) the invalidity or unenforceability of such provision or part thereof
under such circumstances and in such jurisdiction shall not affect the validity
or enforceability of such provision or part thereof under any other
circumstances or in any other jurisdiction, and (c) the invalidity or
unenforceability of such provision or part thereof shall not affect the validity
or enforceability of the remainder of such provision or the validity or
enforceability of any other provision of this Agreement. Each provision of this
Agreement is separable from every other provision of this Agreement, and each
part of each provision of this Agreement is separable from every other part of
such provision.
5.6 ENTIRE AGREEMENT. This Agreement, the Proxy, and any other documents
delivered by the parties in connection herewith constitute the entire agreement
between the parties with respect to the subject matter hereof and thereof and
supersede all prior agreements and understandings between the parties with
respect thereto.
5.7 ASSIGNMENT; BINDING EFFECT. Except as provided herein, neither this
Agreement nor any of the interests or obligations hereunder may be assigned or
delegated by Shareholder and any attempted or purported assignment or delegation
of any of such interests or obligations shall be void. Subject to the preceding
sentence, this Agreement shall be binding upon Shareholder and his heirs,
estate, executors, personal representatives, successors and assigns, and shall
inure to the benefit of Company and its successors and assigns. This Agreement
shall be binding upon any Person to whom any Subject Securities are transferred
to the extent provided in Section 2
5.
<PAGE>
hereof. Nothing in this Agreement is intended to confer on any Person (other
than Company and its successors and assigns) any rights or remedies of any
nature.
5.8 SPECIFIC PERFORMANCE. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement or the Proxy was
not performed in accordance with its specific terms or was otherwise breached.
Shareholder agrees that, in the event of any breach or threatened breach by
Shareholder of any covenant or obligation contained in this Agreement or in the
Proxy, Company shall be entitled (in addition to any other remedy that may be
available to it, including monetary damages) to seek and obtain (a) a decree or
order of specific performance to enforce the observance and performance of such
covenant or obligation, and (b) an injunction restraining such breach or
threatened breach.
5.9 NON-EXCLUSIVITY. The rights and remedies of Company under this
Agreement are not exclusive of or limited by any other rights or remedies which
it may have, whether at law, in equity, by contract or otherwise, all of which
shall be cumulative (and not alternative). Nothing in this Agreement shall limit
any of Shareholder's obligations, or the rights or remedies of Company, under
any Affiliate Agreement between Company and Shareholder; and nothing in any such
Affiliate Agreement shall limit any of Shareholder's obligations, or any of the
rights or remedies of Company, under this Agreement.
5.10 GOVERNING LAW. This Agreement and the Proxy shall be construed in
accordance with, and governed in all respects by, the laws of the State of
California (without giving effect to principles of conflicts of laws).
5.11 COUNTERPARTS. This Agreement may be executed by the parties in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument.
5.12 CAPTIONS. The captions contained in this Agreement are for
convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
5.13 ATTORNEYS' FEES. If any legal action or other legal proceeding
relating to this Agreement or the enforcement of any provision of this Agreement
is brought against Shareholder, the prevailing party shall be entitled to
recover reasonable attorneys' fees, costs and disbursements (in addition to any
other relief to which the prevailing party may be entitled).
5.14 WAIVER. No failure on the part of Company to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of
Company in exercising any power, right, privilege or remedy under this
Agreement, shall operate as a waiver of such power, right, privilege or remedy;
and no single or partial exercise of any such power, right, privilege or remedy
shall preclude any other or further exercise thereof or of any other power,
right, privilege or remedy. Company shall not be deemed to have waived any claim
available to Company arising out of this Agreement, or any power, right,
privilege or remedy of Company under this Agreement, unless the waiver of such
claim, power, right, privilege or remedy is expressly set forth in a written
instrument duly executed and delivered on behalf of Company;
6.
<PAGE>
and any such waiver shall not be applicable or have any effect except in the
specific instance in which it is given.
[THIS SPACE INTENTIONALLY LEFT BLANK]
7.
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this VOTING AGREEMENT to
be executed as of the date first written above.
SCOPUS TECHNOLOGY, INC.
By:_____________________________________
Title:__________________________________
SIEBEL SYSTEMS, INC.
By:_____________________________________
Title:__________________________________
SHAREHOLDER
________________________________________
Name:
Address:________________________________
________________________________________
________________________________________
Facsimile:______________________________
Additional Securities
Shares Held of Record Options and Other Rights Beneficially Owned
- --------------------- ------------------------ ---------------------
SIGNATURE PAGE
<PAGE>
APPENDIX D-1
COMPANY AFFILIATE AGREEMENT
THIS AFFILIATE AGREEMENT (this "AGREEMENT") is dated as of ______________,
1998, by and between SIEBEL SYSTEMS, INC., a Delaware corporation ("PARENT"),
SCOPUS TECHNOLOGY, INC., a California corporation ("COMPANY"), and
("AFFILIATE").
WHEREAS, Affiliate is a shareholder [and an officer and director] of the
Company.
WHEREAS, Parent, Syracuse Acquisition Sub, Inc., a California corporation
and a wholly-owned subsidiary of Parent ("MERGER SUB"), and the Company have
entered into an Agreement and Plan of Merger and Reorganization dated as of
March 1, 1998 (the "MERGER AGREEMENT"), providing for the merger of Merger Sub
with and into the Company (the "MERGER"). The Merger Agreement contemplates
that, upon consummation of the Merger, (i) the holders of the common stock of
the Company ("COMPANY COMMON STOCK") will receive shares of common stock of
Parent ("PARENT COMMON STOCK") in exchange for their shares of Company Common
Stock and (ii) the Company will become a wholly-owned subsidiary of Parent. It
is accordingly contemplated that Affiliate will receive shares of Parent Common
Stock in the Merger.
WHEREAS, Affiliate understands that the Parent Common Stock being issued in
the Merger will be issued pursuant to a registration statement on Form S-4 and
that Affiliate may be deemed to be an "affiliate" of the Company, as the term
"affiliate" is used (i)for purposes of paragraphs (c) and (d) of Rule 145 ("RULE
145") of the General Rules and Regulations of the Securities and Exchange
Commission (the "SEC") under the Securities Act of 1933, as amended (the
"SECURITIES ACT"), and (ii) in the SEC's Accounting Series Releases 130 and 135,
and, as such, Affiliate may only transfer, sell or dispose of such Parent Common
Stock in accordance with this Affiliate Agreement and Rule 145.
WHEREAS, it is a condition to the consummation of the Merger pursuant to
the Merger Agreement that the independent accounting firms that audit the annual
financial statements of Parent and the Company will have delivered the written
concurrences with the conclusions of management of Parent and the Company to the
effect that the Merger will be accounted for as a pooling of interests under
Accounting Principles Board Opinion No. 16.
NOW, THEREFORE, in order to induce Parent to consummate the transactions
contemplated by the Merger Agreement, and for other valuable consideration (the
receipt and sufficiency of which are hereby acknowledged by Affiliate),
Affiliate hereby covenants and agrees as follows:
SECTION 1. REPRESENTATIONS AND WARRANTIES. Affiliate represents and
warrants to Parent as follows:
1.
<PAGE>
(a) Affiliate is the holder and "beneficial owner" (as defined in Rule
13d-3 under the Securities Exchange Act of 1934, as amended) of the number of
shares of the Company Common Stock set forth under Affiliate's signature below
(the "COMPANY SHARES"), and Affiliate has good and valid title to the Company
Shares, free and clear of any liens, pledges, security interests, adverse
claims, equities, options, proxies, charges, encumbrances or restrictions of any
nature with the exception of any option to purchase shares of Company Common
Stock owned by Affiliate that is held by General Atlantic Partners 17, L.P. or
GAP Coinvestments Partners, L.P. as of the date of this Agreement.
(b) Affiliate has carefully read this Agreement, and has discussed
with Affiliate's own independent counsel to the extent Affiliate felt necessary
the limitations imposed on Affiliate's ability to sell, transfer or otherwise
dispose of the shares of Parent Common Stock that Affiliate is to receive in the
Merger (the "PARENT SHARES"). Affiliate fully understands the limitations this
Agreement places upon Affiliate's ability to sell, transfer or otherwise dispose
of the Parent Shares.
(c) Affiliate understands that the representations, warranties and
covenants set forth herein will be relied upon by Parent, the Company, and their
respective affiliates, counsel and accounting firms for purposes of determining
Parent's eligibility to account for the Merger as a "pooling of interests," and
that substantial losses and damages may be incurred by these persons if
Affiliate's representations, warranties or covenants are breached.
SECTION 2. PROHIBITION AGAINST TRANSFER. In addition to the restrictions
set forth elsewhere herein, Affiliate agrees that Affiliate shall not effect any
sale, transfer or other disposition of the Parent Shares unless:
(a) such sale, transfer or other disposition is made in conformity
with the volume and other requirements of Rule 145 under the Securities Act, as
evidenced by a broker's letter and a representation letter executed by Affiliate
(reasonably satisfactory in form and content to Parent), each stating that such
requirements have been met;
(b) counsel reasonably satisfactory to Parent shall have advised
Parent in a written opinion letter (reasonably satisfactory in form and content
to Parent), upon which Parent may rely, that such sale, transfer or other
disposition will be exempt from registration under the Securities Act;
(c) such sale, transfer or other disposition is effected pursuant to
an effective registration statement under the Securities Act; or
(d) an authorized representative of the SEC shall have rendered
written advice to Affiliate to the effect that the SEC would take no action, or
that the staff of the SEC would not recommend that the SEC take action, with
respect to such proposed sale, transfer or other disposition, and a copy of such
written advice and all other related communications with the SEC shall have been
delivered to Parent.
2.
<PAGE>
SECTION 3. STOP TRANSFER INSTRUCTIONS; LEGEND. Affiliate acknowledges and
agrees that (a) stop transfer instructions will be given to Parent's transfer
agent with respect to the Parent Shares, and (b) each certificate representing
any of such shares of Parent Common Stock or any substitutions thereof shall
bear a legend (together with any other legend or legends required by applicable
state securities laws or otherwise), stating in substance:
THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF
1933 APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR
HYPOTHECATED EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF SUCH RULE AND
IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT DATED AS OF _______,
1998, BETWEEN THE REGISTERED HOLDER HEREOF AND SIEBEL SYSTEMS, INC., A
COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF SIEBEL
SYSTEMS, INC..
SECTION 4. COVENANTS RELATED TO POOLING OF INTERESTS. In accordance with
SEC Staff Accounting Bulletin No. 65 ("SAB 65"), during the period contemplated
by SAB 65, until the earlier of (i) Parent's public announcement of financial
results covering at least 30 days of combined operations of Parent and the
Company or (ii) the Merger Agreement is terminated in accordance with its terms,
Affiliate will not sell, exchange, transfer, pledge, distribute, or otherwise
dispose of or grant any option, establish any "short" or put-equivalent position
with respect to or enter into any similar transaction (through derivatives or
otherwise) intended or having the effect, directly or indirectly, to reduce its
risk relative to: (i) any shares of Company Common Stock, except pursuant to
and upon the consummation of the Merger; or (ii) any shares of Parent Common
Stock received by Affiliate in the Merger or any shares of Parent Common Stock
received by Affiliate upon exercise of options assumed by Parent in connection
with the Merger. Parent may, at its discretion, cause a restrictive legend
covering the restrictions referred to in this Section 4 to be placed on Parent
Common Stock certificates issued to Affiliate in the Merger and place a stock
transfer notice consistent with the restrictions referred to in this Section 4
with its transfer agent with respect to such certificates, provided such
restrictive legend shall be removed and/or notice shall be countermanded
promptly upon expiration of the necessity therefor at the request of Affiliate.
SECTION 5. PERMITTED TRANSFERS. Notwithstanding anything to the contrary
contained in this Agreement, Affiliate (i) may transfer Affiliate's pro rata
portion (of the total number of shares available under the "de minimis"
exception referred to in this clause (i) to all affiliates of Parent and
Company) of the "de minimis" number of shares of Company Common Stock and Parent
Common Stock available for sale in accordance with SEC Staff Accounting Bulletin
No. 76 (the "DE MINIMIS POOL") contingent upon confirmation and approval by
legal counsel for Company and independent auditors to the Company and Parent
that such transfer qualifies as within Affiliate's pro rata portion of the De
Minimis Pool and does not otherwise adversely affect the Parent's ability to
account for the Merger as a "pooling of interests" (ii) may (with the written
consent of Parent, not to be unreasonably withheld): (A) transfer shares of
Company Common Stock or Parent Common Stock to the Company in payment of the
exercise
3.
