<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 17, 1999.
REGISTRATION NO. 333-
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
PEOPLESOFT, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C> <C>
DELAWARE 7372 68-0137069
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
4460 HACIENDA DRIVE, PLEASANTON, CA 94588
(925) 694-3000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
CRAIG CONWAY
PRESIDENT AND CHIEF EXECUTIVE OFFICER
PEOPLESOFT, INC.
4460 HACIENDA DRIVE, PLEASANTON, CALIFORNIA 94588
(925) 694-3000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPIES TO:
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KENNETH R. LAMB GREGORY M. GALLO
PETER T. HEILMANN JOE SORENSON
GIBSON, DUNN & CRUTCHER LLP GRAY CARY WARE & FREIDENRICH LLP
ONE MONTGOMERY STREET, TELESIS TOWER 400 HAMILTON AVENUE
SAN FRANCISCO, CALIFORNIA 94104 PALO ALTO, CALIFORNIA 94301
(415) 393-8200 (650) 833-2100
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC:
As soon as practicable after the effective date of this Registration Statement
and the satisfaction or waiver of all other conditions to the merger described
in the proxy statement/prospectus.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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TITLE OF EACH CLASS OF PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
REGISTERED REGISTERED(1) PER SHARE PRICE(1)(2) FEE(2)(3)
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Common Stock, par value
$.01 per share......... 25,892,462 $16.08 $416,339,027 $115,742.25
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</TABLE>
(1) The number of shares to be registered pursuant to this Registration
Statement is based upon the aggregate number of shares of The Vantive
Corporation common stock, par value $.001 per share ("Vantive Common
Stock"), currently outstanding, and the number of shares of Vantive Common
Stock issuable upon exercise of options to acquire shares of Vantive Common
Stock currently outstanding, shares of Vantive Common Stock issuable upon
conversion of Vantive's 4.75% convertible subordinated notes, and shares of
Vantive Common Stock issuable to other third parties, multiplied by an
exchange ratio of 0.825 shares of common stock, par value $.01 per share, of
the Registrant.
(2) The registration fee was computed pursuant to Rules 457(f) and 457(c) under
the Securities Act of 1933, as amended, based on the average of the high and
low sales prices of Vantive Common Stock, as reported by The Nasdaq Stock
Market on November 10, 1999.
(3) $71,155.31 of the registration fee was previously paid with the filing by
The Vantive Corporation of preliminary proxy solicitation materials under
Section 14(g) and Rule 0-11 of the Securities Exchange Act of 1934, as
amended. Such fee has been credited against the registration fee payable
hereunder pursuant to Rule 457(b) under the Securities Act of 1933.
Accordingly, a registration fee of $ 44,586.94 is being paid herewith.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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[VANTIVE LOGO]
------------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 29, 1999
TO THE STOCKHOLDERS OF
THE VANTIVE CORPORATION:
NOTICE IS HEREBY GIVEN that a special meeting of stockholders of The
Vantive Corporation, a Delaware corporation, will be held on December 29, 1999,
at 9:00 a.m., local time, at The Santa Clara TechMart at 5201 Great America
Parkway, Santa Clara, California for the following purposes:
1. To consider and vote upon a proposal to adopt the Agreement and Plan of
Merger, dated as of October 11, 1999, by and among Vantive, PeopleSoft,
Inc., a Delaware corporation, and a wholly-owned Delaware subsidiary of
PeopleSoft that provides for, among other things, a merger that will
result in Vantive becoming a wholly-owned subsidiary of PeopleSoft and
Vantive stockholders becoming PeopleSoft stockholders. In the merger,
each share of Vantive common stock will be converted into 0.825 shares
of PeopleSoft common stock.
2. To consider and vote upon the postponement or adjournment of the special
meeting in order to solicit additional votes to approve the merger
agreement if the secretary of the special meeting determines that there
are not sufficient votes to approve the merger agreement.
The close of business on November 17, 1999 has been fixed as the record
date for determining those stockholders entitled to vote at the special meeting
and any adjournments or postponements of the special meeting. Therefore, only
stockholders of record on November 17, 1999 are entitled to notice of, and to
vote at, the special meeting and any adjournments or postponements of the
special meeting.
By Order of the Board of Directors
/s/ THOMAS L. THOMAS
Thomas L. Thomas
Chairman of the Board and
Chief Executive Officer
November 19, 1999
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING IN PERSON, PLEASE
COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. YOU MAY VOTE
IN PERSON IF YOU ATTEND THE SPECIAL MEETING, EVEN IF YOU HAVE PREVIOUSLY
RETURNED YOUR PROXY CARD.
THE MERGER AGREEMENT MUST BE APPROVED BY THE HOLDERS OF A MAJORITY OF THE
OUTSTANDING SHARES OF VANTIVE COMMON STOCK. YOUR VOTE ON THIS MATTER IS VERY
IMPORTANT. WE URGE YOU TO REVIEW CAREFULLY THE ENCLOSED MATERIAL AND TO RETURN
YOUR PROXY CARD PROMPTLY.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR
ADOPTION OF THE MERGER AGREEMENT.
<PAGE> 3
The information in this prospectus is not complete and may be
changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these securities
and it is not soliciting an offer to buy these securities in any
state where the offer or sale is not permitted.
PRELIMINARY COPY
[VANTIVE LOGO]
PROXY STATEMENT
[LOGO]
PROSPECTUS
------------------------
The Vantive Corporation and PeopleSoft, Inc. have entered into an agreement
that provides for a merger, as a result of which Vantive will become a
wholly-owned subsidiary of PeopleSoft. In the merger, Vantive stockholders will
receive 0.825 shares of PeopleSoft common stock for each of their shares of
Vantive common stock. PeopleSoft will issue at least 22.67 million shares of its
common stock, but may issue as many as 25.89 million shares if all Vantive
options vested as of the date of this proxy statement/ prospectus are exercised
and Vantive's convertible debt is converted prior to the merger.
This proxy statement/prospectus is being furnished to Vantive stockholders
in connection with the solicitation by Vantive's board of directors of proxies
for use at the special meeting of stockholders to be held at The Santa Clara
TechMart at 5201 Great America Parkway, Santa Clara, California, at 9:00 a.m.,
local time, on December 29, 1999. At this meeting, Vantive stockholders will
vote on the proposed merger. This proxy statement/prospectus also constitutes
the prospectus of PeopleSoft with respect to the shares of PeopleSoft common
stock to be issued to Vantive stockholders in the merger.
Share Information:
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PeopleSoft ("PSFT")................... The Nasdaq Stock Market closing price on November 16,
1999: $17.81
Vantive ("VNTV")...................... The Nasdaq Stock Market closing price on November 16,
1999: $14.25
</TABLE>
All information concerning PeopleSoft in this proxy statement/prospectus
has been furnished by PeopleSoft, and all information concerning Vantive in this
proxy statement/prospectus has been furnished by Vantive. Vantive stockholders
are encouraged to read this proxy statement/prospectus carefully and to
understand it before they vote.
SEE "RISK FACTORS" BEGINNING ON PAGE 14 FOR A DISCUSSION OF CERTAIN RISKS
THAT YOU SHOULD CONSIDER IN DETERMINING HOW TO VOTE ON THE PROPOSED MERGER.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED THE SECURITIES TO BE ISSUED IN THIS TRANSACTION OR
DETERMINED THAT THIS PROXY STATEMENT/PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THIS PROXY STATEMENT/PROSPECTUS IS DATED NOVEMBER 19, 1999, AND IS FIRST
BEING MAILED TO VANTIVE STOCKHOLDERS ON OR ABOUT NOVEMBER 22, 1999.
<PAGE> 4
TABLE OF CONTENTS
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PAGE
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SUMMARY..................................................... 1
RISK FACTORS................................................ 14
Risk Factors Relating to the Merger....................... 14
Risk Factors Relating to PeopleSoft....................... 17
Risk Factors Relating to Vantive.......................... 26
VANTIVE SPECIAL MEETING..................................... 35
General................................................... 35
Matters to be Considered.................................. 35
Proxies................................................... 35
Solicitation of Proxies................................... 35
Record Date and Voting Rights............................. 35
Recommendation of Vantive Board........................... 36
THE MERGER.................................................. 37
Background of the Merger.................................. 37
PeopleSoft's Reasons for the Merger....................... 40
Recommendation of the Vantive Board of Directors and
Vantive's Reasons for the Merger....................... 41
Interests of Vantive's Management in the Merger and
Potential Conflicts of Interests....................... 43
Opinion of Vantive's Financial Advisor.................... 45
The Merger................................................ 52
Closing................................................... 52
Conversion of Vantive Stock; Treatment of Vantive Stock
Options and Convertible Subordinated Notes............. 52
Exchange of Certificates; Fractional Shares............... 52
Representations and Warranties............................ 53
Conduct of Business Before the Merger..................... 54
Conditions to Completing the Merger....................... 59
Regulatory and Other Approvals Required for the Merger.... 60
Extension, Waiver and Amendment of the Merger Agreement... 61
Termination of the Merger Agreement....................... 61
Material Federal Income Tax Consequences.................. 63
Accounting Treatment...................................... 65
Employee Benefits and Plans............................... 66
Option Agreement.......................................... 66
Restrictions on Resales by Affiliates..................... 67
Corporate Structure of PeopleSoft After the Merger........ 68
MANAGEMENT AFTER THE MERGER................................. 69
PRICE RANGE OF COMMON STOCK................................. 70
INFORMATION ABOUT PEOPLESOFT................................ 72
General................................................... 72
Management and Additional Information..................... 73
INFORMATION ABOUT VANTIVE................................... 74
General................................................... 74
Management and Additional Information..................... 74
</TABLE>
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PEOPLESOFT CAPITAL STOCK AND COMPARISON OF STOCKHOLDER
RIGHTS...................................................... 75
Description of PeopleSoft Capital Stock................... 75
Comparison of Rights of PeopleSoft Stockholders and
Vantive Stockholders................................... 78
DISSENTERS' APPRAISAL RIGHTS................................ 83
LEGAL MATTERS............................................... 83
EXPERTS..................................................... 83
STOCKHOLDER PROPOSALS....................................... 83
OTHER MATTERS............................................... 83
WHERE YOU CAN FIND MORE INFORMATION......................... 84
</TABLE>
APPENDICES
Appendix A -- Merger Agreement
Appendix B -- Option Agreement
Appendix C -- Opinion of Credit Suisse First Boston Corporation
PeopleSoft, the PeopleSoft logo, PeopleTools, Psn/vision, PeopleCode and
PeopleTalk are trademarks of PeopleSoft, Inc. Vantive, Vantive Sales, Vantive
Support, Vantive Quality, Vantive HelpDesk, Vantive FieldService, Vantive
Inventory, Vantive Procurement, VanWeb, Vantive Partner Desktop, Vantive On-
The-Go, Vantive WebCustomer, Vantive Self-Service and The Vantive Enterprise are
trademarks of The Vantive Corporation. All other trademarks used are owned by
their respective owners.
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SUMMARY
This brief summary highlights selected information from the proxy
statement/prospectus. It does not contain all of the information that is
important to you. We urge you to carefully read the entire proxy
statement/prospectus and the other documents to which this proxy
statement/prospectus refers to fully understand our proposed merger. See "Where
You Can Find More Information."
THE MERGER (PAGE 37)
We have attached the merger agreement to this document as Appendix A.
Please read the merger agreement. It is the legal document that governs the
merger.
PARTIES TO THE MERGER (PAGES 72 AND 74)
PEOPLESOFT, INC.
4460 Hacienda Drive
Pleasanton, California 94588
(925) 694-3000
PeopleSoft, headquartered in Pleasanton, California, is a world leader in
enterprise application software. PeopleSoft provides enterprise application
software for human resource management, financial accounting, distribution,
supply chain management and manufacturing operations. For more than 3,000
customers, PeopleSoft's applications offer a high degree of flexibility, rapid
implementation, scalability across multiple databases and operating systems, and
lower cost of ownership. PeopleSoft's customers include some of the largest
multi-national organizations in the world, as well as small and medium size
businesses and government agencies. All of PeopleSoft's software products are
backed by PeopleSoft Advantage Customer Service, a comprehensive consulting,
education and technical support program.
PeopleSoft's strategy is to offer comprehensive solutions that enable
organizations to manage and enhance their relationships with customers,
suppliers and employees. These solutions will include front office applications
for customer relationship management, eCommerce and employee administration. The
front office applications can be seamlessly integrated with PeopleSoft's
enterprise application software to provide organizations with a complete 360
degree view of their customers, suppliers and employees.
PeopleSoft had approximately 6,400 employees worldwide at September 30,
1999. PeopleSoft had 1998 revenues of $1.3 billion and revenues of $921 million
for the first nine months of 1999.
THE VANTIVE CORPORATION
2525 Augustine Drive
Santa Clara, California 95054
(408) 982-5700
Vantive, headquartered in Santa Clara, California, is a worldwide leader in
customer relationship management solutions and has more than 850 customers.
Vantive's products enable companies to sell, support and service customers
through channels of interaction including the Internet, call center, e-mail, or
directly through sales and service representatives. The Vantive Enterprise is an
integrated software suite that leverages the Internet to increase sales,
marketing, call center, field service, help desk and web service effectiveness.
The Vantive Enterprise is differentiated by its
- high-performance,
- scalable architecture,
- web-based solutions, and
- time- and cost-effective implementations.
Vantive is supported by extensive software, consulting and service partner
programs that provide further technology and vertical expertise as well as
integration support. Founded in 1990, Vantive distributes its products in more
than two dozen countries.
Vantive had approximately 570 full-time employees worldwide at September
30, 1999. Vantive had 1998 revenues of $163 million and revenues of $136 million
for the first nine months of 1999.
1
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EFFECT AND TIMING OF THE MERGER
We propose that PeopleSoft and Vantive combine by way of a merger as a
result of which each of you will become PeopleSoft stockholders. We expect to
complete the merger no later than December 31, 1999, although the merger
agreement does not expire until March 31, 2000. We also expect that the merger
will close within two business days after the special meeting if Vantive
stockholders approve the merger.
EXCHANGE OF SHARES (PAGE 52)
When the merger occurs, each of your shares of Vantive common stock will
automatically become the right to receive from PeopleSoft 0.825 shares of
PeopleSoft common stock.
You will have to surrender your Vantive common stock certificates to
receive new certificates representing PeopleSoft common stock. You will not need
to do this, however, until you receive written instructions after we have
completed the merger.
VANTIVE STOCK OPTIONS AND CONVERTIBLE SUBORDINATED NOTES (PAGE 52)
In the merger, each stock option to buy Vantive common stock will become an
option to buy PeopleSoft common stock. However, each option will continue to be
governed by the terms of the Vantive stock option plan or other agreement under
which it was issued. The number of shares of PeopleSoft common stock subject to
each new stock option, as well as the exercise price of that stock option, will
be adjusted to reflect the merger exchange ratio applicable to the Vantive
common stock.
In addition, PeopleSoft will assume all obligations under Vantive's
convertible subordinated notes and will provide for the conversion rights to
which the subordinated noteholders are entitled.
MANAGEMENT AFTER THE MERGER (PAGE 69)
The composition of PeopleSoft's current executive management is not
expected to change as a result of the merger.
Several members of Vantive's current management have signed employment
agreements providing for them to remain at Vantive, as part of PeopleSoft, after
the merger.
THE VANTIVE STOCKHOLDERS MEETING (PAGE 35)
At the Vantive stockholders meeting, you will be asked to:
1. approve an agreement that provides for a merger in which Vantive
will become a wholly-owned subsidiary of PeopleSoft; and
2. vote on the postponement or adjournment of the meeting to solicit
additional votes to approve the merger agreement, if the secretary of the
meeting decides that there are not enough votes to approve the merger
agreement.
RECORD DATE AND THE VOTE REQUIRED (PAGE 35)
You can vote at the special meeting if you owned Vantive common stock at
the close of business on November 17, 1999, the record date for the meeting. You
can cast one vote for each share of Vantive common stock you owned at that time.
To adopt the merger agreement, the holders of a majority of shares of Vantive
common stock allowed to vote at the meeting must vote in favor of it. As of the
record date, Vantive's directors and executive officers and their affiliates
beneficially owned approximately 420,000 shares of Vantive common stock
entitling them to exercise about 1.5% of the voting power of the Vantive common
stock entitled to vote at the special meeting. PeopleSoft's directors, executive
officers and affiliates owned no shares of Vantive common stock as of the record
date.
You may vote your shares in person by attending the meeting or by mailing
us your proxy if you are unable or do not wish to attend. You may revoke your
proxy at any time before we take a vote at the meeting by sending a written
notice revoking the proxy or a later-dated proxy to the secretary of Vantive, or
by attending the meeting and voting in person.
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<PAGE> 8
OUR REASONS FOR THE MERGER (PAGES 40 AND 41)
PeopleSoft and Vantive are proposing to merge because they believe that the
merger will significantly benefit their respective stockholders, customers and
employees. Specifically, PeopleSoft believes that a combination with Vantive
will benefit these constituencies for the following reasons:
- PeopleSoft would acquire Vantive's customer relationship management
software solution, otherwise known as CRM, which is one of the broadest
CRM solutions available in the market today encompassing marketing,
sales, customer service, field service, help desk and web self-service,
and, similar to PeopleSoft's enterprise software suite, is highly
scalable across multiple databases and operating systems;
- PeopleSoft would acquire a CRM solution which is very highly rated by
industry analysts and has consistently achieved a top rating for customer
satisfaction;
- the merger will enable the combined company to provide a comprehensive
360 degree enterprise view for managing and enhancing relationships with
customers by combining Vantive's CRM solution with PeopleSoft's
enterprise application software;
- PeopleSoft believes Vantive's CRM architecture is more compatible with
PeopleSoft's own architecture;
- the merger will provide PeopleSoft immediate access to Vantive's
employee's who possess specific CRM domain expertise and technical
skills, including computer telephony integration and mobile computing;
- PeopleSoft will be able to expand internationally more quickly because of
Vantive's strong presence, leading market share, and product availability
in key international markets;
- PeopleSoft will gain access to Vantive's customer base; and
- both companies have a common culture, including a shared commitment to
maintaining high customer satisfaction levels, and close geographic
proximity which will facilitate the integration of PeopleSoft's and
Vantive's operations and support functions.
Vantive believes that a merger with PeopleSoft will:
- provide Vantive stockholders with an attractive price for their Vantive
shares;
- potentially reduce stockholder risk after the merger as a result of the
greater resources of the combined companies;
- increase value for Vantive's customers through a diversification of
product and service offerings;
- enhance the opportunity to realize Vantive's strategic objective of
diversifying and building upon its strengths in eBusiness because of the
complementary nature of the product and service offerings of PeopleSoft
and Vantive;
- provide a better opportunity for Vantive to attract and retain qualified
personnel;
- provide access to PeopleSoft's global sales force; and
- provide Vantive immediate access to specific technical skills and depth
of technical talent that PeopleSoft possesses.
The discussion of our reasons for the merger includes forward-looking
statements about possible or assumed future results of our operations and the
performance of the combined company after the merger. Future results and
performance are subject to risks and uncertainties, which could cause such
results and performance to differ significantly from those expressed in these
statements. For a discussion of factors that could affect these future results,
see "Forward-Looking Statements May Prove Inaccurate" on page 7 and "Risk
Factors" on page 14.
3
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VANTIVE BOARD'S RECOMMENDATION TO STOCKHOLDERS (PAGE 41)
The Vantive board of directors believes that the merger is advisable, fair
to you and in your best interests, and unanimously recommends that you vote
"FOR" approval of the merger agreement.
OPINION OF VANTIVE'S FINANCIAL ADVISOR (PAGE 45)
Vantive's financial advisor, Credit Suisse First Boston Corporation, has
delivered a written opinion to the Vantive board of directors as to the
fairness, from a financial point of view, of the exchange ratio provided for in
the merger to the holders of Vantive common stock. The full text of Credit
Suisse First Boston's written opinion is attached to this proxy
statement/prospectus as Appendix C. We encourage you to read this opinion
carefully in its entirety for a description of the procedures followed,
assumptions made, matters considered and limitations on the review undertaken.
CREDIT SUISSE FIRST BOSTON'S OPINION IS DIRECTED TO THE VANTIVE BOARD OF
DIRECTORS AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY STOCKHOLDER AS TO ANY
MATTER RELATING TO THE MERGER.
COMPARATIVE PER SHARE MARKET PRICE INFORMATION (PAGES 70 AND 71)
PeopleSoft common stock is traded on The Nasdaq Stock Market. On October 8,
1999, the last trading day before we announced the merger, PeopleSoft common
stock closed at $17.25 per share. Vantive common stock is also traded on The
Nasdaq Stock Market. On October 8, 1999, Vantive common stock closed at $8.9375
per share.
CONDITIONS TO COMPLETION OF THE MERGER (PAGE 59)
Whether we complete the merger depends on a number of conditions being
satisfied in addition to Vantive stockholders' approval of the merger agreement.
However, either PeopleSoft or Vantive may choose to complete the merger even
though one or more of these conditions has not been satisfied, as long as the
law allows them to do so. We cannot be certain when, or if, the conditions to
the merger will be satisfied or waived, or that the merger will be completed.
REGULATORY APPROVALS REQUIRED FOR THE MERGER (PAGE 60)
PeopleSoft and Vantive may not complete the merger until we have filed
notifications with the United States Federal Trade Commission or the Antitrust
Division of the U.S. Department of Justice, and have waited a specified period
of time. We have filed the necessary notifications and the waiting period was
terminated early.
WAIVER AND AMENDMENT (PAGE 61)
We may jointly amend the merger agreement, and each of us may waive our
right to require the other to adhere to the terms and conditions of the merger
agreement. However, we may not do so after the Vantive stockholders approve the
merger, if the amendment or waiver reduces or changes the consideration that
they will receive, unless the stockholders approve the amendment or waiver.
TERMINATION OF THE MERGER AGREEMENT (PAGE 61)
We can agree at any time prior to completing the merger to terminate the
merger agreement. Also, either of us can decide, without the other's consent, to
terminate the merger agreement if the merger has not been completed by March 31,
2000, the other company has seriously breached the merger agreement, or for
other reasons.
TERMINATION OF THE MERGER AGREEMENT IN CONNECTION WITH AN UNSOLICITED
ACQUISITION PROPOSAL (PAGE 62)
Vantive may engage in negotiations regarding an unsolicited proposal from a
potential acquirer other than PeopleSoft if the Vantive board decides, based
upon the opinion of its financial advisor, that the potential acquirer is
capable of consummating a proposal that is superior to the merger. Vantive may
also provide the potential acquirer with due diligence information if copies are
also provided to PeopleSoft.
Vantive may terminate the merger agreement if, after Vantive's board of
directors has received
4
<PAGE> 10
an unsolicited proposal from a potential acquirer, the board decides in good
faith, after consultation with legal counsel, that it must withdraw its
recommendation of the merger with PeopleSoft in order to comply with its
fiduciary duties under Delaware law. Under these circumstances, however,
Vantive's board of directors must give PeopleSoft the opportunity to at least
match the potential acquirer's proposal. PeopleSoft may terminate the merger
agreement if Vantive's board of directors withdraws or adversely modifies its
recommendation that Vantive stockholders approve the merger with PeopleSoft or
recommends that Vantive stockholders approve another competing transaction.
TERMINATION PAYMENTS (PAGE 62)
In general, Vantive has agreed to pay PeopleSoft $12 million if the merger
agreement is terminated because:
- the Vantive board withdraws or adversely modifies its approval or
recommendation of the merger or recommended that the Vantive stockholders
approve a proposal for a merger or other business combination with a
company other than PeopleSoft;
- Vantive significantly breached its covenants and an offer to acquire
Vantive by a third party had been announced before termination or within
six months after termination Vantive becomes party to a merger or other
business combination with a company other than PeopleSoft; or
- Vantive holds a stockholder meeting and fails to obtain its stockholders'
approval of the merger and an offer to acquire Vantive by a third party
had been announced before the vote and within 12 months after termination
Vantive becomes party to a merger or other business combination with a
company other than PeopleSoft.
REIMBURSEMENT OF EXPENSES (PAGE 62)
Vantive has agreed to pay PeopleSoft $2 million as reimbursement of its
fees and expenses if the merger agreement is terminated for either of the first
two reasons above or if the merger is terminated by PeopleSoft for any of the
following reasons:
- Vantive's representations or warranties in the merger agreement are
untrue so that the conditions to PeopleSoft's obligation to complete the
merger could not be satisfied by March 31, 2000; or
- Vantive failed to perform its agreements in the merger agreement, and
this failure, in the aggregate, substantially adversely affects Vantive
or the ability of PeopleSoft or Vantive to complete the merger or
substantially delays the merger.
PeopleSoft has agreed to pay Vantive $2 million as reimbursement of its
fees and expenses if the merger agreement is terminated by Vantive because:
- PeopleSoft's representations or warranties in the merger agreement are
untrue so that the conditions to Vantive's obligation to complete the
merger could not be satisfied by March 31, 2000; or
- PeopleSoft failed to perform its agreements in the merger agreement, and
this failure, in the aggregate, substantially adversely affects
PeopleSoft or the ability of PeopleSoft or Vantive to complete the merger
or substantially delays the merger.
Otherwise, whether or not the merger is completed, we will each pay our own
fees and expenses.
OPTION AGREEMENT (PAGE 66 AND APPENDIX B)
As part of the merger, Vantive has entered into a stock option agreement
granting PeopleSoft an option to purchase 5,497,300 shares of Vantive common
stock. This option would become exercisable if the $12 million payment described
above becomes payable by Vantive. Vantive has advised PeopleSoft that no event
has occurred as of this date that would allow PeopleSoft to exercise its option.
The total number of shares that PeopleSoft may purchase if it exercises the
option represents 16.667% of the shares of Vantive common stock outstanding on
October 11, 1999,
5
<PAGE> 11
assuming the option had been exercised, or 19.999% before the exercise.
The exercise price of the option is $14.23125 per share. Under certain
circumstances, PeopleSoft may elect to require Vantive to repurchase the option.
PeopleSoft may not receive total value in excess of $4 million from the option.
We entered into the option agreement so that, if a third-party submitted a
successful proposal to acquire Vantive, PeopleSoft would be compensated for its
efforts, expenses and lost business opportunities incurred as a result of its
proposed combination with Vantive.
INTEREST OF VANTIVE'S MANAGEMENT IN THE MERGER THAT DIFFER FROM YOUR INTEREST
(PAGE 43)
Some members of Vantive's management have interests in the merger that
differ from, or are in addition to, their interests as stockholders of Vantive.
These additional interests exist because of employment and related agreements
that these officers have entered into with Vantive and PeopleSoft, and rights
that these officers have or will have under some of the benefit plans maintained
by Vantive and PeopleSoft. These agreements and plans will provide the Vantive
officers with severance benefits if their employment with Vantive is terminated
after this or any other merger occurs or after Vantive is acquired by anyone.
In addition, after the merger, PeopleSoft will continue the indemnification
arrangements for directors and officers of Vantive and its subsidiaries in
effect prior to the merger. However, PeopleSoft's indemnification of Vantive's
directors or officers may be limited to Vantive's net worth as of June 30, 1999.
Also, PeopleSoft will cause Vantive to maintain a policy of directors' and
officers' liability insurance for six years after the merger for the benefit of
those persons who were directors or officers covered by liability insurance
immediately before the merger occurs.
Details about the interests of some of Vantive's directors and executive
officers are described under "The Merger -- Interests of Vantive's Management in
the Merger and Potential Conflicts of Interests."
The members of Vantive's board of directors knew about these interests, and
considered them when they approved the merger agreement.
DISSENTERS' APPRAISAL RIGHTS (PAGE 83)
Delaware law does not provide you with dissenters' appraisal rights in the
merger.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES TO VANTIVE STOCKHOLDERS (PAGE 63)
We expect that, for United States federal income tax purposes, your
exchange of shares of Vantive common stock for shares of PeopleSoft common stock
generally will not cause you to recognize any gain or loss. You may, however,
recognize gain or loss in connection with any cash you receive instead of a
fractional share of PeopleSoft common stock.
THIS TAX TREATMENT MAY NOT APPLY TO EVERY VANTIVE STOCKHOLDER. DETERMINING
THE ACTUAL TAX CONSEQUENCES OF THE MERGER TO YOU MAY BE COMPLICATED. THEY WILL
DEPEND ON YOUR SPECIFIC SITUATION AND ON VARIABLES NOT WITHIN OUR CONTROL. YOU
SHOULD CONSULT YOUR OWN TAX ADVISOR FOR A FULL UNDERSTANDING OF THE MERGER'S TAX
CONSEQUENCES TO YOU.
ACCOUNTING TREATMENT (PAGE 65)
We expect the merger to qualify as a pooling of interests. This means that,
for accounting and financial reporting purposes, PeopleSoft will restate its
historical financial statements to include the historical amounts from Vantive's
financial statements.
MATERIAL DIFFERENCES IN THE RIGHTS OF STOCKHOLDERS (PAGE 75)
The rights of PeopleSoft stockholders are governed by Delaware law and
PeopleSoft's certificate of incorporation and bylaws. The rights of Vantive
stockholders are also governed by Delaware law and Vantive's certificate of
incorporation and bylaws. If we complete the merger, you will become a
stockholder of PeopleSoft, and your rights will be governed by Delaware law and
by PeopleSoft's charter documents.
6
<PAGE> 12
FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE
We have each made forward-looking statements in this proxy
statement/prospectus and in other documents to which we refer you that are
subject to risks and uncertainties. These forward-looking statements include
information about possible or assumed future results of our operations or the
performance of PeopleSoft and Vantive after the merger is completed. When we use
any of the words "believes," "expects," "anticipates," "intends," "estimates" or
similar expressions, we are making forward-looking statements. Many possible
events or factors could affect the actual financial results and performance of
each of our companies before the merger and of the combined company after the
merger, and these factors or events could cause those results or performance to
differ significantly from those expressed in our forward-looking statements.
These possible events or factors include the following:
- we could lose customers as a result of the merger or the announcement of
the merger;
- our revenues after the merger may be lower than we currently expect for a
variety of reasons including changes in market conditions and responses
by competitors;
- integrating our businesses and products or any businesses that we acquire
in the future may be more time consuming, costly and difficult than we
anticipate;
- competition in PeopleSoft's and Vantive's industries is extremely intense
and may increase;
- we are in the process of developing products and services that are
Internet-based, and existing and potential customers may not purchase
these products and services;
- technology-related changes, including "year 2000" data systems
compliance, may be harder for either of us to make or more expensive than
we currently expect, or we may not be able to make them as fast or as
efficiently as our competitors;
- we could have trouble attracting and retaining employees;
- system integrators, distributors, resellers, channel partners and
providers of technology and services may take or fail to take actions
because of the merger that affect the combined company;
- third parties may infringe our proprietary intellectual property rights;
- issues and difficulties that we face in connection with rapid growth;
- litigation involving matters such as intellectual property, securities,
antitrust, employees and customer issues may adversely affect our
business;
- we may not be able to replicate our domestic growth internationally;
- general economic conditions in the U.S. or abroad may change or be worse
than we currently expect;
- U.S. or international legislative or regulatory changes may adversely
affect our business; and
- changes may occur with respect to our stock price or in the securities
markets in general.
7
<PAGE> 13
SELECTED CONSOLIDATED FINANCIAL DATA
The following tables show summarized historical financial data for each of
us. The information is derived from historical financial information that
PeopleSoft and Vantive have presented in their prior SEC filings. PeopleSoft's
consolidated historical financial statements for each of the five years in the
period ended December 31, 1998 were audited by Ernst & Young LLP, independent
auditors, and Vantive's consolidated historical financial statements for each of
the five years in the period ended December 31, 1998 were audited by Arthur
Andersen LLP, independent public accountants. The interim information for the
nine months ended September 30, 1999 and 1998 is derived from unaudited
financial statements of PeopleSoft and Vantive for those periods. Management of
both PeopleSoft and Vantive believe all adjustments, consisting only of normal
recurring adjustments considered necessary for a fair presentation, have been
included. The results for the interim periods presented are not necessarily
indicative of the results that may be expected for any future period. You should
read all of the summary financial information we provide in the following tables
in connection with this historical financial information.
This historical financial information has also been incorporated into this
document by reference. See "Where You Can Find More Information" on page 84.
8
<PAGE> 14
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA
PEOPLESOFT, INC.
