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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 14, 2000
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E.piphany, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 000- 27183 770443392
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1900 South Norfolk Street, Suite 310, San Mateo, California 94403
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (650) 356-3800
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Not Applicable
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
On March 14, 2000, E.piphany, Inc. a Delaware corporation ("E.piphany"),
entered into a definitive Agreement and Plan of Reorganization (the "Merger
Agreement") with Octane Software Inc., a California corporation ("Octane"), and
Orchid Acquisition Corporation, a California corporation and wholly-owned
subsidiary of E.piphany ("Merger Sub"), pursuant to which Merger Sub will merge
with and into Octane and become a wholly-owned subsidiary of E.piphany (the
"Merger"). A copy of the Merger Agreement is attached hereto as Exhibit 2.1, and
copies of related voting agreements are attached hereto as Exhibits 2.2 and 2.3,
and each is incorporated herein by reference.
The Merger will be effected through the issuance of approximately 12.8
million shares of common stock of E.piphany, representing, on a post-effective
and fully diluted basis, approximately 26.5% of the capital stock of the
combined company (the "Shares"), in exchange for each share of capital stock of
Octane, including shares underlying options and warrants to purchase shares of
capital stock of Octane, outstanding immediately prior to the consummation of
the Merger.
Consummation of the Merger is subject to Octane shareholder approval,
E.piphany stockholder approval, regulatory clearance and other customary closing
conditions. The Octane officers, directors and certain of their affiliates have
entered into voting agreements whereby they have agreed to vote their shares of
Octane capital stock in favor of the Merger. In addition, the E.piphany
officers, directors and certain of their affiliates have also entered into
similar voting agreements whereby they have agreed to vote the shares of
E.piphany capital stock held by them in favor of the Merger. We cannot assure
you that the necessary stockholder approval and regulatory clearance will be
obtained or that the other closing conditions will be met.
A copy of the press release dated March 15, 2000 issued by E.piphany
announcing the Merger Agreement is attached hereto as Exhibit 99.1 and is
incorporated herein by reference.
This document may include forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Actual results could differ materially from those
projected in the forward-looking statement as a result of the risk factors set
forth in the Registrant's Forms 10-K and 10-Q reports.
(c) EXHIBITS
2.1 Agreement and Plan of Merger and Reorganization dated March 14,
2000 by and among E.piphany, Inc., Octane Software, Inc. and
Orchid Acquisition Corporation.
2.2 Form of Octane shareholder Voting Agreement.
2.3 Form of E.piphany stockholder Voting Agreement.
99.1 Press Release of E.piphany dated March 15, 2000.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: March 28, 2000
E.PIPHANY, INC.
/s/ Kevin Yeaman
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Kevin Yeaman
Chief Financial Officer
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description of Document
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<S> <C>
2.1 Agreement and Plan of Merger and Reorganization dated March 14, 2000 by
and among E.piphany, Inc., Octane Software, Inc. and Orchid Acquisition
Corporation.
2.2 Form of Octane shareholder Voting Agreement.
2.3 Form of E.piphany stockholder Voting Agreement.
99.1 Press Release of E.piphany dated March 15, 2000.
</TABLE>
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EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
E.PIPHANY, INC.
ORCHID ACQUISITION CORPORATION
AND
OCTANE SOFTWARE, INC.
DATED AS OF MARCH 14, 2000
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I THE MERGER.............................................................................1
1.1 The Merger........................................................................1
1.2 Effective Time....................................................................1
1.3 Effect of the Merger..............................................................2
1.4 Articles of Incorporation; Bylaws.................................................2
1.5 Directors and Officers............................................................2
1.6 Effect of Merger on the Capital Stock of the Constituent Corporations:............2
1.7 Dissenting Shares.................................................................5
1.8 Surrender of Certificates.........................................................6
1.9 No Further Ownership Rights in Company Capital Stock..............................7
1.10 Lost, Stolen or Destroyed Certificates............................................7
1.11 Taking of Necessary Action; Further Action........................................7
1.12 Tax and Accounting Consequences...................................................7
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................................8
2.1 Organization of the Company.......................................................8
2.2 Subsidiaries......................................................................8
2.3 Company Capital Structure.........................................................8
2.4 Authority........................................................................10
2.5 No Conflict......................................................................10
2.6 Consents.........................................................................10
2.7 Company Financial Statements.....................................................10
2.8 No Undisclosed Liabilities.......................................................11
2.9 No Changes.......................................................................11
2.10 Tax Matters......................................................................13
2.11 Restrictions on Business Activities..............................................14
2.12 Title of Properties; Absence of Liens and Encumbrances; Condition of Equipment...15
2.13 Intellectual Property............................................................15
2.14 Agreements, Contracts and Commitments............................................18
2.15 Interested Party Transactions....................................................19
2.16 Governmental Authorization.......................................................20
2.17 Litigation.......................................................................20
2.18 Accounts Receivable; Inventory...................................................20
2.19 Minute Books.....................................................................20
2.20 Environmental Matters............................................................20
2.21 Brokers' and Finders' Fees; Third Party Expenses.................................21
2.22 Employee Matters and Benefit Plans...............................................21
2.23 Insurance........................................................................25
2.24 Compliance with Laws.............................................................25
2.25 Warranties; Indemnities..........................................................25
2.26 Voting Agreements................................................................25
2.27 Complete Copies of Materials.....................................................25
</TABLE>
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TABLE OF CONTENTS
(CONTINUED)
<TABLE>
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Page
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2.28 Registration Statement; Proxy Statement..........................................26
2.29 Representations Complete.........................................................26
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB....................................26
3.1 Organization of Parent and Sub...................................................26
3.2 Authority........................................................................27
3.3 No Conflict......................................................................27
3.4 Consents.........................................................................27
3.5 Capital Structure................................................................27
3.6 SEC Filings; Financial Statements................................................28
3.7 Brokers' and Finders' Fees.......................................................28
3.8 Registration Statement; Proxy Statement..........................................29
3.9 No Changes.......................................................................29
3.10 Representations Complete.........................................................29
ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME..................................................29
4.1 Conduct of Business of the Company...............................................29
4.2 No Solicitation..................................................................32
4.3 Termination of Severance and 401(k) Plans........................................33
ARTICLE V ADDITIONAL AGREEMENTS.................................................................33
5.1 Registration Statement; Shareholder Approval.....................................33
5.2 Access to Information............................................................34
5.3 Confidentiality; Public Disclosure...............................................34
5.4 Consents; Approvals..............................................................35
5.5 Reasonable Efforts...............................................................35
5.6 Notification of Certain Matters..................................................35
5.7 Additional Documents and Further Assurances......................................35
5.8 FIRPTA Compliance................................................................36
5.9 Expenses.........................................................................36
5.10 Termination of Agreements........................................................36
5.11 Employee Benefits................................................................36
5.12 Officers and Directors of the Company's Subsidiaries.............................36
5.13 Employment Agreements............................................................36
5.14 Voting Agreement.................................................................37
5.15 Affiliate Agreements.............................................................37
5.16 Parent Voting Agreement..........................................................37
5.17 Company Stock Option Grants......................................................37
5.18 No Actions Inconsistent With Tax-Free Reorganization.............................37
5.19 Form S-8.........................................................................37
5.20 Assumption of Indemnity Obligations..............................................37
ARTICLE VI CONDITIONS TO THE MERGER.............................................................38
</TABLE>
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TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
Page
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6.1 Conditions to Obligations of Each Party to Effect the Merger.....................38
6.2 Conditions to Obligations of Company.............................................39
6.3 Conditions to the Obligations of Parent and Sub..................................40
ARTICLE VII SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION.........................41
7.1 Survival of Representations and Warranties.......................................41
7.2 Indemnification..................................................................42
7.3 Exclusive Contractual Remedy.....................................................42
7.4 Escrow Arrangements..............................................................42
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER..................................................47
8.1 Termination......................................................................48
8.2 Effect of Termination............................................................48
8.3 Amendment........................................................................49
8.4 Extension; Waiver................................................................49
ARTICLE IX GENERAL PROVISIONS...................................................................49
9.1 Notices..........................................................................49
9.2 Interpretation...................................................................50
9.3 Counterparts; Facsimile..........................................................50
9.4 Entire Agreement; Assignment.....................................................50
9.5 Severability.....................................................................51
9.6 Other Remedies; Specific Performance.............................................51
9.7 Governing Law....................................................................51
9.8 Rules of Construction............................................................51
9.9 Attorneys Fees...................................................................51
</TABLE>
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INDEX OF EXHIBITS
EXHIBITS DESCRIPTION
Exhibit A Merger Agreement
Exhibit B Key Employees
Exhibit C Disclosure Schedules
Exhibit D Form of Employment Agreement
Exhibit E Form of Voting Agreement
Exhibit F Form of Affiliate Agreement
Exhibit G-1 Certain Officers Directors of Parent
Exhibit G-2 Form of Parent Voting Agreement
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INDEX OF REQUIRED SECTIONS OF
DISCLOSURE SCHEDULE
<TABLE>
<CAPTION>
SECTION DESCRIPTION
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2.1 List of Officers and Directors of the Company
2.12(a) List of all real property currently leased by the Company
2.12(b) List of all material items of equipment owned or leased by
the Company
2.13(b) List of all Registered Intellectual Property
2.13(d) List of shrink wrap license agreements of Company
2.13(g) List of agreements relating to Intellectual Property
2.13(h) List of agreements relating to infringement of Intellectual
Property
2.14(a) List of agreements, contracts and commitments
2.14(c) List of consents, waivers, assignments and approvals
2.16 List of Governmental authorizations
2.2 List of Subsidiaries
2.21(a) List of any brokerage or finders' fees incurred
2.21(b) Estimate of Third Party Expenses
2.22(b) List of Employee Plans, International Employee Plans and
Employment Agreements
2.22(i) Description of Effect of Transaction on Company Employee
Plan and Employment Agreements
2.23 List of all insurance policies
2.3(a) List of Shareholders of the Company
2.3(b) List of restricted stock, options and warrants
2.7 List of financial statements of the Company
3.5 List of options and warrants
</TABLE>
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<TABLE>
<CAPTION>
SECTION DESCRIPTION
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<S> <C>
4.1 List of exceptions
4.1(i) List of additional stock options granted at the fair market
value
5.10 List of surviving employment agreements
5.12 List of persons who will enter into Employment Agreements
with Parent
5.13 List of Shareholders who will enter into Voting Agreements
with Parent
5.14 List of persons who are or may be "affiliates" of the
Company within the meaning of Rule 145
5.15 List of Affiliates
5.17 List of employees eligible for additional grants of stock
options
</TABLE>
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AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made and
entered into as of March 14, 2000 among E.PIPHANY, INC., a California
corporation ("Parent"), ORCHID ACQUISITION CORPORATION, a California corporation
and a wholly-owned subsidiary of Parent ("Sub") and OCTANE SOFTWARE, INC., a
California corporation (together with its subsidiaries, as applicable, the
"Company").
RECITALS
WHEREAS, the Boards of Directors of each of the Company, Parent and Sub
believe it is in the best interests of each company and their respective
shareholders that Parent acquire the Company through the statutory merger of Sub
with and into the Company (the "Merger") and, in furtherance thereof, have
approved the Merger.
WHEREAS, certain of the Shareholders of Company and Parent are entering
into Voting Agreements agreeing to vote the shares of Company capital stock and
Parent capital stock, respectively, held by them in favor of the Merger.
WHEREAS, pursuant to the Merger, among other things, all of the issued
and outstanding capital stock of the Company shall be converted into the right
to receive Parent Common Stock (as defined herein). Parent will assume all
outstanding stock options and warrants of the Company.
WHEREAS, the Company, on the one hand, and Parent and Sub, on the other
hand, desire to make certain representations, warranties, covenants and other
agreements in connection with the Merger.
WHEREAS, the parties intend, by executing this Agreement, to adopt a
plan of reorganization within the meaning of Section 368 of the Internal Revenue
Code of 1986, as amended.
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
the parties agree as follows:
1. THE MERGER
1.1 The Merger. At the Effective Time (as defined in Section
1.2) and subject to and upon the terms and conditions of this Agreement and the
applicable provisions of the California General Corporation Law ("California
Law"), Sub shall be merged with and into the Company, the separate corporate
existence of Sub shall cease and the Company shall continue as the surviving
corporation and as a wholly-owned subsidiary of Parent. The surviving
corporation after the Merger is hereinafter sometimes referred to as the
"Surviving Corporation."
1.2 Effective Time. The closing of the Merger (the "Closing") will
take place as promptly as practicable, but in any event no later than one (1)
business day following the approval of the Merger by the Shareholders at the
Company Shareholders' meeting and by the stockholders of the Parent at the
Parent stockholders meeting and the satisfaction or waiver of the conditions set
forth in Article VI, at the offices of
<PAGE> 9
Wilson Sonsini Goodrich & Rosati, Professional Corporation, 650 Page Mill Road,
Palo Alto, California 94304, unless another place or time is agreed to in
writing by Parent and the Company. The date upon which the Closing occurs is
herein referred to as the "Closing Date." On the Closing Date, the parties
hereto shall cause the Merger to be consummated by filing an agreement of merger
(or like instrument) in the form attached hereto as Exhibit A, with an officers
certificate of each constituent corporation attached, with the Secretary of
State of the State of California (the "Merger Agreement"), in accordance with
the applicable provisions of California Law (the time of acceptance by the
Secretary of State of the State of California of such filing being referred to
herein as the "Effective Time").
1.3 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in the applicable provisions of California Law.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time, all the property, rights, privileges, powers and franchises of
the Company and Sub shall vest in the Surviving Corporation, and all debts,
liabilities and duties of the Company and Sub shall become the debts,
liabilities and duties of the Surviving Corporation.
1.4 Articles of Incorporation; Bylaws
(a) Unless otherwise determined by Parent prior to the
Effective Time, at the Effective Time, the Articles of Incorporation of Sub
shall be the Articles of Incorporation of the Surviving Corporation until
thereafter amended as provided by law and such Certificate of Incorporation.
(b) The Bylaws of Sub, as in effect immediately prior
to the Effective Time, shall be the Bylaws of the Surviving Corporation until
thereafter amended.
1.5 Directors and Officers. The directors of the Surviving
Corporation immediately after the Effective Time shall be the directors of Sub
immediately prior to the Effective Time, each to hold the office of director of
the Surviving Corporation in accordance with the provisions of California Law
and the Articles of Incorporation and Bylaws of the Surviving Corporation until
his or her successor is duly qualified and elected. The officers of the
Surviving Corporation immediately after the Effective Time shall be the officers
of Sub immediately prior to the Effective Time, each to hold office in
accordance with the provisions of the Bylaws of the Surviving Corporation.
1.6 Effect of Merger on the Capital Stock of the Constituent
Corporations:
(a) Certain Definitions. For all purposes of this
Agreement, the following terms shall have the following meanings:
"Company Capital Stock" shall mean shares of Company
Common Stock, Company Series A Preferred Stock, Company Series B Preferred Stock
and Company Series C Preferred Stock, and shares of any other capital stock of
the Company.
"Company Common Stock" shall mean outstanding shares of
common stock of the Company.
"Company Options" shall mean all outstanding options or
other rights to purchase shares of Company Common Stock issued pursuant to the
Stock Option Plans and all warrants and other rights to purchase Company Capital
Stock.
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"Company Preferred Stock" shall mean the collective
reference to the Company Series A Preferred Stock, the Company Series B
Preferred Stock and the Company Series C Preferred Stock.
"Company Series A Preferred Stock" shall mean shares of
Series A Preferred Stock of the Company.
"Company Series B Preferred Stock" shall mean shares of
Series B Preferred Stock of the Company.
"Company Series C Preferred Stock" shall mean shares of
Series C Preferred Stock of the Company.
"Estimated Third Party Expenses" shall mean Third Party
Expenses (as defined in Section 5.9) of the Company on the Closing Date,
excluding investment banking advisory fees payable to Morgan Stanley Dean Witter
as a result of services provided to the Company in connection with the Merger
and as listed on Section 2.21(a) of the Disclosure Schedule, as estimated by the
Company in good faith and based on reasonable assumptions.
"GAAP" shall mean U.S. generally accepted accounting
principles consistent with the reporting practices and principles used by Parent
from time to time for preparing its public filings under the Securities and
Exchange Act of 1934, as amended (the "Exchange Act").
"HSR Act" shall mean the Hart Scott Rodino Antitrust
Improvement Act of 1976, as amended.
"Key Employees" shall mean those employees of the
Company listed on Exhibit B hereto.
"Knowledge" of any entity shall mean the knowledge of
any officer or director of such entity.
"Parent Common Stock" shall mean shares of the common
stock, par value $0.0001 per share, of Parent.
"Parent Common Stock Consideration" shall mean
12,793,510 shares of Parent Common Stock less (b) an amount of shares of Parent
Common Stock equal to (1) the amount by which the Estimated Third Party Expenses
exceed $1,500,000 divided by (2) the Trading Price (each of (a) and (b) as
appropriately adjusted for stock splits, stock dividends, combination and the
like of such Parent Common Stock subsequent to the date hereof and prior to the
Effective Time).
"Shareholder" shall mean each holder of any Company
Capital Stock immediately prior to the Effective Time.
"Stock Exchange Ratio" shall mean a number equal to the
quotient obtained by dividing (a) Parent Common Stock Consideration by (b) the
number of Total Outstanding Shares.
"Stock Option Plans" shall mean the Company's 1997 Stock
Option Plans, 2000 Nonstatutory Stock Option Plans and 2000 Pennsylvania Plan.
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"Total Consideration" shall mean the total Parent Common
Stock Consideration paid hereunder.
"Total Outstanding Shares" shall mean the aggregate
number of shares of Company Common Stock outstanding immediately prior to the
Effective Time plus the aggregate number of shares of Company Common Stock
issuable, with or without the passage of time or satisfaction of other
conditions, upon exercise or conversion of all convertible securities, options,
warrants and other rights to acquire or receive shares of Company Capital Stock
outstanding immediately prior to the Effective Time.
"Trading Price" shall mean $192.85.
(b) Effect on Capital Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of the Sub, the Company
or the Shareholders, each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than any Dissenting Shares (as
defined in Section 1.7) will be canceled and extinguished and be converted
automatically into the right to receive, upon surrender of the certificate
representing such share of Company Common Stock and upon the terms and subject
to the conditions set forth below and throughout this Agreement, including,
without limitation Sections 1.6(e) and (f) hereof and the escrow provisions set
forth in Article VII and/or described in Section 1.8(b) hereof, a fraction of a
share of Parent Common Stock equal to the Stock Exchange Ratio.
(c) Assumption of Company Stock Options, Warrants and
Other Rights to Purchase Company Capital Stock.
(i) At the Effective Time, under this Agreement,
each Company Option will be assumed by Parent, and will continue to have, and be
subject to, the same terms and conditions governing such Company Option
immediately prior to the Effective Time (including, without limitation, any
vesting schedule or repurchase rights), except that (i) each Company Option will
be exercisable (or will become exercisable in accordance with its terms) for
that number of whole shares of Parent Common Stock equal to the product of the
number of shares of Company Common Stock that were issuable upon exercise of
such Company Option immediately prior to the Effective Time multiplied by the
Stock Exchange Ratio, rounded down to the nearest whole number of shares of
Parent Common Stock, and (ii) the per share exercise price for the shares of
Parent Common Stock issuable upon exercise of such assumed Company Option will
be equal to the quotient determined by dividing the exercise price per share of
Company Common Stock at which such Company Option was exercisable immediately
prior to the Effective Time by the Stock Exchange Ratio, rounded up to the
nearest whole cent. It is the intention of the parties that the assumed Company
Options qualify to the maximum extent possible following the Effective Time as
incentive stock options as defined in Section 422 of the Code to the extent such
options qualified as incentive stock options prior to the Effective Time. Within
thirty (30) days following the Effective Time, Parent will issue to each holder
of an outstanding Company Option a notice describing the foregoing assumption of
such Company Options by Parent.
(ii) Prior to the Effective Time, the Company
shall take all action necessary to effect the transactions anticipated by this
Section 1.6(c) under all Company Option agreements and any other plan or
arrangement of the Company.
(d) Capital Stock of Sub. Each share of common stock of
Sub issued and outstanding immediately prior to the Effective Time shall be
converted into and exchanged for one validly issued, fully paid and
nonassessable share of common stock of the Surviving Corporation. Each stock
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<PAGE> 12
certificate of Sub evidencing ownership of any such shares shall continue to
evidence ownership of such shares of capital stock of the Surviving Corporation.
(e) Withholding Taxes. All Parent Common Stock issuable
pursuant to Section 1.6 shall be subject to, and reduced by, the amount of any
state, federal and foreign withholding taxes incurred by or applicable to a
Shareholder (and that has not been previously paid by or on behalf of such
Shareholder or the Company) in connection with the Merger, the acquisition of
Company Capital Stock upon the exercise of Company Options, the acceleration of
the vesting of any Company Option or any Company Capital Stock or the payment of
a bonus in the form of Company Capital Stock.
(f) Fractional Shares. No fractional share of Parent
Common Stock shall be issued in the Merger. In lieu thereof, any fractional
share, after aggregating all shares held by a Shareholder, shall be rounded down
to the nearest whole share of Parent Common Stock and to the extent required by
Section 407 of the California Law, such Shareholder will be entitled to receive
an amount of cash equal to the fractional shares to which such Shareholder would
be entitled, multiplied by the Trading Price.
(g) Adjustments to Stock Exchange Ratio. The Stock
Exchange Ratio shall be adjusted to reflect fully the effect of any stock split,
reverse split, dividend (including any dividend or distribution of cash, assets
or securities convertible into Parent Capital Stock or Company Capital Stock),
distribution, reorganization or recapitalization with respect to Parent Common
Stock or Company Capital Stock occurring after the date hereof and prior to the
Effective Time.
1.7 Dissenting Shares.
(a) Notwithstanding any provision of this Agreement to
the contrary, any shares of Company Capital Stock held by a holder who has
exercised and perfected appraisal rights for such shares in accordance with
California Law and who, as of the Effective Time, has not effectively withdrawn
or lost such dissenter's rights ("Dissenting Shares"), shall not be converted
into or represent a right to receive the consideration for Company Capital Stock
pursuant to Section 1.6, but the holder thereof shall only be entitled to such
rights as are granted by California Law.
