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EXHIBIT 1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
PHONE.COM, INC.,
SILVER MERGER SUB INC.
AND
SOFTWARE.COM, INC.
DATED AS OF AUGUST 8, 2000
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TABLE OF CONTENTS
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AGREEMENT AND PLAN OF MERGER....................................................................... 1
ARTICLE 1. THE MERGER.............................................................................. 2
SECTION 1.1 The Merger........................................................................... 2
SECTION 1.2 Closing.............................................................................. 2
SECTION 1.3 Effective Time....................................................................... 2
SECTION 1.4 Effects of the Merger................................................................ 3
SECTION 1.5 Certificates of Incorporation and By-laws of the Surviving Corporation............... 3
SECTION 1.6 Directors and Officers............................................................... 3
ARTICLE 2. EFFECTS OF THE MERGER ON THE CAPITAL STOCK OF SOFTWARE.COM; EXCHANGE OF CERTIFICATES.... 3
SECTION 2.1 Effect on Software.com Capital Stock................................................. 3
SECTION 2.2 Exchange of Shares and Certificates.................................................. 6
SECTION 2.3 Certain Adjustments.................................................................. 8
ARTICLE 3. REPRESENTATIONS AND WARRANTIES.......................................................... 8
SECTION 3.1 Representations and Warranties of Phone and Merger Sub............................... 8
SECTION 3.2 Representations and Warranties of Software.com....................................... 22
ARTICLE 4. COVENANTS RELATING TO CONDUCT OF BUSINESS SECTION....................................... 35
SECTION 4.1 Conduct of Business.................................................................. 35
SECTION 4.2 No Solicitation by Phone............................................................. 40
SECTION 4.3 No Solicitation by Software.com...................................................... 42
ARTICLE 5. ADDITIONAL AGREEMENTS................................................................... 44
SECTION 5.1 Preparation of the Form S-4 and the Joint Proxy Statement; Stockholders' Meetings... 44
SECTION 5.2 Pooling Letters...................................................................... 45
SECTION 5.3 Access to Information; Confidentiality............................................... 45
SECTION 5.4 Commercially Reasonable Efforts...................................................... 46
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SECTION 5.5 Indemnification, Exculpation and Insurance........................................... 46
SECTION 5.6 Fees and Expenses.................................................................... 48
SECTION 5.7 Public Announcements................................................................. 48
SECTION 5.8 Affiliates........................................................................... 48
SECTION 5.9 Nasdaq Listing....................................................................... 49
SECTION 5.10 Tax and Accounting Treatment........................................................ 49
SECTION 5.11 Post-Merger Operations.............................................................. 49
SECTION 5.12 Conveyance Taxes.................................................................... 49
SECTION 5.13 Employee Benefits................................................................... 49
SECTION 5.14 Consents of Accountants............................................................. 50
SECTION 5.15 Phone Board and Officers............................................................ 50
SECTION 5.16 Rights Plans........................................................................ 50
SECTION 5.17 Action by Board of Directors........................................................ 50
ARTICLE 6. CONDITIONS PRECEDENT.................................................................... 51
SECTION 6.1 Conditions to Each Party's Obligation to Effect The Merger........................... 51
SECTION 6.2 Conditions to Obligations of Software.com............................................ 52
SECTION 6.3 Conditions to Obligations of Phone and Merger Sub.................................... 53
ARTICLE 7. TERMINATION, AMENDMENT AND WAIVER....................................................... 54
SECTION 7.1 Termination.......................................................................... 54
SECTION 7.2 Effect of Termination................................................................ 55
SECTION 7.3 Amendment............................................................................ 57
SECTION 7.4 Extension; Waiver.................................................................... 58
ARTICLE 8. GENERAL PROVISIONS...................................................................... 58
SECTION 8.1 Nonsurvival of Representations and Warranties........................................ 58
SECTION 8.2 Notices.............................................................................. 58
SECTION 8.3 Definitions.......................................................................... 59
SECTION 8.4 Interpretation....................................................................... 60
SECTION 8.5 Counterparts......................................................................... 60
SECTION 8.6 Entire Agreement; No Third-Party Beneficiaries....................................... 60
SECTION 8.7 Governing Law........................................................................ 60
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SECTION 8.8 Assignment........................................................................... 61
SECTION 8.9 Consent to Jurisdiction.............................................................. 61
SECTION 8.10 Headings, etc....................................................................... 61
SECTION 8.11 Severability........................................................................ 61
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EXHIBITS
EXHIBIT A-- Form of Phone Stock Option Agreement
EXHIBIT B-- Form of Software.com Stock Option Agreement
EXHIBIT C-- Form of Software.com Voting Agreement
EXHIBIT D-- Form of Phone Voting Agreement
EXHIBIT E-- Form of Software.com Affiliate Letter
EXHIBIT F-- Form of Phone Affiliate Letter
EXHIBIT G-- Form of Strategic Alliance MOU
EXHIBIT H-- Form of Software.com Special Affiliate Letter
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of August 8, 2000, by and among
PHONE.COM, INC., a Delaware corporation ("Phone"), SILVER MERGER SUB INC., a
Delaware corporation and a wholly owned subsidiary of Phone ("Merger Sub") and
SOFTWARE.COM, INC., a Delaware corporation ("Software.com").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of Phone and Software.com deem it
advisable and in the best interests of each corporation and its respective
stockholders that Phone and Software.com engage in a business combination in a
merger of equals in order to advance the long-term strategic business interests
of Phone and Software.com; and
WHEREAS, in furtherance thereof, the Boards of Directors of each of
Phone, Merger Sub and Software.com have approved this Agreement and the merger
of Merger Sub with and into Software.com with Software.com continuing as the
surviving corporation (the "Merger") and have deemed the Merger advisable, upon
the terms and subject to the conditions set forth in this Agreement; and
WHEREAS, the Boards of Directors of each of Phone, Merger Sub and
Software.com, having determined that the Merger and the other transactions
contemplated hereby are advisable and in the best interests of its stockholders,
have approved the transactions contemplated by this Agreement, the Option
Agreements, the Voting Agreements and the Strategic Alliance MOU (as such terms
are hereinafter defined) in accordance with the provisions of the Delaware
General Corporation Law (the "DGCL"); and
WHEREAS, the Board of Directors of Software.com has resolved to
recommend to Software.com's stockholders the approval and adoption of this
Agreement, and the consummation of the transactions contemplated hereby upon the
terms and subject to the conditions set forth herein; and
WHEREAS, the Board of Directors of Phone has resolved to recommend to
Phone's stockholders the approval of the issuance of shares of Phone Common
Stock (as hereinafter defined) pursuant to the Merger and the amendment to
Phone's Certificate of Incorporation to change the name of Phone as of the
Effective Time to a name to be mutually agreed upon in good faith by Phone and
Software.com following the date hereof (the "Phone Charter Amendment"); and
WHEREAS, as a condition and inducement to the execution of this
Agreement, contemporaneously herewith Software.com and Phone will enter into a
stock option agreement (the "Phone Option Agreement") attached hereto as Exhibit
A and a stock option agreement (the "Software.com Option Agreement" and,
together with the Phone Option Agreement, the "Option Agreements") attached
hereto as Exhibit B; and
WHEREAS, as a condition and inducement to the execution of this
Agreement, contemporaneously herewith certain stockholders of Phone will enter
into a voting agreement (the "Phone Voting Agreement") attached hereto as
Exhibit C and certain stockholders of
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Software.com will enter into a voting agreement (the "Software.com Voting
Agreement" and together with the Phone Voting Agreement, the "Voting
Agreements") attached hereto as Exhibit D; and
WHEREAS, as a condition and inducement to the execution of this
Agreement, contemporaneously herewith Software.com and Phone will enter into the
Reciprocal Reseller License and Services Memorandum of Understanding (the
"Strategic Alliance MOU") attached hereto as Exhibit G; and
WHEREAS, for United States federal income tax purposes, it is intended
that the Merger shall qualify as a reorganization within the meaning of section
368(a) of the Internal Revenue Code of 1986, as amended, (the "Code"), and the
rules and regulations promulgated thereunder and this Agreement is intended to
be and is adopted as a plan of reorganization within the meaning of section
368(a) of the Code.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements set forth herein, in the Option Agreements, the Voting
Agreements and the Strategic Alliance MOU the parties agree as follows:
ARTICLE 1.
THE MERGER
SECTION 1.1 The Merger.
Upon the terms and subject to the conditions set forth in this
Agreement, and in accordance with the DGCL, Merger Sub shall be merged with and
into Software.com at the Effective Time (as defined in Section 1.3 hereof).
Following the Effective Time, the separate corporate existence of Merger Sub
shall cease and Software.com shall continue as the surviving corporation (the
"Surviving Corporation") in the Merger and shall succeed to and assume all the
rights, privileges, immunities, properties, powers, and franchises of Merger Sub
in accordance with the DGCL.
SECTION 1.2 Closing.
The closing of the Merger (the "Closing") shall take place at 10:00
a.m., California time, on a date to be specified by the parties, which shall be
no later than the second business day after satisfaction or waiver of all of the
conditions set forth in Article 6 (the "Closing Date"), at the offices of
Skadden, Arps, Slate, Meagher & Flom LLP, 525 University Avenue, Suite 220, Palo
Alto, California 94301, unless another time, date or place is agreed to in
writing by the parties hereto.
SECTION 1.3 Effective Time.
Subject to the provisions of this Agreement, as soon as practicable on
the Closing Date, the parties shall cause the Merger to be consummated by filing
with the Secretary of State of the State of Delaware (the "Secretary of State")
a certificate of merger (the "Certificate of Merger") executed in accordance
with the relevant provisions of the DGCL and shall make all
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other filings or recordings required under the DGCL. The Merger shall become
effective at such time as the Certificate of Merger is duly filed with the
Secretary of State, or at such subsequent date or time as Phone and Software.com
shall agree and specify in the Certificate of Merger (the time Merger becomes
effective being hereinafter referred to as the "Effective Time").
SECTION 1.4 Effects of the Merger.
The Merger shall have the effects set forth in Section 259 of the
DGCL.
SECTION 1.5 Certificates of Incorporation and By-laws of the Surviving
Corporation.
At the Effective Time, subject to the requirements of Section 5.5, the
Certificate of Incorporation and the by-laws of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the Certificate of
Incorporation and by-laws of the Surviving Corporation, in each case until
thereafter amended in accordance with applicable law.
SECTION 1.6 Directors and Officers.
The directors and officers of Merger Sub at the Effective Time shall,
from and after the Effective Time, be the directors and officers, respectively,
of the Surviving Corporation until their successors shall have been duly elected
or appointed or qualified or until their earlier death, resignation or removal
in accordance with the Surviving Corporation's Certificate of Incorporation and
by-laws.
ARTICLE 2.
EFFECTS OF THE MERGER ON THE CAPITAL STOCK OF
SOFTWARE.COM; EXCHANGE OF CERTIFICATES
SECTION 2.1 Effect on Software.com Capital Stock.
As of the Effective Time of the Merger, by virtue of the Merger and
without any action on the part of the holders of any shares of common stock, par
value $0.001 per share, of Software.com ("Software.com Common Stock") or any
shares of common stock of Merger Sub:
(a) Conversion of Software.com Common Stock.
Each issued and outstanding share of Software.com Common Stock (other
than any shares of Software.com Common Stock to be canceled pursuant to Section
2.1(c) hereof) shall be converted into the right to receive 1.6105 (the
"Exchange Ratio") fully paid and nonassessable shares of common stock, par value
$0.001 per share, of Phone ("Phone Common Stock"). As of the Effective Time,
all such shares of Software.com Common Stock shall no longer be outstanding and
shall automatically be canceled and retired and shall cease to exist. As of the
Effective Time, each certificate theretofore representing shares of Software.com
Common Stock, without any action on the part of Phone, Software.com or the
holder thereof, shall be deemed to represent that number of shares of Phone
Common Stock determined by multiplying the shares of Software.com Common Stock
represented thereby by the Exchange Ratio. Each holder of a certificate
representing any shares of Software.com Common Stock shall cease to
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have any rights with respect thereto, except the right to receive, upon the
surrender of any such certificates, certificates representing the shares of
Phone Common Stock to be issued or paid in consideration therefor upon surrender
of such certificate in accordance with Section 2.2 hereof without interest.
(b) Capital Stock of Merger Sub.
Each issued and outstanding share of common stock, par value $0.01 per
share, of Merger Sub shall be converted into one fully paid and nonassessable
share of common stock, par value $0.01 per share, of the Surviving Corporation.
(c) Cancellation of Treasury Shares. Each share of Software.com
Common Stock held in the treasury of Software.com, or owned by Phone or any
direct or indirect subsidiary of Software.com or Phone immediately prior to the
Effective Time shall automatically be canceled and retired and shall cease to
exist, and no consideration shall be delivered in exchange thereof.
(d) Assumption and Conversion of Software.com Options.
(i) As of the Effective Time, each outstanding option or
warrant to purchase Software.com Common Stock (a "Software.com Option") issued
under each Software.com Stock Plan (as defined in Section 3.2(c)) shall
thereafter entitle the holder thereof to receive, upon the exercise thereof,
that number of shares of Phone Common Stock equal to the product of (w) the
number of shares of Software.com Common Stock subject to such Software.com
Option immediately prior to the Effective Time and (x) the Exchange Ratio, at an
exercise price for each full share of Phone Common Stock subject to such
Software.com Option equal to (y) the exercise price per share of Software.com
Common Stock subject to such Software.com Option divided by (z) the Exchange
Ratio, which exercise price per share shall be rounded up to the nearest two-
place decimal. The number of shares of Phone Common Stock that may be purchased
by a holder upon the exercise of any Software.com Option shall not include any
fractional share of Phone Common Stock but shall be rounded, in the case of any
Software.com Option other than an "incentive stock option" (within the meaning
of section 422 of the Code), up and, in the case of any incentive stock option,
down to the nearest whole share, if necessary.
(ii) As of the Effective Time, Phone shall assume in full each
Software.com Option and all of the other rights and obligations of Software.com
under the Software.com Stock Plans (as defined in Section 3.2(c)) as provided
herein. Section 2.1(d)(ii) of the Software.com Disclosure Schedule sets forth a
list summarizing all Software.com Options under all of the Software.com Stock
Plans, including the term and the exercise price of each Software.com Option.
The assumption of a Software.com Option by Phone shall not terminate or modify
(except as required hereunder) any right of first refusal, right of repurchase,
vesting schedule or other restriction on transferability relating to a
Software.com Option or the stock issuable upon the exercise thereof. Continuous
employment with Software.com shall be credited to an optionee for purposes of
determining the number of shares subject to exercise, vesting or repurchase
after the Effective Time, and the provisions in the Software.com Stock Plans
and/or in any stock option agreement evidencing the terms and conditions of any
Software.com Option
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relating to the exercisability of any Software.com Option upon termination of an
optionee's employment or service as a director shall not be deemed triggered
until such time as such optionee shall be neither an employee or officer nor
serving as a director of Phone or any subsidiary. After such assumption, Phone
shall issue, upon any partial or total exercise of any Software.com Option, in
lieu of shares of Software.com Common Stock, the number of shares of Phone
Common Stock to which the holder of the Software.com Option is entitled pursuant
to this Agreement. The assumption by Phone of Software.com Options shall not
give holders of such Software.com Options any additional benefits which they did
not have immediately prior to the Effective Time. Phone shall file with the
Securities and Exchange Commission (the "SEC") as soon as practicable, and in
any event within two (2) business days, following the Effective Time a
registration statement on Form S-8 under the Securities Act of 1933, as amended
(the "Securities Act"), covering, to the extent applicable, the shares of Phone
Common Stock to be issued upon the exercise of Software.com Options assumed by
Phone. Phone shall use commercially reasonable efforts to qualify as soon as
practicable, and in any event within two (2) business days, after the Effective
Time under the applicable state securities laws the issuance of the shares of
Phone Common Stock to be issued upon exercise of such Software.com Options.
Prior to the Effective Time, Software.com shall make such amendments, if any, to
the Software.com Stock Plans as shall be necessary to permit such assumption in
accordance with this Section 2.1(d).
(iii) It is the intention of the parties that, to the extent
that any Software.com Option constitutes an incentive stock option immediately
prior to the Effective Time of the Merger, such Software.com Option shall
continue to qualify as an incentive stock option to the maximum extent permitted
by section 422 of the Code, and that the assumption of Software.com Options
provided by this Section 2.1(d) shall satisfy the conditions of section 424(a)
of the Code.
(e) At the Effective Time, Phone shall assume the outstanding
offering periods under the Software.com Employee Stock Purchase Plan (the
"Software.com ESPP"), and all outstanding rights to purchase shares of
Software.com Common Stock under the Software.com ESPP ("Purchase Rights") shall
be converted (in accordance with the Exchange Ratio) into rights to purchase
shares of Phone Common Stock (with the number of shares rounded down to the
nearest whole share and the purchase price as of the offering date for each
offering period in effect as of the Effective Time rounded up to the nearest
whole cent). All such converted Purchase Rights shall be assumed by Phone, and
each offering period in effect under the Software.com ESPP immediately prior to
the Effective Time shall be continued in accordance with the terms of the
Software.com ESPP until the end of such offering period. The Software.com ESPP
shall terminate or be merged into the stock purchase plan sponsored by Phone
(the "Phone ESPP") immediately following the exercise of the last assumed
Purchase Right, and no additional Purchase Rights shall be granted under the
Software.com ESPP following the Effective Time, provided that references to
Software.com in the Software.com ESPP and related documents shall mean Phone
(except that the purchase price as of the offering date for a relevant period
shall be determined with respect to the fair market value of Software.com Common
Stock on such date, as adjusted hereby). Phone shall take all corporate action
necessary to reserve for issuance a sufficient number of shares of Phone Common
Stock for issuance upon exercise of Purchase Rights under the Software.com ESPP
assumed in accordance with this Section 2.1(e). Phone agrees that, from and
after the Effective Time,
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Software.com employees may participate in the Phone ESPP, subject to the terms
and conditions of the Phone ESPP; provided, however, that Phone shall amend the
Phone ESPP to provide for a special offering period that permits Software.com
employees the ability to immediately participate in the Phone ESPP after the
Effective Time, and that service with Software.com shall be treated as service
with Phone for determining eligibility of Software.com's employees under the
Phone ESPP.
SECTION 2.2 Exchange of Shares and Certificates.
(a) Exchange Agent. As of the Effective Time of the Merger, Phone
shall deposit with U.S. Stock Transfer Corporation or such other bank, trust
company or nationally recognized shareholder services provider as may be
designated by Phone (the "Exchange Agent"), for the benefit of the holders of
shares of Software.com Common Stock, for exchange in accordance with this
Article 2, through the Exchange Agent, certificates representing the shares of
Phone Common Stock (such shares of Phone Common Stock, together with any
dividends or distributions with respect thereto with a record date after the
Effective Time, and any cash payable in lieu of any fractional shares of Phone
Common Stock, being hereinafter referred to as the "Exchange Fund") issuable
pursuant to Section 2.1 hereof in exchange for outstanding shares of
Software.com Common Stock.
(b) Exchange Procedures. As soon as reasonably practicable after
the Effective Time, the Exchange Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Software.com Common Stock (the "Certificates")
whose shares were converted into shares of Phone Common Stock pursuant to
Section 2.1 hereof, (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates to the Exchange Agent and shall be
in such form and have such other provisions as Phone may reasonably specify),
and (ii) instructions for use in effecting the surrender of the Certificates in
exchange for certificates representing shares of Phone Common Stock. Upon
surrender of a Certificate for cancellation to the Exchange Agent or to such
other agent or agents as may be appointed by Phone, together with such letter of
transmittal, duly executed, and such other documents as may reasonably be
required by the Exchange Agent, the holder of such Certificate shall be entitled
to receive in exchange therefor a certificate representing that number of whole
shares of Phone Common Stock which such holder has the right to receive pursuant
to the provisions of this Article 2, and the Certificate so surrendered shall
forthwith be canceled. In the event of a transfer of ownership of Software.com
Common Stock which is not registered in the transfer records of Software.com, a
certificate representing the proper number of shares of Phone Common Stock may
be issued to a person other than the person in whose name the Certificate so
surrendered is registered, if such Certificate shall be properly endorsed or
otherwise be in proper form for transfer and the person requesting such issuance
shall pay any transfer or other taxes required by reason of the issuance of
shares of Phone Common Stock to a person other than the registered holder of
such Certificate or establish to the satisfaction of Phone that such tax has
been paid or is not applicable. No interest shall be paid or shall accrue on any
cash payable in lieu of any fractional shares of Phone Common Stock.