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED
SEPTEMBER 30, FOR THE YEARS ENDED DECEMBER 31,
------------------------- ------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
----------- ----------- ---------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA
Revenues:
License fees................. $ 183,221 $ 432,732 $ 576,467 $433,195 $252,799 $137,808 $ 68,580
Services..................... 722,696 516,769 737,206 382,456 197,253 94,331 44,503
Development and other
services................... 14,839 -- -- -- -- -- --
---------- ---------- ---------- -------- -------- -------- --------
Total revenues........ 920,756 949,501 1,313,673 815,651 450,052 232,139 113,083
Costs and expenses:
Cost of license fees......... 30,796 30,420 42,933 21,635 12,357 8,503 6,817
Cost of services............. 377,041 301,206 424,234 229,178 118,906 56,789 26,740
Cost of development
services................... 13,499 -- -- -- -- -- --
Sales and marketing.......... 237,664 247,302 339,973 225,498 135,757 70,052 35,844
Product development.......... 190,156 148,377 209,677 129,553 70,653 38,625 15,318
General and administrative... 61,141 47,608 61,447 43,611 27,162 16,182 8,167
In-process research and
development and merger
related costs.............. -- -- 13,900 -- 29,393 -- --
Restructuring charge......... 4,355 -- -- -- -- -- --
Contribution to Momentum..... 176,409 -- -- -- -- -- --
---------- ---------- ---------- -------- -------- -------- --------
Total costs and
expenses............ 1,091,061 774,913 1,092,164 649,475 394,228 190,151 92,886
---------- ---------- ---------- -------- -------- -------- --------
Operating income (loss)........ (170,305) 174,588 221,509 166,176 55,824 41,988 20,197
Other income, interest expense
and other.................... 15,688 14,317 20,067 9,862 5,888 4,149 2,192
---------- ---------- ---------- -------- -------- -------- --------
Income (loss) before income
taxes........................ (154,617) 188,905 241,576 176,038 61,712 46,137 22,389
Provision for income taxes..... 8,717 71,784 98,358 67,775 25,851 18,799 9,308
---------- ---------- ---------- -------- -------- -------- --------
Net income (loss).............. $ (163,334) $ 117,121 $ 143,218 $108,263 $ 35,861 $ 27,338 $ 13,081
========== ========== ========== ======== ======== ======== ========
Per Common Share Data
Basic income (loss) per
share........................ $ (0.68) $ 0.51 $ 0.63 $ 0.49 $ 0.17 $ 0.13 $ 0.07
Diluted income (loss) per
share........................ $ (0.68) $ 0.45 $ 0.55 $ 0.44 $ 0.15 $ 0.12 $ 0.06
BALANCE SHEET DATA
Working capital................ $ 326,910 $ 445,701 $ 495,028 $245,014 $109,806 $ 89,437 $ 72,290
Total assets................... $1,279,912 $1,306,106 $1,440,605 $898,336 $540,080 $322,241 $173,987
Long-term obligations.......... $ 103,627 78,066 $ 107,826 -- -- -- $ 958
Stockholders' equity........... $ 546,387 $ 618,133 $ 664,292 $417,304 $253,248 $161,094 $ 94,580
</TABLE>
9
<PAGE> 15
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA
THE VANTIVE CORPORATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS
ENDED SEPTEMBER 30, FOR THE YEARS ENDED DECEMBER 31,
------------------- -------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
-------- -------- -------- -------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA
Revenues:
License............................. $ 61,170 $ 63,435 $ 89,215 $ 76,471 $41,513 $16,631 $ 7,141
Service............................. 75,138 52,263 73,885 40,875 22,761 8,404 3,073
-------- -------- -------- -------- ------- ------- -------
Total revenues............... 136,308 115,698 163,100 117,346 64,274 25,035 10,214
Costs and expenses:
Cost of license fees................ 1,651 856 1,485 736 392 163 110
Cost of services.................... 45,230 29,151 41,436 22,748 12,263 5,968 2,383
Sales and marketing................. 59,242 48,061 67,615 45,811 24,676 11,582 5,068
Research and development............ 25,646 19,982 28,293 17,508 7,261 3,319 2,072
General and administrative.......... 12,383 8,921 12,827 9,377 5,389 2,167 1,099
In-process research and development
and merger related costs.......... -- 9,675 10,895 21,121 -- -- --
Restructuring charges............... 4,375 -- -- -- -- -- --
-------- -------- -------- -------- ------- ------- -------
Total costs and expenses..... 148,527 116,646 162,551 117,301 49,981 23,199 10,732
-------- -------- -------- -------- ------- ------- -------
Operating income (loss)............... (12,219) (948) 549 45 14,293 1,836 (518)
Other income, interest expense and
other............................... 690 499 711 1,305 1,286 439 (30)
-------- -------- -------- -------- ------- ------- -------
Income (loss) before income taxes..... (11,529) (449) 1,260 1,350 15,579 2,275 (548)
Provision for income taxes............ (2,551) 2,870 3,546 8,308 4,674 232 --
-------- -------- -------- -------- ------- ------- -------
Net income (loss)..................... $ (8,978) (3,319) $ (2,286) $ (6,958) $10,905 $ 2,043 $ (548)
======== ======== ======== ======== ======= ======= =======
Per Common Share Data
Basic income (loss) per share......... $ (0.34) $ (0.13) $ (0.09) $ (0.28) $ 0.45 $ 0.10 $ (0.14)
Diluted income (loss) per share....... $ (0.34) $ (0.13) $ (0.09) $ (0.28) $ 0.42 $ 0.09 $ (0.14)
BALANCE SHEET DATA
Working Capital....................... $110,259 $103,952 $109,422 $108,929 $32,959 $24,463 $ 3,438
Total assets.......................... $180,445 $175,819 $184,268 $162,739 $58,364 $34,587 $ 7,457
Convertible debt...................... $ 69,000 $ 69,000 $ 69,000 $ 69,000 -- -- --
Capital lease obligations, net of
current portion..................... $ 97 2 $ 165 $ 25 $ 346 $ 571 $ 415
Mandatorily redeemable convertible
preferred stock..................... -- -- -- -- -- -- $10,801
Total stockholders' equity
(deficit)........................... $ 63,990 $ 63,693 $ 69,038 $ 55,732 $39,431 $26,657 $(6,665)
</TABLE>
10
<PAGE> 16
SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL DATA OF PEOPLESOFT AND VANTIVE
(IN THOUSANDS, EXCEPT PER SHARE DATA)
We are providing the following summary unaudited pro forma combined
financial data to give you a better picture of what the results of operations
and the financial position of the combined businesses of PeopleSoft and Vantive
might have looked like had the merger occurred at an earlier date. This
information is provided for illustrative purposes only and does not show what
the results of operations or financial position of PeopleSoft would have been if
the merger with Vantive actually occurred on the dates assumed. In addition,
this information does not indicate what PeopleSoft's future consolidated
operating results or consolidated financial position will be.
HOW THE PRO FORMA FINANCIAL DATA WAS PREPARED
We derived this data from the unaudited pro forma combined condensed
consolidated financial statements included elsewhere in this proxy
statement/prospectus. These statements assume a business combination between
PeopleSoft and Vantive accounted for as a pooling of interests and combine
PeopleSoft's financial position as of September 30, 1999 and historical results
of operations for the fiscal years ended December 31, 1998, 1997 and 1996 and
the nine months ended September 30, 1999 with Vantive's financial position and
results of operations as of the same date and for the same periods,
respectively. The pro forma statement of operations data assume the combination
occurred at the beginning of the earliest period presented while the pro forma
balance sheet data assume the combination took place on September 30, 1999.
THESE PRO FORMA FINANCIAL STATEMENTS HAVE BEEN BASED ON ASSUMPTIONS
We prepared these pro forma statements on the basis of assumptions
described in the notes thereto. These statements also reflect the issuance of
0.825 of a share of PeopleSoft common stock for each outstanding share of
Vantive common stock, the exchange ratio specified in the merger agreement. The
calculation of the number of shares exchanged was based on the number of shares
of Vantive common stock outstanding as of September 30, 1999. The actual number
of shares of PeopleSoft common stock to be issued will be based on the number of
outstanding shares of Vantive common stock at the effective time of the merger.
In addition, we will assume all of the outstanding Vantive stock options with
the number of shares and the option prices appropriately adjusted by the
exchange ratio. At September 30, 1999, Vantive had options outstanding to
purchase 6,508,882 shares of Vantive common stock which would become options to
purchase 5,369,827 shares of PeopleSoft common stock. The pro forma combined
basic per share amounts are based on PeopleSoft's weighted average shares
outstanding for the respective periods plus Vantive's weighted average shares
outstanding for the respective periods multiplied by the exchange ratio of
0.825. The pro forma combined diluted net income per share amounts are based on
the pro forma weighted average shares computed above plus the potentially
dilutive securities of PeopleSoft and also Vantive on an as adjusted basis using
the exchange ratio.
CHARGES RESULTING FROM THE COMBINATION
PeopleSoft and Vantive estimate they will incur costs in connection with
the merger in the range of $50 million to $70 million. Such costs include direct
transaction costs of approximately $12 million, consisting primarily of business
consulting fees paid to investment bankers, legal and accounting fees and
expenses and $38 million to $58 million for certain exit costs resulting from
the merger. PeopleSoft is only in the preliminary stages of determining such
exit costs which could include, among other things, charges related to severance
for certain employees of Vantive who will not remain with the combined company
following the merger, lease payments for duplicate facilities which will no
longer be used, costs to be incurred to terminate contracts with third parties
who provide redundant or conflicting services and write-off of duplicative
equipment and other fixed assets. Accordingly, such estimates of cost are
preliminary
11
<PAGE> 17
and, therefore subject to change. PeopleSoft anticipates having an exit plan in
place at the time the merger is consummated which is currently expected to be
late in the fourth quarter of 1999, at which time these exit costs, as well as
the direct transaction costs, will be charged to operations.
YOU SHOULD READ THESE SUMMARY PRO FORMA FINANCIAL STATEMENTS WITH THE HISTORICAL
FINANCIAL STATEMENTS
The summary unaudited selected pro forma combined condensed consolidated
financial data should be read in conjunction with the unaudited pro forma
combined condensed financial statements and the related notes, which begin at
page 87. They should also be read in conjunction with the audited financial
statements of PeopleSoft and Vantive which are incorporated in this proxy
statement/prospectus by reference. The summary unaudited pro forma financial
data are not necessarily indicative of what the actual results of operations and
financial position would have been had the merger with Vantive taken place on
January 1, 1996 or September 30, 1999, and do not indicate results of operations
or financial position.
SELECTED UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
NINE MONTHS ENDED --------------------------------
SEPTEMBER 30, 1999 1998 1997 1996
------------------ ---------- -------- --------
<S> <C> <C> <C> <C>
SELECTED UNAUDITED PRO FORMA COMBINED
STATEMENT OF OPERATIONS DATA:
Total revenues.............................. $1,056,992 $1,474,768 $932,154 $514,241
Net income (loss)........................... $ (172,332) $ 139,943 $101,097 $ 46,746
Basic income (loss) per share............... $ (0.66) $ 0.56 $ 0.42 $ 0.20
Shares used in basic per share
computation............................ 262,310 249,807 239,572 231,055
Diluted income (loss) per share............. $ (0.66) $ 0.50 $ 0.37 $ 0.18
Shares used in diluted per share
computation............................ 262,310 281,058 270,204 260,776
</TABLE>
<TABLE>
<CAPTION>
AS OF
SEPTEMBER 30,
1999
-------------
<S> <C>
SELECTED UNAUDITED PRO FORMA COMBINED BALANCE SHEET DATA:
Working capital............................................. $ 395,769
Total assets.............................................. 1,478,485
Long-term obligations..................................... 173,967
Stockholder's equity...................................... 568,505
</TABLE>
UNAUDITED COMPARATIVE PER SHARE DATA
The following tables present certain unaudited historical and unaudited pro
forma per share data that reflect the completion of the merger of PeopleSoft and
Vantive. This data should be read in conjunction with the unaudited pro forma
combined condensed consolidated financial statements included elsewhere in this
proxy statement/prospectus, and the historical financial statements of
PeopleSoft and Vantive incorporated in this proxy statement/prospectus by
reference. The new PeopleSoft unaudited pro forma combined per share data do not
necessarily indicate the operating results that would have been achieved had the
merger of PeopleSoft and Vantive occurred at the beginning of the earliest
period presented, and do not indicate future results of operations or financial
position.
12
<PAGE> 18
The following options and other potential common securities, based upon the
amounts outstanding as of September 30, 1999, have not been included in the
computation of pro forma diluted net loss per share for the nine months ended
September 30, 1999 because their effect would be antidilutive.
<TABLE>
<S> <C>
PeopleSoft options outstanding.............................. 50,450,000
PeopleSoft warrants outstanding............................. 3,240,000
Options to be assumed in connection with the merger with
Vantive................................................... 6,509,000
PeopleSoft equivalent shares issuable upon the conversion of
Vantive's outstanding convertible debt.................... 1,358,000
----------
61,557,000
----------
</TABLE>
CALCULATION OF BOOK VALUE PER SHARE AMOUNTS
The pro forma book value per share is computed by dividing pro forma
stockholders' equity by the pro forma number of shares outstanding at the end of
each period for which the computation is made. For purposes of computing the
historical book value per share of PeopleSoft as of December 31, 1998,
historical book value of $664.3 million was divided by historical actual shares
outstanding of 233,881,000. For purposes of computing the book value per share
of Vantive as of December 31, 1998, historical book value of $69.0 million was
divided by the actual shares outstanding of 26,415,000. For purposes of
computing the pro forma book value per share as of December 31, 1998, pro forma
net book value of $692.3 million was divided by pro forma shares outstanding of
255,673,000. Calculation of Vantive equivalent pro forma per share amounts are
computed by multiplying the pro forma amounts per PeopleSoft share by the
exchange ratio of 0.825 shares of PeopleSoft common stock for each Vantive
common share.
UNAUDITED COMPARATIVE PER SHARE DATA
<TABLE>
<CAPTION>
FOR THE NINE FOR THE YEAR ENDED
MONTHS ENDED DECEMBER 31,
SEPTEMBER 30, 1999 1998
------------------------ ------------------
<S> <C> <C>
HISTORICAL PEOPLESOFT
Net income (loss) per common share -- basic.............. $(0.68) $0.63
Net income (loss) per common shares -- diluted........... $(0.68) $0.55
Book value per common share at period end................ $ 2.17 $2.84
PRO FORMA COMBINED PER PEOPLESOFT SHARE
Net income (loss) per common share -- basic.............. $(0.66) $0.56
Net income (loss) per common share -- diluted............ $(0.66) $0.50
Book value per common share at period end................ $ 2.07 $2.71
</TABLE>
<TABLE>
<CAPTION>
FOR THE NINE FOR THE YEAR ENDED
MONTHS ENDED DECEMBER 31,
SEPTEMBER 30, 1999 1998
------------------------ ------------------
<S> <C> <C>
HISTORICAL VANTIVE
Net income (loss) per common share -- basic.............. $(0.34) $(0.09)
Net income (loss) per common share -- diluted............ $(0.34) $(0.09)
Book value per common share at period end................ $ 2.33 $ 2.61
EQUIVALENT PRO FORMA COMBINED PER VANTIVE SHARE
Net income (loss) per common share -- basic.............. $(0.54) $ 0.46
Net income (loss) per common share -- diluted............ $(0.54) $ 0.41
Book value per common share at period end................ $ 1.71 $ 2.24
</TABLE>
13
<PAGE> 19
RISK FACTORS
Vantive stockholders should carefully consider the following risk factors,
together with the other information included and incorporated by reference in
this proxy statement/prospectus, in deciding whether to vote to approve the
merger.
RISK FACTORS RELATING TO THE MERGER
CHANGES IN THE MARKET VALUE OF PEOPLESOFT COMMON STOCK COULD ADVERSELY AFFECT
THE VALUE OF THE CONSIDERATION THAT YOU ARE RECEIVING FOR YOUR VANTIVE COMMON
STOCK.
There will be no adjustment to the exchange ratio of 0.825 shares for
changes in the market price of either Vantive common stock or PeopleSoft common
stock, and Vantive is not permitted to walk away from the merger or resolicit
the vote of its stockholders solely because of changes in the market price of
PeopleSoft common stock. Accordingly, the specific dollar value of PeopleSoft
common stock to be received by you upon completion of the merger will depend on
the market value of PeopleSoft common stock at the time of the merger.
PEOPLESOFT AND VANTIVE COULD LOSE CUSTOMERS OR FAIL TO ATTRACT NEW CUSTOMERS AS
A RESULT OF THE ANNOUNCEMENT OR CONSUMMATION OF THE MERGER, WHICH WOULD CAUSE A
DECREASE IN REVENUE.
We cannot assure you that PeopleSoft's and Vantive's current customers will
continue their current buying patterns. In addition, the announcement of the
merger may inhibit PeopleSoft's and Vantive's attempts to attract new customers.
Certain of Vantive's or PeopleSoft's current or potential customers may cancel
or defer orders for each company's products as a result of the merger or the
announcement of the merger. We believe these cancellations or deferrals may
occur because some of our current or potential customers might be concerned
about our ability to integrate our operations. See "-- We May Not Successfully
Integrate Our Business Operations Or Our Management May Be Distracted By The
Integration Process." Any such delay or cancellation would adversely affect
PeopleSoft's or Vantive's or, after the merger, the combined company's sales.
VANTIVE STOCKHOLDERS MAY EXPERIENCE LOWER RETURNS ON THEIR INVESTMENT AFTER THE
MERGER.
Vantive stockholders may receive a lower return on their investment after
the merger than if the merger did not occur. If, for example, PeopleSoft does
not achieve the anticipated operating and strategic benefits of the merger or if
PeopleSoft does not otherwise achieve its business objectives and the market
price for PeopleSoft's stock declines, a lower return could occur. The issuance
of PeopleSoft common stock in the merger will result in dilution and this could
hurt its market price. In addition, the trading price of PeopleSoft common stock
has fluctuated significantly in the past and is likely to continue to do so.
Often, these fluctuations have been greater than those experienced by the stock
market in general.
THE IRS MAY CHALLENGE THE TAX-FREE NATURE OF THE MERGER, AND IF THIS CHALLENGE
WERE SUCCESSFUL YOU COULD BE REQUIRED TO PAY INCOME TAX ON ANY GAIN REALIZED IN
THE MERGER.
PeopleSoft and Vantive will not seek a ruling from the Internal Revenue
Service that the merger generally will be tax-free to Vantive stockholders.
Therefore, there is a risk that the Internal Revenue Service may later challenge
the tax-free nature of the merger. If it did, Vantive stockholders might be
required to pay tax on any gain realized in the merger. See "The
Merger -- Material Federal Income Tax Consequences."
14
<PAGE> 20
SOME OF VANTIVE'S DIRECTORS AND OFFICERS HAVE INTERESTS THAT COULD HAVE
INFLUENCED THEIR DECISION TO RECOMMEND THE MERGER TO VANTIVE STOCKHOLDERS.
In considering the recommendation of the Vantive board of directors to
approve the merger, Vantive stockholders should recognize that one of Vantive's
directors and several of its officers have an interest in completing the
transaction because of employment arrangements, potential severance benefits and
other reasons. These reasons are described under the headings "The
Merger -- Interests of Vantive's Management in the Merger and Potential
Conflicts of Interests" and "Management After The Merger."
WE MAY NOT SUCCESSFULLY INTEGRATE OUR BUSINESS OPERATIONS OR OUR MANAGEMENT MAY
BE DISTRACTED BY THE INTEGRATION PROCESS.
After the merger has been completed, PeopleSoft may integrate, among other
things, the following business operations of Vantive into PeopleSoft:
- product and service offerings;
- product development, sales and marketing;
- research and development;
- administrative and customer service functions; and
- management information systems.
Integrating the operations of Vantive with those of PeopleSoft after the
merger may be difficult, costly and time consuming. The integration of our
combined operations may temporarily distract management from the day-to-day
business of the combined company after the merger. PeopleSoft and Vantive may
fail to manage this integration effectively or to achieve any of the anticipated
benefits that both companies hope will result from the merger.
PEOPLESOFT EXPECTS TO INCUR POTENTIALLY SIGNIFICANT INTEGRATION COSTS IN
CONNECTION WITH THE MERGER, WHICH COULD NEGATIVELY AFFECT PEOPLESOFT'S EARNINGS.
PeopleSoft expects to incur costs from integrating Vantive's operations
with those of PeopleSoft. These costs may be substantial and may include:
- costs for employee redeployment, relocation or severance;
- costs for employee retention, which could include salary increases or
bonuses;
- conversion of information systems;
- reorganization or closures of facilities; and
- relocation or disposition of excess equipment or other assets.
We cannot determine the amount of these costs with certainty at this time.
PeopleSoft and Vantive estimate they will incur costs in connection with the
merger in the range of $50 million to $70 million. Such costs include direct
transaction costs of approximately $12 million, consisting primarily of business
consulting fees paid to investment bankers, legal and accounting fees and
expenses and $38 million to $58 million for certain exit costs resulting from
the merger. PeopleSoft is only in the preliminary stages of determining such
exit costs which could include, among other things, charges related to severance
for certain employees of Vantive who will not remain with the combined company
following the merger, lease payments for duplicate facilities which will no
longer be used, costs to be incurred to terminate contracts with third parties
who provide redundant or conflicting services and write-off of duplicative
equipment and other fixed assets. Accordingly, such estimates of cost are
preliminary and, therefore, subject to change. PeopleSoft anticipates having an
exit plan in place at the time the merger is consummated which is currently
expected to be late in the fourth quarter of 1999, at which time these exit
costs, as well as the
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direct transaction costs, will be charged to operations. PeopleSoft expects to
charge the costs of integrating operations in the quarter in which the merger is
completed and in subsequent quarters as decisions are made and costs are
incurred. This will increase PeopleSoft's operating costs and expenses and
decrease PeopleSoft's operating income for those quarters.
PEOPLESOFT COULD LOSE KEY VANTIVE PERSONNEL WHO ARE NECESSARY TO ACHIEVE THE
BENEFITS THAT PEOPLESOFT AND VANTIVE EXPECT TO REALIZE FROM THE MERGER.
The merger could lead to the loss of key Vantive personnel even though some
of them have signed employment and related agreements providing for them to
remain with the combined company. If one or more of Vantive's senior management,
engineers or sales or customer support personnel leaves after the merger is
completed, the business of the combined company could be seriously harmed, and
PeopleSoft may not be able to achieve the benefits that it expects to realize
from the merger.
THE FAILURE TO SATISFY CONDITIONS TO COMPLETION OF THE MERGER COULD JEOPARDIZE
THE MERGER. FAILURE TO COMPLETE THE MERGER COULD BE COSTLY TO VANTIVE AND ITS
STOCKHOLDERS.
Even if Vantive's stockholders approve the merger, the merger may not close
if any of the following occur:
- either PeopleSoft or Vantive experiences any significant adverse change
in its business since the time Vantive and PeopleSoft signed the merger
agreement;
- either PeopleSoft or Vantive has significantly breached any of its
representations, warranties or covenants made in the merger agreement;
- PeopleSoft is unable to account for the merger as a pooling of interests;
or
- there is imposed a law, regulation or court order that prohibits the
merger.
If the merger is not completed:
- Vantive may be required to pay PeopleSoft an expense reimbursement of $2
million and, in some instances if an acquisition or other similar
transaction involving Vantive potentially exists or occurs, a termination
payment of $12 million;
- in some instances if an acquisition or other similar transaction
involving Vantive potentially exists or occurs, PeopleSoft's option to
purchase up to 5,497,300 shares of Vantive common stock may become
exercisable;
- the price of Vantive common stock may decline, assuming that current
market prices reflect a market assumption that the merger will be
completed; and
- Vantive must still pay its costs related to the merger, such as legal,
accounting and financial advisory fees.
Furthermore, if the merger agreement is terminated and PeopleSoft exercises
its option to purchase Vantive common stock, Vantive may not be able to account
for a future transaction as a pooling of interests.
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RISK FACTORS RELATING TO PEOPLESOFT
PEOPLESOFT COULD EXPERIENCE FLUCTUATIONS IN QUARTERLY OPERATING RESULTS WHICH
COULD ADVERSELY IMPACT ITS STOCK PRICE.
PeopleSoft's revenues and results of operations are difficult to predict
and may fluctuate substantially from quarter to quarter. License revenues in any
quarter depend substantially upon PeopleSoft's total contracting activity and
its ability to recognize revenues in that quarter in accordance with its revenue
recognition policies.
PeopleSoft's contracting activity is difficult to forecast for a variety of
reasons, including the following:
- a significant portion of PeopleSoft's license agreements are completed
within the last few weeks of each quarter;
- PeopleSoft's sales cycle is relatively long and increasingly variable
since PeopleSoft has broadened its marketing emphasis to include software
product solutions for a customer's overall business;
- the size of license transactions can vary significantly;
- the possibility of economic downturns that are characterized by decreased
product demand, price erosion, technological shifts, work slowdowns and
layoffs may substantially reduce contracting activity;
- customers may unexpectedly postpone or cancel system replacement or new
system evaluations due to changes in their strategic priorities, project
objectives, budgetary constraints or company management;
- customer evaluations and purchasing processes vary significantly from
company to company, and a customer's internal approval and expenditure
authorization process can be difficult and time consuming, even after
selection of a vendor;
- changes in PeopleSoft's sales incentive plans have had and may continue
to have an unpredictable impact on business patterns; and
- the number, timing and significance of software product enhancements and
new software product announcements by PeopleSoft and its competitors may
affect purchase decisions.
Several factors may require PeopleSoft to defer recognition of license
revenue for a significant period of time after entering into a license
agreement, including:
- whether the license agreement relates entirely to then unavailable
software products;
- whether enterprise transactions include both currently deliverable
software products and software products that are under development or
other undeliverable elements;
- whether the customer demands services that include significant
modifications, customizations or complex interfaces that could delay
product delivery or acceptance;
- whether the transaction involves acceptance criteria that may preclude
revenue recognition or if there are identified product-related issues,
such as known defects; and
- whether the transaction involves payment terms or fees that depend upon
contingencies.
Because of the factors listed above and other specific requirements under
GAAP for software revenue recognition, PeopleSoft must have very precise terms
in its license agreements in order to recognize revenue when it initially
delivers software or performs services. Although PeopleSoft has a standard form
of license agreement that meets the criteria under GAAP for current revenue
recognition on delivered
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elements, it negotiates and revises these terms and conditions in some
transactions. Negotiation of mutually acceptable terms and conditions can extend
the sales cycle, and sometimes PeopleSoft does not obtain terms and conditions
that permit revenue recognition at the time of delivery or even as work on the
project is completed.
Variances or slowdowns in PeopleSoft's prior quarter contracting activity
may impact its consulting, training and maintenance service revenues since these
revenues typically license fee revenues. PeopleSoft's ability to maintain or
increase service revenue primarily depends on its ability to increase the number
of its licensing agreements. In particular, the significant decrease in license
revenues in 1999 versus the prior year may have a significant impact on service
revenues and earnings in the second half of 1999 and in fiscal 2000.
In addition, PeopleSoft's expense levels, operating costs and hiring plans
are based on projections of future revenues and are relatively fixed. If
PeopleSoft's actual revenues fall below expectations, its net income is likely
to be disproportionately adversely affected.
PEOPLESOFT HAS RECENTLY EXPANDED ITS TECHNOLOGY INTO SEVERAL NEW BUSINESS AREAS
AND CANNOT BE CERTAIN THAT ITS EXPANSION WILL BE SUCCESSFUL.
PeopleSoft's future success depends on the Internet being accepted and
widely used for commerce. PeopleSoft has recently expanded its technology into a
number of new business areas to foster long-term growth, including electronic
commerce, on-line business services and other products and services that can be
offered over the Internet. These areas are relatively new to PeopleSoft's
product development, sales and marketing personnel and PeopleSoft cannot be
assured that the markets for these products will develop or that it will be able
to compete effectively or will generate significant revenues in these new areas
making PeopleSoft's success in this area is difficult to predict.
PEOPLESOFT DEPENDS ON THIRD-PARTY TECHNOLOGY WHICH COULD RESULT IN INCREASED
COSTS OR DELAYS IN THE PRODUCTION AND IMPROVEMENT OF PEOPLESOFT'S PRODUCTS.
PeopleSoft licenses numerous critical third-party software products that it
incorporates into its own software products. If any of the third-party software
vendors were to change their product offerings or terminate PeopleSoft's
licenses, PeopleSoft might need to incur additional development costs to ensure
continued performance of its products. In addition, if the cost of licensing any
of these third-party software products significantly increases, PeopleSoft's
gross margin levels could significantly decrease.
PeopleSoft relies on existing partnerships with certain other software
vendors who are also competitors. If these vendors change their business
practices in the future, PeopleSoft may be compelled to find alternative vendors
with complementary software, which may not be available on attractive terms, or
may not be as widely accepted or as effective as the software provided by
PeopleSoft's existing vendors.
THE RELATIONSHIP WITH MOMENTUM BUSINESS APPLICATIONS MAY NEGATIVELY IMPACT
PEOPLESOFT BECAUSE PEOPLESOFT GAVE UP SOME CONTROL OVER RESEARCH AND
DEVELOPMENT.
PeopleSoft faces a number of risks as of a result of its relationship with
Momentum Business Applications and the distribution of the Momentum Business
Applications Class A Common Stock to PeopleSoft stockholders. These include:
- PeopleSoft has less control over important research and development
projects. PeopleSoft and Momentum must agree on project selection,
budgets, timetables and specifications for each project, and Momentum has
oversight responsibilities for the actual product development;
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- PeopleSoft could face restrictions on the amount and timing of its
utilization of, or could lose, the tax benefits associated with the
research and development expenditures on the projects pursued by
Momentum; and
- if PeopleSoft chooses to acquire Momentum, it will likely be required to
record significant accounting charges relating to acquisition of
in-process research and development and amortization of goodwill, which
would decrease earnings.
RECENT ACCOUNTING PRONOUNCEMENTS COULD ADVERSELY IMPACT PEOPLESOFT'S
PROFITABILITY BY DELAYING SOME REVENUE RECOGNITION INTO FUTURE PERIODS.
Within the last 2 years, the American Institute of Certified Public
Accountants issued Statement of Position, or SOP 97-2, "Software Revenue
Recognition," SOP 98-4, "Deferral of the Effective Date of a Provision of SOP
97-2, Software Revenue Recognition," and SOP 98-9, "Modification of SOP 97-2,
Software Revenue Recognition, With Respect to Certain Transactions." These
standards address software revenue recognition matters primarily from a
conceptual level and do not include specific implementation guidance. PeopleSoft
believes that it is currently in compliance with SOPs 97-2 and 98-4. PeopleSoft
has not fully assessed its ability to comply with SOP 98-9 using current
contracting and business practices. However, PeopleSoft believes that SOP 98-9
may require significantly more revenue to be deferred for certain types of
transactions. This new standard is not effective until the year 2000.
The American Institute of Certified Public Accountants has only issued some
implementation guidelines for these standards and the accounting profession is
still discussing a wide range of potential interpretations. These implementation
guidelines, once finalized, could lead to unanticipated changes in PeopleSoft's
current revenue accounting practices that could cause PeopleSoft to recognize
lower profits. As a result, PeopleSoft may change its business practices
significantly in order to continue to recognize a substantial portion of its
license revenues when it delivers its software products. These changes may
reduce demand, extend sales cycles, increase administrative costs and otherwise
adversely affect PeopleSoft.
PEOPLESOFT MAY CHANGE PRICING PRACTICES WHICH COULD IMPACT OPERATING MARGINS OR
CUSTOMER ORDERING PATTERNS.
In the future, PeopleSoft may choose to make changes to its pricing
practices. For example, PeopleSoft may offer additional discounts to customers,
reduce transactions that involve a perpetual use license to its software
products or change maintenance pricing. Such changes could reduce margins or
inhibit PeopleSoft's ability to sell its products.
THERE IS INTENSE COMPETITION IN THE INDUSTRY, WHICH REQUIRES THAT PEOPLESOFT
CONSTANTLY CREATE NEW PRODUCTS, IMPROVE ITS EXISTING PRODUCTS AND SELL ITS
PRODUCTS AT COMPETITIVE PRICES.
PeopleSoft competes with a variety of software vendors, including Internet
application vendors in the enterprise application software market segment,
vendors in the manufacturing software application market segment, vendors in the
emerging enterprise resource optimization software solutions market segment,
providers of human resource management system software products, providers of
financial management systems software products, and numerous small firms that
offer products with new or advanced features. As a result, the market for
business application software has been and continues to be intensely
competitive. Some competitors have become more aggressive with their payment
terms and/or issuance of contractual implementation terms or guarantees.
PeopleSoft may be unable to continue to compete successfully with new and
existing competitors without lowering prices or offering other favorable terms.
In addition, PeopleSoft believes it must differentiate itself through
different or more subtle architectural and technological factors.
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Some of PeopleSoft's competitors may have an advantage over PeopleSoft due
to their significant worldwide presence, longer operating and product
development history, and substantially greater financial, technical and
marketing resources than PeopleSoft. At least one competitor has a larger
installed base. In addition, Oracle Corporation is a competitor whose relational
database management system underlies a significant portion of PeopleSoft's
installed applications.
Furthermore, potential customers may consider outsourcing options,
including data center outsourcing and service bureaus, as viable alternatives to
purchasing PeopleSoft's software products. Although PeopleSoft is pursuing an
outsourcing partner program that it believes will address the needs of the
marketplace, this program may not be successful.
PEOPLESOFT'S ACQUISITIONS MAY NOT BE SUCCESSFUL.
PeopleSoft may acquire or invest in complementary companies, products and
technologies, and enter into joint ventures and strategic alliances with other
companies. Risks commonly encountered in such transactions include:
- the difficulty of assimilating the operations and personnel of the
combined companies;
- the risk that PeopleSoft may not be able to integrate the acquired
technologies or products with its current products and technologies;
- the potential disruption of PeopleSoft's ongoing business;
- the inability to retain key technical and managerial personnel;
- the inability of management to maximize the financial and strategic
position of PeopleSoft through the successful integration of acquired
businesses;
- adverse impact on PeopleSoft's annual effective tax rate;
- dilution of existing equity holders caused by capital stock issuances to
the stockholders of acquired companies or to retain employees of the
acquired companies;
- difficulty in maintaining controls, procedures and policies;
- potential adverse impact on PeopleSoft's relationships with partner
companies or third-party providers of technology or products;
- the impairment of relationships with employees and customers; and
- issues with product quality, product architecture, legal contingencies,
product development issues, or other significant issues that may not be
detected through PeopleSoft's due diligence process.