<PAGE>
price of options to purchase Company Common Stock; (B) transfer shares of Parent
Common Stock in payment of the exercise price of options to purchase Parent
Common Stock; (C) transfer shares of Company Common Stock or Parent Common Stock
to any organization qualified under Section 501(c)(3) of the Internal Revenue
Code of 1986, as amended, so long as such organization has traditionally been
supported by contributions from the general public (as opposed to being
supported largely by a specific donor); and (D) transfer shares of Company
Common Stock or shares of Parent Common Stock to a trust established for the
benefit of Affiliate and/or for the benefit of one or more members of
Affiliate's family, or make a bona fide gift of shares of Common Stock of the
Company or shares of Parent Common Stock to one or more members of Affiliate's
family, provided that in the case of a transfer or gift pursuant to this clause
(C) or (D), a transferee of such shares agrees to be bound by the limitations
set forth in this Agreement.
SECTION 6. SPECIFIC PERFORMANCE. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement was not
performed in accordance with its specific terms or was otherwise breached.
Affiliate agrees that, in the event of any breach or threatened breach by
Affiliate of any covenant or obligation contained in this Agreement, each of
Parent and the Company shall be entitled (in addition to any other remedy that
may be available to it, including monetary damages) to seek and obtain (a) a
decree or order of specific performance to enforce the observance and
performance of such covenant or obligation, and (b) an injunction restraining
such breach or threatened breach.
SECTION 7. INDEPENDENCE OF OBLIGATIONS. The covenants and obligations of
Affiliate set forth in this Affiliate Agreement shall be construed as
independent of any other agreement or arrangement between Affiliate, on the one
hand, and the Company or Parent, on the other. The existence of any claim or
cause of action by Affiliate against the Company or Parent shall not constitute
a defense to the enforcement of any of such covenants or obligations against
Affiliate.
SECTION 8. NOTICES. Any notice or other communication required or
permitted to be delivered under this Agreement shall be in writing and shall be
deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or express delivery service or by facsimile
confirmation) to the address or facsimile telephone number set forth beneath the
name of such party below (or to such other address or facsimile telephone number
as such party shall have specified in a written notice given to the other
party):
IF TO PARENT: SIEBEL SYSTEMS, INC.
1885 South Grant Street
San Mateo, CA 94402
Attn: Vice President Legal Affairs
Fax: (650) 295-5116
WITH A COPY TO: COOLEY GODWARD LLP
3000 Sand Hill Road
Building 3, Suite 230
Menlo Park, CA 94025
Attn: Eric C. Jensen, Esq.
4.
<PAGE>
IF TO COMPANY: SCOPUS TECHNOLOGY, INC.
1900 Powell Street
Emeryville, CA 94608
Attn: Chief Financial Officer
Fax: (510) 597-5964
WITH A COPY TO: WILSON, SONSINI, GOODRICH & ROSATI
650 Page Mill Road
Palo Alto, CA 94304
Attn: Howard Zeprun, Esq.
Fax: (650) 493-9311
IF TO AFFILIATE:
at the address or facsimile phone number set forth below Affiliate's
signature on the signature page hereof.
WITH A COPY TO: WILSON, SONSINI, GOODRICH & ROSATI
650 Page Mill Road
Palo Alto, CA 94304
Attn: Howard Zeprun, Esq.
Fax: (650) 493-9311
SECTION 9. SEVERABILITY. If any provision of this Agreement or any part of
any such provision is held under any circumstances to be invalid or
unenforceable in any jurisdiction, then (a) such provision or part thereof
shall, with respect to such circumstances and in such jurisdiction, be deemed
amended to conform to applicable laws so as to be valid and enforceable to the
fullest possible extent, (b) the invalidity or unenforceability of such
provision or part thereof under such circumstances and in such jurisdiction
shall not affect the validity or enforceability of such provision or part
thereof under any other circumstances or in any other jurisdiction, and (c) the
invalidity or unenforceability of such provision or part thereof shall not
affect the validity or enforceability of the remainder of such provision or the
validity or enforceability of any other provision of this Agreement. Each
provision of this Agreement is separable from every other provision of this
Agreement, and each part of each provision of this Agreement is separable from
every other part of such provision.
SECTION 10. GOVERNING LAW. This Agreement shall be construed in
accordance with, and governed in all respects by, the laws of the State of
California (without giving effect to principles of conflicts of laws).
SECTION 11. WAIVER. No failure on the part of Parent or the Company to
exercise any power, right, privilege or remedy under this Agreement, and no
delay on the part of Parent or the Company in exercising any power, right,
privilege or remedy under this Agreement, shall operate as a waiver of such
power, right, privilege or remedy; and no single or partial exercise of any
such power, right, privilege or remedy shall preclude any other or further
exercise thereof or of any other power, right, privilege or remedy. Neither
Parent or the Company shall be deemed to have waived any claim arising out of
this Agreement, or any power, right, privilege or remedy
5.
<PAGE>
under this Agreement, unless the waiver of such claim, power, right, privilege
or remedy is expressly set forth in a written instrument duly executed and
delivered on behalf of the party deemed to be charged; and any such waiver shall
not be applicable or have any effect except in the specific instance in which it
is given.
SECTION 12. CAPTIONS. The captions contained in this Agreement are for
convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
SECTION 13. FURTHER ASSURANCES. Affiliate shall execute and/or cause to
be delivered to Parent or the Company such instruments and other documents and
shall take such other actions as Parent or the Company may reasonably request to
effectuate the intent and purposes of this Agreement.
SECTION 14. ENTIRE AGREEMENT. This Agreement, the Merger Agreement and any
Voting Agreement or Noncompetition Agreement between Affiliate and Parent or
Irrevocable Proxy executed by Affiliate in favor of Parent constitute the entire
agreement between the parties with respect to the subject matter hereof and
thereof and supersede all prior agreements and understandings between the
parties with respect thereto.
SECTION 15. NON-EXCLUSIVITY. The rights and remedies of Parent and the
Company hereunder are not exclusive of or limited by any other rights or
remedies which Parent may have, whether at law, in equity, by contract or
otherwise, all of which shall be cumulative (and not alternative). Nothing in
this Agreement shall limit any of Affiliate's obligations, or the rights or
remedies of Parent or the Company, under any Voting Agreement (including any
Irrevocable Proxy contained therein) or Noncompetition Agreement between Parent
and Affiliate; and nothing in any such Voting Agreement (including any
Irrevocable Proxy) or Noncompetition Agreement shall limit any of Affiliate's
obligations, or any of the rights or remedies of Parent, under this Agreement.
SECTION 16. AMENDMENTS. This Agreement may not be amended, modified,
altered, or supplemented other than by means of a written instrument duly
executed and delivered on behalf of Parent, the Company and Affiliate.
SECTION 17. BINDING NATURE. This Agreement will be binding upon Affiliate
and Affiliate's representatives, executors, administrators, estate, heirs,
successors and assigns, and shall inure to the benefit of the Company, Parent
and their respective successors and assigns.
SECTION 18. ATTORNEYS' FEES AND EXPENSES. If any legal action or other
legal proceeding relating to the enforcement of any provision of this Agreement
is brought against Affiliate, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
SECTION 19. ASSIGNMENT. This Agreement and all obligations of Affiliate
hereunder are personal to Affiliate and may not be transferred or delegated by
Affiliate at any time. The Company or Parent may freely assign any or all of
its rights under this Affiliate Agreement, in whole or in part, to any other
person or entity without obtaining the consent or approval of Affiliate.
6.
<PAGE>
SECTION 20. SURVIVAL. Each of the representations, warranties, covenants
and obligations contained in this Agreement shall survive the consummation of
the Merger.
7.
<PAGE>
The undersigned have executed this Agreement as of the date first set
forth above.
SIEBEL SYSTEMS, INC.
By:_____________________________________
Title:__________________________________
SCOPUS TECHNOLOGY, INC.
By:_____________________________________
Title:__________________________________
AFFILIATE:
________________________________________
Address:________________________________
________________________________________
________________________________________
Facsimile:______________________________
SCOPUS TECHNOLOGY, INC.
STOCK BENEFICIALLY OWNED BY AFFILIATE:
_________________________________shares
of Common Stock
_________________________________shares
of Common Stock issuable upon exercise
of outstanding options
AFFILIATE AGREEMENT SIGNATURE PAGE
<PAGE>
APPENDIX D-2
PARENT AFFILIATE AGREEMENT
THIS AFFILIATE AGREEMENT (this "AGREEMENT") is dated as of March 1, 1998,
by and between SIEBEL SYSTEMS, INC., a Delaware corporation ("PARENT"), SCOPUS
TECHNOLOGY, INC., a California corporation ("Company") and ___________________
("AFFILIATE").
WHEREAS, Affiliate is a shareholder and an officer and director of Parent.
WHEREAS, Parent, Syracuse Acquisition Sub, Inc., a California corporation
and a wholly-owned subsidiary of Parent ("MERGER SUB"), and Company have entered
into an Agreement and Plan of Merger and Reorganization dated as of March 1,
1998 (the "MERGER AGREEMENT"), providing for the merger of Merger Sub with and
into the Company (the "MERGER"). The Merger Agreement contemplates that, upon
consummation of the Merger, (i) the holders of the common stock of the Company
("COMPANY COMMON STOCK") will receive shares of common stock of Parent ("PARENT
COMMON STOCK") in exchange for their shares of Company Common Stock and (ii) the
Company will become a wholly-owned subsidiary of Parent.
WHEREAS, it is a condition to the consummation of the Merger pursuant to
the Merger Agreement that the independent accounting firms that audit the annual
financial statements of Parent and the Company will have delivered the written
concurrences with the conclusions of management of Parent and the Company to the
effect that the Merger will be accounted for as a pooling of interests under
Accounting Principles Board Opinion No. 16.
NOW, THEREFORE, intending to be legally bound, in order to induce the
Company and Parent to consummate the transactions contemplated by the Merger
Agreement, and for other valuable consideration, the receipt and sufficiently of
which are hereby acknowledged by Affiliate, Affiliate hereby covenants and
agrees as follows:
SECTION 1. REPRESENTATIONS AND WARRANTIES. Affiliate represents and
warrants to Parent as follows:
(a) Affiliate is the holder and "beneficial owner" (as defined in Rule
13d-3 under the Securities Exchange Act of 1934, as amended) of the number of
shares of the Parent Common Stock set forth under Affiliate's signature below
(the "PARENT SHARES"), and Affiliate has good and valid title to the Parent
Shares, free and clear of any liens, pledges, security interests, adverse
claims, equities, options, proxies, charges, encumbrances or restrictions of any
nature.
(b) Affiliate has carefully read this Agreement, and has discussed
with Affiliate's own independent counsel to the extent Affiliate felt necessary
the limitations imposed on Affiliate's ability to sell, transfer or otherwise
dispose of the shares of Parent Common Stock. Affiliate fully understands the
limitations this Agreement places upon Affiliate's ability to sell, transfer or
otherwise dispose of the Parent Shares.
1.
<PAGE>
(c) Affiliate understands that the representations, warranties and
covenants set forth herein will be relied upon by Parent, the Company, and their
respective affiliates, counsel and accounting firms for purposes of determining
Parent's eligibility to account for the Merger as a "pooling of interests," and
that substantial losses and damages may be incurred by these persons if
Affiliate's representations, warranties or covenants are breached.
SECTION 2. COVENANTS RELATED TO POOLING OF INTERESTS. In accordance with
SEC Staff Accounting Bulletin No. 65 ("SAB 65"), during the period contemplated
by SAB 65, until the earlier of (i) Parent's public announcement of financial
results covering at least 30 days of combined operations of Parent and the
Company or (ii) the Merger Agreement is terminated in accordance with its terms,
Affiliate will not sell, exchange, transfer, pledge, distribute or otherwise
dispose of or grant any option, establish any "short" or put-equivalent position
with respect to or enter into any similar transaction (through derivatives or
otherwise) intended or having the effect, directly or indirectly, to reduce its
risk relative to any Parent Common Stock. Parent may, at its discretion, place
a stock transfer notice consistent with the restrictions referred to in this
Section 2 with its transfer agent with respect to such certificates, provided
such restrictive legend shall be removed and/or notice shall be countermanded
promptly upon expiration of the necessity therefor at the request of Affiliate.