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(c) Distributions with Respect to Unexchanged Shares. No dividends
or other distributions with respect to Phone Common Stock with a record date
after the Effective Time shall be paid to the holder of any unsurrendered
Certificate with respect to the shares of Phone Common Stock represented
thereby, and no cash payment in lieu of fractional shares shall be paid to any
such holder pursuant to Section 2.2(e) hereof, until the surrender of such
Certificate in accordance with this Article 2. Subject to the effect of
applicable laws, following surrender of any such Certificate, there shall be
paid to the holder of the certificate representing whole shares of Phone Common
Stock issued in exchange therefor, without interest, (i) at the time of such
surrender, the amount of any cash payable in lieu of a fractional share of Phone
Common Stock to which such holder is entitled pursuant to Section 2.2(e) and the
amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such whole shares of Phone
Common Stock, and (ii) at the appropriate payment date, the amount of dividends
or other distributions with a record date after the Effective Time but prior to
such surrender and a payment date subsequent to such surrender payable with
respect to such whole shares of Phone Common Stock.
(d) No Further Ownership Rights in Software.com Common Stock. All
shares of Phone Common Stock issued upon the surrender for exchange of
Certificates in accordance with the terms of this Article 2 (including any cash
paid pursuant to Section 2.2(c) or 2.2(e) hereof) shall be deemed to have been
issued (and paid) in full satisfaction of all rights pertaining to the shares of
Software.com Common Stock theretofore represented by such Certificates, subject,
however, to the obligation of the Surviving Corporation, as applicable, to pay
any dividends or make any other distributions with a record date prior to the
Effective Time which may have been declared or made by Software.com on such
shares of Software.com Common Stock in accordance with the terms of this
Agreement and which remain unpaid at the Effective Time, and there shall be no
further registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of Software.com Common Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation or the Exchange Agent
for any reason, they shall be canceled and exchanged as provided in this Article
2, except as otherwise provided by law.
(e) Fractional Shares.
(i) No certificates representing fractional shares of Phone
Common Stock shall be issued upon the surrender for exchange of Certificates,
and such fractional share interests shall not entitle the owner thereof to vote
or to any other rights of a stockholder of Phone.
(ii) Notwithstanding any other provision of this Agreement,
each holder of shares of Software.com Common Stock converted pursuant to the
Merger who would otherwise have been entitled to receive a fraction of a share
of Phone Common Stock (after taking into account all Certificates delivered by
such holder) shall receive, in lieu thereof, cash (without interest) in an
amount equal to (i) such fraction multiplied by (ii) the average of the closing
price of a share of Software.com Common Stock for the ten (10) most recent
trading days that Software.com Common Stock has traded ending on the trading day
immediately prior to the Effective Time, as reported on the Nasdaq National
Market.
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(f) Termination of Exchange Fund. Any portion of the Exchange Fund
which remains undistributed to the holders of the Certificates for six (6)
months after the Effective Time shall be delivered to Phone, upon demand, and
any holders of the Certificates who have not theretofore complied with this
Article 2 shall thereafter look only to Phone for payment of their claim for
Phone Common Stock, any cash in lieu of fractional shares of Phone Common Stock
and any dividends or distributions with respect to Phone Common Stock.
(g) No Liability. None of Phone, Merger Sub, Software.com or the
Exchange Agent shall be liable to any person in respect of any shares of Phone
Common Stock (or dividends or distributions with respect thereto) or cash from
the Exchange Fund delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. If any Certificates shall not have
been surrendered prior to seven (7) years after the Effective Time, or
immediately prior to such earlier date on which any shares of Phone Common
Stock, any cash in lieu of fractional shares of Phone Common Stock or any
dividends or distributions with respect to Phone Common Stock in respect of such
Certificate would otherwise escheat to or become the property of any
Governmental Entity, any such shares, cash, dividends or distributions in
respect of such Certificate shall, to the extent permitted by applicable law,
become the property of the Surviving Corporation, free and clear of all claims
or interest of any person previously entitled thereto.
(h) Investment of Exchange Fund. The Exchange Agent shall invest
any cash included in the Exchange Fund, as directed by Phone, on a daily basis.
Any interest and other income resulting from such investments shall be paid to
Phone.
SECTION 2.3 Certain Adjustments.
If between the date hereof and the Effective Time, the outstanding
shares of Software.com Common Stock or Phone Common Stock shall be changed into
a different number of shares by reason of any reclassification,
recapitalization, split-up, combination or exchange of shares, or any dividend
payable in stock or other securities shall be declared thereon with a record
date within such period, the Exchange Ratio shall be adjusted accordingly to
provide to the holders of Software.com Common Stock the same economic effect as
contemplated by this Agreement prior to such reclassification, recapitalization,
split-up, combination, exchange, or dividend.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Representations and Warranties of Phone and Merger Sub.
Phone and Merger Sub represent and warrant to Software.com, subject to
such exceptions as are disclosed in writing in the disclosure letter supplied by
Phone to Software.com dated as of the date hereof (the "Phone Disclosure
Schedule"), which disclosure shall provide an exception to or otherwise qualify
the representations, warranties or covenants of Phone and Merger Sub contained
in the section of this Agreement corresponding by number to such disclosure or
covenant and the other representations, warranties, and covenants herein to the
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extent such disclosure shall reasonably appear to be applicable to such other
representations, warranties, or covenants as follows:
(a) Organization, Standing, and Corporate Power.
(i) Each of Phone and its subsidiaries (as defined in Section
8.3) is a corporation or other legal entity duly organized, validly existing and
in good standing (with respect to jurisdictions which recognize such concept)
under the laws of the jurisdiction in which it is organized and has the
requisite corporate or other power, as the case may be, and authority to carry
on its business as now being conducted, except, as to subsidiaries, for those
jurisdictions where the failure to be so organized, existing or in good standing
individually or in the aggregate would not have a material adverse effect (as
defined in Section 8.3) on Phone. Each of Phone and its subsidiaries is duly
qualified or licensed to do business and is in good standing (with respect to
jurisdictions which recognize such concept) in each jurisdiction in which the
nature of its business or the ownership, leasing or operation of its properties
makes such qualification or licensing necessary, except for those jurisdictions
where the failure to be so qualified or licensed or to be in good standing
individually or in the aggregate would not have a material adverse effect on
Phone.
(ii) Phone and Merger Sub have delivered to or made available
to Software.com prior to the execution of this Agreement complete and correct
copies of any amendments to the certificate of incorporation of Phone (the
"Phone Certificate"), the certificate of incorporation of Merger Sub and the by-
laws of Phone and Merger Sub not filed as of the date hereof with the Phone
Filed SEC Documents (as defined in Section 3.1(g)).
(b) Subsidiaries. Exhibit 21 to Phone's Annual Report on Form 10-K
for the fiscal year ended June 30, 1999, includes all the subsidiaries of Phone
which as of the date of this Agreement are Significant Subsidiaries (as defined
in Rule 1-02 of Regulation S-X of the SEC). All the outstanding shares of
capital stock of, or other equity interests in, each such Significant Subsidiary
have been validly issued and are fully paid and nonassessable and are owned
directly or indirectly by Phone, free and clear of all pledges, claims, liens,
charges, encumbrances and security interests of any kind or nature whatsoever
(collectively, "Liens") and free of any other restriction (including any
restriction on the right to vote, sell or otherwise dispose of such capital
stock or other ownership interests).
(c) Capital Structure.
The authorized capital stock of Phone consists of 250,000,000 shares
of Phone Common Stock and 5,000,000 shares of preferred stock, par value $0.001
per share ("Phone Preferred Stock"). At the close of business on July 31, 2000,
(i) 82,997,462 shares of Phone Common Stock were issued and outstanding; (ii)
908,334 shares were issued and held by Phone in its treasury; (iii) no shares of
Phone Preferred Stock were issued and outstanding; (iv) 27,700,417 shares of
Phone Common Stock were reserved for issuance pursuant to all stock option,
restricted stock or other stock-based compensation, benefits or savings plans,
agreements or arrangements in which current or former employees or directors of
Phone or its subsidiaries participate as of the date hereof, complete and
correct copies of which, in each case as amended as of the date hereof, have
been filed as exhibits to the Phone Filed SEC Documents (as defined
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below) or delivered to Software.com (such plans, collectively, the "Phone Stock
Plans"); (v) 18,105 shares of Phone Common Stock were reserved for issuance upon
the exercise of outstanding warrants; and (vi) 250,000 shares of Phone Preferred
Stock will be designated as Series A Junior Participating Preferred Stock, all
of which will be reserved for issuance upon exercise of preferred stock purchase
rights (the "Phone Rights") issuable pursuant to the Rights Agreement approved
by the board of directors of Phone in connection with its approval of this
Agreement and to be entered into no later than ten (10) days following the date
hereof substantially in the form previously provided to Software.com (the "Phone
Rights Agreement"). The authorized capital stock of Merger Sub consists of 100
shares of common stock, par value $0.01 per share of which 100 shares are issued
and outstanding. Phone is the sole stockholder of Merger Sub and is the legal
and beneficial owner of all 100 issued and outstanding shares. Merger Sub was
formed by Phone on July 31, 2000, solely for the purpose of effecting the Merger
and the other transactions contemplated by this Agreement. Except as
contemplated by this Agreement, Merger Sub does not hold nor has it held any
material assets or incurred any material liabilities nor has Merger Sub carried
on any business activities other than in connection with the Merger and the
other transactions contemplated by this Agreement. All outstanding shares of
capital stock of Phone and Merger Sub are, and all shares of capital stock of
Phone which may be issued pursuant to the Phone Stock Plans will be, when
issued, duly authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights. Except as set forth in this Section 3.1(c) and
except for changes since June 30, 2000, resulting from the issuance of shares of
Phone Common Stock pursuant to the Phone Options or as expressly permitted by
this Agreement, (x) there are not issued, reserved for issuance or outstanding
(A) any shares of capital stock or other voting securities of Phone, (B) any
securities of Phone or any Phone subsidiary convertible into or exchangeable or
exercisable for shares of capital stock or voting securities of Phone, (C) any
warrants, calls, options or other rights to acquire from Phone or any Phone
subsidiary (including any subsidiary trust), or obligations of Phone or any
Phone subsidiary to issue, any capital stock, voting securities or securities
convertible into or exchangeable or exercisable for capital stock or voting
securities of Phone, and (y) there are no outstanding obligations of Phone or
any Phone subsidiary to repurchase, redeem or otherwise acquire any such
securities or to issue, deliver, or sell, or cause to be issued, delivered, or
sold, any such securities. Neither Phone nor any Phone subsidiary is a party to
any agreement restricting the purchase or transfer of, relating to the voting
of, requiring registration of, or granting any preemptive or, except as provided
by the terms of the Phone Options, antidilutive rights with respect to, any
securities of the type referred to in the two preceding sentences. Other than
the Phone subsidiaries, Phone does not directly or indirectly beneficially own
any securities or other beneficial ownership interests in any other entity
except for non-controlling investments made in the ordinary course of business
in entities that are not individually or in the aggregate material to Phone and
its subsidiaries as a whole.
(d) Authority; Non-contravention.
Each of Phone and Merger Sub has all requisite corporate power and
authority to enter into this Agreement, and Phone has all requisite corporate
power and authority to enter into the Option Agreements and, subject to the
Phone Stockholder Approval (as defined in Section 3.1(l)), to consummate the
transactions contemplated hereby and thereby. The execution and delivery of
this Agreement by Phone and Merger Sub, the execution and delivery of the Option
Agreements by Phone and the consummation by Phone and Merger Sub of the
transactions
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contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of Phone and Merger Sub, subject, in the case of
the Merger to the Phone Stockholder Approval. This Agreement and the Option
Agreements have been duly executed and delivered by Phone and Merger Sub and,
assuming the due authorization, execution and delivery of each agreement to
which they are parties by Software.com constitutes (or will constitute, as the
case may be) the legal, valid and binding obligation of Phone and Merger Sub,
enforceable against Phone and Merger Sub in accordance with their terms. The
execution and delivery of this Agreement does not, and the execution and
delivery of the Option Agreements and the consummation of the transactions
contemplated hereby and thereby and compliance with the provisions of this
Agreement and the Option Agreements will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or loss of a benefit under, or result in the creation of any Lien
upon any of the properties or assets of Phone or any of its subsidiaries or in
any restriction on the conduct of Phone's business or operations under, (i) the
Phone Certificate or the by-laws of Phone or the comparable organizational
documents of any of its subsidiaries, (ii) any loan or credit agreement, note,
bond, mortgage, indenture, trust document, lease, or other agreement,
instrument, permit, concession, franchise, license, or similar authorization
applicable to Phone or any of its subsidiaries or their respective properties or
assets or (iii) subject to the governmental filings and other matters referred
to in the following sentence, any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Phone or any of its subsidiaries or
their respective properties or assets, other than, in the case of clauses (ii)
and (iii), any such conflicts, violations, defaults, rights, losses,
restrictions, or Liens that individually or in the aggregate would not (x) have
a material adverse effect on Phone or Software.com or (y) reasonably be expected
to impair the ability of each of Phone and Merger Sub to perform its obligations
under this Agreement or the Option Agreements. No consent, approval, order or
authorization of, action by or in respect of, or registration, declaration or
filing with, any federal, state, local or foreign government, any court,
administrative, regulatory or other governmental agency, commission or authority
or any non-governmental self-regulatory agency, commission or authority (a
"Governmental Entity") is required by or with respect to Phone or any of its
subsidiaries in connection with the execution and delivery of this Agreement by
Phone and Merger Sub, or the execution and delivery by Phone of the Option
Agreements or the consummation by Phone and Merger Sub of the transactions
contemplated hereby and thereby, except for (1) the filing of a pre-merger
notification and report form by Phone and Merger Sub under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act") or filings or
notifications under the antitrust, competition or similar laws of any foreign
jurisdiction; (2) the filing with the SEC of (A) a proxy statement relating to
the Phone Stockholders' Meeting (as defined in Section 5.1(b)) (such proxy
statement, together with the proxy statement relating to the Software.com
Stockholders' Meeting (as defined in Section 5.1(c)), in each case as amended or
supplemented from time to time, the "Joint Proxy Statement"), (B) the
registration statement on Form S-4 to be filed with the SEC by Phone in
connection with the issuance of Phone Common Stock in the Merger (the "Form S-
4"), and (C) such reports under Section 13(a), 13(d), 15(d) or 16(a) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as may be
required in connection with this Agreement, the Option Agreements and the
transactions contemplated hereby and thereby; (3) the filing of the Certificate
of Merger with the Secretary of State of the State of Delaware and appropriate
documents with the relevant authorities of other states in which Phone and
Merger Sub are
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qualified to do business and such filings with Governmental Entities to satisfy
the applicable requirements of state securities or "blue sky" laws; and, (4)
such consents, approvals, orders or authorizations the failure of which to be
made or obtained individually or in the aggregate would not (x) have a material
adverse effect on Phone and Merger Sub or (y) reasonably be expected to impair
the ability of each of Phone and Merger Sub to perform its obligations under
this Agreement.
(e) SEC Documents; Undisclosed Liabilities.
Phone has filed all required registration statements, prospectuses,
reports, schedules, forms, statements and other documents (including exhibits
and all other information incorporated therein) with the SEC since June 11, 1999
(the "Phone SEC Documents"). As of their respective dates, the Phone SEC
Documents complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such Phone SEC
Documents, and none of the Phone SEC Documents when filed 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 light of
the circumstances under which they were made, not misleading. The financial
statements of Phone included in the Phone SEC Documents comply as to form, as of
their respective dates of filing with the SEC, in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in accordance with generally
accepted accounting principles ("GAAP") (except, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto)
and fairly present the consolidated financial position of Phone and its
consolidated subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments which are not
material). Except (i) as reflected in such financial statements or in the notes
thereto or (ii) for liabilities incurred in connection with this Agreement, the
Option Agreements, or the transactions contemplated hereby or thereby, or (iii)
for liabilities incurred in the ordinary course of business consistent with past
practices, and which would not reasonably be expected to have a material adverse
effect, neither Phone nor any of its subsidiaries has any liabilities or
obligations of any nature that, individually or in the aggregate, would have a
material adverse effect on Phone.
(f) Information Supplied.
None of the information supplied or to be supplied by Phone and Merger
Sub specifically for inclusion or incorporation by reference in (i) the Form S-4
will, at the time the Form S-4 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 to make the statements therein
not misleading or (ii) the Joint Proxy Statement will, at the date it is first
mailed to Phone's stockholders or at the time of the Phone Stockholders'
Meeting, 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 light of the circumstances under which they are made, not
misleading. The Form S-4 and the Joint Proxy Statement will comply as to form
in all material respects with the requirements of the Exchange Act and the rules
and
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regulations thereunder, except that no representation or warranty is made by
Phone with respect to statements made or incorporated by reference therein based
on information supplied by Software.com specifically for inclusion or
incorporation by reference in the Form S-4 or the Joint Proxy Statement.
(g) Absence of Certain Changes or Events.
Except for liabilities incurred in connection with this Agreement, the
Option Agreements or the transactions contemplated hereby and thereby, and
except as permitted by Section 4.1(a), since March 31, 2000, Phone and its
subsidiaries have conducted their business only in the ordinary course
consistent with past practice or as disclosed in any Phone SEC Document filed
since such date and prior to the date hereof, and there has not been (i) any
material adverse change in Phone, (ii) any declaration, setting aside or payment
of any dividend or other distribution (whether in cash, stock or property) with
respect to any of Phone's capital stock, (iii) any split, combination or
reclassification of any of Phone's capital stock or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of,
or in substitution for shares of Phone's capital stock, except for issuances of
Phone Common Stock upon exercise or conversion of Phone Options, in each case
awarded prior to the date hereof in accordance with their present terms or
issued pursuant to Section 4.1(a), (iv) (A) any granting by Phone or any of its
subsidiaries to any current or former director, officer or other key employee of
Phone or its subsidiaries of any increase in compensation, bonus or other
benefits, except for normal increases as a result of promotions, normal
increases of base pay or target bonuses in the ordinary course of business or as
was required under any employment agreements in effect as of March 31, 2000, (B)
any granting by Phone or any of its subsidiaries to any such current or former
director, officer or key employee of any increase in severance or termination
pay, or (C) any entry by Phone or any of its subsidiaries into, or any amendment
of, any employment, deferred compensation, consulting, severance, termination or
indemnification agreement with any such current or former director or officer,
or any material amendment of any of the foregoing with any key employee, (v)
except insofar as may have been disclosed in Phone SEC Documents filed and
publicly available prior to the date of this Agreement (as amended to the date
hereof, the "Phone Filed SEC Documents") or required by a change in GAAP, any
change in accounting methods, principles or practices by Phone materially
affecting its assets, liabilities or business, (vi) except insofar as may have
been disclosed in the Phone Filed SEC Documents, any tax election that
individually or in the aggregate would have a material adverse effect on Phone
or any of its tax attributes or any settlement or compromise of any material
income tax liability, or (vii) any action taken by Phone or any of the Phone
subsidiaries during the period from April 1, 2000, through the date of this
Agreement that, if taken during the period from the date of this Agreement
through the Effective Time, would constitute a breach of Section 4.1(a).
(h) Compliance with Applicable Laws; Litigation.
(i) Phone, its subsidiaries and employees hold all permits,
licenses, variances, exemptions, orders, registrations and approvals of all
Governmental Entities which are required for the operation of the businesses of
Phone and its subsidiaries (the "Phone Permits"), except where the failure to
have any such Phone Permits individually or in the aggregate would not have a
material adverse effect on Phone. Except as specifically disclosed in the Phone
SEC Documents filed with the SEC prior to the date hereof, Phone and its
subsidiaries are in
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<PAGE>
compliance with the terms of the Phone Permits and all applicable laws,
statutes, orders, rules, regulations, policies or guidelines promulgated, or
judgments, decisions or orders entered by any Governmental Entity (all such
laws, statutes, orders, rules, regulations, policies, guidelines, judgments,
decisions and orders, collectively, "Applicable Laws"), relating to Phone or its
business or properties, except where the failure to be in compliance with such
Applicable Laws individually or in the aggregate would not have a material
adverse effect on Phone. As of the date of this Agreement, except as disclosed
in the Phone Filed SEC Documents, no action, demand, requirement or
investigation by any Governmental Entity and no suit, action or proceeding by
any person, in each case with respect to Phone or any of its subsidiaries or any
of their respective properties, is pending or, to the knowledge (as defined in
Section 8.3(e)) of Phone, threatened, other than, in each case, those the
outcome of which individually or in the aggregate would not (A) have a material
adverse effect on Phone and Merger Sub or (B) reasonably be expected to impair
the ability of each of Phone and Merger Sub to perform its obligations under
this Agreement or the Option Agreements or prevent or materially delay the
consummation of any of the transactions contemplated hereby or thereby.