In addition, combinations with other companies may not qualify for pooling
of interests accounting, which would require PeopleSoft to use the purchase
method of accounting. The purchase method of accounting for business
combinations would require large write-offs of any in process research and
development costs related to companies being acquired, as well as ongoing
amortization costs for goodwill and other intangible assets valued in the
combinations with companies. Such write-offs and ongoing amortization charges
may have a significant negative impact on operating margins and net income in
the quarter of the combination and for several subsequent years. PeopleSoft may
not be successful in overcoming these risks or any other problems encountered in
connection with such transactions.
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IF AN INDUSTRY STANDARD DEVELOPMENT TOOL IS ESTABLISHED, CONFORMANCE TO THE
STANDARD COULD REQUIRE A COSTLY REDESIGN OF EXISTING SOFTWARE PRODUCTS.
PeopleSoft's software products include a suite of proprietary software
development tools, known as PeopleTools, which are fundamental to the effective
use of PeopleSoft's software products. While no industry standard exists for
software development tools, several companies have focused on providing software
development tools and each of them is attempting to establish its software
development tools as the accepted industry standard. In addition, Microsoft is
attempting to establish several standards in the marketplace. If a software
product other than PeopleTools becomes the clearly established and widely
accepted industry standard, PeopleSoft may not be able to respond appropriately
or sufficiently rapidly to the emergence of an industry standard or might be
compelled to abandon or modify PeopleTools in favor of such an established
standard; be forced to redesign its software products to operate with such third
party's software development tools; or face the potential sales obstacle of
marketing a proprietary software product against other vendors' software
products that incorporate a standardized software development toolset.
PEOPLESOFT'S SIGNIFICANT INTERNATIONAL OPERATIONS AND SALES SUBJECT IT TO RISKS
ASSOCIATED WITH RAPID AND UNEXPECTED GROWTH OUTSIDE OF THE UNITED STATES.
PeopleSoft continues to invest in an effort to enhance its international
operations. The global reach of PeopleSoft's business could cause it to be
subject to unexpected, uncontrollable and rapidly changing events and
circumstances in addition to those experienced in United States locations.
Changes in the following factors, among others, could have an adverse impact on
PeopleSoft's business and earnings:
- conducting business in currencies other than United States dollars
subjects PeopleSoft to factors such as currency controls and fluctuations
in currency exchange rates;
- PeopleSoft may be unable to hedge some transactions because of
uncertainty or the inability to reasonably estimate its foreign exchange
exposure;
- PeopleSoft may hedge some anticipated transactions and transaction
exposures, but could experience losses if exchange rates move in the
opposite direction;
- differing foreign technical standards;
- increased cost and development time required to localize PeopleSoft
products;
- lack of experience in a particular geographic market;
- regulatory, social, political, labor or economic conditions in a specific
country or region;
- laws, policies and other regulatory requirements affecting trade and
investment including loss or modification of exemptions for taxes and
tariffs, and import and export license requirements;
- exposure to different legal standards; and
- operating costs in many countries are higher than in the United States.
THE EURO CREATES UNCERTAINTY FOR PEOPLESOFT'S PRODUCT DEVELOPMENT AND AS A
RESULT COULD IMPACT SALES.
PeopleSoft's latest software release contains European Monetary Union, or
EMU, functionality that allows for dual currency reporting and information
management. However, since the Euro will not be the sole legally required
currency in any of the member nations until 2002, it is possible that all issues
related to conversion to EMU have not surfaced yet, and may not have been
adequately addressed. In addition, PeopleSoft's products may be used with
third-party products that may or may not be EMU compliant. Although PeopleSoft
continues to take steps to address the impact, if any, of EMU compliance for
such
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third-party products, failure of any critical technology components to operate
properly under EMU may adversely affect sales or require PeopleSoft to incur
unanticipated expenses to remedy any problems.
PEOPLESOFT'S CONTINUED GROWTH DEPENDS UPON ITS ABILITY TO BUILD AND MAINTAIN
RELATIONSHIPS WITH THIRD PARTIES.
A key aspect of PeopleSoft's sales and marketing strategy is to build and
maintain strong working relationships with businesses that PeopleSoft believes
play an important role in the successful marketing of its software products.
PeopleSoft's current and potential customers often rely on third-party system
integrators to develop, deploy and manage client/server applications. PeopleSoft
believes that its marketing and sales efforts are enhanced by the worldwide
presence of these companies. However, these companies, most of which have
significantly greater financial and marketing resources than PeopleSoft, may
start, or in some cases increase, the marketing of business application software
in competition with PeopleSoft, or may otherwise discontinue their relationships
with or support of PeopleSoft. If PeopleSoft's partners are unable to recruit
and adequately train a sufficient number of consulting personnel to support the
implementation of PeopleSoft's software products, PeopleSoft may lose customers.
In addition, integrators who generate consulting fees from customers by
providing implementation services may be less likely to recommend PeopleSoft's
software application architecture, including PeopleTools, if these products are
more difficult to install and maintain than competitors' similar product
offerings.
PeopleSoft has also in the past, and may in the future enter into, various
development or joint business arrangements to develop new software products or
extensions to its existing software products. Under these joint business
arrangements, PeopleSoft may distribute itself or jointly sell with its business
partners an integrated software product and pay a royalty to the business
partner based on end-user license fees. While PeopleSoft intends to develop
business applications that are integrated with its software products, these
software products may in fact not be integrated or brought to market or the
market may not accept the integrated enterprise solution. As a result,
PeopleSoft may not achieve the revenues that it anticipated at the time it
entered into the joint business arrangement.
PEOPLESOFT'S CONTINUED GROWTH DEPENDS UPON ITS ABILITY TO RETAIN AND ATTRACT A
SUFFICIENT NUMBER OF QUALIFIED EMPLOYEES.
PeopleSoft believes that its future success will depend in large part upon
its ability to attract, train and retain highly-skilled technical, managerial,
sales and marketing personnel. Although PeopleSoft invests significant resources
in recruiting and retaining employees, competition for personnel in the software
industry is intense, and, at times, PeopleSoft has had difficulty locating
highly qualified candidates within desired geographic locations, or with certain
industry-specific domain expertise. If PeopleSoft's competitors increase their
use of non-compete agreements, the pool of available sales and technical
personnel may further narrow in certain areas, even if the non-compete
agreements are ultimately unenforceable. PeopleSoft may grant large numbers of
options or other stock-based awards to attract and retain personnel, which could
be highly dilutive to PeopleSoft stockholders. The failure to attract, train,
retain and effectively manage employees could increase PeopleSoft's costs, hurt
PeopleSoft's development and sales efforts and cause a degradation of
PeopleSoft's customer service.
Since the fourth quarter of 1998, PeopleSoft has experienced turnover of
several senior executives. PeopleSoft has hired or promoted qualified candidates
to fill these positions. However, since the employees are new to the positions,
it is possible that the newly hired or promoted employees will not easily
transition into these leadership roles or be able to successfully lead
PeopleSoft in its efforts to grow the company. In addition, uncertainty created
by turnover of key employees could cause fluctuations in PeopleSoft's stock
price.
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PEOPLESOFT MAY NOT MEET THE CHALLENGES ASSOCIATED WITH RAPID GROWTH.
PeopleSoft has experienced rapid growth over the past decade. This growth
has resulted in increased responsibilities for management personnel and has
placed a significant strain upon operating and financial controls, systems, and
resources. To compete effectively and manage potential future growth, PeopleSoft
must continue to implement and improve the speed and quality of its information
decision support systems, management decisions, procedures and controls.
PeopleSoft's personnel, procedures, systems and controls may not be adequate to
support its future operations.
PEOPLESOFT'S SOFTWARE PRODUCTS AND PRODUCT DEVELOPMENT ARE COMPLEX, WHICH MAKES
IT INCREASINGLY DIFFICULT TO INNOVATE, EXTEND ITS PRODUCT OFFERINGS, AND TO
AVOID COSTS RELATED TO CORRECTION OF PROGRAM ERRORS.
The market for PeopleSoft's software products is characterized by rapid
technological change, evolving industry standards, changes in customer
requirements and frequent new product introductions and enhancements.
PeopleSoft's future success will depend in part upon its ability to:
- continue to enhance and expand its core applications;
- continue to provide enterprise solutions;
- continue to successfully integrate third-party products;
- enter new markets; and
- develop and introduce new products that keep pace with technological
developments, including developments related to the Internet, satisfy
increasingly sophisticated customer requirements and achieve market
acceptance. PeopleSoft may not be able to enhance existing products or
develop and introduce new products in a timely manner.
PeopleSoft's software products can be licensed for use with a variety of
popular industry standard relational database management systems. There may be
future or existing relational database management system platforms that achieve
popularity within the business application marketplace and on which PeopleSoft
may desire to offer its applications. These future or existing relational
database management system products may or may not be architecturally compatible
with PeopleSoft's software product design. PeopleSoft may not be able to develop
software products on additional platforms with the specifications and within the
time frame necessary for market success.
Despite testing by PeopleSoft and by third parties, PeopleSoft's software
programs, like all software programs generally, may contain a number of
undetected errors when they are first introduced or as new releases are
subsequently released. This may result in increased costs to correct such errors
and reduced acceptance of PeopleSoft's software products in the marketplace. The
effort and expense of developing, testing and maintaining software product lines
will increase with the increasing number of possible combinations of:
- vendor hardware platforms;
- operating systems and updated versions;
- PeopleSoft application software products and updated versions; and
- relational database management system platforms and updated versions.
Developing consistent software product performance characteristics across all of
these combinations could place a significant strain on PeopleSoft's development
resources and software product release schedules.
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PEOPLESOFT RELIES ON CLIENT INTERFACES WHICH COULD NEGATIVELY IMPACT PEOPLESOFT
IF CURRENT OR FUTURE CLIENT INTERFACES ARE NOT COMPATIBLE WITH PEOPLESOFT'S
CURRENT SOFTWARE PRODUCT DESIGN.
Currently, PeopleSoft supports client platforms using browsers certified to
run its Java-based Web client, or Microsoft's Windows family of software
products, including Windows 3.1 (for PeopleSoft releases prior to Release 6
only), Windows NT, Windows 95 and Windows 98. If Microsoft fundamentally changes
the architecture of its software products so that users of PeopleSoft's software
applications experience significant performance degradation or PeopleSoft's
software applications become incompatible with future versions of Microsoft's
Windows operating system, it could cause PeopleSoft to expend significant
resources to reconfigure its products. The use of a Web browser as a primary
user interface is emerging as an alternative to the traditional desktop access
through networked Microsoft Windows-based personal computers. This client access
via the Internet or an intranet involves numerous risks inherent in using the
Internet, including security, availability and reliability. PeopleSoft may wish
to offer its applications on future or existing client platforms that achieve
popularity within the business application marketplace. These future or existing
client platforms may or may not be architecturally compatible with PeopleSoft's
current software product design. PeopleSoft may not be able to support new
client interfaces and achieve market acceptance of new client interfaces which
it does support.
PEOPLESOFT HAS LIMITED PROTECTION OF INTELLECTUAL PROPERTY AND PROPRIETARY
RIGHTS AND MAY POTENTIALLY INFRINGE THIRD-PARTY INTELLECTUAL PROPERTY RIGHTS.
PeopleSoft considers certain aspects of its internal operations, software
and documentation to be proprietary, and relies on a combination of contract,
patent, copyright, trademark and trade secret laws and other measures to protect
this information. Outstanding applications may not result in issued patents and,
even if issued, the patents may not provide any meaningful competitive
advantage. Existing copyright laws afford only limited protection. PeopleSoft
believes that the rapid pace of technological change in the computer software
industry has made trade secret and copyright protection less significant than
factors such as:
- knowledge, ability and experience of PeopleSoft's employees;
- frequent software product enhancements; and
- timeliness and quality of support services.
PeopleSoft's competitors may independently develop technologies that are
substantially equivalent or superior to PeopleSoft's technology. Through an
escrow arrangement, PeopleSoft has granted many of its customers a contingent
future right to use PeopleSoft's source code solely for internal maintenance
services. This possible access to PeopleSoft's source code may increase the
likelihood of misappropriation or other misuse of PeopleSoft's intellectual
property. Finally, the laws of some countries in which PeopleSoft's software
products are or may be licensed do not protect PeopleSoft's software products
and intellectual property rights to the same extent as the laws of the United
States. Defending PeopleSoft's rights could be costly.
Third parties may assert infringement claims against PeopleSoft. These
assertions could distract management, require PeopleSoft to enter into royalty
arrangements, and could result in costly and time consuming litigation,
including damage awards.
PEOPLESOFT MAY EXPERIENCE LIABILITY CLAIMS ARISING OUT OF THE LICENSING OF ITS
SOFTWARE AND PROVISION OF SERVICES.
PeopleSoft's agreements contain provisions designed to limit its exposure
to potential liability claims. However, these provisions could be invalidated by
unfavorable judicial decisions or by federal, state, local
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or foreign laws or ordinances. For example, PeopleSoft might not be able to
avoid or limit liability for disputes relating to product performance or the
provision of services. If a claim against PeopleSoft were successful, PeopleSoft
might be required to incur significant expense and pay substantial damages. Even
if PeopleSoft was to prevail, the accompanying publicity could adversely impact
the demand for PeopleSoft's software.
UNCERTAINTY SURROUNDING THE YEAR 2000 OR THE FAILURE OF PEOPLESOFT'S OR
THIRD-PARTY'S PRODUCTS TO BE YEAR 2000 READY AND PEOPLESOFT'S FAILURE TO
ADEQUATELY DEVELOP AND IMPLEMENT CONTINGENCY PLANS COULD IMPACT SALES, SUBJECT
PEOPLESOFT TO LIABILITY CLAIMS, OR CAUSE PEOPLESOFT TO EXPERIENCE PRODUCT
INTERRUPTIONS OR DELAYS THAT MIGHT CAUSE PEOPLESOFT TO INCUR UNANTICIPATED
EXPENSES.
Each customer's evaluation of its need to achieve Year 2000 readiness may
affect its purchase decisions. PeopleSoft believes that many current and
potential customers are heavily engaged in testing and correcting system Year
2000 issues, and beginning in the second half of 1998 PeopleSoft's revenues have
been negatively impacted by such customers choosing to defer system investments.
In addition, PeopleSoft's sales cycles have lengthened due to lessened urgency
of customers' system investment decisions. Because Year 2000-related impacts on
customer purchasing decisions are unprecedented, PeopleSoft has a limited
ability to forecast accurately the effects of the Year 2000 on its
quarter-to-quarter revenues.
PeopleSoft's internal business information systems are comprised primarily
of the same currently-supported application software products it generally
offers for license to customers. These applications have been tested for Year
2000 readiness. However, PeopleSoft cannot be sure that no Year 2000 readiness
issues will arise related to its application software products. As a result,
PeopleSoft's customers who use these products could assert claims that could be
costly and time consuming to defend and could result in the payment of damages.
PeopleSoft uses other third-party vendor network equipment,
telecommunication products, and software products that may not be Year 2000
ready. PeopleSoft currently is taking steps to address the impact of any
currently known Year 2000 issue surrounding these third-party products. The
failure of any critical technology components to operate properly in the Year
2000 could cause a significant disruption in PeopleSoft's business and cause
PeopleSoft to incur significant unanticipated expenses to remedy any problems.
PEOPLESOFT'S STOCK PRICE IS VOLATILE AND THERE IS A RISK OF LITIGATION.
The trading price of PeopleSoft common stock has in the past and may in the
future be subject to wide fluctuations in response to factors such as the
following:
- revenue or results of operations in any quarter failing to meet the
expectations, published or otherwise, of the investment community;
- announcements of technological innovations by PeopleSoft or its
competitors;
- new products or the acquisition of significant customers by PeopleSoft or
its competitors;
- developments with respect to patents, copyrights or other proprietary
rights of PeopleSoft or its competitors;
- changes in recommendations or financial estimates by securities analysts;
- changes in management:
- conditions and trends in the software industry generally;
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- the announcement of acquisitions or other significant transactions by
PeopleSoft or its competitors;
- adoption of new accounting standards affecting the software industry; and
- general market conditions and other factors.
Fluctuations in the price of PeopleSoft's common stock may expose
PeopleSoft to the risk of securities class action lawsuits. As a result of the
significant declines in the price of its common stock during the second half of
fiscal 1998 and the first half of fiscal 1999, several such lawsuits were filed
against PeopleSoft. Although PeopleSoft believes that these lawsuits are without
merit, defending against them could result in substantial costs and divert
management's attention and resources. In addition, any settlement or adverse
determination of these lawsuits could subject PeopleSoft to significant
liabilities. PeopleSoft cannot be assured that there will not be additional
lawsuits in the future.
RISK FACTORS RELATING TO VANTIVE
VANTIVE'S QUARTERLY OPERATING RESULTS MAY FLUCTUATE IN FUTURE PERIODS AND THIS
MAY CAUSE IT TO FAIL TO MEET EXPECTATIONS.
Vantive's quarterly operating results have varied significantly in the past
and Vantive expects that they will vary significantly from quarter to quarter in
the future. In addition, Vantive's operating results may not follow any past
trends. If the operating results are below the expectations of public market
analysts and investors, the price of Vantive common stock may fall. These
quarterly variations are caused by many factors, including:
- variations in demand for Vantive's products;
- the timing and execution of individual contracts, product deployments,
and achievement of milestones, particularly for large orders;
- delays in customer orders and in the closing of sales near the end of a
quarter;
- the amount and timing of increases in expenses;
- costs and complications relating to acquisitions and integration of new
technologies or businesses; and
- the utilization rate of services personnel.
It is particularly difficult to predict the timing or amount of Vantive's
license revenues because Vantive recognizes a substantial portion of its license
revenues in the last month of a quarter, and often in the last weeks or days of
a quarter. Nevertheless, Vantive bases its decisions regarding its operating
expenses in part on anticipated revenue trends. Because many of Vantive's
expenses are relatively fixed in the short term, a delay in recognizing revenue
from a limited number of license transactions could cause operating results to
vary significantly from quarter to quarter and could result in operating losses.
To the extent these expenses are not followed by increased revenues that match
projections, operating results will suffer.
VANTIVE'S MARKET IS CHARACTERIZED BY RAPID TECHNOLOGICAL CHANGE AND FAILURE TO
ENHANCE PRODUCTS AND DEVELOP NEW PRODUCTS TO RESPOND TO SUCH CHANGE COULD HARM
VANTIVE'S BUSINESS.
Vantive's failure to enhance its product line and develop new products to
successfully respond to rapid technological change would significantly harm its
business. The software market in which Vantive competes is characterized by
rapid technological change. Existing products may become obsolete and
unmarketable when products using new technologies are introduced and/or when
industry standards emerge. For example, Vantive's customers have adopted a wide
variety of hardware, software, database,
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Internet-based and networking platforms. Vantive must continue to support and
maintain its products on a variety of such platforms. As a result, the life
cycles of its products are difficult to estimate. To be successful, Vantive must
continue to enhance its current product line and develop new products that
successfully respond to such developments. In addition, customers may defer or
forego purchases of Vantive products if Vantive, its competitors or major
hardware, systems or software vendors introduce or announce new products or
product enhancements.
VANTIVE MAY NOT BE ABLE TO DEVELOP NEW PRODUCTS OR ENHANCE EXISTING PRODUCTS ON
A TIMELY BASIS.
Vantive may experience difficulties that could delay or prevent the
successful development, introduction or marketing of new or enhanced products in
the future. Vantive's product development requires substantial investment. There
can be no assurance that Vantive will have sufficient resources to make the
necessary investments. Vantive has delayed enhancements or new product release
dates several times in the past and may not be able to introduce enhancements or
new products successfully or in a timely manner in the future. Vantive's
business could be significantly harmed if it delays the release of its products
and product enhancements or if these products or product enhancements fail to
achieve market acceptance when released.
VANTIVE DEVELOPS COMPLEX SOFTWARE PRODUCTS SUSCEPTIBLE TO SOFTWARE ERRORS OR
DEFECTS THAT COULD RESULT IN LOST REVENUES, OR DELAYED OR LIMITED MARKET
ACCEPTANCE.
Vantive faces possible claims and higher costs as a result of the
complexity of its products and the potential for undetected errors. Vantive's
software products may contain errors that may be detected at any point in the
products' life cycles. Vantive has in the past discovered software errors in
certain of its products and as a result has experienced delays in shipment of
products during the period required to correct these errors. There can be no
assurance that, despite testing by Vantive and by current and potential
customers, errors will not be found in new products or releases after shipment,
resulting in loss of revenue or delay in market acceptance and sales, diversion
of development resources, injury to Vantive's reputation, or increased service
and warranty costs, any of which could severely harm Vantive's business.
Vantive's products are generally used in systems with other vendors' products,
and as a result, they must integrate successfully with existing systems. System
errors, whether caused by Vantive's products or those of another vendor, could
adversely affect the market acceptance of Vantive's products, and any necessary
revisions could cause Vantive to incur significant expenses.
OTHERS MAY BRING PRODUCT LIABILITY CLAIMS AGAINST VANTIVE WHICH COULD BE
TIME-CONSUMING AND EXPENSIVE TO DEFEND.
Since Vantive's products are often used for mission-critical applications
such as sales, marketing or field services, errors, defects or other performance
problems could result in financial or other damages to Vantive's customers.
Although Vantive's license agreements generally contain provisions designed to
limit its exposure to product liability claims, existing or future laws or
unfavorable judicial decisions could negate such limitation of liability
provisions. Although no product liability actions have been filed against
Vantive to date, such an action could result in damages and, even if it were
unsuccessful, could be time-consuming and costly to defend.
VANTIVE'S GLOBAL OPERATIONS AND ITS PLANNED EXPANSION OF ITS INTERNATIONAL
OPERATIONS MAKE VANTIVE MUCH MORE SUSCEPTIBLE TO RISKS FROM INTERNATIONAL
OPERATIONS.
International revenue, or revenue derived from sales to customers in
foreign countries, accounted for approximately 33% and 26% of Vantive's revenue
for the nine months ended September 30, 1999 and 1998, respectively. Vantive
intends to substantially expand its international operations and to enter new
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international markets. The following are some of the risks Vantive faces from
doing business on an international basis:
- significant management attention and financial resources to successfully
translate and localize its software products into various languages;
- difficulties in staffing and managing foreign operations;
- its ability to maintain or increase international market demand for its
products;
- licenses, tariffs and other trade barriers; and
- political and economic instability.
Vantive, or its distributors, resellers or channel partners, may also not
be able to sustain or increase international revenues from licenses or from
consulting and customer support or its relationships with distributors,
resellers or channel partners may deteriorate.
FLUCTUATIONS IN THE RELATIVE VALUE OF FOREIGN CURRENCIES COULD HARM VANTIVE'S
OPERATING RESULTS.
Exchange rate fluctuations could cause currency transaction gains and
losses. Vantive's foreign subsidiaries operate primarily in local currencies and
their results are translated into U.S. dollars. Vantive began hedging activities
in the second quarter of 1999 to limit the exposure resulting from increases in
the value of the U.S. dollar relative to foreign currencies. Hedging activities
do not guarantee complete protection from exchange rate fluctuation risk and
exposure resulting from a fluctuation in the value of the U.S. dollar relative
to foreign currencies could significantly harm Vantive's operating results.
REMEDIATION OF PROBLEMS RELATED TO THE EURO MAY INVOLVE SIGNIFICANT TIME AND
EXPENSE AND MAY REDUCE VANTIVE'S FUTURE SALES.
Vantive's business may be harmed, including reduction of future sales, if
it is not able to successfully address and remedy any problems related to the
adoption by member countries of the Euro. On January 1, 1999 the Euro became a
functional legal currency of member countries who were required to fix their
respective currencies to the new currency. During the next three years, business
in member countries will be conducted in both the existing national currency and
the Euro. Vantive and its third-party suppliers have products that may or may
not address the issues related to conversion to the European Monetary Union or,
EMU. Although Vantive continues to take steps to address the impact, if any, of
EMU compliance for its products or third-party products it uses or embeds,
failure of any critical technology components to operate properly in compliance
with conversion to the EMU may reduce sales or require Vantive to incur
unanticipated expenses to remedy any problems.
SERVICE REVENUES REPRESENT A SIGNIFICANT PERCENTAGE OF VANTIVE'S TOTAL REVENUES
AND LOWER THAN ANTICIPATED SERVICE REVENUES WOULD SIGNIFICANTLY HARM VANTIVE'S
BUSINESS.
If service revenues are lower than anticipated, Vantive's business,
financial condition and operating results could be adversely affected. Service
revenues represented 55.1% of Vantive's total revenues in the first nine months
of 1999 and 45.2% of Vantive's total revenues in the first nine months of 1998.
Vantive anticipates that service revenues will continue to represent a
significant percentage of total revenues. Service revenues depend in part on
ongoing renewals of support contracts by its customers, some of which may not
renew their support contracts. In addition, consulting revenues as a percentage
of total revenues could decline if customers select third-party service
providers to install and service Vantive products more frequently than they have
in the past. Vantive's ability to increase service revenues depends in part on
its ability to increase the scale of its services organization, including its
ability to successfully recruit and train a sufficient number of qualified
services personnel. Vantive may not be able to do so.
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SERVICE REVENUES AND THIRD-PARTY CONTRACT REVENUES CARRY LOWER GROSS MARGINS
THAN LICENSE REVENUES AND AN OVERALL INCREASE IN THESE AREAS AS A PERCENTAGE OF
TOTAL REVENUES COULD HAVE AN ADVERSE IMPACT ON VANTIVE'S BUSINESS.
Because service revenues have lower gross margins than license revenues, a
continued increase in the percentage of total revenues represented by service
revenues could have a detrimental impact on Vantive's overall gross margins and
could adversely affect its operating results. In addition, Vantive subcontracts
certain consulting, customer support and training services to third-party
service providers. Third-party contract revenues generally carry lower gross
margins than Vantive's service business overall. As a result, service revenues
and related margins may vary from period to period, depending on the mix of
these third-party contract revenues.
A HIGH DEGREE OF VANTIVE'S COSTS ARE FIXED AND COULD CAUSE ADVERSE IMPACTS ON
OPERATING MARGINS IF REVENUES FALL SHORT OF EXPECTATIONS.
Vantive's business, as well as the customer relationship management systems
industry as a whole, is characterized by a very high degree of operating
leverage. A substantial portion of Vantive's operating costs and expenses
consist of employee and facility related costs, which are relatively fixed over
the short term. In addition, Vantive's expense levels and hiring plans are based
substantially on Vantive's projections of future revenues. If Vantive's actual
revenues fall below expectations, its net income is likely to be
disproportionately adversely affected.
VANTIVE INCORPORATES SOFTWARE LICENSED FROM THIRD PARTIES WITH ITS PRODUCTS AND
ANY SIGNIFICANT INTERRUPTION IN THE AVAILABILITY OF THESE THIRD-PARTY SOFTWARE
PRODUCTS OR DEFECTS IN THESE PRODUCTS COULD IMPAIR VANTIVE'S BUSINESS.
Vantive licenses technology on a non-exclusive basis from several
businesses for use with its products and anticipates that Vantive will continue
to do so in the future. Vantive's inability to continue to license these
products or to license other necessary products for use with its products or
substantial increases in royalty payments under third-party licenses could harm
Vantive's business. In addition, the effective implementation of Vantive
products depends upon the successful operation of third-party licensed products
in conjunction with its products, and therefore any undetected errors in such
licensed products may prevent the implementation or impair the functionality of
products, delay new product introductions or injure Vantive's reputation.
INTERFACING VANTIVE'S PRODUCTS WITH THE LEADING SOFTWARE PRODUCTS IN THEIR
CATEGORY MAY REQUIRE GREATER USE OF THIRD-PARTY SOFTWARE WHICH IN TURN COULD
REQUIRE VANTIVE TO REWRITE ITS SOFTWARE PRODUCTS OR ENTER INTO UNFAVORABLE
LICENSE AGREEMENTS.
Vantive's commitment to adopt or interface with "best-of-breed" software
technology may require it to increase use of third-party software. To qualify as
"best-of-breed," Vantive must determine that the technology has a clear future
market direction, is extremely robust and is commercially supported. The greater
use of third-party software could require Vantive to invest significant
resources in rewriting some or all of its software applications products
utilizing third-party software. It could also require Vantive to enter into
license arrangements with third-parties which could result in higher royalty
payments and a loss of product differentiation. Vantive cannot assure you that
Vantive would be able to successfully rewrite its products or enter into
commercially reasonable licenses, and the costs of, or inability or delays in,
doing so could significantly harm Vantive's business.
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THE MARKETS IN WHICH VANTIVE SELLS ITS PRODUCTS ARE HIGHLY COMPETITIVE AND
VANTIVE MAY NOT BE ABLE TO COMPETE EFFECTIVELY.
The market for customer relationship management software and services is
intensely competitive, fragmented and rapidly changing. Vantive faces
competition or potential competition in the customer relationship management
software market and services primarily from the following types of companies:
- front-office software applications vendors;
- large enterprise hardware and software vendors;
- system integrators;
- Internet start-ups; and
- Vantive's potential customers' internal information technology
departments, which may seek to develop proprietary enterprise
relationship management systems.
In addition, as Vantive develops new products, particularly applications
focused on specific industries, Vantive may begin competing with companies with
whom Vantive has not previously competed. It is also possible that new
competitors will enter the market or that Vantive's competitors will form
alliances that may enable them to rapidly increase their market share or that
Vantive's current business partners may now or in the future compete with
Vantive.
VANTIVE'S FAILURE TO SUCCESSFULLY MANAGE ITS RAPID GROWTH COULD STRAIN ITS
RESOURCES AND ADVERSELY AFFECT ITS BUSINESS.
Vantive has recently experienced a period of growth and expansion that has
placed significant demands on its managerial, administrative, operational,
financial and other resources. Its ability to successfully offer new products
and services in a rapidly evolving market requires effective planning and
management. Its new employees include a number of key managerial, marketing,
planning, technical and operations personnel who have not yet been fully
integrated into Vantive's organization. Vantive intends to continue to expand
its operations internationally and domestically, grow its customer base and
pursue market opportunities through multiple growth strategies. To accommodate
continued anticipated growth and expansion, Vantive will be required to:
- improve existing and implement new operational and financial systems,
procedures and controls;
- hire, train, manage, retain and motivate qualified personnel and enter
into relationships with strategic partners;
- integrate its new management team; and
- anticipate and respond to changing market conditions.
These measures may place a significant burden on Vantive's management and
its internal resources. If Vantive is not able to install adequate control
systems in an efficient and timely manner, if its current or planned personnel
systems, procedures and controls are not adequate to support future operations,
or if Vantive is unable to otherwise manage growth effectively, Vantive's
business could be harmed.
IF VANTIVE LOSES KEY PERSONNEL OR IS UNABLE TO HIRE ADDITIONALLY QUALIFIED
PERSONNEL AS NECESSARY, VANTIVE MAY NOT BE SUCCESSFUL.
Vantive has experienced substantial employee turnover in 1999. Vantive's
success depends to a significant degree on the continued contributions of its
key management, engineering, sales and marketing and professional services
personnel, many of whom would be difficult to replace. Vantive's success also
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depends in large part on its ability to attract and retain highly skilled
engineering, sales and marketing and professional services personnel.
Competition for such personnel is intense, especially in the Silicon Valley,
where Vantive's principal facilities are located. If Vantive is unable to retain
its existing key personnel, or attract and train additional qualified personnel,
its business could be harmed.
VANTIVE DEPENDS ON EMERGING MARKETS FOR THE GROWTH OF FRONT-OFFICE AUTOMATION
SOFTWARE AND A SLOWER GROWTH IN THE DEMAND FOR INTEGRATED FRONT-OFFICE PRODUCTS
WOULD HARM VANTIVE'S BUSINESS.
Vantive's future financial performance will depend in large part on the
growth in demand for individual front-office automation software as well as the
number of organizations adopting comprehensive front-office automation software
information systems for their client/server and Web computing environments.
Vantive believes that an important competitive advantage for its products is
their ability to be integrated with one another and with other back office
software into a front-office automation information system. If the demand for
integrated suites of front-office automation applications fails to develop, or
develops more slowly than Vantive currently anticipates, this could have a
significant negative effect on the demand for Vantive's products and on its
business, results of operations and financial condition.
VANTIVE'S BUSINESS DEPENDS ON A LIMITED NUMBER OF PRODUCTS AND A DECLINE IN THE
DEMAND FOR THESE PRODUCTS COULD HARM VANTIVE'S BUSINESS.
To date, a significant portion of Vantive's license revenue is derived from
the sale of a limited number of products, in particular, Vantive Support,
Vantive FieldService, Vantive Sales and Vantive HelpDesk. License revenues from
these products and their enhanced versions may continue to account for a
significant portion of its future revenues. As a result, factors adversely
affecting the pricing of or demand for such products such as competition or
technological change could significantly affect its business in a negative
manner.
VANTIVE'S PERFORMANCE WILL DEPEND ON THE GROWTH OF THE INTERNET FOR COMMERCE.
Vantive's future success depends on the Internet being accepted and widely
used for commerce. Vantive is investing in the field service, eCommerce and Web
product markets. "eCommerce," or electronic commerce, represents paperless
transactions between businesses or between a business and a customer. "Web
product" is a product that can be easily used or adapted for the Internet.