(b) Notwithstanding the provisions of subsection (a), if
any holder of Dissenting Shares shall effectively withdraw or lose (through
failure to perfect or otherwise) his or her dissenter's rights, then, as of the
later of Effective Time and the occurrence of such event, such holder's shares
shall automatically be converted into and represent only the right to receive
the consideration for Company Capital Stock as provided in Section 1.6, without
interest thereon, upon surrender of the certificate representing such shares.
(c) The Company shall give Parent (i) prompt notice of
any written demand for purchase received by the Company pursuant to the
applicable provisions of California Law and (ii) the opportunity to participate
in all negotiations and proceedings with respect to such demands. The Company
shall not, except with the prior written consent of Parent, voluntarily make any
payment with respect to any such demands or offer to settle or settle any such
demands. To the extent that Parent or the Company makes any payment or payments
in respect of any Dissenting Shares, Parent shall be entitled to recover under
the terms of Article VII hereof the aggregate amount by which such payment or
payments exceed the aggregate consideration that otherwise would have been
payable in respect of such shares.
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1.8 Surrender of Certificates.
(a) Exchange Agent. The Corporate Secretary of Parent or
an institution selected by Parent and reasonably satisfactory to the Company
shall serve as exchange agent (the "Exchange Agent") in the Merger.
(b) Parent to Provide Shares. Promptly after the
Effective Time, Parent shall make available to the Exchange Agent for exchange
in accordance with this Article I, Certificates representing the shares of
Parent Common Stock representing the Parent Common Stock Consideration (in the
aggregate amount to be issued in the Merger); provided, however, that on behalf
of the Shareholders, pursuant to Section 7.3 hereof, Parent shall deposit into
an escrow account the number of shares of Parent Common Stock issued in respect
of Company Common Stock held by such Shareholders pursuant to Section 1.6(b) to
the Escrow Agent on behalf of the Shareholders equal to the product obtained by
multiplying (x) ten percent (10%) by (y) the Parent Common Stock Consideration
(the "Escrow Amount"). The portion of the Escrow Amount contributed on behalf of
each Shareholder shall be in proportion to the aggregate number of shares of
Parent Common Stock which such Shareholder would otherwise be entitled to
receive in the Merger by virtue of ownership of outstanding shares of Company
Common Stock.
(c) Exchange Procedures. Concurrently with the
distribution of the Proxy Statement/Prospectus (as hereinafter defined), Parent
shall cause the Exchange Agent to mail to each holder of record (as of such
date) of a certificate or certificates (the "Certificates") which immediately
prior to the Effective Time represented outstanding shares of Company Capital
Stock whose shares were converted into the right to receive shares of Parent
Common Stock pursuant to Section 1.6, (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 Parent may
reasonably specify) and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for certificates representing shares of Parent
Common Stock. Upon surrender of Certificates for cancellation to the Exchange
Agent or to such other agent or agents as may be appointed by Parent, together
with such letter of transmittal, duly completed and validly executed in
accordance with the instructions thereto, the holders of such Certificates shall
be entitled to receive in exchange therefor certificates representing the number
of whole shares of Parent Common Stock, and the Certificates so surrendered
shall forthwith be canceled. Until so surrendered, outstanding Certificates will
be deemed from and after the Effective Time, for all corporate purposes, subject
to Section 1.8(d) as to the payment of dividends, to evidence the ownership of
the number of full shares of Parent Common Stock into which such shares of
Company Capital Stock shall have been so converted and the right to receive any
dividends or distributions payable pursuant to Section 1.8(d).
(d) Distributions With Respect to Unexchanged Shares.
No dividends or other distributions declared or made after the date of this
Agreement with respect to Parent Common Stock with a record date after the
Effective Time will be paid to the holders of any unsurrendered Certificates
with respect to the shares of Parent Common Stock represented thereby until the
holders of record of such Certificates shall surrender such Certificates.
Subject to applicable law, following surrender of any such Certificates, the
Exchange Agent shall deliver to the record holders thereof, without interest,
certificates representing whole shares of Parent Common Stock issued in exchange
therefor and the amount of any such dividends or other distributions with a
record date after the Effective Time payable with respect to such whole shares
of Parent
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<PAGE> 14
Common Stock. No interest shall accrue or be owed to a Shareholder with respect
to any amounts which the Shareholder has the right to receive.
(e) Transfers of Ownership. If certificates for shares
of Parent Common Stock are to be issued in a name other than that in which the
Certificates surrendered in exchange therefor are registered, it will be a
condition of the issuance thereof that the Certificates so surrendered will be
properly endorsed and otherwise in proper form for transfer and that the persons
requesting such exchange will have paid to Parent or any agent designated by it
any transfer or other taxes required by reason of the issuance of certificates
for shares of Parent Common Stock in any name other than that of the registered
holder of the Certificates surrendered, or established to the satisfaction of
Parent or any agent designated by it that such tax has been paid or is not
payable.
(f) No Liability. Notwithstanding anything to the
contrary in this Section 1.8, none of the Exchange Agent, the Surviving
Corporation or any party hereto shall be liable to a holder of shares of Company
Capital Stock for any amount properly paid to a public official pursuant to any
applicable abandoned property, escheat or similar law.
1.9 No Further Ownership Rights in Company Capital Stock. All
consideration paid in respect of the surrender for exchange of shares of Company
Capital Stock in accordance with the terms hereof, shall be deemed to be full
satisfaction of all rights pertaining to such shares of Company Capital Stock,
and there shall be no further registration of transfers on the records of the
Surviving Corporation of shares of Company Capital Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for any reason, they
shall be canceled and exchanged as provided in this Article I.
1.10 Lost, Stolen or Destroyed Certificates. In the event any
Certificates evidencing shares of Company Capital Stock shall have been lost,
stolen or destroyed, the Exchange Agent shall issue in exchange for such lost,
stolen or destroyed certificates, upon the making of an affidavit of that fact
by the holder thereof, such shares of Parent Common Stock as may be required
pursuant to Section 1.8; provided, however, that Parent may, in its discretion
and as a condition precedent to the issuance thereof, require the owner of such
lost, stolen or destroyed certificates to deliver a bond in such sum as it may
reasonably direct against any claim that may be made against Parent or the
Exchange Agent with respect to the certificates alleged to have been lost,
stolen or destroyed.
1.11 Taking of Necessary Action; Further Action. If, at any time
after the Effective Time, any further action is necessary or desirable to carry
out the purposes of this Agreement and to vest the Surviving Corporation with
full right, title and possession to all assets, property, rights, privileges,
powers and franchises of the Company, Parent and Sub, the officers and directors
of the Company, Parent and Sub are fully authorized in the name of their
respective corporations or otherwise to take, and will take, all such lawful and
necessary action.
1.12 Tax and Accounting Consequences. It is intended by the
parties hereto that the Merger shall constitute a reorganization within the
meaning of Section 368 of the Internal Revenue Code of 1986, as amended (the
"Code") and the parties hereby adopt this Agreement as a plan of reorganization.
Each party has consulted with its own tax advisors and accountants with respect
to the tax and accounting consequences, respectively, of the Merger.
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<PAGE> 15
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub, subject to such
exceptions as are specifically disclosed in the disclosure schedule (referencing
the appropriate Section and paragraph numbers) supplied by the Company to Parent
and attached hereto as Exhibit C (the "Disclosure Schedule"), that on the date
hereof and as of the Effective Time as though made at the Effective Time as
follows:
2.1 Organization of the Company. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of California. The Company has the corporate power to own its properties
and to carry on its business as now being conducted. The Company is duly
qualified to do business and in good standing as a foreign corporation in each
jurisdiction in which the failure to be so qualified could have a Company
Material Adverse Effect. Each of the Subsidiaries (as defined in Section 2.2
below) of the Company is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its formation and has the corporate or
other applicable power to own its properties and to carry on its business as now
being conducted. Each of the Subsidiaries is duly qualified to do business and
in good standing in each jurisdiction outside of the jurisdiction of its
formation in which the failure to be so qualified would have a Company Material
Adverse effect. For all purposes of this Agreement, the term "Company Material
Adverse Effect" means any change, event or effect that is materially adverse to
the business, assets (including intangible assets), condition (financial or
otherwise), results of operations or prospects of the Company and its
subsidiaries, taken as a whole; provided, however, that a change, event or
effect resulting directly from the announcement of this Agreement and the Merger
shall not be deemed to have a Company Material Adverse Effect. The Company has
delivered a true and correct copy of its Articles of Incorporation and Bylaws,
each as amended to date, to Parent. Section 2.1 of the Disclosure Schedule lists
the directors and officers of the Company. The operations now being conducted by
the Company have not been conducted under any other name.
2.2 Subsidiaries. Except as set forth in Section 2.2 of the
Disclosure Schedule, the Company does not have, and has never had, any
subsidiaries and does not otherwise own, and has not otherwise owned, any shares
in the capital of or any interest in, or control of, directly or indirectly, any
corporation, partnership, association, joint venture or other business entity.
The entities set forth in Section 2.2 of the Disclosure Schedule are hereinafter
occasionally referred to individually as a "Subsidiary" and, collectively, as
the "Subsidiaries." Section 2.2 of the Disclosure Schedule also sets forth or
references the form and percentage interest of the Company in the Subsidiaries
and, to the extent that a Subsidiary set forth thereon is not wholly owned by
the Company, lists the other person, persons, entity or entities who have an
interest in such Subsidiary and references the percentage of such interest.
2.3 Company Capital Structure.
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<PAGE> 16
(a) The authorized Company Capital Stock consists of
30,000,000 shares of authorized Company Common Stock, with no par value, of
which 9,707,353 shares are issued and outstanding as of the date hereof, and
13,350,000 shares of Preferred Stock, with no par value, of which 4,750,000
shares are designated Series A Preferred Stock, of which 4,650,000 are issued
and outstanding as of the date hereof 4,850,000 shares are designated Series B
Preferred Stock, of which 4,778,780 are issued and outstanding of the date
hereof and 3,750,000 shares are designated Series C Preferred Stock, of which
3,552,540 are issued and outstanding as of the date hereof. Each share of
Company Series A Preferred Stock is convertible into 1 share of Company Common
Stock. Each share of Company Series B Preferred Stock is convertible into 1
share of Company Common Stock. Each share of Company Series C Preferred Stock is
convertible into 1 share of Company Common Stock. All outstanding shares of
Preferred Stock will convert into Common Stock prior to the Closing. The Company
Capital Stock is held by the persons, with the addresses and in the amounts set
forth in Section 2.3(a) of the Disclosure Schedule. All outstanding shares of
Company Capital Stock are duly authorized, validly issued, fully paid and
non-assessable and not subject to preemptive rights created by statute, the
Articles of Incorporation or Bylaws of the Company or any agreement to which the
Company is a party or by which it is bound and have been issued in compliance
with federal and state securities laws. There are no declared or accrued unpaid
dividends with respect to any shares of the Company's Capital Stock. The Company
has no other capital stock authorized, issued or outstanding.
(b) Except for the Stock Option Plans, the Company has
never adopted or maintained any Stock Option Plans or other plan providing for
equity compensation of any person. The Company has reserved 7,092,500 shares of
Company Common Stock for issuance to employees and consultants pursuant to the
Stock Option Plans, and 2,003,074 shares are subject to outstanding unexercised
options as of the date hereof. Except as set forth on Section 2.3(b) of the
Disclosure Schedule, there is no outstanding Company Capital Stock which is
subject to vesting. Section 2.3(b) of the Disclosure Schedule sets forth for
each outstanding Company Option, the name and the address of the holder, the
number of shares of Company Common Stock subject to such Company Warrant, the
exercise price of such Company Option, the vesting schedule of such Company
Option including the extent to which such Company Option has vested to the date
hereof and whether the vesting of such Company Option will be accelerated by
reason of the transactions contemplated by this Agreement, and whether such
Company Option is intended to qualify as an incentive stock option within the
meaning of Section 422 of the Code. Section 2.3(b) of the Disclosure Schedule
also sets forth the name of the holder of any Company Capital Stock subject to
vesting, the number of shares of Company Capital Stock subject to vesting and
the vesting schedule for such Company Capital Stock, including the extent vested
to date. Section 2.3(b) of the Disclosure Schedule sets forth for each
outstanding warrant to purchase Company Capital Stock (a "Company Warrant"), the
name of the holder, the number of shares of Company Common Stock subject to such
Company Warrant and the exercise price of such Company Warrant. Except as set
forth on Section 2.3(b) of the Disclosure Schedule, there are no options,
warrants, calls, rights, commitments or agreements of any character, written or
oral, to which the Company is a party or by which it is bound obligating the
Company to issue, deliver, sell, repurchase or redeem, or cause to be issued,
delivered, sold, repurchased or redeemed, any shares of the capital stock of the
Company or obligating the Company to grant, extend, accelerate the vesting of,
change the price of, otherwise amend or enter into any such option, warrant,
call, right, commitment or agreement. There are no outstanding or authorized
stock appreciation, phantom stock, profit participation, or other similar rights
with respect to the Company. There are no voting trusts, proxies, or other
agreements or understandings with respect to the voting stock of the Company.
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<PAGE> 17
2.4 Authority. The Company has all requisite power and authority
to enter into this Agreement and any Related Agreements (as hereinafter defined)
to which it is a party and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement and any Related
Agreements to which the Company is a party and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of the Company, and no further action is
required on the part of the Company to authorize the Agreement, any Related
Agreements to which it is a party and the transactions contemplated hereby and
thereby, subject only to the approval of this Agreement by the Shareholders of
record as of the Record Date. This Agreement and the Merger have been
unanimously approved by the Board of Directors of the Company. This Agreement
and any Related Agreements to which the Company is a party have been duly
executed and delivered by the Company and, assuming the due authorization,
execution and delivery by the other parties hereto and thereto, constitute the
valid and binding obligation of the Company enforceable in accordance with their
respective terms, subject to the laws of general application relating to
bankruptcy, insolvency and the relief of debtors and to rules of law governing
specific performance, injunctive relief or other equitable remedies. The
"Related Agreements" shall mean all such ancillary agreements and certificates
required in this Agreement to be executed and delivered in connection with the
transactions contemplated hereby.
2.5 No Conflict. The execution and delivery by the Company of
this Agreement and any Related Agreements to which the Company is a party do
not, and, the consummation of the transactions contemplated hereby and thereby
will not, conflict with, or result in any violation of, or default under (with
or without notice or lapse of time, or both), or give rise to a right of
termination, cancellation, modification or acceleration of any obligation or
loss of any benefit under (any such event, a "Conflict") (i) any provision of
the Articles of Incorporation and Bylaws of the Company, (ii) any mortgage,
indenture, lease, contract or other agreement or instrument, permit, concession,
franchise or license to which the Company or any of its respective properties or
assets (including intangible assets) is subject, or (iii) any judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to the Company or
its respective properties or assets.
2.6 Consents. No consent, waiver, approval, order or
authorization of, or registration, declaration or filing with, any court,
administrative agency or commission or other federal, state, county, local or
other foreign governmental authority, instrumentality, agency or commission
("Governmental Entity") is required by or with respect to the Company in
connection with the execution and delivery of this Agreement and any Related
Agreements to which the Company is a party or the consummation of the
transactions contemplated hereby and thereby, except for (i) such consents,
waivers, approvals, orders, authorizations, registrations, declarations and
filings as may be required under applicable securities laws and (ii) the filing
of the Merger Agreement with the Secretary of State of the State of California.
2.7 Company Financial Statements. Section 2.7 of the Disclosure
Schedule sets forth the Company's audited consolidated balance sheet as of
December 31, 1998 and the related audited consolidated statements of income and
cash flow for the twelve-month periods ended December 31, 1998 (the "Audited
Financials") and the Company's unaudited balance sheets as of December 31, 1999
and January 31, 2000, and the related unaudited statements of income and cash
flow for the twelve months and one month, respectively, then ended (the
"Unaudited Financials"). The Unaudited Financials and the Audited Financials are
correct in all material respects and have been prepared in accordance with GAAP
applied on a basis consistent throughout the periods indicated and consistent
with each other. The Unaudited Financials and Audited Financials present fairly
the consolidated financial condition and consolidated operating results of the
Company and any consolidated subsidiaries as of the dates and during the periods
indicated therein, subject in the case of the Unaudited Financials, to normal
year-end adjustments, which will not be material in amount or
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<PAGE> 18
significance and provided that the Unaudited Financials do not include footnotes
typically associated with financial statements. The Company's unaudited Balance
Sheet as of January 31, 2000 shall be hereinafter referred to as the "Current
Balance Sheet."
2.8 No Undisclosed Liabilities. The Company has no liability,
indebtedness, obligation, expense, claim, deficiency, guaranty or endorsement of
any type, whether accrued, absolute, contingent, matured, unmatured or other,
which individually or in the aggregate (i) has not been reflected in the Current
Balance Sheet, or (ii) has not arisen in the ordinary course of business
consistent with past practices since December 31, 1999, none of which is
material to the business, results of operations or condition (financial or
otherwise) of the Company.
2.9 No Changes. Since January 31, 2000 through the date of this
Agreement, there has not been, occurred or arisen any:
(a) amendments or changes to the Articles of
Incorporation or Bylaws of the Company;
(b) capital expenditure or commitment by the Company,
exceeding $50,000 individually or $100,000 in the aggregate;
(c) destruction of, damage to or loss of any material
assets, business or customer of the Company (whether or not covered by
insurance);
(d) labor trouble or claim of wrongful discharge or
other unlawful labor practice or action;
(e) change in accounting methods or practices (including
any change in depreciation or amortization policies or rates) by the Company;
(f) revaluation by the Company of any of its assets;
(g) declaration, setting aside or payment of a dividend
or other distribution with respect to the capital stock of the Company or any
direct or indirect redemption, purchase or other acquisition by the Company of
its capital stock other than repurchase of shares of Company Capital Stock from
employees in connection with the termination of such employees' employment with
the Company;
(h) increase in the salary or other compensation payable
or to become payable by the Company to any of its officers, directors, employees
or advisors, or the declaration, payment or commitment or obligation of any kind
for the payment, by the Company of a bonus or other additional salary or
compensation to any such person, other than "spot" bonuses paid to employees and
salary increases that do not exceed $20,000 individually or $100,000 in the
aggregate, annually;
(i) agreement, contract, covenant, instrument, lease,
license or commitment to which the Company is a party or by which it or any of
its assets (including intangible assets) are bound or any termination,
extension, amendment or modification the terms of any agreement, contract,
covenant, instrument, lease, license or commitment to which the Company is a
party or by which it or any of its assets are bound in each case involving
obligations or payments by or to the Company in excess of $100,000
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<PAGE> 19
individually or $250,000 in the aggregate, other than commercial licenses of the
Company's software in the ordinary course of business;
(j) sale, lease, license or other disposition of any of
the assets or properties of the Company valued in excess of $50,000 individually
or $100,000 in the aggregate or any creation of any security interest in such
assets or properties, other than commercial licenses of the Company's software
in the ordinary course of business;
(k) loan by the Company to any person or entity,
incurring by the Company of any indebtedness, guaranteeing by the Company of any
indebtedness, issuance or sale of any debt securities of the Company or
guaranteeing of any debt securities of others, except for advances to employees
for travel and business expenses in the ordinary course of business, consistent
with past practice;
(l) waiver or release of any right or claim of the
Company including any write-off or other compromise of any account receivable of
the Company involving amounts in excess of $10,000 individually or $50,000 in
the aggregate;
(m) the commencement or notice or threat or reasonable
basis therefor of any lawsuit or, to the Company's Knowledge, proceeding or
investigation against the Company or its affairs;
(n) knowledge of any claim or potential claim of
ownership by any person other than the Company of the Company Intellectual
Property (as defined in Section 2.13) or of infringement by the Company of any
other person's Intellectual Property (as defined in Section 2.13);
(o) issuance or sale, or contract to issue or sell, by
the Company of any shares of its capital stock or securities exchangeable,
convertible or exercisable therefor, or any securities, warrants, options or
rights to purchase any of the foregoing, other than issuances under the Stock
Option Plans reflected on Schedule 2.3;
(p) (i) sale or license of any Company Intellectual
Property or entering into of any agreement with respect to the Company
Intellectual Property with any person or entity or with respect to the
Intellectual Property of any person or entity other than commercial licenses of
the Company's software in the ordinary course of business or (ii) purchase or
license of any Intellectual Property or entering into of any agreement with
respect to the Intellectual Property of any person or entity other than the
Company, except for end-user licenses of commercially available software
applications for internal use by the Company in the ordinary course of business
or (iii) change in pricing or royalties set or charged by the Company to its
customers or licensees or in pricing or royalties set or charged by persons who
have licensed Intellectual Property to the Company;
(q) event or condition of any character that has had or
is reasonably likely to have a Company Material Adverse Effect;
(r) transaction by the Company except in the ordinary
course of business as conducted on that date and consistent with past practices;
or
(s) negotiation or agreement by the Company or any
officer or employee thereof to do any of the things described in the preceding
clauses (a) through (r) (other than negotiations or agreements with Parent and
its representatives regarding the transactions contemplated by this Agreement).
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<PAGE> 20
2.10 Tax Matters.
(a) Definition of Taxes. For the purposes of this
Agreement, "Tax" or, collectively, "Taxes," means (i) any and all federal,
state, local and foreign taxes, assessments and other governmental charges,
duties, impositions and liabilities, including taxes based upon or measured by
gross receipts, income, profits, sales, use and occupation, and value added, ad
valorem, transfer, franchise, withholding, payroll, recapture, employment,
excise and property taxes, together with all interest, penalties and additions
imposed with respect to such amounts; (ii) any liability for the payment of any
amounts of the type described in clause (i) as a result of being a member of an
affiliated, consolidated, combined or unitary group for any period; and (iii)
any liability for the payment of any amounts of the type described in clause (i)
or (ii) as a result of any express or implied obligation to indemnify any other
person or as a result of any obligations under any agreements or arrangements
with any other person with respect to such amounts and including any liability
for taxes of a predecessor entity.
(b) Tax Returns and Audits.
(i) As of the Effective Time, the Company will
have prepared and timely filed all required federal, state, local and foreign
returns, estimates, information statements and reports ("Returns") relating to
any and all Taxes concerning or attributable to the Company or its operations
and such Returns are true and correct and have been completed in accordance with
applicable law.
(ii) As of the Effective Time, the Company (A)
will have paid all Taxes required to be paid by the Company on or before the
Effective Time or will have reflected a reserve for such Taxes on the Current
Balance Sheet and will have withheld with respect to its employees all federal
and state income taxes, FICA, FUTA and other Taxes required to be withheld, and
(B) will have accrued on the Current Balance Sheet all Taxes attributable to the
periods covered by the Current Balance Sheet and will not have incurred any
liability for Taxes for the period prior to the Effective Time other than in the
ordinary course of business.