SECTION 3. PERMITTED TRANSFERS. Notwithstanding anything to the contrary
contained in this Agreement, Affiliate may (i) transfer Affiliate's pro rata
portion (of the total number of shares available under the "de minimis"
exception referred to in this clause (i) to all affiliates of Parent and
Company) of the "de minimis" amount of Company Common Stock and Parent Common
Stock available for sale in accordance with SEC Staff Accounting Bulletin No. 76
(the "DE MINIMIS POOL") contingent upon confirmation by legal counsel for Parent
and independent auditors for Parent and the Company as to whether such transfer
qualifies as within Affiliate's pro rata portion of the De Minimis Pool and (ii)
may (with the written consent of Parent, not to be unreasonably withheld): (A)
transfer shares of Parent Common Stock in payment of the exercise price of
options to purchase Parent Common Stock; (B) transfer shares of Parent Common
Stock to any organization qualified under Section 501(c)(3) of the Internal
Revenue Code of 1986, as amended, so long as such organization has traditionally
been supported by contributions from the general public (as opposed to being
supported largely by a specific donor); and (C) transfer shares of Parent Common
Stock to a trust established for the benefit of Affiliate and/or for the benefit
of one or more members of Affiliate's family, or make a bona fide gift of Parent
Common Stock to one or more members of Affiliate's family, provided that in the
case of a transfer or gift pursuant to this clause (B) or (C), a transferee of
such shares agrees to be bound by the limitations set forth in this Agreement.
SECTION 4. SPECIFIC PERFORMANCE. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement was not
performed in accordance with its specific terms or was otherwise breached.
Affiliate agrees that, in the event of any breach or threatened breach by
Affiliate of any covenant or obligation contained in this Agreement, each of
Parent and the Company shall be entitled (in addition to any other remedy that
may be available to it, including monetary damages) to seek and obtain (a) a
decree or order of specific performance to enforce the observance and
performance of such covenant or obligation, and (b) an injunction restraining
such breach or threatened breach.
2.
<PAGE>
SECTION 5. INDEPENDENCE OF OBLIGATIONS. The covenants and obligations of
Affiliate set forth in this Affiliate Agreement shall be construed as
independent of any other agreement or arrangement between Affiliate, on the one
hand, and Parent or the Company , on the other. The existence of any claim or
cause of action by Affiliate against Parent or the Company shall not constitute
a defense to the enforcement of any of such covenants or obligations against
Affiliate.
SECTION 6. NOTICES. Any notice or other communication required or
permitted to be delivered under this Agreement shall be in writing and shall be
deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or express delivery service or by facsimile
confirmation) to the address or facsimile telephone number set forth beneath the
name of such party below (or to such other address or facsimile telephone number
as such party shall have specified in a written notice given to the other
party):
IF TO PARENT: SIEBEL SYSTEMS, INC.
1885 South Grant Street
San Mateo, CA 94402
Attn: Vice President Legal Affairs
Fax: (650) 295-5116
WITH A COPY TO: COOLEY GODWARD LLP
3000 Sand Hill Road
Building 3, Suite 230
Menlo Park, CA 94025
Attn: Eric C. Jensen, Esq.
IF TO THE COMPANY: SCOPUS TECHNOLOGY, INC.
1900 Powell Street
Emeryville, CA 94608
Attn: Chief Financial Officer
Fax: (510) 597-5964
WITH A COPY TO: WILSON, SONSINI GOODRICH & ROSATI
650 Page Mill Road
Palo Alto, CA 94304
Attn: Howard S. Zeprun, Esq.
(650) 493-6811
if to Affiliate:
at the address or facsimile phone number set forth below Affiliate's
signature on the signature page hereof.
SECTION 7. SEVERABILITY. If any provision of this Agreement or any part of
any such provision is held under any circumstances to be invalid or
unenforceable in any jurisdiction, then (a) such provision or part thereof
shall, with respect to such circumstances and in such jurisdiction, be deemed
amended to conform to applicable laws so as to be valid and enforceable to the
fullest possible extent, (b) the invalidity or unenforceability of such
provision or part
3.
<PAGE>
thereof under such circumstances and in such jurisdiction shall not affect the
validity or enforceability of such provision or part thereof under any other
circumstances or in any other jurisdiction, and (c) the invalidity or
unenforceability of such provision or part thereof shall not affect the validity
or enforceability of the remainder of such provision or the validity or
enforceability of any other provision of this Agreement. Each provision of this
Agreement is separable from every other provision of this Agreement, and each
part of each provision of this Agreement is separable from every other part of
such provision.
SECTION 8. GOVERNING LAW. This Agreement shall be construed in accordance
with, and governed in all respects by, the laws of the State of California
(without giving effect to principles of conflicts of laws).
SECTION 9. WAIVER. No failure on the part of Parent or the Company to
exercise any power, right, privilege or remedy under this Agreement, and no
delay on the part of Parent or the Company in exercising any power, right,
privilege or remedy under this Agreement, shall operate as a waiver of such
power, right, privilege or remedy; and no single or partial exercise of any such
power, right, privilege or remedy shall preclude any other or further exercise
thereof or of any other power, right, privilege or remedy. Neither Parent nor
the Company shall be deemed to have waived any claim arising out of this
Agreement, or any power, right, privilege or remedy under this Agreement, unless
the waiver of such claim, power, right, privilege or remedy is expressly set
forth in a written instrument duly executed and delivered on behalf of the party
to be charged; and any such waiver shall not be applicable or have any effect
except in the specific instance in which it is given.
SECTION 10. CAPTIONS. The captions contained in this Agreement are for
convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
SECTION 11. FURTHER ASSURANCES. Affiliate shall execute and/or cause to
be delivered to Parent and the Company such instruments and other documents and
shall take such other actions as Parent or the Company may reasonably request to
effectuate the intent and purposes of this Agreement.
SECTION 12. ENTIRE AGREEMENT. This Agreement, the Merger Agreement and any
Voting Agreement between Affiliate and the Company constitute the entire
agreement between the parties with respect to the subject matter hereof and
thereof and supersede all prior agreements and understandings between the
parties with respect thereto.
SECTION 13. NON-EXCLUSIVITY. The rights and remedies of Parent and the
Company hereunder are not exclusive of or limited by any other rights or
remedies which Parent or the Company may have, whether at law, in equity, by
contract or otherwise, all of which shall be cumulative (and not alternative).
Nothing in this Agreement shall limit any of Affiliate's obligations, or the
rights or remedies of Parent or the Company under any Voting Agreement between
Company, Parent and Affiliate and nothing in such Voting Agreement shall limit
any of Affiliate's obligations, or any of the rights or remedies of Parent or
the Company, under this Agreement.
4.
<PAGE>
SECTION 14. AMENDMENTS. This Agreement may not be amended, modified,
altered, or supplemented other than by means of a written instrument duly
executed and delivered on behalf of Parent, the Company and Affiliate.
SECTION 15. BINDING NATURE. This Agreement will be binding upon Affiliate
and Affiliate's representatives, executors, administrators, estate, heirs,
successors and assigns, and shall inure to the benefit of Parent, the Company
and their respective and its successors and assigns.
SECTION 16. ATTORNEYS' FEES AND EXPENSES. If any legal action or other
legal proceeding relating to the enforcement of any provision of this Agreement
is brought against Affiliate, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
SECTION 17. ASSIGNMENT. This Agreement and all obligations of Affiliate
hereunder are personal to Affiliate and may not be transferred or delegated by
Affiliate at any time. Parent or the Company may freely assign any or all of its
rights under this Affiliate Agreement in whole or in part, to any other person
or entity without obtaining the consent or approval of Affiliate.
SECTION 18. SURVIVAL. Each of the representations, warranties, covenants
and obligations contained in this Agreement shall survive the consummation of
the Merger.
5.
<PAGE>
The undersigned have executed this Agreement as of the date first set
forth above.
SIEBEL SYSTEMS, INC.
By:_____________________________________
Title:__________________________________
AFFILIATE:
Address:________________________________
________________________________________
________________________________________
Facsimile:______________________________
SIEBEL SYSTEMS, INC.
STOCK BENEFICIALLY OWNED BY AFFILIATE AS
OF JANUARY 31, 1998:
__________ shares of Common Stock
__________ shares of Common Stock
issuable upon exercise of outstanding
options
SCOPUS TECHNOLOGY, INC.
By:_____________________________________
Title:__________________________________
AFFILIATE AGREEMENT SIGNATURE PAGE
<PAGE>
Appendix E
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of March __, 1998 (this "Agreement"), by
and between SCOPUS TECHNOLOGY, INC., a California corporation (the "Company"),
and SIEBEL SYSTEMS, INC., a Delaware corporation ("Parent").
RECITALS
A. The Company, Parent and Syracuse Acquisition Sub, a California
corporation ("Merger Sub"), are entering into an Agreement and Plan of
Reorganization, dated as of the date hereof (the "Merger Agreement"), providing
for, among other things, the merger of Merger Sub with and into the Company as
the surviving corporation in the Merger.
B. As a condition and inducement to Parent's willingness to enter into the
Merger Agreement, Parent has requested that the Company agree, and the Company
has agreed, to grant Parent the Option.
C. Terms not defined herein shall have the meanings set forth in the
Merger Agreement.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
Company and Parent agree as follows:
1. Grant of Option. Subject to the terms and conditions set forth herein,
---------------
the Company hereby grants to Parent an irrevocable option (the "Option") to
purchase up to 3,493,879 shares of the common stock of the Company (such shares,
subject to adjustment under Section 4 below, being referred to as the "Option
Shares"), at a purchase price of $20.00 (subject to adjustment as set forth
under Section 4 below) per Option Share (the "Purchase Price").
2. Exercise of Option.
------------------
(a) The Option shall become exercisable, and Parent may exercise the
Option, in whole or in part, on any one occasion at any time following the
occurrence of a Triggering Event; provided, however, that if the Option shall
have become exercisable under this Section 2(a), then the Option shall terminate
and be of no further force and effect upon the earliest to occur of (i) the
Effective Time, (ii) 270 days after the first occurrence of a Triggering Event,
and (iii) the valid termination of the Merger Agreement in accordance with its
terms prior to the occurrence of a Triggering Event.
(b) If (i) the Company Shareholders' Meeting shall have been held (either
on the date for which such meeting was originally scheduled or pursuant to any
permissible adjournment or postponement) and the Merger Agreement and the Merger
shall not have been adopted and approved at such meeting by the Required Company
Shareholder Vote, (ii) following the date hereof and at or prior to the time of
the Company Shareholders' Meeting, an Acquisition Proposal shall have been
publicly announced, and (iii) on or prior to the first anniversary of the
termination of the Merger Agreement, the Company shall have entered into a
definitive agreement providing for a Company Acquisition or a Company
Acquisition shall have been consummated, then the Option shall become
exercisable, and Parent may exercise the Option, in whole or in part, on any one
occasion at any time following the date of such definitive agreement (or if
there is no definitive agreement, the consummation of such Company Acquisition);
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provided, however, that if the Option shall have become exercisable under this
Section 2(b), then the Option shall terminate and be of no further force and
effect 180 days after the date of such definitive agreement (or if there is no
definitive agreement, 180 days after the consummation of such Company
Acquisition).
(c) Notwithstanding the termination of the Option, Parent shall be
entitled to purchase the Option Shares if it has exercised the Option in
accordance with the terms hereof prior to the termination of the Option, and the
termination of the Option shall not affect any rights hereunder which do not by
their terms terminate or expire prior to or as of such termination.