Should these markets fail to develop, not accept Vantive's products, or cause
Vantive to lose new business and/or customers in its traditional markets,
Vantive's business could be adversely affected.
VANTIVE'S FAILURE TO EXPAND ITS DIRECT SALES FORCE AND THIRD-PARTY DISTRIBUTION
CHANNELS WOULD IMPEDE ITS REVENUE GROWTH AND FINANCIAL CONDITION.
Vantive has historically sold its products through its direct sales force.
Vantive's ability to achieve significant revenue growth in the future will
depend in large part on its success in recruiting and training sufficient sales
personnel and establishing relationships with distributors, resellers and
systems integrators. Vantive is currently investing, and plans to continue to
invest, significant resources to expand its domestic and international direct
sales force and to develop distribution relationships with certain third-party
distributors, resellers and systems integrators. There can be no assurance that
Vantive will be able to attract a sufficient number of third-party distribution
partners or that such partners will recommend Vantive products and if Vantive
fails, it will hurt Vantive's sales. In addition, there can be no assurance that
Vantive will be able to successfully expand its direct sales force or other
distributors. If Vantive fails to expand its direct sales force or other
distribution channels Vantive's business could be harmed.
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VANTIVE RELIES ON ITS RELATIONSHIPS WITH THIRD PARTIES FOR, AMONG OTHER THINGS,
THE SALES, MARKETING AND IMPLEMENTATION OF ITS PRODUCTS AND ITS FAILURE TO
MAINTAIN THESE EXISTING RELATIONSHIPS OR TO ESTABLISH NEW RELATIONSHIPS COULD
HARM VANTIVE'S BUSINESS.
Vantive relies heavily on its relationships with a number of organizations
that are important to worldwide sales and marketing of Vantive products. If
Vantive fails to maintain its existing relationships, or to establish new
relationships, or if Vantive partners do not perform to its expectations,
Vantive's sales could be significantly hurt. Vantive also relies on a number of
systems consulting and integration firms to implement its software, provide
customer support services and endorse its products during the competitive
evaluation stage of the sales cycle. Although Vantive seeks to maintain
relationships with these service providers, many of them have similar, and often
more established, relationships with Vantive's competitors. These third parties,
many of which have significantly greater resources than Vantive has, may in the
future market software products that compete with Vantive's products or reduce
or discontinue their relationships with Vantive or their support of Vantive
products. In addition, Vantive's business, financial condition and operating
results could be harmed if:
- Vantive is unable to develop and retain effective, long-term
relationships with systems integrators;
- Vantive is unable to adequately train a sufficient number of systems
integrators;
- systems integrators do not have or do not devote the resources necessary
to facilitate implementation of Vantive products; or
- systems integrators endorse a product or technology other than Vantive's
products or technology.
THE PRICE OF VANTIVE'S COMMON STOCK MAY BE VOLATILE, WHICH MAY SUBJECT VANTIVE
TO A RISK OF SECURITIES LITIGATION.
The price of Vantive's common stock has been and may continue to be
volatile. The market price of Vantive's common stock could substantially
fluctuate due to a variety of factors outside of Vantive's control, in addition
to Vantive's financial performance. Furthermore, stock prices for many
technology companies fluctuate widely for reasons that may be unrelated to
operating results of such companies and could result from many other factors.
These fluctuations, as well as general economic, market and political conditions
such as recessions or military conflicts, may significantly and adversely affect
the market price of Vantive's common stock, which could in turn harm Vantive's
business.
In the past, following periods of volatility in the market price of a
company's securities, securities class action litigation has often been
instituted against such a company. Such litigation could result in substantial
costs and a diversion of management's attention and resources. Vantive is
currently a defendant in three substantially similar securities class action
lawsuits based largely upon fluctuations in Vantive's stock price in 1998.
COSTS NECESSARY TO PROTECT VANTIVE'S PROPRIETARY SOFTWARE AND OTHER PROPRIETARY
INFORMATION COULD SIGNIFICANTLY HARM VANTIVE'S BUSINESS AND, DESPITE VANTIVE'S
EFFORTS, IT MAY BE UNABLE TO PROTECT AGAINST INFRINGEMENT.
Vantive's success and ability to compete depends on its proprietary
technology. Vantive relies primarily on copyright, trade secret, trademark and
patent law, as well as contractual provisions, to protect its proprietary
software and other proprietary information. Vantive presently has two patents
and one patent application pending. Vantive also enters into agreements with its
employees, consultants and customers to control their access to and distribution
of its software, documentation and other proprietary information. Nevertheless,
a third party could copy or otherwise obtain Vantive's software or other
proprietary information without authorization, or could develop software
competitive to Vantive's software.
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In addition, effective trademark protection may not be available. Vantive's
competitors may adopt names similar to Vantive's trade-names, thereby impeding
Vantive's ability to build brand identity and possibly leading to customer
confusion.
Vantive may have to litigate to enforce its intellectual property rights,
to protect its trade secrets or know-how or to determine their scope and
validity, or the scope, validity or enforceability of the proprietary rights of
other third parties. Enforcing or defending Vantive's proprietary technology is
expensive, could cause the diversion of Vantive's resources, and may not prove
successful. In addition, the laws of other countries may not protect Vantive's
products and intellectual property rights to the same extent as the laws of the
United States. Vantive's protective measures may be inadequate in these
countries to protect Vantive's proprietary rights. Any failure to enforce or
protect Vantive's intellectual property rights could cause Vantive to lose a
valuable asset and could harm Vantive's business.
CLAIMS BY THIRD PARTIES ALLEGING INFRINGEMENT OF THEIR PROPRIETARY RIGHTS COULD
BE COSTLY TO DEFEND OR COULD OTHERWISE SIGNIFICANTLY HARM VANTIVE'S BUSINESS.
Although Vantive is not aware of any infringement by any of its products of
the intellectual property rights of any third party, claims may be made against
Vantive in the future that allege violation of such proprietary rights as a
result of the internal use of Vantive products or their external use by
Vantive's customers or other third parties. Any such claim would be costly and
time-consuming to defend, would divert Vantive management's attention, could
cause product delays, could require the payment of damages, and could otherwise
harm Vantive's business. If Vantive were to discover that its products violate a
third-party's proprietary rights, Vantive could be required to enter into
royalty or licensing agreements in order to be able to sell its products. Such
arrangements may not be available to Vantive, and even if they are available,
they might be prohibitively expensive.
YEAR 2000 ISSUES PRESENT TECHNOLOGICAL RISKS, COULD CAUSE DISRUPTION TO
VANTIVE'S BUSINESS AND COULD HARM VANTIVE'S FUTURE SALES.
As is true for most companies, the Year 2000 issue creates risks for
Vantive. If systems do not correctly recognize date information when the year
changes to 2000, there could be an adverse impact on Vantive's operations. The
Year 2000 issue not only may have an impact on Vantive at the end of the
calendar year 1999, but could also have an impact on Vantive in the year 2000.
The risks posed by Year 2000 issues could adversely affect Vantive's business in
a number of significant ways. Vantive's risk exists primarily in the following
areas:
- systems used by Vantive to run its business including information
systems, equipment and facilities;
- systems used by Vantive's suppliers;
- potential warranty or other claims from its customers relating to Vantive
products or services; and
- potential for reduced spending, or a moratorium on spending, by potential
customers due to Year 2000 remediation.
Vantive believes that it has adequately addressed each of these risks,
except the risk of potential reduced spending by customers which is beyond
Vantive's control. If remediation is inadequate, there could be a significant
adverse effect on Vantive's business.
VANTIVE'S CURRENT REVENUE RECOGNITION PRACTICES MAY NEED TO CHANGE, WHICH COULD
HARM VANTIVE'S BUSINESS.
The American Institute of Certified Public Accountants issued Statement of
Position 97-2, Software Revenue Recognition, in October 1997 and amended it by
Statement of Position 98-4. Vantive adopted
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these statements effective January 1, 1998. In December 1998, the American
Institute of Certified Public Accountants issued Statement of Position 98-9
which further amended Statement of Position 97-2 and 98-4. Vantive believes its
current revenue recognition policies and practices are consistent with these
statements. However, full interpretations of Statement of Position 97-2 are
still being debated. Once these interpretations are available, Vantive's current
revenue accounting practices may need to change, and such changes could harm
Vantive's future revenues and earnings.
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VANTIVE SPECIAL MEETING
GENERAL
This proxy statement/prospectus is first being mailed to the recordholders
of Vantive common stock around November 22, 1999. Also enclosed is a notice of
the special meeting of Vantive stockholders and a form of proxy that the Vantive
board of directors is soliciting for use at the special meeting and at any
adjournments or postponements thereof. The special meeting will be held on
December 29, 1999, 9:00 a.m., local time, at The Santa Clara TechMart at 5201
Great America Parkway, Santa Clara, California.
MATTERS TO BE CONSIDERED
The purpose of the special meeting is to vote on the merger agreement.
Vantive stockholders may also be asked to vote upon a proposal to adjourn or
postpone the special meeting to allow additional time for the solicitation of
additional votes to approve the merger agreement if the secretary of the meeting
determines that there are not sufficient votes to approve the merger agreement.
PROXIES
Vantive stockholders should fill out and send back the accompanying form of
proxy if they will be unable to attend the special meeting in person. Vantive
stockholders may revoke their proxies at any time before the proxies are
exercised by giving the secretary of Vantive written notice of revocation,
properly executed proxies of a later date or by attending the special meeting
and voting in person. Written notices of revocation and other communications
with respect to the revocation of Vantive proxies should be addressed to The
Vantive Corporation, 2525 Augustine Drive, Santa Clara, California 95054,
Attention: Secretary. All shares represented by valid proxies received and not
revoked before they are exercised will be voted in the manner specified in the
proxies. If no specification is made, the proxies will be voted in favor of the
merger agreement. No proxy that is voted against the merger agreement will be
voted in favor of any adjournment or postponement of the special meeting for the
purpose of soliciting additional proxies. However, if a stockholder abstains
from voting on the adoption of the merger agreement and makes no specification
on an adjournment or postponement for the purpose of soliciting additional
proxies, then the proxy will be voted for the adjournment or postponement.
SOLICITATION OF PROXIES
Vantive will pay the entire cost of soliciting proxies. In addition to
soliciting proxies by mail, Vantive will request banks, brokers and other
recordholders to send proxies and proxy material to the beneficial owners of
Vantive common stock and obtain their voting instructions, if necessary. Vantive
will reimburse these recordholders for their reasonable expenses in performing
these tasks. Vantive has also made arrangements with D. F. King & Co., Inc. to
assist in soliciting proxies from banks, brokers and nominees and has agreed to
pay D. F. King & Co., Inc. approximately $8,000 plus expenses for its services.
If necessary, Vantive may also use several of its regular employees, who will
not be specially compensated, to solicit proxies from Vantive stockholders,
either personally or by telephone, letter or other means.
RECORD DATE AND VOTING RIGHTS
The Vantive board of directors has fixed November 17, 1999 as the record
date for determining the Vantive stockholders entitled to notice of and to vote
at the Vantive special meeting. Therefore, only stockholders of record at the
close of business on the record date will receive notice of, and be able to vote
at, the Vantive special meeting. At the close of business on the record date,
there were 981,928 shares of Vantive common stock outstanding held by about 327
recordholders in addition to approximately
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26,841,132 holders who do not hold shares in their own names. A majority of
these shares must be present at the special meeting, either in person or by
proxy, in order for there to be a quorum at the special meeting. There must be a
quorum in order for the vote on the merger agreement to occur. Each share of
outstanding Vantive common stock entitles its holder to one vote.
Shares of Vantive common stock present in person at the Vantive special
meeting but not voting, and shares for which Vantive has received proxies but
with respect to which holders of these shares have abstained, will be counted as
present at the special meeting for purposes of determining whether or not a
quorum exists. Brokers who hold shares in nominee or "street" name for customers
who are the beneficial owners of the shares may not give a proxy to vote shares
held for these customers on the matters to be voted on at the special meeting
without specific instructions from them. However, broker non-votes will be
counted for purposes of determining whether a quorum exists.
Under Delaware law and Vantive's certificate of incorporation, holders of a
majority of the outstanding shares of Vantive common stock entitled to vote at
the Vantive special meeting must vote for the merger agreement in order for it
to be adopted by Vantive.
Because approval of the merger agreement requires the affirmative vote of
holders of a majority of the outstanding shares of Vantive common stock entitled
to vote at the special meeting, abstentions and broker non-votes will have the
same effect as votes against approving the merger agreement. Therefore, the
Vantive board of directors urges stockholders to complete, date and sign the
accompanying proxy and return it promptly in the enclosed, postage-paid
envelope.
As of the record date, Vantive's directors and executive officers
beneficially owned approximately 420,000 shares of Vantive common stock,
entitling them to exercise about 1.5% of the voting power of the Vantive common
stock entitled to vote at the special meeting. Vantive expects that each of
these directors and/or executive officers will vote his or her shares for the
merger agreement.
More information about the beneficial ownership of Vantive common stock by
those who own more than 5% of the stock, and more detailed information about the
beneficial ownership of Vantive common stock by Vantive's directors and
executive officers, can be found in Vantive's annual report on Form 10-K for the
year ended December 31, 1998, incorporated into this proxy statement/prospectus
by reference. See "Where You Can Find More Information."
RECOMMENDATION OF THE VANTIVE BOARD
The Vantive board of directors has unanimously approved the merger
agreement and the proposed merger and other transactions described in the merger
agreement. The Vantive board believes that the merger agreement is in the best
interests of Vantive and its stockholders and recommends that Vantive
stockholders vote "FOR" the merger agreement. See "The Merger -- Recommendation
of the Vantive Board of Directors and Vantive's Reasons for the Merger."
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THE MERGER
This section of the proxy statement/prospectus describes the most
significant aspects of the merger, including the principal provisions of the
merger agreement and the option agreement between Vantive and PeopleSoft. The
following discussion which includes a summary of the significant terms and
provisions of the merger agreement and the option agreement is qualified by
reference to the merger agreement and the option agreement. The merger agreement
is attached as Appendix A and the option agreement is attached as Appendix B to
this proxy statement/prospectus, each of which is incorporated herein by
reference. Other than statements of historical facts, statements made in this
section including statements as to the benefits expected to result from the
merger and as to future financial performance and the analyses performed by the
financial advisors of Vantive and Peoplesoft are forward-looking statements.
Actual results could differ significantly from those anticipated in these
forward-looking statements as a result of various factors, including those set
forth in "Risk Factors" and elsewhere in this proxy statement/prospectus.
BACKGROUND OF THE MERGER
As a regular part of their business plans PeopleSoft and Vantive have from
time to time each considered opportunities for expanding and strengthening their
technology, products, research and development capabilities and distribution
channels, including strategic acquisitions, business combinations, investments,
licensing and development agreements and joint ventures.
Since December 1995, PeopleSoft and Vantive have been customers of each
other. On November 16, 1996 the two companies furthered their relationship with
the execution of a joint development and integration agreement relating to a
field service product. On August 18, 1998 the two companies entered into a
software alliance program master agreement that replaced all previous
agreements. As part of the agreement Vantive was designated a "preferred
partner" of PeopleSoft for the front office applications market and became
entitled to all the rights such designation confers including but not limited to
potential sales leads, access to the PeopleSoft alliance connection and use of
the PeopleSoft Global Alliance Program logo. On September 30, 1998 the two
companies signed an alliance agreement which gave PeopleSoft the right to
distribute up to $800,000 of specified Vantive products in the United States.
From time to time, representatives from the two companies met to further those
agreements.
On July 12, 1999, Craig Conway, President and Chief Executive Officer of
PeopleSoft and Rick Bergquist, Chief Technology Officer of PeopleSoft, met with
Thomas L. Thomas, Chief Executive Officer of Vantive at PeopleSoft's
headquarters in Pleasanton, California. The purpose of the meeting was to
discuss the potential expansion of the current partnership between the two
companies to include original equipment manufacturer agreements and joint
marketing programs. As a result of this meeting, on July 19, 1999, the
development teams of both companies met at Vantive's headquarters in Santa Clara
to review their products and see what could be done with the two products to
enhance the companies' respective competitive positions.
In mid-August, 1999, PeopleSoft hired Goldman Sachs & Co. to assist
PeopleSoft in exploring its strategic alternatives, including potential
partnerships or business combinations, in a variety of market segments.
On or about September 10, 1999, a meeting of members of PeopleSoft's key
management team was held at which Messrs. Conway and Bergquist and Stephen Hill,
Acting Chief Financial Officer, Howard Gwin, Executive Vice
President -- Worldwide Operations, Baer Tierkel, Senior Vice
President -- Strategy and Business Development, Michael Gioja, Executive Vice
President -- Development, Jeff Carr, Senior Vice President -- Global Marketing,
Anne Jordan, Senior Vice President and General Counsel, and David Thompson,
Chief Information Officer, discussed possible strategic business combinations
for PeopleSoft, including a transaction with Vantive.
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On September 17, 1999, Vantive's board held a telephonic meeting with a
general discussion of strategic matters, including a brief mention of meetings
with PeopleSoft.
On September 24, 1999, Messrs. Conway, Hill and Tierkel and Ms. Jordan,
while attending an off site management team meeting in Marina del Rey,
California, met separately and discussed various proposed transactions. At this
meeting management decided to approach Vantive about a possible combination. Mr.
Conway made a telephone call to Mr. Thomas suggesting that they meet to discuss
a potential business combination.
On September 25, 1999, Mr. Conway met with Mr. Thomas at a restaurant in
Palo Alto, California, to discuss a potential merger of the two companies and to
determine a preliminary valuation basis for the proposed business combination.
Messrs. Conway and Thomas had a general discussion regarding valuation and
agreed to continue discussions.
On September 26, 1999, Mr. Thomas called Mr. Conway and they agreed to
continue exploratory discussions and to begin assembling teams on both sides to
prepare executive presentations.
On September 27, 1999, Messrs. Conway and Thomas met and discussed a
possible merger with Vantive. In connection with these discussions, both parties
executed a confidentiality agreement, which was subsequently replaced.
During the week of September 27, Mr. Thomas and Mr. Conway had several
telephone conversations regarding the companies' interest in pursuing merger
discussions. In addition, Credit Suisse First Boston, Vantive's financial
advisor, held several discussions with Goldman Sachs regarding the schedule for
financial and business due diligence.
On October 1, 1999, Mr. Thomas called Mr. Conway and informed him of the
preliminary financial results of Vantive's third quarter.
On October 2 and 3, 1999, during internal meetings at Vantive's
headquarters, representatives of Credit Suisse First Boston, Mr. Thomas, Leonard
LeBlanc, Chief Financial Officer, David Schellhase, General Counsel, Catherine
Frye, Vice President of Business Development, Brian Tuller, Director of Product
Marketing, James Reno, Chief Technology Officer, Guy DuBois, Vice President of
International Operations and Michael Loo, Vice President of Finance discussed
the prospect of a business combination with PeopleSoft and prepared for due
diligence meetings.
On October 4, 1999, a meeting between the senior managers of both
companies, their financial advisors and outside legal counsel took place in
Pleasanton, California to provide overviews of the organizations. In attendance
for PeopleSoft were Messrs. Conway, Hill, Gwin, and Tierkel, Ms. Jordan, Philip
Wilmington, Senior Vice President -- Americas Operations, Faith Richardson,
Manager of Corporate Development and Dave Sankaran, Vice President -- Finance,
Global Operations. In attendance for Vantive were Messrs. Thomas, LeBlanc, Reno,
Schellhase, Loo, Tuller and DuBois. Also in attendance were representative of
Gibson, Dunn & Crutcher LLP, PeopleSoft's legal counsel, Goldman Sachs, Gray
Cary Ware & Freidenrich LLP, Vantive's legal counsel, and Credit Suisse First
Boston. At the meeting, PeopleSoft's and Vantive's executives made presentations
regarding their respective businesses and product strategies. Also on October 4,
1999, PeopleSoft's board held a telephonic meeting at which the board authorized
management to engage in due diligence and complete negotiating the terms of the
transaction and instructed Mr. Conway to execute a formal engagement letter with
Goldman Sachs as PeopleSoft's financial advisor with respect to the proposed
transaction.
On October 5, 1999, Vantive and PeopleSoft executed a new confidentiality
agreement, and Gibson, Dunn & Crutcher distributed drafts of the proposed merger
agreement and stock option agreement to the parties for their review.
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During the period beginning on October 5, 1999 through October 11, 1999,
the parties, their financial advisors and their legal counsel conducted due
diligence.
In the evening of October 5, 1999, Vantive's board of directors held a
special meeting to discuss the strategic benefits to Vantive and its
stockholders of a combined company as well as the prospects of Vantive as a
stand-alone company. After extensive discussion, the board directed Mr. Thomas
to continue the discussions with PeopleSoft.
On October 7, 1999, after conferring with Mr. Hill and Ms. Jordan,
representatives of Gibson, Dunn & Crutcher and Goldman Sachs discussed the terms
of the merger agreement and the stock option agreement with representatives of
Gray Cary Ware & Freidenrich and Credit Suisse First Boston and Patricia Timm,
Corporate Counsel for Vantive.
On October 8, 1999, the PeopleSoft transaction team reviewed the status of
the negotiations and due diligence with Mr. Conway. That afternoon, after
conferring with Mr. Hill and Ms. Jordan, representatives of Gibson, Dunn &
Crutcher continued to discuss the terms of the merger agreement and the stock
option agreement with representatives of Vantive, Gray Cary Ware & Freidenrich
and Credit Suisse First Boston.
On October 8, 1999, at a special telephonic meeting, PeopleSoft's board,
among other things, discussed the status of the proposed transaction with
Vantive. Members of the board discussed the strategic advantages to PeopleSoft
that would result from a merger with Vantive. Mr. Conway presented to the board
a summary of all discussions with Vantive, Ms. Jordan updated the board on the
preliminary results of the due diligence and the board provided Mr. Conway some
guidance about the circumstances under which PeopleSoft should continue
discussions. The board approved a resolution authorizing a transaction within
specified parameters, including a deal structure involving stock and the
assumption of outstanding options, convertible debt and other rights to acquire
Vantive common stock. A representative of Goldman Sachs presented to the board
considerations relevant to determination of the exchange ratio for the issuance
of PeopleSoft shares of common stock to Vantive stockholders and the assumption
of outstanding options, convertible debt and any such other rights. Based on
that information, the board directed Mr. Conway to continue discussions.
On the morning of October 9, 1999, Mr. Conway met with Mr. Thomas to
discuss the terms of the proposed transaction, including the exchange ratio.
On October 9, 1999, Vantive held a special meeting of the board of
directors to discuss the potential transaction. At that meeting, representatives
of Gray Cary Ware & Freidenrich made a presentation on the significant terms and
conditions of the draft merger agreement and reviewed the board's fiduciary
duties with respect to considering a business combination transaction.
Representatives of Credit Suisse First Boston reviewed with the board the
financial terms of the proposed transaction and also discussed the possibility
of soliciting the potential interest of other companies with whom Vantive could
combine. The Vantive board, management and financial and legal advisors
discussed the advantages and disadvantages of the potential transaction with
PeopleSoft, all of which are discussed below under "Recommendation of the
Vantive Board and Vantive's Reasons for the Merger." The board also discussed
the advantages and disadvantages associated with a combination with another
company or remaining independent. Credit Suisse First Boston presented a
financial analysis of the proposed exchange ratio. At that time, the board
considered a fixed exchange ratio of 0.825, which implied a valuation for
Vantive of $14.23 per share, based upon the October 8, 1999 closing price of
$17.25 per share of PeopleSoft. After extensive discussion, the board determined
to continue discussions with PeopleSoft and provided guidance and parameters for
the negotiations.
In the evening of October 9, 1999 and throughout the day on October 10,
1999, representatives of Vantive, PeopleSoft, Credit Suisse First Boston,
Goldman Sachs, Gray Cary Ware & Freidenrich and
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Gibson, Dunn & Crutcher held various telephonic conference calls to continue
negotiating the terms of the transaction, including provisions in the draft
merger agreement and the option agreement.
On October 10, 1999, Vantive held a special meeting of the board of
directors by teleconference. Gray Cary Ware & Freidenrich updated the board on
the terms of the merger agreement. Credit Suisse First Boston delivered its
opinion, which was subsequently confirmed by delivery of a written opinion dated
October 11, 1999, to the effect, that as of the date of the opinion and based
upon and subject to the matters stated in the opinion, the exchange ratio
provided for in the merger was fair, from a financial point of view, to the
holders of Vantive common stock. The board reviewed the advantages and
disadvantages of the proposed merger, as well as the alternative of remaining
independent, which had been discussed at the meeting held on October 9, 1999.
After extensive discussion, the Vantive board approved an exchange ratio of
0.825, and instructed management to continue discussions with PeopleSoft and
approved a resolution authorizing Mr. Thomas to execute the merger agreement
upon negotiation of satisfactory terms.
On October 10, 1999, at a special meeting held via teleconference,
PeopleSoft's board, among other things, discussed the status of the proposed
transaction with Vantive, Mr. Hill presented to the board a summary of all
discussions with Vantive, Goldman Sachs advised the board regarding the
financial aspects of the transaction and Kenneth R. Lamb of Gibson, Dunn &
Crutcher presented the PeopleSoft board with the proposed final terms of the
transactions. The board approved a resolution authorizing the transaction on
that basis.
On October 11, 1999, the parties finalized the merger agreement, the stock
option agreement and all exhibits. Vantive, PeopleSoft and PeopleSoft's
subsidiary then executed the merger agreement and the stock option agreement and
publicly announced the execution prior to the open of the stock market on
October 11, 1999.
PEOPLESOFT'S REASONS FOR THE MERGER
PeopleSoft's strategic intent is to grow its business and provide its
customers with completely integrated customer solutions through internal
development, strategic acquisitions, business combinations and alliances.
PeopleSoft's board of directors approved the merger and determined that the
merger would provide PeopleSoft with a strategic presence in the customer
relationship management software, or CRM, market segment and that Vantive's
leadership in key market segments would complement PeopleSoft's leadership in
enterprise client/server and Internet based application software products. In
approving the merger PeopleSoft's board considered the following expected
benefits:
- PeopleSoft would acquire Vantive's customer relationship management
software solution, otherwise known as CRM, which is one of the broadest
CRM solutions available in the market today encompassing marketing,
sales, customer service, field service, help desk and web self-service,
and, similar to PeopleSoft's enterprise software suite, is highly
scalable across multiple databases and operating systems;
- PeopleSoft would acquire a CRM solution which is very highly rated by
industry analysts and has consistently achieved a top rating for customer
satisfaction;
- the merger will enable the combined company to provide a comprehensive
360 degree enterprise view for managing and enhancing relationships with
customers by combining Vantive's CRM solution with PeopleSoft's
enterprise application software;
- PeopleSoft believes Vantive's CRM architecture is more compatible with
PeopleSoft's own architecture;
- the merger will provide PeopleSoft immediate access to Vantive's
employees who possess specific CRM domain expertise and technical skills,
including computer telephony integration and mobile computing;
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- PeopleSoft will be able to expand internationally more quickly because of
Vantive's strong presence, leading market shares and products
availability in key international markets; and
- PeopleSoft will gain access to Vantive's customer base; and
- both companies have a common culture, including a shared commitment to
maintaining high customer satisfaction levels and close geographic
proximity, which will facilitate the integration of PeopleSoft's and
Vantive's operations and support functions.
The above discussion of reasons for the merger includes forward-looking
statements about possible or assumed future results of operations of the
combined company and the performance of the combined company after the merger.
Future results and performance are subject to risks and uncertainties, which
could cause such results and performance to differ significantly from those
expressed in these statements. For a discussion of these risks and
uncertainties, and other factors that could affect future results and
performance, see "Risk Factors."
RECOMMENDATION OF THE VANTIVE BOARD OF DIRECTORS AND VANTIVE'S REASONS FOR THE
MERGER
The Vantive board of directors believes that the merger is advisable and
fair to and in the best interests of Vantive and Vantive's stockholders.
Accordingly, the Vantive board of directors has unanimously approved the merger
agreement and unanimously recommends that Vantive stockholders vote "FOR" the
adoption of the merger agreement and the transactions contemplated by that
agreement, including the merger.
The Vantive board believes that the merger will be beneficial to Vantive
and its stockholders for the following reasons:
- the merger is expected to provide Vantive stockholders with an attractive
price for their Vantive shares;
- the merger is expected to potentially reduce stockholder risk after the
merger as a result of the greater resources of the combined companies;
- the merger is expected to increase value for Vantive's customers through
a diversification of product and service offerings;
- the merger is expected to enhance the opportunity to realize Vantive's
strategic objective of diversifying and building upon its strengths in
eBusiness because of the complementary nature of the product and service
offerings of PeopleSoft and Vantive;
- the merger is expected to provide a better opportunity for Vantive to
attract and retain qualified personnel;
- the merger is expected to provide access to PeopleSoft's global sales
force; and
- the merger is expected to provide Vantive immediate access to specific
technical skills and depth of technical talent that PeopleSoft possesses.
In arriving at its decision to approve the merger agreement and the merger,
the Vantive board considered a number of factors. In particular, the Vantive
board considered:
- the strategic benefits expected from the merger, and the anticipated
effect of the merger on long-term stockholder value, in light of the
business, financial condition, results of operations and prospects of
Vantive and PeopleSoft, the current economic and industry environment,
and the risks and uncertainties of proceeding as a separate stand-alone
company;
- the fact that the exchange ratio represented a premium of approximately
60% to Vantive stockholders based on the closing prices of PeopleSoft
common stock and Vantive common stock
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on October 8, 1999 and a premium based on the average closing prices of
PeopleSoft and Vantive common stock in recent historical periods;
- the immediate access to specific technical skills and depth of technical
talent that PeopleSoft possesses;
- the complementary characteristics of the respective business and
management philosophies and corporate cultures of Vantive and PeopleSoft;
- the potential benefits of the merger to Vantive's customers and employees
such as gaining access to PeopleSoft's more extensive product offerings;
- the potential for reduced stockholder risk after the merger as a result
of the diversification of product and service offerings and revenue
bases;
- the fairness to Vantive of the terms and conditions of the merger
agreement, which were the product of extensive arm's length negotiations;
- the financial presentation of Credit Suisse First Boston, including its
opinion to the effect that as of the date of the opinion and based upon
the matters stated in the opinion, the exchange ratio was fair to the
holders of Vantive common stock from a financial point of view;
- other possible strategic advantages for Vantive; and
- the fact that the merger is expected to qualify as a tax-free
reorganization, generally enabling Vantive stockholders to exchange their
Vantive common stock for PeopleSoft common stock without having current
taxes due.
In assessing the merger, the Vantive board considered a number of sources
of information, including:
- historical information concerning the respective businesses, financial
performance, condition, operations, technology, products, properties,
assets, management style, competitive position and trends and prospects
of PeopleSoft and Vantive;
- SEC filings by PeopleSoft;
- current and historical market prices, volatility and trading data for the
two companies;
- information and advice based on the results of due diligence
investigations by members of Vantive's management and Vantive's legal,
financial and accounting advisors concerning the business, financial
performance, condition, operations, technology, products, properties,
assets, competitive position and trends and prospects of PeopleSoft,
trends in PeopleSoft's business and financial results and the
capabilities of PeopleSoft's management team;
- reports from management relating to the prospects for successful
integration of the two companies; and
- reports by Gray Cary Ware & Freidenrich on the terms of the merger
agreement and related agreements, and an evaluation of those terms in
comparison to the terms of other recent mergers and acquisitions.
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The Vantive board also identified and considered a number of uncertainties
and risks in its deliberations concerning the merger, including, but not limited
to:
- the risk that the potential benefits sought in the merger might not be
fully realized, if at all;
- the potential effects of the public announcement of the merger on
Vantive's stock price, sales, customer relations and operating results
and Vantive's ability to attract and retain key management, engineers,
salespeople and other technical and non-technical personnel;
- the risk of market confusion and potential delay or reduction in or
cancellation of product or service contracts;
- the risk that PeopleSoft would be unable to achieve growth or sustain
profitability after the merger;
- the potential difficulties in the technical integration of Vantive's and
PeopleSoft's product and service offerings;
- the effect of the covenant not to solicit other bidders and limitations
on the ability of Vantive to consider competing offers prior to
consummation of the merger;
- the provisions in the merger agreement that require payments to be made
if the merger agreement is terminated;
- the effect of the option agreement on Vantive's capital structure and the
fact that by entering into the option agreement Vantive would likely be
precluded from being acquired in a pooling of interests transaction by a
third party; and
- the other risks associated with the businesses of Vantive and PeopleSoft
and the merger described under "Risk Factors" in this proxy
statement/prospectus.
The Vantive board of directors also evaluated PeopleSoft's requirement
before entering into any agreement that Vantive agree to the provisions of the
merger agreement limiting Vantive's rights to consider and negotiate acquisition
proposals with others. It appeared unlikely to the Vantive board that Vantive
would be able to enter into an agreement with PeopleSoft without these
provisions. In the view of the Vantive board, the potentially negative factors,
either individually or collectively, did not outweigh the potential benefits to
the Vantive stockholders of the merger.
The above discussion of the information and factors considered by the
Vantive board is not intended to be exhaustive but is believed to include all
significant factors considered by it. In view of the variety of factors
considered in connection with its evaluation of the merger, the Vantive board
did not find it practicable to and did not quantify or otherwise assign relative
or specific weight to the factors considered in reaching its determination. In
addition, individual members of the Vantive board may have given different
weight to different factors.