(iii) The Company has not been delinquent in the
payment of any Tax nor is there any Tax deficiency outstanding, assessed or
proposed against the Company, nor has the Company executed any waiver of any
statute of limitations on or extending the period for the assessment or
collection of any Tax.
(iv) No audit or other examination of any Return
of the Company is presently in progress, nor has the Company been notified of
any request for such an audit or other examination.
(v) As of the date of the Current Balance Sheet,
the Company has no liabilities for due but unpaid federal, state, local and
foreign Taxes which have not been accrued or reserved against on the Current
Balance Sheet, whether asserted or unasserted, contingent or otherwise.
(vi) The Company has made available to Parent or
its legal counsel, copies of all foreign, federal and state income and all state
sales and use the Returns for the Company filed for all periods since its
inception.
(vii) There are (and immediately following the
Effective Time there will be) no liens, pledges, charges, claims, restrictions
on transfer, mortgages, security interests or other encumbrances
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<PAGE> 21
of any sort (collectively, "Liens") on the assets of the Company relating to or
attributable to Taxes other than Liens for Taxes not yet due and payable.
(viii) None of the Company's assets are treated
as "tax-exempt use property", within the meaning of Section 168(h) of the Code.
(ix) As of the Effective Time, there will not be
any contract, agreement, plan or arrangement, including but not limited to the
provisions of this Agreement, covering any employee or former employee of the
Company that, individually or collectively, could give rise to the payment of
any amount that would not be deductible as an expense under applicable law.
(x) The Company has not filed any consent
agreement under Section 341(f) of the Code or agreed to have Section 341(f)(4)
of the Code apply to any disposition of a subsection (f) asset (as defined in
Section 341(f)(4) of the Code) owned by the Company.
(xi) The Company is not a party to any tax
sharing, indemnification or allocation agreement nor does the Company owe any
amount under any such agreement, other than this Agreement.
(xii) The Company's tax basis in its assets for
purposes of determining its future amortization, depreciation and other federal
income tax deductions is accurately reflected on the Company's tax books and
records.
(xiii) The Company is not and has never been at
any time, a "United States Real Property Holding Corporation" within the meaning
of Section 897(c)(2) of the Code.
(xiv) No adjustment relating to any Return filed
by the Company has been proposed formally or, to the Knowledge of the Company,
informally by any tax authority to the Company or any representative thereof.
(xv) The Company has not participated (either as
a "distributing" or "controlled" corporation) in any transaction described in
Section 355 of the Code.
(c) Executive Compensation Tax. There is no contract,
agreement, plan or arrangement to which the Company is a party as of the date of
this Agreement, including but not limited to the provisions of this Agreement,
covering any employee or former employee of Company, individually or
collectively, that could give rise to the payment of any amount that would not
be deductible pursuant to Sections 280G, 404 or 162(m) of the Code or constitute
a "parachute payment" under Section 280G of the Code.
2.11 Restrictions on Business Activities. There is no agreement
(noncompete or otherwise), commitment, judgment, injunction, order or decree to
which the Company is a party or otherwise binding upon the Company which has or
may have the effect of prohibiting or impairing any business practice of the
Company, any acquisition of property (tangible or intangible) by the Company or
the conduct of business by the Company. Without limiting the foregoing, the
Company has not entered into any agreement under which it is restricted from
selling, licensing or otherwise distributing any of its technology or products
to or providing services to, customers or potential customers or any class of
customers, in any geographic area, during any period of time or in any segment
of the market.
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<PAGE> 22
2.12 Title of Properties; Absence of Liens and Encumbrances;
Condition of Equipment.
(a) The Company does not own any real property, nor has
the Company ever owned any real property. Section 2.12(a) of the Disclosure
Schedule sets forth a list of all real property currently leased by the Company,
the name of the lessor, the date of the lease and each amendment thereto and,
with respect to any current lease, the aggregate annual rental and/or other fees
payable under any such lease. All such current leases are in full force and
effect, are valid and effective in accordance with their respective terms, and
there is not, under any of such leases, any existing default or event of default
(or event which with notice or lapse of time, or both, would constitute a
default).
(b) The Company has good and valid title to, or, in the
case of leased properties and assets, valid leasehold interests in, all of its
tangible properties and assets, real, personal and mixed, used or held for use
in its business, free and clear of any Liens, except as reflected in the Current
Balance Sheet and except for Liens for Taxes not yet due and payable and such
imperfections of title and encumbrances, if any, which are not material in
character, amount or extent, and which do not detract from the value, or
interfere with the present use, of the property subject thereto or affected
thereby.
(c) Section 2.12(c) of the Disclosure Schedule lists
all material items of equipment (the "Equipment") owned or leased by the Company
as of the date hereof, and such Equipment is, (i) adequate for the conduct of
the business of the Company as currently conducted and (ii) in good operating
condition, regularly and properly maintained, subject to normal wear and tear.
(d) The Company has sole and exclusive ownership, free
and clear of any Liens, of all customer files and other customer information
relating to customers of the Company's current and former customers (the
"Customer Information"). No person other than the Company possesses any claims
or rights with respect to use of the Customer Information.
2.13 Intellectual Property.
(a) For the purposes of this Agreement, the following
terms have the following definitions:
"Intellectual Property" shall mean any or all of the
following (i) works of authorship including, without limitation, computer
programs, source code and executable code, whether embodied in software,
firmware or otherwise, documentation, designs, files, records, data and mask
works, (ii) inventions (whether or not patentable), improvements, and
technology, (iii) proprietary and confidential information, trade secrets and
know how, (iv) databases, data compilations and collections and technical data,
(v) logos, trade names, trade dress, trademarks and service marks, (vi) domain
names, web addresses and sites, (vii) tools, methods and processes, and (viii)
all versions of the foregoing in any form and embodied in any media.
"Intellectual Property Rights" shall mean worldwide
common law and statutory rights associated with (i) patents and patent
applications, (ii) copyrights, copyrights registrations and copyrights
applications and "moral" rights, (iii) the protection of trade and industrial
secrets and confidential information, (iv) other proprietary rights relating to
intangible intellectual property, (v) trademarks, trade names and service marks,
(vi) analogous rights to those set forth above, and (vii) divisions,
continuations,
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<PAGE> 23
renewals, reissuances and extensions of the foregoing (as applicable) now
existing or hereafter filed, issued or acquired.
"Company Intellectual Property" shall mean any
Intellectual Property and Intellectual Property Rights that are owned by or
exclusively licensed to the Company.
"Registered Intellectual Property Rights" shall mean
Intellectual Property Rights that have been registered, filed, certified or
otherwise perfected by recordation with any state, government or other public
legal authority.
(b) Section 2.13(b) of the Disclosure Schedule lists as
of the date hereof all Registered Intellectual Property owned by, or filed in
the name of, the Company (the "Company Registered Intellectual Property") and
lists any proceedings or actions before any court, tribunal (including the
United States Patent and Trademark Office (the "PTO") or equivalent authority
anywhere in the world) related to any of the Company Registered Intellectual
Property Rights.
(c) Subject to licenses of the Company's software in
the ordinary course of business, each item of Company Intellectual Property,
including all Company Registered Intellectual Property listed in Section 2.13(b)
of the Disclosure Schedule and all Intellectual Property licensed to the
Company, is free and clear of any Liens or other encumbrances. The Company is
the exclusive owner or licensee of all Company Intellectual Property.
(d) To the extent that any Intellectual Property has
been developed or created independently or jointly by any person other than the
Company for which the Company has, directly or indirectly, paid, the Company has
a written agreement with such person with respect thereto, and the Company
thereby has obtained ownership of, and is the exclusive owner of, all such
Intellectual Property and associated Intellectual Property Rights by operation
of law or by valid assignment.
(e) Subject to licenses of the Company's software in the
ordinary course of business, the Company has not transferred ownership of or
granted any license of or right to use or authorized the retention of any rights
to use any Intellectual Property or Intellectual Property Rights that is or was
Company Intellectual Property, to any other person.
(f) The Company Intellectual Property, together with
other Intellectual Property to which the Company has a valid and subsisting
license, constitutes all the Intellectual Property and Intellectual Property
Rights used in and/or necessary to the conduct of the business of the Company as
it has been conducted in the past or as it currently is conducted, or currently
planned to be conducted, including, without limitation, the design, development,
manufacture, use, import and sale of products, technology and services
(including products, technology or services currently under development).
(g) Other than "shrink-wrap" and similar widely
available commercial end-user licenses, and licenses of the Company's software
in the ordinary course of business the contracts, licenses and agreements listed
in Section 2.13(g) of the Disclosure Schedule include all contracts, licenses
and agreements to which the Company is a party with respect to any Intellectual
Property and Intellectual Property Rights. No person who has licensed
Intellectual Property or Intellectual Property Rights to the Company has
ownership rights or license rights to improvements made by the Company in such
Intellectual Property which has been licensed to the Company.
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(h) Section 2.13(h) of the Disclosure Schedule lists
as of the date hereof all contracts, licenses and agreements between the Company
and any other person wherein or whereby the Company has agreed to, or assumed,
any obligation or duty to warrant, indemnify, reimburse, hold harmless, guaranty
or otherwise assume or incur any obligation or liability or provide a right of
rescission with respect to the infringement or misappropriation by the Company
or such other person of the Intellectual Property Rights of any person other
than the Company.
(i) The operation of the business of the Company as it
has been conducted in the past or as it currently is conducted or is currently
planned to be conducted by the Company, including but not limited to the design,
development, use, import, manufacture and sale of the products, technology or
services (including products, technology or services currently under
development) of the Company does not infringe or misappropriate the Intellectual
Property Rights of any person, violate the rights of any person (including
rights to privacy or publicity), or constitute unfair competition or trade
practices under the laws of any jurisdiction, and the Company has not received
notice from any person claiming that such operation or any act, product,
technology or service (including products, technology or services currently
under development) of the Company infringes or misappropriates the Intellectual
Property Rights of any person or constitutes unfair competition or trade
practices under the laws of any jurisdiction (nor does the Company have
Knowledge of any basis therefor).
(j) Each item of Company Registered Intellectual
Property is valid and subsisting, and all necessary registration, maintenance
and renewal fees in connection with such Company Registered Intellectual
Property have been paid and all necessary documents and certificates in
connection with such Company Registered Intellectual Property have been filed
with the relevant patent, copyright, trademark or other authorities in the
United States or foreign jurisdictions, as the case may be, for the purposes of
maintaining such Company Registered Intellectual Property. There are no actions
that must be taken by the Company within sixty (60) days of the date hereof,
including the payment of any registration, maintenance or renewal fees or the
filing of any documents, applications or certificates for the purposes of
maintaining, perfecting or preserving or renewing any Company Registered
Intellectual Property. In each case in which the Company has acquired any
Intellectual Property Rights from any person, the Company has obtained a valid
and enforceable assignment sufficient to transfer such rights in such
Intellectual Property as are necessary for development and license of the
Company's products.
(k) There are no contracts, licenses or agreements
between the Company and any other person with respect to Company Intellectual
Property under which there is any dispute known to the Company regarding the
scope of such agreement, or performance under such agreement including with
respect to any payments to be made or received by the Company thereunder.
(l) To the Knowledge of the Company, no person is
infringing or misappropriating any Company Intellectual Property.
(m) The Company has taken commercially reasonable
steps that are required to protect the Company's rights in confidential
information and trade secrets of the Company or provided by any other person to
the Company. Without limiting the foregoing, the Company has, and enforces, a
policy requiring each employee, consultant and contractor to execute proprietary
information, confidentiality and assignment agreements substantially in the
Company's standard forms, and all current and former employees, consultants and
contractors of the Company have executed such an agreement.
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(n) No Company Intellectual Property, Intellectual
Property Rights or service of the Company is subject to any proceeding or
outstanding decree, order, judgment, agreement or stipulation that restricts in
any manner the use, transfer or licensing thereof by the Company or may affect
the validity, use or enforceability of such Company Intellectual Property.
(o) No (i) product, technology, service or publication
of the Company, (ii) material published or distributed by the Company or (iii)
conduct or statement of Company constitutes obscene material, a defamatory
statement or material, false advertising or otherwise violates any law or
regulation.
(p) All of the Company's products (including products
currently under development) will record, store, process, calculate and present
calendar dates falling on and after (and if applicable, spans of time including)
January 1, 2000, and will calculate any information dependent on or relating to
such dates in the same manner, and with the same functionality, data integrity
and performance, as the products record, store, process, calculate and present
calendar dates on or before December 31, 1999, or calculate any information
dependent on or relating to such dates (collectively, "Year 2000 Compliant").
All of the Company's products (i) will lose no functionality with respect to the
introduction of records containing dates falling on or after January 1, 2000 and
(ii) will be interoperable with other products used and distributed by Parent
that may deliver records to the Company's products or receive records from the
Company's products, or interact with the Company's products, including but not
limited to back-up and archived data. All of the Company's internal computer and
technology products and systems are Year 2000 Compliant.
2.14 Agreements, Contracts and Commitments.
(a) Except as set forth in Sections 2.13(g), 2.13(h) or
2.14(a) of the Disclosure Schedule, as of the date hereof, the Company is not a
party to nor is it bound by:
(i) any employment or consulting agreement,
contract or commitment, other than confidentiality agreements, with an employee
or individual consultant or salesperson or consulting or sales agreement,
contract or commitment with a firm or other organization,
(ii) any agreement or plan, including, without
limitation, any Stock Option Plans, stock appreciation rights plan or stock
purchase plan, any of the benefits of which will be increased, or the vesting of
benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the value of any of the benefits
of which will be calculated on the basis of any of the transactions contemplated
by this Agreement,
(iii) any fidelity or surety bond or completion
bond,
(iv) any lease of personal property having a
value individually in excess of $50,000 or $100,000 in the aggregate,
(v) any agreement, contract or commitment
containing any covenant limiting the freedom of the Company to engage in any
line of business or to compete with any person,
(vi) any agreement, contract or commitment
relating to capital expenditures and involving future payments in excess of
$250,000 individually or $1,000,000 in the aggregate,
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(vii) any agreement, contract or commitment
relating to the disposition or acquisition of assets or any interest in any
business enterprise outside the ordinary course of the Company's business,
(viii) any mortgages, indentures, loans or
credit agreements, security agreements or other agreements or instruments
relating to the borrowing of money or extension of credit,
(ix) any purchase order or contract for the
purchase of materials involving in excess of $250,000 individually,
(x) any construction contracts involving future
obligation of the Company in excess of $250,000 individually,
(xi) any dealer, distribution, joint marketing
or development agreement,
(xii) any sales representative, original
equipment manufacturer, value added, remarketer, reseller or independent
software vendor or other agreement for use or distribution of the Company's
products, technology or services, or
(xiii) any other agreement, contract or
commitment that involves $250,000 individually or is not cancelable without
penalty within thirty (30) days.
(b) The Company is in compliance with and has not
breached, violated or defaulted under, or received notice that it has breached,
violated or defaulted under, any of the terms or conditions of any agreement,
contract, covenant, instrument, lease, license or commitment to which it is a
party or by which it is bound (collectively a "Contract"), nor does the Company
have Knowledge of any event that would constitute such a breach, violation or
default with the lapse of time, giving of notice or both. Each Contract is in
full force and effect and is not subject to any default thereunder by any party
obligated to the Company pursuant thereto. The Company has obtained, or will
obtain prior to the Closing Date, all necessary consents, waivers and approvals
of parties to any Contract as are required thereunder in connection with the
Merger or for such Contracts to remain in effect without modification after the
Closing. Following the Effective Time, the Company will be permitted to exercise
all of its rights under the Contracts without the payment of any additional
amounts or consideration other than ongoing fees, royalties or payments which
the Company would otherwise be required to pay had the transactions contemplated
by this Agreement not occurred. and all consents, waivers, assignments and
approvals under any of the Contracts as may be required in connection with the
Merger are set forth in Section 2.14(c) of the Disclosure Schedule.
2.15 Interested Party Transactions. No officer, director or, to
the Company's knowledge, Shareholder (nor any ancestor, sibling, descendant or
spouse of any of such persons, or any trust, partnership or corporation in which
any of such persons has or has had any direct or indirect interest), has or has
had, directly or indirectly, (i) an interest in any entity which furnished or
sold, or furnishes or sells, services, products or technology that the Company
furnishes or sells, or proposes to furnish or sell, or (ii) any interest in any
entity that purchases from or sells or furnishes to the Company any goods or
services or (iii) a beneficial interest in any Contract; provided, that
ownership of no more than one percent (1%) of the outstanding voting stock of a
publicly traded corporation shall not be deemed an "interest in any entity" for
purposes of this Section 2.15.
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2.16 Governmental Authorization. Section 2.16 of the Disclosure
Schedule accurately lists each consent, license, permit, grant or other
authorization issued to the Company by a Governmental Entity (i) pursuant to
which the Company currently operates or holds any interest in any of their
properties or (ii) which is required for the operation of its business or the
holding of any such interest (herein collectively called "Company
Authorizations"). The Company Authorizations are in full force and effect and
constitute all Company Authorizations required to permit the Company to operate
or conduct its business or hold any interest in its properties or assets.
2.17 Litigation. There is no action, suit, claim or proceeding
of any nature pending, or, to the Company's Knowledge, threatened, against the
Company, its properties (tangible or intangible) or any of their officers or
directors, nor, to the Knowledge of the Company, is there any reasonable basis
therefor. To the Company's Knowledge, there is no investigation pending or
threatened against the Company, its properties or any of their officers or
directors (nor, to the best Knowledge of the Company, is there any reasonable
basis therefor) by or before any Governmental Entity. No Governmental Entity has
at any time challenged or questioned the legal right of the Company to conduct
its operations as presently or previously conducted.
2.18 Accounts Receivable; Inventory.
(a) The Company has made available to Parent a list of
all accounts receivable of the Company as of January 31, 2000 along with a range
of days elapsed since invoice.
(b) All accounts receivable arose in the ordinary
course of business, are carried at values determined in accordance with GAAP
consistently applied. The reserves associated with such accounts receivable were
established in accordance with GAAP. No person has any Lien on any of such
Accounts Receivable and no request or agreement for deduction or discount has
been made with respect to any of such Accounts Receivable.
(c) The Company does not maintain any inventory on its
financial statements. Such policy is in accordance with GAAP.
2.19 Minute Books. The minutes of the Company made available to
counsel for Parent are the only minutes of the Company and contain a reasonably
accurate summary of all meetings of the Board of Directors (or committees
thereof) of the Company and its respective shareholders or actions by written
consent since the time of incorporation of the Company.
2.20 Environmental Matters.
(a) Hazardous Material. The Company has not: (i)
operated any underground storage tanks at any property that the Company has at
any time owned, operated, occupied or leased; or (ii) illegally released any
material amount of any substance that has been designated by any Governmental
Entity or by applicable federal, state or local law to be radioactive, toxic,
hazardous or otherwise a danger to health or the environment, including, without
limitation, PCBs, asbestos, petroleum, and urea-formaldehyde and all substances
listed as hazardous substances pursuant to the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended, or defined as a
hazardous waste pursuant to the United States Resource Conservation and Recovery
Act of 1976, as amended, and the regulations promulgated pursuant to said laws
(a "Hazardous Material"), but excluding office and janitorial supplies properly
and safely maintained. To the Company's knowledge, no Hazardous Materials are
present as a result of the
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<PAGE> 28
deliberate actions of the Company or as a result of any actions of any other
person or otherwise, in, on or under any property, including the land and the
improvements, ground water and surface water thereof, that the Company has at
any time owned, operated, occupied or leased.
(b) Hazardous Materials Activities. The Company has not
transported, stored, used, manufactured, disposed of, released or exposed its
employees or others to Hazardous Materials in violation of any law in effect on
or before the Effective Time, nor has either of them disposed of, transported,
sold, or manufactured any product containing a Hazardous Material (any or all of
the foregoing being collectively referred to as "Hazardous Materials
Activities") in violation of any rule, regulation, treaty or statute promulgated
by any Governmental Entity in effect prior to or as of the date hereof to
prohibit, regulate or control Hazardous Materials or any Hazardous Material
Activity.
(c) Permits. The Company currently holds all
environmental approvals, permits, licenses, clearances and consents (the
"Environmental Permits") necessary for the conduct of the Company's Hazardous
Material Activities, respectively, and other businesses of the Company as such
activities and businesses are currently being conducted.
(d) Environmental Liabilities. No action, proceeding,
revocation proceeding, amendment procedure, writ, injunction or claim is
pending, or to the Company's Knowledge, threatened concerning any Environmental
Permit, Hazardous Material or any Hazardous Materials Activity of the Company.
The Company does not have Knowledge of any fact or circumstance which could
reasonably be expected to involve the Company in any environmental litigation or
impose upon the Company any environmental liability.
2.21 Brokers' and Finders' Fees; Third Party Expenses. Except as
set forth in Section 2.21(a) of the Disclosure Schedule, the Company has not
incurred, nor will it incur, directly or indirectly, any liability for brokerage
or finders' fees or agents' commissions or any similar charges in connection
with the Agreement or any transaction contemplated hereby. Section 2.21(a) of
the Disclosure Schedule sets forth the principal terms and conditions of any
agreement, written or oral, with respect to such fees. Section 2.21(b) of the
Disclosure Schedule sets forth the Company's current reasonable estimate of all
Third Party Expenses (as defined in Section 5.9) expected to be incurred by the
Company in connection with the negotiation and effectuation of the terms and
conditions of this Agreement and the transactions contemplated hereby.
