<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 15, 1998
REGISTRATION NO. 333-48055
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
AMENDMENT NO. 1 TO FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------
SIEBEL SYSTEMS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
--------------
<TABLE>
<S> <C> <C>
DELAWARE 7372 94-3187233
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION 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)
COPIES TO:
<TABLE>
<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, PROFESSIONAL CORPORATION
3000 EL CAMINO REAL 650 PAGE MILL ROAD,
PALO ALTO, CA 94306 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. [_]
--------------
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>
JOINT PROXY STATEMENT APRIL 17, 1998
SIEBEL LOGO APPEARS HERE
1855 SOUTH 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 18, 1998 at
11:00 a.m., 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,
/s/ Thomas M. Siebel
Thomas M. Siebel
Chairman and Chief Executive Officer
YOUR VOTE IS IMPORTANT--PLEASE RETURN YOUR PROXY PROMPTLY
<PAGE>
JOINT PROXY STATEMENT
SIEBEL LOGO APPEARS HERE
1855 SOUTH GRANT STREET
SAN MATEO, CALIFORNIA 94402
----------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 18, 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 18, 1998 at 11:00 a.m. 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 10, 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
/s/ JAMES C. GAITHER
James C. Gaither
Secretary
San Mateo, California
April 17, 1998
<PAGE>
JOINT PROXY STATEMENT APRIL 17, 1998
SCOPUS LOGO APPEARS HERE
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 18,
1998 at 8:30 a.m., 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 approval and adoption 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,
/s/ Ori S. Sasson
Ori S. Sasson
President and Chief Executive
Officer
YOUR VOTE IS IMPORTANT--PLEASE RETURN YOUR PROXY PROMPTLY
<PAGE>
JOINT PROXY STATEMENT
SCOPUS LOGO APPEARS HERE
1900 POWELL ST.
EMERYVILLE, CALIFORNIA 94608
----------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 18, 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 18, 1998 at 8:30 a.m., 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 14, 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
/s/ A. Aaron Omid
A. Aaron Omid
Secretary
Emeryville, California
April 17, 1998
<PAGE>
SIEBEL LOGO JOINT PROXY STATEMENT SCOPUS LOGO
FOR SPECIAL MEETINGS TO BE HELD ON MAY 18, 1998
SIEBEL LOGO APPEARS HERE
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
approve and adopt 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 approval and adoption 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 19, 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 17, 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 26.
---------------
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 17, 1998.
<PAGE>
<TABLE>
<CAPTION>
PAGE
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<S> <C>
AVAILABLE INFORMATION...................................................... 3
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............................ 4
SUMMARY.................................................................... 5
THE COMPANIES.............................................................. 5
Siebel Systems, Inc....................................................... 5
Scopus Technology, Inc.................................................... 5
Syracuse Acquisition Sub, Inc............................................. 5
THE SIEBEL SPECIAL MEETING................................................. 6
Time, Date, Place and Purpose............................................. 6
Record Date and Vote Required............................................. 6
THE SCOPUS SPECIAL MEETING................................................. 6
Time, Date, Place and Purpose............................................. 6
Record Date and Vote Required............................................. 6
THE MERGER................................................................. 7
General................................................................... 7
Effective Time of the Merger; Closing Date................................ 7
Stock Ownership Following the Merger...................................... 7
Exchange of Scopus Stock Certificates..................................... 7
Scopus' Reasons for the Merger............................................ 8
Recommendation of the Scopus Board of Directors........................... 8
Opinion of Financial Advisor to Scopus.................................... 8
Siebel's Reasons For the Merger........................................... 8
Recommendation of the Siebel Board of Directors........................... 8
Opinion of Financial Advisor to Siebel.................................... 9
Non-solicitation.......................................................... 9
Conduct of Business....................................................... 9
Conditions to the Merger.................................................. 9
Termination............................................................... 10
Expenses and Termination Fees............................................. 11
Interests of Certain Persons in the Merger................................ 11
Voting Agreements......................................................... 11
Affiliate Agreements...................................................... 12
Stock Option Agreement.................................................... 12
Noncompetition Agreements................................................. 12
Certain Federal Income Tax Consequences................................... 13
Anticipated Accounting Treatment.......................................... 13
Rights of Dissenting Shareholders of Scopus............................... 13
Risk Factors.............................................................. 14
Markets and Market Prices................................................. 14
SIEBEL SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION.............. 15
SCOPUS SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION.............. 16
UNAUDITED SELECTED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION...... 17
COMPARATIVE PER SHARE DATA................................................. 18