The Vantive board of directors is unanimous in its recommendation that
Vantive stockholders vote for approval and adoption of the merger agreement. For
a discussion of the interests of certain executive officers and directors of
Vantive in the merger, see "-- Interests of Vantive's Management in the Merger
and Potential Conflicts of Interests."
INTERESTS OF VANTIVE'S MANAGEMENT IN THE MERGER AND POTENTIAL CONFLICTS OF
INTERESTS
Some members of Vantive's management have interests in the merger that are
in addition to their interests as Vantive stockholders generally. The Vantive
board was aware of these interests and considered them in approving the merger
agreement.
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The directors, officers and principal stockholders of Vantive and their
associates may have had in the past, and may have in the future, transactions in
the ordinary course of business with PeopleSoft. Any of these transactions were,
and are expected to be, on substantially the same terms as those between
PeopleSoft and others for similar transactions.
As a result of the merger, PeopleSoft will assume outstanding options to
purchase Vantive common stock under Vantive's stock option plans.
Employment Agreements. At the time it entered into the merger agreement,
PeopleSoft also entered into employment agreements with certain Vantive
employees, including Ms. Alexander, Mr. DuBois, Eric Miles and William Morton.
Each of these employees will commence employment with PeopleSoft or one of its
subsidiaries on the day after the closing of the merger and will serve in
roughly the same capacities as he or she serves in his or her current position
with Vantive. Each will also be entitled to a specified annual base salary and a
bonus, provided that the employee and the combined company reach certain
predetermined goals.
The employment agreements for Ms. Alexander and Messrs. Miles and Morton
provide that each is an at-will employee and either the employee or PeopleSoft
may terminate the employment relationship at any time. Mr. DuBois' employment
agreement is for an unlimited period and unless terminated for cause, may only
be terminated upon three months notice.
The employment agreements further entitle each employee to specified
severance benefits if their employment is terminated without cause. If
terminated without cause within the first 24 months after their start date, each
of Mr. Miles and Ms. Alexander would be entitled to four months base salary in
effect on the date of termination. Mr. Miles and Ms. Alexander would also be
entitled to the benefits of Vantive's executive retention and severance plan, as
described below during the times specified in that plan. If terminated without
cause within the first 12 months after his start date, Mr. Morton would be
entitled to six months base salary in effect on the date of his termination. If
terminated without cause, Mr. DuBois would be entitled to the benefits provided
for in his current employment agreement with Vantive as described below. Mr.
DuBois would also receive certain benefits upon a change in control as outlined
in his Vantive employment agreement and described below.
In addition, Messrs. DuBois and Miles and Ms. Alexander have each agreed in
their employment agreements not to compete with or solicit the employees or
customers of PeopleSoft or post-merger Vantive for 12 months following any
termination of employment. Mr. Morton has agreed not to solicit the employees or
customers of PeopleSoft or post-merger Vantive for six months following a
termination of employment without cause.
Executive Retention and Severance Plan. The Vantive executive retention and
severance plan provides for certain payments and accelerated vesting of stock
options to a number of Vantive executives where their employment is terminated
upon a change in control. The merger will be a change in control for purposes of
the Vantive executive retention and severance plan. The executive will be deemed
to have been terminated upon a change in control if:
- the executive is terminated for any reason other than cause at any time
during the time period beginning on the date 30 days prior to the date of
the merger agreement until 12 months, or 18 months in the case of chief
executive officer, following the effective date of the merger; or
- the executive resigns from Vantive for good reason as defined in the plan
within 12 months following the effective date of the merger, or 18 months
in the case of the chief executive officer.
Subject to a number of conditions, if terminated upon a change in control,
Mr. Thomas would receive credit for three years' additional service towards the
vesting of his options, vesting in full of certain shares of restricted stock,
payment of two years' base salary and an amount equal to his prior year's bonus;
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Messrs. LeBlanc and DuBois, considered executive vice presidents under the plan,
would each receive credit for three years' additional service towards the
vesting of their options and payment of two years' base salary and an amount
equal to 50% of their prior year's bonuses; and Ms. Alexander, Messrs. Loo,
Miles, and Schellhase, Donna Taylor and James Whitaker would each receive credit
for two years' additional service towards the vesting of his or her options and
payment of one year's base salary and an amount equal to 50% of his or her prior
year's bonus.
In the event that any payment or benefit received by the executive under
the Vantive executive retention and severance plan would subject the executive
to the golden parachute excise tax and Vantive to the non-deductibility
provisions of the Internal Revenue Code, the executive may, in his or her sole
discretion, elect to reduce the amounts of any benefits and payments under the
plan in order to avoid triggering such provisions.
Acceleration of Stock Options. In addition to the accelerated vesting under
the executive retention and severance plan, in the event of a change in control,
Ms. Alexander, Ms. Taylor and Messrs. DuBois, LeBlanc, Loo, Schellhase and
Whitaker will be given credit for an additional 12 months towards the vesting of
his or her options as of the date of the change in control.
Severance Arrangements. Some of Vantive's employees have severance
arrangements with Vantive in the event of their termination for any reason other
than voluntary resignation, death, disability or just cause. Upon a qualifying
termination,
- Mr. LeBlanc would be entitled to receive six months of paid COBRA
coverage of medical, dental and other insurance, 12 months of accelerated
vesting on stock options, and a salary continuation of six months;
- Mr. DuBois would be entitled to receive nine months of paid health
coverage, nine months of accelerated vesting on stock options and a
salary and on-target bonus continuation of nine months. Mr. DuBois may
also be entitled to certain statutory benefits under applicable law; and
- Mr. Whitaker would be entitled to three months of paid COBRA coverage of
medical, dental and other insurance and a salary continuation of three
months.
Indemnification; Directors' and Officers' Insurance. The merger agreement
provides that, after the merger, PeopleSoft will, as permitted by law, indemnify
persons who were Vantive's directors or officers before the merger who suffer
liabilities or losses from any threatened or actual claim or proceeding based on
the merger agreement or on the fact that the person was a Vantive director or
officer. The merger agreement further provides that PeopleSoft will cause the
Vantive officers and directors immediately prior to the merger to be covered by
Vantive's directors' and officers' liability insurance policy or a similar
policy for six years after the merger. In addition, PeopleSoft has agreed to
honor Vantive's agreements in effect on October 11, 1999 and charter provisions
in effect on the closing date to indemnify its officers and directors.
PeopleSoft's indemnification of Vantive's directors or officers may be limited
to Vantive's net worth as of June 30, 1999.
OPINION OF VANTIVE'S FINANCIAL ADVISOR
Credit Suisse First Boston has acted as Vantive's financial advisor in
connection with the merger. Vantive selected Credit Suisse First Boston based on
Credit Suisse First Boston's experience, expertise and reputation, and
familiarity with Vantive's business. Credit Suisse First Boston is an
internationally recognized investment banking firm and is regularly engaged in
the valuation of businesses and securities in connection with mergers and
acquisitions, leveraged buyouts, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for corporate and other purposes.
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<PAGE> 51
In connection with Credit Suisse First Boston's engagement, Vantive
requested that Credit Suisse First Boston evaluate the fairness, from a
financial point of view, to the holders of Vantive common stock of the exchange
ratio provided for in the merger. On October 10, 1999, at a meeting of the
Vantive board of directors held to evaluate the merger, Credit Suisse First
Boston rendered to the Vantive board of directors an oral opinion, which opinion
was confirmed by delivery of a written opinion dated October 11, 1999, the date
of the merger agreement, to the effect that, as of that date and based on and
subject to the matters described in its opinion, the exchange ratio was fair,
from a financial point of view, to the holders of Vantive common stock.
The full text of Credit Suisse First Boston's written opinion dated October
11, 1999 to the Vantive board of directors, which sets forth, among other
things, the procedures followed, assumptions made, matters considered and
limitations on the review undertaken, is attached as Appendix C and is
incorporated into this document by reference. Holders of Vantive common stock
are urged to, and should, read this opinion carefully and in its entirety.
Credit Suisse First Boston's opinion is addressed to the Vantive board of
directors and relates only to the fairness of the exchange ratio from a
financial point of view, does not address any other aspect of the merger or any
related transaction and does not constitute a recommendation to any stockholder
as to any matter relating to the merger. The summary of Credit Suisse First
Boston's opinion in this proxy statement/prospectus is qualified in its entirety
by reference to the full text of the opinion.
In arriving at its opinion, Credit Suisse First Boston reviewed the merger
agreement, as well as publicly available business and financial information
relating to Vantive and PeopleSoft. Credit Suisse First Boston also reviewed
other information relating to Vantive and PeopleSoft, including publicly
available financial forecasts, and met with the managements of Vantive and
PeopleSoft to discuss the businesses and prospects of Vantive and PeopleSoft.
Credit Suisse First Boston also considered financial and stock market data of
Vantive and PeopleSoft, and compared those data with similar data for other
publicly held companies in businesses Credit Suisse First Boston deemed similar
to those of Vantive and PeopleSoft. Credit Suisse First Boston considered, to
the extent publicly available, the financial terms of other business
combinations and other transactions which have recently been effected. Credit
Suisse First Boston also considered other information, financial studies,
analyses and investigations and financial, economic and market criteria which it
deemed relevant.
In connection with its review, Credit Suisse First Boston did not assume
any responsibility for independent verification of any of the foregoing
information and relied on such information being complete and accurate in all
material respects. With respect to the publicly available financial forecasts,
the managements of Vantive and PeopleSoft reviewed the forecasts and informed
Credit Suisse First Boston that they believed that the forecasts represented
reasonable estimates and judgments as to the future financial performance of
Vantive and PeopleSoft. Credit Suisse First Boston also assumed, with the
consent of the Vantive board of directors, that the merger would be treated as a
pooling of interests in accordance with generally accepted accounting principles
and as a tax-free reorganization for federal income tax purposes. In addition,
Credit Suisse First Boston was not requested to make, and did not make, an
independent evaluation or appraisal of the assets or liabilities, contingent or
otherwise, of Vantive or PeopleSoft, nor was Credit Suisse First Boston
furnished with any evaluations or appraisals. The Credit Suisse First Boston
opinion is necessarily based upon information available to it, and financial,
economic, market and other conditions as they exist and can be evaluated, on the
date of the Credit Suisse First Boston opinion. Credit Suisse First Boston did
not express any opinion as to the actual value of the PeopleSoft common stock
when issued pursuant to the merger or the prices at which the PeopleSoft common
stock will trade subsequent to the merger. In connection with its engagement,
Credit Suisse First Boston was not requested to, and did not, solicit third
party indications of interest regarding the possible acquisition of all or a
part of Vantive or its assets.
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<PAGE> 52
In preparing its opinion to the Vantive board of directors, Credit Suisse
First Boston performed a variety of financial and comparative analyses,
including those described below. The summary of Credit Suisse First Boston's
analyses described below is not a complete description of the analyses
underlying Credit Suisse First Boston's opinion. The preparation of a fairness
opinion is a complex process involving various determinations as to the most
appropriate and relevant methods of financial analyses and the application of
those methods to the particular circumstances and, therefore, a fairness opinion
is not readily susceptible to partial analysis or summary description. In
arriving at its opinion, Credit Suisse First Boston made qualitative judgments
as to the significance and relevance of each analysis and factor that it
considered. Accordingly, Credit Suisse First Boston believes that its analyses
must be considered as a whole and that selecting portions of its analyses and
factors or focusing on information presented in tabular format, without
considering all analyses and factors or the narrative description of the
analyses, could create a misleading or incomplete view of the processes
underlying its analyses and opinion.
In its analyses, Credit Suisse First Boston considered industry
performance, regulatory, general business, economic, market and financial
conditions and other matters, many of which are beyond the control of Vantive
and PeopleSoft. No company, transaction or business used in Credit Suisse First
Boston's analyses as a comparison is identical to Vantive or PeopleSoft or the
merger, and an evaluation of the results of those analyses is not entirely
mathematical. Rather, the analyses involve complex considerations and judgments
concerning financial and operating characteristics and other factors that could
affect the acquisition, public trading or other values of the companies,
business segments or transactions being analyzed. The estimates contained in
Credit Suisse First Boston's analyses and the ranges of valuations resulting
from any particular analysis are not necessarily indicative of actual values or
predictive of future results or values, which may be significantly more or less
favorable than those suggested by the analyses. In addition, analyses relating
to the value of businesses or securities do not purport to be appraisals or to
reflect the prices at which businesses or securities actually may be sold.
Accordingly, Credit Suisse First Boston's analyses and estimates are inherently
subject to substantial uncertainty.
Credit Suisse First Boston's opinion and financial analyses were only one
of many factors considered by the Vantive board of directors in its evaluation
of the merger and should not be viewed as determinative of the views of the
Vantive board of directors or management with respect to the merger or the
exchange ratio.
The following is a summary of the material financial analyses performed by
Credit Suisse First Boston in connection with the preparation of its opinion and
reviewed with the Vantive board of directors at a meeting of the Vantive board
of directors held on October 9, 1999. THE FINANCIAL ANALYSES SUMMARIZED BELOW
INCLUDE INFORMATION PRESENTED IN TABULAR FORMAT. IN ORDER TO FULLY UNDERSTAND
CREDIT SUISSE FIRST BOSTON'S FINANCIAL ANALYSES, THE TABLES MUST BE READ
TOGETHER WITH THE TEXT OF EACH SUMMARY. THE TABLES ALONE DO NOT CONSTITUTE A
COMPLETE DESCRIPTION OF THE FINANCIAL ANALYSES. CONSIDERING THE DATA SET FORTH
IN THE TABLES BELOW WITHOUT CONSIDERING THE FULL NARRATIVE DESCRIPTION OF THE
FINANCIAL ANALYSES, INCLUDING THE METHODOLOGIES AND ASSUMPTIONS UNDERLYING THE
ANALYSES, COULD CREATE A MISLEADING OR INCOMPLETE VIEW OF CREDIT SUISSE FIRST
BOSTON'S FINANCIAL ANALYSES.
Historical Stock Price Analysis. Credit Suisse First Boston reviewed the
prices at which the Vantive common stock traded since Vantive's initial public
offering on August 15, 1995 through October 8, 1999. Credit Suisse First Boston
noted that the all-time high price for Vantive common stock was $42.25 on
October 16, 1996 and the all-time low price for Vantive common stock was $5.00
on October 8, 1998.
Credit Suisse First Boston also reviewed the prices at which the PeopleSoft
common stock traded since PeopleSoft's initial public offering on November 19,
1992 through October 8, 1999. Credit Suisse First Boston noted that the all-time
high price for PeopleSoft common stock was $55.94 on April 21, 1998 and the
all-time low price for PeopleSoft common stock was $1.59 on February 19, 1993.
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<PAGE> 53
Comparative Stock Price Performance. Credit Suisse First Boston reviewed
the recent stock price performance of Vantive and compared such performance with
each of the companies in the enterprise applications software industry listed
below and with the Nasdaq composite index over the period from January 2, 1998
through October 8, 1999. Credit Suisse First Boston also compared the recent
stock price performance of Vantive with an equal-weighted enterprise resource
planning software index comprised of the following companies during the same
period: SAP AG, Oracle Corporation, J.D. Edwards & Company and Baan Company N.V.
The results of this analysis were as follows:
<TABLE>
<CAPTION>
INCREASE/(DECREASE)
IN MARKET PRICE PER SHARE
COMPANY OR INDEX FROM 1/2/98 TO 10/8/99
---------------- -------------------------
<S> <C>
Vantive..................................................... (67)%
Siebel Systems, Inc......................................... 322%
Clarify, Inc................................................ 295%
Remedy Corporation.......................................... 28%
PeopleSoft.................................................. (54)%
Pegasystems Inc............................................. (57)%
Nasdaq Composite Index...................................... 83%
Enterprise Resource Planning Software Index................. 96%
</TABLE>
Peer Group Comparison. Credit Suisse First Boston compared equity market
capitalization, stock price as a multiple of earnings per share, commonly
referred to as EPS, and aggregate market capitalization as a multiple of
revenues for each of Vantive and PeopleSoft with corresponding information for
the following companies in the enterprise applications software industry:
<TABLE>
<CAPTION>
CRM SOFTWARE COMPANIES ERP SOFTWARE COMPANIES
---------------------- ----------------------
<S> <C>
- - Siebel Systems, Inc. - SAP AG
- - Clarify, Inc. - Oracle Corporation
- - Remedy Corporation - J.D. Edwards & Company
- - SalesLogix Corporation - Baan Company N.V.
- - UNYX Software Corporation
- - Pegasystems Inc.
</TABLE>
For the groups of companies, the mean of the group is shown. The multiples
are based on a compilation of publicly available information and consensus
forecasts by securities research analysts. In particular, such comparison
showed:
<TABLE>
<CAPTION>
MULTIPLE OF SELECTED VALUATION METRICS AS OF OCTOBER 8, 1999
--------------------------------------------------------------------------
SIEBEL CLARIFY, CRM ERP
VALUATION METRIC VANTIVE PEOPLESOFT SYSTEMS, INC. INC. SOFTWARE SOFTWARE
---------------- ------- ---------- ------------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Aggregate Value/
Projected Calendar
1999 Revenue................................ 1.0x 3.0x 11.7x 5.0x 6.5x 5.0x
Aggregate Value/
Projected Calendar
2000 Revenue................................ 0.9x 2.5x 8.3x 3.4x 4.5x 4.2x
Share Price/
Projected Calendar
2000 EPS.................................... 32.7x 66.1x 70.0x 41.9x 45.1x 50.4x
</TABLE>
Historical Exchange Ratio Analysis. Credit Suisse First Boston reviewed the
average of the ratios of the closing stock price for Vantive divided by the
closing stock price for PeopleSoft over various periods beginning January 2,
1998 and ending October 8, 1999 and computed the premium of the exchange ratio
in relation to averages of these ratios. The following table sets forth the
average of the exchange ratios
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<PAGE> 54
over the various periods covered and the premium implied by the exchange ratio
in relation to such averages:
<TABLE>
<CAPTION>
PERCENTAGE PREMIUM
REPRESENTED BY EXCHANGE
AVERAGE EXCHANGE RATIO IN MERGER OVER
PERIOD PRECEDING OCTOBER 8, 1999 RATIO OVER PERIOD HISTORICAL EXCHANGE RATIOS
-------------------------------- ----------------- --------------------------
<S> <C> <C>
October 8, 1999............................................. 0.518x 59.2%
10 trading days............................................. 0.492x 67.7%
30 trading days............................................. 0.517x 59.7%
60 trading days............................................. 0.581x 42.0%
90 trading days............................................. 0.608x 35.7%
180 trading days............................................ 0.631x 30.8%
Since January 2, 1998....................................... 0.547x 50.8%
</TABLE>
Exchange Ratio Premiums Paid Analysis. Credit Suisse First Boston reviewed
the exchange ratios in eight selected relevant stock-for-stock transactions in
the enterprise applications software industry, as well as 131 selected
stock-for-stock transactions in the technology industry. Credit Suisse First
Boston compared the premium implied by the exchange ratios in the selected
transactions to the average of the ratios of the closing stock prices of the
companies involved in each of the selected transactions over the latest twelve
months, 90-day, 60-day, 30-day, 10-day and one-day periods ending the day
preceding the public announcement of the relevant transactions. Credit Suisse
First Boston also calculated the exchange ratio implied by comparing the median
of the premiums observed in each of the selected transactions to the average of
the ratios of the daily closing stock prices of Vantive and PeopleSoft for the
comparable periods ended on October 8, 1999. This analysis indicated the
following:
<TABLE>
<CAPTION>
MEDIAN PERCENTAGE PREMIUM OVER IMPLIED VANTIVE/PEOPLESOFT
AVERAGE HISTORICAL EXCHANGE RATIOS IN EXCHANGE RATIO BASED ON
PERIOD PRECEDING ANNOUNCEMENT SELECTED TRANSACTIONS MEDIAN PREMIUMS
----------------------------- ------------------------------------- --------------------------
<S> <C> <C>
Selected Transactions in the Enterprise
Applications Software Industry
1 Trading Day................................ 20.7% 0.626x
10 trading days.............................. 32.2% 0.650x
30 trading days.............................. 34.4% 0.694x
60 trading days.............................. 36.3% 0.792x
90 trading days.............................. 25.7% 0.764x
Latest twelve months......................... 2.2% 0.587x
Selected Transactions in the Technology Industry
1 Trading Day................................ 26.5% 0.655x
10 trading days.............................. 31.7% 0.648x
30 trading days.............................. 34.3% 0.694x
60 trading days.............................. 33.3% 0.774x
90 trading days.............................. 28.8% 0.782x
Latest twelve months......................... 19.5% 0.686x
</TABLE>
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<PAGE> 55
Selected Transactions Analysis. Credit Suisse First Boston analyzed the
publicly available financial terms of the following 13 publicly announced
transactions involving companies in the enterprise applications software
industry and call center industry, or the "Selected Transactions," as well as
206 transactions in the software industry, or the "Software Transactions":
<TABLE>
<CAPTION>
ACQUIROR TARGET
-------- ------
<S> <C>
- Alcatel Genesys Telecommunications Laboratories, Inc.
- Nortel Networks Corp. Periphonics Corp.
- ADC Telecommunications, Inc. Saville Systems PLC
- Security First Technologies Corp. Edify Corp.
- Lucent Technologies Inc. Kenan Systems Corp.
- Oracle Corp. Concentra Corp.
- Aspect Telecommunications Corp. Voicetek Corp.
- Siebel Systems, Inc. Scopus Technology, Inc.
- International Business Machines Corp. Software Artistry, Inc.
- Cisco Systems, Inc. GeoTel Communications Corp.
- Lucent Technologies Inc. Mosaix, Inc.
- Koninklijke Philips Electronics N.V Voice Control Systems, Inc.
- Baan Company, N.V. Aurum Software, Inc.
</TABLE>
This analysis indicated that the median premium to the closing stock price
of the target company one day and 30 days prior to the announcement of the
transaction paid was approximately 28.6% and 56.6% in the Selected Transactions
and 30.4% and 47.0% in the Software Transactions, as compared to the premium
represented by the nominal price implied by the exchange ratio to the closing
stock price for Vantive one day and 30 days prior to announcement of the merger
of approximately 59.2% and 86.6%. The following table sets forth information
concerning the median multiples of the selected financial metrics paid in these
precedent transactions and the multiple of the same financial metrics for
Vantive implied by the exchange ratio:
<TABLE>
<CAPTION>
MEDIAN MULTIPLE PAID IN
PRECEDENT TRANSACTIONS
----------------------------
SELECTED SOFTWARE MULTIPLE IMPLIED
METRIC TRANSACTIONS TRANSACTIONS BY EXCHANGE RATIO
------ ------------ ------------ -----------------
<S> <C> <C> <C>
Aggregate Transaction Value/
Latest Twelve Months Revenue.............................. 4.5x 3.6x 2.2x
Share Price/Next Twelve Months EPS........................ 42.2x 30.1x 57.0x
</TABLE>
Contribution Analysis. Credit Suisse First Boston analyzed the relative
contributions of Vantive and PeopleSoft to the revenue, gross profit, operating
income and net income of the combined company for estimated calendar years 1999
and 2000, based on estimates prepared by securities research analysts, as well
as for the latest twelve months. Credit Suisse First Boston then analyzed the
pro forma ownership of the combined company implied by Vantive's relative
contribution. This analysis indicated the following:
<TABLE>
<CAPTION>
IMPLIED VANTIVE SHAREHOLDER PRO FORMA
OWNERSHIP LEVEL BASED ON VARIOUS PERIODS
---------------------------------------------------
OPERATING METRIC LATEST 12 MONTHS CALENDAR 1999 CALENDAR 2000
---------------- ---------------- -------------- -------------
<S> <C> <C> <C>
Revenues............................................... 11.2% 12.1% 13.2%
Gross Profit........................................... 12.7% 14.1% 15.2%
Operating Income....................................... 1.8% Not Meaningful 9.9%
Net Income............................................. 2.2% Not Meaningful 9.6%
</TABLE>
Credit Suisse First Boston noted that the pro forma fully diluted ownership
of the Vantive stockholders in the combined company implied by the exchange
ratio was 8.8%.
Pro Forma Earnings Impact Analysis. Credit Suisse First Boston analyzed the
potential pro forma effect of the merger on PeopleSoft's and Vantive's EPS for
estimated calendar years 2000 and 2001. This
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<PAGE> 56
analysis was performed based on a consensus of securities research analysts'
estimates for PeopleSoft and three scenarios for Vantive. The first scenario,
the research analyst case, was based on publicly available research analysts
estimates. The second scenario, the alternative case one, was based on
adjustments to the research analyst case discussed with and reviewed by the
management of Vantive assuming decreased revenue growth and constant operating
margins for Vantive. The third scenario, the alternative case two, was based on
adjustments to the research analyst case discussed with and reviewed by the
management of Vantive assuming increased revenue growth and operating margins
for Vantive. This analysis indicated the following accretion/(dilution) to
PeopleSoft's and Vantive's EPS, both before and after giving effect to potential
benefits and cost savings and other potential synergies anticipated by the
management of Vantive to result from the merger:
<TABLE>
<CAPTION>
ACCRETION/(DILUTION) TO PEOPLESOFT AND VANTIVE EPS
--------------------------------------------------
ESTIMATED CALENDAR 2000 ESTIMATED CALENDAR 2001
----------------------- -----------------------
VANTIVE PEOPLESOFT VANTIVE PEOPLESOFT
-------- ----------- -------- -----------
<S> <C> <C> <C> <C>
Without Synergies:
Research Analyst Case....................................... (14.0%) 1.5% 1.6% (0.1%)
Alternative Case One........................................ 0.8% (0.1%) 117.4% (4.7%)
Alternative Case Two........................................ (42.9%) 7.3% 10.1% (0.8%)
With Synergies:
Research Analyst Case....................................... 16.9% 38.1% 25.9% 23.7%
Alternative Case One........................................ 37.7% 36.5% 171.8% 19.2%
Alternative Case Two........................................ 23.4% 43.8% 36.6% 23.0%
</TABLE>
Potential Future Trading Analysis. Credit Suisse First Boston calculated
the equivalent per share present value of Vantive common stock both on a
stand-alone basis and assuming the merger is consummated. This analysis was
based upon publicly available research analysts estimates and on the alternative
case one and alternative case two estimates, as described above, and assumed a
range of multiples of EPS and discount rates for Vantive on a stand alone basis
and for the combined company. This analysis indicated the following ranges of
approximate equivalent per share present values of Vantive common stock based on
earnings for calendar years 2000 and 2001, both before and after giving effect
to potential revenues, cost savings and other synergies anticipated by Vantive
management to result from the merger:
<TABLE>
<CAPTION>
ESTIMATED PER SHARE PRESENT VALUE FOR VANTIVE
COMMON STOCK
----------------------------------------------
ESTIMATED ESTIMATED
CALENDAR YEAR 2000 CALENDAR YEAR 2001
--------------------- ---------------------
<S> <C> <C>
Vantive Stand Alone......................................... $4.19 - $15.88 $ 4.03 - $18.06
Combined Company -- Without Synergies....................... $4.22 - $ 9.06 $ 8.76 - $19.16
Combined Company -- With Synergies.......................... $5.77 - $12.16 $10.95 - $23.73
</TABLE>
Vantive has agreed to pay Credit Suisse First Boston for its financial
advisory services a fee of $1.5 million upon announcement of the merger and,
upon completion of the merger, a total fee equal to 1.25% of the aggregate value
of the transaction against which any prior fees paid in connection with the
merger will be credited. Vantive also has agreed to reimburse Credit Suisse
First Boston for its out-of-pocket expenses, including fees and expenses of
legal counsel and any other advisor retained by Credit Suisse First Boston, and
to indemnify Credit Suisse First Boston and related parties against liabilities,
including liabilities under the federal securities laws, arising out of its
engagement.
Credit Suisse First Boston and its affiliates have in the past provided
financial services to Vantive unrelated to the proposed merger, for which
services Credit Suisse First Boston and its affiliates have received
compensation. In the ordinary course of business, Credit Suisse First Boston and
its affiliates may actively trade the debt and equity securities of both Vantive
and PeopleSoft for their own accounts and for the accounts of customers and,
accordingly, may at any time hold long or short positions in such securities.
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<PAGE> 57
THE MERGER
Once the conditions to completing the merger contained in the merger
agreement have been satisfied or waived, the merger will be completed in
accordance with Delaware law.
CLOSING
The closing date of the merger will be a date specified by PeopleSoft and
Vantive but will be no later than two business days after the satisfaction or
waiver of the latest to occur of the conditions to the merger in the merger
agreement. PeopleSoft and Vantive anticipate that the merger will close no later
than December 31, 1999. However, a delay in obtaining any required governmental
approval may delay closing the merger. We cannot assure you if or when these
approvals will be obtained or that the merger will, in fact, be completed. If
the merger does not occur on or before March 31, 2000, either PeopleSoft or
Vantive may terminate the merger agreement and its obligations to consummate the
merger unless the failure to complete the merger by that date is due to the
failure of the party seeking to terminate the merger agreement to perform or
observe its obligations in the merger agreement. See "-- Conditions to
Completing the Merger" and "-- Regulatory and Other Approvals Required for the
Merger."
CONVERSION OF VANTIVE STOCK; TREATMENT OF VANTIVE STOCK OPTIONS AND CONVERTIBLE
SUBORDINATED NOTES
In the merger, each Vantive stockholder will receive 0.825 shares of
PeopleSoft common stock for each of his or her shares of Vantive common stock.
Each stock option, whether vested or unvested, to acquire Vantive common
stock granted under Vantive's stock option and incentive plans, which we refer
to as the Vantive stock plans, and any other right to acquire Vantive common
stock, outstanding and unexercised immediately before the merger will be
converted automatically in the merger into a stock option or other right to
purchase PeopleSoft common stock. In each case, the number of shares of
PeopleSoft common stock subject to the new PeopleSoft options or other rights
will be equal to 0.825 shares of PeopleSoft common stock for each share of
Vantive common stock that the holder of the Vantive option or other right would
have been entitled to receive had the holder exercised the option or other
right, in full immediately before the merger. The applicable exercise price will
be adjusted by dividing the per share exercise price in effect immediately
before the merger by 0.825. The terms of each new PeopleSoft option or other
right will be substantially the same, including vesting requirements, as the
corresponding Vantive option or other right. In any event, options that are
incentive stock options under the Internal Revenue Code will be adjusted as
provided by the Internal Revenue Code.
Soon after the merger occurs, PeopleSoft will deliver to the holders of
Vantive options and other rights notices that describe these holders' rights
under the Vantive stock plans and other rights, as applicable, and confirmation
that the terms of the agreements evidencing the grants of the options or other
rights continue subject to adjustments giving effect to stock splits or similar
adjustments.
In addition, PeopleSoft will assume all obligations under Vantive's
convertible subordinated notes and will provide for the conversion rights to
which the subordinated noteholders are entitled.
EXCHANGE OF CERTIFICATES; FRACTIONAL SHARES
Following the merger, PeopleSoft will deliver to its designated exchange
agent certificates representing the shares of PeopleSoft common stock, and cash
instead of any fractional shares that would otherwise be issued to Vantive
stockholders under the merger agreement, in exchange for the outstanding shares
of Vantive common stock.
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<PAGE> 58
Within three business days after the merger becomes effective, the exchange
agent will mail to Vantive stockholders a transmittal letter. The transmittal
letter will contain instructions with respect to the surrender of certificates
representing Vantive common stock.
PLEASE DO NOT RETURN VANTIVE COMMON STOCK CERTIFICATES WITH THE ENCLOSED
PROXY AND DO NOT FORWARD YOUR CERTIFICATES TO THE EXCHANGE AGENT UNLESS AND
UNTIL YOU RECEIVE A LETTER OF TRANSMITTAL FOLLOWING THE MERGER.
Upon surrender of the certificates representing Vantive common stock after
the merger accompanied by a completed letter of transmittal, you will be issued
a certificate representing the shares of PeopleSoft common stock issued to you
in the merger and you will be paid cash instead of any fraction of a share of
PeopleSoft common stock you would otherwise receive. The amount of cash you
receive instead of a fraction of a share will be equal to the fraction of a
PeopleSoft share you would otherwise receive multiplied by the average of the
last reported sales price for PeopleSoft common stock, as adjusted for stock
splits, as reported on the Nasdaq National Market on the ten trading days
immediately before the day the merger becomes effective.
PeopleSoft will pay you dividends or other distributions declared on
PeopleSoft common stock only after the merger has occurred and after you have
surrendered your certificates representing Vantive common stock.
If a certificate for Vantive common stock has been lost, stolen or
destroyed, the exchange agent will issue your shares of PeopleSoft common stock
and any cash instead of a fraction of a share only after you have delivered an
affidavit as to such loss, theft or destruction and as to your ownership of the
certificate. PeopleSoft or the exchange agent may require you to post a
customary bond in such amount as PeopleSoft or the exchange agent may determine
is reasonably satisfactory as indemnity against any claim that may be made
against PeopleSoft with respect to the lost, stolen or destroyed certificate.