2.22 Employee Matters and Benefit Plans.
(a) Definitions. For purposes of this Agreement, the
following terms shall have the meanings set forth below:
(i) "Code" shall mean the Internal Revenue Code
of 1986, as amended;
(ii) "Company Employee Plan" shall mean any
plan, program, policy, practice, contract, agreement or other arrangement
providing for compensation, severance, termination pay, deferred compensation,
performance awards, stock or stock-related awards, fringe benefits or other
employee benefits or remuneration of any kind, whether written or unwritten or
otherwise, funded or unfunded, including without limitation, each "employee
benefit plan," within the meaning of Section 3(3) of ERISA which is or has been
maintained, contributed to, or required to be contributed to, by the Company or
any
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<PAGE> 29
ERISA Affiliate for the benefit of any Employee, or with respect to which the
Company or any ERISA Affiliate has or may have any liability or obligation;
(iii) "COBRA" shall mean the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended;
(iv) "DOL" shall mean the Department of Labor;
(v) "Employee" shall mean any current or former
employee, consultant or director of the Company or any Affiliate;
(vi) "Employee Agreement" shall mean each
management, employment, severance, consulting, relocation, repatriation,
expatriation, visas, work permit or other agreement, contract or understanding
between the Company or any ERISA Affiliate and any Employee pursuant to which
such Employee has (A) any continued right of employment, (B) any right of
severance, separation pay, salary continuation, or other compensation or money
owed, or (C) any change of right as a result of a merger, acquisition or change
of control of the Company;
(vii) "ERISA" shall mean the Employee Retirement
Income Security Act of 1974, as amended;
(viii) "ERISA Affiliate" shall mean any other
person or entity under common control with the Company within the meaning of
Section 414(b), (c), (m) or (o) of the Code and the regulations issued
thereunder;
(ix) "FMLA" shall mean the Family Medical Leave
Act of 1993, as amended;
(x) "International Employee Plan" shall mean
each Company Employee Plan that has been adopted or maintained by the Company or
any ERISA Affiliate, whether informally or formally, or with respect to which
the Company or any ERISA Affiliate will or may have any liability, for the
benefit of Employees who perform services outside the United States;
(xi) "IRS" shall mean the Internal Revenue
Service;
(xii) "Multiemployer Plan" shall mean any
"Pension Plan" (as defined below) which is a "multiemployer plan," as defined in
Section 3(37) of ERISA;
(xiii) "PBGC" shall mean the Pension Benefit
Guaranty Corporation; and
(xiv) "Pension Plan" shall mean each Company
Employee Plan which is an "employee pension benefit plan," within the meaning of
Section 3(2) of ERISA.
(b) Schedule. Section 2.22(b) of the Disclosure
Schedule contains an accurate and complete list of each Company Employee Plan,
International Employee Plan, each Employment Agreement. The Company does not
have any plan or commitment to establish any new Company Employee Plan,
International Employee Plan, or Employee Agreement, to modify any Company
Employee Plan or Employee Agreement (except to the extent required by law or to
conform any such Company Employee Plan or Employee Agreement to the requirements
of any applicable law, in each case as previously disclosed to
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<PAGE> 30
Parent in writing, or as required by this Agreement), or to adopt or enter into
any Company Employee Plan, International Employee Plan, or Employee Agreement.
(c) Documents. The Company has made available to
Parent: (i) correct and complete copies of all documents embodying each Company
Employee Plan, International Employee Plan, and each Employee Agreement
including (without limitation) all amendments thereto and all related trust
documents; (ii) the most recent annual actuarial valuations, if any, prepared
for each Company Employee Plan; (iii) the three (3) most recent annual reports
(Form Series 5500 and all schedules and financial statements attached thereto),
if any, required under ERISA or the Code in connection with each Company
Employee Plan; (iv) if the Company Employee Plan is funded, the most recent
annual and periodic accounting of Company Employee Plan assets; (v) the most
recent summary plan description together with the summary(ies) of material
modifications thereto, if any, required under ERISA with respect to each Company
Employee Plan; (vi) all IRS determination, opinion, notification and advisory
letters, and all applications and correspondence to or from the IRS or the DOL
with respect to any such application or letter; (vii) all material written
agreements and contracts relating to each Company Employee Plan, including, but
not limited to, administrative service agreements, group annuity contracts and
group insurance contracts; (viii) all communications material to any Employee or
Employees relating to any Company Employee Plan and any proposed Company
Employee Plans, in each case, relating to any amendments, terminations,
establishments, increases or decreases in benefits, acceleration of payments or
vesting schedules or other events which would result in any material liability
to the Company; (ix) all correspondence to or from any governmental agency
relating to any Company Employee Plan; (x) all COBRA forms and related notices
(or such forms and notices as required under comparable law); (xi) all policies
pertaining to fiduciary liability insurance covering the fiduciaries for each
Company Employee Plan; (xii) the three (3) most recent plan years discrimination
tests for each Company Employee Plan; and (xiii) all registration statements,
annual reports (Form 11-K and all attachments thereto) and prospectuses prepared
in connection with each Company Employee Plan.
(d) Employee Plan Compliance. (i) The Company has
performed in all material respects all obligations required to be performed by
it under, is not in default or violation of, and has no knowledge of any default
or violation by any other party to each Company Employee Plan, and each Company
Employee Plan has been established and maintained in all material respects in
accordance with its terms and in compliance with all applicable laws, statutes,
orders, rules and regulations, including but not limited to ERISA or the Code;
(ii) each Company Employee 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, notification or advisory
letter from the IRS with respect to each such Plan as to its qualified status
under the Code, including all amendments to the Code effected by the Tax Reform
Act of 1986 and subsequent legislation, 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
as to the qualified status of each such Company Employee Plan; (iii) no
"prohibited transaction," within the meaning of Section 4975 of the Code or
Sections 406 and 407 of ERISA, and not otherwise exempt under Section 4975 or
Section 408 of ERISA (or any administrative class exemption issued thereunder),
has occurred with respect to any Company Employee Plan; (iv) there are no
actions, suits or claims pending, or, to the knowledge of the Company,
threatened or reasonably anticipated (other than routine claims for benefits)
against any Company Employee Plan or against the assets of any Company Employee
Plan; (v) each Company Employee Plan (other than any Stock Option Plans) can be
amended, terminated or otherwise discontinued after the Effective Time, without
material liability to the Parent, Company or any of its Affiliates (other than
ordinary administration expenses); (vi) there are no audits, inquiries or
proceedings
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<PAGE> 31
pending or, to the knowledge of the Company or any Affiliates, threatened by the
IRS or DOL with respect to any Company Employee Plan; and (vii) neither the
Company nor any Affiliate is subject to any penalty or tax with respect to any
Company Employee Plan under Section 502(i) of ERISA or Sections 4975 through
4980 of the Code.
(e) Pension Plan. Neither the Company nor any ERISA
Affiliate has ever maintained, established, sponsored, participated in, or
contributed to, any Pension Plan which is subject to Title IV of ERISA or
Section 412 of the Code.
(f) Multiemployer and Multiple Employer Plans. At no
time has the Company or any ERISA Affiliate contributed to or been obligated to
contribute to any Multiemployer Plan. Neither the Company, nor any ERISA
Affiliate has at any time ever maintained, established, sponsored, participated
in, or contributed to any multiple employer plan, or to any plan described in
Section 413(c) of the Code.
(g) No Post-Employment Obligations. No Company
Employee Plan provides, or reflects or represents any liability to provide
retiree health benefits to any person for any reason, except as may be required
by COBRA or other applicable statute, and the Company has never represented,
promised or contracted (whether in oral or written form) to any Employee (either
individually or to Employees as a group) or any other person that such
Employee(s) or other person would be provided with retiree health benefits,
except to the extent required by statute.
(h) Health Care Compliance. Neither the Company nor any
ERISA Affiliate has, prior to the Effective Time and in any material respect,
violated any of the health care continuation requirements of COBRA, the
requirements of FMLA, the requirements of the Health Insurance Portability and
Accountability Act of 1996, the requirements of the Women's Health and Cancer
Rights Act, the requirements of the Newborns' and Mothers' Health Protection Act
of 1996, or any amendment to each such Act, or any similar provisions of state
law applicable to its Employees.
(i) Effect of Transaction. Except as set forth on
Sections 2.3(b) or 2.22(i) of the Disclosure Schedule, the execution of this
Agreement and the consummation of the transactions contemplated hereby will not
(either alone or upon the occurrence of any additional or subsequent events)
constitute an event under any Company Employee Plan, Employee Agreement, trust
or loan that will or may result in any payment (whether of severance pay or
otherwise), acceleration, forgiveness of indebtedness, vesting, distribution,
increase in benefits or obligation to fund benefits with respect to any
Employee.
(j) Employment Matters. The Company: (i) is in
compliance in all respects with all applicable foreign, federal, state and local
laws, rules and regulations respecting employment, employment practices, terms
and conditions of employment and wages and hours, in each case, with respect to
Employees; (ii) has withheld and reported all amounts required by law or by
agreement to be withheld and reported with respect to wages, salaries and other
payments to Employees; (iii) is not liable for any arrears of wages or any taxes
or any penalty for failure to comply with any of the foregoing; and (iv) is not
liable for any payment to any trust or other fund governed by or maintained by
or on behalf of any governmental authority, with respect to unemployment
compensation benefits, social security or other benefits or obligations for
Employees (other than routine payments to be made in the normal course of
business and consistent with past practice). There are no pending, threatened or
reasonably anticipated claims or actions against the Company under any worker's
compensation policy or long-term disability policy.
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<PAGE> 32
(k) Labor. No work stoppage or labor strike against the
Company is pending, threatened or reasonably anticipated. The Company does not
know of any activities or proceedings of any labor union to organize any
Employees. There are no actions, suits, claims, labor disputes or grievances
pending, or, to the knowledge of the Company, threatened or reasonably
anticipated relating to any labor, safety or discrimination matters involving
any Employee, including, without limitation, charges of unfair labor practices
or discrimination complaints, which, if adversely determined, would,
individually or in the aggregate, result in any material liability to the
Company. Neither the Company nor any of its subsidiaries has engaged in any
unfair labor practices within the meaning of the National Labor Relations Act.
The Company is not presently, nor has it been in the past, a party to, or bound
by, any collective bargaining agreement or union contract with respect to
Employees and no collective bargaining agreement is being negotiated by the
Company.
(l) International Employee Plan. Each International
Employee Plan has been established, maintained and administered in compliance
with its terms and conditions and with the requirements prescribed by any and
all statutory or regulatory laws that are applicable to such International
Employee Plan. Furthermore, no International Employee Plan has unfunded
liabilities, that as of the Effective Time, will not be offset by insurance or
fully accrued. Except as required by law, no condition exists that would prevent
the Company or Parent from terminating or amending any International Employee
Plan at any time for any reason without liability to the Company or its
Affiliates (other than ordinary administration expenses or routine claims for
benefits).
2.23 Insurance. Section 2.23 of the Disclosure Schedule lists
all insurance policies and fidelity bonds covering the assets, business,
equipment, properties, operations, employees, officers and directors of the
Company. There is no claim by the Company 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. All premiums due and payable under all
such policies and bonds have been paid, and the Company is otherwise in
compliance with the terms of such policies and bonds (or other policies and
bonds providing substantially similar insurance coverage). The Company does not
have Knowledge of any threatened termination of, or premium increase with
respect to, any of such policies.
2.24 Compliance with Laws. The Company has complied with, is not
in violation of, and has not received any notices of violation with respect to,
any material foreign, federal, state or local statute, law or regulation.
2.25 Warranties; Indemnities. Except for the warranties and
indemnities contained in (i) those contracts and agreements set forth in Section
2.13(g) of the Disclosure Schedule and (ii) the Company's standard license
agreements substantially in the form set forth in Section 2.13(d) of the
Disclosure Schedule, the Company has not given any warranties or indemnities
relating to products or technology sold or licensed or services rendered by the
Company.
2.26 Voting Agreements. The Principal Shareholders (as defined
below) who are executing Voting Agreements pursuant to Section 5.14, own in the
aggregate a sufficient percentage of the outstanding voting securities of the
Company to approve the Merger under California Law, and the Company's Articles
of Incorporation.
2.27 Complete Copies of Materials. The Company has delivered or
made available true and complete copies of each document (or summaries of same)
that has been requested by Parent or its counsel.
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2.28 Registration Statement; Proxy Statement. None of the
information supplied or to be supplied by Company for inclusion or incorporation
by reference in (i) the registration statement on Form S-4 to be filed with the
SEC by Parent in connection with the issuance of the Parent Common Stock in or
as a result of the Merger (the "S-4") will, at the time the 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 in order to make the statements therein, in light of the circumstances
under which they are made, not misleading; and (ii) the proxy
statement/prospectus to be filed with the SEC by Company and Parent pursuant to
Section 5.1(a) hereof (the "Proxy Statement/Prospectus") will, at the dates
mailed to the stockholders of Parent and Company, at the times of the
stockholders meeting of Company (the "Company Stockholders' Meeting") and the
Stockholders meeting of Parent (the "Parent Stockholders' Meeting") in
connection with the transactions contemplated hereby and as of the Effective
Time, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading. The Proxy Statement/Prospectus will comply as to form in all
material respects with the provisions of the Exchange Act and the rules and
regulations promulgated by the SEC thereunder. Notwithstanding the foregoing,
the Company makes no representation or warranty with respect to any information
supplied by Parent or Sub for use in and which is contained in any of the
foregoing documents.
2.29 Representations Complete. None of the representations or
warranties made by the Company (as modified by the Disclosure Schedule), nor any
statement made in any Schedule or certificate furnished by the Company pursuant
to this Agreement or furnished in or in connection with documents mailed or
delivered to the Shareholders for use in soliciting their consent to this
Agreement and the Merger 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.
3. REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub represent and warrant to the Company that on the date
hereof, and as of the Effective Time as though made on the date hereof, as
follows:
3.1 Organization of Parent and Sub. Parent and each of its
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Sub is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Each of Parent, Sub and the other subsidiaries of Parent has the
corporate power to own its properties and to carry on its business as now being
conducted. Each of Parent, Sub and the other subsidiaries of Parent is duly
qualified to do business and in good standing as a foreign corporation in each
jurisdiction in which the failure to be so qualified could have a Parent
Material Adverse Effect. For all purposes of this Agreement, the term "Parent
Material Adverse Effect" means any change, event or effect that is materially
adverse to the business, assets (including intangible assets), condition
(financial or otherwise), results of operations or prospects of the Parent and
its subsidiaries, taken as a whole; provided, however, that neither (i) a
decline in the market price of the Parent's Common Stock that is not as a result
of other changes to the business, assets (including intangible assets),
conditions (financial or otherwise), results of operations or prospects of
Parent and its subsidiaries, taken as a whole, nor (ii) a change, event or
effect resulting directly from the announcement of this Agreement and the
Merger, shall be deemed to have a Parent Material Adverse Effect. Parent has
made
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available a true and correct copy of the Certificate of Incorporation and Bylaws
of Parent and Sub, each as amended to date, to the Company.
3.2 Authority. Each of Parent and Sub has all requisite power
and authority to enter into this Agreement and any Related Agreements to which
it is a party and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and any Related Agreements
to which Parent is a party and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate action
on the part of Parent and Sub, and no further action is required on the part of
Parent and Sub to authorize the Agreement, any Related Agreements to which it is
a party and the transactions contemplated hereby and thereby subject only to the
approval of this Agreement by the stockholders of Parent. This Agreement and the
Merger have been approved by the Board of Directors of Parent and Sub and the
Stockholders Sub. This Agreement and any Related Agreements to which Parent is a
party have been duly executed and delivered by Parent and, assuming the due
authorization, execution and delivery by the other parties hereto and thereto,
constitute the valid and binding obligation of Parent enforceable in accordance
with their respective terms, subject to the laws of general application relating
to bankruptcy, insolvency and the relief of debtors and to rules of law
governing specific performance, injunctive relief or other equitable remedies.
This Agreement and any Related Agreements to which Sub is a party have been duly
executed and delivered by Sub and, assuming the due authorization, execution and
delivery by the other parties hereto and thereto, constitute the valid and
binding obligation of Sub enforceable in accordance with their respective terms,
subject to the laws of general application relating to bankruptcy, insolvency
and the relief of debtors and to rules of law governing specific performance,
injunctive relief or other equitable remedies.
3.3 No Conflict. The execution and delivery by Parent of this
Agreement and any Related Agreements to which Parent is a party and the
execution and delivery by Sub of this Agreement and any Related Agreements to
which Sub is a party do not, and the consummation of the transactions
contemplated hereby and thereby will not, or result in, any Conflict with or
under (i) any provision of the Certificate of Incorporation and Bylaws of
Parent, Sub or any other Subsidiary of Parent, (ii) any mortgage, indenture,
lease, contract or other agreement or instrument, permit, concession, franchise
or license to which Parent, Sub or any other Subsidiary of Parent or any of
their respective properties or assets (including intangible assets) is subject,
or (iii) any judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Parent, Sub or any other Subsidiary of Parent or its
respective properties or assets or any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Sub or its respective properties or
assets.
3.4 Consents. No consent, waiver, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required by or with respect to Parent or Sub in connection with the
execution and delivery of this Agreement and Related Agreements to which Parent
or Sub is a party or the consummation of the transactions contemplated hereby
and thereby, except for (i) such consents, waivers, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
applicable securities laws and (ii) the filing of the Merger Agreement with the
Secretary of State of the State of California.
3.5 Capital Structure.
(a) The authorized stock of Parent consists of
100,000,000 shares of Common Stock, $0.0001 par value, of which 32,309,194
shares were issued and outstanding as of February 29, 2000, and 5,000,000 shares
of undesignated Preferred Stock, $0.0001 par value, none of which were
outstanding on
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such date. The authorized capital stock of Sub consists of 100 shares of Common
Stock, $0.01 par value, 100 shares of which, as of the date hereof, are issued
and outstanding and are held by Parent. All such shares of Parent and Sub have
been duly authorized, and all such issued and outstanding shares have been
validly issued, are fully paid and nonassessable and are free of any liens or
encumbrances other than any liens or encumbrances created by or imposed upon the
holders thereof. Parent has also reserved an aggregate of 11,267,501 shares of
Common Stock for issuance pursuant to its employee and director stock and option
and stock purchase plans 4,061,994 of which are subject to outstanding options
or commitments for issuance and 7,205,507 of which are reserved for future
issuance, and an aggregate of 65,569 shares of Common Stock for issuance
pursuant to outstanding warrants. There are no other options, warrants, calls,
rights, commitments or agreements of any character to which Parent is a party or
by which it is bound obligating Parent to issue, deliver, sell, repurchase or
redeem, or cause to be issued, delivered, sold, repurchased or redeemed, any
shares of the capital stock of Parent or obligating Parent to grant, extend or
enter into any such option, warrant, call, right, commitment or agreement.
(b) The shares of Parent Common Stock to be issued
pursuant to the Merger will be duly authorized, validly issued, fully paid,
non-assessable, free of any liens or encumbrances, issued in compliance with all
applicable state and federal securities laws and not subject to any preemptive
rights or rights of first refusal created by statute or the Certificate of
Incorporation or Bylaws of Parent, Sub, or any other Subsidiary of Parent or any
agreement to which Parent, Sub or any other Subsidiary of Parent is a party or
is bound.
3.6 SEC Filings; Financial Statements.
(a) Parent has filed all forms, reports and documents
required to be filed with the SEC (collectively, the "Parent SEC Reports"). The
Parent SEC Reports (i) at the time they were filed, complied as to form in all
material respects with the requirements of the Securities Act or the Exchange
Act, as the case may be, and (ii) did not at the time they were filed (or if
amended or superseded by a filing prior to the date of this Agreement, then on
the date of such filing) contain any untrue statement of a material fact or omit
to state a material fact require 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. Except to the extent set forth in the preceding sentence,
Parent and Sub make no representation or warranty whatsoever concerning the
Parent SEC Reports as of any time other than the time they were filed. None of
the Parent's subsidiaries is required to file any forms, reports or other
documents with the SEC.
(b) Each of the consolidated financial statements
(including, in each case, any related notes thereto) (the "Parent Financial
Statements") contained in the Parent SEC Reports has been prepared in accordance
with GAAP applied on a consistent basis throughout the period involved (except
as may be indicated in the notes thereto) and each fairly presents in all
material respects the consolidated financial position of Parent and its
subsidiaries as at the respective dates thereof and the consolidated results of
its operations and cash flows for the periods indicated, except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which will not be material in significance.
3.7 Brokers' and Finders' Fees. Except for certain fees the
Parent has agreed to pay to Credit Suisse First Boston Corporation, the Parent
has not incurred, nor will it incur, directly or indirectly, any liability for
brokerage or finders' fees or agents' commissions or any similar charges in
connection with this Agreement or any transaction contemplated hereby.
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3.8 Registration Statement; Proxy Statement. None of the
information supplied or to be supplied by Parent or Sub for inclusion or
incorporation by reference in (i) the S-4 will, at the time the 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 in order to make the statements therein, in light of the circumstances
under which they are made, not misleading; and (ii) the Proxy
Statement/Prospectus will, at the dates mailed to the stockholders of Parent and
Company, at the time of the Company Stockholders' Meeting and the Parent
Stockholders' Meeting and as of the Effective Time, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The S-4 will comply as
to form in all material respects with the provisions of the Securities Act and
the Exchange Act, as applicable and the rules and regulations promulgated by the
SEC thereunder. Notwithstanding the foregoing, Parent makes no representation or
warranty with respect to any information supplied by the Company for use in and
which is contained in any of the foregoing documents.
3.9 No Changes. Since December 31, 1999, there has not been,
occurred or arisen any event or condition of any character that has had or is
reasonably likely to have a Parent Material Adverse Effect.
3.10 Representations Complete. None of the representations or
warranties made by Parent, nor any statement made in any Schedule or certificate
furnished by Parent pursuant to this Agreement or furnished in or in connection
with documents mailed or delivered to Parent Stockholders for use in soliciting
their consent 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.
4. CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 Conduct of Business of the Company. During the period from
the date of this Agreement and continuing until the earlier of the termination
of this Agreement or the Effective Time, the Company agrees (except to the
extent that Parent shall otherwise consent in writing), to carry on the
Company's business in the usual, regular and ordinary course in substantially
the same manner as heretofore conducted, to pay the debts and Taxes of the
Company when due, to pay or perform other obligations when due, and, to the
extent consistent with such business, use their reasonable best efforts
consistent with past practice and policies to preserve intact the Company's
present business organizations, keep available the services of the Company's
present officers and key employees and preserve the Company's relationships with
customers, suppliers, distributors, licensors, licensees, and others having
business dealings with it, all with the goal of preserving unimpaired the
Company's goodwill and ongoing businesses at the Effective Time. The Company
shall promptly notify Parent of any event or occurrence or emergency not in the
ordinary course of business of the Company and any material event involving the
Company.