(ii) Neither Phone nor any Phone subsidiary is subject to any
outstanding order, injunction or decree which has had or, insofar as can be
reasonably foreseen, individually or in the aggregate would have, a material
adverse effect on Phone.
(i) Absence of Changes in Benefit Plans.
Phone has delivered to Software.com or made available to Software.com
for review true and complete copies of (i) all severance and employment
agreements of Phone with directors, executive officers or key employees, (ii)
all written and material unwritten severance programs and policies of each of
Phone and each Phone subsidiary, and (iii) all plans or arrangements of Phone
and each Phone subsidiary relating to its employees which contain change in
control provisions, in each case which has not been filed as an exhibit to a
Phone Filed SEC Document. Documents made available are identified in Section
3.1(i) of the Phone Disclosure Schedule. Since March 31, 2000, there has not
been any adoption or amendment in any material respect by Phone or any of its
subsidiaries of (A) any collective bargaining agreement with respect to any
employees of, (B) any material bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase, stock
option, phantom stock, retirement, vacation, severance, disability, death
benefit, hospitalization, medical or other plan, arrangement or understanding
providing benefits to any current or former officers, directors or employees of,
(C) any employment agreement, consulting agreement or severance agreement with
any current or former officer or director of, or (D) any material employment
agreement, consulting agreement or severance agreement with any employee of
Phone or any of its wholly owned subsidiaries (collectively, the "Phone Benefit
Plans"), or any material change in any actuarial or other assumption used to
calculate funding obligations with respect to any Phone pension plans, or any
material change in the manner in which contributions to any Phone pension plans
are made or the basis on which such contributions are determined. Since March
31, 2000, neither Phone nor any Phone subsidiary has amended any Phone Options
or any Phone Stock Plans to accelerate the vesting of, or release restrictions
on, awards thereunder, or to provide for such acceleration in the event of a
change in control.
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(j) Benefit Plans.
(i) With respect to the Phone Benefit Plans, no event has
occurred and there exists no condition or set of circumstances, in connection
with which Phone or any of its subsidiaries would be subject to any liability
that individually or in the aggregate would have a material adverse effect on
Phone under the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), the Code or any other applicable law.
(ii) Each Phone Benefit Plan has been administered in
accordance with its terms, except for any failures so to administer any Phone
Benefit Plan that individually or in the aggregate would not have a material
adverse effect on Phone. The Phone Benefit Plans have been operated, and are, in
compliance with the applicable provisions of ERISA, the Code and all other
applicable laws and the terms of all applicable collective bargaining
agreements, except for any failures to be in such compliance that individually
or in the aggregate would not have a material adverse effect on Phone. Each
Phone Benefit Plan intended to qualify under section 401(a) of the Code and each
trust intended to qualify under section 501(a) of the Code has either received a
favorable determination, opinion or advisory letter from the Internal Revenue
Service (the "IRS") with respect to each such Phone Benefit Plan as to its
qualified status under the Code, or has remaining a period of time under
applicable Treasury regulations or IRS pronouncements in which to apply for such
a letter and make any amendments necessary to obtain a favorable determination,
opinion or advisory as to the qualified status of each Phone Benefit Plan. To
the knowledge of Phone, no fact or event has occurred since the date of any
determination opinion or advisory letter from the IRS which is reasonably likely
to affect adversely the qualified status of any such Phone Benefit Plan or the
exempt status of any such trust.
(iii) No Phone Benefit Plan is subject to Title IV of ERISA or
is a "multi-employer plan" within the meaning of Section 3(37) of ERISA.
(iv) No Phone Benefit Plan provides medical benefits (whether
or not insured), with respect to current or former employees after retirement or
other termination of service (other than coverage mandated by applicable law or
benefits, the full cost of which is borne by the current or former employee)
other than individual arrangements the amounts of which are not material.
(v) Phone has previously provided to Software.com a copy of
each collective bargaining or other labor union contract applicable to persons
employed by Phone or any of its subsidiaries to which Phone or any of its
subsidiaries is a party. No collective bargaining agreement is being negotiated
or renegotiated by Phone or any of its subsidiaries. As of the date of this
Agreement, there is no labor dispute, strike or work stoppage against Phone or
any of its subsidiaries pending or, to the knowledge of Phone, threatened which
may interfere with the respective business activities of Phone or any of its
subsidiaries, except where such dispute, strike or work stoppage individually or
in the aggregate would not have a material adverse effect on Phone. As of the
date of this Agreement, to the knowledge of Phone, none of Phone, any of its
subsidiaries or any of their respective representatives or employees has
committed any material unfair labor practice in connection with the operation of
the respective businesses of Phone or any of its subsidiaries, and there is no
material charge or complaint
15
<PAGE>
against Phone or any of its subsidiaries by the National Labor Relations Board
or any comparable governmental agency pending or threatened in writing.
(vi) No employee of Phone or any Phone subsidiary will be
entitled to any material payment, additional benefits or any acceleration of the
time of payment or vesting of any benefits under any Phone Benefit Plan as a
result of the transactions contemplated by this Agreement (either alone or in
conjunction with any other event such as a termination of employment).
(vii) To the knowledge of Phone, no material oral or written
representation or commitment with respect to any aspect of any Phone Benefit
Plan has been made to employees of Phone or any Phone subsidiaries by an
authorized Phone employee prior to the Closing Date that is not materially in
accordance with the written or otherwise preexisting terms and provisions of
such Phone Benefit Plans in effect immediately prior to the Closing Date.
(viii) Except such as would not have a material adverse effect,
there are no material unresolved claims or disputes under the terms of, or in
connection with, any Phone Benefit Plan (other than routine undisputed claims
for benefits), and no action, legal or otherwise, has been commenced with
respect to any material claim.
(ix) To the knowledge of Phone, no non-exempt "prohibited
transaction" (within the meaning of section 4975(c) of the Code) involving any
Phone Benefit Plan has occurred that could subject Phone to any material tax
penalty or other cost or liability (by indemnification or otherwise).
(x) Neither Phone nor any Phone subsidiary is obligated to
make any parachute payments as such term is defined in section 280G of the Code,
and neither is a party to any agreement that under certain circumstances is
reasonably likely to obligate it, or any successor in interest, to make any
parachute payments that will not be deductible under section 280G of the Code.
Neither Phone nor any Phone subsidiary is obligated to make reimbursement or
gross-up payments to any person in respect to excess parachute payments.
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<PAGE>
(k) Taxes.
(i) Each of Phone and its subsidiaries has filed all material
Tax Returns required to be filed by it (taking into account all applicable
extensions) with the appropriate Tax Authority and all such returns are true,
complete, and correct in all material respects, or requests for extensions to
file such returns have been timely filed, granted, and have not expired, except
to the extent that such failures to file, to be complete, true, or correct, or
to have extensions granted that remain in effect individually or in the
aggregate would not have a material adverse effect on Phone. Phone and each of
its subsidiaries has paid (or Phone has paid or caused to be paid on its behalf)
all Taxes shown as due on such returns, and the most recent financial statements
contained in the Phone Filed SEC Documents reflect an adequate reserve in
accordance with GAAP for all Taxes payable by Phone and its subsidiaries for all
taxable periods and portions thereof accrued through the date of such financial
statements.
(ii) No deficiencies for any Taxes have been proposed,
asserted or assessed against Phone or any of its subsidiaries that are not
adequately reserved for, except for deficiencies that individually or in the
aggregate would not have a material adverse effect on Phone. Phone and its
subsidiaries have disclosed all material deficiencies or adjustments for Taxes
that have been proposed or assessed by any Tax Authority against Phone or any of
its subsidiaries. All of the Federal income Tax Returns of the "affiliated
group" (as defined in section 1504(a) of the Code) of which Phone is the common
parent are no longer subject to any Audit by virtue of the expiration of the
applicable statutory period of limitations for the assessment of Tax.
(iii) Neither Phone nor any of its subsidiaries has taken any
action or knows of any fact, agreement, plan or other circumstance that is
reasonably likely to prevent the Merger from qualifying as a "reorganization"
within the meaning of section 368(a) of the Code.
(iv) No Audits are presently pending with regard to any Taxes
or Tax Returns of Phone or its subsidiaries.
(v) Neither Phone nor any of its subsidiaries is a party to
any agreement providing for the allocation, indemnification, or sharing of
Taxes.
(vi) Other than the "affiliated group" (as defined in section
1504(a) of the Code) of which Phone is the common parent, neither Phone nor any
of its subsidiaries has been a member of any "affiliated group."
(vii) There are no liens for Taxes on any of the assets of
Phone or its subsidiaries except for liens for Taxes that are not yet due and
payable and for which adequate reserves have been provided in accordance with
GAAP in the most recent financial statements contained in the Phone Filed SEC
Documents.
(viii) As used in this Agreement, "Audit" means any audit,
assessment, or other examination relating to Taxes by any Tax Authority or any
administrative or judicial proceedings or appeals of such proceedings relating
to Taxes. "Tax" or "Taxes" means all Federal, state, local, and foreign taxes,
and other assessments of a similar nature (whether imposed directly or through
withholding), including any interest, additions to tax, or penalties
17
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applicable thereto, imposed by any Tax Authority. "Tax Authority" means the
Internal Revenue Service and any other domestic or foreign governmental
authority responsible for the administration of any Taxes. "Tax Returns" mean
all Federal, state, local and foreign tax returns, declarations, statements,
reports, schedules, forms, and information returns and any amendments thereto.
(l) Voting Requirements.
The affirmative vote at the Phone Stockholders' Meeting (the "Phone
Stockholder Approval") of (i) the holders of a majority of all outstanding
shares of Phone Common Stock present in person or by proxy and entitled to vote
at a duly convened and held meeting of Phone stockholders to approve the
issuance of shares of Phone Common Stock pursuant to the Merger and (ii) the
holders of a majority of all outstanding shares of Phone Common Stock to approve
the Phone Charter Amendment are the only votes of the holders of any class or
series of Phone's capital stock necessary to adopt this Agreement and approve
the transactions contemplated hereby.
(m) State Takeover Statutes; Certificate of Incorporation.
The Board of Directors of Phone has adopted a resolution or
resolutions approving this Agreement, the Option Agreements and the Software.com
Voting Agreement and the transactions contemplated hereby and thereby and,
assuming the accuracy of Software.com's representation and warranty contained in
Section 3.2(p), such approval constitutes approval of the Merger and the other
transactions contemplated hereby and by the Option Agreements and the
Software.com Voting Agreement by the Phone Board of Directors under the
provisions of Section 203 of the DGCL such that Section 203 of the DGCL does not
apply to this Agreement, the Option Agreements, the Software.com Voting
Agreement and the transactions contemplated hereby and thereby. To the knowledge
of Phone, no state takeover statute other than Section 203 of the DGCL (which
has been rendered inapplicable) is applicable to the Merger or the other
transactions contemplated hereby.
(n) Brokers.
Except for fees payable to Credit Suisse First Boston Corporation
("CSFB") pursuant to an engagement letter, dated June 16, 2000, a true and
complete copy of which has been provided to Software.com, no broker, investment
banker, financial advisor or other person is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Phone or Merger Sub.
(o) Opinion of Financial Advisors.
Phone has received the opinion of CSFB, dated the date of this
Agreement, to the effect that, as of such date, the Exchange Ratio is fair from
a financial point of view to Phone, a signed copy of which opinion will be
delivered to Software.com promptly after execution of this Agreement.
(p) Ownership of Software.com Common Stock.
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To the knowledge of Phone and Merger Sub, as of the date hereof or at
any time within twelve (12) months prior to the date of this Agreement (and
before giving effect to the Software.com Option Agreement and the Software.com
Voting Agreement, which will be entered into immediately after the execution of
this Agreement), neither Phone nor, to its knowledge without independent
investigation, any of its affiliates, (i) beneficially owns (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, or (ii) is party to any
agreement, arrangement or understanding for the purpose of acquiring, holding,
voting or disposing of, in each case, shares of capital stock of Software.com.
(q) Intellectual Property.
(i) To the knowledge of Phone, Phone or its subsidiaries own
or have a valid right to use all trademarks, service marks, trade names,
Internet domain names, designs, slogans, and general intangibles of like nature,
together with all applications, registrations and goodwill related to the
foregoing (collectively, "Phone Trademarks"); patents (including any
registration, continuations, continuations-in-part, renewals and applications
for any of the foregoing); copyrights (including any registrations, renewals and
applications for any of the foregoing); Phone Software (as defined below);
technology, trade secrets and other confidential information, know-how,
proprietary processes, formulae, algorithms, models, and methodologies
(collectively, "Phone Trade Secrets") used in or necessary for the conduct of
Phone's and each of its subsidiary's business as currently conducted (all such
intellectual property being referred to herein as the "Phone Intellectual
Property"), except where the failure to possess such right would not have a
material adverse effect. For purposes of this Section 3.1(q), "Phone Software"
means any and all (a) computer programs, including any and all software
implementations of algorithms, models and methodologies, whether in source code
or object code, (b) databases and compilations, including any and all data and
collections of data, whether machine readable or otherwise, (c) descriptions,
flowcharts and other work product used to design, plan, organize and develop any
of the foregoing, (d) the technology supporting any Internet site(s) operated by
or on behalf of Phone or any of its subsidiaries and (e) all documentation,
including user manuals and training materials, relating to any of the foregoing.
(ii) The Phone Intellectual Property owned by Phone or any of
its subsidiaries is free and clear of all Liens.
(iii) All material Phone Intellectual Property owned by Phone
or any of its subsidiaries is valid and subsisting, in full force and effect,
and has not been canceled, has not expired, nor has it been abandoned. There is
no pending or, to Phone's knowledge, threatened opposition, interference or
cancellation proceeding before any court or registration authority in any
jurisdiction against any registrations in respect of the Phone Intellectual
Property (other than Phone Trademarks) owned by Phone or any of its
subsidiaries.
(iv) To the actual knowledge of Phone or any of its
subsidiaries, the conduct of the business of Phone and its subsidiaries as
currently conducted does not infringe upon (either directly or indirectly such
as through contributory infringement or inducement to infringe) any intellectual
property rights owned or controlled by any third party. There are no claims or
suits pending and as to which Phone has received actual notice or, to the
knowledge of Phone, threatened, and neither Phone nor any of its subsidiaries
has received any notice of a
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third-party claim or suit, (a) alleging that its activities or the conduct of
its business infringes upon, violates, or constitutes the unauthorized use of
the intellectual property rights of any third party or (b) challenging the
ownership, use, validity or enforceability of any Phone Intellectual Property,
which in any case would have a material adverse effect.
(v) There are no written settlements, forbearances to sue,
consents, judgments, or orders or similar obligations which in any material
respect (a) restrict the right of Phone or its subsidiaries to use any Phone
Intellectual Property owned by Phone, or (b) restrict the business of Phone or
its subsidiaries in order to accommodate a third party's intellectual property
rights or (c) except for licenses with customers for Phone Software, there are
no agreements that permit third parties to use any Phone Intellectual Property
owned or controlled by Phone or any of its subsidiaries.
(vi) Phone and each of its subsidiaries takes reasonable
measures to protect the confidentiality of Phone Trade Secrets, including (i)
requiring its employees and independent contractors having access thereto to
execute written nondisclosure agreements and (ii) requiring all licensees to
maintain the confidentiality of Phone Trade Secrets. To the actual knowledge of
Phone or its subsidiaries, no Phone Trade Secret has been knowingly disclosed or
authorized to be disclosed to any third party other than pursuant to a
nondisclosure agreement or other appropriate instrument that adequately protects
Phone and the applicable subsidiary's proprietary interests in and to such trade
secrets. To the knowledge of Phone, no party to any nondisclosure agreement or
nondisclosure obligation relating to its trade secrets is in breach or default
thereof.
(vii) To the knowledge of Phone, no third party is
misappropriating, infringing, diluting, or violating any Phone Intellectual
Property owned by Phone or any of its subsidiaries other than immaterial
disputes concerning use by a third party of Phone Trademarks of Phone or a
subsidiary.
(viii) The consummation of the Merger and the other
transactions contemplated by this Agreement shall not result in the loss or
impairment of Phone's or of any subsidiary's right to own or use any of the
Phone Intellectual Property, and will not require the consent of any
governmental authority, except where such loss or impairment or the failure to
obtain consent would not result in a material adverse effect.
(r) Certain Contracts.
Except as set forth in the Phone Filed SEC Documents, neither Phone
nor any of its subsidiaries is a party to or bound by (i) any "material
contract" (as such term is defined in Item 601(b)(10) of Regulation S-K of the
SEC), (ii) any non-competition agreement or any other agreement or obligation
which purports to limit in any material respect the manner in which, or the
localities in which, all or any material portion of the business of Phone and
its subsidiaries (including, for purposes of this Section 3.1(r), Software.com
and its subsidiaries, assuming the Merger have taken place), taken as a whole,
is or would be conducted, (iii) any exclusive supply or purchase contracts or
any exclusive requirements contracts or (iv) any contract or other agreement
which would prohibit or materially delay the consummation of the Merger or any
of the transactions contemplated by this Agreement (all contracts of the type
described in clauses
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(i) and (ii) being referred to herein as "Phone Material Contracts"). Phone has
delivered to Software.com or provided to Software.com for review, prior to the
execution of this Agreement, complete and correct copies of all Phone Material
Contracts not filed as exhibits to the Phone Filed SEC Documents. Each Phone
Material Contract is valid and binding on Phone (or, to the extent a Phone
subsidiary is a party, such subsidiary) and is in full force and effect, and
Phone and each Phone subsidiary have in all material respects performed all
obligations required to be performed by them to date under each Phone Material
Contract, except where such noncompliance, individually or in the aggregate,
would not have a material adverse effect on Phone. Neither Phone nor any Phone
subsidiary knows of, or has received notice of, any violation or default under
(nor, to the knowledge of Phone, does there exist any condition which with the
passage of time or the giving of notice or both would result in such a violation
or default under) any Phone Material Contract.
(s) Phone Rights Agreement.
Phone has delivered to Software.com a true, correct and complete copy
of the Phone Rights Agreement. Phone has taken all action so that the entering
into of this Agreement, the Phone Option Agreement, the Phone Voting Agreement,
the Merger, the acquisition of shares pursuant to the Phone Option Agreement and
the other transactions contemplated hereby and thereby will not result in the
grant of any rights to any person under the Phone Rights Agreement or enable or
require the Phone Rights to be exercised, distributed or triggered.
(t) Environmental Liability.
Except as set forth in the Phone Filed SEC Documents, there are no
legal, administrative, arbitral or other proceedings, claims, actions, causes of
action, private environmental investigations or remediation activities or
governmental investigations of any nature pending or threatened against Phone or
any of its subsidiaries seeking to impose, or that could reasonably be expected
to result in the imposition of, on Phone or any of its subsidiaries, any
liability or obligation arising under common law or under any local, state or
federal environmental statute, regulation or ordinance, including, without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended ("CERCLA"), which liability or obligation could
reasonably be expected to have a material adverse effect on Phone. To the
knowledge of Phone, there is no reasonable basis for any such proceeding, claim,
action or governmental investigation that would impose any liability or
obligation that could reasonably be expected to have a material adverse effect
on Phone.
(u) Insurance.
Phone and each of its subsidiaries have policies of insurance and
bonds of the type and in amounts customarily carried by persons conducting
businesses or owning assets similar to those of Phone and its subsidiaries.
There is no claim pending under any of such policies or bonds as to which
coverage has been questioned, denied or disputed by the underwriters of such
policies or bonds, except questioned, denied or disputed claims the failure to
provide coverage for which would not, individually or in the aggregate, have a
material adverse effect on Phone. All premiums due and payable under all such
policies and bonds have been paid and Phone and its subsidiaries are otherwise
in compliance in all material respects with
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the terms of such policies and bonds. Phone has no knowledge of any threatened
termination of, or material premium increase with respect to, any of such
policies.