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS................ 19
</TABLE>
(i)
<PAGE>
<TABLE>
<CAPTION>
PAGE
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<S> <C>
RISK FACTORS............................................................... 26
Risks Relating to the Merger.............................................. 26
Risks Relating to the Business of Siebel.................................. 27
Risks Relating to the Business of Scopus.................................. 33
THE SIEBEL SPECIAL MEETING................................................. 36
Purpose of the Siebel Special Meeting..................................... 36
Proxies................................................................... 36
Date, Time and Place of Meeting........................................... 36
Voting Rights and Outstanding Shares...................................... 36
Solicitation.............................................................. 37
Vote Required............................................................. 37
Revocability of Proxies................................................... 37
THE SCOPUS SPECIAL MEETING................................................. 37
Purpose of the Scopus Special Meeting..................................... 37
Proxies................................................................... 38
Date, Time and Place of Meeting........................................... 38
Voting Rights and Outstanding Shares...................................... 38
Solicitation.............................................................. 38
Vote Required............................................................. 38
Revocability of Proxies................................................... 39
COMPARATIVE PER SHARE MARKET PRICE DATA AND DIVIDEND POLICY................ 39
APPROVAL OF THE MERGER AND RELATED TRANSACTIONS............................ 40
Background of the Merger.................................................. 40
Joint Reasons For the Merger.............................................. 42
Scopus' Reasons For the Merger............................................ 42
Siebel's Reasons For the Merger........................................... 43
Opinion of Financial Advisor to Scopus.................................... 45
Opinion of Financial Advisor to Siebel.................................... 48
Interests of Certain Persons in the Merger................................ 51
Voting Agreements......................................................... 52
Affiliate Agreements...................................................... 52
Stock Option Agreement.................................................... 53
Noncompetition Agreements................................................. 54
Certain Federal Income Tax Consequences................................... 55
Anticipated Accounting Treatment.......................................... 56
Regulatory Matters........................................................ 57
Rights of Dissenting Shareholders of Scopus............................... 57
No Siebel Appraisal Rights................................................ 59
Resale of Siebel Common Stock............................................. 59
THE REORGANIZATION AGREEMENT............................................... 60
General................................................................... 60
Merger Consideration...................................................... 60
Stock Options and Employee Stock Purchase Plan............................ 60
Stock Ownership Following the Merger...................................... 61
Conversion of Shares; Procedures for Exchange of Certificates............. 61
Effect on Certificates.................................................... 62
Corporate Matters......................................................... 62
</TABLE>
(ii)
<PAGE>
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Conditions to the Merger................................................. 62
Representations and Warranties........................................... 65
Covenants................................................................ 65
Termination.............................................................. 69
Expenses And Termination Fees............................................ 71
SCOPUS PRINCIPAL SHAREHOLDERS............................................. 72
COMPARISON OF SHAREHOLDERS' RIGHTS........................................ 73
Size of the Board of Directors........................................... 73
Classified Board of Directors............................................ 73
Cumulative Voting........................................................ 74
Removal of Directors..................................................... 74
Filling Vacancies on the Board of Directors.............................. 74
Interested Director Transactions......................................... 74
Indemnification of Directors and Officers............................... 75
Amendments to the Certificate of Incorporation and Articles of
Incorporation........................................................... 75
Amendment of Bylaws...................................................... 76
Power to Call Special Shareholders' Meeting; Action by Consent........... 76
Inspection of Shareholders' List......................................... 76
Dividends and Repurchases of Shares...................................... 76
Approval of Certain Corporate Transactions............................... 77
Business Combination Following a Change of Control....................... 77
Shareholder Derivative Suits............................................. 77
Appraisal Rights......................................................... 77
Dissolution.............................................................. 78
EXPERTS................................................................... 78
CERTAIN LITIGATION........................................................ 79
LEGAL MATTERS............................................................. 79
</TABLE>
<TABLE>
<C> <S>
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
</TABLE>
(iii)
<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.
3
<PAGE>
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.