Except as expressly contemplated by this Agreement as set forth in
Section 4.1 of the Disclosure Schedule, the Company shall not, without the prior
written consent of Parent (which consent may be pursuant to electronic mail, and
need not be signed):
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(a) make any expenditures or enter into any commitment
or transaction exceeding $250,000 individually or that is not in the ordinary
course of business and consistent with past practice, or any commitment or
transaction of the type described in Section 2.9 hereof;
(b) (i) other than commercial licenses of the Company's
software in the ordinary course of business consistent with past practice, sell
any Company Intellectual Property or enter into any agreement with respect to
the Company Intellectual Property with any person or entity or with respect to
the Intellectual Property of any person or entity, (ii) buy any Intellectual
Property or enter into any agreement with respect to the Intellectual Property
of any person or entity, (iii) enter into any agreement with respect to
development of any Intellectual Property with a third party;
(c) other than commercial licenses of the Company's
software in the ordinary course of business consistent with past practice, sell
or enter into any license agreement with respect to the Company Intellectual
Property with any person or entity or buy or enter into any license agreement
with respect to the Intellectual Property of any person or entity;
(d) other than commercial licenses of the Company's
software in the ordinary course of business consistent with past practice,
transfer to any person or entity any rights to the Company Intellectual
Property;
(e) enter into or amend any Contract pursuant to which
any other party is granted distribution, development or similar rights of any
type or scope with respect to any products or technology of the Company;
(f) enter into or amend any Contract pursuant to which
as other party is granted marketing or similar rights of any type or scope with
respect to any products or technology of the Company;
(g) amend or otherwise modify (or agree to do so),
except in the ordinary course of business, or violate the terms of, any of the
Contracts set forth or described in the Disclosure Schedule;
(h) commence or settle any litigation;
(i) declare, set aside or pay any dividends on or make
any other distributions (whether in cash, stock or property) in respect of any
of its capital stock, or 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 capital stock of the Company, or
repurchase, redeem or otherwise acquire, directly or indirectly, any shares of
the capital stock of the Company (or options, warrants or other rights
exercisable therefor) except for repurchases of shares of Company Capital Stock
from employees of the Company in connection with the termination of their
employment with the Company;
(j) except for the issuance of shares of Company Capital
Stock upon the exercise or conversion of options, warrants or other rights, or
convertible securities outstanding on the date hereof, and except for the grant
of additional stock options at the fair market value to the persons and in the
amounts listed and with the vesting as set forth on Section 4.1(j) to the
Disclosure Schedule, issue, grant, deliver or sell or authorize or propose the
issuance, grant, delivery or sale of, or purchase or propose the purchase of,
any shares of its capital stock or securities convertible into, or
subscriptions, rights, warrants or
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options to acquire, or other agreements or commitments of any character
obligating it to issue or purchase any such shares or other convertible
securities, or accelerate the vesting of any stock options.
(k) cause or permit any amendments to its Articles of
Incorporation or Bylaws;
(l) acquire or agree to acquire by merging or
consolidating with, or by purchasing any assets or equity securities of, or by
any other manner, any business or any corporation, partnership, association or
other business organization or division thereof, or otherwise acquire or agree
to acquire any assets which are material, individually or in the aggregate, to
the Company's business;
(m) sell, lease, license or otherwise dispose of any
of its material properties or assets, except properties or assets which are not
Intellectual Property and commercial licenses of the Company's software in the
ordinary course of business and consistent with past practices;
(n) incur any indebtedness for borrowed money or
guarantee any such indebtedness or issue or sell any debt securities or
guarantee any debt securities of others other than pursuant to capital leases
outstanding as of the date hereof;
(o) grant any loans to others or purchase debt
securities of others or amend the terms of any outstanding loan agreement;
(p) grant any severance or termination pay (i) to any
director or officer or (ii) to any other employee except payments made pursuant
to standard written agreements outstanding on the date hereof and disclosed in
the Disclosure Schedule, other than pursuant to the Company's standard practice
of granting two weeks' pay to terminating employees in consideration for a
release of claims;
(q) adopt any employee benefit plan, or enter into any
employment contract, pay or agree to pay any special bonus or special
remuneration to any director or employee, or increase the salaries or wage rates
of its employees other than in connection with the regularly scheduled
performance reviews of individual employees;
(r) revalue any of its assets, including without
limitation writing down the value of inventory or writing off notes or accounts
receivable other than in the ordinary course of business;
(s) pay, discharge or satisfy, in an amount in excess of
$100,000 in any one case or $250,000 in the aggregate, any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or otherwise),
other than payroll, pre-existing lease obligations or the payment, discharge or
satisfaction in the ordinary course of business of liabilities reflected or
reserved against in the Current Balance Sheet;
(t) make or change any material election in respect of
Taxes, adopt or change any accounting method in respect of Taxes, enter into any
closing agreement, settle any claim or assessment in respect of Taxes, or
consent to any extension or waiver of the limitation period applicable to any
claim or assessment in respect of Taxes;
(u) enter into any strategic alliance or joint
marketing arrangement or agreement;
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(v) other than as specifically requested in writing
by Parent or as specified in Section 2.22(i) of the Disclosure Schedule,
accelerate the vesting schedule of any of the outstanding Company Options or
Company Capital Stock;
(w) hire or terminate employees or encourage employees
to resign, excluding those individuals to whom offers have been made and are
outstanding as of the date of this Agreement as set forth in Schedule 4.1(w); or
(x) take, or agree in writing or otherwise to take, any
of the actions described in Sections 4.1(a) through (w) above, or any other
action that would prevent the Company from performing or cause the Company not
to perform its covenants hereunder, or any other action not in the ordinary
course of the Company's business and consent with past practice.
4.2 No Solicitation. Until the earlier of the Effective Time or
the date of termination of this Agreement pursuant to the provisions of Section
8.1 hereof, the Company shall not (nor will it permit any of its officers,
directors, employees, stockholders, agents, representatives or affiliates to),
directly or indirectly, take any of the following actions with any party other
than Parent or its designees:
(a) solicit, encourage, initiate, continue or
participate in any negotiations or discussions with respect to any offer or
proposal to acquire or license all or any material part of the business of
Company (the "Business"), whether by merger, purchase of assets, tender offer,
license or otherwise, or effect any such transaction,
(b) disclose any information not customarily disclosed
to any person concerning the Business or afford to any person or entity access
to its properties, books or records,
(c) assist or cooperate with any person to make any
proposal to purchase or license all or a material portion of the Business
(including, without limitation any technology or proprietary information related
to the Business), or
(d) enter into any agreement or arrangement with any
person providing for the acquisition or licensing of all or any material portion
of the Business (whether by way of merger, purchase of assets (including,
without limitation any technology or proprietary information of Company), tender
offer, license or otherwise).
In the event Company shall receive any offer or proposal, directly or
indirectly, of the type referred to in clause (a) or (c) above, or any request
for disclosure or access pursuant to clause (b) above, it shall immediately
inform Parent as to any such offer or proposal, provide Parent with a complete
copy of any written offer or proposal and any related correspondence, and will
cooperate with Parent by furnishing any other information Parent may reasonably
request (including without limitation the identity of the party making the offer
or proposal and all terms and conditions of the offer or proposal). Without
limiting the foregoing, it is understood that any violation of the restrictions
set forth above by any officer, director, employee, stockholder, agent,
representative or affiliate of Company shall be deemed to be a breach of this
Section 4.2 by Company. Company agrees that irreparable damage would occur in
the event that the provisions of this Section 4.2 are not performed in
accordance with their specific terms or were otherwise breached. Company
accordingly agrees that Parent shall be entitled, without the requirement of
posting a bond or other security, to an injunction or injunctions to prevent
breaches of the provisions of this Section 4.2
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and to enforce specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction, this being in addition to any
other remedy to which Parent may be entitled at law or in equity.
4.3 Termination of Severance and 401(k) Plans. Company and its
affiliates, as applicable, each agrees to terminate any and all group severance,
separation or salary continuation plans, programs, or arrangements that are
covered under ERISA, as of the day immediately preceding the Closing Date other
than the agreement set forth on Schedule 5.10. In addition, Company shall,
unless Parent informs Company otherwise at least three (3) days prior to the
Closing Date, terminate its 401(k) plan effective as of the day immediately
preceding the Closing Date. Parent shall receive from Company evidence that
Company's and each affiliate's, as applicable, severance and/or 401(k) plan(s)
have been terminated pursuant to resolution of each such entity's Board of
Directors (the form and substance of which resolutions shall be subject to
review and reasonable approval of Parent), effective as of the day immediately
preceding the Closing Date.
5. ADDITIONAL AGREEMENTS
5.1 Registration Statement; Shareholder Approval.
(a) Within thirty (30) days after the execution of this
Agreement, the Company and the Parent shall prepare, with the cooperation of
each other, the Proxy Statement/Prospectus, and Parent will prepare and file
with the SEC the S-4 in which the Proxy Statement/Prospectus will be included as
a prospectus. Each of Parent and the Company shall provide promptly to the other
such information concerning its business and financial statements and affairs
as, in the reasonable judgment of the providing party or its counsel, may be
required or appropriate for inclusion in the Proxy Statement/Prospectus and the
S-4, or in any amendments or supplements thereto, and to cause its counsel and
current and former auditors to cooperate with the other's counsel and auditors
in the preparation of the Proxy Statement/Prospectus and the S-4 (including, but
not limited to, delivery of appropriate consents in a timely manner). Each of
the Company and Parent shall use its respective reasonable best efforts to
respond to any comments of the SEC and have the S-4 declared effective under the
Securities Act as promptly as practicable after such filing. The Company and the
Parent shall cause the Proxy Statement/Prospectus to be mailed to the
Shareholders and the stockholders of the Parent, respectively, at the earliest
practicable time and in no event later than five (5) days after the S-4 is
declared effective by the SEC, subject to Parent approval, which approval shall
not be unreasonably withheld. As promptly as practicable after the date of this
Agreement, the Company and Parent will prepare and file any other filings
required under the Exchange Act, the Securities Act or any other Federal,
foreign or Blue Sky laws relating to the Merger and the transactions
contemplated by this Agreement (the "Other Filings"). Each of the Company and
Parent will notify the other promptly upon the receipt of any comments from the
SEC or its staff and of any request by the SEC or its staff or any other
government officials for amendments or supplements to the S-4, the Proxy
Statement/Prospectus or any Other Filing or for additional information and will
supply the other with copies of all correspondence between such party or any of
its representatives, on the one hand, and the SEC, or its staff or any other
government officials, on the other hand, with respect to the S-4, the Proxy
Statement/Prospectus, the Merger or any Other Filing. The Proxy
Statement/Prospectus, the S-4 and the Other Filings will comply in all material
respects with all applicable requirements of law and the rules and regulations
promulgated thereunder. Whenever any event occurs which is required to be set
forth in an amendment or supplement to the Proxy Statement/Prospectus, the S-4
or any Other Filing, the Company or Parent, as the case may be, will promptly
inform the other of such occurrence and cooperate in filing with the
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SEC or its staff or any other government officials, and/or mailing to the
Shareholders, such amendment or supplement.
(b) The Company will take all action necessary in
accordance with California Law and its Articles of Incorporation and Bylaws to
convene a special meeting of its Shareholders to be held on the twenty-first day
after the mailing of the Proxy Statement/Prospectus to the Shareholders for the
purpose of voting upon this Agreement and the Merger. The Company will use
commercially reasonable efforts to solicit from its shareholders proxies in
favor of the adoption and approval of this Agreement and the approval of the
Merger and will take all other action necessary or advisable to secure the vote
or consent of its shareholders required to obtain such approvals. The materials
submitted to the Company's Shareholders shall have been subject to review and
approval by Parent and include information regarding the Company, the terms of
the Merger and this Agreement and the unanimous recommendation of the Board of
Directors of the Company in favor of the Merger and this Agreement.
(c) Parent shall take all action necessary in accordance
with its Certificate of Incorporation and Bylaws, Delaware Law and the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated hereunder to convene a special meeting of its stockholders to be
held on the twenty-first day after the mailing of the Ross Statement/Prospectus
to its stockholders for the purpose of approving the issuance of the Parent
Common Stock consideration in the Merger. Parent will use commercially
reasonable efforts to solicit from its stockholders proxies in favor of the
issuance of the Parent Common Stock Consideration in the Merger and will take
all other action necessary or advisable to secure the vote of its stockholders
required to issue such shares. The materials submitted to the Parent's
Shareholders shall be subject to review by the Company and include information
regarding Parent, the terms of the Merger and this Agreement and the unanimous
recommendation of the Board of Directors of Parent in favor of the Merger and
this Agreement. Each of Parent, Sub and Company hereby agree not to take any
action specifically for the purpose of preventing or delaying (i) the filing of
the S-4, (ii) the effectiveness of the S-4, (iii) the date of the Company
Stockholders' Meeting or the Parent Stockholders' meeting, or (iv) the
consummation of the Merger.
5.2 Access to Information. The Company shall afford Parent and
its accountants, counsel and other representatives, reasonable access during
normal business hours during the period prior to the Effective Time to (a) all
of the Company's properties, books, contracts, commitments and records, (b) all
other information concerning the business, properties and personnel (subject to
restrictions imposed by applicable law) of the Company as Parent may reasonably
request and (c) all employees of the Company as identified by Parent. The
Company agrees to provide to Parent and its accountants, counsel and other
representatives copies of internal financial statements and projections
(including by returns and supporting documentation) promptly upon request.
Parent shall provide the Company with copies of such publicly available
information about Parent as the Company may request. No information or knowledge
obtained in any investigation pursuant to this Section 5.2 shall affect or be
deemed to modify any representation or warranty contained herein or the
conditions to the obligations of the parties to consummate the Merger.
5.3 Confidentiality; Public Disclosure.
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(a) Each of the parties hereto hereby agrees that the
information obtained pursuant to Section 5.2 or pursuant to the negotiation and
execution of this Agreement or the effectuation of the transaction contemplated
hereby shall be governed by the terms of the Mutual Nondisclosure Agreement
dated as of February 12, 2000 by and between the Company and Parent (the "NDA").
(b) Each of the parties hereto agrees to continue to be
bound by the publicity and disclosure provisions at the NDA.
5.4 Consents; Approvals.
(a) The Company shall use its best efforts to obtain the
consents, waivers, assignments and approvals under any of the Contracts or
otherwise as may be required in connection with the Merger (all of such
consents, waivers and approvals are set forth in the Disclosure Schedule) so as
to preserve all rights of, and benefits to, the Company thereunder.
(b) As soon as may be reasonably practicable, Parent
and Company each shall file with the United States Federal Trade Commission (the
"FTC") and the Antitrust Division of the United States Department of Justice
("DOJ") Notification and Report Forms relating to the transactions contemplated
herein as required by HSR, as well as comparable pre-merger notification forms
required by the merger notification or control laws and regulations of any
applicable jurisdiction, as agreed to by the parties. Parent, Sub and Company
each shall promptly (a) supply the other with any information which may be
required by the FTC, the DOJ or the competition or merger control authorities of
any jurisdiction and which the parties may reasonably deem appropriate. Parent
and Sub will each pay 50% of the applicable HSR filing fee.
5.5 Reasonable Efforts. Subject to the terms and conditions
provided in this Agreement, each of the parties hereto shall use commercially
reasonable efforts to take promptly, or cause to be taken, all actions, and to
do promptly, or cause to be done, all things necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated hereby, to obtain all necessary waivers, consents and
approvals and to effect all necessary registrations and filings and to remove
any injunctions or other impediments or delays, legal or otherwise, in order to
consummate and make effective the transactions contemplated by this Agreement
for the purpose of securing to the parties hereto the benefits contemplated by
this Agreement.
5.6 Notification of Certain Matters. The Company and Parent
shall give prompt notice to each other of (i) the occurrence or non-occurrence
of any event, the occurrence or non-occurrence of which is likely to cause any
representation or warranty of such party contained in this Agreement to be
untrue or inaccurate and (ii) any failure of such party to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder; provided, however, that the delivery of any notice pursuant to
this Section 5.6 shall not limit or otherwise affect any remedies available to
the party receiving such notice. Further, disclosure by the Company or Parent
pursuant to this Section 5.6 shall not be deemed to amend or supplement the
Disclosure Schedule or prevent or cure any misrepresentations, breach of
warranty or breach of covenant.
5.7 Additional Documents and Further Assurances. Each party
hereto, at the request of another party hereto, shall execute and deliver such
other instruments and do and perform such other acts and things as may be
necessary or desirable for effecting completely the consummation of this
Agreement and the transactions contemplated hereby.
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5.8 FIRPTA Compliance. On the Closing Date, the Company shall
deliver to Parent a properly executed statement in a form reasonably acceptable
to Parent for purposes of satisfying Parent's obligations under Treasury
Regulation Section 1.1445-2(c)(3).
5.9 Expenses. Whether or not the Merger is consummated, all fees
and expenses incurred in connection with the Merger including, without
limitation, all legal, accounting, financial advisory, consulting and all other
fees and expenses of third parties ("Third Party Expenses") incurred by a party
in connection with the negotiation and effectuation of the terms and conditions
of this Agreement and the transactions contemplated hereby, shall be the
obligation of the respective party incurring such fees and expenses.
5.10 Termination of Agreements. Except as set forth in Section
5.10 of the Disclosure Schedule, Company shall terminate, or cause to be
terminated, prior to Closing, all employment agreements between the Company and
any person, other than non-disclosure, confidentiality and invention assignment
agreements and those agreements entered into in connection with this Agreement.
5.11 Employee Benefits. Each Employee who remains an employee of
the Surviving Corporation after the Effective Time shall be eligible, upon (i)
the Employee's execution of Parent's standard form of Proprietary Information,
Invention Assignment and Arbitration Agreement and (ii) proof of appropriate
employment authorization from the U.S. Immigration and Naturalization Service or
the U.S. Department of State reflecting a right to work in the United States, to
receive salary and benefits (such as medical benefits, bonuses and 401(k) plan
participation) consistent with Parent's standard human resource policies. All
such employees shall be "at-will" employees of the Surviving Corporation.
Subject to the foregoing, each Company Employee at the time of the Closing shall
be eligible to participate in the employee benefit plans and compensation
programs maintained by Parent applicable to other similarly-situated employees
of Parent, including (without limitation) retirement plans, savings or profit
sharing plans, incentive or other bonus plans, life, disability, health,
accident and other insurance programs, paid vacations, and similar plans or
programs, subject, in each case, to the generally applicable terms and
conditions of the applicable plan or program in question. Parent shall make its
commercially reasonable best efforts to ensure that under the terms of each such
plan or program, each Employee's service with the Company and its predecessors
prior to the Closing, to the extent consistent with the Company's records, as
delivered to Parent, shall be treated as service, to the extent permitted by law
and provided that it should not result in duplication of benefits with Parent
for all purposes. Parent shall make its commercially reasonable best efforts to
ensure that, to the extent consistent with the Company's records, as delivered
to Parent, each such Employee shall be credited with all deductibles,
co-payments or out-of-pocket expenses incurred under any Company plan or program
for purposes of any deductible or out-of-pocket requirements under any similar
Company plan or program. During the Employee's period of employment, such
Employee shall be entitled to receive all fringe benefits and perquisites in
accordance with the plans, practices, programs and policies of Parent as from
time to time in effect.
5.12 Officers and Directors of the Company's Subsidiaries. The
Company will obtain and deliver to Parent on the Closing Date resignations from
all of the officers and directors of its subsidiaries, if any.
5.13 Employment Agreements. The Company shall deliver or cause
to be delivered to Parent, concurrently with the execution of this Agreement,
from each of the individuals listed on Section 5.13 of the Disclosure Schedule
an executed Employment Agreement with the Parent substantially in the form
attached hereto as Exhibit D, upon proof of appropriate employment authorization
from the U.S. Immigration and
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Naturalization Service or the U.S. Department of State reflecting a right to
work in the United States, and subject to and in compliance with Parent's
standard human resources policies and procedures.
5.14 Voting Agreement. The Company shall deliver or cause to be
delivered to Parent, concurrently with the execution of this Agreement, from
each of the shareholders listed in Section 5.14 of the Disclosure Schedule (the
"Principal Shareholders"), an executed Voting Agreement with the Parent
substantially in the form attached hereto as Exhibit E.
5.15 Affiliate Agreements. Section 5.15 of the Disclosure
Schedule sets forth those persons who, in the Company's reasonable judgment, are
or may be "affiliates" of the Company within the meaning of Rule 145 (each such
person a "Rule 145 Affiliate") promulgated under the Securities Act ("Rule
145"). The Company shall provide Parent such information and documents as Parent
shall reasonably request for purposes of reviewing such list. The Company shall
deliver or cause to be delivered to Parent, concurrently with the execution of
this Agreement from each of the Rule 145 Affiliates of the Company, an executed
agreement ("Rule 145 Affiliate Agreement") in the form attached hereto as
Exhibit F. Parent and Sub shall be entitled to place appropriate legends on the
certificates evidencing any Parent Common Stock to be received by such Rule 145
Affiliates pursuant to the terms of this Agreement, and to issue appropriate
stop transfer instructions to the transfer agent for Parent Common Stock,
consistent with the terms of such Rule 145 Affiliate Agreements.
5.16 Parent Voting Agreement. The Parent shall deliver or cause
to be delivered to Company, concurrently with the execution of this Agreement,
from each of the individual officers and directors of the Parent listed on
Exhibit G-1, as executed Parent Voting Agreement with the Company substantially
in the form attended hereto as Exhibit G-2.
5.17 Company Stock Option Grants. Parent and Company agree that
Company may grant stock options from its Stock Option Plans in the amounts and
with terms and conditions consistent with past practice. All such grants shall
have exercise prices equal to the fair market value of Company's common stock on
the date of grant or as otherwise agreed to by parent in writing.
5.18 No Actions Inconsistent With Tax-Free Reorganization. The
Company, Parent and Sub shall (and, following the Effective Time, Parent shall
cause the Company to) take no action with respect to the capital stock, assets
or liabilities of the Company that could reasonably be expected to cause the
Merger to fail to qualify as a "reorganization" within the meaning of Section
368(a) of the Code and shall report the Merger as a reorganization on all Tax
Returns. Neither Parent, Sub nor Company has taken any action which could
reasonably be expected to preclude the Merger from qualifying as a
reorganization under Section 368(a) of the Code.
5.19 Form S-8. Parent shall file a registration statement on
Form S-8 to register shares of Parent Common Stock issuable upon exercise of
assumed Company Options (other than Company Options in the form of warrants or
other investments issued pursuant to arrangements that are not eligible for
registration on Form S-8) within 15 days after the Closing Date. During the
period that any such assumed Company Options are exercisable by their terms,
Parent will maintain in effect such registration statement and Parent shall
comply with any applicable federal and state securities laws requirements
applicable with respect to any shares of Parent Common Stock issuable pursuant
to the exercise of any assumed Company Options.