(v) Accounting Matters.
As of the date hereof, to the knowledge of Phone, none of Phone, any
of its subsidiaries or any of their respective directors, officers or
stockholders, has taken any action which would prevent the accounting for the
Merger as a pooling of interests in accordance with Accounting Principles Board
Opinion No. 16 ("APB 16") and the interpretative releases pursuant thereto and
the pronouncements of the SEC.
(w) Transactions with Affiliates.
Except as disclosed in the Phone SEC Documents filed prior to the date
of this Agreement or as disclosed in the Phone Disclosure Schedule, since June
30, 1999, there have been no transactions, agreements, arrangements or
understandings between Phone and its affiliates that would be required to be
disclosed under the Item 404 of Regulation S-K under the Securities Act.
(x) Full Disclosure.
None of the representations or warranties made by Phone or Merger Sub
herein or in any schedule hereto, including the Phone Disclosure Schedule, or
any certificate furnished by Phone or Merger Sub pursuant to this Agreement,
contains or will contain at the Effective Time any untrue statement of a
material fact, or omits or will omit at the Effective Time, to state any
material fact necessary in order to make the statements contained herein or
therein, in the light of the circumstances under which made, not misleading.
SECTION 3.2 Representations and Warranties of Software.com.
Software.com represents and warrants to Phone and Merger Sub, subject
to such exceptions as are disclosed in writing in the disclosure letter supplied
by Software.com to Phone dated as of the date hereof (the "Software.com
Disclosure Schedule"), which disclosure shall provide an exception to or
otherwise qualify the representations, warranties or covenants of Software.com
contained in the section of this Agreement corresponding by number to such
disclosure or covenant and the other representations, warranties and covenants
herein to the extent such disclosure shall reasonably appear to be applicable to
such other representations, warranties or covenants as follows:
(a) Organization, Standing and Corporate Power.
(i) Each of Software.com and its subsidiaries (as defined in
Section 8.3) is a corporation or other legal entity duly organized, validly
existing and in good standing (with respect to jurisdictions which recognize
such concept) under the laws of the jurisdiction in which it is organized and
has the requisite corporate or other power, as the case may be, and authority to
carry on its business as now being conducted, except, as to subsidiaries, for
those jurisdictions where the failure to be so organized, existing or in good
standing individually or in the aggregate would not have a material adverse
effect (as defined in Section 8.3(b)) on
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Software.com. Each of Software.com and its subsidiaries is duly qualified or
licensed to do business and is in good standing (with respect to jurisdictions
which recognize such concept) in each jurisdiction in which the nature of its
business or the ownership, leasing or operation of its properties makes such
qualification or licensing necessary, except for those jurisdictions where the
failure to be so qualified or licensed or to be in good standing individually or
in the aggregate would not have a material adverse effect on Software.com.
(ii) Software.com has delivered to Phone prior to the
execution of this Agreement complete and correct copies of any amendments to its
Certificate of Incorporation (the "Software.com Certificate") and by-laws not
filed as of the date hereof with the Software.com SEC Documents (as defined in
Section 3.2(e)).
(b) Subsidiaries.
Exhibit 21 to Software.com's Annual Report on Form 10-K for the fiscal
year ended December 31, 1999, includes all the subsidiaries of Software.com
which as of the date of this Agreement are Significant Subsidiaries (as defined
in Rule 102 of Regulation S-X of the SEC). All the outstanding shares of
capital stock of, or other equity interests in, each such Significant Subsidiary
have been validly issued and are fully paid and nonassessable and are owned
directly or indirectly by Software.com, free and clear of all Liens and free of
any other restriction (including any restriction on the right to vote, sell or
otherwise dispose of such capital stock or other ownership interests).
(c) Capital Structure.
The authorized capital stock of Software.com consists of 150,000,000
shares of Software.com Common Stock, and 5,000,000 shares of preferred stock,
without par value ("Software.com Preferred Stock"). At the close of business on
July 31, 2000: (i) 48,866,633 shares of Software.com Common Stock were issued
and outstanding; (ii) 52,698 shares of Software.com Common Stock were held by
Software.com in its treasury; (iii) no shares of Software.com Preferred Stock
were issued and outstanding; (iv) 8,817,838 shares of Software.com Common Stock
were reserved for issuance pursuant to all stock option, restricted stock or
other stock-based compensation, benefits or savings plans, agreements or
arrangements in which current or former employees or directors of Software.com
or its subsidiaries participate as of the date hereof, complete and correct
copies of which, in each case as amended as of the date hereof, have been filed
as exhibits to the Software.com Filed SEC Documents or delivered to Phone (such
plans, collectively, the "Software.com Stock Plans"), (v) 850,000 shares of
Software.com Common Stock were reserved for issuance pursuant to options outside
the Software.com Stock Plans; and (vi) 146,721 shares of Software.com Common
Stock were reserved for issuance upon the exercise of outstanding warrants and
(vii) 155,000 shares of Software.com Preferred Stock will be designated as
Series A Participating Preferred Stock all of which will be reserved for
issuance upon the exercise of preferred stock purchase rights (the "Software.com
Rights") issued pursuant to the Rights Agreement approved by the board of
directors of Software.com in connection with its approval of this Agreement and
to be entered into no later than ten (10) days following the date hereof
substantially in the form previously provided to Phone (the "Software.com Rights
Agreement"). All outstanding shares of capital stock of Software.com are, and
all shares which may be issued as permitted by this Agreement or
23
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otherwise will be, when issued, duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights. Except as set forth in this
Section 3.2(c), and except for changes since March 31, 2000, resulting from the
issuance of shares of Software.com Common Stock pursuant to the Software.com
Options or as expressly permitted by this Agreement, (x) there are not issued,
reserved for issuance or outstanding (A) any shares of capital stock or other
voting securities of Software.com, (B) any securities of Software.com or any
Software.com subsidiary convertible into or exchangeable or exercisable for
shares of capital stock or voting securities of Software.com, (C) any warrants,
calls, options or other rights to acquire from Software.com or any Software.com
subsidiary, and any obligation of Software.com or any Software.com subsidiary to
issue, any capital stock, voting securities or securities convertible into or
exchangeable or exercisable for capital stock or voting securities of
Software.com, and (y) there are no outstanding obligations of Software.com or
any Software.com subsidiary to repurchase, redeem or otherwise acquire any such
securities or to issue, deliver or sell, or cause to be issued, delivered or
sold, any such securities. Neither Software.com nor any Software.com subsidiary
is a party to any agreement restricting the purchase or transfer of, relating to
the voting of, requiring registration of, or granting any preemptive or, except
as provided by the terms of the Software.com Options, antidilutive rights with
respect to, any securities of the type referred to in the two preceding
sentences. Other than the Software.com subsidiaries, Software.com does not
directly or indirectly beneficially own any securities or other beneficial
ownership interests in any other entity except for non-controlling investments
made in the ordinary course of business in entities which are not individually
or in the aggregate material to Software.com and its subsidiaries as a whole.
(d) Authority; Non-contravention.
Software.com has all requisite corporate power and authority to enter
into this Agreement and the Option Agreements. Subject to the Software.com
Stockholder Approval (as defined in Section 3.2(l)), Software.com has all
requisite corporate power and authority to consummate the transactions
contemplated by this Agreement and the Option Agreements. The execution and
delivery of this Agreement and the Option Agreements by Software.com and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action on the part of Software.com,
subject in the case of the Merger, to the Software.com Stockholder Approval.
This Agreement and the Option Agreements have been duly executed and delivered
by Software.com and, assuming the due authorization, execution and delivery
thereof by Phone and Merger Sub, constitute (or will constitute, as the case may
be) the legal, valid and binding obligation of Software.com enforceable against
Software.com in accordance with their terms. The execution and delivery of this
Agreement does not, and the execution and delivery of the Option Agreements and
the consummation of the transactions contemplated hereby and thereby and
compliance with the provisions of this Agreement and the Option Agreements will
not, conflict with, or result in any violation of, or default (with or without
notice or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or loss of a benefit under, or
result in the creation of any Lien upon any of the properties or assets of
Software.com or any of its subsidiaries or any restriction on the conduct of
Software.com's business or operations under, (i) the Software.com Certificate or
the by-laws of Software.com or the comparable organizational documents of any of
its subsidiaries, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, trust document, lease or other agreement, instrument, permit,
concession, franchise,
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license or similar authorization applicable to Software.com or any of its
subsidiaries or their respective properties or assets or (iii) subject to the
governmental filings and other matters referred to in the following sentence,
any judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Software.com or any of its subsidiaries or their respective
properties or assets, other than, in the case of clauses (ii) and (iii), any
such conflicts, violations, defaults, rights, losses, restrictions or Liens that
individually or in the aggregate would not (x) have a material adverse effect on
Software.com or (y) reasonably be expected to impair the ability of Software.com
to perform its obligations under this Agreement or the Option Agreements. No
consent, approval, order or authorization of, action by, or in respect of, or
registration, declaration or filing with, any Governmental Entity is required by
or with respect to Software.com or any of its subsidiaries in connection with
the execution and delivery of this Agreement or the Option Agreements by
Software.com or the consummation by Software.com of the transactions
contemplated hereby or thereby, except for (1) the filing of a pre-merger
notification and report form by Software.com under the HSR Act or filings or
notifications under the antitrust, competition or similar laws of any foreign
jurisdiction; (2) the filing with the SEC of (A) the Joint Proxy Statement
relating to the Software.com Stockholders' Meeting and (B) such reports under
Section 13(a), 13(d), 15(d) or 16(a) of the Exchange Act as may be required in
connection with this Agreement and the Option Agreements and the transactions
contemplated hereby and thereby; (3) the filing of the Certificate of Merger
with the Secretary of State of the State of Delaware and appropriate documents
with the relevant authorities of other states in which Software.com is qualified
to do business; and (4) such consents, approvals, orders or authorizations the
failure of which to be made or obtained individually or in the aggregate would
not (x) have a material adverse effect on Software.com or (y) reasonably be
expected to impair the ability of Software.com to perform its obligations under
this Agreement.
(e) SEC Documents; Undisclosed Liabilities.
Software.com has filed all required registration statements,
prospectuses, reports, schedules, forms, statements and other documents
(including exhibits and all other information incorporated therein) with the SEC
since June 29, 1999 (the "Software.com SEC Documents"). As of their respective
dates, the Software.com SEC Documents complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
the rules and regulations of the SEC promulgated thereunder applicable to such
Software.com SEC Documents, and none of the Software.com SEC Documents when
filed 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 light of the circumstances under which they were made,
not misleading. The financial statements of Software.com included in the
Software.com SEC Documents comply as to form, as of their respective dates of
filing with the SEC, in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with GAAP (except, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present the consolidated financial position of
Software.com and its consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments which are not material). Except (i) as reflected in such financial
statements or in the notes thereto or (ii) for liabilities incurred in
connection with this Agreement, the Option
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Agreements or the transactions contemplated hereby or thereby, or (iii) for
liabilities incurred in the ordinary course of business consistent with past
practices and which would not reasonably be expected to have a material adverse
effect, neither Software.com nor any of its subsidiaries has any liabilities or
obligations of any nature which, individually or in the aggregate, would have a
material adverse effect on Software.com.
(f) Information Supplied.
None of the information supplied or to be supplied by Software.com
specifically for inclusion or incorporation by reference in (i) the Form S-4
will, at the time the Form S-4 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 to make the statements therein
not misleading or (ii) the Joint Proxy Statement will, at the date it is first
mailed to Software.com's stockholders or at the time of the Software.com
Stockholders' Meeting, 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 light of the circumstances under which they
are made, not misleading. The Joint Proxy Statement and the Form S-4 will
comply as to form in all material respects with the requirements of the
Securities Act and the Exchange Act and the rules and regulations thereunder,
except that no representation or warranty is made by Software.com with respect
to statements made or incorporated by reference therein based on information
supplied by Phone specifically for inclusion or incorporation by reference in
the Joint Proxy Statement or the Form S-4.
(g) Absence of Certain Changes or Events.
Except for liabilities incurred in connection with this Agreement, the
Option Agreements or the transactions contemplated hereby or thereby, and except
as permitted by Section 4.1(b), since March 31, 2000, Software.com and its
subsidiaries have conducted their business only in the ordinary course
consistent with past practice or as disclosed in any Software.com SEC Document
filed since such date and prior to the date hereof, and there has not been (i)
any material adverse change (as defined in Section 8.3(b)) in Software.com, (ii)
any declaration, setting aside or payment of any dividend or other distribution
(whether in cash, stock or property) with respect to any of the capital stock of
Software.com or any of its subsidiaries, (iii) any split, combination or
reclassification of any of the capital stock of Software.com or any of its
subsidiaries or any issuance or the authorization of any issuance of any other
securities in respect of, in lieu of or in substitution for shares of the
capital stock of Software.com or any of its subsidiaries, except for issuances
of Software.com Common Stock upon exercise or conversion of Software.com
Options, in each case awarded prior to the date hereof in accordance with their
present terms or issued pursuant to Section 4.1(b), (iv) (A) any granting by
Software.com or any of its subsidiaries to any current or former director,
officer or other key employee of Software.com or its subsidiaries of any
increase in compensation, bonus or other benefits, except for normal increases
as a result of promotions, normal increases of base pay or target bonuses in the
ordinary course of business or as was required under any employment agreements
in effect as of March 31, 2000, (B) any granting by Software.com or any of its
subsidiaries to any such current or former director, officer or key employee of
any increase in severance or termination pay, or (C) any entry by Software.com
or any of its subsidiaries into, or any amendment of, any employment, deferred
compensation, consulting, severance, termination
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or indemnification agreement with any such current or former director, officer,
or any material amendment of any of the foregoing with any key employee, (v)
except insofar as may have been disclosed in Software.com SEC Documents filed
and publicly available prior to the date of this Agreement (as amended to the
date hereof, the "Software.com Filed SEC Documents") or required by a change in
GAAP, any change in accounting methods, principles or practices by Software.com
materially affecting its assets, liabilities or business, (vi) except insofar as
may have been disclosed in the Software.com Filed SEC Documents, any tax
election that individually or in the aggregate would have a material adverse
effect on Software.com or any of its tax attributes or any settlement or
compromise of any material income tax liability or (vii) any action taken by
Software.com or any of the Software.com subsidiaries during the period from
April 1, 2000, through the date of this Agreement that, if taken during the
period from the date of this Agreement through the Effective Time, would
constitute a breach of Section 4.1(b).
(h) Compliance with Applicable Laws; Litigation.
(i) Software.com, its subsidiaries and employees hold all
permits, licenses, variances, exemptions, orders, registrations and approvals of
all Governmental Entities which are required for the operation of the businesses
of Software.com and its subsidiaries (the "Software.com Permits") except where
the failure to have any such Software.com Permits individually or in the
aggregate would not have a material adverse effect on Software.com. Except as
specifically disclosed in the Software.com SEC Documents filed with the SEC
prior to the date hereof, Software.com and its subsidiaries are in compliance
with the terms of the Software.com Permits and all Applicable Laws relating to
Software.com and its subsidiaries or their respective business or properties,
except where the failure to be in compliance with such Applicable Laws
individually or in the aggregate would not have a material adverse effect on
Software.com. As of the date of this Agreement, except as disclosed in the
Software.com Filed SEC Documents, no action, demand, requirement or
investigation by any Governmental Entity and no suit, action or proceeding by
any person, in each case with respect to Software.com or any of its subsidiaries
or any of their respective properties, is pending or, to the knowledge of
Software.com, threatened, other than, in each case, those the outcome of which
individually or in the aggregate would not (A) have a material adverse effect on
Software.com or (B) reasonably be expected to impair the ability of Software.com
to perform its obligations under this Agreement or the Option Agreements or
prevent or materially delay the consummation of any of the transactions
contemplated hereby or thereby.
(ii) Neither Software.com nor any Software.com subsidiary is
subject to any outstanding order, injunction or decree which has had or, insofar
as can be reasonably foreseen, individually or in the aggregate would have, a
material adverse effect on Software.com.
(i) Absence of Changes in Benefit Plans.
Software.com has delivered to Phone or made available to Phone for
review true and complete copies of (i) all severance and employment agreements
of Software.com with directors, executive officers, or key employees, (ii) all
written and material unwritten severance programs and policies of each of
Software.com and each Software.com subsidiary, and (iii) all plans or
arrangements of Software.com and each Software.com subsidiary relating to its
employees that contain change in control provisions, in each case which has not
been filed as an
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exhibit to a Software.com Filed SEC Document. Documents made available are
identified in Section 3.2(i) of the Software.com Disclosure Schedule. Since
March 31, 2000, there has not been any adoption or amendment in any material
respect by Software.com or any of its subsidiaries of any (A) collective
bargaining agreement with respect to any employees of, (B) any material bonus,
pension, profit sharing, deferred compensation, incentive compensation, stock
ownership, stock purchase, stock option, phantom stock, retirement, vacation,
severance, disability, death benefit, hospitalization, medical or other plan,
arrangement, or understanding providing benefits to any current or former
officers, directors or employees of, (C) any employment agreement, consulting
agreement or severance agreement with any current or former officer or director
of, or (D) any material employment agreement, consulting agreement or severance
agreement with any employee of Software.com or any of its wholly owned
subsidiaries (collectively, the "Software.com Benefit Plans"), or any material
change in any actuarial or other assumption used to calculate funding
obligations with respect to any Software.com pension plans, or any material
change in the manner in which contributions to any Software.com pension plans
are made or the basis on which such contributions are determined. Since March
31, 2000, neither Software.com nor any Software.com subsidiary has amended any
Software.com Options or any Software.com Stock Plans to accelerate the vesting
of, or release restrictions on, awards thereunder, or to provide for such
acceleration in the event of a change in control.
(j) Benefit Plans.
(i) With respect to the Software.com Benefit Plans, no event
has occurred and there exists no condition or set of circumstances, in
connection with which Software.com or any of its subsidiaries would be subject
to any liability that individually or in the aggregate could have a material
adverse effect on Software.com under ERISA, the Code or any other applicable
law.
(ii) Each Software.com Benefit Plan has been administered in
accordance with its terms, except for any failures so to administer any
Software.com Benefit Plan that individually or in the aggregate would not have a
material adverse effect on Software.com. The Software.com Benefit Plans have
been operated, and are, in compliance with the applicable provisions of ERISA,
the Code and all other applicable laws and the terms of all applicable
collective bargaining agreements, except for any failures to be in such
compliance that individually or in the aggregate would not have a material
adverse effect on Software.com. Each Software.com Benefit Plan intended to
qualify under section 401(a) of the Code and each trust intended to qualify
under section 501(a) of the Code has received either a favorable determination,
opinion or advisory letter from the IRS with respect to each such Software.com
Benefit Plan as to its qualified status under the Code, or has remaining a
period of time under applicable Treasury regulations or IRS pronouncements in
which to apply for such a letter and make any amendments necessary to obtain a
favorable determination, opinion or advisory as to the qualified status of each
Software.com Benefit Plan. To the knowledge of Software.com, no fact or event
has occurred since the date of any determination letter from the IRS which is
reasonably likely to affect adversely the qualified status of any such
Software.com Benefit Plan or the exempt status of any such trust.
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(iii) No Software.com Benefit Plan is subject to Title IV of
ERISA or is a "multi-employer plan" within the meaning of Section 3(37) of
ERISA.
(iv) No Software.com Benefit Plan provides medical benefits
(whether or not insured), with respect to current or former employees after
retirement or other termination of service (other than coverage mandated by
applicable law or benefits, the full cost of which is borne by the current or
former employee) other than individual arrangements the amounts of which are not
material.
(v) Software.com has previously provided to Phone a copy of
each collective bargaining or other labor union contract applicable to persons
employed by Software.com or any of its subsidiaries to which Software.com or any
of its subsidiaries is a party. No collective bargaining agreement is being
negotiated or renegotiated by Software.com or any of its subsidiaries. As of the
date of this Agreement, there is no labor dispute, strike or work stoppage
against Software.com or any of its subsidiaries pending or, to the knowledge of
Software.com, threatened which may interfere with the respective business
activities of Software.com or any of its subsidiaries, except where such
dispute, strike or work stoppage individually or in the aggregate would not have
a material adverse effect on Software.com. As of the date of this Agreement, to
the knowledge of Software.com, none of Software.com, any of its subsidiaries or
any of their respective representatives or employees has committed any material
unfair labor practice in connection with the operation of the respective
businesses of Software.com or any of its subsidiaries, and there is no material
charge or complaint against Software.com or any of its subsidiaries by the
National Labor Relations Board or any comparable governmental agency pending or
threatened in writing.