REPRESENTATIONS AND WARRANTIES
The merger agreement contains representations and warranties by PeopleSoft
and Vantive. These include:
- due organization, existence, good standing and qualification to do
business and, in the case of Vantive, its subsidiaries and its equity
investments;
- capitalization of the companies and their subsidiaries;
- corporate power and authority to enter into the merger agreement and
perform its obligations under the merger agreement and, in the case of
Vantive, the stock option agreement;
- proper execution, delivery and enforceability of the merger agreement
and, in the case of Vantive, the stock option agreement;
- compliance of the merger agreement with each party's charter documents,
significant agreements and applicable law;
- governmental and third-party approvals;
- each party's financial statements and SEC filings;
- broker's fees arising from the merger;
- absence of undisclosed significant and negative changes in its business;
- absence of legal proceedings and injunctions that are significant or may
prevent or delay the merger;
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<PAGE> 59
- accuracy of the information about each party furnished to the other
and/or included in this proxy statement/prospectus;
- each party's and Vantive's subsidiaries' compliance with applicable law;
- pooling of interests accounting treatment and tax-free reorganization
treatment of the merger;
- absence of existing defaults under its charter documents, significant
agreements and applicable law;
- absence of undisclosed liabilities and, in the case of Vantive,
undisclosed liabilities of its subsidiaries;
- opinion of financial advisor;
- affiliates of the companies; and
- ownership of or rights to significant intellectual property.
The merger agreement contains additional representations and warranties of
Vantive. These include its:
- unanimous approval of the merger and the stock option agreement by
Vantive's board of directors;
- absence of environmental liabilities;
- payment of taxes and filing of tax returns;
- employee benefit plans, labor, employment and related matters;
- insurance;
- certain business practices;
- product warranties and guaranties;
- customers and suppliers;
- "Year 2000" compliance;
- restrictions on business activities;
- scheduled contracts and commitments;
- title to, and leases of, properties and absence of liens on properties
and assets;
- the merger and Vantive not being subject to anti-takeover laws or
regulations;
- stockholder vote required to approve the merger; and
- Vantive preferred stock rights not being triggered by the merger
agreement, stock option agreement or the merger.
CONDUCT OF BUSINESS BEFORE THE MERGER
Each of PeopleSoft and Vantive has agreed to do certain things before the
merger occurs. These include Vantive and its subsidiaries each:
- conducting its business in the ordinary course;
- using commercially reasonable effort to preserve intact its business
organization and business relationships; and
- retaining the services of its current officers and key employees.
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PeopleSoft and Vantive have also agreed to:
- cooperate with each other and use all reasonable efforts to make all
filings, and to obtain consents and approvals of all third parties and
governmental authorities, necessary to complete the merger, and to comply
with the terms and conditions of all these consents and approvals;
- furnish to the other party all information about itself and its
subsidiaries as the other party reasonably requests;
- use all reasonable efforts to take all actions to comply promptly with
legal requirements imposed on it and to complete the merger;
- not issue any press release or make any other public statements without
the advance approval of the other party;
- promptly tell the other party about any events or circumstances that
would cause any representations or warranties to not be true or any
obligations not to have been fulfilled; and
- not take any action which would prevent the treatment of the merger as a
pooling of interests transaction for financial accounting purposes.
PeopleSoft has also agreed to use all reasonable efforts to list its shares
to be issued in the merger and upon the exercise of stock options assumed in the
merger on the Nasdaq National Market. Subject to the merger agreement,
PeopleSoft has agreed to use all reasonable efforts to cause the merger to occur
as soon as practicable after Vantive stockholders approve the merger.
Unless the merger agreement permits, or except as already disclosed to
PeopleSoft, Vantive has agreed for itself and on behalf of its subsidiaries not
to:
- amend its charter documents;
- issue or agree to issue any stock or any other securities or equity
equivalents, except for grants of options in the amounts and under the
option plans disclosed to PeopleSoft as of the date of the merger
agreement and shares of Vantive common stock issued under options granted
prior to the date of the merger;
- split, combine or reclassify any shares of its capital stock;
- declare or pay any dividend or other payment of any kind in respect of
its capital stock;
- redeem any of its or its subsidiaries' securities;
- take any action resulting in an event of default under its outstanding
convertible subordinated notes;
- adopt a plan of complete or partial liquidation, dissolution, merger or
other reorganization other than the merger with PeopleSoft;
- alter any subsidiary's corporate structure or ownership;
- incur or assume any debt, except under existing lines of credit in the
ordinary course of business, consistent with past practices, or change
the terms of any existing debt;
- become responsible for the obligations of any other person except for
obligations of Vantive's subsidiaries incurred in the ordinary course of
business, consistent with past practices;
- make any loans to or investments in any other person, except its
subsidiaries or for customary loans or advances to employees in the
ordinary course of business consistent with its past practices;
- pledge or encumber its capital stock;
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- mortgage or pledge any of its significant assets or create or permit any
significant lien on these assets;
- except as required by law, enter into, adopt, modify or terminate any
employee compensation, benefit or similar plan or increase in any
compensation or fringe benefits;
- grant any severance or termination pay, except as required by law or by
any written agreements existing on October 11, 1999;
- voluntarily accelerate the vesting of any stock options;
- acquire, license, sell, lease, transfer or dispose of any significant
assets in any transaction or series of related transactions having a fair
market value over $200,000 total, except for sales of its products and
licenses of its software in the ordinary course of business;
- enter into any exclusive license, distribution, marketing, sales or other
agreements;
- enter into any product development agreement with a term beyond 45 days
that could exceed $50,000 for any single agreement or $100,000 total;
- sell or dispose of any intellectual property;
- except as required as a result of a change in law or in generally
accepted accounting principles, significantly change any of its
accounting principles, practices or methods;
- revalue in any significant respect any of its assets other than in the
ordinary course of business;
- acquire any other business or entity;
- enter into any significant agreement other than a non-exclusive license
agreement or a service agreement with end-users entered into in the
ordinary course of business;
- modify or waive any significant right under its important contracts;
- modify its standard product warranty terms or existing product warranties
in any significant and negative manner;
- authorize any new or additional capital expenditure(s) over $200,000 in
any calendar quarter, except as required pursuant to existing customer
contracts;
- authorize any new or additional manufacturing capacity expenditures for
any new manufacturing capacity contracts or arrangements;
- make or revoke any material tax election or settle or compromise any
material income tax liability;
- fail to file any tax returns when due or fail to cause filed tax returns
to be complete and accurate in all material respects;
- permit any significant insurance policy to expire, be canceled or
terminated, unless a comparable insurance policy is obtained and in
effect;
- fail to pay any significant taxes or other significant debts when due;
- settle or compromise any legal proceeding that relates to the merger
agreement, involves more than $100,000 total or would otherwise be
significant to Vantive, or relates to any intellectual property matters;
- take or fail to take any action that could reasonably be expected to
limit the use of any net operating losses or tax credits or other similar
items or to cause any transaction intended by Vantive or its subsidiaries
to be a tax-free reorganization to fail to qualify as such a
reorganization;
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- enter into any licensing or distribution agreements that are not
cancelable with less than 45 days notice or provides for payment by or to
Vantive of more than $100,000, except for agreements entered into in the
ordinary course of business consistent with past practice;
- take, or fail to take, any action that may interfere with pooling of
interests treatment of the merger;
- fail to meet any SEC filing deadlines;
- engage in any willful action with the intent to directly or indirectly
adversely impact the merger; and
- agree to take any of the actions described above.
Vantive has also agreed to use all reasonable efforts not to do anything
that would make any of its representations or warranties contained in the merger
agreement untrue.
The merger agreement restricts Vantive's ability to discuss or negotiate
proposals for certain significant transactions with anyone other than
PeopleSoft. These provisions require Vantive not to have or continue discussions
with anyone else for any third-party acquisition.
We use the term third-party acquisition to mean any of the following:
- an acquisition of Vantive by anyone other than PeopleSoft or its
affiliates;
- the acquisition of any significant portion of Vantive's assets, other
than the sale of its products in the ordinary course of business
consistent with its past practices;
- an acquisition of 15% or more of the outstanding shares of Vantive common
stock;
- Vantive's adoption of a plan of liquidation or declaration or payment of
an extraordinary dividend;
- Vantive's repurchase of more than 10% of the outstanding shares of
Vantive common stock; or
- Vantive's acquisition of any interest or investment in any business whose
annual revenue, net income or assets is equal to or greater than 10% of
the annual revenue, net income or assets of Vantive.
Vantive has agreed that it will:
- cease and not encourage, solicit, participate in or initiate discussions
with or provide any non-public information to anyone except PeopleSoft
concerning any third-party acquisition. However, the merger agreement
does not prohibit the Vantive board of directors from taking and
disclosing to Vantive stockholders a position contemplated by Rules 14d-9
and 14e-2 under the Securities Exchange Act of 1934, or Exchange Act,
with regard to a tender or exchange offer made by someone other than
PeopleSoft. In addition, if the Vantive board determines in its good
faith judgment, after consultation with legal counsel of nationally
recognized standing, that its fiduciary duties require it to do so, the
Vantive board may participate in discussions with a third-party regarding
any unsolicited bona fide proposal or offer, but only for so long as such
discussions are likely to lead to an offer:
1. to acquire, solely for cash and/or securities, all of the shares of
Vantive common stock then outstanding, or all or substantially all of
Vantive's assets;
2. that contains terms that the Vantive board of directors by a majority
vote determines, in good faith taking into account, as to the financial
terms, the opinion of a financial advisor of nationally recognized
reputation, to be more favorable to Vantive stockholders than the
merger with PeopleSoft, provided that any financing required to
consummate the transaction contemplated by the offer is either in the
possession of the third-party or committed or in the
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good faith determination of Vantive's board, based on the opinion of a
financial advisor of nationally recognized reputation, is likely to be
obtained on a timely basis;
3. that the Vantive board by a majority vote determines, in its good faith
judgment based on consultation with a financial advisor of nationally
recognized reputation and its legal or other advisers, to be reasonably
capable of being completed after taking into account all aspects of the
transaction; and
4. that does not contain a right of first refusal or right of first offer
regarding any counter-proposal that PeopleSoft might make.
We sometimes refer to an offer that has all of these characteristics as
a superior proposal.
- notify PeopleSoft if Vantive or any of its subsidiaries or other
affiliates receives any communication regarding a third-party
acquisition, including its key terms and conditions and the identity of
the third-party;
- provide a copy of any written agreements, proposals, or other materials
Vantive receives about a third-party acquisition;
- provide copies of all information furnished in connection with such
third-party acquisition if the information has not already been provided
to PeopleSoft; and
- advise PeopleSoft from time to time upon PeopleSoft's request, of the
status of any third-party acquisition, and any significant changes or
developments concerning any third-party acquisition.
Except as described below, the Vantive board of directors may not withdraw
or modify its recommendation of the merger with PeopleSoft. Vantive also may not
approve, recommend, cause or permit Vantive to enter into any letter of intent,
agreement or obligation relating to any third-party acquisition. However, if the
Vantive board determines in its good faith judgment, after consultation with
legal counsel of nationally recognized standing and in a manner consistent
therewith, that its fiduciary duties require it to do so, the Vantive board may
withdraw its recommendation of the merger and approve or recommend any superior
proposal. The Vantive board of directors may do so only after providing written
notice to PeopleSoft advising PeopleSoft that the Vantive board of directors has
received a superior proposal. This notice must specify its significant terms and
conditions and identify the person making the superior proposal. PeopleSoft will
then have three business days to make a counter offer, which must be accepted if
the Vantive board of directors by a majority vote determines in good faith,
based on the opinion of a financial advisor of nationally recognized reputation,
that PeopleSoft's counter offer is at least as favorable to Vantive stockholders
as the superior proposal. If PeopleSoft fails to make a counter offer, Vantive
may enter into an agreement with respect to the superior proposal only if the
merger agreement is concurrently terminated in accordance with its terms and
Vantive has paid all of the $12 million termination payment and $2 million of
expense reimbursement due to PeopleSoft under the merger agreement, as described
below under "-- Termination of the Merger Agreement -- Termination Payment and
Expenses." This termination will also give PeopleSoft rights under the stock
option agreement as described below.
Vantive also has agreed that it will:
- provide PeopleSoft, upon reasonable notice, with reasonable access to
Vantive's employees to, among other things, deliver offers of continued
employment and provide information to the employees about PeopleSoft;
- provide PeopleSoft and its representatives with reasonable access to
Vantive's employees, books and records, offices and other facilities;
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- take all reasonable action to amend, merge, freeze or terminate all of
its compensation and benefit plans as requested in writing by PeopleSoft;
- provide PeopleSoft periodic financial information;
- promptly grant such approvals and use all reasonable efforts to eliminate
or minimize the effects of any takeover statute or any similar applicable
law;
- will not redeem any of the rights issued pursuant to, or amend the rights
agreement or cause any such rights to become exercisable in connection
with the merger or otherwise; and
- take all necessary actions to provide that each outstanding and valid
option granted or provided under its employee stock purchase plan is
exercised before, and that the plan will terminate immediately after, the
effectiveness of the merger.
PeopleSoft and Vantive have agreed that they each will take all necessary
action to ensure that the corporation surviving the merger or PeopleSoft will
assume all obligations under Vantive's subordinated notes and will have provided
for the conversion rights to which the subordinated noteholders are entitled.
PeopleSoft has agreed that it will:
- make available to Vantive, upon Vantive's reasonable request, executive
officers and key employees to answer questions and make available
information about PeopleSoft;
- file a registration statement for PeopleSoft's shares issuable upon
exercise of its assumed stock options;
- use all reasonable efforts to provide each U.S. employee of PeopleSoft,
who was previously an employee of Vantive, full credit for services
performed for Vantive for employee benefits; and
- not declare or pay a dividend, make any payments to stockholders, or
redeem any of its securities, except as required by its options or
agreements with former employees, directors, or consultants providing for
the repurchase of unvested stock.
CONDITIONS TO COMPLETING THE MERGER
Neither of PeopleSoft or Vantive must complete the merger unless:
- Vantive stockholders have approved the merger agreement;
- all applicable waiting periods under the Hart-Scott-Rodino Act or other
similar foreign anti-trust laws have terminated or expired;
- no law or order by any United States federal or state or foreign court or
United States federal or state or foreign governmental authority
prohibits, enjoins or restricts the merger;
- PeopleSoft and Vantive have received all governmental approvals or other
requirements necessary to complete the merger and generally operate
Vantive's business after the merger as it was operated before the merger;
- the registration statement containing this proxy statement/prospectus has
become effective and is not subject to any stop order or proceedings
seeking a stop order by the SEC; and
- PeopleSoft and Vantive receive letters from their own respective
independent auditors regarding treatment of this merger as a pooling of
interests for accounting purposes.
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Vantive will not be required to complete the merger unless:
- except for insignificant defects, PeopleSoft's representations and
warranties in the merger agreement are true on the date of the merger;
- PeopleSoft has performed each of its agreements to be performed before
the merger;
- the PeopleSoft common stock issuable to Vantive stockholders in the
merger are approved for quotation on the Nasdaq National Market;
- Vantive has received an opinion from its or PeopleSoft's tax counsel
stating that generally the merger will be tax-free to Vantive, PeopleSoft
and Vantive stockholders for federal income tax purposes; and
- there have been no events, changes or effects, individually or in the
aggregate, having a significant adverse effect on PeopleSoft.
PeopleSoft will not be required to complete the merger unless:
- except for insignificant defects, Vantive's representations and
warranties contained in the merger agreement are true on the date of the
merger;
- Vantive has performed each of its agreements to be performed before the
merger;
- PeopleSoft receives letters from Vantive's directors and executive
officers relating to restrictions on the disposition of the PeopleSoft
common stock received by them in the Merger;
- there have been no events, changes or effects, individually or in the
aggregate, having a significant adverse effect on Vantive;
- PeopleSoft has received the opinion of its or Vantive's tax counsel
stating that generally the merger will be tax-free for federal income tax
purposes;
- the shares of PeopleSoft issuable to Vantive's stockholders and
optionholders in the merger are approved for quotation on the Nasdaq
National Market; and
- the opinion of the financial advisor to Vantive must still be in effect
as it was on the date of the merger agreement.
All of the conditions to completing the merger are waivable. If the
condition in respect of either party's receipt of a tax opinion confirming that
the merger is a tax-free reorganization is waived and the change in tax
consequences is material, or if any other material condition is waived, Vantive
will resolicit its stockholders' approval and will recirculate the proxy
statement/prospectus to its stockholders. PeopleSoft and Vantive cannot assure
you that all of the conditions to completing the merger will be satisfied or
waived.
REGULATORY AND OTHER APPROVALS REQUIRED FOR THE MERGER
General. PeopleSoft and Vantive have agreed to use all reasonable efforts
to do all things reasonably necessary under applicable law to complete the
merger. These things include:
- obtaining consents of all third parties and governmental authorities
necessary or advisable to complete the merger; and
- contesting any legal action designed to prevent the merger.
Antitrust. Under the Hart-Scott-Rodino Antitrust Improvements Act, and the
U.S. Federal Trade Commission's rules, PeopleSoft and Vantive may not complete
the merger until we have filed the required
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notifications with the Federal Trade Commission or the Antitrust Division of the
U.S. Department of Justice, and have waited a specified period of time. On
October 26, 1999, Vantive and PeopleSoft filed the notifications required under
the Hart-Scott-Rodino Act, as well as certain information required to be given
to the Federal Trade Commission and the Department of Justice. On November 3,
1999, Vantive and PeopleSoft made a pre-merger filing with the Brazilian
Government. Vantive and PeopleSoft intend to make a similar filing in Australia
on November 19, 1999. Early termination of the waiting period under the
Hart-Scott-Rodino Act was granted on November 5, 1999. At any time before or
after the merger, and even if the Hart-Scott-Rodino Act waiting period has
expired, the Department of Justice, the Federal Trade Commission or any state or
foreign governmental authority could take action under the antitrust laws as it
deems necessary in the public interest. This action could include seeking to
enjoin the merger or seeking PeopleSoft's divestiture of Vantive or PeopleSoft's
divestiture of its or Vantive's businesses. Private parties may also seek to
take legal action under the antitrust laws under certain circumstances.
Based on information available to them, PeopleSoft and Vantive believe that
the merger will comply with all significant federal, state and foreign antitrust
laws. However, we cannot assure you that there will not be a challenge to the
merger on antitrust grounds or that, if this kind of challenge were made, we
would prevail.
PeopleSoft and Vantive are not aware of any other significant regulatory
approvals or actions that are required for the merger. If any additional
governmental approvals or actions are required, we intend to obtain them. We
cannot assure you, however, that we will be able to obtain any additional
approvals or actions.
EXTENSION, WAIVER AND AMENDMENT OF THE MERGER AGREEMENT
Extension and Waiver. At any time before the merger, PeopleSoft and Vantive
may agree to:
- extend the time for performing any of the obligations or other acts of
the other party;
- waive any inaccuracies in the other's representations and warranties; and
- waive the other's compliance with any of the agreements or conditions in
the merger agreement.
Amendment. The merger agreement may be changed by us at any time before or
after Vantive stockholders approve the merger. However, any change which by law
requires the approval of Vantive stockholders will require their subsequent
approval to be effective.
TERMINATION OF THE MERGER AGREEMENT
Termination. The merger agreement may be terminated and the merger
abandoned at any time before completing the merger, whether or not approved by
Vantive stockholders. This termination may occur in the following ways:
- PeopleSoft and Vantive agree in writing to terminate it;
- PeopleSoft or Vantive decides to terminate it because:
1. any state or federal court or other governmental authority has issued a
final, non-appealable ruling prohibiting the merger; or
2. the merger is not completed by March 31, 2000, unless the failure to
complete it by that date is due to the failure of the party seeking to
terminate the merger agreement to perform its agreements in the merger
agreement;
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- Vantive decides to terminate it because:
1. PeopleSoft's representations or warranties in the merger agreement are
untrue so that the conditions to Vantive's obligation to complete the
merger could not be satisfied by March 31, 2000, so long as Vantive has
not seriously breached its own obligations under the merger agreement;
2. PeopleSoft failed to perform its agreements in the merger agreement,
and this failure, in the aggregate, substantially adversely affects
PeopleSoft or the ability of PeopleSoft or Vantive to complete the
merger or substantially delays the merger, so long as Vantive has not
seriously breached its own obligations under the merger agreement;
3. Vantive has failed to obtain its stockholders' approval of the merger;
or
4. the Vantive board has received a superior proposal and responded in a
way that permitted termination of the merger agreement, including
payment of the termination payment and expenses to PeopleSoft;
- PeopleSoft decides to terminate it because:
1. Vantive's representations or warranties in the merger agreement are
untrue so that the conditions to PeopleSoft's obligation to complete
the merger could not be satisfied by March 31, 2000, so long as
PeopleSoft has not seriously breached its own obligations under the
merger agreement;
2. Vantive has failed to perform its agreements in the merger agreement,
and this failure, in the aggregate, substantially adversely affects
Vantive or the ability of PeopleSoft or Vantive to complete the merger
or substantially delays the merger, so long as PeopleSoft has not
seriously breached its own obligations under the merger agreement;
3. the Vantive board has recommended a superior proposal to its
stockholders;
4. the Vantive board has withdrawn or adversely modified its approval or
recommendation of the merger; or
5. Vantive convened a meeting of the Vantive stockholders to vote on the
merger but did not obtain their approval of the merger.
Effect of Termination. Even after the merger agreement has been terminated,
its confidentiality and fees and expenses provisions will remain in effect.
Also, termination will not relieve either party from liability for any
fraudulent misconduct or willful breach by it of the merger agreement before it
was terminated.
Termination Payment and Expenses. Vantive has agreed to pay PeopleSoft $12
million if the merger agreement is terminated as follows:
- it is terminated by Vantive because the Vantive board of directors
received a superior proposal and responded in a way that permitted its
termination;
- it is terminated by PeopleSoft because:
1. the Vantive board recommended that the Vantive stockholders approve a
superior proposal;
2. Vantive significantly breached its covenants an offer to acquire
Vantive by a third party had been announced before termination or
within six months after termination Vantive becomes party to a
third-party acquisition;
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3. the Vantive board withdraws or adversely modifies its approval or
recommendation of the merger; or
4. Vantive holds a stockholder meeting and fails to obtain their approval
of the merger and an offer to acquire Vantive by a third party had been
announced before the vote and Vantive within 12 months becomes party to
a third-party acquisition.
In addition, Vantive has agreed to pay PeopleSoft $2 million as
reimbursement of its fees and expenses if the merger agreement is terminated as
follows:
- it is terminated by Vantive because the Vantive board of directors
received a superior proposal and responded in a way that permitted its
termination;
- it is terminated by PeopleSoft for any of the following reasons:
1. Vantive's representations or warranties in the merger agreement are
untrue so that the conditions to PeopleSoft's obligation to complete
the merger could not be satisfied by March 31, 2000 so long as
PeopleSoft has not seriously breached its own obligations under the
merger agreement;
2. Vantive failed to perform its agreements in the merger agreement, and
this failure, in the aggregate, substantially adversely affects Vantive
or the ability of PeopleSoft or Vantive to complete the merger or
substantially delays the merger, so long as PeopleSoft has not
seriously breached its own obligations under the merger agreement;
3. the Vantive board of directors recommended that stockholders approve a
superior proposal; or
4. the Vantive board withdrew or adversely modified its approval or
recommendation of the merger.
Further, PeopleSoft has agreed to pay Vantive $2 million as reimbursement
of its fees and expenses if the merger agreement is terminated by Vantive
because:
- PeopleSoft's representations or warranties in the merger agreement are
untrue so that the conditions to Vantive's obligation to complete the
merger could not be satisfied by March 31, 2000, so long as Vantive has
not seriously breached its own obligations under the merger agreement; or
- PeopleSoft failed to perform its agreements in the merger agreement, and
this failure, in the aggregate, adversely effects PeopleSoft or the
ability of PeopleSoft or Vantive to complete the merger or substantially
delays the merger, so long as Vantive has not seriously breached its own
obligations under the merger agreement.
Except as described above, whether or not the merger occurs, we have agreed
to pay our own fees and expenses incurred in connection with the merger
agreement.
If the merger agreement is terminated in a manner obligating Vantive to pay
PeopleSoft the $12 million termination payment, PeopleSoft will have the right
to exercise its option to purchase up to 5,497,300 shares of Vantive common
stock. See "-- Option Agreement."
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The following discussion addresses the material federal income tax
considerations of the merger that are generally applicable to Vantive
stockholders who are exchanging their Vantive common stock for PeopleSoft common
stock pursuant to the merger. The following discussion does not deal with all
federal income tax considerations that may be relevant to particular Vantive
stockholders in light of their particular circumstances, such as stockholders
who are dealers in securities, banks, insurance companies,
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foreign persons, or tax-exempt organizations. This discussion also does not
apply to stockholders who are subject to alternative minimum tax, who hold their
shares as part of a hedge, straddle or other risk reduction transaction or who
acquired their Vantive common stock through stock option or stock purchase
programs or otherwise as compensation. In addition, it does not address the tax
consequences of the merger under foreign, state or local tax laws or tax
consequences of transactions completed before or after the merger, such as the
exercise of options or rights to purchase Vantive common stock in anticipation
of the merger.
VANTIVE STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS REGARDING
THE TAX CONSEQUENCES TO THEM OF THE MERGER BASED ON THEIR OWN CIRCUMSTANCES,
INCLUDING THE APPLICABLE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES TO
THEM OF THE MERGER.
The following discussion is based on the Internal Revenue Code, applicable
Treasury Regulations, judicial decisions and administrative rulings and
practice, all as of the date of this proxy statement/prospectus, all of which
are subject to change. Any such changes could be applied retroactively and could
affect the accuracy of the statements and conclusions in this discussion and the
tax consequences of the merger to PeopleSoft, Vantive and/or their stockholders.
Neither PeopleSoft nor Vantive has requested or will request a ruling from
the Internal Revenue Service with regard to any of the tax consequences of the
merger. However, it is a condition to the consummation of the merger that
PeopleSoft and Vantive receive an opinion of Gibson, Dunn & Crutcher LLP,
counsel to PeopleSoft, and/or Gray Cary Ware & Freidenrich LLP, counsel to
Vantive, that:
- the merger will constitute a reorganization under Section 368(a) of the
Internal Revenue Code; and
- each of PeopleSoft and Vantive will be a party to the reorganization
within the meaning of Section 368(b) of the Internal Revenue Code.
If the merger constitutes a reorganization within the meaning of Section
368(a) of the Internal Revenue Code as discussed above, and subject to the
limitations and qualifications referred to in this discussion, in the opinion of
Gibson, Dunn & Crutcher and Gray Cary Ware & Freidenrich, the following U.S.
federal income tax consequences will result from the merger:
- no gain or loss will be recognized by a Vantive stockholder upon the
receipt of PeopleSoft common stock solely in exchange for Vantive common
stock in the merger, except for gain or loss arising from the receipt of
cash in lieu of a fractional share as discussed below;
- the aggregate tax basis of the PeopleSoft common stock received by a
Vantive stockholder in the merger, including any fractional share of
PeopleSoft common stock for which cash is received, will be the same as
the aggregate tax basis of the Vantive common stock exchanged for the
PeopleSoft stock;
- the holding period of the PeopleSoft common stock received by each
Vantive stockholder in the merger will include the period for which the
Vantive common stock exchanged therefor was considered to be held,
provided that the Vantive common stock was held as a capital asset at the
time of the merger;
- a Vantive stockholder receiving cash instead of a fractional share of
PeopleSoft common stock will generally recognize gain or loss equal to
the difference between the amount of cash received and the stockholder's
basis in the fractional share; and
- neither PeopleSoft nor Vantive will recognize gain or loss solely as a
result of the merger.
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The opinions that have been rendered and the opinions to be rendered at the
closing of the merger are and will be conditioned upon the following
assumptions:
- the truth and accuracy of the statements, covenants, representations and
warranties in the merger agreement, in the representations received from
PeopleSoft and Vantive that are to be delivered to counsel, and that are
substantially in the forms contained in exhibits in the merger agreement,
to support the opinions, and in other documents related to PeopleSoft and
Vantive relied upon by such counsel for those opinions;
- consummation of the merger in accordance with the merger agreement,
without any waiver, breach or amendment of any material provisions of the
merger agreement, the effectiveness of the merger under applicable state
law, and the performance of all covenants contained in the merger
agreement and the tax representations without waiver or breach of any
material provision thereof;
- the accuracy of any representation or statement made "to the knowledge
of" or similarly qualified without such qualification, and as to all
matters in which a person or entity is making a representation, that such
person or entity is not a party to, does not have, or is not aware of,
any plan or intention, understanding or agreement inconsistent with such
representation, and there is no such plan, intention, understanding or
agreement inconsistent with such representation;
- the reporting of the merger as a reorganization under Section 368(a) of
the Internal Revenue Code by PeopleSoft and Vantive in their respective
federal income tax returns; and
- other customary assumptions as to the accuracy and authenticity of
documents provided to such counsel.
If any of these statements, covenants, representations, warranties or
assumptions is inaccurate, the conclusions contained in those opinions could be
adversely affected and the consequences of the merger may differ from those
described above. Moreover, opinions of counsel are not binding on the Internal
Revenue Service or the courts. If the Internal Revenue Service determines
successfully that the merger is not a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code, Vantive stockholders must recognize
gain or loss with respect to each share of Vantive common stock surrendered in
the merger in an amount equal to the difference between the tax basis in the
share and the fair market value of the PeopleSoft common stock received in
exchange for the Vantive share. In such event, a Vantive stockholder's aggregate
basis in the PeopleSoft common stock received in the merger would equal its fair
market value, and the stockholder's holding period for the stock would begin the
day after the merger.
A stockholder of Vantive may be subject to backup withholding at a rate of
31%. However, backup withholding will not apply to a stockholder who either (i)
furnishes a correct taxpayer identification number and certifies that he or she
is not subject to backup withholding by completing the substitute Form W-9 that
will be included as part of the transmittal letter, or (ii) otherwise proves to
PeopleSoft and its exchange agent that the stockholder is exempt from backup
withholding.
ACCOUNTING TREATMENT
We believe that the merger will be accounted for as a pooling of interests
transaction under GAAP. Under this method of accounting, the book value of the
assets, liabilities and stockholders' equity of each of PeopleSoft and Vantive,
as reported on their respective consolidated balance sheets, will be carried
over to the consolidated balance sheet of the combined company, and no goodwill
will be created. PeopleSoft will be able to include in its results of operations
the consolidated income or loss of Vantive for the entire fiscal year in which
the merger occurs and prior year's financial statements will be restated to
include
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Vantive. The unaudited pro forma financial information in this proxy
statement/prospectus has been prepared using the pooling of interests accounting
method to account for the merger.
EMPLOYEE BENEFITS AND PLANS
After the merger, the employee benefit plans, arrangements and agreements
of Vantive existing on the date of the merger agreement, will remain in effect
with respect to Vantive employees covered by these plans when the merger occurs
unless PeopleSoft requests Vantive to modify, freeze or terminate any of these
Vantive benefit plans. Vantive's employee stock purchase plan will be terminated
on December 17, 1999. Vantive employees who become entitled to participate in
PeopleSoft's compensation and benefit plans will be given full credit for
service performed for Vantive for purposes of eligibility, vesting, benefit
accrual and determination of the level of benefits under parent benefit plans
and employee arrangements, with the exception of PeopleSoft's vision plan and
any defined benefit plans maintained by PeopleSoft and as otherwise limited by
PeopleSoft's employee plans.
OPTION AGREEMENT
PeopleSoft and Vantive have also entered into an option agreement that
permits PeopleSoft to purchase up to 5,497,300 shares of Vantive common stock at
a cash exercise price of $14.23125 per share. The total number of shares
issuable upon exercise of the option represents 16.667% of the Vantive common
stock outstanding on October 11, 1999, assuming exercise of the option, or
19.999% of Vantive common stock outstanding on that date, excluding the shares
received by PeopleSoft.
We entered into the option agreement so that, if a third party submitted a
successful proposal to acquire Vantive, PeopleSoft would be compensated for its
efforts, expenses and lost business opportunities incurred as a result of its
attempted business combination with Vantive.
PeopleSoft may exercise the option, in whole or in part, if the merger
agreement is terminated in a manner obligating Vantive to pay PeopleSoft the $12
million termination payment. See "-- Termination of the Merger
Agreement -- Termination Payment and Expenses." PeopleSoft may exercise the
option until the 12 month anniversary of the date the merger agreement is
terminated except that if the merger agreement was terminated as a result of
Vantive's failure to perform its agreements under the merger agreement having in
the aggregate, a significant adverse effect on Vantive or the ability of
PeopleSoft or Vantive to complete the merger, or substantially delays the
merger, the option will expire on the sixth month anniversary of the termination
date. However, PeopleSoft may not exercise the option if it has willfully and
significantly breached the merger agreement.
If after the date of the signing of the merger agreement any third party
acquires or agrees to acquire 15% or more of the outstanding shares of Vantive
common stock, the merger is terminated before such third-party acquisition and
such acquisition occurs before the expiration of the option, or Vantive enters
into an agreement with any third party providing for an acquisition of Vantive
or any significant part of its assets, then PeopleSoft, if it so elects, instead
of exercising the option, will have the right to receive in cancellation of the
option cash equal to:
1. the excess over the option exercise price of the greater of:
- the market value of a share of Vantive common stock on the last trading
day before exercise; or
- the highest price per share paid in connection with a third-party
acquisition not involving Vantive's assets; or
- the fair market value equivalent of a share of Vantive common stock in
connection with a third-party acquisition of Vantive assets,
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2. multiplied by 5,497,300, the number of Vantive shares covered by the
option.