5.20 Assumption of Indemnity Obligations.
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(a) Articles of Incorporation and Bylaws. Parent and the
Surviving Corporation agree that the obligations set forth in the Amended and
Restated Articles of Incorporation and Bylaws of Company to indemnify its
directors and officers, as in effect immediately prior to the Effective Time,
shall survive the Merger, and any rights of the directors and officers to such
indemnification thereunder shall not be adversely affected by and amendment,
repeal or other modification thereto after the Effective Time. From and after
the Effective Time, such obligations shall be the joint and several obligations
of Parent and the Surviving Corporation.
(b) Indemnification Agreements. Subject to Section
5.20(c) hereof, the Surviving Corporation and Parent shall honor and fulfill in
all respects the obligations of Company pursuant to the Indemnification
Agreements between Company and such officers and directors.
(c) Exclusion. Notwithstanding the foregoing, nothing in
this Section 5.20 is intended to release any director or officer of Company, who
is also a Shareholder of Company, from their respective indemnity obligations
under Section 7 hereof.
6. CONDITIONS TO THE MERGER
6.1 Conditions to Obligations of Each Party to Effect the
Merger. The respective obligations of the Parent, Sub and Company to effect the
Merger shall be subject to the satisfaction at or prior to the Effective Time of
the following conditions:
(a) Shareholder Approval. The Shareholders shall have
duly approved by the requisite vote under California Law and the Company's
Articles of Incorporation, the Merger, this Agreement and the transactions
contemplated hereby. The Stockholders of Parent shall have duly approved by
requisite vote under Delaware General Corporation Law and Parent's Certificate
of Incorporation, the Merger, this Agreement and the transactions contemplated
hereby.
(b) Permits. All approvals from government authorities,
including any requisite Blue Sky approvals, which are appropriate or necessary
for the consummation of the Merger and the other transactions contemplated by
this Agreement, shall have been obtained.
(c) No Injunctions or Restraints; Illegality. No
temporary restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal restraint or
prohibition preventing the consummation of the Merger shall be in effect, nor
shall any proceeding brought by an administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign, seeking any of
the foregoing be pending; nor shall there be any action taken, or any statute,
rule, regulation or order enacted, entered, enforced or deemed applicable to the
Merger, which makes the consummation of the Merger illegal or otherwise
prohibits consummation of the Merger.
(d) No Order; HSR Act. No Governmental Entity shall
have enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, executive order, decree, injunction or other order (whether
temporary, preliminary or permanent) which is in effect and which has the effect
of making the Merger illegal or otherwise prohibiting consummation of the
Merger. All waiting periods under the HSR Act relating to the transactions
contemplated hereby (if any) will have expired or terminated early.
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(e) Tax Opinions. The Company and Parent shall each have
received written opinions from their respective counsel, Venture Law Group, A
Professional Corporation, and Wilson Sonsini Goodrich & Rosati, Professional
Corporation, to the effect that the Merger will constitute a reorganization
within the meaning of Section 368(a) of the Code; provided, however, that if the
counsel to either the Company or Parent does not render such opinion, this
condition shall nonetheless be deemed to be satisfied with respect to such party
if counsel to the other party renders such opinion to such party. The parties to
this Agreement agree to make reasonable representations as requested by such
counsel for the purpose of rendering such opinions.
6.2 Conditions to Obligations of Company. The obligations of the
Company to consummate and effect this Agreement and the transactions
contemplated hereby shall be subject to the satisfaction at or prior to the
Effective Time of each of the following conditions, any of which may be waived,
in writing, exclusively by the Company:
(a) Representations, Warranties and Covenants. The
representations and warranties of Parent and Sub in this Agreement shall be true
and correct in all respects on and as of the Effective Time as though such
representations and warranties were made on and as of such time and each of
Parent and Sub shall have performed and complied in all respects with all
covenants and obligations of this Agreement required to be performed and
complied with by it as of the Effective Time, except to the extent that any such
inaccuracy or noncompliance would not result in a Parent Material Adverse
Effect.
(b) Legal Opinion. The Company shall have received a
legal opinion from Wilson Sonsini Goodrich & Rosati with respect to the issuance
of the shares of Parent Common Stock in the Merger, in such form as Company and
its counsel shall reasonably request.
(c) Certificate of the Parent. Company shall have been
provided with a certificate executed on behalf of Parent by a Vice President to
the effect that, as of the Effective Time:
(i) all representations and warranties made by
Parent and Sub in this Agreement are true and correct in all respects on and as
of the Effective Time as though such representations and warranties were made on
and as of such time, except to the extent that any such inaccuracy or
noncompliance would not result in a Parent Material Adverse Effect;
(ii) all covenants and obligations of this
Agreement to be performed by Parent and Sub on or before such date have been so
performed in all respects, except to the extent that any such inaccuracy or
noncompliance would not result in a Parent Material Adverse Effect; and
(iii) the provisions set forth in Section
6.2(e).
(d) Secretary's Certificate. Company shall have been
provided with a certificate of the Parent's Secretary relating to the
organization, existence and good standing of Parent and Sub and the
authorization of this Agreement and the transactions contemplated hereby and
other customary matters, all in form and substance satisfactory to Company and
its counsel.
(e) No Parent Material Adverse Effect. There shall not
have occurred any event or condition of any character that has had or is
reasonably likely to have a Parent Material Adverse Effect.
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6.3 Conditions to the Obligations of Parent and Sub. The
obligations of Parent and Sub to consummate and effect this Agreement and the
transactions contemplated hereby shall be subject to the satisfaction at or
prior to the Effective Time of each of the following conditions, any of which
may be waived, in writing, exclusively by Parent:
(a) Representations, Warranties and Covenants. The
representations and warranties of the Company in this Agreement shall be true
and correct in all respects on and as of the Effective Time as though such
representations and warranties were made on and as of the Effective Time and the
Company shall have performed and complied in all respects with all covenants and
obligations of this Agreement required to be performed and complied with by them
as of the Effective Time except to the extent that any such non-compliance or
inaccuracy would not result in a Company Material Adverse Effect.
(b) No Company Material Adverse Effect. There shall not
have occurred any event or condition of any character that has had or is
reasonably likely to have a Company Material Adverse Effect.
(c) Shareholder Approval. The Shareholders shall have
duly approved, by the requisite vote, any payments and benefits to Employees as
a result of the Merger, this Agreement or the transactions contemplated hereby
which are characterized as "parachute payments," within the meaning of Section
280G(b)(2) of the Internal Revenue Code.
(d) Claims. There shall be no bona fide action, suit,
claim or proceeding of any nature pending against the Parent, Sub or the
Company, their respective properties or any of their officers or directors,
arising out of, or in any way connected with, the Merger or the other
transactions contemplated by the terms of this Agreement that would reasonably
be expected to have a Company Material Adverse Effect.
(e) Dissenters. Shareholders holding no more than five
percent (5%) of the Company Capital Stock shall have exercised or given notice
of their intent to exercise dissenter's rights in accordance with California
Law.
(f) Third Party Consents. Any and all material
consents, waivers, assignments and approvals in Section 2.6 hereto shall have
been obtained.
(g) Legal Opinion. Parent shall have received a legal
opinion from Venture Law Group, legal counsel to the Company, in such form as
Parent and its counsel shall reasonably request.
(h) Employment Agreements. Each of the individuals
listed in Section 5.13 of the Disclosure Schedule hereto shall have entered into
an Employment Agreement with Parent and each of such Employment Agreements shall
be in full force and effect at the Effective Time and no such individual shall
be in breach of the agreement, threatening to breach such agreement or taking
any action materially inconsistent with such individual's obligations under the
agreement.
(i) Affiliate Agreements. Each Rule 145 Affiliate of
the Company shall have entered into a Rule 145 Affiliate Agreement and each of
such agreements shall be in full force and effect at the Effective Time and no
party to any such agreement shall be in breach of the agreement, are threatening
to breach such agreement or taking any action materially inconsistent with the
party's obligations under the agreement.
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(j) Conversion of Preferred Stock. All outstanding
shares of Company Preferred Stock shall have converted into shares of Company
Common Stock.
(k) Termination of Employment Agreements. All
employment agreements between the Company and any other person shall have been
terminated to the extent contemplated in Section 5.10.
(l) Estimated Third Party Expenses. Parent shall have
received from the Company at least three business days prior to the Closing Date
a detailed schedule of the Estimated Third Party Expenses paid or payable by the
Company certified as to correctness by the Company in a form reasonably
satisfactory to Parent.
(m) Employee Retention. At least eighty percent (80%)
of the Company's sales, services, technical and engineering employees, and all
Key Employees, as of the date hereof remain employees of the Company as of the
Closing Date.
(n) Secretary's Certificate. Parent shall have been
provided with a certificate of the Parent's Secretary relating to the
organization, existence and good standing of Company and the authorization of
this Agreement and the transactions contemplated hereby and other customary
matters, all in form and substance satisfactory to Parent and its counsel.
(o) Certificate of the Company. Parent shall have been
provided with a certificate executed on behalf of Company by its Chief Executive
Officer to the effect that, as of the Effective Time:
(i) all representations and warranties made by
the Company in this Agreement are true and correct on and as of the Effective
Time as though such representations and warranties were made on and as of such
time except to the extent that any such inaccuracy or noncompliance would not
have a Company Material Adverse Effect;
(ii) all covenants and obligations of this
Agreement to be performed by the Company on or before such date have been so
performed except to the extent that any such inaccuracy or noncompliance would
not have a Company Material Adverse Effect; and
(iii) the provisions set forth in Sections
6.3(b) and (c) have been satisfied.
(p) Other Documents. Parent shall have been provided
with such other documents from the Company as it shall reasonably request.
7. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
7.1 Survival of Representations and Warranties. The Company's
representations and warranties in this Agreement shall survive the Merger and
shall continue until the date that is twelve (12) months after the Closing Date
(the "Escrow Termination Date"). All of the Parent's and Sub's representations
and warranties in this Agreement shall survive the Merger and shall continue
until the date that is twelve (12) months after the Closing Date.
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7.2 Indemnification. The Company agrees to indemnify and hold
Parent and its officers, directors and affiliates harmless against all claims,
losses, liabilities, damages, deficiencies, costs and expenses, including
reasonable attorneys' fees and expenses of investigation and defense
(hereinafter individually a "Loss" and collectively "Losses") incurred by
Parent, its officers, directors, or affiliates (including the Surviving
Corporation) directly or indirectly as a result of (a) any inaccuracy or breach
of a representation or warranty of the Company contained in this Agreement or
any Related Agreements (b) any failure by the Company to perform or comply with
any covenant contained in this Agreement or any Related Agreements or (c) the
Third Party Expenses of the Company exceeding the greater of the Estimated Third
Party Expenses or $500,000. The Shareholders shall not have any right of
indemnification or contribution from the Company with respect to any Loss
claimed by an indemnified party after the Effective Time. Notwithstanding the
foregoing, the Company shall not have any liability under subsections (a) or (b)
of this Section 7.2, unless and until the aggregate Losses for which
indemnification is sought (aggregating all of the claims against the Company
under subsections (a) or (b)) exceed $1,750,000 (the "Basket"), in which case
the full amount of such Losses (including the $1,750,000) shall be subject to
indemnification; provided, however, that in the event that aggregate Losses
attributable to breaches of Section 2.13 ("Section 2.13 Losses") exceed $500,000
prior to such time as total aggregate Losses exceed the Basket, then the Company
shall have liability to Parent to the extent of such Section 2.13 Losses
(including the $500,000), and provided, further, that in the event the Company
has liability to Parent for Section 2.13 Losses pursuant to the foregoing
proviso, then the Basket shall be reduced to $1,250,000 for Losses other than
Section 2.13 Losses.
7.3 Exclusive Contractual Remedy. Except in the case of fraud or
willful misconduct, the rights of the Parent to make claims upon the Escrow Fund
in accordance with this Section 7 shall be the sole and exclusive remedy of
Parent, the Surviving Corporation and any other Indemnified Persons after the
Closing with respect to any representation, warranty, covenant or agreement made
by Company under this Agreement and no Shareholder of Company shall have any
personal liability to Parent, the Surviving Corporation or any other Indemnified
Persons after the Closing in connection with the Merger.
7.4 Escrow Arrangements.
(a) Escrow Fund. As security for the indemnity provided
for in Section 7.2 hereof and by virtue of this Agreement and the Merger
Agreement, the Company and the Shareholders will be deemed to have received and
deposited with the Escrow Agent (as defined below) the Escrow Amount (plus any
additional shares as may be issued upon any stock split, stock dividend or
recapitalization effected by Parent after the Effective Time with respect to the
Escrow Amount) without any act of the Company or any Shareholders. As soon as
practicable after the Effective Time, the Escrow Amount, without any act of any
Shareholders, will be deposited with U.S. Bank Trust N.A. (or other institution
acceptable to Parent and the Securityholder Agent (as defined in Section 7.4(g)
below)) as Escrow Agent (the "Escrow Agent"), such deposit to constitute an
escrow fund (the "Escrow Fund") to be governed by the terms set forth herein.
The Escrow Agent may execute this Agreement following the date hereof and prior
to the Effective Time, and such latter execution shall not affect the binding
nature of this Agreement as of the date hereof among the signatories hereto.
(b) Escrow Period; Distribution upon Termination of
Escrow Periods. Subject to the following requirements, the Escrow Fund shall be
in existence immediately following the Effective Time and shall terminate at
5:00 p.m., Pacific time, on the Escrow Termination Date (the "Escrow Period");
provided that, the Escrow Period shall not terminate with respect to such
remaining portion of the Escrow Fund (or some portion thereof) that in the
reasonable judgement of Parent, subject to the objection of the
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Securityholder Agent (as defined below) and the subsequent arbitration of the
matter in the manner provided in Section 7.4(f) hereof, is necessary to satisfy
(i) any then pending unsatisfied claims specified in any Officer's Certificate
delivered to the Escrow Agent prior to the termination of the Escrow Period and
(ii) any unsatisfied claims specified in any Officer's Certificate delivered to
the Escrow Agent prior to three days after the termination of the Escrow Period
with respect to facts and circumstances existing prior to the termination of
such Escrow Period (including, in the case of both (i) and (ii) above, an
Officer's Certificate delivered to the Escrow Agent that states that the Parent
reasonably believes that it may have a claim against the Escrow Fund and
describing the grounds for such claim). As soon as all such claims have been
resolved, the Escrow Agent shall deliver to the Shareholders the remaining
portion of the Escrow Fund not required to satisfy such claims. Deliveries of
Escrow Amounts to the Shareholders pursuant to this Section 7.4(b) shall be made
in proportion to their respective original contributions to the Escrow Fund.
(c) Protection of Escrow Fund.
(i) The Escrow Agent shall hold and safeguard
the Escrow Fund during the Escrow Period, shall treat such fund as a trust fund
in accordance with the terms of this Agreement and not as the property of Parent
and shall hold and dispose of the Escrow Fund only in accordance with the terms
hereof.
(ii) Any shares of Parent Common Stock or other
equity securities issued or distributed by Parent (including shares issued upon
a stock split) ("New Shares") in respect of Parent Common Stock in the Escrow
Fund which have not been released from the Escrow Fund shall be added to the
Escrow Fund and become a part thereof. New Shares issued in respect of shares of
Parent Common Stock which have been released from the Escrow Fund shall not be
added to the Escrow Fund but shall be distributed to the record holders thereof.
Cash dividends on Parent Common Stock, if any, shall not be added to the Escrow
Fund but shall be distributed to the record holders thereof.
(iii) Each Shareholder shall have voting rights
and the right to distributions of dividends with respect to the shares of Parent
Common Stock contributed to the Escrow Fund by such Shareholders (and on any
voting securities added to the Escrow Fund in respect of such shares of Parent
Common Stock).
(d) Claims Upon Escrow Fund.
(i) Upon receipt by the Escrow Agent at any time
on or before three days after the last day of the Escrow Period of a certificate
signed by any officer of Parent (an "Officer's Certificate"): (A) stating that
Parent has paid Losses, (B) specifying in reasonable detail the individual items
of Losses included in the amount so stated, the date each such item was paid,
and the nature of the misrepresentations, breach of warranty or covenant to
which such items are related and (C) specifying the number of Escrow Shares
necessary to satisfy such claim, the Escrow Agent shall, subject to the
provisions of Section 7.4(e), deliver to Parent out of the Escrow Fund as
promptly as practicable, shares of Parent Common Stock held in the Escrow Fund
in an amount equal to such Losses.
(ii) For the purposes of determining the number
of shares of Parent Common Stock to be delivered to Parent out of the Escrow
Fund as indemnity pursuant to Section 7.4(b) and 7.4(d)(i) hereof, the shares of
Parent Common Stock shall be valued at the Trading Price.
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(e) Objections to Claims. At the time of delivery of any
Officer's Certificate to the Escrow Agent, a duplicate copy of such certificate
shall be delivered to the Securityholder Agent and for a period of thirty (30)
days after such delivery, the Escrow Agent shall make no delivery to Parent of
any Escrow Amounts pursuant to Section 7.4(d) hereof unless the Escrow Agent
shall have received written authorization from the Securityholder Agent to make
such delivery. After the expiration of such thirty (30) day period, the Escrow
Agent shall make delivery of shares of Parent Common Stock from the Escrow Fund
in accordance with Section 7.4(d) hereof, provided that no such payment or
delivery may be made if the Securityholder Agent shall object in a written
statement to the claim made in the Officer's Certificate, and such statement
shall have been delivered to the Escrow Agent prior to the expiration of such
thirty (30) day period.
(f) Resolution of Conflicts; Arbitration.
(i) In case the Securityholder Agent shall so
object in writing to any claim or claims made in any Officer's Certificate, the
Securityholder Agent and Parent shall attempt in good faith to agree upon the
rights of the respective parties with respect to each of such claims. If the
Securityholder Agent and Parent should so agree, a memorandum setting forth such
agreement shall be prepared and signed by both parties and shall be furnished to
the Escrow Agent. The Escrow Agent shall be entitled to rely on any such
memorandum and distribute shares of Parent Common Stock from the Escrow Fund in
accordance with the terms thereof.
(ii) If no such agreement can be reached after
good faith negotiation, either Parent or the Securityholder Agent may demand
arbitration of the matter unless the amount of the damage or loss is at issue in
pending litigation with a third party, in which event arbitration shall not be
commenced until such amount is ascertained or both parties agree to arbitration;
and in either such event the matter shall be settled by arbitration conducted by
one arbitrator mutually agreeable to Parent and the Securityholder Agent. In the
event that within forty-five (45) days after submission of any dispute to
arbitration, Parent and the Securityholder Agent cannot mutually agree on one
arbitrator, Parent and the Securityholder Agent shall each select one
arbitrator, and the two arbitrators so selected shall select a third arbitrator.
The arbitrator or arbitrators, as the case may be, shall set a limited time
period and establish procedures designed to reduce the cost and time for
discovery while allowing the parties an opportunity, adequate in the sole
judgement of the arbitrator or majority of the three arbitrators, as the case
may be, to discover relevant information from the opposing parties about the
subject matter of the dispute. The arbitrator or a majority of the three
arbitrators, as the case may be, shall rule upon motions to compel or limit
discovery and shall have the authority to impose sanctions, including attorneys'
fees and costs, to the extent as a court of competent law or equity, should the
arbitrator or a majority of the three arbitrators, as the case may be, determine
that discovery was sought without substantial justification or that discovery
was refused or objected to without substantial justification. The decision of a
the arbitrator or a majority of the three arbitrators, as the case may be, as to
the validity and amount of any claim in such Officer's Certificate shall be
binding and conclusive upon the parties to this Agreement, and notwithstanding
anything in Section 7.4(e) hereof, the Escrow Agent shall be entitled to act in
accordance with such decision and make or withhold payments out of the Escrow
Fund in accordance therewith. Such decision shall be written and shall be
supported by written findings of fact and conclusions which shall set forth the
award, judgment, decree or order awarded by the arbitrator(s).
(iii) Judgment upon any award rendered by the
arbitrator(s) may be entered in any court having jurisdiction. Any such
arbitration shall be held in San Mateo County, California under the rules then
in effect of the American Arbitration Association. The arbitrator(s) shall
determine how all
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expenses relating to the arbitration shall be paid, including without
limitation, the respective expenses of each party, the fees of each arbitrator
and the administrative fee of the American Arbitration Association.
(g) Securityholder Agent of the Shareholders; Power of
Attorney.
(i) In the event that the Merger is approved,
effective upon such vote, and without further act of any Shareholders, David N.
Strohm shall be appointed as agent and attorney-in-fact (the "Securityholder
Agent") for each Shareholder of the Company, for and on behalf of Shareholders,
to give and receive notices and communications, to authorize delivery to Parent
of shares of Parent Common Stock from the Escrow Fund in satisfaction of claims
by Parent, to object to such deliveries, to agree to, negotiate, enter into
settlements and compromises of, and demand arbitration and comply with orders of
courts and awards of arbitrators with respect to such claims, and to take all
actions necessary or appropriate in the judgment of Securityholder Agent for the
accomplishment of the foregoing. Such agency may be changed by the Shareholders
from time to time upon not less than thirty (30) days prior written notice to
Parent; provided that the Securityholder Agent may not be removed unless holders
of a majority interest of the Escrow Fund agree to such removal and to the
identity of the substituted agent. No bond shall be required of the
Securityholder Agent, and the Securityholder Agent shall not receive
compensation for his or her services, but shall be entitled to reimbursement of
reasonable and documented out-of-pocket expenses (including reasonable legal
fees) incurred in carrying out the Securityholder Agent's duties as such out of
the Escrow Fund to the extent available. Notices or communications to or from
the Securityholder Agent shall constitute notice to or from each of the
Shareholders. The Securityholder Agent may execute this Agreement following the
date hereof and prior to the Effective Time, and such latter execution shall not
affect the binding nature of this Agreement as of the date hereof among the
signatories hereto.
(ii) The Securityholder Agent shall not be liable
for any act done or omitted hereunder as Securityholder Agent while acting in
good faith and in the exercise of reasonable judgment. The Shareholders on whose
behalf the Escrow Amount was contributed to the Escrow Fund shall severally
indemnify the Securityholder Agent and hold the Securityholder Agent harmless
against any loss, liability or expense incurred without negligence or bad faith
on the part of the Securityholder Agent and arising out of or in connection with
the acceptance or administration of the Securityholder Agent's duties hereunder,
including the reasonable fees and expenses of any legal counsel retained by the
Securityholder Agent.