(vi) No employee of Software.com or any Software.com
subsidiary will be entitled to any material payment, additional benefits or any
acceleration of the time of payment or vesting of any benefits under any
Software.com Benefit Plan as a result of the transactions contemplated by this
Agreement (either alone or in conjunction with any other event such as a
termination of employment).
(vii) To the knowledge of Software.com, no material oral or
written representation or commitment with respect to any aspect of any
Software.com Benefit Plan has been made to employees of Software.com or any
Software.com subsidiaries by an authorized Software.com employee prior to the
Closing Date that is not materially in accordance with the written or otherwise
preexisting terms and provisions of such Software.com Benefit Plans in effect
immediately prior to the Closing Date.
(viii) Except as would not have a material adverse effect, there
are no material unresolved claims or disputes under the terms of, or in
connection with, any Software.com Benefit Plan (other than routine undisputed
claims for benefits), and no action, legal or otherwise, has been commenced with
respect to any material claim.
(ix) To the knowledge of Software.com, no non-exempt
"prohibited transaction" (within the meaning of section 4975(c) of the Code)
involving any Software.com Benefit Plan has occurred that could subject
Software.com to any material tax penalty or other cost or liability (by
indemnification or otherwise).
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(x) Neither Software.com nor any Software.com subsidiary is
obligated to make any parachute payments as such term is defined in section 280G
of the Code, and neither is a party to any agreement that under certain
circumstances is reasonably likely to obligate it, or any successor in interest,
to make any parachute payments that will not be deductible under section 280G of
the Code. Neither Software.com nor any Software.com subsidiary is obligated to
make reimbursement or gross-up payments to any person in respect to excess
parachute payments.
(k) Taxes.
(i) Each of Software.com and its subsidiaries has filed all
material Tax Returns required to be filed by it (taking into account all
applicable extensions) with the appropriate Tax Authority and all such returns
are complete, true, and correct in all material respects, or requests for
extensions to file such returns have been timely filed, granted, and have not
expired, except to the extent that such failures to file, to be complete, true,
or correct, or to have extensions granted that remain in effect individually or
in the aggregate would not have a material adverse effect on Software.com.
Software.com and each of its subsidiaries has paid (or Software.com has paid or
caused to be paid on its behalf) all Taxes shown as due on such returns, and the
most recent financial statements contained in the Software.com Filed SEC
Documents reflect an adequate reserve in accordance with GAAP for all Taxes
payable by Software.com and its subsidiaries for all taxable periods and
portions thereof accrued through the date of such financial statements.
(ii) No deficiencies for any Taxes have been proposed,
asserted or assessed against Software.com or any of its subsidiaries that are
not adequately reserved for, except for deficiencies that individually or in the
aggregate would not have a material adverse effect on Software.com. Software.com
and its subsidiaries have disclosed all material deficiencies or adjustments for
Taxes that have been proposed or assessed by any Tax Authority against
Software.com or any of its subsidiaries. All of the Federal income Tax Returns
of the "affiliated group" (as defined in section 1504(a) of the Code) of which
Software.com is the common parent are no longer subject to any Audit by virtue
of the expiration of the applicable statutory period of limitations for the
assessment of Tax.
(iii) Neither Software.com nor any of its subsidiaries has
taken any action or knows of any fact, agreement, plan or other circumstance
that is reasonably likely to prevent the Merger from qualifying as a
"reorganization" within the meaning of section 368(a) of the Code.
(iv) No Audits are presently pending with regard to any Taxes
or Tax Returns of Software.com or its subsidiaries.
(v) Neither Software.com nor any of its subsidiaries is a
party to any agreement providing for the allocation, indemnification, or sharing
of Taxes.
(vi) Other than the "affiliated group" (as defined in section
1504(a) of the Code) of which Software.com is the common parent, neither
Software.com nor any of its subsidiaries has been a member of any "affiliated
group."
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(vii) There are no liens for Taxes on any of the assets of
Software.com or its subsidiaries except for liens for Taxes that are not yet due
and payable and for which adequate reserves have been provided in accordance
with GAAP in the most recent financial statements contained in the Software.com
Filed SEC Documents.
(l) Voting Requirements.
The affirmative vote at the Software.com Stockholders' Meeting (the
"Software.com Stockholder Approval") of the holders of a majority of all
outstanding shares of Software.com Common Stock entitled to vote at a duly
convened and held meeting of Software.com stockholders is the only vote of the
holders of any class or series of Software.com's capital stock necessary to
adopt this Agreement and approve the transactions contemplated hereby.
(m) State Takeover Statutes; Certificate of Incorporation.
The Board of Directors of Software.com has adopted a resolution or
resolutions approving this Agreement, the Option Agreements, the Phone Voting
Agreement and the transactions contemplated hereby and thereby, and, assuming
the accuracy of Phone's representation and warranty contained in Section 3.1(p),
such approval constitutes approval of the Merger and the other transactions
contemplated hereby and by the Option Agreements and the Phone Voting Agreement
by the Software.com Board of Directors under the provisions of Section 203 of
the DGCL such that Section 203 of the DGCL does not apply to this Agreement, the
Option Agreements, the Phone Voting Agreement or the transactions contemplated
hereby and thereby. To the knowledge of Software.com, no state takeover statute
other than Section 203 of the DGCL (which has been rendered inapplicable) is
applicable to the Merger or the other transactions contemplated hereby.
(n) Brokers.
Except for fees payable to Morgan Stanley & Co. Incorporated pursuant
to an engagement letter dated July 28, 2000, a true and correct copy of which
has been provided to Phone, no broker, investment banker, financial advisor or
other person, is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission in connection with the transactions contemplated
by this Agreement based upon arrangements made by or on behalf of Software.com.
(o) Opinion of Financial Advisors.
Software.com has received the opinion of Morgan Stanley & Co.
Incorporated, dated the date of this Agreement, to the effect that, as of such
date, Exchange Ratio is fair from a financial point of view to holders of
Software.com Common Stock (other than Phone and its affiliates), a signed copy
of which opinion will be delivered to Phone promptly after execution of this
Agreement.
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(p) Ownership of Phone Common Stock.
To the knowledge of Software.com, as of the date hereof or at any time
within twelve (12) months prior to the date of this Agreement (and before giving
effect to the Phone Option Agreement and the Phone Voting Agreement, which will
be entered into immediately after the execution of this Agreement) neither
Software.com nor, to its knowledge without independent investigation, any of its
affiliates, (i) beneficially owns (as defined in either Rule 13d-3 under the
Exchange Act) or owned, directly or indirectly, or (ii) is or was party to any
agreement, arrangement or understanding for the purpose of acquiring, holding,
voting or disposing of, in each case, shares of capital stock of Phone.
(q) Intellectual Property.
(i) To the knowledge of Software.com, Software.com or its
subsidiaries own or have a valid right to use all trademarks, service marks,
trade names, Internet domain names, designs, slogans, and general intangibles of
like nature, together with all applications, registrations, renewals and
goodwill related to the foregoing (collectively, "Software.com Trademarks");
patents (including any registration, continuations, continuations-in-part,
renewals and applications for any of the foregoing); copyrights (including any
registrations and applications for any of the foregoing); Software.com Software
(as defined below); technology, trade secrets and other confidential
information, know-how, proprietary processes, formulae, algorithms, models, and
methodologies (collectively, "Software.com Trade Secrets") used in or necessary
for the conduct of Software.com's and each of its subsidiary's business as
currently conducted (all such intellectual property being referred to herein as
the "Software.com Intellectual Property"), except where the failure to possess
such right would not have a material adverse effect. For purposes of this
Section 3.2(q), "Software.com Software" means any and all (a) computer programs,
including any and all software implementations of algorithms, models and
methodologies, whether in source code or object code, (b) databases and
compilations, including any and all data and collections of data, whether
machine readable or otherwise, (c) descriptions, flowcharts and other work
product used to design, plan, organize and develop any of the foregoing, (d) the
technology supporting any Internet site(s) operated by or on behalf of
Software.com or any of its subsidiaries and (e) all documentation, including
user manuals and training materials, relating to any of the foregoing.
(ii) The Software.com Intellectual Property owned by
Software.com or any of its subsidiaries is free and clear of all Liens.
(iii) All material Software.com Intellectual Property owned by
Software.com or any of its subsidiaries is valid and subsisting, in full force
and effect, and has not been canceled, has not expired, nor has it been
abandoned. There is no pending or, to Software.com's knowledge, threatened
opposition, interference or cancellation proceeding before any court or
registration authority in any jurisdiction against any registrations in respect
of the Software.com Intellectual Property owned by Software.com or any of its
subsidiaries.
(iv) To the actual knowledge of Software.com or any of its
subsidiaries, the conduct of the business of Software.com and its subsidiaries
as currently conducted does not infringe upon (either directly or indirectly
such as through contributory
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infringement or inducement to infringe) any intellectual property rights owned
or controlled by any third party. There are no claims or suits pending and as to
which Software.com has received actual notice or, to the knowledge of
Software.com, threatened, and neither Software.com nor any of its subsidiaries
has received any notice of a third-party claim or suit, (a) alleging that its
activities or the conduct of its business infringes upon, violates, or
constitutes the unauthorized use of the intellectual property rights of any
third party or (b) challenging the ownership, use, validity or enforceability of
any Software.com Intellectual Property (other than Software.com Trademarks),
which in any case would have a material adverse effect.
(v) There are no written settlements, forbearances to sue,
consents, judgments, or orders or similar obligations which in any material
respect (a) restrict the right of Software.com or its subsidiaries to use any
Software.com Intellectual Property owned by Software.com, or (b) restrict the
business of Software.com or its subsidiaries in order to accommodate a third
party's intellectual property rights or (c) except for licenses with customers
for the Software.com Software, there are no agreements that permit third parties
to use any Software.com Intellectual Property owned or controlled by
Software.com or any of its subsidiaries.
(vi) Software.com and each of its subsidiaries takes
reasonable measures to protect the confidentiality of Software.com Trade
Secrets, including (i) requiring its employees and independent contractors
having access thereto to execute written nondisclosure agreements and (ii)
requiring all licensees to maintain the confidentiality of Software.com Trade
Secrets. To the actual knowledge of Software.com or its subsidiaries, no
Software.com Trade Secret has been knowingly disclosed or authorized to be
disclosed to any third party other than pursuant to a nondisclosure agreement or
other appropriate instrument that adequately protects Software.com and the
applicable subsidiary's proprietary interests in and to such trade secrets. To
the knowledge of Software.com, no party to any nondisclosure agreement or
nondisclosure obligation relating to its trade secrets is in breach or default
thereof.
(vii) To the knowledge of Software.com, no third party is
misappropriating, infringing, diluting, or violating any Software.com
Intellectual Property owned by Software.com or any of its subsidiaries other
than immaterial disputes concerning use by a third party of Software.com
Trademarks of Software.com or any of its subsidiaries.
(viii) The consummation of the Merger and the other transactions
contemplated by this Agreement shall not result in the loss or impairment of
Software.com's or of any subsidiary's right to own or use any of the
Software.com Intellectual Property, and will not require the consent of any
governmental authority, except where such loss or impairment or the failure to
obtain consent would not result in a material adverse effect.
(r) Certain Contracts.
Except as set forth in the Software.com Filed SEC Documents, neither
Software.com nor any of its subsidiaries is a party to or bound by (i) any
"material contract" (as such term is defined in Item 601(b)(10) of Regulation S-
K of the SEC), (ii) any non- competition agreement or any other agreement or
obligation which purports to limit in any material respect the manner in which,
or the localities in which, all or any material portion of the business of
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Software.com and its subsidiaries (including, for purposes of this Section
3.2(r), Phone and its subsidiaries, assuming the Merger has taken place), taken
as a whole, is or would be conducted, (iii) any exclusive supply or purchase
contracts or any exclusive requirements contracts or (iv) any contract or other
agreement which would prohibit or materially delay the consummation of the
Merger or any of the transactions contemplated by this Agreement (all contracts
of the type described in clauses (i) and (ii) being referred to herein as
"Software.com Material Contracts"). Software.com has delivered to Phone or made
available to Phone for review, prior to the execution of this Agreement,
complete and correct copies of all Software.com Material Contracts not filed as
exhibits to the Software.com Filed SEC Documents. Each Software.com Material
Contract is valid and binding on Software.com (or, to the extent a Software.com
subsidiary is a party, such subsidiary) and is in full force and effect, and
Software.com and each Software.com subsidiary have in all material respects
performed all obligations required to be performed by them to date under each
Software.com Material Contract, except where such noncompliance, individually or
in the aggregate, would not have a material adverse effect on Software.com.
Neither Software.com nor any Software.com subsidiary knows of, or has received
notice of, any violation or default under (nor, to the knowledge of
Software.com, does there exist any condition which with the passage of time or
the giving of notice or both would result in such a violation or default under)
any Software.com Material Contract.
(s) Software.com Rights Agreement.
Software.com has delivered to Phone a true, correct and complete copy
of the Software.com Rights Agreement. Software.com has taken all action so that
the entering into of this Agreement, the Software.com Option Agreement, the
Software.com Voting Agreement and the Merger, the acquisition of shares pursuant
to the Software.com Option Agreement and the other transactions contemplated
hereby and thereby will not result in the grant of any rights to any person
under the Software.com Rights Agreement or enable or require the Software.com
Rights to be exercised, distributed or triggered.
(t) Environmental Liability.
Except as set forth in the Software.com Filed SEC Documents, there are
no legal, administrative, arbitral or other proceedings, claims, actions, causes
of action, private environmental investigations or remediation activities or
governmental investigations of any nature pending or threatened against
Software.com or any of its subsidiaries seeking to impose, or that could
reasonably be expected to result in the imposition, on Software.com or any of
its subsidiaries, of any liability or obligation arising under common law or
under any local, state or federal environmental statute, regulation or
ordinance, including, without limitation, CERCLA, which liability or obligation
could reasonably be expected to have a material adverse effect on Software.com.
To the knowledge of Software.com, there is no reasonable basis for any such
proceeding, claim, action or governmental investigation that would impose any
liability or obligation that could reasonably be expected to have a material
adverse effect on Software.com.
(u) Insurance.
Software.com and each of its subsidiaries have policies of insurance
and bonds of the type and in amounts customarily carried by persons conducting
businesses or owning assets
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similar to those of Software.com and its subsidiaries. There is no material
claim pending under any of such policies or bonds as to which coverage has been
questioned, denied or disputed by the underwriters of such policies or bonds,
except questioned, denied or disputed claims the failure to provide coverage for
which would not, individually or in the aggregate, have a material adverse
effect on Software.com. All premiums due and payable under all such policies and
bonds have been paid and Software.com and its subsidiaries are otherwise in
compliance in all material respects with the terms of such policies and bonds.
Software.com has no knowledge of any threatened termination of, or material
premium increase with respect to, any of such policies.
(v) Accounting Matters.
As of the date hereof, to the knowledge of Software.com, none of
Software.com, any of its subsidiaries or any of their respective directors,
officers or stockholders, has taken any action which would prevent the
accounting for the Merger as a pooling of interests in accordance with APB 16,
the interpretative releases pursuant thereto and the pronouncements of the SEC.
(w) Transactions with Affiliates.
Except as disclosed in the Software.com SEC Documents filed prior to
the date of this Agreement or as disclosed in the Software.com Disclosure
Schedule, since December 31, 1999, there have been no transactions, agreements,
arrangements or understandings between Software.com and its affiliates that
would be required to be disclosed under the Item 404 of Regulation S-K under the
Securities Act.
(x) Full Disclosure.
None of the representations or warranties made by Software.com herein
or in any schedule hereto, including the Software.com Disclosure Schedule, or
any certificate furnished by Software.com pursuant to this Agreement, contains
or will contain at the Effective Time any untrue statement of a material fact,
or omits or will omit at the Effective Time, to state any material fact
necessary in order to make the statements contained herein or therein, in the
light of the circumstances under which made, not misleading.
ARTICLE 4.
COVENANTS RELATING TO CONDUCT OF BUSINESS SECTION
SECTION 4.1 Conduct of Business.
(a) Conduct of Business by Phone.
Except as set forth in Section 4.1(a) of the Phone Disclosure
Schedule, as otherwise expressly contemplated by this Agreement or as consented
to by Software.com in writing, such consent not to be unreasonably withheld or
delayed, during the period from the date of this Agreement to the Effective
Time, Phone shall, and shall cause its subsidiaries to, carry on their
respective businesses in the ordinary course consistent with past practice and
in compliance in all material respects with all applicable laws and regulations
and, to the extent consistent therewith, use reasonable efforts to preserve
intact their current business
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organizations, use reasonable efforts to keep available the services of their
current officers and other key employees and preserve their relationships with
those persons having business dealings with them to the end that their goodwill
and ongoing businesses shall be unimpaired at the Effective Time. Without
limiting the generality of the foregoing (but subject to the above exceptions),
during the period from the date of this Agreement to the Effective Time, Phone
shall not, and shall not permit any of its subsidiaries to:
(i) other than dividends and distributions by a direct or
indirect wholly owned subsidiary of Phone to its parent, or by a subsidiary that
is partially owned by Phone or any of its subsidiaries, provided that Phone or
any such subsidiary receives or is to receive its proportionate share thereof,
(x) declare, set aside or pay any dividends on, make any other distributions in
respect of, or enter into any agreement with respect to the voting of, any of
its capital stock, (y) split, combine or reclassify any of its capital stock or
issue or authorize the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock, except for issuances of
Phone Common Stock upon the exercise of Phone Options, in each case, outstanding
as of the date hereof in accordance with their present terms (including cashless
exercise) or issued pursuant to Section 4.1(a)(ii) or (z) purchase, redeem or
otherwise acquire any shares of capital stock of Phone or any of its
subsidiaries or any other securities thereof or any rights, warrants or options
to acquire any such shares or other securities (except, in the case of clause
(z), for the deemed acceptance of shares upon cashless exercise of Phone Options
outstanding on the date hereof, or in connection with withholding obligations
relating thereto);
(ii) except in connection with acquisitions permitted or
contemplated by clause (iv) of this Section 4.1(a), issue, deliver, sell, pledge
or otherwise encumber or subject to any Lien any shares of its capital stock,
any other voting securities or any securities convertible into, or any rights,
warrants or options to acquire, any such shares, voting securities or
convertible securities (other than the issuance of Phone Common Stock upon the
exercise or conversion of Phone Options outstanding as of the date hereof in
accordance with their present terms or the issuance of Phone Options (and shares
of Phone Common Stock upon the exercise thereof) granted after the date hereof
in the ordinary course of business consistent with past practice for employees
(so long as such additional amount of Phone Common Stock subject to Phone
Options issued to such employees does not exceed four and one-half million
(4,500,000) shares of Phone Common Stock in the aggregate));
(iii) except as contemplated hereby, amend its certificate of
incorporation, by-laws or other comparable organizational documents;
(iv) acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial portion of the assets or equity or other
securities of, or by any other manner, any business or any person, or, except
for transactions pursuant to contracts or agreements in force at the date of
this Agreement or acquisitions or investments permitted or contemplated by
Section 4.1(a) of the Phone Disclosure Schedule, make any material investment
either by purchase of stock or securities, contributions to capital, property
transfers, or purchase of any property or assets of any other individual,
corporation or other entity other than a subsidiary of Phone;
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(v) sell, lease, license, mortgage or otherwise encumber or
subject to any Lien or otherwise dispose of any of its properties or assets
(including securitizations), other than in the ordinary course of business
consistent with past practice, including, without limitation, in connection with
consolidation of acquired businesses or as would not have a material adverse
effect on Phone;
(vi) take any action that would cause the representations and
warranties set forth in Section 3.1(g) and qualified as to materiality to be no
longer true and correct or, if not so qualified, to be no longer true and
correct in all material respects;
(vii) incur any indebtedness for borrowed money or issue any
debt securities or assume, guarantee or endorse, or otherwise as an
accommodation become responsible for the obligations of any person for borrowed
money, other than pursuant to a revolving credit facility or receivables
facility or commercial paper facility in effect as of the date hereof (including
any replacement facilities), in the ordinary course of business consistent with
past practice;
(viii) settle any material claim (including any Tax claim),
action or proceeding involving money damages, except in the ordinary course of
business consistent with past practice;
(ix) make any material Tax election except in the ordinary
course of business and consistent with past practice;
(x) other than in the ordinary course of business or in
connection with acquisitions permitted by Section 4.1(a) of the Phone Disclosure
Schedule, enter into or terminate any material contract or agreement, or make
any change in any of its material leases or contracts, other than amendments or
renewals of contracts and leases without material adverse changes of terms;
(xi) except for increases in accordance with normal past
practice, increase in any manner the compensation or fringe benefits of any of
its officers or directors, or materially increase the foregoing in respect of
employees; enter into any commitment to pay any pension, retirement or severance
benefit to any such officers or directors, or make any material commitment to
pay the foregoing to any employees; commit itself to, or enter into, any
employment agreement involving compensation of more than Two Hundred Thousand
Dollars ($200,000.00) per year or a term other than "at will;" adopt or commit
itself to any new benefit, base salary or stock option plan or arrangement; or
amend, supplement, or accelerate the timing of payments or vesting under, or
otherwise materially amend or supplement any existing benefit, stock option or
compensation plan or arrangement (other than as may be required by applicable
law);
(xii) change any of the accounting methods used by Phone or any
of its subsidiaries unless required by generally accepted accounting principles
or take or knowingly allow to be taken any action which would jeopardize the
treatment of the Merger as a pooling of interests for accounting purposes; or
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(xiii) authorize, or commit or agree to take, any of the
foregoing actions; provided that the limitations set forth in this Section
4.1(a) (other than clause (iii)) shall not apply to any transaction between
Phone and any wholly owned subsidiary or between any wholly owned subsidiaries
of Phone.