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 11, 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.
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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 the Siebel
Principal Offices. Merger Sub's telephone number is (650) 295-5000.
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THE SIEBEL SPECIAL MEETING
TIME, DATE, PLACE AND PURPOSE
The Siebel Special Meeting will be held at the Siebel Principal Offices on
May 18, 1998 at 11:00 a.m. 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 10,
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 71,518,511 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 23.3% 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 18, 1998 at 8:30 a.m. 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 14,
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 20,638,674 shares of
Scopus Common Stock outstanding and entitled to vote at the Scopus Special
Meeting.
Certain shareholders of Scopus, who together hold approximately 25.8% 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").
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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 19, 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. The Reorganization Agreement provides
that Siebel and Scopus shall mutually agree as to the treatment of outstanding
rights under the Scopus 1995 Employee Stock Purchase Plan prior to the
Effective Time. As of April 10, 1998, Siebel and Scopus have agreed that the
Scopus 1995 Employee Stock Purchase Plan will be terminated immediately 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 19, 1998.
STOCK OWNERSHIP FOLLOWING THE MERGER
Based upon the number of shares of Scopus Common Stock issued and
outstanding as of the Scopus Record Date (assuming no exercise of outstanding
options or other rights to purchase Scopus Common Stock), an aggregate of
approximately 15,027,018 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 the Siebel Record Date (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 17.4% 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 the Scopus Record Date, the total number of outstanding options to purchase
Scopus Common Stock shall convert into and become options to purchase an
aggregate of 2,549,154 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
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"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 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
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
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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, 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
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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 "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
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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."
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 25.8% 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.
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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 23.3% 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 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
12
<PAGE>
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."
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
13
<PAGE>
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 26 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 April 9, 1998, the closing
sale price of Siebel Common Stock as reported by Nasdaq was $28.125 (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 April 9, 1998, the closing sale
price of Scopus Common Stock as reported by Nasdaq was $19.75. 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."
14
<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 13, 1993 YEAR ENDED DECEMBER 31,
(INCEPTION) TO ---------------------------------------
DECEMBER 31, 1993 1994 1995 1996 1997
------------------ --------- ------------------ ----------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
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)
</TABLE>
<TABLE>
<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 paid on March 20,
1998.
15
<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)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DA-
TA:
Net revenues............ $2,704 $6,535 $15,250 $28,596 $63,130 $ 41,627 $ 66,131
Merger termination ex-
penses................. -- -- -- -- -- -- 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
------ ------ ------- ------- -------- ------------
(IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets............... $2,385 $5,504 $11,424 $41,581 $108,529 $114,492
Mandatorily redeemable pre-
ferred 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.
16
<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 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
------------ ------------ -------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
PRO FORMA COMBINED CONDENSED STATEMENT
OF OPERATIONS DATA(1):
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
--------------
(IN THOUSANDS)
<S> <C>
PRO FORMA COMBINED CONDENSED BALANCE SHEET DATA:
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 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.
17
<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> <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>
NINE MONTHS ENDED
YEAR ENDED MARCH 31, 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> <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> <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 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 paid on
Siebel Common Stock on March 20, 1998).
18
<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 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 paid on March 20, 1998.
19
<PAGE>
SIEBEL SYSTEMS, INC. AND SCOPUS TECHNOLOGY, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
DECEMBER 31, 1997
(IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
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
======== ======== ======= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
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.
20
<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 computa-
tion................................................ 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 computa-
tion................................................ 32,296 10,470 39,919
======= ======= =======
</TABLE>
See accompanying notes to unaudited pro forma combined condensed financial
statements.
21
<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 computa-
tion................................................ 67,462 19,379 81,572
======= ======= =======
Basic net income per share........................... $ 0.10 $ 0.35 $ 0.18
------- ------- -------
Shares used in basic net income per share computa-
tion................................................ 49,600 17,924 62,650
======= ======= =======
</TABLE>
See accompanying notes to unaudited pro forma combined condensed financial
statements.
22
<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.
23
<PAGE>
SIEBEL SYSTEMS, INC. AND SCOPUS TECHNOLOGY, INC.
NOTES TO UNAUDITED PRO FORMA
COMBINED CONDENSED FINANCIAL STATEMENTS--(CONTINUED)
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 paid on 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.