(d) In the event that Parent wishes to exercise the Option, it shall send
to the Company a written notice (the date of which being herein referred to as
the "Notice Date") to that effect which notice also specifies a date not earlier
than three business days nor later than 20 business days from the Notice Date
for the closing of the purchase of the Option Shares to be purchased (the
"Option Closing Date"); provided, however, that (i) if the closing of the
purchase of such Option Shares pursuant to the Option (the "Option Closing")
cannot be consummated by reason of any applicable judgment, decree, order, law
or regulation, the period of time that otherwise would run pursuant to this
sentence shall run instead from the date on which such restriction on
consummation has expired or been terminated and (ii) without limiting the
foregoing, if prior notification to or approval of any regulatory authority is
required in connection with such purchase, Parent and the Company shall promptly
file the required notice or application for approval and shall cooperate in the
expeditious filing of such notice or application, and the period of time that
otherwise would run pursuant to this sentence shall run instead from the date on
which, as the case may be, (A) any required notification period has expired or
been terminated or (B) any required approval has been obtained, and in either
event, any requisite waiting period has expired or been terminated. The place of
the Option Closing shall be at the offices of Cooley Godward LLP, Five Palo Alto
Square, Palo Alto, California 94306, and the time of the Option Closing shall be
10:00 a.m. (West Coast Time) on the Option Closing Date (as it may be extended
pursuant to this Section 2(d)).
3. Payment and Delivery of Certificates.
------------------------------------
(a) At the Option Closing, Parent shall pay to the Company in immediately
available funds by wire transfer to a bank account designated in writing by the
Company an amount equal to the Purchase Price multiplied by the number of Option
Shares being acquired by Parent.
(b) At the Option Closing, simultaneously with the delivery of immediately
available funds as provided in Section 3(a), the Company shall deliver to Parent
a certificate or certificates representing the Option Shares to be purchased at
the Option Closing, which Option Shares shall be free and clear of all liens,
claims, charges and encumbrances of any kind whatsoever other than those created
by Parent or created under applicable securities laws.
(c) Certificates for the Option Shares delivered at the Option Closing
shall have typed or printed thereon a restrictive legend which shall read
substantially as follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE
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<PAGE>
REOFFERED OR SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
ALSO SUBJECT TO BUY-BACK PROVISIONS IN FAVOR OF THE ISSUER."
It is understood and agreed that the foregoing legend with respect to securities
laws shall be removed by delivery of substitute certificate(s) without such
legend upon the sale of any Option Shares pursuant to (i) a registered public
offering or (ii) Rule 144 under the Securities Act or any other sale as a result
of which such legend is no longer required (upon the receipt by the Company of
an opinion of counsel reasonably satisfactory to the Company that the conditions
for removal of such legend have been satisfied).
4. Adjustment upon Changes in Capitalization, Etc.
----------------------------------------------
(a) In the event of any stock dividend or extraordinary cash or other
distribution, split-up, merger, consolidation, recapitalization, combination,
sale of all or substantially all of the Company's assets, exchange of shares, or
similar transaction involving the Company or any Company Stock, the type and
number of shares or securities subject to the Option, and the Purchase Price
therefor, shall be adjusted appropriately, and proper provision shall be made in
the agreements governing such transaction, so that Parent shall receive upon
exercise of the Option the number and class of shares or other securities or
property that Parent would have received in respect of Company Stock if the
Option had been exercised immediately prior to such event or the record date
therefor, as applicable.
(b) If at any time from the date the Option becomes exercisable through the
tenth anniversary of such date, Parent or any of Parent's affiliates effects a
sale, transfer or other disposition of the Option or any of the Option Shares or
any rights therein (a "Sale"), then Parent shall cause to be paid to the Company
(in cash or in the form of the other consideration, if any, received by Parent
pursuant to the Sale), the amount by which: (i) the Proceeds of such Sale,
exceeds (ii) the Aggregate Cost Amount with respect to the Option or the Option
Shares (as the case may be) subject to such Sale. For purposes of this Section
4:
(i) The "Proceeds" of a Sale shall mean the aggregate amount of the
proceeds (in cash or in kind) paid to Parent or any of its affiliates pursuant
to such Sale (with any non-cash proceeds being valued at the fair market value
thereof).
(ii) The "Aggregate Cost Amount" with respect to the Option shall be
equal to the aggregate amount of all costs (including, without limitation,
brokers fees and commissions, filing fees, legal fees, accounting fees, any
amounts paid or payable by Parent under Section 16(b) of the Exchange Act and
any taxes) paid or payable as a result of the Sale by Parent of the Option. The
"Aggregate Cost Amount" with respect to any Option Share shall be equal to the
sum of (A) the aggregate dollar amount paid by Parent or its affiliate(s) for
such Option Shares, (B) the aggregate amount of all costs (including, without
limitation, brokers fees and commissions, filing fees, legal fees, accounting
fees, any amounts paid or payable by Parent under Section 16(b) of the Exchange
Act and any taxes) paid or payable as a result of the acquisition or Sale of
such Option Shares, and (C) interest at the rate of 7% per annum on the dollar
amount referred to in clause "(A)" of this sentence (for the period commencing
as of the date such Option Shares were acquired by Parent and ending on the date
of the Sale of such Option Shares).
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(c) During the 180-day period commencing 270 days after the acquisition, if
any, by Parent of the Option Shares, the Company may (to the extent lawfully
permitted) elect to repurchase any or all of the Option Shares held by Parent or
any other Person at a price equal to the Aggregate Cost Amount with respect to
the Option Shares to be repurchased; provided, however, that such 180-day period
shall be extended to the extent necessary to allow any applicable governmental
notification period to expire or be terminated and any required governmental
approval to be obtained.
(d) Notwithstanding anything to the contrary contained in this Agreement, a
Sale shall not be deemed to have taken place in connection with any conversion
or exchange of the Option as contemplated by Section 4(b) hereof.
5. Listing. If Company Stock or any other securities to be acquired upon
-------
exercise of the Option are then listed on any national securities exchange or
national securities quotation system, the Company, upon the request of Parent,
shall promptly file an application to list the shares of Company Stock or other
securities to be acquired upon exercise of the Option on such national
securities exchange or national securities quotation system and shall use
reasonable efforts to obtain approval of such listing as promptly as
practicable.
6. Registration Rights. The Company shall, if requested by Parent at any
-------------------
time and from time to time within five years after the date of exercise of the
Option, as expeditiously as possible prepare and file up to two registration
statements under the Securities Act if such registration is necessary in order
to permit the sale or other orderly disposition of any or all securities that
have been acquired by exercise by Parent of the Option, in accordance with the
intended method of sale or other disposition stated by Parent, including a
"shelf" registration statement under Rule 415 under the Securities Act or any
successor provision; and the Company shall use its reasonable efforts to qualify
such securities under any applicable state securities laws; provided, however,
that the Company shall not be required to qualify to do business in or consent
to general service of process in, any jurisdiction by reason of this sentence.
Parent agrees to use reasonable efforts to cause, and to cause any underwriters
of any sale or other disposition to cause, any sale or other disposition
pursuant to such registration statement to be effected on a widely distributed
basis. The Company shall use reasonable efforts to cause each such registration
statement to become effective, to obtain all consents or waivers of other
parties which are required therefor, and to keep such registration statement
effective for such period not in excess of 90 calendar days from the day such
registration statement first becomes effective as may be reasonably necessary
to effect such sale or other disposition. The obligations of the Company to file
a registration statement and to maintain its effectiveness may be suspended for
one or more periods of time not exceeding 60 calendar days in the aggregate (in
any 180 day period) with respect to any registration statement if the Board of
Directors of the Company shall have determined that the filing of such
registration statement or the maintenance of its effectiveness would adversely
affect the Company. In the event of any suspension of any registration
statement, the Company agrees that the period of time during which the Company
is obligated to maintain the effectiveness of such registration statement shall
be extended for a period of time equal to the period during which such
suspension was in place. Any registration statement prepared and filed under
this Section, and any sale covered thereby, shall be at the Company's expense
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<PAGE>
except for underwriting discounts or commission, brokers' fees and the fees and
disbursements of Parent's counsel related thereto. Parent shall provide all
information reasonably requested by the Company for inclusion in any
registration statement to be filed hereunder. If, during the time periods
referred to in the first sentence of this Section, the Company effects an
underwritten registration under the Securities Act of the Company's equity
securities for its own account or for any other of its stockholders (other than
on Form S-4 or Form S-8, or any successor form), it shall allow Parent the right
to participate in such registration; provided that, if the managing underwriters
of such offering advise the Company in writing that in their opinion the number
of securities requested to be included in such registration exceeds the number
which can be sold in such offering, priority shall be given to the securities
intended to be included therein by the Company for its own account and,
thereafter, the Company shall include the securities requested to be included
therein by Parent pro rata with the securities intended to be included therein
by other stockholders of the Company not having agreements giving them priority
in such registration. In connection with any registration pursuant to this
Section, Parent and the Company shall provide each other and any underwriter of
the offering with customary representations, warranties, covenants,
indemnification, and contribution in connection with such registration.
7. Miscellaneous.
-------------
(a) Fees and Expenses. Except as otherwise provided in the Merger
-----------------
Agreement, all costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby shall be borne by the party incurring such
expenses.
(b) Amendment. This Agreement may not be amended except by an instrument
---------
in writing signed on behalf of each of the parties.
(c) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
-------------
ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO ITS
RULES OF CONFLICT OF LAWS.
(d) Notices. All notices or other communications under this Agreement
-------
shall be in writing nd shall be given (and shall be deemed to have been duly
given upon receipt) by delivery in Person, by cable, telegram, telex or other
standard form of telecommunications, or by registered or certified mail, postage
prepaid, return receipt requested, addressed as follows:
If to the Company:
Scopus Technology, Inc.
1900 Powell Street
Emeryville, CA 94608
Fax: (510) 397-5964
With a copy to:
Wilson, Sonsini, Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304
Attn: Howard Zeprun, Esq.
Fax: (650) 493-9300
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If to Parent:
Siebel Systems, Inc.
1885 South Grant Street
San Mateo, CA 94402
Attn: Vice President Legal Affairs
Fax: (650) 295-5116
With a copy to:
Cooley Godward, LLP
3000 Sand Hill Road
Menlo Park, CA 94025
Attn: Eric C. Jensen, Esq.
Fax: (650) 854-2691
or to such other address as any party may have furnished to the other parties in
writing in accordance with this Section.
(e) Assignment; Binding Effect. This Agreement and Parent's rights,
--------------------------
interests and obligations may by assigned by Parent (by operation of law or
otherwise) without the consent of any other Person. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns. Notwithstanding anything contained in this
Agreement to the contrary, nothing in this Agreement, expressed or implied, is
intended to confer on any Person other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
(f) Further Assurances. In the event of any exercise of the Option by
------------------
Parent, the Company and Parent shall execute and deliver all other documents and
instruments and take all other action that may be reasonably necessary in order
to consummate the transactions provided for by such exercise.
(g) ENFORCEMENT. THE PARTIES HERETO AGREE THAT IRREPARABLE DAMAGE WOULD
-----------
OCCUR IN THE EVENT THAT ANY OF THE PROVISIONS OF THIS AGREEMENT WERE NOT
PERFORMED IN ACCORDANCE WITH THEIR SPECIFIC TERMS OR WERE OTHERWISE BREACHED. IT
IS ACCORDINGLY AGREED THAT THE PARTIES SHALL BE ENTITLED TO AN INJUNCTION OR
INJUNCTIONS TO PREVENT BREACHES OF THIS AGREEMENT AND TO ENFORCE SPECIFICALLY
THE TERMS AND PROVISIONS HEREOF IN ANY COURT OF THE UNITED STATES OR ANY STATE
HAVING JURISDICTION, THIS BEING IN ADDITION TO ANY OTHER REMEDY TO WHICH THEY
ARE ENTITLED AT LAW OR IN EQUITY. EACH OF THE PARTIES HERETO (I) CONSENTS TO
SUBMIT ITSELF TO THE PERSONAL JURISDICTION OF ANY FEDERAL COURT LOCATED IN THE
STATE OF CALIFORNIA OR ANY CALIFORNIA STATE COURT IN THE EVENT ANY DISPUTE
ARISES OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT, (II) AGREES THAT IT SHALL NOT ATTEMPT TO DENY OR DEFEAT SUCH PERSONAL
JURISDICTION BY MOTION OR OTHER REQUEST FOR LEAVE FROM ANY SUCH COURT, AND (III)
AGREES THAT IT SHALL NOT BRING ANY ACTION RELATING TO THIS AGREEMENT OR ANY OF
THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT IN ANY COURT OTHER THAN A
FEDERAL COURT SITTING IN THE STATE OF CALIFORNIA OR A CALIFORNIA STATE COURT.