(b) Conduct of Business by Software.com.
Except as set forth in Section 4.1(b) of the Software.com Disclosure
Schedule, as otherwise expressly contemplated by this Agreement or as consented
to by Phone in writing, such consent not to be unreasonably withheld or delayed,
during the period from the date of this Agreement to the Effective Time,
Software.com shall, and shall cause its subsidiaries to, carry on their
respective businesses in the ordinary course consistent with past practice and
in compliance in all material respects with all applicable laws and regulations
and, to the extent consistent therewith, use all reasonable efforts to preserve
intact their current business organizations, use reasonable efforts to keep
available the services of their current officers and other key employees and
preserve their relationships with those persons having business dealings with
them to the end that their goodwill and ongoing businesses shall be unimpaired
at the Effective Time. Without limiting the generality of the foregoing (but
subject to the above exceptions), during the period from the date of this
Agreement to the Effective Time, Software.com shall not, and shall not permit
any of other Software.com subsidiaries to:
(i) other than dividends and distributions by a direct or
indirect wholly owned subsidiary of Software.com to its parent, or by a
subsidiary that is partially owned by Software.com or any of its subsidiaries,
provided that Software.com or any such subsidiary receives or is to receive its
proportionate share thereof, (x) declare, set aside or pay any dividends on,
make any other distributions in respect of, or enter into any agreement with
respect to the voting of, any of its capital stock or the capital stock of any
of its subsidiaries, (y) split, combine or reclassify any of its capital stock
or issue or authorize the issuance of any other securities in respect of, in
lieu of or in substitution for shares of its capital stock or the capital stock
of any of its subsidiaries, except for issuances of Software.com Common Stock
upon the exercise of Software.com Options outstanding as of the date hereof in
accordance with their present terms (including cashless exercise) or issued
pursuant to Section 4.1(b)(ii) or (z) purchase, redeem or otherwise acquire any
shares of capital stock of Software.com or any of its subsidiaries or any other
securities thereof or any rights, warrants or options to acquire any such shares
or other securities (except, in the case of clause (z), for the deemed
acceptance of shares upon cashless exercise of Software.com Options, or in
connection with withholding obligations relating thereto);
(ii) except in connection with acquisitions permitted or
contemplated by clause (iv) of this Section 4.2(b), issue, deliver, sell, pledge
or otherwise encumber or subject to any Lien any shares of its capital stock,
any other voting securities or any securities convertible into, or any rights,
warrants or options to acquire, any such shares, voting securities or
convertible securities (other than the issuance of Software.com Common Stock
upon the exercise of Software.com Options outstanding as of the date hereof in
accordance with their present terms or the issuance of Software.com Options (and
shares of Software.com Common Stock upon the exercise thereof) granted after the
date hereof in the ordinary course of business consistent with past practice for
employees (so long as such additional amount of Software.com
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Common Stock subject to Software.com Employee Stock Options issued to employees
does not exceed four and one-half million (4,500,000) shares of Software.com
Common Stock in the aggregate));
(iii) except as contemplated hereby, amend its certificate of
incorporation, by-laws or other comparable organizational documents;
(iv) acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial portion of the assets or equity or other
securities of, or by any other manner, any business or any person, or, except
for transactions pursuant to contracts or agreements in force at the date of
this Agreement or acquisitions or investments permitted or contemplated by
Section 4.1(b) of the Software.com Disclosure Schedule, make any material
investment either by purchase of stock or securities, contributions to capital,
property transfers, or purchase of any property or assets of any other
individual, corporation or other entity other than a subsidiary of Software.com;
(v) sell, lease, license, mortgage or otherwise encumber or
subject to any Lien or otherwise dispose of any of its properties or assets
(including securitizations), other than in the ordinary course of business
consistent with past practice, including, without limitation, in connection with
consolidation of acquired businesses or as would not have a material adverse
effect on Software.com;
(vi) take any action that would cause the representations and
warranties set forth in Section 3.2(g) and qualified as to materiality to be no
longer be true and correct or, if not so qualified, to be no longer true and
correct in all material respects;
(vii) incur any indebtedness for borrowed money or issue any
debt securities or assume, guarantee or endorse, or otherwise as an
accommodation become responsible for the obligations of any person for borrowed
money, other than pursuant to a revolving credit facility or receivables
facility or commercial paper facility in effect as of the date hereof (including
any replacement facilities), in the ordinary course of business consistent with
past practice;
(viii) settle any claim (including any Tax claim), action or
proceeding involving money damages, except in the ordinary course of business
consistent with past practice;
(ix) make any material Tax election except in the ordinary
course of business and consistent with past practice;
(x) other than in the ordinary course of business or in
connection with acquisitions permitted by Section 4.1(b) of the Software.com
Disclosure Schedule, enter into or terminate any material contract or agreement,
or make any change in any of its material leases or contracts, other than
amendments or renewals of contracts and leases without material adverse changes
of terms;
(xi) except for increases in accordance with normal past
practice, increase in any manner the compensation or fringe benefits of any of
its officers or directors, or
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materially increase the foregoing in respect of employees; enter into any
commitment to pay any pension, retirement or severance benefit to any such
officers or directors, or make any material commitment to pay any of the
foregoing to any employees; commit itself to, or enter into, any employment
agreement involving base salary of more than Two Hundred Thousand Dollars
($200,000.00) per year or a term other than "at will;" adopt or commit itself to
any new benefit, compensation or stock option plan or arrangement; or amend,
supplement, or accelerate the timing of payments or vesting under, or otherwise
materially amend or supplement any existing benefit, stock option or
compensation plan or arrangement (other than as may be required by applicable
law);
(xii) change any of the accounting methods used by Software.com
or any of its subsidiaries unless required by generally accepted accounting
principles or take or knowingly allow to be taken any action which would
jeopardize the treatment of the Merger as a pooling of interests for accounting
purposes; or
(xiii) authorize, or commit or agree to take, any of the
foregoing actions; provided that the limitations set forth in this Section
4.1(b) (other than clause (iii)) shall not apply to any transaction between
Software.com and any wholly owned subsidiary or between any wholly owned
subsidiaries of Software.com.
(c) Other Actions.
Except as required by law, Phone, Software.com and Merger Sub shall
not, and shall not permit any of their respective subsidiaries to, voluntarily
take any action that would, or that could reasonably be expected to, result in
any of the conditions to the Merger set forth in Article 6 not being satisfied.
(d) Advice of Changes.
Each of Phone, Software.com and Merger Sub shall promptly advise the
other parties orally and in writing to the extent it has knowledge of any change
or event which would cause a failure of any of the conditions set forth in
Article 6 to be satisfied; provided, however, that no such notification shall
affect the representations, warranties, covenants or agreements of the parties
(or remedies with respect thereto) or the conditions to the obligations of the
parties under this Agreement.
SECTION 4.2 No Solicitation by Phone.
(a) Phone shall not, nor shall it permit any of its subsidiaries to,
nor shall it authorize or permit any of its officers, directors or employees or
any investment banker, financial advisor, attorney, accountant or other
representative retained by it or any of its subsidiaries to, directly or
indirectly through another person, (i) solicit, initiate or encourage (including
by way of furnishing information), or take any other action designed to
facilitate, any inquiries or the making of any proposal the consummation of
which would constitute an Alternative Transaction (as hereinafter defined) or
(ii) participate in any discussions or negotiations regarding any Alternative
Transaction; provided, however, that if, at any time prior to the adoption of
this Agreement by the holders of Phone Common Stock, the Board of Directors of
Phone determines in good faith, after consultation with outside counsel, that
the failure to provide such information
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or participate in such negotiations or discussions would result in a reasonable
possibility that the Board of Directors of Phone would breach its fiduciary
duties to Phone's stockholders under applicable law, Phone may, in response to
any such proposal that was not solicited by it or that did not otherwise result
from a breach of this Section 4.2(a), and subject to compliance with Section
4.2(c), (x) furnish information with respect to Phone and its subsidiaries to
any person pursuant to a customary confidentiality agreement containing terms as
to confidentiality no less restrictive than the terms of the confidentiality
agreement, dated June 9, 2000, entered into between Software.com and Phone (the
"Confidentiality Agreement") and (y) participate in negotiations regarding such
proposal. For purposes of this Agreement "Alternative Transaction" means any of
(i) a transaction or series of transactions pursuant to which any person (or
group of persons) other than Software.com and its subsidiaries and other than
Phone and its subsidiaries (a "Third Party") acquires or would acquire, directly
or indirectly, beneficial ownership (as defined in Rule 13d-3 under the Exchange
Act) of more than twenty percent (20%) of the outstanding shares of Software.com
or Phone, as the case may be, whether from Software.com or Phone or pursuant to
a tender offer or exchange offer or otherwise, (ii) any acquisition or proposed
acquisition of Software.com or any of its significant subsidiaries or Phone or
any of its significant subsidiaries, as the case may be, by a merger or other
business combination (including any so-called "merger of equals" and whether or
not Software.com or any of its significant subsidiaries or Phone or any of its
significant subsidiaries, as the case may be, is the entity surviving any such
merger or business combination) or (iii) any other transaction pursuant to which
any Third Party acquires or would acquire, directly or indirectly, control of
assets (including for this purpose the outstanding equity securities of
subsidiaries of Software.com or Phone, as the case may be, and any entity
surviving any merger or combination including any of them) of Software.com or
any of its subsidiaries or Phone or any of its subsidiaries, as the case may be,
for consideration equal to twenty percent (20%) or more of the fair market value
of all of the outstanding shares of Software.com Common Stock or all of the
outstanding shares of Phone Common Stock, as the case may be, on the date prior
to the date hereof.
(b) Neither the Board of Directors of Phone nor any committee
thereof shall (i) except as expressly permitted by this Section 4.2(b),
withdraw, qualify or modify, or propose publicly to withdraw, qualify or modify,
in a manner adverse to Software.com, the approval or recommendation by such
Board of Directors or such committee of the Merger, this Agreement, the issuance
of Phone Common Stock in connection with the Merger or the Charter Amendment,
(ii) approve or recommend, or propose publicly to approve or recommend, any
Alternative Transaction, or (iii) cause Phone to enter into any letter of
intent, agreement in principle, acquisition agreement or other similar agreement
related to any Alternative Transaction. Notwithstanding the foregoing, in the
event that prior to the adoption of this Agreement by the holders of Phone
Common Stock the Board of Directors of Phone determines in good faith, after it
has received a Phone Superior Proposal (as defined below) and after consultation
with outside counsel, that the failure to do so would result in a reasonable
possibility that the Board of Directors of Phone would breach its fiduciary
duties to Phone's stockholders under applicable law, the Board of Directors of
Phone may (subject to this and the following sentences) inform Phone
stockholders that it no longer believes that the Merger or this Agreement is
advisable and no longer recommends approval of the issuance of shares of Phone
Common Stock pursuant to this Agreement (a "Phone Subsequent Determination"),
but only at a time that is after the third business day following Software.com's
receipt of written notice advising Software.com that the Board of Directors of
Phone has received a Phone Superior Proposal specifying the material
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terms and conditions of such Phone Superior Proposal, identifying the person
making such Phone Superior Proposal and stating that it intends to make a Phone
Subsequent Determination. For purposes of this Agreement, a "Phone Superior
Proposal" means any proposal (on its most recently amended or modified terms, if
amended or modified) made by a Third Party to enter into an Alternative
Transaction which the Board of Directors of Phone determines in its good faith
judgment (after consultation with a financial advisor of nationally recognized
reputation) to be more favorable to Phone's stockholders than the Merger taking
into account all relevant factors (including whether, in the good faith judgment
of the Board of Directors of Phone, after consultation with a financial advisor
of nationally recognized reputation, the third party is reasonably able to
finance the transaction). Notwithstanding any other provision of this Agreement,
Phone shall submit this Agreement to its stockholders whether or not the Board
of Directors of Phone makes a Phone Subsequent Determination.
(c) In addition to the obligations of Phone set forth in paragraphs
(a) and (b) of this Section 4.2, and in any event within one (1) business day,
Phone shall promptly advise Software.com orally and in writing of any request
for information or of any proposal in connection with an Alternative
Transaction, the material terms and conditions of such request or proposal and
the identity of the person making such request or proposal. Phone will keep
Software.com reasonably informed of the status and details (including amendments
or proposed amendments) of any such request or proposal on a current basis.
(d) Nothing contained in this Section 4.2 shall prohibit Phone (i)
from taking and disclosing to its stockholders a position contemplated by Rule
14d-9 or Rule 14e-2(a) promulgated under the Exchange Act or (ii) from making
any disclosure to its stockholders if, in the good faith judgment of the Board
of Directors of Phone, after consultation with outside counsel, failure so to
disclose would be inconsistent with its fiduciary duties to Phone's stockholders
under applicable law.
SECTION 4.3 No Solicitation by Software.com.
(a) Software.com shall not, nor shall it permit any of its
subsidiaries to, nor shall it authorize or permit any of its officers, directors
or employees or any investment banker, financial advisor, attorney, accountant
or other representative retained by it or any of its subsidiaries to, directly
or indirectly through another person, (i) solicit, initiate or encourage
(including by way of furnishing information), or take any other action designed
to facilitate, any inquiries or the making of any proposal the consummation of
which would constitute an Alternative Transaction or (ii) participate in any
discussions or negotiations regarding any Alternative Transaction; provided,
however, that if, at any time prior to the adoption of this Agreement by the
holders of Software.com Common Stock, the Board of Directors of Software.com
determines in good faith, after consultation with outside counsel, that the
failure to provide such information or participate in such negotiations or
discussions would result in a reasonable possibility that the Board of Directors
of Software.com breach its fiduciary duties to Software.com's stockholders under
applicable law, Software.com may, in response to any such proposal that was not
solicited by it or which did not otherwise result from a breach of this Section
4.3(a), and subject to compliance with Section 4.3(c), (x) furnish information
with respect to Software.com and its subsidiaries to any person pursuant to a
customary confidentiality agreement containing terms as to confidentiality no
less restrictive than the
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Confidentiality Agreement, as amended pursuant to Section 8.6 hereof, and (y)
participate in negotiations regarding such proposal.
(b) Neither the Board of Directors of Software.com nor any committee
thereof shall (i) except as expressly permitted by this Section 4.3(b),
withdraw, qualify or modify, or propose publicly to withdraw, qualify or modify,
in a manner adverse to Phone, the approval or recommendation by such Board of
Directors or such committee of the Merger, or this Agreement, (ii) approve or
recommend, or propose publicly to approve or recommend, any Alternative
Transaction, or (iii) cause Software.com to enter into any letter of intent,
agreement in principle, acquisition agreement or other similar agreement related
to any Alternative Transaction. Notwithstanding the foregoing, in the event that
prior to the adoption of this Agreement by the holders of Software.com Common
Stock the Board of Directors of Software.com determines in good faith, after it
has received a Software.com Superior Proposal (as defined below) and after
consultation with outside counsel, that the failure to do so would result in a
reasonable possibility that the Board of Directors of Software.com would breach
its fiduciary duties to Software.com's stockholders under applicable law, the
Board of Directors of Software.com may (subject to this and the following
sentences) inform Software.com stockholders that it no longer believes that the
Merger or this Agreement is advisable and no longer recommends approval (a
"Software.com Subsequent Determination"), but only at a time that is after the
third business day following Phone's receipt of written notice advising Phone
that the Board of Directors of Software.com has received a Software.com Superior
Proposal, specifying the material terms and conditions of such Software.com
Superior Proposal, identifying the person making such Software.com Superior
Proposal and stating that it intends to make a Software.com Subsequent
Determination. For purposes of this Agreement, a "Software.com Superior
Proposal" means any proposal (on its most recently amended or modified terms, if
amended or modified) made by a Third Party enter into an Alternative Transaction
on terms which the Board of Directors of Software.com determines in its good
faith judgment (after consultation with a financial advisor of nationally
recognized reputation) to be more favorable to Software.com's stockholders than
the Merger taking into account all relevant factors (including whether, in the
good faith judgment of the Board of Directors of Software.com, after
consultation with a financial advisor of nationally recognized reputation, the
third party is reasonably able to finance the transaction). Notwithstanding any
other provision of this Agreement, Software.com shall submit this Agreement to
its stockholders whether or not the Board of Directors of Software.com make a
Software.com Subsequent Determination.
(c) In addition to the obligations of Software.com set forth in
paragraphs (a) and (b) of this Section 4.3, and in any event within one (1)
business day, Software.com shall promptly advise Phone orally and in writing of
any request for information or of any proposal in connection with an Alternative
Transaction, the material terms and conditions of such request or proposal and
the identity of the person making such request or proposal. Software.com will
keep Phone reasonably informed of the status and details (including amendments
or proposed amendments) of any such request or proposal on a current basis.
(d) Nothing contained in this Section 4.3 shall prohibit
Software.com from (i) taking and disclosing to its stockholders a position
contemplated by Rule 14d-9 or Rule 14e-2(a) promulgated under the Exchange Act
or (ii) from making any disclosure to its stockholders if, in the good faith
judgment of the Board of Directors of Software.com, after consultation with
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outside counsel, failure so to disclose would be inconsistent with its fiduciary
duties to Software.com's stockholders under applicable law.
ARTICLE 5.
ADDITIONAL AGREEMENTS
SECTION 5.1 Preparation of the Form S-4 and the Joint Proxy Statement;
Stockholders' Meetings.
(a) As soon as practicable following the date of this Agreement,
Phone and Software.com shall prepare and file with the SEC the Joint Proxy
Statement, and Phone shall prepare and file with the SEC the Form S-4, in which
the Joint Proxy Statement will be included as a prospectus. Each of Phone and
Software.com shall use commercially reasonable efforts to have the Form S-4
declared effective under the Securities Act as promptly as practicable after
such filing. Phone will use commercially reasonable efforts to cause the Joint
Proxy Statement to be mailed to Phone's stockholders, and Software.com will use
commercially reasonable efforts to cause the Joint Proxy Statement to be mailed
to Software.com's stockholders, in each case as promptly as practicable after
the Form S-4 is declared effective under the Securities Act. Phone shall also
take any action required to be taken under any applicable state securities laws
in connection with the issuance of shares of Phone Common Stock in the Merger
and the conversion of Software.com Options into options to acquire Phone Common
Stock, and Software.com shall furnish all information concerning Software.com
and the holders of Software.com Common Stock as may be reasonably requested in
connection with any such action. No filing of, or amendment or supplement to,
the Form S-4 or the Joint Proxy Statement will be made by Phone without
Software.com's prior consent and without providing Software.com the opportunity
to review and comment thereon. Phone will advise Software.com promptly after it
receives notice thereof, of the time when the Form S-4 has become effective or
any supplement or amendment has been filed, the issuance of any stop order, the
suspension of the qualification of the Phone Common Stock issuable in connection
with the Merger for offering or sale in any jurisdiction, or any request by the
SEC for amendment of the Joint Proxy Statement or the Form S-4 or comments
thereon and responses thereto or requests by the SEC for additional information.