24
<PAGE>
SIEBEL SYSTEMS, INC. AND SCOPUS TECHNOLOGY, INC.
NOTES TO UNAUDITED PRO FORMA
COMBINED CONDENSED FINANCIAL STATEMENTS--(CONTINUED)
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 paid on 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.
25
<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 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 "The Merger--Markets and Market Prices," 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 significant 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."
26
<PAGE>
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.
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,
retain and integrate 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. Siebel 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
27
<PAGE>
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.
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.
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 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
28
<PAGE>
to achieve significant revenue growth in the future will depend in large part
on its success in recruiting and training 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 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
29
<PAGE>
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 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
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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 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.
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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,
and certain affiliates of Mr. Siebel owned approximately 23.3% of the
outstanding shares of Siebel Common Stock as of the Siebel Record Date. 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.
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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 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.
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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
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
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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, 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'
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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.
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 18, 1998, at 11:00 a.m., 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
71,518,511 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.
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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 or,
at Siebel's request, D.F. King & Co., Inc. No additional compensation will be
paid to directors, officers or other regular employees for such services, but
D.F. King & Co., Inc. will be paid its customary fee, estimated to be
approximately $4,000, if it renders solicitation 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.
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.
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.
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THE SCOPUS BOARD OF DIRECTORS UNANIMOUSLY APPROVED THE REORGANIZATION
AGREEMENT AND THE MERGER, AND RECOMMENDS A VOTE FOR THE APPROVAL AND ADOPTION
OF THE REORGANIZATION AGREEMENT AND 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 18, 1998, at 8:30 a.m., 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
20,638,674 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 or,
at Scopus' request, CIC Letter Service, Inc. No additional compensation will
be paid to directors, officers or other regular employees for such services,
but CIC Letter Service, Inc. will be paid its customary fee, estimated to be
approximately $5,500, if it renders solicitation services.
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.
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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 25.8 % 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.
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.................................... 21.250 15.155 31.375 15.750
Fourth Quarter................................... 24.500 16.375 16.875 8.938
1998 CALENDAR YEAR
First Quarter.................................... 31.750 18.375 21.000 10.625
Second Quarter (through April 9)................. 29.250 26.625 20.625 19.125
</TABLE>
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<PAGE>
As of the Siebel Record Date, there were approximately 294 record holders of
Siebel Common Stock. As of the Scopus Record Date, there were approximately
100 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 9, 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 $20.872
February 27, 1998............................... 30.750 22.389
April 9, 1998................................... 28.125 20.478
</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.
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
40
<PAGE>
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 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.
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<PAGE>
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."
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 27, 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
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<PAGE>
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 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
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<PAGE>
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 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
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<PAGE>
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 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
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"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.
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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, 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.
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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 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.
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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 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
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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 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
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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 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."
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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
5,332,426 outstanding shares of Scopus Common Stock (representing
approximately 25.8% of the shares of Scopus Common Stock 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: (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 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
16,684,600 outstanding shares of Siebel Common Stock (representing
approximately 23.3% of the shares of Siebel Common Stock as of the Siebel
Record Date) 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
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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 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
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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).
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
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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 are, 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:
(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;
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(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.
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.
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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 have also filed a pre-merger
notification concerning their acquisition of Siebel Common Stock. Siebel
revised its required pre-merger Notification and Report Forms on April 3,
1998. Siebel and Scopus are also voluntarily providing additional information
to the Federal Trade Commission. 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
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
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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.
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.
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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 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
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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."
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
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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 effect
and the term, exercisability, vesting schedule and other provisions of such
Scopus Option shall otherwise remain unchanged.
Employee Stock Purchase Plan. The Reorganization Agreement provides that
Siebel and Scopus shall mutually agree as to the treatment of outstanding
rights to purchase shares of Scopus Common Stock under the Scopus 1995
Employee Stock Purchase Plan (the "Scopus Purchase Plan") prior to the
Effective Time. As of April 10, 1998, Siebel and Scopus have agreed that the
Scopus Purchase Plan will be terminated immediately prior to the Effective
Time. Such termination shall have the effects set forth in the Scopus Purchase
Plan, i.e. the date of such termination shall be deemed to be the last day of
a Plan Period (as defined in the Scopus Purchase Plan), all amounts in
participants' cash accounts shall be used to purchase shares of Scopus Common
Stock, and such shares shall be allocated to each participant's share account
as provided in the Scopus Purchase Plan; provided, however, that no shares
shall be purchased that would result in the allocation of any fractional
shares to any participants, and any amounts remaining shall be allocated to
the participants. Following the Effective Time, Scopus employees meeting the
eligibility requirements under the Siebel Employee Stock Purchase Plan (the
"Siebel Purchase Plan") shall be eligible to enroll in the Siebel Purchase
Plan effective July 1, 1998.