(h) Actions of the Securityholder Agent. A decision,
act, consent or instruction of the Securityholder Agent shall constitute a
decision of all the Shareholders for whom a portion of the Escrow Amount
otherwise issuable to them are deposited in the Escrow Fund and shall be final,
binding and conclusive upon each of such Shareholders, and the Escrow Agent and
Parent may rely upon any such decision, act, consent or instruction of the
Securityholder Agent as being the decision, act, consent or instruction of each
and every such Shareholder. The Escrow Agent and Parent are hereby relieved from
any liability to any person for any acts done by them in accordance with such
decision, act, consent or instruction of the Securityholder Agent.
(i) Third-Party Claims. In the event Parent becomes
aware of a third-party claim which Parent believes may result in a demand
against the Escrow Fund, Parent shall notify the Securityholder Agent of such
claim, and the Securityholder Agent and the Shareholders of the Company shall be
entitled, at their expense, to participate in any defense of such claim. Parent
shall have the right in its sole discretion to settle any such claim; provided,
however, that except with the consent of the Securityholder Agent, no settlement
of any such claim with third-party claimants shall be determinative of the
amount of any
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claim against the Escrow Fund. In the event that the Securityholder Agent has
consented to any such settlement, the Securityholder Agent shall have no power
or authority to object under any provision of this Article VII to the amount of
any claim by Parent against the Escrow Fund with respect to such settlement.
(j) Escrow Agent's Duties.
(i) The Escrow Agent shall be obligated only for
the performance of such duties as are specifically set forth herein, and as set
forth in any additional written escrow instructions which the Escrow Agent may
receive after the date of this Agreement which are signed by an officer of
Parent and the Securityholder Agent, and may rely and shall be protected in
relying or refraining from acting on any instrument reasonably believed to be
genuine and to have been signed or presented by the proper party or parties. The
Escrow Agent shall not be liable for any act done or omitted hereunder as Escrow
Agent while acting in good faith and in the exercise of reasonable judgment, and
any act done or omitted pursuant to the advice of counsel shall be conclusive
evidence of such good faith.
(ii) The Escrow Agent is hereby expressly
authorized to disregard any and all warnings given by any of the parties hereto
or by any other person, excepting only orders or process of courts of law, and
is hereby expressly authorized to comply with and obey orders, judgments or
decrees of any court. In case the Escrow Agent obeys or complies with any such
order, judgment or decree of any court, the Escrow Agent shall not be liable to
any of the parties hereto or to any other person by reason of such compliance,
notwithstanding any such order, judgment or decree being subsequently reversed,
modified, annulled, set aside, vacated or found to have been entered without
jurisdiction.
(iii) The Escrow Agent shall not be liable in
any respect on account of the identity, authority or rights of the parties
executing or delivering or purporting to execute or deliver this Agreement or
any documents or papers deposited or called for hereunder.
(iv) The Escrow Agent shall not be liable for
the expiration of any rights under any statute of limitations with respect to
this Agreement or any documents deposited with the Escrow Agent.
(v) In performing any duties under the
Agreement, the Escrow Agent shall not be liable to any party for damages,
losses, or expenses, except for negligence or willful misconduct on the part of
the Escrow Agent. The Escrow Agent shall not incur any such liability for (A)
any act or failure to act made or omitted in good faith, or (B) any action taken
or omitted in reliance upon any instrument, including any written statement of
affidavit provided for in this Agreement that the Escrow Agent shall in good
faith believe to be genuine, nor will the Escrow Agent be liable or responsible
for forgeries, fraud, impersonations, or determining the scope of any
representative authority. In addition, the Escrow Agent may consult with the
legal counsel in connection with Escrow Agent's duties under this Agreement and
shall be fully protected in any act taken, suffered, or permitted by him/her in
good faith in accordance with the advice of counsel. The Escrow Agent is not
responsible for determining and verifying the authority of any person acting or
purporting to act on behalf of any party to this Agreement.
(vi) If any controversy arises between the
parties to this Agreement, or with any other party, concerning the subject
matter of this Agreement, its terms or conditions, the Escrow Agent will not be
required to determine the controversy or to take any action regarding it. The
Escrow Agent may hold all documents and shares of Parent Common Stock and may
wait for settlement of any such controversy
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<PAGE> 54
by final appropriate legal proceedings or other means as, in the Escrow Agent's
discretion, the Escrow Agent may be required, despite what may be set forth
elsewhere in this Agreement. In such event, the Escrow Agent will not be liable
for damages.
Furthermore, the Escrow Agent may at its option,
file an action of interpleader requiring the parties to answer and litigate any
claims and rights among themselves. The Escrow Agent is authorized to deposit
with the clerk of the court all documents and shares of Parent Common Stock held
in escrow, except all cost, expenses, charges and reasonable attorney fees
incurred by the Escrow Agent due to the interpleader action and which the
parties jointly and severally agree to pay. Upon initiating such action, the
Escrow Agent shall be fully released and discharged of and from all obligations
and liability imposed by the terms of this Agreement.
(vii) The parties and their respective
successors and assigns agree jointly and severally to indemnify and hold Escrow
Agent harmless against any and all losses, claims, damages, liabilities, and
expenses, including reasonable costs of investigation, counsel fees, including
allocated costs of in-house counsel and disbursements that may be imposed on
Escrow Agent or incurred by Escrow Agent in connection with the performance of
his/her duties under this Agreement, including but not limited to any litigation
arising from this Agreement or involving its subject matter other than arising
out of its negligence or willful misconduct provided, however, that the
Shareholder's maximum liability hereunder shall not exceed the amounts then
available from the Escrow Fund.
(viii) The Escrow Agent may resign at any time
upon giving at least thirty (30) days written notice to Parent and the
Securityholder Agent; provided, however, that no such resignation shall become
effective until the appointment of a successor escrow agent which shall be
accomplished as follows: the parties shall use their best efforts to mutually
agree on a successor escrow agent within thirty (30) days after receiving such
notice. If the parties fail to agree upon a successor escrow agent within such
time, the Escrow Agent shall have the right to appoint a successor escrow agent
authorized to do business in the state of California. The successor escrow agent
shall execute and deliver an instrument accepting such appointment and it shall,
without further acts, be vested with all the estates, properties, rights,
powers, and duties of the predecessor escrow agent as if originally named as
escrow agent. Upon appointment of a successor escrow agent, the Escrow Agent
shall be discharged from any further duties and liability under this Agreement.
(k) Fees. All fees of the Escrow Agent for performance
of its duties hereunder shall be paid by Parent in accordance with the standard
fee schedule of the Escrow Agent. It is understood that the fees and usual
charges agreed upon for services of the Escrow Agent shall be considered
compensation for ordinary services as contemplated by this Agreement. In the
event that the conditions of this Agreement are not promptly fulfilled, or if
the Escrow Agent renders any service not provided for in this Agreement, or if
the parties request a substantial modification of its terms, or if any
controversy arises, or if the Escrow Agent is made a party to, or intervenes in,
any litigation pertaining to the Escrow Fund or its subject matter, the Escrow
Agent shall be reasonably compensated for such extraordinary services and
reimbursed for all costs, attorney's fees, including allocated costs of in-house
counsel, and expenses occasioned by such default, delay, controversy or
litigation. The Parent promises to pay these sums upon demand.
8. TERMINATION, AMENDMENT AND WAIVER
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<PAGE> 55
8.1 Termination. Except as provided in Section 8.2, this
Agreement may be terminated and the Merger abandoned at any time prior to the
Effective Time:
(a) by mutual consent of the Company and Parent;
(b) by Parent or the Company if: (i) the Effective Time
has not occurred by October 15, 2000, provided, however, that the right to
terminate this Agreement under this Section 8.1(b)(i) shall not be available to
any party whose action or failure to act has been a principal cause of or
resulted in the failure of the Merger to occur on or before such date and such
action or failure to act constitutes a breach of this Agreement; (ii) there
shall be a final nonappealable order of a federal or state court in effect
preventing consummation of the Merger; or (iii) there shall be any statute,
rule, regulation or order enacted, promulgated or issued or deemed applicable to
the Merger by any Governmental Entity that would make consummation of the Merger
illegal;
(c) by Parent if there shall be any action taken, or
any statute, rule, regulation or order enacted, promulgated or issued or deemed
applicable to the Merger by any Governmental Entity, which would: (i) prohibit
or materially restrict the Parent's or the Surviving Corporation's ownership or
operation of any portion of the business of the Company or (ii) compel Parent or
the Company to dispose of or hold separate all or a portion of the business or
assets of the Company or Parent as a result of the Merger;
(d) by Parent if it is not in material breach of its
obligations under this Agreement and there has been a material breach of any
representation, warranty, covenant or agreement contained in this Agreement or
any Related Agreements on the part of the Company and such breach has not been
cured within ten (10) calendar days after written notice to the Company;
provided, however, that, no cure period shall be required for a breach which by
its nature cannot be cured.
(e) by Parent if an event having a Company Material
Adverse Effect shall have occurred after the date of this Agreement.
(f) by the Company if it is not in material breach of
its obligations under this Agreement and there has been a material breach of any
representation, warranty, covenant or agreement contained in this Agreement or
any Related Agreements on the part of Parent and such breach has not been cured
within ten (10) calendar days after written notice to Parent; provided, however,
that, no cure period shall be required for a breach which by its nature cannot
be cured.
(g) by Company if an event having a Parent Material
Adverse Effect shall have occurred after the date of this Agreement.
(h) by Parent if Company fails to obtain approval of
the Merger by the Company Shareholders at the Company Stockholders' Meeting; or
(i) by Company if Parent fails to obtain approval of
the Merger by the Parent shareholders at the Parent Stockholders' Meeting
(including an adjournment thereof held within twenty (20) days of the initial
stockholder meeting).
8.2 Effect of Termination. In the event of termination of this
Agreement as provided in Section 8.1, this Agreement shall forthwith become void
and there shall be no liability or obligation on the part of Parent, Sub or the
Company, or their respective officers, directors or Shareholders; provided, that
each
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<PAGE> 56
party shall remain liable for any willful breaches of this Agreement prior to
its termination; provided further that, the provisions of Sections 5.3 and
5.9(a), Article IX and this Section 8.2 shall remain in full force and effect
and survive any termination of this Agreement.
8.3 Amendment. This Agreement may be amended by the parties
hereto at any time by execution of an instrument in writing signed on behalf of
Parent, Sub and the Company.
8.4 Extension; Waiver. At any time prior to the Effective Time,
Parent and Sub, on the one hand, and the Company, on the other hand, may, to the
extent legally allowed, (a) extend the time for the performance of any of the
obligations of the other party hereto, (b) waive any inaccuracies in the
representations and warranties made to such party contained herein or in any
document delivered pursuant hereto, and (c) waive compliance with any of the
agreements or conditions for the benefit of such party contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
9. GENERAL PROVISIONS
9.1 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally or by
commercial messenger or courier service, or mailed by registered or certified
mail (return receipt requested) or sent via facsimile (with acknowledgment of
complete transmission) to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice), provided,
however, that notices sent by mail will not be deemed given until received:
(a) if to Parent or Sub, to:
E.piphany, Inc.
1900 South Norfolk Street, Suite 310
San Mateo, California 94403
Attention: General Counsel
Telephone No.: (650) 356-3800
Facsimile No.: (650) 356-3801
with a copy to:
Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304
Attention: Aaron J. Alter, Esq.
N. Anthony Jeffries, Esq.
Telephone No.: (650) 493-9300
Facsimile No.: (650) 493-6811
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<PAGE> 57
(b) if to the Company, to
Octane Software, Inc.
2929 Campus Drive #101
San Mateo, California 94403
Attention: Aditya Guleri
Telephone No.: (650) 295-6200
Facsimile No.: (650) 295-6370
with a copy to:
Venture Law Group, A Professional Corporation
2800 Sand Hill Road
Menlo Park, CA 94025
Attention: Sanjay Khare, Esq.
Telephone No.: (650) 854-4488
Facsimile No.: (650) 854-1121
(c) If to the Escrow Agent, to:
U.S. Bank Trust N.A.
One California Street, 4th Floor
San Francisco, California 94111
Attention: Ann Gadsby
Telephone No.: (415) 273-4532
Facsimile No.: (415) 273-4593
(d) If to the Securityholder Agent, to:
Grey Lock
755 Page Mill Road
Building A, Suite 100
Palo Alto, California 94304
Attention: David N. Strohm
Telephone No.: (650) 493-5525
Facsimile No.: (650) 493-5575
9.2 Interpretation. The words "include," "includes" and
"including" when used herein shall be deemed in each case to be followed by the
words "without limitation." The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
9.3 Counterparts; Facsimile. This Agreement may be executed by
facsimile and in one 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 party, it
being understood that all parties need not sign the same counterpart.
9.4 Entire Agreement; Assignment. This Agreement, the Related
Agreements, the Exhibits and Schedules hereto, the Mutual Nondisclosure
Agreement, dated February 12, 2000 between the Company
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<PAGE> 58
and Parent and the documents and instruments and other agreements among the
parties hereto referenced herein: (a) constitute the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings both written and oral, among the parties with
respect to the subject matter hereof; (b) except as set forth in Section 5.20
are not intended to confer upon any other person any rights or remedies
hereunder; and (c) shall not be assigned (other than by operation of law),
except that Parent and Sub may assign their respective rights and delegate their
respective obligations hereunder to their respective affiliates.
9.5 Severability. In the event that any provision of this
Agreement or the application thereof, becomes or is declared by a court of
competent jurisdiction to be illegal, void or unenforceable, the remainder of
this Agreement will continue in full force and effect and the application of
such provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further agree
to replace such void or unenforceable provision of this Agreement with a valid
and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of such void or unenforceable provision.
9.6 Other Remedies; Specific Performance. Any and all remedies
herein expressly conferred upon a party will be deemed cumulative with and not
exclusive of any other remedy conferred hereby, or by law or equity upon such
party, and the exercise by a party of any one remedy will not preclude the
exercise of any other remedy. The parties hereto agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to seek an injunction
or injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy to which they
are entitled at law or in equity.
9.7 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 conflicts of
laws thereof. Each of the parties hereto irrevocably consents to the exclusive
jurisdiction and venue of any court within San Mateo County, State of
California, in connection with any matter based upon or arising out of this
Agreement or the matters contemplated herein, agrees that process may be served
upon them in any manner authorized by the laws of the State of Delaware for such
persons and waives and covenants not to assert or plead any objection which they
might otherwise have to such jurisdiction, venue and such process. Each of
Parent, Company and Sub hereby irrevocably waives all right to trial by jury in
any action, proceeding or counterclaim (whether based on contract, tort or
otherwise) arising out of or relating to this agreement or the actions of
Parent, Company or Sub in the negotiation, administration, performance and
enforcement hereof.
9.8 Rules of Construction. The parties hereto agree that they
have been represented by counsel during the negotiation and execution of this
Agreement and, therefor, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.
9.9 Attorneys Fees. If any action or other proceeding relating
to the enforcement of any provision of this Agreement is brought by any party
hereto, the prevailing party shall be entitled to recover reasonable attorneys'
fees, costs and disbursements (in addition to any other relief to which the
prevailing party may be entitled).
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<PAGE> 59
IN WITNESS WHEREOF, Parent, Sub, the Company, the Escrow Agent and the
Securityholder Agent have caused this Agreement to be signed, all as of the date
first written above.
E.PIPHANY, INC. OCTANE SOFTWARE, INC.
By: By:
--------------------------- ---------------------------
Name: Name:
------------------------- -------------------------
Title: Title:
------------------------ ------------------------
ORCHID ACQUISITION CORPORATION ESCROW AGENT:
U.S. BANK TRUST N.A.
(for purpose of Article VII only)
By: By:
--------------------------- ---------------------------
Name: Name:
------------------------- -------------------------
Title: Title:
------------------------ ------------------------
SECURITYHOLDER AGENT:
David N. Strohm
(for purposes of Article VII only)
By:
---------------------------
Name:
-------------------------
<PAGE> 1
EXHIBIT 2.2
VOTING AGREEMENT
THIS VOTING AGREEMENT (this "Agreement") is made and entered into as of
March ___, 2000, among _______________, Inc., a Delaware corporation ("Parent"),
and the undersigned shareholder and/or option holder (the "Shareholder") of
_______________, Inc., a _______________ corporation (the "Company").
WHEREAS, the Company, Sub (as defined below), Parent and certain other
parties have entered into an Agreement and Plan of Reorganization (the
"Reorganization Agreement"), which provides for the merger of a wholly-owned
subsidiary of Parent ("Sub") into the Company (the "Merger"). Pursuant to the
Merger, all issued and outstanding capital stock of the Company shall be
converted into the right to receive common stock of Parent, as set forth in the
Reorganization Agreement;
WHEREAS, Shareholder is the beneficial owner (as defined in Rule 13d-3
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) of
such number of shares of the outstanding capital stock of the Company and shares
subject to outstanding options and warrants as is indicated on the signature
page of this Agreement; and
WHEREAS, in consideration of the execution of the Reorganization
Agreement by Parent, Shareholder (in its, his or her capacity as such) agrees to
vote the Shares (as defined below), and other such shares of capital stock of
the Company over which Shareholder has voting power, so as to facilitate
consummation of the Merger.
NOW, THEREFORE, intending to be legally bound, the parties hereto agree
as follows:
1. Certain Definitions. Capitalized terms not defined herein shall
have the meanings ascribed to them in the Reorganization Agreement. For purposes
of this Agreement:
(a) "Expiration Date" shall mean the earlier to occur of (i)
such date and time as the Reorganization Agreement shall have been terminated
pursuant to Article VIII thereof, or (ii) such date and time as the Merger shall
become effective in accordance with the terms and provisions of the
Reorganization Agreement.
(b) "Person" shall mean any (i) individual, (ii) corporation,
limited liability company, partnership or other entity, or (iii) governmental
authority.
(c) "Shares" shall mean: (i) all securities of the Company
(including all shares of Company Capital Stock and all options, warrants and
other rights to acquire shares of Company Capital Stock) owned by Shareholder as
of the date of this Agreement; and (ii) all additional securities of the Company
(including all additional shares of Company Capital Stock and all additional
options, warrants and other rights to acquire shares of Company Capital Stock)
of which Shareholder acquires ownership during the period from the date of this
Agreement through the Expiration Date.
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<PAGE> 2
(d) Transfer. A Person shall be deemed to have effected a
"Transfer" of a security if such person directly or indirectly: (i) sells,
pledges, encumbers, grants an option with respect to, transfers or disposes of
such security or any interest in such security; or (ii) enters into an agreement
or commitment providing for the sale of, pledge of, encumbrance of, grant of an
option with respect to, transfer of or disposition of such security or any
interest therein.
2. Transfer of Shares.
(a) Transferee of Shares to be Bound by this Agreement.
Shareholder agrees that, during the period from the date of this Agreement
through the Expiration Date, Shareholder shall not cause or permit any Transfer
of any of the Shares to be effected unless such Transfer is in accordance with
any affiliate agreement between Shareholder and Parent contemplated by the
Reorganization Agreement and each Person to which any of such Shares, or any
interest in any of such Shares, is or may be transferred shall have: (a)
executed a counterpart of this Agreement and a proxy in the form attached hereto
as Exhibit A (with such modifications as Parent may reasonably request); and (b)
agreed in writing to hold such Shares (or interest in such Shares) subject to
all of the terms and provisions of this Agreement.
(b) Transfer of Voting Rights. Shareholder agrees that, during
the period from the date of this Agreement through the Expiration Date,
Shareholder shall not deposit (or permit the deposit of) any Shares in a voting
trust or grant any proxy or enter into any voting agreement or similar agreement
in contravention of the obligations of Shareholder under this Agreement with
respect to any of the Shares.
3. Agreement to Vote Shares. At every meeting of the Shareholders of
the Company called, and at every adjournment thereof, and on every action or
approval by written consent of the Shareholders of the Company, Shareholder (in
its, his or her capacity as such) shall cause the Shares to be voted in favor of
approval of the Reorganization Agreement and the Merger, in favor of the
automatic conversion of Company Preferred Stock into Company Common Stock
immediately prior to Effective Time, in favor of each of the other transactions
contemplated by the Reorganization Agreement, in favor of any matter that could
reasonably be expected to facilitate the Merger and against any matter that is
inconsistent with the prompt consummation of the Merger and other transactions
contemplated by the Reorganization Agreement.
4. Irrevocable Proxy. Concurrently with the execution of this
Agreement, Shareholder agrees to deliver to Parent a proxy in the form attached
hereto as Exhibit A (the "Proxy"), which shall be irrevocable to the fullest
extent permissible by law, with respect to the Shares.
5. Irrevocable Election to Conversion. Shareholder hereby agrees and
elects to the automatic conversion immediately prior to Effective Time of the
Shares into Company Common Stock, as appropriate, pursuant to the terms of the
Company's Certificate of Incorporation, which agreement and election shall be
irrevocable to the fullest extent permissible by law.
6. Representations and Warranties of the Shareholder. Shareholder (a)
is the sole beneficial owner of the shares of Company Capital Stock and the
options and warrants to purchase shares of Company Capital Stock indicated on
the final page of this Agreement, free and clear of any liens, claims, options,
rights of first refusal (except as may be held by the Company), co-sale rights,
charges or other encumbrances; (b) does not beneficially own any securities of
the Company other than the shares of Company Capital Stock and options and
warrants to purchase shares of Company Capital Stock indicated on the final page
of this Agreement; and (c) has full power and authority to make, enter into and
carry out the terms of this Agreement and the Proxy.
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<PAGE> 3
7. Additional Documents. Shareholder (in its, his or her capacity as
such) hereby covenants and agrees to execute and deliver any additional
documents necessary or desirable, in the reasonable opinion of Parent, to carry
out the intent of this Agreement.
8. Consent and Waiver. Shareholder (not in its, his or her capacity as
a director or officer of the Company) hereby gives any consents or waivers that
are reasonably required for the consummation of the Merger under the terms of
any agreements to which Shareholder is a party or pursuant to any rights
Shareholder may have.
9. Legending of Shares. If so requested by Parent, Shareholder agrees
that the Shares shall bear a legend stating that they are subject to this
Agreement and to an irrevocable proxy. Subject to the terms of Section 2 hereof,
Shareholder agrees that Shareholder shall not Transfer the Shares without first
having the aforementioned legend affixed to the certificates representing the
Shares.
10. Termination. This Agreement shall terminate and shall have no
further force or effect on such date and time as the Reorganization Agreement
shall have been terminated pursuant to Article VIII thereof.