If at any time prior to the Effective Time any information relating to Phone or
Software.com, or any of their respective affiliates, officers or directors,
should be discovered by Phone or Software.com which should be set forth in an
amendment or supplement to any of the Form S-4 or the Joint Proxy Statement, so
that any of such documents would not include any misstatement of a material fact
or omit to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, the party
which discovers such information shall promptly notify the other parties hereto
and an appropriate amendment or supplement describing such information shall be
promptly filed with the SEC and, to the extent required by law, disseminated to
the stockholders of Phone and Software.com.
(b) Phone shall, as promptly as practicable after the Form S-4 is
declared effective under the Securities Act, duly give notice of, convene and
hold a meeting of its stockholders (the "Phone Stockholders' Meeting") in
accordance with the DGCL for the purpose of obtaining the Phone Stockholder
Approval and shall, subject to the provisions of Section
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4.2(b) hereof, through its Board of Directors, recommend to its stockholders the
approval of the issuance of the shares of Phone Common Stock in the Merger and
the Phone Charter Amendment.
(c) Software.com shall, as promptly as practicable after the Form
S-4 is declared effective under the Securities Act, duly give notice of, convene
and hold a meeting of its stockholders (the "Software.com Stockholders'
Meeting") in accordance with the DGCL for the purpose of obtaining the
Software.com Stockholder Approval and shall, subject to the provisions of
Section 4.3(b) hereof, through its Board of Directors, recommend to its
stockholders the approval and adoption of this Agreement, the Merger and the
other transactions contemplated hereby.
(d) Software.com and Phone will use commercially reasonable efforts
to hold the Phone Stockholders' Meeting and the Software.com Stockholders'
Meeting on the same date and as soon as reasonably practicable after the date
hereof.
SECTION 5.2 Pooling Letters.
Software.com shall use commercially reasonable efforts to obtain from
Software.com's accounting firm, Ernst & Young, a signed report in form and
substance reasonably satisfactory to Phone and dated not earlier than five (5)
days prior to the Closing Date, to the effect that, subject to customary
qualifications, such firm concurs with the conclusion of Software.com's
management that Software.com qualifies as a "combining company" in accordance
with the criteria set forth in paragraph 46 of APB 16 and has not violated the
criteria set forth in paragraphs 47c, 47d and 48c of APB 16 during the period
extending from two (2) years preceding the date of initiation to the date of
such report and Phone shall use commercially reasonable efforts to obtain from
Phone's accounting firm, KPMG LLP a signed report in form and substance
reasonably satisfactory to Phone and dated not earlier than five (5) days prior
to the Closing Date, to the effect that such firm concurs with the conclusion of
Phone's management that pooling of interests accounting for the Merger under APB
16 is appropriate.
SECTION 5.3 Access to Information; Confidentiality.
Subject to the Confidentiality Agreement and subject to applicable
law, each of Phone and Software.com shall, and shall cause each of its
respective subsidiaries to, afford to the other party and to the officers,
employees, accountants, counsel, financial advisors and other representatives of
such other party, reasonable access during normal business hours during the
period prior to the Effective Time to all their respective properties, books,
contracts, commitments, personnel and records (provided that such access shall
not interfere with the business or operations of such party) and, during such
period, each of Phone and Software.com shall, and shall cause each of its
respective subsidiaries to, furnish promptly to the other party (a) a copy of
each report, schedule, registration statement and other document filed by it
during such period pursuant to the requirements of federal or state securities
laws and (b) all other information concerning its business, properties and
personnel as such other party may reasonably request. No review pursuant to this
Section 5.3 shall affect any representation or warranty given by the other party
hereto. Each of Phone and Software.com will hold, and will cause its
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respective officers, employees, accountants, counsel, financial advisors and
other representatives and affiliates to hold, any nonpublic information in
accordance with the terms of the Confidentiality Agreements. Phone shall also
cooperate with Software.com and use its best efforts to obtain an estimate of
withdrawal liability from each multi-employer plan with respect to which Phone
contributes as of the date hereof.
SECTION 5.4 Commercially Reasonable Efforts.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use commercially reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective, in the most expeditious
manner practicable, the Merger and the other transactions contemplated by this
Agreement, including (i) the obtaining of all necessary actions or nonactions,
waivers, consents and approvals from Governmental Entities and the making of all
necessary registrations and filings and the taking of all steps as may be
necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by, any Governmental Entity, (ii) the obtaining of all necessary
consents, approvals or waivers, and any necessary or appropriate financing
arrangements, from third parties, (iii) the defending of any lawsuits or other
legal proceedings, whether judicial or administrative, challenging this
Agreement or the consummation of the transactions contemplated by this
Agreement, including seeking to have any stay or temporary restraining order
entered by any court or other Governmental Entity vacated or reversed, and (iv)
the execution and delivery of any additional instruments necessary to consummate
the transactions contemplated by, and to fully carry out the purposes of, this
Agreement. Notwithstanding anything to the contrary in this Agreement, neither
Software.com nor Phone shall be required to hold separate (including by trust or
otherwise) or divest any of their respective businesses or assets, or enter into
any consent decree or other agreement that would restrict either Software.com or
Phone in the conduct of its business as heretofore conducted.
(b) In connection with and without limiting the foregoing, Phone and
Software.com shall (i) take all action necessary to ensure that no state
takeover statute or similar statute or regulation is or becomes applicable to
this Agreement, the Option Agreements, or any of the transactions contemplated
hereby and thereby and (ii) if any state takeover statute or similar statute or
regulation becomes applicable to such agreements or transactions, take all
action necessary to ensure that such transactions may be consummated as promptly
as practicable on the terms contemplated by this Agreement and otherwise to
minimize the effect of such statute or regulation on the Merger and the other
transactions contemplated by this Agreement.
SECTION 5.5 Indemnification, Exculpation and Insurance.
Phone agrees that at all times after the Effective Time, it shall
indemnify, and shall cause the Surviving Corporation to indemnify, each person
who is now, or has been at any time prior to the date hereof, a director or
officer of Software.com, any of its subsidiaries or affiliates, or of any of
its successors and assigns (individually an "Indemnified Party" and collectively
the "Indemnified Parties"), to the same extent and in the same manner as is now
provided in the certificate of incorporation or by-laws of Software.com or
otherwise in effect at
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the Effective Time (pursuant to an indemnification agreement or otherwise), with
respect to any claim, liability, loss, damage, cost or expense (whenever
asserted or claimed) based in whole or in part on, or arising in whole or in
part out of, any matter existing or occurring at or prior to the Effective Time.
Phone shall, or shall cause the Surviving Corporation to, maintain in effect for
not less than six (6) years after the Effective Time the current policies of
directors' and officers' liability insurance maintained by Software.com on the
date hereof (provided that Phone or the Surviving Corporation may substitute
therefor policies having at least the same coverage and containing terms and
conditions which are no less advantageous to the persons currently covered by
such policies as insured) with respect to matters existing or occurring at or
prior to the Effective Time. Without limiting the foregoing, in the event any
Indemnified Party becomes involved in any capacity in any action, proceeding or
investigation based in whole or in part on, or arising in whole or in part out
of, any matter, including the transactions contemplated hereby, existing or
occurring at or prior to the Effective Time, then, following the Effective Time,
to the extent permitted by law Phone shall, or shall cause the Surviving
Corporation to, periodically advance to such Indemnified Party its legal and
other expenses (including the cost of any investigation and preparation incurred
in connection therewith), subject to the provision by such Indemnified Party of
an undertaking to reimburse the amounts so advanced in the event of a final
determination by a court of competent jurisdiction that such Indemnified Party
is not entitled thereto. Promptly after receipt by an Indemnified Party of
notice of the assertion (an "Assertion") of any claim or the commencement of any
action against him or her in respect to which indemnity or reimbursement may be
sought against Phone, the Surviving Corporation or a subsidiary of Phone
("Indemnitors") hereunder, such Indemnified Party shall notify any Indemnitor in
writing of the Assertion, but the failure to so notify any Indemnitor shall not
relieve any Indemnitor of any liability it may have to such Indemnified Party
hereunder except to the extent such failure shall have materially prejudiced
Indemnitor in defending against such Assertion. Indemnitors shall be entitled to
participate in and, to the extent Indemnitors (A) elect by written notice to
such Indemnified Party within thirty (30) days after receipt by any Indemnitor
of notice of such Assertion and (B) acknowledge in writing their obligation to
indemnify the Indemnified Parties in connection with such Assertion, to assume
the defense of such Assertion, at their own expense, with counsel chosen by
Indemnitors and reasonably satisfactory to such Indemnified Party.
Notwithstanding that Indemnitors shall have elected by such written notice to
assume the defense of any Assertion, such Indemnified Party shall have the right
to participate in the investigation and defense thereof, with separate counsel
chosen by such Indemnified Party, but in such event the fees and expenses of
such counsel shall be paid by such Indemnified Party, unless, in the opinion of
such separate counsel, (i) such Indemnified Party has available to him one or
more defenses to such Assertion that may not be available to the Indemnitors,
(ii) there is otherwise a conflict of interest between the Indemnified Party, on
the one hand, and the Indemnitors, on the other hand, or (iii) the Indemnitors
fail to vigorously pursue the defense of the asserted claim. No Indemnified
Party shall settle any Assertion without the prior written consent of Phone, nor
shall any Indemnitor settle any Assertion without either (i) the written consent
of all Indemnified Parties against whom such Assertion was made, or (ii)
obtaining a general release from the party making the Assertion for all
Indemnified Parties as a condition of such settlement. The provisions of this
Section 5.5 are intended for the benefit of, and shall be enforceable by, the
respective Indemnified Parties. The provisions of this Section 5.5 are not
intended to constitute insurance. To the extent that any policy of insurance
shall provide all or any part of the indemnity owed to the Indemnified Parties,
or any of them,
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hereunder, the Indemnitors shall be relieved of their obligation with regard
thereto. No acceptance by an Indemnified Party of any defense from any third
party with respect to an Assertion shall be deemed to constitute a waiver by
such Indemnified Party of its rights under this Section 5.5 or to receive the
full measure of the indemnity provided for hereby.
SECTION 5.6 Fees and Expenses.
Except as set forth in this Section 5.6 and in Section 7.2, all fees
and expenses incurred in connection with the Merger, this Agreement, the Option
Agreements and the transactions contemplated by this Agreement and the Option
Agreements shall be paid by the party incurring such fees or expenses, whether
or not the Merger are consummated, except that each of Software.com and Phone
shall bear and pay one-half of the costs and expenses (other than the fees and
expenses of each party's attorneys and accountants which shall be paid by the
party incurring such expenses) incurred by Phone, Merger Sub, or Software.com in
connection with (i) the filing, printing and mailing of the Form S-4 and the
Joint Proxy Statement (including SEC filing fees) and (ii) the filings of the
premerger notification and report forms under the HSR Act (including filing
fees). In addition, all transfer taxes incurred by Phone, Merger Sub or
Software.com in connection with the Merger arising on or after the Effective
Time shall be borne by Phone.
SECTION 5.7 Public Announcements.
Software.com and Phone will consult with each other and agree before
issuing, and provide each other the opportunity to review, comment upon and
concur with, and use reasonable efforts to agree on, any press release with
respect to the transactions contemplated by this Agreement, the Option
Agreements, including the Merger, and shall not issue any such press release
prior to such consultation and agreement, except as either party may determine
is required by applicable law, court process or by obligations pursuant to any
listing agreement with any national securities exchange or stock market. The
parties agree that the initial press release to be issued with respect to the
transactions contemplated by this Agreement shall be in the form heretofore
agreed to by the parties.
SECTION 5.8 Affiliates.
(a) On or before the date hereof, Phone shall prepare and deliver a
copy to Software.com of a letter identifying all persons who may be deemed to
be, at the time this Agreement is submitted for approval and adoption by the
stockholders of Phone, "affiliates" of Phone for purposes of applicable SEC
accounting releases with respect to pooling of interests accounting treatment
and such list shall be updated as necessary to reflect changes from the date
hereof. Phone shall use commercially reasonable efforts to cause each person
identified on such list to deliver to Phone on or before the date hereof,
written agreements substantially in the form attached as Exhibit F hereto, and
in the event any other person becomes an affiliate of Phone thereafter to cause
such person to deliver such an agreement to Phone as soon as practicable but in
any event at Closing.
(b) On or before the date hereof, Software.com shall deliver to
Phone a letter identifying all persons who may be deemed to be, at the time this
Agreement is submitted for
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approval and adoption by the stockholders of Software.com, "affiliates" of
Software.com for purposes of Rule 145 under the Securities Act and for purposes
of applicable SEC accounting releases with respect to pooling of interests
accounting treatment and such list shall be updated as necessary to reflect
changes from the date hereof. Software.com shall use commercially reasonable
efforts to cause each person identified on such list to deliver to Phone on or
before the date hereof, written agreements substantially in the form attached as
Exhibit E or Exhibit H hereto, as applicable, and in the event any other person
becomes an affiliate of Software.com thereafter to cause such person to deliver
such an agreement to Phone as soon as practicable but in any event at Closing.
SECTION 5.9 Nasdaq Listing.
Phone shall use commercially reasonable efforts to cause the Phone
Common Stock issuable under Article 2 to be approved for listing on the Nasdaq
National Market, subject to official notice of issuance, as promptly as
practicable after the date hereof, and in any event prior to the Closing Date.
SECTION 5.10 Tax and Accounting Treatment.
Each of Phone, Software.com and their respective subsidiaries shall
use all reasonable efforts to cause the Merger to qualify (i) for treatment as a
pooling of interests for accounting purposes and (ii) as a reorganization within
the meaning of section 368(a) of the Code, and to obtain the opinions of counsel
referred to in sections 6.2 and 6.3. Neither Phone, nor Software.com, nor their
respective subsidiaries, shall take any action to cause the Merger to fail to
qualify (i) for treatment as a pooling of interests for accounting purposes or
(ii) as a reorganization within the meaning of section 368(a) of the Code.
SECTION 5.11 Post-Merger Operations.
Following the Effective Time, the headquarters of Phone and its
subsidiaries shall be located in Redwood City, California, until such time as
the Board of Directors of Phone otherwise determines.
SECTION 5.12 Conveyance Taxes.
Software.com and Phone shall cooperate in the preparation, execution
and filing of all returns, questionnaires, applications or other documents
regarding any real property transfer or gains, sales, use, transfer, value
added, stock transfer and stamp taxes, any transfer, recording, registration and
other fees or any similar taxes which become payable in connection with the
transactions contemplated by this Agreement that are required or permitted to be
filed on or before the Effective Time.
SECTION 5.13 Employee Benefits.
For a period of one (1) year after the Closing, Phone covenants that
it shall provide all active employees of Software.com and their dependants and
all qualified beneficiaries with coverage under one or more Phone welfare
benefit plans (each, a "Phone Welfare Benefit Plan"), including without
limitation health coverage (collectively, "Coverage"),
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which meet the following requirements as of the Effective Time: (A) the Coverage
is comparable in the aggregate to that provided under the Software.com welfare
benefit plans listed in Section 5.13 of the Software.com Disclosure Schedule
(each, a "Software.com Scheduled Welfare Plan"), (B) service with Software.com
prior to the Effective Time shall be credited against all service and waiting
period requirements under the Phone Welfare Benefit Plans, (C) such Phone
Welfare Benefit Plans shall not provide for any pre-existing condition
exclusions other than any such exclusions existing under the Software.com
Scheduled Welfare Plans, and (D) the deductibles and/or copayments in effect
under the Phone Welfare Benefit Plans shall be credited with any applicable
deductibles and/or copayments paid by such individuals under the Software.com
Scheduled Welfare Plans for the plan year in which the Effective Time occurs.
SECTION 5.14 Consents of Accountants.
Phone and Software.com will each use all reasonable efforts to cause
to be delivered to each other consents from their respective independent
auditors, dated the date on which the Form S-4 shall become effective, in form
reasonably satisfactory to the recipient and customary in scope and substance
for consents delivered by independent public accountants in connection with
registration statements on Form S-4 under the Securities Act.
SECTION 5.15 Phone Board and Officers.
(a) The Board of Directors of Phone shall take all action necessary
so that effective as of the Effective Time, the Board of Directors of Phone
consists of six members, three (3) of whom are members of the current Phone
Board of Directors designated by Phone (the "Phone Designees") and three (3) of
whom are members of the current Software.com Board of Directors designated by
Software.com (the "Software.com Designees") and that each of the three (3)
classes of Phone Directors includes one Phone Designee and one Software.com
Designee.
(b) The Board of Directors of Phone will take all necessary action
to appoint, effective as of the Effective Time, (i) Donald J. Listwin to the
position of President and Chief Executive Officer of Phone, (ii) Alain Rossmann
to the position of Executive Vice President and Chairman of the Board of
Directors of Phone, (iii) John L. MacFarlane to the position of Executive Vice
President of Phone and (iv) Alan S. Black to the position of Chief Financial
Officer of Phone. Phone shall take all action necessary to elect such additional
members of management and executive officers of Phone as the Board of Directors
of Phone may determine.
SECTION 5.16 Rights Plans.
(a) Phone shall not redeem the Phone Rights, or amend, modify (other
than to delay any "distribution date" therein) or terminate the Phone Rights
Plan prior to the Effective Time unless required to do so by order of a court of
competent jurisdiction.
(b) Software.com shall not redeem the Software.com Rights or amend,
modify (other than to delay any "distribution date" therein) or terminate the
Software.com Rights Plan prior to the Effective Time unless required to do so by
order of a court of competent jurisdiction.
SECTION 5.17 Action by Board of Directors.
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Prior to the Effective Time, the board of directors of each of Phone
and Software.com shall comply as applicable with the provisions of the SEC's no-
action letter dated January 12, 1999, addressed to Skadden, Arps, Slate, Meagher
and Flom LLP relating to Rule 16b of the Exchange Act.
ARTICLE 6.
CONDITIONS PRECEDENT
SECTION 6.1 Conditions to Each Party's Obligation to Effect The Merger.
The respective obligation of each party to effect the Merger is
subject to the satisfaction or waiver on or prior to the Closing Date of the
following conditions:
(a) Stockholder Approvals.
Each of the Phone Stockholder Approval and the Software.com
Stockholder Approval shall have been obtained.
(b) HSR Act.
The waiting period (and any extension thereof) applicable to the
Merger under the HSR Act shall have been terminated or shall have expired.
(c) Governmental and Regulatory Approvals.
Other than the filing of the Certificates of Merger provided for under
Section 1.3 and filings pursuant to the HSR Act (which are addressed in Section
6.1(b)), all consents, approvals and actions of, filings with and notices to any
Governmental Entity required of Phone, Software.com or any of their subsidiaries
to consummate the Merger and the other transactions contemplated hereby
(together with the matters contemplated by Section 6.1(b), the "Requisite
Regulatory Approvals") shall have been obtained.
(d) No Injunctions or Restraints.
No judgment, order, decree, statute, law, ordinance, rule or
regulation, entered, enacted, promulgated, enforced or issued by any court or
other Governmental Entity of competent jurisdiction or other legal restraint or
prohibition (collectively, "Restraints") shall be in effect (i) preventing the
consummation of the Merger, or (ii) which otherwise is reasonably likely to have
a material adverse effect on Phone following the Effective Time or the effective
operation of the combined company following consummation of the Merger.
(e) Form S-4.
The Form S-4 shall have become effective under the Securities Act
prior to the mailing of the Joint Proxy Statement by each of Phone and
Software.com to their respective stockholders and no stop order or proceedings
seeking a stop order shall be threatened by the SEC or shall have been initiated
by the SEC.
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(f) Nasdaq Listings.
The shares of Phone Common Stock issuable to the stockholders of
Software.com as contemplated by Article 2 shall have been approved for listing
on the Nasdaq National Market, subject to official notice of issuance.
SECTION 6.2 Conditions to Obligations of Software.com.
The obligation of Software.com to effect the Merger is further subject
to satisfaction or waiver of the following conditions:
(a) Representations and Warranties.
The representations and warranties of Phone and Merger Sub set forth
herein shall be true and correct both when made and at and as of the Closing
Date, as if made at and as of such time (except to the extent expressly made as
of an earlier date, in which case as of such date), except where the failure of
such representations and warranties (other than those set forth in Section
3.1(c)) which shall be true and correct in all material respects to be so true
and correct (without giving effect to any limitation as to "materiality" or
"material adverse effect" set forth therein) does not have, and is not likely to
have, individually or in the aggregate, a "material adverse effect" on Phone.