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
15,027,018 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 17.4% 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.
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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 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
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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.
(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"
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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.
(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.
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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.
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;
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(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;
(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;
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(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 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
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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 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."
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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, 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;
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(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);
(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
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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 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 PERCENT
BENEFICIAL OWNER SHARES 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 direc-
tors 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.
(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.
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(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.
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
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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 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
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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.
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.
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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 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.
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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.
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
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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.
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,
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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 74,645 shares of, and 44,000 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 OF CONTENTS
<TABLE>
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Section 1. DESCRIPTION OF TRANSACTION................................... 1
1.1 Merger of Merger Sub into the Company........................ 1
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......................................... 2
1.6 Stock Options................................................ 3
1.7 Closing of the Company's Transfer Books...................... 3
1.8 Exchange of Certificates..................................... 3
1.9 Dissenting Shares............................................ 4
1.10 Tax Consequences............................................. 5
1.11 Accounting Consequences...................................... 5
1.12 Further Action............................................... 5
Section 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY................ 5
2.1 Due Organization; Subsidiaries; Etc.......................... 5
2.2 Articles of Incorporation and Bylaws......................... 5
2.3 Capitalization, Etc.......................................... 5
2.4 SEC Filings; Financial Statements............................ 7
2.5 Absence of Changes Since the Date of the Company Balance
Sheet........................................................ 7
2.6 Absence of Changes Since the Date of the Unaudited Interim
Balance Sheet................................................ 7
2.7 Leasehold; Equipment......................................... 9
2.8 Title to Assets.............................................. 9
2.9 Receivables; Significant Customers........................... 9
2.10 Proprietary Assets........................................... 10
2.11 Contracts.................................................... 12
2.12 Year 2000 Liabilities........................................ 13
2.13 Compliance with Legal Requirements........................... 14
2.14 Governmental Authorizations.................................. 14
2.15 Tax Matters.................................................. 14
2.16 Employee and Labor Matters; Benefit Plans.................... 15
2.17 Environmental Matters........................................ 17
2.18 Insurance.................................................... 17
2.19 Transactions with Affiliates................................. 17
2.20 Legal Proceedings; Orders.................................... 17
2.21 Authority; Inapplicability of Anti-takeover Statutes; Binding
Nature of Agreement.......................................... 18
2.22 No Existing Discussions...................................... 18
2.23 Accounting Matters........................................... 18
2.24 Vote Required................................................ 18
2.25 Non-Contravention; Consents.................................. 18
2.26 Fairness Opinion............................................. 19
2.27 Financial Advisor............................................ 19
2.28 Disclosure................................................... 19
2.29 Customs...................................................... 20
Section 3. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB...... 20
3.1 Organization, Standing and Power............................. 20
3.2 Certificate of Incorporation and Bylaws...................... 20
3.3 Capitalization, Etc.......................................... 20
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3.4 SEC Filings; Financial Statements.............. 21
3.5 Disclosure Absence of Certain.................. 21
3.6 Changes or Events Authority; Binding........... 21
3.7 Nature of Agreement Non-Contravention;......... 22
3.8 Consents....................................... 22
3.9 Proprietary Assets............................. 22
3.10 Contracts Compliance with Legal................ 22
3.11 Requirements................................... 23
3.12 Tax Matters Governmental....................... 23
3.13 Authorizations................................. 24
3.14 Legal Proceedings.............................. 24
3.15 Vote Required.................................. 24
3.16 Valid Issuance................................. 24
3.17 Accounting Matters............................. 24
3.18 Fairness Opinion............................... 24
Section 4. CERTAIN COVENANTS OF THE COMPANY............... 24
4.1 Access and Investigation ...................... 24
4.2 Operation of the Company's Business............ 24
4.3 Operation of the Parent's Business............. 26
4.4 No Solicitation................................ 26
4.5 Financial Statements........................... 27
Section 5. ADDITIONAL COVENANTS OF THE PARTIES............ 27
5.1 Registration Statement; Prospectus/Proxy
Statement...................................... 27
5.2 Company Shareholders' Meeting.................. 28
5.3 Parent Stockholders' Meeting................... 29
5.4 Regulatory Approvals........................... 29
5.5 Stock Options.................................. 30
5.6 Form S-8....................................... 31
5.7 Indemnification of Officers and Directors...... 31
5.8 Pooling of Interests; Tax Free Reorganization.. 31
5.9 Additional Agreements.......................... 31
5.10 Confidentiality................................ 32
5.11 Disclosure..................................... 32
5.12 Affiliate Agreements........................... 32
5.13 Tax Matters.................................... 32
5.14 Letter of the Company's Accountants............ 32
5.15 Noncompetition Agreements...................... 32
5.16 Nasdaq Listing................................. 32
5.17 FIRPTA Matters................................. 33
Section 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT
AND MERGER SUB................................ 33
6.1 Accuracy of Representations.................... 33
6.2 Performance of Covenants....................... 33
6.3 Effectiveness of Registration Statement........ 33
6.4 Stockholder Approval........................... 33
6.5 Agreements and Documents....................... 33
6.6 No Material Adverse Change..................... 34
6.7 FIRPTA Compliance.............................. 34
6.8 HSR Act........................................ 34
6.9 Listing........................................ 34