The economic benefit that PeopleSoft may derive under the option agreement
is limited to $4 million. The option may not be exercised for a number of
Vantive shares as would, at exercise, result in PeopleSoft's receiving a total
value exceeding this amount. Any amount PeopleSoft receives in excess of that
amount must be paid to Vantive.
As of the date of this proxy statement/prospectus, Vantive has informed
PeopleSoft that no event triggering PeopleSoft's ability to exercise the option
has occurred.
Vantive is obligated to issue its shares upon exercise of the option only
if there is no legal or regulatory restriction on the exercise, all applicable
waiting periods under applicable laws have expired, and PeopleSoft has not
substantially breached the merger agreement.
PeopleSoft may request that Vantive register under the Securities Act of
1933, or the Securities Act, the offering and sale of the Vantive shares that
have been acquired by or are issuable to PeopleSoft upon exercise of the option,
if requested by PeopleSoft within two years after an event permitting exercise
of the option. Any registration request must be for at least 20% of the option
shares or, if for less than 20% of the originally issuable option shares, all of
PeopleSoft's remaining option shares. PeopleSoft may make up to two demands for
registration. PeopleSoft's registration rights terminate with respect to any
option shares that may be sold under Rule 144(k) of the Securities Act. Vantive
may include any other securities in any registration demanded by PeopleSoft only
with PeopleSoft's consent. Vantive will use all reasonable efforts to cause each
registration statement to become effective and remain so for 90 days and to
obtain all consents or waivers required from other persons. Vantive's obligation
to file a registration statement and to maintain its effectiveness may be
suspended for up to 90 days if the Vantive board determines this registration
would seriously and negatively affect Vantive, or financial statements required
to be included in the registration statement are not yet available. If Vantive
proposes to register the offering and sale of Vantive common stock for cash for
itself or any other Vantive stockholder in a firm commitment underwriting, it
will generally allow PeopleSoft to participate in the registration so long as
PeopleSoft agrees to participate in the underwriting on terms reasonably
satisfactory to its managing underwriters.
The expenses of preparing and filing any registration statement for these
Vantive shares and any sale covered by it will generally be paid by Vantive,
except for underwriting discounts or commissions or brokers' fees, and the fees
and disbursements of PeopleSoft's counsel.
For each registration of option shares, Vantive and PeopleSoft have agreed
to customary indemnification provisions for losses and liabilities under the
Securities Act and otherwise. However, PeopleSoft will not be required to
indemnify Vantive beyond PeopleSoft's net proceeds from the offering of its
option shares.
Upon the issuance of option shares, Vantive will use all commercially
reasonable efforts to promptly list the shares on the Nasdaq National Market or
on any other exchange on which Vantive common stock is then listed.
Because the rights and obligations of PeopleSoft and Vantive under the
option agreement are subject to compliance with the Hart-Scott-Rodino Act,
PeopleSoft included in its merger notifications filed with the Department of
Justice and Federal Trade Commission a description of its rights under the
option agreement. See "-- Regulatory and Other Approvals Required for the
Merger."
RESTRICTIONS ON RESALES BY AFFILIATES
The shares of PeopleSoft common stock issuable to Vantive stockholders in
the merger and upon exercise of outstanding Vantive stock options after the
merger have been registered under the Securities Act. Therefore, these shares of
PeopleSoft common stock may be traded freely and without restriction by
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those Vantive stockholders and holders of Vantive stock options who are not
"affiliates" of Vantive as defined under the Securities Act. An "affiliate" of
Vantive is a person who controls, is controlled by, or is under common control
with, Vantive. Any subsequent transfer of these shares by a person who is an
affiliate of Vantive at the time the merger is voted on by the Vantive
stockholders will require one of the following:
- further registration of these shares under the Securities Act;
- compliance with Rule 145 under the Securities Act; or
- the availability of another exemption from registration under the
Securities Act.
These restrictions are expected to apply to Vantive's directors and
executive officers and the holders of 10% or more of its outstanding shares of
common stock. PeopleSoft will give stop transfer instructions to its transfer
agent and legend certificates representing the PeopleSoft common stock to be
received by affiliated persons.
SEC guidelines for qualifying for the pooling of interests method of
accounting also limit sales of shares of the acquiring and acquired company by
affiliates of either company in a business combination. SEC guidelines also
indicate that the pooling of interests method will generally not be challenged
on the basis of sales by affiliates of the acquiring or acquired company if the
affiliates do not transfer any of the shares of the company they own or shares
of a company they receive in a merger during the period beginning 30 days before
the merger and ending when financial results covering at least 30 days of post-
merger operations of the combined company have been published.
PeopleSoft and Vantive have agreed to use all reasonable efforts to cause
each of their affiliates to deliver a written agreement intended to ensure
compliance with the Securities Act and preserve the companies' ability to treat
the merger as a pooling of interests.
CORPORATE STRUCTURE OF PEOPLESOFT AFTER THE MERGER
Although the merger is structured so that Vantive will become a subsidiary
of PeopleSoft, PeopleSoft may elect to merge directly with Vantive after the
closing of the merger. Therefore, all statements in this proxy
statement/prospectus relating to employees, management and operations of Vantive
after the merger should be understood to be equally applicable to PeopleSoft if
such a merger occurs. Such a merger will not affect your right to receive shares
of PeopleSoft common stock in the merger or otherwise affect your rights as a
PeopleSoft stockholder.
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MANAGEMENT AFTER THE MERGER
BOARDS OF DIRECTORS
The PeopleSoft board of directors will not change as a result of the
merger. Immediately after the merger, the Vantive board of directors will
consist of two directors selected by PeopleSoft.
MANAGEMENT
The composition of PeopleSoft's executive management is not expected to
change as a result of the merger. It is expected that after the merger, Marie
Alexander, Guy DuBois, William Morton and Eric Miles will also remain with
Vantive with responsibilities comparable to those of their current positions as
specified in their employment agreements with PeopleSoft.
Key management and staff positions within the combined company post-merger
have not been finally determined. From time to time prior to the merger,
decisions may be made with respect to the management and operations of Vantive
post-merger, including its other officers and managers.
Information about the current PeopleSoft directors and executive officers
is included or incorporated by reference into PeopleSoft's annual report on Form
10-K for the year ended December 31, 1998. Information about the current Vantive
directors and executive officers can be found in Vantive's annual report on Form
10-K for the year ended December 31, 1998. PeopleSoft's and Vantive's annual
reports on Form 10-K are incorporated by reference into this proxy
statement/prospectus. See "Where You Can Find More Information."
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PRICE RANGE OF COMMON STOCK
PEOPLESOFT. PeopleSoft common stock is listed on The Nasdaq Stock Market
under the symbol "PSFT". The following table shows, for the periods indicated,
the high and low reported closing sale prices per share of PeopleSoft common
stock on The Nasdaq Stock Market. The stock prices have been adjusted to reflect
the 2-for-1 stock splits effected by PeopleSoft in December 1994, November 1995,
November 1996 and December 1997. PeopleSoft has never declared or paid any cash
dividends on its common stock, and does not plan on declaring any dividends in
the near future.
<TABLE>
<CAPTION>
PRICE RANGE OF
COMMON STOCK
------------------
HIGH LOW
------- -------
<S> <C> <C>
1996
First Quarter............................................. $14.813 $ 8.688
Second Quarter............................................ $18.250 $11.938
Third Quarter............................................. $21.188 $14.094
Fourth Quarter............................................ $26.125 $20.125
1997
First Quarter............................................. $28.375 $18.875
Second Quarter............................................ $28.438 $15.313
Third Quarter............................................. $33.188 $26.000
Fourth Quarter............................................ $39.500 $27.188
1998
First Quarter............................................. $52.688 $31.438
Second Quarter............................................ $55.938 $41.938
Third Quarter............................................. $50.875 $27.250
Fourth Quarter............................................ $32.500 $16.813
1999
First Quarter............................................. $24.500 $14.625
Second Quarter............................................ $17.500 $12.125
Third Quarter............................................. $18.250 $13.063
Fourth Quarter (through November 16, 1999)................ $17.813 $14.500
</TABLE>
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VANTIVE. Vantive common stock is listed on The Nasdaq Stock Market under
the symbol "VNTV." The following table shows the high and low closing sales
prices for Vantive common stock for the periods indicated, as reported on The
Nasdaq Stock Market. All sales prices have been adjusted to reflect the 2-for-1
stock split effected by Vantive in October 1996. Vantive has never declared or
paid any cash dividends on its common stock, and does not plan on declaring any
dividends in the near future. The merger agreement prohibits Vantive from paying
cash dividends on Vantive common stock before the merger. See "The Merger --
Conduct of Business Before the Merger."
<TABLE>
<CAPTION>
PRICE RANGE OF
COMMON STOCK
------------------
HIGH LOW
------- -------
<S> <C> <C>
1996
First Quarter............................................. $12.250 $ 9.500
Second Quarter............................................ $19.750 $11.000
Third Quarter............................................. $32.380 $12.750
Fourth Quarter............................................ $42.250 $21.156
1997
First Quarter............................................. $34.250 $19.000
Second Quarter............................................ $30.875 $14.500
Third Quarter............................................. $38.000 $21.750
Fourth Quarter............................................ $30.625 $21.375
1998
First Quarter............................................. $36.563 $24.375
Second Quarter............................................ $39.375 $20.125
Third Quarter............................................. $19.125 $ 6.000
Fourth Quarter............................................ $10.063 $ 5.000
1999
First Quarter............................................. $14.625 $ 8.969
Second Quarter............................................ $12.563 $ 6.313
Third Quarter............................................. $13.156 $ 7.625
Fourth Quarter (through November 16, 1999)................ $14.250 $ 8.313
</TABLE>
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INFORMATION ABOUT PEOPLESOFT
GENERAL
PeopleSoft designs, develops, markets and supports a family of enterprise
application software products for use throughout large and medium sized
organizations. These organizations include corporations worldwide, higher
education institutions, and federal, state, provincial and local government
agencies. PeopleSoft provides enterprise application software for human resource
management, financial accounting, distribution, supply chain management, and
manufacturing operations. For more than 3,000 customers, PeopleSoft's
applications offer a high degree of flexibility, rapid implementation,
scalability across multiple databases and operating systems, and lower cost of
ownership.
Incorporated in Delaware in 1987, PeopleSoft shipped its first software
product, a human resource management system, in December 1988. In 1992,
PeopleSoft introduced the first of a series of financial management and
accounting system software products, and, in 1994, it introduced the first of a
series of distribution and supply chain management products. Since that time,
PeopleSoft has introduced several additions to its existing product lines, plus
industry specific software products. These industry solutions include
manufacturing products, public sector financial management products, public
sector human resource management products, student administration products for
the higher education market, and human resource and financial management
products for the U.S. federal government market. In the first quarter of 1999,
PeopleSoft released its first analytical application products to support
management decision making.
In addition, all of PeopleSoft's software products are backed by PeopleSoft
advantage customer service, a comprehensive consulting, education and technical
support program. PeopleSoft's consulting business offers a variety of services
to its customers including implementation assistance, project planning and
strategy, upgrade assistance, electronic commerce, workflow or OLAP deployment,
and minor software product enhancements. PeopleSoft's education business offers
comprehensive training for key groups affected by the implementation of
PeopleSoft's products and technology. PeopleSoft technical support program
includes 24-hour telephone support, access to the PeopleSoft Advantage Customer
Care Business Center and software product enhancements and upgrades released
during the term of support contract.
PeopleSoft's strategy is to offer comprehensive solutions that enable
organizations to manage and enhance their relationships with customers,
suppliers and employees. These solutions will include front office applications
for customer relationship management, eCommerce and employee administration. In
the third quarter of 1999, PeopleSoft shipped its first two front office
applications, PeopleSoft eProcurement and PeopleSoft eStore. PeopleSoft
eProcurement enables employees to purchase goods and services over the Internet
while PeopleSoft eStore enables customers to conduct business to business and
business to consumer commerce over the Internet. Front office applications such
as PeopleSoft eProcurement and PeopleSoft eStore can be integrated with
PeopleSoft's enterprise application software. This integration facilitates the
seamless flow of information across multiple applications, such as purchasing,
accounts payable and general ledger in the case of PeopleSoft eProcurement, and
subjects a transaction to enterprise application functionality such as workflow
whereby a purchase by an employee may be automatically screened for
authorization and routed for approval based on pre-designated system settings.
In addition to front office applications, PeopleSoft is developing a suite
of analytical applications to support management decision making. Analytic
applications take transaction information from multiple sources including
PeopleSoft's enterprise application software and provide detailed analytic
information which may be used to broaden or deepen an organization's
relationships with its customers, suppliers and employees. The combination of
enterprise applications, front office applications, and analytical applications
can provide organizations with a complete 360 degree view of their customers,
suppliers and employees.
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As of September 30, 1999, PeopleSoft employed approximately 6,400 people
worldwide.
PeopleSoft's principal executive offices are located at 4460 Hacienda
Drive, Pleasanton, California 94588, and its telephone number is (925) 694-3000.
MANAGEMENT AND ADDITIONAL INFORMATION
Information relating to executive compensation, various benefit plans,
including stock option plans, voting securities and the principal holders
thereof, relationships and related transactions between PeopleSoft and its
management or major stockholders and other related matters as to PeopleSoft is
incorporated by reference or set forth in PeopleSoft's annual report on Form
10-K for the year ended December 31, 1998, incorporated into this proxy
statement/prospectus by reference. PeopleSoft stockholders desiring copies of
such documents may contact PeopleSoft at its address or telephone number
indicated under "Where You Can Find More Information."
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INFORMATION ABOUT VANTIVE
GENERAL
Vantive is a leading provider of customer relationship management
solutions. Vantive empowers companies to more effectively win, keep, and know
their customers. The Vantive Enterprise, Vantive's integrated software suite,
enables call center, marketing, field sales, help-desk and field service
personnel to deliver consistent customer service across many channels via the
Internet, the call center, or in person. The consulting implementation and
integration services that Vantive provides are intended to help its customers
implement and optimize Vantive's software products. A "call center" is typically
a functional area of a company in which a number of employees process container
orders, complaints or service requests. "Field sales" refers to a direct sales
force deployed throughout a geographic region. "Field service" refers to repair
technicians deployed throughout a geographic region.
The Vantive Enterprise is built using a component-based, multi-tier
architecture and a common data model. "Multi-tiered architecture" is a software
design intended to enhance scalability (the capacity to expand the number of
users or the number of transactions processed for a given module of software)
and minimize use of network bandwidth. A "common data model" is a database
shared by each application in The Vantive Enterprise. Certain features of the
modules in The Vantive Enterprise are accessible via a Web browser which permits
wider use of these features than would be available under more traditional
client-server product architectures. Vantive Enterprise software may be used
independently or as part of an integrated, enterprise-wide, front-office
automation system. Vantive believes businesses can better manage customer
relationships by sharing valuable customer information throughout their
organizations. The Vantive Enterprise has been deployed by businesses in a broad
range of industries that include the following:
- software
- communications
- consumer products
- finance
- outsourcing/services
- personal computer hardware
- healthcare
- manufacturing
- medical products
- public sector/regulated industry
- on-line services
- consumer goods
- retail
As of September 30, 1999, Vantive had approximately 570 full-time employees
worldwide.
Vantive was incorporated in California in 1990 and reincorporated in
Delaware in 1995. Its principal executive offices are located at 2525 Augustine
Drive, Santa Clara, California 95054, and its telephone number is (408)
982-5700.
MANAGEMENT AND ADDITIONAL INFORMATION
Information relating to executive compensation, various benefit plans,
including stock option plans, voting securities and the principal holders
thereof, relationships and related transactions between Vantive and its
management or major stockholders and other related matters as to Vantive is
incorporated by reference or set forth in Vantive's annual report on Form 10-K
for the year ended December 31, 1998, incorporated into this proxy
statement/prospectus by reference. Vantive stockholders desiring copies of such
documents may contact Vantive at its address or telephone number indicated under
"Where You Can Find More Information."
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PEOPLESOFT CAPITAL STOCK AND COMPARISON OF STOCKHOLDER RIGHTS
When PeopleSoft and Vantive complete the merger, Vantive stockholders will
become PeopleSoft stockholders.
The following is a description of the PeopleSoft common stock to be issued
in the merger and a summary of the significant differences between the rights of
holders of PeopleSoft common stock and Vantive common stock.
DESCRIPTION OF PEOPLESOFT CAPITAL STOCK
PeopleSoft's restated certificate of incorporation provides that
PeopleSoft's authorized capital stock consists of 700,000,000 shares of common
stock and 2,000,000 shares of preferred stock.
PeopleSoft Common Stock. As of September 30, 1999, there were approximately
251,988,000 shares of PeopleSoft common stock outstanding held of record by
approximately 3,542 persons. PeopleSoft common stockholders are entitled to one
vote per share on all matters to be voted upon by PeopleSoft stockholders.
Subject to the preferences of any outstanding preferred stock, PeopleSoft common
stockholders are entitled to receive ratably dividends, if any, as the
PeopleSoft board of directors may declare from time to time out of funds legally
available for dividend payments. In the event of a liquidation, dissolution or
winding up of PeopleSoft, PeopleSoft common stockholders share ratably in all
assets remaining after payment of liabilities and any preferential liquidation
rights of any outstanding preferred stock. The PeopleSoft common stock has no
preemptive or conversion rights or other subscription rights nor do redemption
or sinking fund provisions apply to the PeopleSoft common stock. All outstanding
shares of PeopleSoft common stock are fully paid and non-assessable, and the
shares of PeopleSoft common stock to be outstanding after the merger will be
fully paid and non-assessable. Boston Equiserv LLC is the transfer agent and
registrar for the PeopleSoft common stock. Boston Equiserv's address is 289
South San Antonio Road, Suite 100, Los Altos, CA 94022.
PeopleSoft Preferred Stock. The PeopleSoft board of directors may issue
shares of PeopleSoft preferred stock in one or more series and, subject to
Delaware law, may:
- fix the rights, preferences, privileges and restrictions of any series;
and
- specify the number of shares and designation of any series.
As of the date of this proxy statement/prospectus, no shares of PeopleSoft
preferred stock were outstanding. Although PeopleSoft presently does not intend
to do so, its board may issue without stockholder approval PeopleSoft preferred
stock with voting and conversion rights which could negatively affect the voting
power or other rights of the PeopleSoft common stockholders. The issuance of
PeopleSoft preferred stock may delay or prevent a change in control of
PeopleSoft.
PeopleSoft Rights Plan
General. Under a stockholders rights plan adopted in 1995 and amended in
1997, PeopleSoft's board declared a dividend of one PeopleSoft right for each
outstanding share of PeopleSoft common stock. BankBoston, N.A. has been
appointed to serve as rights agent. Each PeopleSoft right entitles the
registered holder to purchase one one-thousandth of a share of PeopleSoft
participating preferred stock at a price of $190. The terms of the PeopleSoft
rights are fully described in the PeopleSoft rights agreement between PeopleSoft
and the rights agent.
Distribution Date. The PeopleSoft rights attach to and trade only together
with the shares of PeopleSoft common stock. The PeopleSoft rights will separate
from shares of PeopleSoft common stock
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and rights certificates will be issued and become exercisable upon the earlier
of the following events, which is referred to as a distribution date:
- ten days after public announcement that a person or group of affiliated
or associated persons has acquired, or obtained the right to acquire,
beneficial ownership of 20% or more of the outstanding PeopleSoft common
stock; or
- ten days after the announcement or commencement of a tender offer or
exchange offer which would result in the beneficial ownership by a person
or group of 20% or more of the outstanding shares of PeopleSoft common
stock.
Any person or group of affiliated or associated persons described above is
referred to as a 20% acquirer.
Issuance of Rights Certificates; Expiration of Rights. After the
distribution date, rights certificates will be mailed to recordholders of
PeopleSoft common stock on the distribution date. The PeopleSoft rights will
expire on the earliest of:
- February 15, 2005;
- redemption or exchange of the PeopleSoft rights; or
- completing an acquisition of PeopleSoft resulting from a tender offer
determined by a majority of the PeopleSoft board to be adequate and in
the best interests of PeopleSoft and its stockholders.
Exercise of the Rights. Following the distribution date, and until one of
the further events described below, PeopleSoft rights will entitle the holder to
receive, for payment of the rights purchase price, one one-thousandth of a share
of the PeopleSoft preferred stock. If PeopleSoft does not have sufficient
preferred stock available for all PeopleSoft rights to be exercised, or the
PeopleSoft board decides that such action is necessary and not contrary to the
interests of PeopleSoft rights holders, PeopleSoft may instead substitute cash,
assets or other securities for the PeopleSoft preferred stock upon exercise of
PeopleSoft rights.
Unless the PeopleSoft rights are earlier redeemed, after a distribution
date, each holder of a PeopleSoft right which has not been exercised, other than
a 20% acquirer, whose rights will be void, will have the right to receive, upon
exercise and payment of the rights purchase price, PeopleSoft common stock
having a value equal to two times the rights purchase price.
Unless the PeopleSoft rights are earlier redeemed, if, after a distribution
date,
- PeopleSoft is acquired in a merger or other business combination
transaction,
- 50% or more of PeopleSoft's consolidated assets or earning power are sold
other than in the ordinary course of business,
each PeopleSoft right, other than PeopleSoft rights owned by the 20% acquirer,
will be exercisable for shares of common stock of the acquiring company with a
value equal to two times the rights exercise price unless the transaction
determined by a majority of the directors to be adequate and otherwise in the
best interests of PeopleSoft and its stockholders. Where the PeopleSoft board
has made such determination, the PeopleSoft rights will not become exercisable
and will expire.
Exchange and Redemption. At any time after a distribution date and before
the acquisition by such 20% acquirer of 50% or more of the outstanding
PeopleSoft common stock, the PeopleSoft board may exchange the PeopleSoft
rights, other than rights owned by the 20% acquirer, in whole or in part, at an
exchange ratio of one share of PeopleSoft common stock per right.
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At any time after the earlier of the tenth day following acquisition by a
20% acquirer and the expiration date of the rights, the PeopleSoft board may
redeem the rights in whole, but not part, for $.01 per share.
Amendment of Rights Agreement. The PeopleSoft rights agreement may be
supplemented or amended by the PeopleSoft board before a distribution date
without the approval of holders of PeopleSoft rights. After a distribution date,
the PeopleSoft rights agreement may be amended by the PeopleSoft board to cure
any ambiguity, defect or inconsistency, to make changes which do not adversely
affect the interests of holders of PeopleSoft rights, excluding the 20%
acquirer, or to shorten or lengthen any time period under the PeopleSoft rights
agreement; except no amendment to adjust the time period governing redemption
may be made when the PeopleSoft rights are not redeemable.
Rights and Preferences of the PeopleSoft Preferred Stock. Preferred stock
purchasable upon exercise of the rights will not be redeemable. Each share of
preferred stock will be entitled to a dividend of 1,000 times the dividend
declared per share of PeopleSoft common stock. Each share of preferred stock
will be entitled to receive 1,000 times the amount received per share of common
stock in the event of any merger, consolidation or other transaction in which
the shares of PeopleSoft common stock are changed or exchanged and a minimum
preferential liquidation preference equal to 1,000 times the per share amount
distributed to PeopleSoft common stockholders in the event of a liquidation.
This description of the PeopleSoft rights is qualified by reference to
PeopleSoft's rights agreement, which is incorporated by reference in this proxy
statement/prospectus. See "Where You Can Find More Information."
Certain Antitakeover Effects of the PeopleSoft Rights. The PeopleSoft
rights are designed to protect and maximize the value of the outstanding equity
interests in PeopleSoft in the event of an unsolicited attempt by an acquirer to
take-over PeopleSoft, in a manner or on terms not approved by the PeopleSoft
board. The PeopleSoft rights have been declared by the PeopleSoft board to deter
these types of tactics, including a gradual accumulation in the open market of
shares of PeopleSoft common stock representing a 20% or greater position to be
followed by a merger or a partial or two-tier tender offer that does not treat
all stockholders equally and may unfairly pressure stockholders, not give
stockholders any real choice and deprive them of the full value of their shares.
The PeopleSoft rights may make more difficult or discourage an acquisition of
PeopleSoft deemed undesirable by the PeopleSoft board by causing substantial
dilution to a person or group that attempts to acquire PeopleSoft on terms or in
a manner not approved by the PeopleSoft board, except for an acquisition offer
conditioned upon the negation, purchase or redemption of the PeopleSoft rights.
Antitakeover Effects of Delaware Law and Certain Provisions of PeopleSoft's
Charter Documents. Certain provisions of Delaware law and PeopleSoft's
certificate of incorporation may also make more difficult the acquisition of
PeopleSoft by tender offer, a proxy contest or otherwise and the removal of
officers and directors.
- Delaware law prohibits a publicly-held Delaware corporation from engaging
in a business combination with an interested stockholder unless the
business combination is approved in a specified manner. Generally, an
interested stockholder is a person who, together with its affiliates and
associates, owns 15% or more of the corporation's voting stock or owned
15% of such voting stock within three years before the proposed business
combination, or is affiliated with the corporation.
- The PeopleSoft certificate provides that the PeopleSoft board be divided
into two classes, with staggered two-year terms. The classification of
the PeopleSoft board makes it more difficult for PeopleSoft's
stockholders to replace the PeopleSoft board and for another party to
obtain control of PeopleSoft by replacing the board. Since the PeopleSoft
board has the power to retain and
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discharge officers of PeopleSoft, these provisions could also make it
more difficult for stockholders or another party to effect a change in
management.
- PeopleSoft's certificate provides that for so long as the company has a
class of stock registered under the Exchange Act, stockholder action can
be taken only at an annual or special meeting of stockholders and may not
be taken by written consent.
- PeopleSoft's certificate and bylaws require the affirmative vote of the
holders of at least two-thirds of the outstanding voting stock of
PeopleSoft to amend the provisions described above.
COMPARISON OF RIGHTS OF PEOPLESOFT STOCKHOLDERS AND VANTIVE STOCKHOLDERS
The rights of holders of PeopleSoft common stock are governed by Delaware
law, PeopleSoft's certificate of incorporation and PeopleSoft's bylaws, while
the rights of Vantive stockholders are governed by Delaware law, Vantive's
certificate of incorporation and Vantive's bylaws. In most respects, the rights
of Vantive stockholders are similar to those of PeopleSoft stockholders. The
following discussion summarizes the significant differences between the
companies' charter documents. This summary is not a complete discussion of, and
is qualified by reference to, PeopleSoft's certificate of incorporation,
PeopleSoft's bylaws, Vantive's certificate of incorporation, Vantive's bylaws
and Delaware law.
Capital Stock. Vantive's authorized capital stock consists of 50,000,000
shares of common stock, $0.001 par value, and 2,000,000 shares of preferred
stock, $0.001 par value. As of September 30, 1999, there were 27,486,659 shares
of Vantive common stock outstanding held by approximately 335 recordholders and
no shares of Vantive preferred stock outstanding. PeopleSoft's authorized
capital stock consists of 700,000,000 shares of common stock and 2,000,000
shares of preferred stock.
Classified Board. The PeopleSoft certificate provides that the PeopleSoft
board be divided into two classes, with staggered two-year terms. The Vantive
certificate does not provide for a classified board.
Directors. PeopleSoft's bylaws provide for the PeopleSoft board to consist
of five members. Directors may only be removed for cause and by an affirmative
vote of not less than two-thirds the total outstanding shares of PeopleSoft
common stock. Board vacancies may be filled by the affirmative vote of a
majority of the directors then in office.
Vantive's bylaws provide for the Vantive board to initially consist of
seven members, which number may be changed by a resolution adopted by a majority
of the Vantive board. Directors may be removed from office with or without cause
by the affirmative vote of the holders of at least a majority of outstanding
shares entitled to vote. Generally, board vacancies may be filled by the
affirmative vote of a majority of the remaining directors and if a director was
removed, the vacancy may be also be filled at a special meeting of the
stockholders held for that purpose.
Directors' Committees. The PeopleSoft bylaws provide that the board may by
resolution of a majority of the board delegate powers normally held by the
PeopleSoft board to a committee comprised of one or more members of the
PeopleSoft board to the extent permitted by resolution of the board or the
bylaws. These committees have no authority or power to adopt an agreement of
merger or consolidation, recommend to PeopleSoft stockholders regarding the
sale, lease, or exchange of all or substantially all of PeopleSoft's property or
assets, recommend dissolution or a revocation of a dissolution of PeopleSoft or
amend PeopleSoft's bylaws. In addition, committees have no authority to amend
PeopleSoft's certificate except to fix the designation and any preferences of
rights of shares issued if authorized by Board resolution. Finally, committees
may not declare a dividend, authorize issuance of stock; or adopt a certificate
of ownership and merger except as expressly authorized by board resolution
establishing the committee, or by PeopleSoft's bylaws or certificate.
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The Vantive bylaws provide that a vote of the majority of the Vantive board
effects designation of committees of the board. These committees may declare a
dividend, authorize the issuance of stock, or adopt a certificate of ownership
and merger only if the board resolution designating the committee so provides.
Stockholder Proposals. PeopleSoft's bylaws require in order to nominate
directors for election or other business before a stockholder meeting, a
stockholder must give notice in writing not less than 20 days nor more than 60
days before the meeting of his or her intent to bring the nomination or business
before the meeting, and the business must be a proper subject for stockholder
action under Delaware law. If less than 30 days notice of the meeting is given,
the stockholder's notice must be received no later than 10 days after the date
of the meeting is first publicly announced. The stockholder notice must state:
- if the stockholder intends to make nominations, any information regarding
each nominee as would be required to be included in a proxy statement
under the proxy rules of the SEC, including the written consent of each
nominee to being named in the proxy statement as a nominee and to serve
as a director if elected;
- if the stockholder intends to make nominations, a description of all
arrangements or understandings between the stockholder and each nominee
and any other persons under which the nominations will be made;
- a brief description of the business to be brought before the meeting, the
reasons for conducting the business at the meeting and any material
interest of the stockholder or the beneficial owners on whose behalf the
nomination or proposal is made, if any, in the business;
- the name and address of the stockholder who intends to make nominations
or propose the business and the name, age, principal occupation and
business and residential addresses of each nominee; and
- the class and number of shares of PeopleSoft stock owned beneficially and
of record by the stockholder who seeks to bring the action and the
beneficial owners, if any, on whose behalf the nomination or proposal is
made.
The Vantive bylaws provide that in order to properly bring nominations for
the election of directors or other business before a stockholder meeting, a
stockholder must give notice in writing to Vantive's secretary not less than 120
days before the anniversary of the date on which Vantive mailed its proxy
materials for the previous year's annual meeting of Vantive stockholders of his
or her intent to bring the nomination or business before the meeting. If the
date of the meeting is set more than 30 days before or after the date
contemplated at the time of the previous year's annual meeting, if no annual
meeting was held the previous year, or for a special meeting, the stockholder's
notice must be received no later than 10 days after the date of the meeting is
first publicly announced. The stockholder notice must state:
- the name and address of the stockholder who intends to make nominations
or propose the business and of each nominee;
- the class and number of shares of Vantive common stock owned beneficially
and of record by the stockholder who seeks to bring the action and the
beneficial owners, if any, on whose behalf the nomination or proposal is
made, and if the stockholder intends to make nominations, of whether the
stockholder intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice;
- if the stockholder intends to make nominations, a description of all
arrangements or understandings between the stockholder and each nominee
and any other persons under which the nominations will be made;
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- a brief description of the business to be brought before the meeting, the
reasons for conducting the business at the meeting and any material
interest of the stockholder or the beneficial owners on whose behalf the
proposal is made, if any, in the business;
- other information regarding each nominee or each matter of business to be
proposed by the stockholder as would be required to be included in a
proxy statement under the proxy rules of the SEC had the nominee been
nominated or the matter proposed by the Vantive board; and
- the consent of each nominee to serve as a director of Vantive if so
elected.
Right to Call Special Meetings of Stockholders. PeopleSoft's bylaws provide
that special meetings of PeopleSoft stockholders may be called by PeopleSoft's
board, chairman or president.
The Vantive bylaws provide that special meetings of stockholders of Vantive
may be called by the resolution approved by a majority of the total number of
authorized directors of Vantive's board or by stockholders holding shares
representing not less than 10% of the votes entitled to vote at the meeting.
Stockholders entitled to call a special meeting must submit a written
request by registered mail to Vantive's president or chief executive officer.
The Vantive board determines the time and place for the meeting. The time set
for the special meeting will not be less than 120 nor more than 130 days after
the receipt of the request for the special meeting and the determination of its
validity. The Vantive board will set a record date not more than 60 days nor
less than 10 days before the meeting, nor more than 60 days before any other
action, to determine the stockholders entitled to vote at the special meeting.
Following the receipt of the request, the secretary of Vantive must give notice
of the special meeting to the stockholders entitled to vote at the meeting.
No Written Consent by Stockholders. So long as PeopleSoft or Vantive has a
class of stock registered under the Exchange Act, stockholder action can be
taken only at an annual or special meeting of stockholders and may not be taken
by written consent.
Amendment of Certificate of Incorporation and Bylaws. PeopleSoft's
certificate of incorporation provides that the approval of at least 66 2/3% of
the total number of votes of the outstanding shares entitled to vote in the
election of directors must approve any amendment to the certificate to the
provisions of the certificate relating to:
- removal of a director;
- the classified board and indemnification of directors, officers,
employees or agents; or
- the amendment of the bylaws or the certificate.