(h) Counterparts. This Agreement may be executed by the parties hereto in
------------
separate counterparts, each of which when so executed and delivered shall be an
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original, but all such counterparts shall together constitute one and the same
instrument. Each counterpart may consist of a number of copies hereof each
signed by less than all, but together signed by all of the parties hereto.
IN WITNESS WHEREOF, the Company and Parent have caused this Agreement to be
signed by their respective officers thereunto duly authorized as of the day and
year first written above.
Scopus Technology, Inc.
By:_______________________
Siebel Systems, Inc.
By:________________________
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APPENDIX F
CALIFORNIA GENERAL CORPORATION LAW
CHAPTER 13 DISSENTERS' RIGHTS
SEC. 1300. CORPORATE PURCHASE OF DISSENTING SHARES.
(a) If the approval of the outstanding shares (Section 152) of a corporation
is required for a reorganization under subdivisions (a) and (b) or subdivision
(e) or (f) of Section 1201, each shareholder of the corporation entitled to
vote on the transaction and each shareholder of a subsidiary corporation in a
short-form merger may, by complying with this chapter, require the corporation
in which the shareholder holds shares to purchase for cash at their fair
market value the shares owned by the shareholder which are dissenting shares
as defined in subdivision (b). The fair market value shall be determined as of
the day before the first announcement of the terms of the proposed
reorganization or short-form merger, excluding any appreciation or
depreciation in consequence of the proposed action, but adjusted for any stock
split, reverse stock split, or share dividend which becomes effective
thereafter.
(b) As used in this chapter, "dissenting shares" means shares which come
within all of the following descriptions:
(1) Which were not immediately prior to the reorganization or short-form
merger either (A) listed on any national securities exchange certified by
the Commissioner of Corporations under subdivision (o) of Section 25100 or
(B) listed on the list of OTC margin stocks issued by the Board of
Governors of the Federal Reserve System, and the notice of meeting of
shareholders to act upon the reorganization summarizes this section and
Sections 1301, 1302, 1303 and 1304; provided, however, that this provision
does not apply to any shares with respect to which there exists any
restriction on transfer imposed by the corporation or by any law or
regulation; and provided, further, that this provision does not apply to
any class of shares described in subparagraph (A) or (B) if demands for
payment are filed with respect to 5 percent or more of the outstanding
shares of that class.
(2) Which were outstanding on the date for the determination of
shareholders entitled to vote on the reorganization and (A) were not voted
in favor of the reorganization or, (B) if described in subparagraph (A) or
(B) of paragraph (1) (without regard to the provisos in that paragraph),
were voted against the reorganization, or which were held of record on the
effective date of a short-form merger; provided, however, that subparagraph
(A) rather than subparagraph (B) of this paragraph applies in any case
where the approval required by Section 1201 is sought by written consent
rather than at a meeting.
(3) Which the dissenting shareholder has demanded that the corporation
purchase at their fair market value, in accordance with Section 1301.
(4) Which the dissenting shareholder has submitted for enforcement, in
accordance with Section 1302.
(c) As used in this chapter, "dissenting shareholder" means the record
holder of dissenting shares and includes a transferee of record.
SEC. 1301. NOTICE TO DISSENTING SHAREHOLDERS; DEMAND FOR PURCHASE OF SHARES.
(a) If, in the case of a reorganization, any shareholders of a corporation
have a right under Section 1300, subject to compliance with paragraphs (3) and
(4) of subdivision (b) thereof, to require the corporation to purchase their
shares for cash, such corporation shall mail to each such shareholder a notice
of the approval of the reorganization by its outstanding shares (Section 152)
within 10 days after the date of such approval, accompanied by a copy of
Sections 1300, 1302, 1303, 1304 and this section, a statement of the price
determined by the corporation to represent the fair market value of the
dissenting shares, and a brief description of the procedure to be followed if
the shareholder desires to exercise the shareholder's right under such
sections. The statement of price constitutes an offer by the corporation to
purchase at the price stated any dissenting shares as defined in subdivision
(b) of Section 1300, unless they lose their status as dissenting shares under
Section 1309.
(b) Any shareholder who has a right to require the corporation to purchase
the shareholder's shares for cash under Section 1300, subject to compliance
with paragraphs (3) and (4) of subdivision (b) thereof, and who desires
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the corporation to purchase such shares shall make written demand upon the
corporation for the purchase of such shares and payment to the shareholder in
cash of their fair market value. The demand is not effective for any purpose
unless it is received by the corporation or any transfer agent thereof (1) in
the case of shares described in clause (i) or (ii) of paragraph (1) of
subdivision (b) of Section 1300 (without regard to the provisos in that
paragraph), not later than the date of the shareholders' meeting to vote upon
the reorganization, or (2) in any other case within 30 days after the date on
which the notice of the approval by the outstanding shares pursuant to
subdivision (a) or the notice pursuant to subdivision (i) of Section 1110 was
mailed to the shareholder.
(c) The demand shall state the number and class of the shares held of record
by the shareholder which the shareholder demands that the corporation purchase
and shall contain a statement of what such shareholder claims to be the fair
market value of those shares as of the day before the announcement of the
proposed reorganization or short-form merger. The statement of fair market
value constitutes an offer by the shareholder to sell the shares at such
price.
SEC. 1302. SHAREHOLDER CERTIFICATES OR NOTICE; TIME LIMIT FOR SUBMISSION.
Within 30 days after the date on which notice of the approval by the
outstanding shares or the notice pursuant to subdivision (i) of Section 1110
was mailed to the shareholder, the shareholder shall submit to the corporation
at its principal office or at the office of any transfer agent thereof, (a) if
the shares are certificated securities, the shareholder's certificates
representing any shares which the shareholder demands that the corporation
purchase, to be stamped or endorsed with a statement that the shares are
dissenting shares or to be exchanged for certificates of appropriate
denomination so stamped or endorsed or (b) if the shares are uncertificated
securities, written notice of the number of shares which the shareholder
demands that the corporation purchase. Upon subsequent transfers of the
dissenting shares on the books of the corporation, the new certificates,
initial transaction statement, and other written statements issued therefor
shall bear a like statement, together with the name of the original dissenting
holder of the shares.
SEC. 1303. AGREED PRICE; INTEREST; FILING OF AGREEMENTS; TIME FOR PAYMENT.
(a) If the corporation and the shareholder agree that the shares are
dissenting shares and agree upon the price of the shares, the dissenting
shareholder is entitled to the agreed price with interest thereon at the legal
rate on judgments from the date of the agreement. Any agreements fixing the
fair market value of any dissenting shares as between the corporation and the
holders thereof shall be filed with the secretary of the corporation.
(b) Subject to the provisions of Section 1306, payment of the fair market
value of dissenting shares shall be made within 30 days after the amount
thereof has been agreed or within 30 days after any statutory or contractual
conditions to the reorganization are satisfied, whichever is later, and in the
case of certificated securities, subject to surrender of the certificates
therefor, unless provided otherwise by agreement.
SEC. 1304. ACTION TO DETERMINE WHETHER SHARES ARE DISSENTING OR TO DETERMINE
FAIR MARKET VALUE.
(a) If the corporation denies that the shares are dissenting shares, or the
corporation and the shareholder fail to agree upon the fair market value of
the shares, then the shareholder demanding purchase of such shares as
dissenting shares or any interested corporation, within six months after the
date on which notice of the approval by the outstanding shares (Section 152)
or notice pursuant to subdivision (i) of Section 1110 was mailed to the
shareholder, but not thereafter, may file a complaint in the superior court of
the proper county praying the court to determine whether the shares are
dissenting shares or the fair market value of the dissenting shares or both or
may intervene in any action pending on such a complaint.
(b) Two or more dissenting shareholders may join as plaintiffs or be joined
as defendants in any such action and two or more such actions may be
consolidated.
(c) On the trial of the action, the court shall determine the issues. If the
status of the shares as dissenting shares is in issue, the court shall first
determine that issue. If the fair market value of the dissenting shares is in
issue, the court shall determine, or shall appoint one or more impartial
appraisers to determine, the fair market value of the shares.
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SEC. 1305. APPRAISER'S REPORT.
(a) If the court appoints an appraiser or appraisers, they shall proceed
forthwith to determine the fair market value per share. Within the time fixed
by the court, the appraisers, or a majority of them, shall make and file a
report in the office of the clerk of the court. Thereupon, on the motion of
any party, the report shall be submitted to the court and considered on such
evidence as the court considers relevant. If the court finds the report
reasonable, the court may confirm it.
(b) If a majority of the appraisers appointed fail to make and file a report
within 10 days from the date of their appointment or within such further time
as may be allowed by the court or the report is not confirmed by the court,
the court shall determine the fair market value of the dissenting shares.
(c) Subject to the provisions of Section 1306, judgment shall be rendered
against the corporation for payment of an amount equal to the fair market
value of each dissenting share multiplied by the number of dissenting shares
which any dissenting shareholder who is a party, or who has intervened, is
entitled to require the corporation to purchase, with interest thereon at the
legal rate from the date on which judgment was entered.
(d) Any such judgment shall be payable forthwith with respect to
uncertificated securities and, with respect to certificated securities, only
upon the endorsement and delivery to the corporation of the certificates for
the shares described in the judgment. Any party may appeal from the judgment.
(e) The costs of the action, including reasonable compensation to the
appraisers to be fixed by the court, shall be assessed or apportioned as the
court considers equitable, but, if the appraisal exceeds the price offered by
the corporation, the corporation shall pay the costs (including in the
discretion of the court attorneys' fees, fees of expert witnesses and interest
at the legal rate on judgments from the date of compliance with Sections 1300,
1301 and 1302 if the value awarded by the court for the shares is more than
125 percent of the price offered by the corporation under subdivision (a) of
Section 1301).
SEC. 1306. HOLDERS OF DISSENTING SHARES AS CREDITORS.
To the extent that the provisions of Chapter 5 prevent the payment to any
holders of dissenting shares of their fair market value, they shall become
creditors of the corporation for the amount thereof together with interest at
the legal rate on judgments until the date of payment, but subordinate to all
other creditors in any liquidation proceeding, such debt to be payable when
permissible under the provisions of Chapter 5.
SEC. 1307. DIVIDENDS ON DISSENTING SHARES AFTER APPROVAL DATE.
Cash dividends declared and paid by the corporation upon the dissenting
shares after the date of approval of the reorganization by the outstanding
shares (Section 152) and prior to payment for the shares by the corporation
shall be credited against the total amount to be paid by the corporation
therefor.
SEC. 1308. RIGHTS IN DISSENTING SHARES PRIOR TO DETERMINATION OF FAIR MARKET
VALUE.
Except as expressly limited in this chapter, holders of dissenting shares
continue to have all the rights and privileges incident to their shares, until
the fair market value of their shares is agreed upon or determined. A
dissenting shareholder may not withdraw a demand for payment unless the
corporation consents thereto.
SEC. 1309. TERMINATION OF DISSENTING SHAREHOLDER STATUS.
Dissenting shares lose their status as dissenting shares and the holders
thereof cease to be dissenting shareholders and cease to be entitled to
require the corporation to purchase their shares upon the happening of any of
the following:
(a) The corporation abandons the reorganization. Upon abandonment of the
reorganization, the corporation shall pay on demand to any dissenting
shareholder who has initiated proceedings in good faith under this chapter all
necessary expenses incurred in such proceedings and reasonable attorneys'
fees.
F-3
<PAGE>
(b) The shares are transferred prior to their submission for endorsement in
accordance with Section 1302 or are surrendered for conversion into shares of
another class in accordance with the articles.
(c) The dissenting shareholder and the corporation do not agree upon the
status of the shares as dissenting shares or upon the purchase price of the
shares, and neither files a complaint or intervenes in a pending action as
provided in Section 1304, within six months after the date on which notice of
the approval by the outstanding shares or notice pursuant to subdivision (i)
of Section 1110 was mailed to the shareholder.
(d) The dissenting shareholder, with the consent of the corporation,
withdraws the shareholder's demand for purchase of the dissenting shares.
SEC. 1310. LITIGATION; SUSPENSION OF PROCEEDINGS.