(b) Performance of Obligations of Phone and Merger Sub.
Each of Phone and Merger Sub shall have performed in all material
respects all obligations required to be performed by it under this Agreement at
or prior to the Closing Date.
(c) No Material Adverse Change.
At any time after the date of this Agreement there shall not have
occurred any material adverse change relating to Phone.
(d) Officer's Certificate.
Software.com shall have received an officer's certificate duly
executed by each of the Chief Executive Officer and Chief Financial Officer of
Phone to the effect that the conditions set forth in Sections 6.2(a), (b) and
(c) have been satisfied.
(e) Tax Opinion.
Software.com shall have received an opinion of Wilson, Sonsini,
Goodrich & Rosati, Professional Corporation, in form and substance reasonably
satisfactory to Software.com, dated as of the Effective Time, substantially to
the effect that, on the basis of facts, representations and assumptions set
forth in such opinion, for United States federal income tax purposes, the Merger
will constitute a "reorganization" within the meaning of section 368(a) of the
Code.
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In rendering such opinion, Wilson, Sonsini, Goodrich & Rosati,
Professional Corporation may receive and rely upon representations contained in
certificates of Software.com, Phone, Merger Sub and others, and the parties
agree to provide Wilson, Sonsini, Goodrich & Rosati, Professional Corporation
with such certificates as Wilson, Sonsini, Goodrich & Rosati, Professional
Corporation may reasonably request in connection with rendering its opinion.
SECTION 6.3 Conditions to Obligations of Phone and Merger Sub.
The obligations of Phone and Merger Sub to effect the Merger are
further subject to satisfaction or waiver of the following conditions:
(a) Representations and Warranties.
The representations and warranties of Software.com set forth herein
shall be true and correct both when made and at and as of the Closing Date, as
if made at and as of such time (except to the extent expressly made as of an
earlier date, in which case as of such date), except where the failure of such
representations and warranties (other than those set forth in Section 3.2(c))
which shall be true and correct in all material respects to be so true and
correct (without giving effect to any limitation as to "materiality," or
"material adverse effect" set forth therein) does not have, and is not likely to
have, individually or in the aggregate, a material adverse effect on
Software.com.
(b) Performance of Obligations of Software.com.
Software.com shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior to
the Closing Date.
(c) No Material Adverse Change.
At any time after the date of this Agreement there shall not have
occurred any material adverse change relating to Software.com.
(d) Officer's Certificate.
Phone shall have received an officer's certificate duly executed by
each of the Chief Executive Officer and Chief Financial Officer of Software.com
to the effect that the conditions set forth in Sections 6.3(a), (b) and (c) have
been satisfied.
(e) Tax Opinion.
Phone shall have received an opinion of Skadden, Arps, Slate, Meagher
& Flom LLP, in form and substance reasonably satisfactory to Phone, dated as of
the Effective Time, substantially to the effect that, on the basis of facts,
representations and assumptions set forth in such opinion, for United States
federal income tax purposes, the Merger will constitute a "reorganization"
within the meaning of section 368(a) of the Code.
In rendering such opinion, Skadden, Arps, Slate, Meagher & Flom LLP
may receive and rely upon representations contained in certificates of Phone,
Merger Sub,
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Software.com and others, and the parties agree to provide Skadden, Arps, Slate,
Meagher & Flom LLP with such certificates as Skadden, Arps, Slate, Meagher &
Flom LLP may reasonably request in connection with rendering its opinion.
ARTICLE 7.
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.1 Termination.
This Agreement may be terminated at any time prior to the Effective
Time, and (except in the case of 7.1(e) or 7.1(f)) whether before or after the
Phone Stockholder Approval or the Software.com Stockholder Approval:
(a) by mutual written consent of Software.com and Phone, if the
Board of Directors of each so determines by a vote of a majority of its entire
board;
(b) by either the Board of Directors of Software.com or the Board of
Directors of Phone:
(i) if the Merger shall not have been consummated by March
31, 2001 (the "Outside Date") unless such termination right has been expressly
restricted in writing by the Board of Directors of Software.com or Phone, as the
case may be; provided, however, that the right to terminate this Agreement
pursuant to this Section 7.1(b)(i) shall not be available to any party whose
failure to perform any of its obligations under this Agreement results in the
failure of the Merger to be consummated by such time; provided, however, that in
-------- -------
the event either Phone or Software.com has received a request, demand or legal
order from a Governmental Entity with responsibility for administering
antitrust, competition or other similar foreign rules, regulations or laws for
additional documentation or other information, the Outside Date shall be
extended to June 30, 2001;
(ii) if the Phone Stockholder Approval shall not have been
obtained at a Phone Stockholders' Meeting duly convened therefor or at any
adjournment or postponement thereof;
(iii) if the Software.com Stockholder Approval shall not have
been obtained at a Software.com Stockholders' Meeting duly convened therefor or
at any adjournment or postponement thereof;
(iv) if any Restraint having any of the effects set forth in
Section 6.1(d) shall be in effect and shall have become final and nonappealable,
or if any Governmental Entity that must grant a Requisite Regulatory Approval
has denied approval of the Merger and such denial has become final and
nonappealable;
(c) by the Board of Directors of Software.com if either of Phone or
Merger Sub shall have breached or failed to perform any of its representations,
warranties, covenants or other agreements contained in this Agreement, which
breach or failure to perform (A) would
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give rise to the failure of a condition set forth in Section 6.2(a) or (b), and
(B) is incapable of being cured by Phone or is not cured within fifteen (15)
business days of written notice thereof;
(d) by the Board of Directors of Phone, if Software.com shall have
breached or failed to perform in any material respect any of its
representations, warranties, covenants or other agreements contained in this
Agreement, which breach or failure to perform (A) would give rise to the failure
of a condition set forth in Section 6.3(a) or (b), and (B) is incapable of being
cured by Software.com or is not cured within fifteen (15) business days of
written notice thereof;
(e) by the Board of Directors of Software.com, at any time prior to
the Phone Stockholders' Meeting, if (i) the Phone Board of Directors shall have
(A) failed to include in the Joint Proxy Statement to the stockholders of Phone,
its recommendation without modification or qualification that such stockholders
approve the issuance of Phone Common Stock in the Merger and the Charter
Amendment, (B) subsequently withdrawn such recommendation, (C) modified or
qualified such recommendation in a manner adverse to the interests of
Software.com or (D) failed to reconfirm such recommendation within ten (10)
business days of receipt of a written request from Software.com to do so or (ii)
Phone shall have materially breached the provisions of Section 4.2 of this
Agreement;
(f) by the Board of Directors of Phone, at any time prior to the
Software.com Stockholders' Meeting, if (i) the Software.com Board of Directors
shall have (A) failed to include in the Joint Proxy Statement to the
stockholders of Software.com, its recommendation without modification or
qualification that such stockholders approve this Agreement and the transaction
contemplated hereby, or (B) subsequently withdrawn such recommendation, or (C)
modified or qualified such recommendation in a manner adverse to the interests
of Phone, or (D) failed to reconfirm such recommendation within ten (10)
business days of receipt of a written request from Phone to do so or (ii)
Software.com shall have materially breached the provisions of Section 4.3 of
this Agreement.
SECTION 7.2 Effect of Termination.
(a) In the event of termination of this Agreement as provided in
Section 7.1 hereof, and subject to the provisions of Section 8.1 hereof, this
Agreement shall forthwith become void and there shall be no liability on the
part of any of the parties, except (i) as set forth in this Section 7.2 and in
Sections 5.3, 5.6, 3.1(n) and 3.2(n) hereof, and (ii) nothing herein shall
relieve any party from liability for any willful breach hereof.
(b) (1) If this Agreement is terminated by Software.com or Phone
pursuant to Section 7.1(b)(ii) hereof because of the failure to obtain the
required approval from the Phone stockholders and at the time of such
termination or prior to the meeting of Phone's stockholders there shall have
been a publicly-announced and not irrevocably and unconditionally withdrawn
offer or proposal for, or any agreement with respect to, a transaction that
would constitute an Alternative Transaction (as defined in Section 4.2(a)
hereof, except that for purposes of this Section 7.2(b), the applicable
percentage of clause (i) of such definition shall be fifty percent (50%))
involving Phone or any of the Phone subsidiaries (whether or not such offer,
proposal, announcement or agreement shall have been rejected prior to the time
of such termination or of
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the meeting), Phone shall pay to Software.com an amount equal to Software.com's
actual out-of-pocket fees, costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby (the "Software.com
Expenses").
(2) If, within twelve (12) months following a termination
contemplated by (1) above, (x) Phone consummates an Alternative Transaction or
(y) Phone enters into an agreement or binding letter of intent providing for an
Alternative Transaction, then Phone shall pay to Software.com a termination fee
equal to One Hundred Ninety-Five Million Dollars ($195,000,000.00) (the
"Termination Fee") minus the Software.com Expenses already paid pursuant to (1)
above.
(3) If this Agreement is terminated (i) by Software.com as a
result of Phone's material breach of Section 5.1(b) hereof, which is not cured
within thirty (30) days after notice thereof to Phone, or (ii) by Software.com
pursuant to Section 7.1(e) hereof, Phone shall pay to Software.com an amount
equal to the Termination Fee.
(c) (1) If this Agreement is terminated by Software.com or Phone
pursuant to Section 7.1(b)(iii) hereof because of the failure to obtain the
required approval from the Software.com stockholders and at the time of such
termination or prior to the meeting of Software.com's stockholders there shall
have been a publicly-announced and not irrevocably and unconditionally withdrawn
offer or proposal for, or any agreement with respect to, a transaction that
would constitute an Alternative Transaction (as defined in Section 4.2(a)
hereof, except that for purposes of this Section 7.2(c), the applicable
percentage of clause (i) of such definition shall be fifty percent (50%))
involving Software.com or any of the Software.com subsidiaries (whether or not
such offer, proposal, announcement or agreement shall have been rejected prior
to the time of such termination or of the meeting), Software.com shall pay to
Phone an amount equal to Phone's actual out-of-pocket fees, costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby (the "Phone Expenses").
(2) If, within twelve (12) months following a termination
contemplated by (1) above, (x) Software.com consummates an Alternative
Transaction or (y) Software.com enters into an agreement or binding letter of
intent providing for an Alternative Transaction, then Software.com shall pay to
Phone a termination fee equal to the Termination Fee minus the Phone Expenses
already paid pursuant to (1) above.
(3) If this Agreement is terminated (i) by Phone as a result of
Software.com's material breach of Section 5.1(c) hereof which is not cured
within thirty (30) days after notice thereof to Software.com, or (ii) by Phone
pursuant to Section 7.1(f) hereof, Software.com shall pay to Phone an amount
equal to the Termination Fee.
(d) Each payment of Software.com Expenses, Phone Expenses or the
Termination Fee payable under Sections 7.2(b)(1) , 7.2(b)(2), 7.2 (c)(1) or
7.2(c)(2) above shall be payable in cash, payable no later than one (1) business
day following the delivery of notice of termination to the other party.
(e) Each Termination Fee payable under Section 7.2(b)(3) shall be
payable in cash and shares of Phone Common Stock, in such combination as Phone
may elect (provided that
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the cash component must be at least Forty Million Dollars ($40,000,000.00)) with
an aggregate value (for all purposes of this Section 7.2(e), such shares of
Phone Common Stock shall be valued at a price per share equal to the average
closing price per share of Phone Common Stock for the five (5) most recent
trading days that Phone Common Stock has traded ending on the trading day
immediately prior to the termination date, as reported on the Nasdaq National
Market) equal to the Termination Fee, payable no later than three (3) business
days following the delivery of notice of termination to the other party. If
Phone satisfies its obligation to pay the Termination Fee in part by issuing
shares of Phone Common Stock (the "Phone Termination Fee Shares"), then
Software.com shall be entitled to registration rights with respect to such
shares as described in the Phone Stock Option Agreement (treating Phone
Termination Fee Shares for all purposes of Section 7 of the Phone Stock Option
Agreement as if they were Option Shares (as defined in the Phone Stock Option
Agreement)).
(f) Each Termination Fee payable under Section 7.2(c)(3) shall be
paid in cash and shares of Software.com Common Stock, in such combination as
Software.com may elect (provided that the cash component must be at least Forty
Million Dollars ($40,000,000.00)) with an aggregate value (for all purposes of
this Section 7.2(e), such shares of Software.com Common Stock to be valued at a
price per share equal to the average closing price per share of Software.com
Common Stock for the five (5) most recent trading days that Software.com Common
Stock has traded ending on the trading day immediately prior to the termination
date, as reported on the Nasdaq National Market) equal to the Termination Fee,
payable no later than three (3) business days following the delivery of notice
of termination to the other party. If Software.com satisfies its obligation to
pay the Termination Fee in part by issuing shares of Software.com Common Stock
(the "Software.com Termination Fee Shares"), then Phone shall be entitled to
registration rights with respect to such shares as described in the Software.com
Stock Option Agreement (treating Software.com Termination Fee Shares for all
purposes of Section 7 of the Software.com Stock Option Agreement as if they were
Option Shares (as defined in the Software.com Stock Option Agreement)).
(g) Software.com and Phone agree that the agreements contained in
Sections 7.2(b) and (c) above are an integral part of the transaction
contemplated by this Agreement and constitute liquidated damages and not a
penalty. If one party fails to promptly pay to the other any fee due under such
Sections 7.2(b) and (c), the defaulting party shall pay the costs and expenses
(including legal fees and expenses) in connection with any action, including the
filing of any lawsuit or other legal action, taken to collect payment.
SECTION 7.3 Amendment.
Subject to compliance with applicable law, this Agreement may be
amended by the parties at any time before or after the Phone Stockholder
Approval or the Software.com Stockholder Approval; provided, however, that after
any such approval, there may not be, without further approval of such the
stockholders of Phone (in the case of the Phone Stockholder Approval) and the
stockholders of Software.com (in the case of the Software.com Stockholder
Approval), any amendment of this Agreement that changes the amount or the form
of the consideration to be delivered to the holders of Software.com Common Stock
hereunder, or which by law otherwise expressly requires 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
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hereto and duly approved by the parties' respective Boards of Directors or a
duly designated committee thereof.
SECTION 7.4 Extension; Waiver.
At any time prior to the Effective Time, a party may, subject to the
proviso of Section 7.3 (and for this purpose treating any waiver referred to
below as an amendment), (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties of the other parties contained in this
Agreement or in any document delivered pursuant to this Agreement or (c) waive
compliance by the other party with any of the agreements or conditions contained
in this Agreement. Any agreement on the part of a party to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party. Any extension or waiver given in compliance with this
Section 7.4 or failure to insist on strict compliance with an obligation,
covenant, agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure.
ARTICLE 8.
GENERAL PROVISIONS
SECTION 8.1 Nonsurvival of Representations and Warranties.
None of the representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time. This Section 8.1 shall not limit any covenant or agreement of the parties
that by its terms contemplates performance after the Effective Time.
SECTION 8.2 Notices.
All notices, requests, claims, demands, and other communications under
this Agreement shall be in writing and shall be deemed given if delivered
personally, telecopied or faxed (which is confirmed) or sent by overnight
courier (providing proof of delivery) to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
(a) if to Software.com to:
Software.com, Inc.
525 Anacapa Street
Santa Barbara, CA 93101
Attention: General Counsel
Facsimile: (805) 957-1532
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with copies to:
Wilson Sonsini Goodrich & Rosati, Professional Corporation
650 Page Mill Road
Palo Alto, CA 94304
Attention: Elizabeth R. Flint, Esq.
Facsimile: (650) 493-6811
and to:
Wilson Sonsini Goodrich & Rosati, Professional Corporation
Spear Street Tower, Suite 3300
One Market Plaza
San Francisco, CA 94105
Attention: Steve L. Camahort, Esq.
Facsimile: (415) 947-2099
(b) if to Phone or Merger Sub, to it at:
Phone.com, Inc.
800 Chesapeake Drive
Redwood City, CA 94063
Attention: General Counsel
Facsimile: (650) 817-7190
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
525 University Avenue, Suite 220
Palo Alto, CA 94301
Attention: Kenton J. King, Esq.
Facsimile: (650) 470-4570
SECTION 8.3 Definitions.
For purposes of this Agreement:
(a) An "affiliate" of any person means another person that directly
or indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, such first person, where "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of a person, whether through the ownership
of voting securities, by contract, as trustee or executor, or otherwise;
(b) "material adverse change" or "material adverse effect" means,
when used in connection with Phone or Software.com, any change, effect, event,
occurrence or state of facts that is or could reasonably be expected to be
materially adverse to the business, financial condition or results of operations
of such party and its subsidiaries taken as a whole, it being understood that
none of the following shall be deemed by itself or by themselves, either alone
or
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in combination, to constitute a material adverse effect: (i) a change in the
market price or trading volume of Software.com Common Stock or Phone Common
Stock, as the case may be or (ii) conditions affecting the U.S. economy as a
whole;
(c) "person" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity;
(d) a "subsidiary" of any person means another person, an amount of
the voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its Board of Directors or
other governing body (or, if there are no such voting interests, fifty percent
(50%) or more of the equity interests of which) is owned directly or indirectly
by such first person; and
(e) "knowledge" of any person which is not an individual means the
knowledge of such person's executive officers or senior management of such
person's operating divisions and segments.
SECTION 8.4 Interpretation.
When a reference is made in this Agreement to an Article, Section or
Exhibit, such reference shall be to an Article or Section of, or an Exhibit to,
this Agreement unless otherwise indicated. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation." The words "hereof," "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein. The definitions contained in this Agreement
are applicable to the singular as well as the plural forms of such terms and to
the masculine as well as to the feminine and neuter genders of such term. Any
agreement, instrument or statute defined or referred to herein or in any
agreement or instrument that is referred to herein means such agreement,
instrument or statute as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or consent and
(in the case of statutes) by succession of comparable successor statutes and
references to all attachments thereto and instruments incorporated therein.
References to a person are also to its permitted successors and assigns.
SECTION 8.5 Counterparts.
This Agreement may be executed in two or more counterparts, all of
which shall be considered one and the same agreement and shall become effective
when one or more counterparts have been signed by each of the parties and
delivered to the other parties.
SECTION 8.6 Entire Agreement; No Third-Party Beneficiaries.
This Agreement (including the documents and instruments referred to
herein), the Option Agreements, the Voting Agreements and the Confidentiality
Agreement (a) constitute the entire agreement, and supersede all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter of this Agreement and (b) except for the
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provisions of Section 5.5, are not intended to confer upon any person other than
the parties any rights or remedies.
SECTION 8.7 Governing Law.
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Delaware, regardless of the laws that might otherwise
govern under applicable principles of conflict of laws thereof.
SECTION 8.8 Assignment.
Neither this Agreement nor any of the rights, interests or obligations
under this Agreement shall be assigned, in whole or in part, by operation of law
or otherwise by either of the parties hereto without the prior written consent
of the other party. Any assignment in violation of the preceding sentence shall
be void. Subject to the preceding two sentences, this Agreement will be binding
upon, inure to the benefit of, and be enforceable by, the parties and their
respective successors and assigns.
SECTION 8.9 Consent to Jurisdiction.
Each of the parties hereto (a) consents to submit itself to the
personal jurisdiction of any federal court located in the State of Delaware or
any Delaware state court in the event any dispute arises out of this Agreement
or any of the transactions contemplated by this Agreement, (b) agrees that it
will not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court, and (c) agrees that it will 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
Delaware or a Delaware state court.
SECTION 8.10 Headings, etc.
The headings and table of contents contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 8.11 Severability.
If any term or other provision of this Agreement is invalid, illegal
or incapable of being enforced by any rule of law or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect, insofar as the foregoing can be accomplished without
materially affecting the economic benefits anticipated by the parties to this
Agreement. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible to the fullest extent permitted by applicable law
in an acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the extent possible.
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IN WITNESS WHEREOF, Software.com, Phone.com and Merger Sub have caused
this Agreement to be signed by their respective officers thereunto duly
authorized, all as of the date first written above.
SOFTWARE.COM, INC.
By: _____________________________________
Name:
Title:
PHONE.COM, INC.
By: _____________________________________
Name:
Title:
SILVER MERGER SUB INC.
By: _____________________________________
Name:
Title:
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