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6.10 No Restraints................................................. 34
6.11 No Governmental Litigation.................................... 34
6.12 1998 Audited Financial Statements............................. 34
Section 7. CONDITIONS PRECEDENT TO OBLIGATION OF THE COMPANY............. 34
7.1 Accuracy of Representations................................... 35
7.2 Performance of Covenants...................................... 35
7.3 Effectiveness of Registration Statement....................... 35
7.4 Stockholder Approval.......................................... 35
7.5 Agreements and Documents...................................... 35
7.6 No Material Adverse Change.................................... 36
7.7 HSR Act....................................................... 36
7.8 Listing....................................................... 36
7.9 No Restraints................................................. 36
Section 8. TERMINATION................................................... 36
8.1 Termination................................................... 36
8.2 Notice of Termination; Effect of Termination.................. 37
8.3 Expenses; Termination Fees.................................... 37
Section 9. MISCELLANEOUS PROVISIONS...................................... 38
9.1 Amendment..................................................... 38
9.2 Waiver........................................................ 38
9.3 No Survival of Representations and Warranties................. 38
9.4 Entire Agreement; Counterparts................................ 38
9.5 Applicable Law; Jurisdiction.................................. 38
9.6 Disclosure Schedules.......................................... 39
9.7 Attorneys' Fees............................................... 39
9.8 Assignability; Third Party Beneficiaries...................... 39
9.9 Notices....................................................... 39
9.10 Cooperation................................................... 39
9.11 Liability..................................................... 39
9.12 Construction.................................................. 40
</TABLE>
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APPENDIX A
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.
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").
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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.
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.
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(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.
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
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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 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 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.
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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 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
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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 "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.
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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 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;
(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;
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(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 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
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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, 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,
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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 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 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.
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(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
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);
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(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.
(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
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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.
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 P LANS.
(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 2.16 of 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 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).
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(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
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.
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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 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.
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(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 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;
(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;
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(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
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
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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 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.
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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 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 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.
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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, 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
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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.
(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
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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").
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 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;
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(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.
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
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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 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
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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 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, 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.
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(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 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,
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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, 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.
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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.
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 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.
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(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 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.
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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 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
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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, 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 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:
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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 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.
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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. his 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;
(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);
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<PAGE>
(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 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 Company Common Stock issuable upon exercise of
all outstanding Company Options (based on the treasury method) as of February
27, 1998.
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(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.
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)
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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 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):
<TABLE>
<C> <S>
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
</TABLE>
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
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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."
(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.
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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.
/s/ Howard H. Graham
By: _________________________________
Title: Senior Vice President,
Finance and Administration
and Chief Financial Officer
SYRACUSE ACQUISITION SUB, INC.