If litigation is instituted to test the sufficiency or regularity of the
votes of the shareholders in authorizing a reorganization, any proceedings
under Sections 1304 and 1305 shall be suspended until final determination of
such litigation.
SEC. 1311. SHARES SPECIFYING AMOUNT IN EVENT OF MERGER OR REORGANIZATION.
This chapter, except Section 1312, does not apply to classes of shares whose
terms and provisions specifically set forth the amount to be paid in respect
to such shares in the event of a reorganization or merger.
SEC. 1312. ATTACK ON VALIDITY OF MERGER OR REORGANIZATION.
(a) No shareholder of a corporation who has a right under this chapter to
demand payment of cash for the shares held by the shareholder shall have any
right at law or in equity to attack the validity of the reorganization or
short-form merger, or to have the reorganization or short-form merger set
aside or rescinded, except in an action to test whether the number of shares
required to authorize or approve the reorganization have been legally voted in
favor thereof; but any holder of shares of a class whose terms and provisions
specifically set forth the amount to be paid in respect to them in the event
of a reorganization or short-form merger is entitled to payment in accordance
with those terms and provisions or, if the principal terms of the
reorganization are approved pursuant to subdivision (b) of Section 1202, is
entitled to payment in accordance with the terms and provisions of the
approved reorganization.
(b) If one of the parties to a reorganization or short-form merger is
directly or indirectly controlled by, or under common control with, another
party to the reorganization or short-form merger, subdivision (a) shall not
apply to any shareholder of such party who has not demanded payment of cash
for such shareholder's shares pursuant to this chapter; but if the shareholder
institutes any action to attack the validity of the reorganization or short-
form merger or to have the reorganization or short-form merger set aside or
rescinded, the shareholder shall not thereafter have any right to demand
payment of cash for the shareholder's shares pursuant to this chapter. The
court in any action attacking the validity of the reorganization or short-form
merger or to have the reorganization or short-form merger set aside or
rescinded shall not restrain or enjoin the consummation of the transaction
except upon 10 days' prior notice to the corporation and upon a determination
by the court that clearly no other remedy will adequately protect the
complaining shareholder or the class of shareholders of which such shareholder
is a member.
(c) If one of the parties to a reorganization or short-form merger is
directly or indirectly controlled by, or under common control with, another
party to the reorganization or short-form merger, in any action to attack the
validity of the reorganization or short-form merger or to have the
reorganization or short-form merger set aside or rescinded, (1) a party to a
reorganization or short-form merger which controls another party to the
reorganization or short-form merger shall have the burden of proving that the
transaction is just and reasonable as to the shareholders of the controlled
party, and (2) a person who controls two or more parties to a reorganization
shall have the burden of proving that the transaction is just and reasonable
as to the shareholders of any party so controlled.
F-4
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Delaware General Corporation Law provides, in substance, that
Delaware corporations shall have the power, under specified circumstances, to
indemnify their directors, officers, employees and agents in connection with
actions, suits or proceedings brought against them by third parties and in
connection with actions or suits by or in the right of the corporation, by
reason of the fact that they were or are such directors, officers, employees and
agents, against expenses (including attorney's fees) and, in the case of
actions, suits or proceedings brought by third parties, against judgments, fines
and amounts paid in settlement actually and reasonably incurred in any action,
suit or proceeding.
The Registrant's Amended and Restated Certificate of Incorporation, as
amended and Bylaws provide for indemnifications to the fullest extent permitted
by the Delaware General Corporation Law. As permitted by the Delaware General
Corporation Law, the Registrant's Amended and Restated Certificate of
Incorporation, as amended eliminates the personal liability of its directors to
the Registrant and its stockholders, in certain circumstances, for monetary
damages arising from a breach of the director's duty of care. Additionally, the
Registrant has entered into indemnification agreements with each of its
directors and officers. These agreements provide indemnification to the fullest
extent permitted by law. The agreements do not provide indemnification for,
among other things, conduct that is adjudged to be fraud, deliberate dishonesty
or willful misconduct.
THE REGISTRANT HAS OBTAINED DIRECTORS' AND OFFICERS' LIABILITY
INSURANCE THAT COVERS CERTAIN LIABILITIES, INCLUDING LIABILITIES TO THE
REGISTRANT AND ITS STOCKHOLDERS.
Pursuant to the Reorganization Agreement, all rights to
indemnification existing in favor of the persons serving as directors or
officers of Scopus as of the date of the Reorganization Agreement for acts and
omissions occurring prior to the Effective Time, as provided in the Scopus
Articles of Incorporation and the Scopus Bylaws (as in effect as of the date of
the Reorganization Agreement) and as provided in the indemnification agreements
between Scopus and said directors and officers (as in effect as of the date of
the Reorganization Agreement), shall survive the Merger and the Registrant shall
cause the Surviving Corporation to perform all of its obligations arising
thereunder for a period of not less than eight years from the Effective Time.
The Reorganization Agreement also provides that from the Effective Time until
the third anniversary of the Effective Time, the Registrant will cause the
Surviving Corporation to maintain in effect, for the benefit of the persons
serving as directors and officers of Scopus as of the date of the Reorganization
Agreement with respect to acts or omissions occurring prior to the Effective
Time, the Existing Policy; provided, however, that (i) the Surviving Corporation
may substitute for the Existing Policy a policy or policies of comparable
coverage, and (ii) the Surviving Corporation shall not be required to pay an
annual premium for the Existing Policy (or for any substitute policies) in
excess of 150% of the annual premium currently paid by Scopus for such
insurance. The Reorganization Agreement further provides that in the event any
future annual premium for the Existing Policy (or any substitute policies)
exceeds 150% of the annual premium currently paid by Scopus for such insurance,
the Surviving Corporation shall be entitled to reduce the amount of coverage of
the Existing Policy (or any substitute policies) to the amount of coverage that
can be obtained for a premium equal to 150% of the annual premium currently paid
by Scopus for such insurance.
II-1
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) EXHIBITS
EXHIBIT
NUMBER EXHIBIT
- ------ ----------------------------------------------------------------------
2.1 Agreement and Plan of Merger and Reorganization dated as of March 1,
1998, by and among Siebel Systems, Inc., a Delaware corporation
("Siebel"), Syracuse Acquisition Sub, Inc., a California corporation
and a wholly owned subsidiary of Siebel, and Scopus Technology, Inc.,
a California corporation ("Scopus") (See Appendix A to the Joint Proxy
Statement/Prospectus).
5.1 Legal Opinion of Cooley Godward LLP.
8.1 Tax Opinion of Cooley Godward LLP.
8.2 Tax Opinion of Wilson Sonsini Goodrich & Rosati, P.C.
11.1 Statement of Computation of Earnings (Loss) per Share for Siebel
Systems Inc. (1)
11.2 Statement of Computation of Earnings (Loss) per Share for Scopus
Technology, Inc. (2)
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of Coopers & Lybrand LLP.
23.3 Consent of NationsBanc Montgomery Securities LLC.
23.4 Consent of Morgan Stanley & Co. Incorporated.
23.5 Consent of Cooley Godward LLP (See Exhibits 5.1 and 8.1).
23.6 Consent of Wilson Sonsini Goodrich & Rosati, P.C. (See Exhibit 8.2).
24.1 Power of Attorney (See page II-4).
99.1 Form of Scopus Voting Agreement (Incorporated by reference to Exhibit
99.2 of the Current Report on Form 8-K filed by Siebel on
March 16, 1998).
99.2 Form of Siebel Voting Agreement (Incorporated by reference to Exhibit
99.3 of the Current Report on Form 8-K filed by Siebel on
March 16, 1998).
99.3 Form of Scopus Affiliate Agreement (See Appendix D-1 of the Joint
Proxy Statement/Prospectus).
99.4 Form of Siebel Affiliate Agreement (See Appendix D-2 of the Joint
Proxy Statement/Prospectus).
99.5 Stock Option Agreement (See Appendix E of the Joint Proxy
Statement/Prospectus).
99.6 Form of Siebel Proxy Card.
99.7 Form of Scopus Proxy Card.
- ------------------
(1) Incorporated by reference to the Siebel Annual Report on Form 10-K for
the year ended December 31, 1997.
(2) Incorporated by reference to the Scopus Annual Report on form 10-K for
the year ended March 31, 1997 and the Scopus Form 10-Q for the nine-
month period ended December 31, 1997.
(b) FINANCIAL STATEMENT SCHEDULES
All schedules have been omitted because they are not applicable or not
required or the information required to be set forth therein is included in the
Annual Reports on Form 10-K of Siebel and Scopus incorporated by reference into
the Joint Proxy Statement/Prospectus.
(c) ITEM 4(B) REPORTS
See Appendices B-1 and B-2 to the Joint Proxy Statement/Prospectus.
ITEM 22. UNDERTAKINGS.
(1) The Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the Joint Proxy
Statement/Prospectus pursuant to Items 4, 10(b), 11 or 13 of Form S-4, within
one business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally
II-2
<PAGE>
prompt means. This includes information contained in documents filed subsequent
to the effective date of the Registration Statement through the date of
responding to the request.
(2) The Registrant hereby undertakes to supply by means of a post-
effective amendment all information concerning a transaction, and the company
being acquired involved therein, that was not the subject of and included in the
Registration Statement when it became effective.
(3) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(4) Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended (the "Act") may be permitted to directors,
officers and controlling persons of the Registrant pursuant to the Amended and
Restated Certificate of Incorporation (the "Certificate of Incorporation") and
the Bylaws (the "Bylaws") of the Registrant and the Delaware General Corporation
Law, the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in a successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the question has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(5) (A) The undersigned Registrant hereby undertakes as follows: that
prior to any public reoffering of the securities registered hereunder through
use of a prospectus which is a part of this Registration Statement, by any
person or party who is deemed to be an underwriter within the meaning of Rule
145(c), the issuer undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable form.
(B) The Registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (A) immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the Registration Statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of San
Mateo, County of San Mateo, State of California on the 16th day of March, 1998.
By: /s/ Thomas M. Siebel
---------------------
Thomas M. Siebel
Chairman and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Thomas M. Siebel and Howard H. Graham and
each of them, as his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his name, place, and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments, exhibits thereto and other documents in connection
therewith) to this Registration Statement and any subsequent registration
statement filed by the registrant pursuant to Securities and Exchange Commission
Rule 462, which relates to this Registration Statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in connection therewith,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the require of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Thomas M. Siebel Chairman, Chief Executive March 16, 1998
- ----------------------------- Officer and Director
Thomas M. Siebel (Principal Executive Officer)
/s/ Howard H. Graham Senior Vice President, Finance March 16, 1998
- ----------------------------- and Administration, and Chief
Howard H. Graham Financial Officer
(Principal Financial and
Accounting Officer)
/s/ Eric E. Schmidt Director March 16, 1998
- -----------------------------
Eric E. Schmidt
/s/ James C. Gaither Director March 16, 1998
- -----------------------------
James C. Gaither
/s/ George T. Shaheen Director March 16, 1998
- -----------------------------
George T. Shaheen
/s/ Charles R. Schwab Director March 16, 1998
- -----------------------------
Charles R. Schwab
/s/ A. Michael Spence Director March 16, 1998
- -----------------------------
A. Michael Spence
</TABLE>
II-4
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------ -------------------------------------------------------------------------
<S> <C>
2.1 Agreement and Plan of Merger and Reorganization dated as of March 1,
1998, by and among Siebel Systems, Inc., a Delaware corporation
("Siebel"), Syracuse Acquisition Sub, Inc., a California corporation and
a wholly owned subsidiary of Siebel, and Scopus Technology, Inc., a
California corporation ("Scopus") (See Appendix A to the Joint Proxy
Statement/Prospectus).
5.1 Legal Opinion of Cooley Godward LLP.
8.1 Tax Opinion of Cooley Godward LLP.
8.2 Tax Opinion of Wilson Sonsini Goodrich & Rosati, P.C.
11.1 Statement of Computation of Earnings (Loss) per Share for Siebel Systems Inc. (1)
11.2 Statement of Computation of Earnings (Loss) per Share for Scopus Technology, Inc. (2)
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of Coopers & Lybrand LLP.