11. Miscellaneous.
(a) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, then the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
(b) Binding Effect and Assignment. This Agreement and all of
the provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns, but,
except as otherwise specifically provided herein, neither this Agreement nor any
of the rights, interests or obligations of the parties hereto may be assigned by
either of the parties without prior written consent of the other.
(c) Amendments and Modification. This Agreement may not be
modified, amended, altered or supplemented except upon the execution and
delivery of a written agreement executed by the parties hereto.
(d) Waiver. No waiver, alteration or modification of any of
the provisions of this Agreement shall be binding unless in writing and signed
by duly authorized representatives of the parties hereto. No failure or delay by
any party in executing any right, power or privilege hereunder shall operate as
a waiver hereof, nor shall any single or partial exercise hereof preclude any
other or future exercise hereof or the exercise of any other right, power or
privilege hereof.
(e) Specific Performance; Injunctive Relief. The parties
hereto acknowledge that Parent shall be irreparably harmed and that there shall
be no adequate remedy at law for a violation of any of the covenants or
agreements of Shareholder set forth herein. Therefore, it is agreed that, in
addition to any other remedies that may be available to Parent upon any such
violation, Parent shall have the right to enforce such covenants and agreements
by specific performance, injunctive relief or by any other means available to
Parent at law or in equity.
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(f) Notices. All notices and other communications pursuant to
this Agreement shall be in writing and deemed to be sufficient if contained in a
written instrument and shall be deemed given if delivered personally,
telecopied, sent by nationally-recognized overnight courier or mailed by
registered or certified mail (return receipt requested), postage prepaid, to the
parties at the following address (or at such other address for a party as shall
be specified by like notice):
If to Parent: ------------------------------------
------------------------------------
------------------------------------
Attention: General Counsel
Telephone:
--------------------------
Facsimile:
--------------------------
With a copy to: Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304
Attention: Aaron Alter, Esq.
Tony Jeffries, Esq.
Telephone: (650) 493-9300
Facsimile: (650) 493-6811
If to Shareholder: To the address for notice set forth on the
signature page hereof.
(g) Governing Law. This Agreement shall be governed by the laws
of the State of Delaware, without reference to rules of conflicts of law.
(h) Entire Agreement. This Agreement and the Proxy contain the
entire understanding of the parties in respect of the subject matter hereof, and
supersede all prior negotiations and understandings between the parties with
respect to such subject matter.
(i) Effect of Headings. The Section headings are for convenience
only and shall not affect the construction or interpretation of this Agreement.
(j) Facsimile; Counterparts. This Agreement may be executed by
facsimile and in several counterparts, each of which shall be an original, but
all of which together shall constitute one and the same agreement.
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<PAGE> 5
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on the day and year first above written.
E.piphany, Inc.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
[SIGNATURE PAGE TO VOTING AGREEMENT]
<PAGE> 6
SHAREHOLDER:
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
Address:
---------------------------
- -----------------------------------
Phone:
-----------------------------
Facsimile:
-------------------------
Shares beneficially owned:
shares of Company Common Stock
- ---------------------
shares of Company Common Stock issuable upon exercise of
outstanding options or warrants
- --------------------
shares of Company Series A Preferred Stock
shares of Company Series A Preferred Stock issuable upon
exercise of outstanding warrants
- --------------------
shares of Company Series B Preferred Stock
- --------------------
shares of Company Series B Preferred Stock issuable upon
exercise of outstanding warrants
- ---------------------
shares of Company Series C Preferred Stock
- --------------------
shares of Company Series C Preferred Stock issuable upon
exercise of outstanding warrants
- --------------------
[SIGNATURE PAGE TO VOTING AGREEMENT]
<PAGE> 7
EXHIBIT A
IRREVOCABLE PROXY
The undersigned Shareholder of _______________, a Delaware corporation
(the "Company"), hereby irrevocably (to the fullest extent permitted by law)
appoints ____________, ____________ and ____________, and each of them, as the
sole and exclusive attorneys and proxies of the undersigned, with full power of
substitution and resubstitution, to vote and exercise all voting and related
rights (to the full extent that the undersigned is entitled to do so) with
respect to all of the shares of capital stock of the Company that now are or
hereafter may be beneficially owned by the undersigned, and any and all other
shares or securities of the Company issued or issuable in respect thereof on or
after the date hereof (collectively, the "Shares") in accordance with the terms
of this Proxy. The Shares beneficially owned by the undersigned Shareholder of
the Company as of the date of this Proxy are listed on the final page of this
Proxy. Upon the undersigned's execution of this Proxy, any and all prior proxies
given by the undersigned with respect to any Shares are hereby revoked and the
undersigned agrees not to grant any subsequent proxies with respect to the
Shares until after the Expiration Date (as defined below).
This Proxy is irrevocable (to the fullest extent permitted by law), is
coupled with an interest and is granted pursuant to that certain Voting
Agreement of even date herewith by and among _______________, a Delaware
corporation ("Parent") and the undersigned Shareholder (the "Voting Agreement"),
and is granted in consideration of Parent entering into that certain Agreement
and Plan of Reorganization (the "Reorganization Agreement"), among Parent,
_______________ Acquisition Corporation, a Delaware corporation and a
wholly-owned subsidiary of Parent ("Sub"), and the Company. The Reorganization
Agreement provides for the merger of Sub with and into the Company in accordance
with its terms (the "Merger"). As used herein, the term "Expiration Date" shall
mean the earlier to occur of (i) such date and time as the Reorganization
Agreement shall have been validly terminated pursuant to Article VIII thereof or
(ii) such date and time as the Merger shall become effective in accordance with
the terms and provisions of the Reorganization Agreement. Capitalized terms not
defined herein shall have the meanings ascribed to them in the Reorganization
Agreement.
The attorneys and proxies named above, and each of them, are hereby
authorized and empowered by the undersigned, at any time prior to the Expiration
Date, to act as the undersigned's attorney and proxy to vote the Shares, and to
exercise all voting, consent and similar rights of the undersigned with respect
to the Shares (including, without limitation, the power to execute and deliver
written consents) at every annual, special or adjourned meeting of Shareholders
of the Company and in every written consent in lieu of such meeting in favor of
approval of the Reorganization Agreement and the Merger, in favor of the
automatic conversion of Company Preferred Stock into Company Common Stock
immediately prior to Effective Time, in favor of each of the other transactions
contemplated by the Reorganization Agreement, in favor of any matter that could
reasonably be expected to facilitate the Merger and against any matter that is
inconsistent with the prompt consummation of the Merger or other transactions
contemplated by the Reorganization Agreement.
The attorneys and proxies named above may not exercise this Proxy on
any other matter except as provided above. The undersigned Shareholder may vote
the Shares on all other matters.
Any obligation of the undersigned hereunder shall be binding upon the
successors and assigns of the undersigned.
<PAGE> 8
This Proxy is irrevocable (to the fullest extent permitted by law).
This Proxy shall terminate, and be of no further force and effect, automatically
upon the Expiration Date.
Dated: , 1999
-------------------------------------
SHAREHOLDER
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Shares beneficially owned:
- --------------------
shares of the Company Common Stock
- --------------------
shares of the Company Common Stock issuable upon
exercise of outstanding options or warrants
- --------------------
shares of the Company Series A Preferred Stock
- --------------------
shares of the Company Series A Preferred Stock
issuable upon exercise of outstanding warrants
- --------------------
shares of the Company Series B Preferred Stock
- --------------------
shares of the Company Series B Preferred Stock
issuable upon exercise of outstanding warrants
- --------------------
shares of the Company Series C Preferred Stock
- --------------------
shares of the Company Series C Preferred Stock
issuable upon exercise of outstanding warrants
- --------------------
<PAGE> 1
EXHIBIT 2.3
VOTING AGREEMENT
THIS VOTING AGREEMENT (this "Agreement") is made and entered into as of
March ___, 2000, between Octane Software, Inc., a California corporation
("Company"), and the undersigned stockholder (the "Stockholder") of E.piphany
Inc., a Delaware corporation (the "Parent").
WHEREAS, the Company, Sub (as defined below), Parent and certain other
parties have entered into an Agreement and Plan of Reorganization (the
"Reorganization Agreement"), which provides for the merger of a wholly-owned
subsidiary of Parent ("Sub") into the Company (the "Merger"). Pursuant to the
Merger, all issued and outstanding capital stock of the Company shall be
converted into the right to receive common stock of Parent, as set forth in the
Reorganization Agreement;
WHEREAS, Stockholder is the beneficial owner (as defined in Rule 13d-3
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) of
such number of shares of the outstanding common stock of the Company as is
indicated on the signature page of this Agreement; and
WHEREAS, in consideration of the execution of the Reorganization
Agreement by Parent, Stockholder (in its, his or her capacity as such) agrees to
vote the Shares (as defined below), so as to facilitate consummation of the
Merger.
NOW, THEREFORE, intending to be legally bound, the parties hereto agree
as follows:
1. Certain Definitions. Capitalized terms not defined herein shall
have the meanings ascribed to them in the Reorganization Agreement. For purposes
of this Agreement:
(a) "Expiration Date" shall mean the earlier to occur of (i)
such date and time as the Reorganization Agreement shall have been terminated
pursuant to Article VIII thereof, or (ii) such date and time as the Merger shall
become effective in accordance with the terms and provisions of the
Reorganization Agreement.
(b) "Person" shall mean any (i) individual, (ii) corporation,
limited liability company, partnership or other entity, or (iii) governmental
authority.
(c) "Shares" shall mean all securities of the Parent
beneficially owned (if any) by Stockholder as of the record date for the vote of
the Stockholders with respect to the Merger.
(d) Transfer. A Person shall be deemed to have effected a
"Transfer" of a security if such person directly or indirectly: (i) sells,
pledges, encumbers, grants an option with respect to, transfers or disposes of
such security or any interest in such security; or (ii) enters into an agreement
or commitment providing for the sale of, pledge of, encumbrance of, grant of an
option with respect to, transfer of or disposition of such security or any
interest therein.
(e) "Stockholders" shall mean the holders of common stock of
the Parent.
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<PAGE> 2
2. Transfers Permitted. Nothing in this Agreement shall be deemed to
prohibit, restrict or in any way limit Stockholder's right to Transfer any
securities of the Parent beneficially owned by Stockholder.
3. Agreement to Vote Shares. At every meeting of the Stockholders
called, and at every adjournment thereof, and on every action or approval by
written consent of the Stockholders of the Parent, Stockholder (in its, his or
her capacity as such) shall cause the Shares to be voted in favor of approval of
the Reorganization Agreement and the Merger, in favor of each of the other
transactions contemplated by the Reorganization Agreement, and in favor of any
matter that could reasonably be expected to facilitate the Merger and against
any matter that is intended specifically for the purpose of preventing or
delaying the Merger and other transactions contemplated by the Reorganization
Agreement.
4. Representations and Warranties of the Stockholder. Stockholder (a)
is the beneficial owner of the shares of Parent common stock indicated on the
final page of this Agreement as of the date of this Agreement (with the
understanding that the number of shares held on the record date may be different
than such number); and (b) has full power and authority to make, enter into and
carry out the terms of this Agreement.
5. Termination. This Agreement shall terminate and shall have no
further force or effect on the Expiration Date.
6. Miscellaneous.
(a) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, then the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
(b) Binding Effect and Assignment. This Agreement and all of
the provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns, but,
except as otherwise specifically provided herein, neither this Agreement nor any
of the rights, interests or obligations of the parties hereto may be assigned by
either of the parties without prior written consent of the other.
(c) Amendments and Modification. This Agreement may not be
modified, amended, altered or supplemented except upon the execution and
delivery of a written agreement executed by the parties hereto.
(d) Waiver. No waiver, alteration or modification of any of
the provisions of this Agreement shall be binding unless in writing and signed
by duly authorized representatives of the parties hereto. No failure or delay by
any party in executing any right, power or privilege hereunder shall operate as
a waiver hereof, nor shall any single or partial exercise hereof preclude any
other or future exercise hereof or the exercise of any other right, power or
privilege hereof.
(e) Specific Performance; Injunctive Relief. The parties
hereto acknowledge that Company shall be irreparably harmed and that there shall
be no adequate remedy at law for a violation of any of the covenants or
agreements of Stockholder set forth herein. Therefore, it is agreed that, in
addition to any other remedies that may be available to Company upon any such
violation, Company shall have the right to enforce such covenants and agreements
by specific performance, injunctive relief or by any other means available to
Company at law or in equity.
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<PAGE> 3
(f) Notices. All notices and other communications pursuant to
this Agreement shall be in writing and deemed to be sufficient if contained in a
written instrument and shall be deemed given if delivered personally,
telecopied, sent by nationally-recognized overnight courier or mailed by
registered or certified mail (return receipt requested), postage prepaid, to the
parties at the following address (or at such other address for a party as shall
be specified by like notice):
If to Company: At the address as set forth in the
Reorganization Agreement
With a copy to: Venture Law Group at the address as set forth
in the Reorganization Agreement
If to Stockholder: Care of the address of the Parent as set
forth in the Reorganization Agreement.
(g) Governing Law. This Agreement shall be governed by the
laws of the State of Delaware, without reference to rules of conflicts of law.
(h) Entire Agreement. This Agreement contain the entire
understanding of the parties in respect of the subject matter hereof, and
supersede all prior negotiations and understandings between the parties with
respect to such subject matter.
(i) Effect of Headings. The Section headings are for
convenience only and shall not affect the construction or interpretation of this
Agreement.
(j) Facsimile; Counterparts. This Agreement may be executed by
facsimile and in several counterparts, each of which shall be an original, but
all of which together shall constitute one and the same agreement.
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<PAGE> 4
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on the day and year first above written.
COMPANY:
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
STOCKHOLDER:
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Shares beneficially owned:
shares of Company Common Stock
- ------------------
shares of Company Common Stock issuable upon the exercise
of outstanding options and warrants
- ------------------
<PAGE> 1
EXHIBIT 99.1
E.PIPHANY ENTERS INTO DEFINITIVE AGREEMENT TO ACQUIRE OCTANE SOFTWARE
NEXT-GENERATION SOFTWARE COMPANIES COMBINE TO PROVIDE FIRST WEB-BASED,
INTEGRATED SUITE OF INTELLIGENT CUSTOMER INTERACTION SOLUTIONS
SAN MATEO, Calif. - March 15, 2000- E.piphany, Inc. (Nasdaq: EPNY), a
leading provider of customer-focused analytic, campaign management and real-time
personalization applications, today announced that it has signed a definitive
agreement to acquire privately-held Octane Software, Inc., a next-generation
provider of multi-channel customer care applications for sales, service and
support. The combination extends E.piphany's first mover advantage by
establishing the only web-based, intelligent solution that coordinates and
unifies all inbound and outbound interactions with customers in real-time.
Together, E.piphany(TM) and Octane(TM) serve more than 125 industry-leading
enterprises in e-commerce, financial services, communications, consumer-packaged
goods and technology, including American Express Company, Autoweb.com, Charles
Schwab & Co., Compaq Computer Corp., Critical Path, GTE, Hewlett Packard
Company, Internet Capital Group Inc., Procter & Gamble and WingspanBank.com.
"To create a successful customer lifecycle management system, large
enterprises must intelligently connect outbound sales and marketing with inbound
service and support," said Barry Wilderman, Vice President of META Group's
Application Delivery Strategic service. "We believe that vendors like E.piphany
(with its acquisition of Octane), will deliver integrated suites of applications
that span key components of both operational and analytical CRM."
Under the terms of the definitive agreement, E.piphany will issue
approximately 12.8 million shares of its common stock to the shareholders of
Octane, or approximately 26.5% of the combined company on a fully diluted basis.
The transaction will be accounted for as a purchase. The acquisition is subject
to customary closing conditions, including the approval of E.piphany's and
Octane's shareholders and regulatory approvals.
"Today's announcement marks a defining moment for the entire CRM
market," said Roger Siboni, president and CEO of E.piphany. "Both companies have
invested in building the most sophisticated, web-based product architectures
which will facilitate rapid integration of the two product suites, and raise the
bar for any company who wishes to compete in this rapidly expanding market.
Furthermore, the complementary nature of our business philosophies, vision,
management team, employees, products, partnerships and vertical industries is
remarkable."
"E.piphany has clearly demonstrated its expertise and market leadership
in providing real-time analytic and personalization technology to drive lifetime
customer relationships," said Tim Guleri, CEO of Octane. "At the same time, our
delivery of the leading Internet-based applications for sales, service and
support has set a new standard in providing high value customer care. Together,
we are able to dramatically expand our footprint in the market and provide a
suite of solutions that we believe is generations beyond any other offering."
Mr. Siboni added, "Upon completing the transaction, E.piphany will have
an unparalleled management team, with more than 500 worldwide employees,
including more than 60 'enterprise-class' quota carrying sales representatives.
Combined, we have extensive relationships with leading system integrators,
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<PAGE> 2
resellers, Internet infrastructure providers, and ASP partners. In addition, our
shared vision, common culture and geographic headquarter proximity should enable
a rapid and seamless integration of the two companies."
ABOUT OCTANE SOFTWARE
Octane Software, Inc. is a next-generation provider of multi-channel
customer interaction applications and infrastructure software for sales, service
and support. Built by a team of customer relationship management industry
experts, Octane enables companies to provide real-time, interactive customer
care to engage, acquire and retain customers in the new Internet economy. With
Octane 2000(TM), Octane's award-winning Web-based customer interaction suite,
companies can manage business-critical relationships between customers,
partners, suppliers and employees over a variety of touchpoints, including Web,
email, chat, phone and fax. Octane 2000's open Internet architecture provides a
technology set including enterprise integration, Internet-class scalability,
actionable business intelligence and a flexible design environment.
Headquartered in San Mateo, Calif., with sales offices in Atlanta, Boston,
Chicago, Phoenix, European headquarters in the United Kingdom and Asia Pacific
headquarters in Australia, Octane can be reached at 1-650-295-6200, U.S.
toll-free at 1-877-4OCTANE, via e-mail at [email protected], or on the Web at
www.Octane.com.
ABOUT E.PIPHANY
E.piphany is the provider of real-time analytical applications that
create a single enterprise-wide view of the customer enabling insight and
personalized action across all touchpoints. The E.piphany E.4(TM) system is
designed to help companies get, keep and grow customer relationships for the new
Customer Economy. The E.4 system is an integrated suite of software solutions
that enable companies to profile and analyze individual customer characteristics
and preferences and then leverage that information to drive marketing campaigns
and individually tailored products and services. The E.piphany E.4 system
combines best-of-breed extraction, data warehousing, reporting, data mining,
campaign management and real-time personalization into an integrated platform
that eliminates the need to assemble and maintain multiple tools from various
vendors. E.piphany E.4 integrates and manages information from existing
front-and-back-office systems, third-party data, and other sources, turning
every piece of enterprise-wide information into focused customer knowledge.
E.piphany E.4 is the only customer-focused analytic, campaign management and
real-time personalization application that is designed from the ground up around
Internet technology. Headquartered in San Mateo, Calif., with worldwide sales
and service centers and European headquarters in the United Kingdom, E.piphany
can be reached at 1-877-764-4163 or on the Web at www.epiphany.com.
E.piphany and Octane will be hosting a press and analyst conference
call at 8:00 am PST, March 15, 2000. The call-in number is 1-800-553-0326 in the
United States and 612-332-0718 for International callers.
###
The statements contained herein including those made by Mr. Siboni and
Mr. Guleri constitute forward-looking statements which are subject to certain
risks, including the risks that: the merger of the two companies may not be
consummated due to failure to obtain timely regulatory and stockholder approval;
the ability to integrate the two businesses after the merger; and the ability of
the combined business to successfully compete. For a more extensive list of
those risks, we refer you to the risk factors listed on the proxy
statement/prospectus to be filed with the SEC in connection with the merger.
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<PAGE> 3
ADDITIONAL INFORMATION AND WHERE TO FIND IT
E.piphany plans to file a Registration Statement on SEC Form S-4 in
connection with the merger, and E.piphany and Octane expect to mail a Joint
Proxy Statement/Prospectus to stockholders of E.piphany and Octane containing
information about the merger. Investors and security holders are urged to read
the Registration Statement and the Joint Proxy Statement/Prospectus carefully
when they are available. The Registration Statement and the Joint Proxy
Statement/Prospectus will contain important information about E.piphany, Octane,
the merger and related matters. Investors and security holders will be able to
obtain free copies of these documents through the website maintained by the US
Securities and Exchange Commission at http://www.sec.gov. Free copies of the
Joint Proxy Statement/Prospectus and these other documents may also be obtained
by request from E.piphany by accessing the Investor Relations website at
E.piphany, Inc. http://www.epiphany.com/irform.html or by mail to E.piphany,
Inc., 1900 South Norfolk Street, San Mateo, California 94403, attention:
Investor Relations, telephone: 650-356-3800, or from Octane by sending mail to
Octane, 2929 Campus Drive #101, San Mateo, California 94403, attention: Investor
Relations, telephone: 650-295-6200.
In addition to the Registration Statement and the Joint Proxy
Statement/Prospectus, E.piphany files annual, quarterly and special reports,
proxy statements and other information with the Securities and Exchange
Commission. You may read and copy any reports, statements or other information
filed by E.piphany at the SEC public reference rooms at 450 Fifth Street, N.W.,
Washington, D.C. 20549 or at any of the Commission's other public reference
rooms in New York, New York and Chicago, Illinois. Please call the Commission at
1-800-SEC-0330 for further information on the public reference rooms.
E.piphany's filings with the Commission are also available to the public from
commercial document-retrieval services and at the Web site maintained by the
Commission at http://www.sec.gov. E.piphany and Octane and their respective
directors, executive officers and certain other members of management and
employees may be soliciting proxies from E.piphany and Octane stockholders in
favor of, among other things, the adoption of the merger agreement, in the case
of Octane, and the issuance of shares in connection with the merger, in the case
of E.piphany. A complete description of these matters and a description of any
interests that the directors and executive officers of Octane have in the merger
will be available in the Joint Proxy Statement/Prospectus.
E.piphany, E.4 and the E.piphany logo are trademarks of E.piphany, Inc.
Octane, Octane Software, Octane 2000, are trademarks of Octane Software, Inc.
Press Contact:
Heather McLellan, E.piphany, 650.356.3863, [email protected]
Jaia Zimmerman, Octane Software, 650.295.6365, [email protected]
Investor Relations Contact:
Todd Friedman, E.piphany, 650-356-3934, [email protected]
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