/s/ Howard H. Graham
By: _________________________________
Title: President and Chief Financial
Officer
SCOPUS TECHNOLOGY, INC.
/s/ Michelle Axelson
By: _________________________________
Title: Senior Vice President and
Chief Financial Officer
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<PAGE>
EXHIBITS INDEX
<TABLE>
<S> <C>
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
</TABLE>
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<PAGE>
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, 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).
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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
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.
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<PAGE>
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.
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
A-45
<PAGE>
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.
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.
A-46
<PAGE>
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.
B-1-1
<PAGE>
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
B-1-2
<PAGE>
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
B-2-1
<PAGE>
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
B-2-2
<PAGE>
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.
(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.
C-1-1
<PAGE>
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 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.
C-1-2
<PAGE>
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.
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.
C-1-3
<PAGE>
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.
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
C-1-4
<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.
6.10 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).
C-1-5
<PAGE>
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]
C-1-6
<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: __________________________
<TABLE>
<CAPTION>
ADDITIONAL
SECURITIES
SHARES HELD OPTIONS AND BENEFICIALLY
OF RECORD OTHER RIGHTS OWNED
------------- -------------- --------------
<S> <C> <C>
</TABLE>
SIGNATURE PAGE
C-1-7
<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 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.
VOTING AGREEMENT
1
<PAGE>
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.
(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.
C-2-1
<PAGE>
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
(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.
C-2-2
<PAGE>
(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 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
C-2-3
<PAGE>
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
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 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.
C-2-4
<PAGE>
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; 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]
C-2-5
<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: __________________________
<TABLE>
<CAPTION>
ADDITIONAL
SECURITIES
SHARES HELD OPTIONS AND BENEFICIALLY
OF RECORD OTHER RIGHTS OWNED
------------- -------------- --------------
<S> <C> <C>
</TABLE>
SIGNATURE PAGE
C-2-6
<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:
(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.
D-1-1
<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. 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.
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
D-1-2
<PAGE>
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 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
D-1-3
<PAGE>
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 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 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.
D-1-4
<PAGE>
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.
SECTION 20. Survival. Each of the representations, warranties, covenants and
obligations contained in this Agreement shall survive the consummation of the
Merger.
D-1-5
<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
D-1-6
<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.
(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
D-2-1
<PAGE>
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.
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.
D-2-2
<PAGE>
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 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.
D-2-3
<PAGE>
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.
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.
D-2-4
<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
D-2-5
<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); 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).
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(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 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
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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).
(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,
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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 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
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With a copy to: Wilson, Sonsini, Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304
Attn: Howard Zeprun, Esq.
Fax: (650) 493-9300
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 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.
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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
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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 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.
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(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.
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.
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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.
(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
F-4
<PAGE>
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-5
<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
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
------- -------
<C> <S>
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 L.L.P.
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.
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>
- --------
*Previously filed.
(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 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.
II-2
<PAGE>
(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 Amendment No. 1 to the 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 14th
day of April, 1998.
By: *
_________________________________
Thomas M. Siebel
Chairman and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment No. 1 to the 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>
* Chairman, Chief Executive April 14, 1998
____________________________________ Officer and Director
Thomas M. Siebel (Principal Executive
Officer)
/s/ Howard H. Graham Senior Vice President, April 14, 1998
____________________________________ Finance
Howard H. Graham and Administration, and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
* Director April 14, 1998
____________________________________
Eric E. Schmidt
* Director April 14, 1998
____________________________________
James C. Gaither
* Director April 14, 1998
____________________________________
George T. Shaheen
* Director April 14, 1998
____________________________________
Charles R. Schwab
* Director April 14, 1998
____________________________________
A. Michael Spence
</TABLE>
*By: /s/ Howard H. Graham
________________________
Howard H. Graham
Attorney-in-Fact
II-4
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
------- -------
<C> <S>
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 L.L.P.
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.
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>
- --------
*Previously filed.
(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 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Siebel Systems, Inc.
We consent to incorporation herein by reference 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.
/s/ KPMG Peat Marwick LLP
San Jose, California
April 14, 1998
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Amendment No. 1 to the
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 L.L.P.
_________________________________
Coopers & Lybrand L.L.P.
San Jose, California
April 14, 1998