23.3 Consent of NationsBanc Montgomery Securities LLC.
23.4 Consent of Morgan Stanley & Co. Incorporated.
23.5 Consent of Cooley Godward LLP (See Exhibits 5.1 and 8.1).
23.6 Consent of Wilson Sonsini Goodrich & Rosati, P.C. (See Exhibit 8.2).
24.1 Power of Attorney (See page II-4).
99.1 Form of Scopus Voting Agreement (Incorporated by reference to Exhibit
99.2 of the Current Report on Form 8-K filed by Siebel on
March 16, 1998).
99.2 Form of Siebel Voting Agreement (Incorporated by reference to Exhibit
99.3 of the Current Report on Form 8-K filed by Siebel on March 16, 1998).
99.3 Form of Scopus Affiliate Agreement (See Appendix D-1 of the Joint
Proxy Statement/Prospectus).
99.4 Form of Siebel Affiliate Agreement (See Appendix D-2 of the Joint
Proxy Statement/Prospectus).
99.5 Stock Option Agreement (See Appendix E of the Joint Proxy Statement/Prospectus).
99.6 Form of Siebel Proxy Card.
99.7 Form of Scopus Proxy Card.
</TABLE>
- -------------------
(1) Incorporated by reference to the Siebel Annual Report on Form 10-K for
the year ended December 31, 1997.
(2) Incorporated by reference to the Scopus Annual Report on form 10-K for
the year ended March 31, 1997 and the Scopus Form 10-Q for the nine-month
period ended December 31, 1997.
<PAGE>
EXHIBIT 5.1
[LETTERHEAD OF COOLEY GODWARD LLP APPEARS HERE]
March 16, 1998
Siebel Systems, Inc.
1855 South Grant Street
San Mateo, CA 94402
Ladies and Gentlemen:
We have acted as counsel for Siebel Systems, Inc., a Delaware corporation (the
"Company" or "Siebel"), in connection with the merger (the "Merger") and other
transactions contemplated by the certain Agreement and Plan of Merger and
Reorganization, dated as of March 1, 1998, by and among Siebel, Syracuse
Acquisition Sub, Inc., a California corporation and a wholly-owned subsidiary
of Siebel ("Merger Sub"), and Scopus Technology, Inc., a California
corporation ("Scopus"). This opinion is being furnished in connection with a
Registration Statement on Form S-4 (the "Registration Statement") to be filed
by the Company with the Securities Exchange Commission covering the offer and
sale of up to 8,768,338 shares (the "Shares") of common stock, par value
$0.001 per share, of the Company ("Common Stock"), to be issued in connection
with the merger of Merger Sub with and into Scopus.
In rendering this opinion, we have examined the following documents: (i) the
Company's Certificate of Incorporation and Bylaws, as amended and restated
since the inception of the Company; (ii) the minutes of the Board of
Directors' meetings convened on February 28, 1998 and on March 1, 1998; (iii)
the Registration Statement; and (iv) such other documents, legal opinions and
precedents, corporate and other records of the Company, and certificates of
public officials and officers of the Company that we have deemed necessary or
appropriate to provide a basis for the below opinion.
We are of the opinion that the Shares, which are being offered and sold by the
Company pursuant to the Registration Statement, when sold in the manner and
for the consideration contemplated by the Registration Statement, will be
legally issued, fully paid and non-assessable.
We consent to the filing of this opinion as an Exhibit to the Registration
Statement and to the reference to our firm under the heading "Legal Matters."
Sincerely,
COOLEY GODWARD LLP
/s/ PATRICK A. POHLEN
- ----------------------------------
Patrick A. Pohlen
<PAGE>
EXHIBIT 8.1
[LETTERHEAD OF COOLEY GODWARD LLP APPEARS HERE]
March 16, 1998
Siebel Systems, Inc.
1855 South Grant
San Mateo, California 94402
Ladies and Gentlemen:
This opinion is being delivered to you in connection with the Form S-4
Registration Statement (the "Registration Statement") filed pursuant to the
Agreement and Plan of Merger and Reorganization dated as of March 1, 1998 (the
"Reorganization Agreement") by and among Siebel Systems, Inc., a Delaware
corporation ("Parent"), Syracuse Acquisition Sub, Inc., a California corporation
and wholly owned subsidiary of Parent ("Merger Sub"), and Scopus Technologies,
Inc., a California corporation (the "Company").
Except as otherwise provided, capitalized terms used but not defined herein
shall have the meanings set forth in the Reorganization Agreement. All section
references, unless otherwise indicated, are to the Internal Revenue Code of
1986, as amended (the "Code").
We have acted as counsel to Parent and Merger Sub in connection with the Merger.
As such, and for the purpose of rendering this opinion, we have examined, and
are relying upon (without any independent investigation or review thereof) the
truth and accuracy, at all relevant times, of the statements, covenants,
representations and warranties contained in the following documents (including
all exhibits and schedules attached thereto):
(a) the Reorganization Agreement;
(b) those certain tax representation letters dated March 1, 1998, delivered
to us by Parent, Merger Sub and the Company containing certain representations
of Parent, Merger Sub and the Company (the "Tax Representation Letters"); and
(c) such other instruments and documents related to the formation,
organization and operation of Parent, Merger Sub and the Company and related to
the consummation of the Merger and the other transactions contemplated by the
Reorganization Agreement as we have deemed necessary or appropriate.
In connection with rendering this opinion, we have assumed (without any
independent investigation or review thereof) that:
1. Original documents submitted to us (including signatures thereto) are
authentic, documents submitted to us as copies conform to the original
documents, and that all such
<PAGE>
[LOGO OF COOLEY GODWARD LLP APPEARS HERE]
Siebel Systems, Inc.
March 16, 1998
Page Two
documents have been (or will be by the Effective Time) duly and validly executed
and delivered where due execution and delivery are a prerequisite to the
effectiveness thereof;
2. All representations, warranties and statements made or agreed to by
Parent, Merger Sub and the Company, their managements, employees, officers,
directors and shareholders in connection with the Merger, including, but not
limited to, those set forth in the Reorganization Agreement (including the
exhibits thereto) and the Tax Representation Letters are true and accurate at
all relevant times;
3. All covenants contained in the Reorganization Agreement (including
exhibits thereto) and the Tax Representation Letters are performed without
waiver or breach of any material provision thereof;
4. The Merger will be reported by Parent and the Company on their respective
federal income tax returns in a manner consistent with the opinion set forth
below; and
5. Any representation or statement made "to the best of knowledge" or
similarly qualified is correct without such qualification.
Based on our examination of the foregoing items and subject to the limitations,
qualifications, assumptions and caveats set forth herein, we are of the opinion
that, for federal income tax purposes, the Merger will be a reorganization
within the meaning of Section 368(a)(1) of the Code.
In addition to your request for our opinion on this specific matter of federal
income tax law, you have asked us to review the discussion of federal income tax
issues contained in the Registration Statement. We have reviewed the discussion
entitled "Certain Federal Income Tax Consequences" contained in the Registration
Statement and believe that, insofar as it relates to statements of law and legal
conclusions, it is correct in all material respects.
We consent to the reference to our firm under the caption "Certain Federal
Income Tax Consequences" in the Proxy Statement included in the Registration
Statement and to the filing of this opinion as an exhibit to the Proxy Statement
and to the Registration Statement.
This opinion does not address the various state, local or foreign tax
consequences that may result from the Merger or the other transactions
contemplated by the Reorganization Agreement. In addition, no opinion is
expressed as to any federal income tax consequence of the Merger or the other
transactions contemplated by the Reorganization Agreement except as specifically
set forth herein, and this opinion may not be relied upon except with respect to
the consequences specifically discussed herein. Furthermore, this opinion only
relates to the holders of Company capital stock who hold such stock as a capital
asset. No opinion is expressed as to the federal income tax treatment that may
be relevant to a particular investor in light of personal circumstances or to
certain types of investors subject to special treatment under the federal
<PAGE>
[LOGO OF COOLEY GODWARD LLP APPEARS HERE]
Siebel Systems, Inc.
March 16, 1998
Page Three
income tax laws (for example, life insurance companies, dealers in securities,
taxpayers subject to the alternative minimum tax, banks, tax-exempt
organizations, non-United States persons, and stockholders who acquired their
shares of Company capital stock pursuant to the exercise of options or otherwise
as compensation or who hold their Company capital stock as a hedge or as part of
a hedging, straddle, conversion or other risk reduction transaction.
No opinion is expressed as to any transaction other than the Merger as described
in the Reorganization Agreement, or as to any other transaction whatsoever,
including the Merger, if all of the transactions described in the Reorganization
Agreement are not consummated in accordance with the terms of the Reorganization
Agreement and without waiver of any material provision thereof. To the extent
that any of the representations, warranties, statements and assumptions material
to our opinion and upon which we have relied are not accurate and complete in
all material respects at all relevant times, our opinion would be adversely
affected and should not be relied upon.
This opinion only represents our best judgment as to the federal income tax
consequences of the Merger and is not binding on the Internal Revenue Service or
any court of law, tribunal, administrative agency or other governmental body.
The conclusions are based on the Code, existing judicial decisions,
administration regulations and published rulings. No assurance can be given
that future legislative, judicial or administrative changes or interpretations
would not adversely affect the accuracy of the conclusions stated herein.
Nevertheless, by rendering this opinion, we undertake no responsibility to
advise you of any new developments in the application or interpretation of the
federal income tax laws.
This opinion is being delivered solely in connection with the Registration
Statement. It is intended for the benefit of Parent and Merger Sub and may not
be relied upon or utilized for any other purpose or by any other person and may
not be made available to any other person without our prior written consent.
Sincerely,
Cooley Godward LLP
/s/ Susan Cooper Philpot
Susan Cooper Philpot
SCP:dp
<PAGE>
EXHIBIT 8.2
March 13, 1998
Scopus Technologies, Inc.
1900 Powell Street
Emeryville, California 94608
Ladies and Gentlemen:
This opinion is being delivered to you in connection with the Form S-4
Registration Statement filed with the Securities and Exchange Commission (which
contains a prospectus and joint proxy statement) (the "Registration Statement")
filed pursuant to the Agreement and Plan of Merger and Reorganization dated as
of March 1, 1998 (the "Reorganization Agreement") by and among Siebel Systems,
Inc., a Delaware corporation ("Siebel"), Syracuse Acquisition Sub, Inc., a
California corporation and wholly owned subsidiary of Siebel ("Merger Sub"), and
Scopus Technologies, Inc., a California corporation ("Scopus").
Except as otherwise provided, capitalized terms used but not defined herein
shall have the meanings set forth in the Reorganization Agreement. All section
references, unless otherwise indicated, are to the Internal Revenue Code of
1986, as amended (the "Code").
We have acted as counsel to Scopus in connection with the Merger. As such,
and for the purpose of rendering this opinion, we have examined, and are relying
upon (without any independent investigation or review thereof) the truth and
accuracy, at all relevant times, of the statements, covenants, representations
and warranties contained in the following documents (including all exhibits and
schedules attached thereto):
1. the Reorganization Agreement;
2. those certain tax representation letters dated March 13, 1998,
delivered to us by Siebel, Merger Sub and Scopus containing certain
representations of Siebel, Merger Sub and Scopus (the "Tax
Representation Letters"); and
3. such other instruments and documents related to the formation,
organization and operation of Siebel, Merger Sub and Scopus and
related to the consummation of the Merger and the other transactions
contemplated by the Reorganization Agreement as we have deemed
necessary or appropriate.
<PAGE>
Scopus Technologies, Inc.
March 13, 1998
Page 2
In connection with rendering this opinion, we have assumed (without any
independent investigation or review thereof) that:
1. Original documents submitted to us (including signatures thereto) are
authentic, documents submitted to us as copies conform to the original
documents, and that all such documents have been (or will be by the
Effective Time) duly and validly executed and delivered where due execution
and delivery are a prerequisite to the effectiveness thereof;
2. All representations, warranties and statements made or agreed to by Siebel,
Merger Sub and Scopus, their managements, employees, officers, directors
and shareholders in connection with the Merger, including, but not limited
to, those set forth in the Reorganization Agreement (including the exhibits
thereto) and the Tax Representation Letters are true and accurate at all
relevant times;
3. All covenants contained in the Reorganization Agreement (including exhibits
thereto) and the Tax Representation Letters are performed without waiver or
breach of any material provision thereof;
4. The Merger will be reported by Siebel and Scopus on their respective
federal income tax returns in a manner consistent with the opinion set
forth below; and
5. Any representation or statement made "to the best of knowledge" or
similarly qualified is correct without such qualification.
Based on our examination of the foregoing items and subject to the
limitations, qualifications, assumptions and caveats set forth herein, we are of
the opinion that, if the Merger is consummated in accordance with the
Reorganization Agreement (and without any waiver, breach or amendment of any of
the provisions thereof) and the statements set forth in the Tax Representation
Letters are true and correct as of the Effective Time, then for federal income
tax purposes, the Merger will be a reorganization within the meaning of Section
368(a)(1) of the Code.
In addition to your request for our opinion on this specific matter of
federal income tax law, you have asked us to review the discussion of federal
income tax issues contained in the Registration Statement. We have reviewed the
discussion entitled "Certain Federal Income Tax Consequences" contained in the
Registration Statement and believe that, insofar as it relates to statements of
law and legal conclusions, it is correct in all material respects.
<PAGE>
Scopus Technologies, Inc.
March 13, 1998
Page 3
We consent to the reference to our firm under the caption "Certain Federal
Income Tax Consequences" in the Proxy Statement included in the Registration
Statement and to the filing of this opinion as an exhibit to the Proxy Statement
and to the Registration Statement.
This opinion does not address the various state, local or foreign tax
consequences that may result from the Merger or the other transactions
contemplated by the Reorganization Agreement. In addition, no opinion is
expressed as to any federal income tax consequence of the Merger or the other
transactions contemplated by the Reorganization Agreement except as specifically
set forth herein, and this opinion may not be relied upon except with respect to
the consequences specifically discussed herein. Furthermore, this opinion only
relates to the holders of Scopus capital stock who hold such stock as a capital
asset.
No opinion is expressed as to any transaction other than the Merger as
described in the Reorganization Agreement, or as to any other transaction
whatsoever, including the Merger, if all of the transactions described in the
Reorganization Agreement are not consummated in accordance with the terms of the
Reorganization Agreement and without waiver of any material provision thereof.
To the extent that any of the representations, warranties, statements and
assumptions material to our opinion and upon which we have relied are not
accurate and complete in all material respects at all relevant times, our
opinion would be adversely affected and should not be relied upon.
This opinion only represents our best judgment as to the federal income tax
consequences of the Merger and is not binding on the Internal Revenue Service or
any court of law, tribunal, administrative agency or other governmental body.
The conclusions are based on the Code, existing judicial decisions,
administrative regulations and published rulings. No assurance can be given
that future legislative, judicial or administrative changes or interpretations
would not adversely affect the accuracy of the conclusions stated herein.
Nevertheless, by rendering this opinion, we undertake no responsibility to
advise you of any new developments in the application or interpretation of the
federal income tax laws.
<PAGE>
Scopus Technologies, Inc.
March 13, 1998
Page 4
This opinion is being delivered solely in connection with the Registration
Statement. It is intended for the benefit of Scopus and may not be relied upon
or utilized for any other purpose or by any other person and may not be made
available to any other person without our prior written consent.
Very truly yours,
/s/ Wilson Sonsini Goodrich & Rosati
-----------------------------------------------
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Siebel Systems, Inc.
We consent to the incorporation by reference in the registration statement
dated March 16, 1998 on Form S-4 of Siebel Systems, Inc. of our reports dated
January 21, 1998, except as to Note 8 which is as of March 2, 1998, with
respect to the consolidated balance sheets of Siebel Systems, Inc. and
subsidiaries as of December 31, 1997 and 1996, and the related consolidated
statements of operations, stockholders' equity, and cash flows for each of the
years in the three-year period ended December 31, 1997, and the related
schedule, which reports appear in the December 31, 1997 annual report on Form
10-K of Siebel Systems, Inc.
We consent to the reference to our firm under the heading "Experts" in the
Joint Proxy Statement/ Prospectus.
/s/ KPMG Peat Marwick LLP
San Jose, California
March 13, 1998
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement
of Siebel Systems, Inc. on Form S-4 of our report dated April 18, 1997, on our
audits of the consolidated financial statements and financial statement
schedule of Scopus Technology, Inc. and subsidiaries as of March 31, 1997 and
1996, and for the years ended March 31, 1997, 1996 and 1995, which report is
included in the Scopus Technology, Inc. Annual Report on Form 10-K. We also
consent to the reference to our firm under the caption "Experts."
/s/ Coopers & Lybrand LLP
COOPERS & LYBRAND LLP
San Jose, California
March 13, 1998
<PAGE>
EXHIBIT 23.3
March 16, 1998
NATIONSBANC MONTGOMERY SECURITIES LLC
FORM OF OPINION INCLUSION CONSENT
Members of the Board of Directors
Siebel Systems, Inc.
1855 South Grant Street
San Mateo, CA 94404
Gentlemen:
We hereby consent to the inclusion of our opinion letter dated February 28,
1998 to the Board of Directors of Siebel Systems, Inc. (the "Company") regarding
the acquisition of Scopus Technology by the Company, in the Company's
Registration Statement on Form S-4 (the "Registration Statement") and to the
references therein to our firm and to our opinion under the headings: "THE
MERGER - Opinion of Financial Advisor to Siebel," "APPROVAL OF THE MERGER -
Background of the Merger," "- Siebel's Reasons for the Merger," "- Opinion of
Financial Advisor to Siebel." In giving the foregoing consent, we do not admit
(i) that we come within the category of persons whose consent is required under
Section 7 of the Securities Act of 1933, as amended (the "Securities Act"), or
the rules and regulations of the Securities and Exchange Commission promulgated
thereunder, and (ii) that we are experts with respect to any part of the
Registration Statement within the meaning of the term "experts" as used in the
Securities Act and the rules and regulations of the Securities and Exchange
Commission promulgated thereunder.
Very truly yours,
/s/ NATIONSBANC MONTGOMERY SECURITIES LLC
-------------------------------------------------------
NATIONSBANC MONTGOMERY SECURITIES LLC
<PAGE>
EXHIBIT 23.4
March 13, 1998
CONSENT OF MORGAN STANLEY & CO. INCORPORATED
Siebel Systems, Inc.
1855 South Grant Street
San Mateo, California 94402
Dear Sirs:
We hereby consent to the inclusion in the Registration Statement of
Siebel Systems, Inc. ("Siebel") on Form S-4, with respect to the shares of
Common Stock, par value $0.001 per share of Siebel, of our opinion letter
appearing as Appendix B-1 to the Prospectus and Proxy Statement which is part
of the Registration Statement, and to the references of our firm name therein.
In giving such consent, we do not thereby admit that we come within the
category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the rules and regulations adopted by
the Securities and Exchange Commission thereunder, nor do we admit that we are
experts with respect to any part of the Registration Statement within the
meanings of the term "experts" as used in the Securities Act of 1933, as
amended, or the rules and regulations of the Securities and Exchange
Commission thereunder.
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
By: /s/ Charles R. Cory
------------------------------
Charles R. Cory
Managing Director
<PAGE>
EXHIBIT 99.6
SIEBEL SYSTEMS, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE SPECIAL MEETING OF STOCKHOLDERS
To Be Held On May __, 1998
The undersigned hereby appoints Thomas M. Siebel and Howard H. Graham and each
of them, as attorneys and proxies of the undersigned, with full power of
substitution, to vote all of the shares of stock of Siebel Systems, Inc., which
the undersigned may be entitled to vote at the Special Meeting of Stockholders
of Siebel Systems, Inc. to be held at 1855 South Grant Street, San Mateo, CA
94402 on MAY [ ], 1998 at 1:00 p.m. (local time, and at any and all
postponements, continuations and adjournments thereof), with all powers that the
undersigned would possess if personally present, upon and in respect of the
following matters and in accordance with the following instructions, with
discretionary authority as to any and all other matters that may properly come
before the meeting.
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR
PROPOSAL 1, AS MORE SPECIFICALLY DESCRIBED IN THE PROXY STATEMENT. IF
SPECIFIC INSTRUCTIONS ARE INDICATED, THIS PROXY WILL BE VOTED IN
ACCORDANCE THEREWITH.
MANAGEMENT RECOMMENDS A VOTE FOR PROPOSAL 1.
PROPOSAL 1: To approve the issuance of shares of common stock, $0.001 par value
per share, of Siebel Systems, Inc., a Delaware corporation
("Siebel"), pursuant to the Agreement and Plan of Merger and
Reorganization by and among Siebel, Scopus Technology, Inc., a
California corporation ("Scopus"), and Syracuse Acquisition, Inc.,
a California corporation and wholly owned subsidiary of Siebel
("Merger Sub") (the "Reorganization Agreement"). Pursuant to the
Reorganization Agreement, Merger Sub will be merged with and into
Scopus and Scopus will become a wholly owned subsidiary of Siebel.
+ For + Against + Abstain
(Continued and to be signed on other side)
<PAGE>
DATED __________________ , 1998 __________________________________________
__________________________________________
SIGNATURE(S)
Please sign exactly as your name appears
hereon. If the stock is registered in the
names of two or more persons, each should
sign. Executors, administrators, trustees,
guardians and attorneys-in-fact should add
their titles. If signer is a corporation,
please give full corporate name and have
a duly authorized officer sign, stating
title. If signer is a partnership, please
sign in partnership name by authorized
person.
PLEASE VOTE, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED RETURN ENVELOPE
WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES.
2
<PAGE>
EXHIBIT 99.7
SCOPUS TECHNOLOGY, INC.
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD MAY __, 1998
P THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
R
O The undersigned shareholder of SCOPUS TECHNOLOGY, INC., a California
X corporation, hereby acknowledges receipt of the Notice of Special
Y Meeting of Shareholders and Joint Proxy Statement/Prospectus, each
dated April __, 1998, and hereby appoints Ori Sasson and Michele L.
Axelson proxies and attorneys-in-fact, each with full power of
substitution, on behalf of the undersigned, to represent the
undersigned at the Special Meeting of Shareholders of SCOPUS
TECHNOLOGY, INC. to be held at the Berkeley Radisson Hotel, 200 Marina
Boulevard, Berkeley, California 94710, on _______________,
_______________, 1998 at __:00 p.m., local time, and at any adjournment
or adjournments thereof, and to vote all shares of Common Stock that
the undersigned would be entitled to vote if then and there personally
present, on all matters set forth on the reverse side hereof.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH
THE SPECIFICATIONS MADE HEREIN. IF NO SPECIFICATION IS INDICATED, THE
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED FOR EACH OF THE PERSONS
AND THE PROPOSALS ON THE REVERSE SIDE HEREOF AND FOR SUCH OTHER MATTERS
AS MAY PROPERLY COME BEFORE THE SPECIAL MEETING OF SHAREHOLDERS AS THE
PROXYHOLDER DEEMS ADVISABLE.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
---------
SEE
REVERSE
SIDE
---------
<PAGE>
<TABLE>
<CAPTION>
[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
<S> <C>
1. Proposal to approve and adopt For Against Abstain MARK HERE FOR ADDRESS CHANGE AND
the Agreement and Plan of [_] [_] [_] NOTE NEW ADDRESS IN SPACE BELOW. [_]
Reorganization dated as of March
1, 1998, among Scopus Technology,
Inc., a California corporation
("Scopus"), Siebel Systems, Inc.,
a Delaware corporation ("Siebel")
and Syracuse Acquisition Sub,
Inc., a California corporation and
wholly owned subsidiary of Siebel
("Merger Sub") with and into
Scopus pursuant to which Scopus
will become a wholly owned
subsidiary of Siebel.
2. To vote or otherwise represent PLEASE MARK, SIGN, DATE AND RETURN THE
the shares on any and all other PROXY CARD PROMPTLY USING THE ENCLOSED
business which may properly come ENVELOPE.
before the Special Meeting of
Shareholders or any adjournment or NOTE: Please sign exactly as you name
adjournments thereof, according appears on your stock certificate. If the
and in the discretion of the stock is registered in the names of two or
proxyholder. more persons, each should sign. Executors,
administrators, trustees, guardians, attorneys
and corporate officers should insert their titles.
Signature _________________________________ Date _________ Signature________________________________ Date _________
</TABLE>