Subject to the rights of the PeopleSoft stockholders, the PeopleSoft board
may make, amend or repeal the PeopleSoft bylaws. PeopleSoft's certificate of
incorporation provides that at least 66 2/3% of the total number of votes of the
outstanding shares entitled to vote in the election of directors must approve
any amendment of the special meeting provision, the advance notice of
stockholder nominees provision and the advance notice of stockholder business
provision of the PeopleSoft bylaws by the stockholders.
Vantive's certificate of incorporation provides that at least 66 2/3% of
the total number of votes of the outstanding shares entitled to vote in the
election of directors must approve any amendment to the provisions of the
certificate relating to:
- management of Vantive's business and conduct of its affairs;
- the number of directors, vacancies of board seats and removal of
directors;
- amendment of Vantive's bylaws by Vantive stockholders;
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- indemnification of Vantive's directors, officers, employees and agents;
or
- amendment of Vantive's certificate.
Vantive's bylaws may be amended by vote of the majority of the Vantive
board. In addition, Vantive's certificate of incorporation provides that any
adoption, amendment or repeal of the Vantive bylaws by the Vantive stockholders
requires an affirmative vote of at least 66 2/3% of the voting power of all of
the then outstanding shares entitled to vote in the election of directors.
Interested Director Transaction. The PeopleSoft and Vantive certificates of
incorporation do not specifically provide for interested director transactions.
Under Delaware law, certain contracts or transactions in which one or more of
the directors of PeopleSoft or Vantive has an interest are void or voidable
unless the following conditions are met:
- the stockholders approve the contract or transaction after full
disclosure of material facts;
- the board approves the transaction after full disclosure of material
facts and the transaction is fair, and approved by a majority of the
disinterested directors, even though less than a quorum; or
- the contract or transaction must have been fair as to PeopleSoft or
Vantive at the time it was approved.
Interested Stockholder Transaction. Both PeopleSoft and Vantive are subject
to the provisions of Delaware law which prohibit the corporation from engaging
in a business combination with an interested stockholder unless certain
specified approvals are obtained.
Directors' Liability. The PeopleSoft and Vantive certificates of
incorporation eliminate the liability of directors to the fullest extent
permitted by Delaware law.
Vantive Rights Plan.
General. Vantive has entered into a stockholder rights plan that permits
Vantive to issue rights entitling the holders of such rights to purchase shares
of Vantive's preferred stock.
As with most stockholder rights plans, the terms of Vantive's rights plan
are complex and not easily summarized, particularly as it relates to the
acquisition of Vantive's common stock and to exercisability. This summary may
not contain all of the information that is important to you. Accordingly, you
should carefully read Vantive's stockholder rights plan, which is incorporated
by this reference into this proxy statement/prospectus, in its entirety.
The stockholder rights plan provides that each outstanding share of Vantive
common stock will have the right to purchase one one-thousandth of a preferred
share of Vantive attached to it. The purchase price per one one-thousandth of
Vantive preferred share under the rights plan is $75, subject to adjustment.
Distribution Date. Initially, the rights under the Vantive rights plan are
attached to outstanding certificates representing Vantive common stock, and no
separate certificates representing the rights will be distributed. The rights
will be separate from Vantive common stock and will be represented by separate
certificates approximately 10 days after a person or group of affiliated or
associated persons acquires, obtains the right to acquire, or announces or
commences a tender offer for 15% or more of the outstanding Vantive common
stock, other than PeopleSoft in this merger, which we refer to as a distribution
date. We refer to the above described person or group as a 15% acquirer. The
Vantive rights will not separate from the Vantive common stock or become
exercisable as a result of the merger.
Issuance of Rights Certificates; Expiration of Rights. After the rights
separate from the Vantive common stock, certificates representing the rights
will be mailed to record holders of the common stock. Once distributed, the
rights certificates alone will represent the rights.
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All shares of Vantive common stock issued prior to the date the rights
separate from the common stock will be issued with the rights attached. The
rights are not exercisable until the date the rights separate from the common
stock. The Vantive rights will expire on November 18, 2008, or upon the
completion of the merger, unless earlier redeemed or exchanged by Vantive.
Exercise of the Rights; Exchange and Redemption. After a distribution date,
each right will entitle the holder, other than a 15% acquirer, to purchase a
number of shares of Vantive common stock with a market value equal to the right
purchase price, as adjusted, divided by half the average of the daily closing
prices per share of the Vantive common stock for the prior 30 consecutive
trading days.
Each right will entitle the holder, other than a 15% acquirer, to purchase
a number of shares of common stock of the acquirer with a market value equal to
the right purchase price divided by one-half the average market price for the
prior 30 consecutive trading days of the Vantive common stock. Unless the
Vantive rights are earlier redeemed, in the event that, after a distribution
date,
- Vantive merges into another entity;
- an acquiring entity merges into Vantive; or
- Vantive sells more than 50% of its assets or earning power,
under Vantive's rights plan, any rights that are or were owned by an acquirer of
more than 50% of Vantive's outstanding common stock will be null and void.
The Vantive rights plan contains exchange provisions which provide that
after an acquirer obtains 15% or more of Vantive's capital stock, but less than
50% of Vantive's outstanding common stock, the Vantive board of directors may,
at its option, exchange all or part of the then outstanding and exercisable
rights for common shares. In such an event, the exchange ratio is one common
share per right, adjusted to reflect any stock split, stock dividend or similar
transaction.
The Vantive board of directors may, at its option, redeem all of the
outstanding rights under the rights plan prior to the earlier of (1) a
distribution date or (2) the final expiration date of the rights plan. The
redemption price under the rights plan is $.001 per right. The right to exercise
the rights will terminate upon action of the Vantive board of directors ordering
the redemption of the rights and the only right of the holders of the rights
will be to receive the redemption price.
Amendment of Rights Plan. Until the Vantive rights become nonredeemable,
Vantive may, except with respect to the rights redemption price, amend the
Vantive rights plan in any manner. After the Vantive rights become
nonredeemable, Vantive may amend the rights plan, provided that no amendment may
adversely affect the interests of the holders of the Vantive rights, other than
the 15% acquirer, or cause the Vantive rights to again become redeemable or the
rights plan to again be freely amendable.
Rights and Preferences of Preferred Stock. Holders of rights will have no
rights as stockholders of Vantive, including the right to vote or receive
dividends, simply by virtue of holding the rights. Preferred stock purchasable
upon exercise of the rights will not be redeemable. Each share of preferred
stock will be entitled to a dividend of 1,000 times the dividend declared per
share of Vantive common stock. Each share of preferred stock will be entitled to
receive 1,000 times the amount per share of common stock in the event of any
merger, consolidation or other transaction in which the shares of Vantive Common
Stock are changed or exchanged, and a minimum preferential liquidation
preference equal to the greater of $75,000 per share plus accrued dividends or
1,000 times the per share amount distributed to Vantive common stockholders in
the event of a liquidation.
Certain Antitakeover Effects of the Vantive Rights. The Vantive stockholder
rights plan contains rights that have anti-takeover effects. The rights may
cause substantial dilution to a person or group that attempts to acquire Vantive
without conditioning the offer on a substantial number of rights being
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acquired. Accordingly, the existence of the rights may deter acquirers from
making takeover proposals or tender offers. However, the rights are not intended
to prevent a takeover, but rather are designed to enhance the ability of the
Vantive board of directors to negotiate with an acquirer on behalf of all the
stockholders. In addition, the rights should not interfere with a proxy contest.
DISSENTERS' APPRAISAL RIGHTS
Vantive stockholders will not be entitled to dissenters' appraisal rights
under Delaware law or any other statute in connection with the merger.
LEGAL MATTERS
The validity of the PeopleSoft common stock to be issued in connection with
the merger has been passed upon by Gibson, Dunn & Crutcher LLP, San Francisco,
California.
EXPERTS
The consolidated financial statements of PeopleSoft at December 31, 1998
and 1997, and for each of the three years in the period ended December 31, 1998,
incorporated by reference in the Proxy Statement of Vantive, which is referred
to and made a part of this Prospectus and Registration Statement of PeopleSoft,
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their report incorporated by reference herein, and are included in reliance upon
such report given on the authority of such firm as experts in accounting and
auditing.
The audited consolidated financial statements and schedules of Vantive
incorporated by reference in this proxy statement/prospectus have been audited
by Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto and are incorporated herein in reliance upon the
authority of said firm as experts in giving said reports.
STOCKHOLDER PROPOSALS
Vantive will hold a 2000 annual meeting of stockholders only if the merger
does not occur before the time of the meeting. In the event that the meeting is
held, the secretary of Vantive must receive any proposals of Vantive
stockholders intended to be presented at the 2000 annual meeting by no later
than January 3, 2000 in order for the proposals to be considered for inclusion
in the Vantive proxy materials relating to the meeting.
OTHER MATTERS
As of the date of this proxy statement/prospectus, the Vantive board of
directors and the PeopleSoft board of directors know of no matters that will be
presented for consideration at the Vantive special meeting other than as
described in this proxy statement/prospectus. If any other matters shall
properly come before the Vantive special meeting or any adjournment or
postponement of the special meeting and be voted upon, the enclosed proxies will
be deemed to confer discretionary authority on the individuals named as proxies
therein to vote the shares represented by such proxies as to any such matters.
The individuals named as proxies intend to vote or not to vote in accordance
with the recommendation of the management of Vantive.
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WHERE YOU CAN FIND MORE INFORMATION
PeopleSoft has filed with the SEC a registration statement under the
Securities Act that registers the distribution to Vantive stockholders of the
shares of PeopleSoft common stock to be issued in connection with the merger.
The registration statement, including the attached exhibits and schedules,
contains additional relevant information about PeopleSoft and PeopleSoft common
stock. The rules and regulations of the SEC allow us to omit certain information
included in the registration statement from this proxy statement/prospectus.
In addition, PeopleSoft and Vantive file reports, proxy statements and
other information with the SEC under the Exchange Act. You may read and copy
this information at the SEC's Public Reference Room, 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549. You may also obtain copies of this
information by mail from the Public Reference Section at prescribed rates. You
may obtain information on the operation of the Public Reference Room by calling
1-800-SEC-0330.
The SEC also maintains an Internet site that contains reports, proxy
statements and other information about issuers, like PeopleSoft and Vantive, who
file electronically with the SEC. The address of that site is
http://www.sec.gov.
The SEC allows PeopleSoft and Vantive to incorporate by reference
information into this proxy statement/prospectus. This means that the companies
can disclose important business and financial information to you by referring
you to another document filed separately with the SEC. The information
incorporated by reference is considered to be a part of this proxy
statement/prospectus, except for any information that is superseded by
information that is included directly in this document.
This proxy statement/prospectus incorporates by reference the documents
listed below that PeopleSoft and Vantive have previously filed with the SEC.
They contain important information about our companies and their financial
condition.
<TABLE>
<CAPTION>
PEOPLESOFT SEC FILINGS PERIOD
---------------------- ------
<S> <C>
Annual report on Form 10-K........................... Year ended December 31, 1998
The description of PeopleSoft common stock contained
in PeopleSoft's Registration Statement on Form 8-A
(File No. 0-20170)................................... Filed: October 7, 1992
The description of PeopleSoft Preferred Share
Purchase Rights contained in PeopleSoft's
Registration Statement on Form 8-A126/A (File No.
0-20170)........................................... Filed: March 25, 1998
Quarterly reports on Form 10-Q....................... Quarter ended March 31, 1999
Quarter ended June 30, 1999
Quarter ended September 30, 1999
Current report on Form 8-K........................... Filed: June 28, 1999
October 13, 1999
</TABLE>
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<TABLE>
<CAPTION>
VANTIVE SEC FILINGS PERIOD
------------------- ------
<S> <C>
Annual report on Form 10-K......................... Year ended December 31, 1998
The description of Vantive common stock contained
in Vantive's Registration Statement on Form 8-A
(File No. 0-026592)................................ Filed: August 10, 1995
The description of Vantive's Preferred Stock
Purchase Rights contained in Vantive's
Registration Statement on Form 8-A126 (File No.
0-26592)......................................... Filed: December 18, 1998
Quarterly reports on Form 10-Q..................... Quarter ended March 31, 1999
Quarter ended June 30, 1999
Quarter ended September 30, 1999
Current reports on Form 8-K........................ Filed: October 21, 1999
</TABLE>
PeopleSoft and Vantive incorporate by reference additional documents that
either company may file with the SEC between the date of this proxy
statement/prospectus and the date of the Vantive special meeting. These
documents include periodic reports, such as annual reports on Form 10-K,
quarterly reports on Form 10-Q and current reports on Form 8-K, as well as proxy
statements.
PeopleSoft common stock and Vantive common stock are quoted on the Nasdaq
National Market. Accordingly, you may inspect the information in the companies'
files with the SEC at the offices of The Nasdaq Stock Market, Inc., 1735 K
Street, N.W., Washington, D.C. 20006.
PeopleSoft has supplied all information contained or incorporated by
reference in this proxy statement/prospectus relating to PeopleSoft, as well as
all pro forma financial information, and Vantive has supplied all such
information relating to Vantive.
You can obtain any of the documents incorporated by reference in this
document through PeopleSoft or Vantive, as the case may be, or from the SEC
through the SEC's web site at the address described above. Documents
incorporated by reference are available from the companies without charge,
excluding any exhibits to those documents unless the exhibit is specifically
incorporated by reference as an exhibit in this proxy statement/prospectus. You
can obtain documents incorporated by reference in this proxy
statement/prospectus without charge by requesting them in writing or by
telephone from the appropriate company at the following addresses:
PEOPLESOFT
Boston Equiserv, LLC
289 South San Antonio Road
Suite 100
Los Altos, CA 94022
Telephone: (650) 917-3800
VANTIVE
D.F. King & Co., Inc.
77 Water St.
New York, NY 10005-4495
Telephone: (800) 431-9633
IF YOU WOULD LIKE TO REQUEST DOCUMENTS, PLEASE DO SO BY DECEMBER 21, 1999
TO RECEIVE THEM BEFORE THE VANTIVE SPECIAL MEETING. If you request any
incorporated documents from us, we will mail them to you by first class mail, or
another equally prompt means, within one business day after we receive your
request.
Information contained in PeopleSoft's or Vantive's web sites is not a part
of this proxy statement/ prospectus.
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No one has been authorized to give any information or make any
representation about the merger or our companies that is different from, or in
addition to, that contained in this proxy statement/prospectus or in any of the
materials that we have incorporated into this document. Therefore, if anyone
does give you information of this sort, you should not rely on it. If you are in
a jurisdiction where offers to exchange or sell, or solicitations of offers to
exchange or purchase, the securities offered by this document or the
solicitation of proxies is unlawful, or if you are a person to whom it is
unlawful to direct these types of activities, then the offer presented in this
document does not extend to you. The information contained in this document
speaks only as of the date of this document unless the information specifically
indicates that another date applies.
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UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following Unaudited Pro Forma Combined Condensed Consolidated Financial
Statements assume a business combination between PeopleSoft and Vantive
accounted for as a pooling of interests and are derived from the historical
consolidated financial statements and the related notes, which are incorporated
by reference in this proxy statement/prospectus. The Unaudited Pro Forma
Combined Condensed Consolidated Balance Sheet combines PeopleSoft's balance
sheet as of September 30, 1999 with Vantive's balance sheet as of the same date.
The Unaudited Pro Forma Combined Condensed Consolidated Statements of Operations
combine PeopleSoft's historical results of operations for the fiscal years ended
December 31, 1998, 1997 and 1996 and the nine months ended September 30, 1999
with Vantive's results of operations for the same periods. The pro forma
statement of operations data assume the combination occurred at the beginning of
the earliest period presented while the pro forma balance sheet data assume the
combination took place on September 30, 1999.
The pro forma information is presented for illustrative purposes only and
is not necessarily indicative of the operating results or financial position
that would have occurred if the merger had been consummated at the beginning of
the earliest period presented, nor is it necessarily indicative of the future
operating results or financial position of the combined companies following the
merger.
These Unaudited Pro Forma Combined Condensed Consolidated Financial
Statements are based on, and should be read in conjunction with, the historical
consolidated financial statements and the related notes thereto of PeopleSoft
and Vantive, incorporated herein by reference.
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UNAUDITED PRO FORMA COMBINED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1999
(IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL PRO FORMA PRO FORMA
PEOPLESOFT VANTIVE ADJUSTMENTS COMBINED
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents................ $ 299,792 $ 55,472 $ 355,264
Short-term investments................... 186,648 33,078 219,726
Accounts receivable, net................. 301,354 47,004 348,358
Investments available for sale........... 63,374 -- 63,374
Deferred income taxes.................... 49,917 7,337 19,000(4) 76,254
Other current assets..................... 55,723 13,483 $ (400)(3) 68,806
---------- -------- -------- ----------
Total current assets........... 956,808 156,374 18,600 1,131,782
Property and equipment, net.............. 168,119 20,490 (472)(3) 188,137
Investments.............................. 68,004 68,004
Deferred income taxes.................... 2,273 2,273
Capitalized software, less accumulated
amortization........................... 43,221 43,221
Other assets............................. 41,487 3,581 45,068
---------- -------- -------- ----------
$1,279,912 $180,445 $ 18,128 $1,478,485
========== ======== ======== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
liabilities............................ $ 102,108 $ 20,812 $ 60,000(4) $ 182,920
Accrued compensation and related
expenses............................... 123,726 5,714 129,440
Income taxes payable..................... 1,150 1,150
Deferred revenue......................... 402,914 19,589 422,503
---------- -------- -------- ----------
Total current liabilities...... 629,898 46,115 60,000 736,013
Convertible debt......................... 69,000 69,000
Long term deferred revenue............... 89,589 89,589
Other long term liabilities.............. 14,038 1,340 15,378
Stockholders' equity:
Common stock............................. 2,520 27 200(1) 2,747
Additional paid-capital.................. 419,456 77,252 (200)(1) 496,508
Accumulated other comprehensive income... 25,794 (1,088) 24,706
Retained earnings........................ 98,617 (12,201) (41,872)(3)(4) 44,544
---------- -------- -------- ----------
Total stockholders' equity..... 546,387 63,990 (41,872) 568,505
---------- -------- -------- ----------
$1,279,912 $180,445 $ 18,128 $1,478,485
========== ======== ======== ==========
</TABLE>
88
<PAGE> 94
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL PRO FORMA PRO FORMA
PEOPLESOFT VANTIVE ADJUSTMENTS COMBINED
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Revenues:
License fees.......................... $ 183,221 $ 61,170 $ 244,391
Services.............................. 722,696 75,138 $ (72)(3) 797,762
Development and other services........ 14,839 14,839
---------- -------- ------- ----------
Total revenues................ 920,756 136,308 (72) 1,056,992
Costs and expenses:
Cost of license fees.................. 30,796 1,651 32,447
Cost of services...................... 377,041 45,230 (38)(3) 422,233
Cost of development services.......... 13,499 13,499
Sales and marketing................... 237,664 59,242 296,906
Product development................... 190,156 25,646 215,802
General and administrative............ 61,141 12,383 73,524
Restructuring charge.................. 4,355 4,375 8,730
Contribution to Momentum Business
Application........................ 176,409 176,409
---------- -------- ------- ----------
Total costs and expenses...... 1,091,061 148,527 (38) 1,239,550
---------- -------- ------- ----------
Operating loss........................ (170,305) (12,219) (34) (182,558)
Other income, interest expense and
other.............................. 15,688 690 16,378
---------- -------- ------- ----------
Loss before income taxes.............. (154,617) (11,529) (34) (166,180)
Provision for (benefit from) income
taxes.............................. 8,717 (2,551) (14)(3) 6,152
---------- -------- ------- ----------
Net loss.............................. $ (163,334) $ (8,978) $ (20) $ (172,332)
========== ======== ======= ==========
Basic and diluted loss per share........ $ (0.68) $ (0.34) $ 0.36 $ (0.66)
========== ======== ======= ==========
Shares used in basic and diluted per
share computation(2)............... 240,231 26,763 (4,684) 262,310
========== ======== ======= ==========
</TABLE>
89
<PAGE> 95
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL PRO FORMA PRO FORMA
PEOPLESOFT VANTIVE ADJUSTMENTS COMBINED
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Revenues:
License fees.............................. $ 576,467 $ 89,215 $(1,405)(3) $ 664,277
Services.................................. 737,206 73,885 (600)(3) 810,491
---------- -------- ------- ----------
Total revenues.................... 1,313,673 163,100 (2,005) 1,474,768
Costs and expenses:
Cost of license fees...................... 42,933 1,485 44,418
Cost of services.......................... 424,234 41,436 (337)(3) 465,333
Sales and marketing....................... 339,973 67,615 407,588
Product development....................... 209,677 28,293 237,970
General and administrative................ 61,447 12,827 74,274
In-process research and development and
merger related costs................... 13,900 10,895 24,795
---------- -------- ------- ----------
Total costs and expenses.......... 1,092,164 162,551 (337) 1,254,378
---------- -------- ------- ----------
Operating income............................ 221,509 549 (1,668) 220,390
Other income, interest expense and other.... 20,067 711 20,778
---------- -------- ------- ----------
Income before income taxes.................. 241,576 1,260 (1,668) 241,168
Provision for income taxes.................. 98,358 3,546 679(3) 101,225
---------- -------- ------- ----------
Net income (loss)........................... $ 143,218 $ (2,286) $ (989) $ 139,943
========== ======== ======= ==========
Basic income (loss) per share............... $ 0.63 $ (0.09) $ 0.02 $ 0.56
========== ======== ======= ==========
Shares used in basic per share
computation............................... 228,479 25,852 (4,524) 249,807
========== ======== ======= ==========
Diluted income (loss) per share............. $ 0.55 $ (0.09) $ 0.04 $ 0.50
========== ======== ======= ==========
Shares used in diluted per share
computation(2)............................ 258,305 25,852 (3,099) 281,058
========== ======== ======= ==========
</TABLE>
90
<PAGE> 96
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL PRO FORMA PRO FORMA
PEOPLESOFT VANTIVE ADJUSTMENTS COMBINED
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Revenues:
License fees............................... $433,195 $ 76,471 $509,666
Services................................... 382,456 40,875 $ (843)(3) 422,488
-------- -------- ------- --------
Total revenues..................... 815,651 117,346 (843) 932,154
Costs and expenses:
Cost of license fees....................... 21,635 736 22,371
Cost of services........................... 229,178 22,748 (505)(3) 251,421
Sales and marketing........................ 225,498 45,811 271,309
Product development........................ 129,553 17,508 147,061
General and administrative................. 43,611 9,377 52,988
In-process research and development and
merger related costs.................... 21,121 21,121
-------- -------- ------- --------
Total costs and expenses........... 649,475 117,301 (505) 766,271
-------- -------- ------- --------
Operating income............................. 166,176 45 (338) 165,883
Other income, interest expense and other..... 9,862 1,305 11,167
-------- -------- ------- --------
Income before income taxes................... 176,038 1,350 (338) 177,050
Provision for income taxes................... 67,775 8,308 (130)(3) 75,953
-------- -------- ------- --------
Net income (loss)............................ $108,263 $ (6,958) $ (208) $101,097
======== ======== ======= ========
Basic income (loss) per share................ $ 0.49 $ (0.28) $ 0.21 $ 0.42
======== ======== ======= ========
Shares used in basic per share computation... 219,302 24,570 (4,300) 239,572
======== ======== ======= ========
Diluted income (loss) per share.............. $ 0.44 $ (0.28) $ 0.21 $ 0.37
======== ======== ======= ========
Shares used in diluted per share
computation(2)............................. 248,321 24,570 (2,687) 270,204
======== ======== ======= ========
</TABLE>
91
<PAGE> 97
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL PRO FORMA PRO FORMA
PEOPLESOFT VANTIVE ADJUSTMENTS COMBINED
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Revenues:
License fees............................... $252,799 $41,513 $294,312
Services................................... 197,253 22,761 $ (85)(3) 219,929
-------- ------- ------- --------
Total revenues..................... 450,052 64,274 (85) 514,241
Costs and expenses:
Cost of license fees....................... 12,357 392 12,749
Cost of services........................... 118,906 12,263 (51)(3) 131,118
Sales and marketing........................ 135,757 24,676 160,433
Product development........................ 70,653 7,261 77,914
General and administrative................. 27,162 5,389 32,551
In-process research and development and
merger related costs.................... 29,393 29,393
-------- ------- ------- --------
Total costs and expenses........... 394,228 49,981 (51) 444,158
-------- ------- ------- --------
Operating income............................. 55,824 14,293 (34) 70,083
Other income, interest expense and other..... 5,888 1,286 7,174
-------- ------- ------- --------
Income before income taxes................... 61,712 15,579 (34) 77,257
Provision for income taxes................... 25,851 4,674 (14)(3) 30,511
-------- ------- ------- --------
Net income................................... $ 35,861 $10,905 $ (20) $ 46,746
======== ======= ======= ========
Basic income per share....................... $ 0.17 $ 0.45 $ (0.42) $ 0.20
======== ======= ======= ========
Shares used in basic per share computation... 211,248 24,008 (4,201) 231,055
======== ======= ======= ========
Diluted income per share..................... $ 0.15 $ 0.42 $ (0.39) $ 0.18
======== ======= ======= ========
Shares used in diluted per share
computation(2)............................. 239,452 25,847 (4,523) 260,776
======== ======= ======= ========
</TABLE>
92
<PAGE> 98
NOTES TO UNAUDITED PRO FORMA COMBINED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. PRO FORMA SHARE ISSUANCE
The Unaudited Pro Forma Combined Condensed Consolidated Financial
Statements reflect the issuance of 0.825 of a share of PeopleSoft common stock
for each outstanding share of Vantive common stock. The actual number of shares
of PeopleSoft common stock to be issued will be based on the number of
outstanding shares of Vantive common stock outstanding at the effective time of
the merger.
The following table provides the pro forma share issuances in connection
with the merger as of September 30, 1999:
<TABLE>
<S> <C>
Vantive common shares outstanding as of September 30,
1999...................................................... 27,487,000
Exchange ratio.............................................. 0.825:1.00
-----------
Number of shares of PeopleSoft stock exchanged.............. 22,677,000
Number of shares of PeopleSoft common stock outstanding as
of September 30, 1999..................................... 251,988,000
-----------
Number of shares of PeopleSoft common stock outstanding as
of September 30, 1999 assuming completion of the merger on
that date................................................. 274,665,000
-----------
</TABLE>
In addition, at the effective time of the merger, PeopleSoft will assume
all of the outstanding Vantive stock options with the number of shares and the
option price appropriately adjusted by the exchange ratio. At September 30,
1999, Vantive had options outstanding to purchase 6,508,882 shares of Vantive
stock which would become options to purchase 5,369,827 shares of PeopleSoft
common stock.
2. PRO FORMA COMBINED PER SHARE AMOUNTS
The pro forma combined basic net income or loss per share amounts are based
on PeopleSoft's weighted average shares outstanding for the respective periods
plus Vantive's weighted average shares outstanding for the respective periods
multiplied by the exchange ratio of 0.825. The pro forma combined diluted net
income per share amounts are based on the pro forma weighted average shares
computed above plus the potentially dilutive securities of PeopleSoft and also
of Vantive on an as adjusted basis using the exchange ratio.
3. CONFORMING AND INTERCOMPANY ADJUSTMENTS
There are no material differences between the accounting policies of
PeopleSoft and Vantive; accordingly, no pro forma conforming adjustments are
required. Certain Income Statement captions have been combined for consistency
of presentation. The Unaudited Pro Forma Combined Condensed Consolidated
Financial Statements include adjustments to eliminate transactions between
PeopleSoft and Vantive.
4. MERGER TRANSACTION COSTS
PeopleSoft and Vantive estimate they will incur costs in connection with
the merger in the range of $50 million to $70 million. Such costs include direct
transaction costs of approximately $12 million, consisting primarily of business
consulting fees paid to investment bankers, legal and accounting fees and
expenses and $38 million to $58 million for certain exit costs resulting from
the merger. PeopleSoft is only in the preliminary stages of determining such
exit costs which could include, among other things, charges related to severance
for certain employees of Vantive who will not remain with the combined company
following the merger, lease payments for duplicate facilities which will no
longer be used, costs to be incurred to terminate contracts with third parties
who provide redundant or conflicting services and
93
<PAGE> 99
write-off of duplicative equipment and other fixed assets. Accordingly, such
estimates of cost are preliminary and, therefore, subject to change. PeopleSoft
anticipates having an exit plan in place at the time the merger is consummated
which is currently expected to be late in the fourth quarter of 1999, at which
time these exit costs, as well as the direct transaction costs, will be charged
to operations.
The Pro Forma Combined Condensed Balance Sheet as of September 30, 1999
gives effect to such expenses using the mid-point of $60 million of the range
above, less the related income tax effect, but these expenses have not been
reflected in the Pro Forma Combined Condensed Consolidated Statements of
Operations.
94
<PAGE> 100
APPENDIX A
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
DATED AS OF OCTOBER 11, 1999
BY AND AMONG
PEOPLESOFT, INC.,
THE VANTIVE CORPORATION
AND
VICKERS ACQUISITION, INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 101
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE 1 THE MERGER......................................................... 1
Section 1.1. The Merger.................................................. 1
Section 1.2. Effective Time.............................................. 1
Section 1.3. Closing of the Merger....................................... 1
Section 1.4. Effects of the Merger....................................... 2
Section 1.5. Certificate of Incorporation and Bylaws..................... 2
Section 1.6. Directors................................................... 2
Section 1.7. Officers.................................................... 2
Section 1.8. Conversion of Shares........................................ 2
Section 1.9. Dissenters' Rights.......................................... 2
Section 1.10. Exchange of Certificates.................................... 3
Section 1.11. Stock Options............................................... 4
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................... 5
Section 2.1. Organization and Qualification; Subsidiaries; Investments... 5
Section 2.2. Capitalization of the Company and its Subsidiaries.......... 6
Section 2.3. Authority Relative to this Agreement; Recommendation........ 7
Section 2.4. SEC Reports; Financial Statements........................... 7
Section 2.5. Information Supplied........................................ 8
Section 2.6. Consents and Approvals; No Violations....................... 8
Section 2.7. No Default.................................................. 9
Section 2.8. No Undisclosed Liabilities; Absence of Changes.............. 9
Section 2.9. Litigation.................................................. 10
Section 2.10. Compliance with Applicable Law.............................. 10
Section 2.11. Employee Benefits........................................... 10
Section 2.12. Labor and Employment Matters................................ 14
Section 2.13. Environmental Laws and Regulations.......................... 14
Section 2.14. Taxes....................................................... 15
Section 2.15. Intellectual Property....................................... 16
Section 2.16. Insurance................................................... 20
Section 2.17. Restrictions on Business Activities......................... 21
Section 2.18. Title to Properties; Absence of Liens and Encumbrances...... 21
Section 2.19. Certain Business Practices.................................. 21
Section 2.20. Product Warranties.......................................... 21
Section 2.21. Agreements, Scheduled Contracts and Commitments............. 22
Section 2.22. Suppliers and Customers..................................... 22
Section 2.23. Vote Required............................................... 22
Section 2.24. Pooling..................................................... 22
Section 2.25. Affiliates.................................................. 23
Section 2.26. Opinion of Financial Advisor................................ 23
Section 2.27. Brokers..................................................... 23
Section 2.28. Company Rights Agreement.................................... 23
Section 2.29. Takeover Statutes........................................... 23
Section 2.30. Representations Complete.................................... 23
</TABLE>
i
<PAGE> 102
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION...........
23
Section 3.1. Organization................................................ 24
Section 3.2. Capitalization of Parent and its Subsidiaries............... 24
Section 3.3. Authority Relative to this Agreement........................ 25
Section 3.4. SEC Reports; Financial Statements........................... 25
Section 3.5. Information Supplied........................................ 26
Section 3.6. Consents and Approvals; No Violations....................... 26
Section 3.7. Litigation.................................................. 26
Section 3.8. Tax Treatment; Pooling...................................... 26
Section 3.9. Opinion of Financial Advisor................................ 26
Section 3.10. Brokers..................................................... 27
Section 3.11. No Prior Activities......................................... 27
Section 3.12. No Undisclosed Liabilities; Absence of Changes.............. 27
Section 3.13. Compliance with Applicable Law.............................. 27
Section 3.14. Affiliates.................................................. 27
Section 3.15. Intellectual Property....................................... 27
Section 3.16. No Default.................................................. 27
Section 3.17. Representations Complete.................................... 28
ARTICLE 4 COVENANTS.......................................................... 28
Section 4.1. Conduct of Business of the Company.......................... 28
Section 4.2. Preparation of S-4 and the Proxy Statement.................. 31
Section 4.3. No Solicitation or Negotiation.............................. 31
Section 4.4. Comfort Letters............................................. 33
Section 4.5. Meeting of Stockholders..................................... 33
Section 4.6. Nasdaq National Market...................................... 34
Section 4.7. Access to Information....................................... 34
Section 4.8. Certain Filings; Reasonable Efforts......................... 35
Section 4.9. Public Announcements........................................ 35
Section 4.10. Indemnification and Directors' and Officers' Insurance...... 35
Section 4.11. Notification of Certain Matters............................. 37
Section 4.12. Affiliates; Pooling; Tax-Free Reorganization................ 37
Section 4.13. Additions to and Modification of Company Disclosure Schedule
and Parent Disclosure Schedule.............................. 37
Section 4.14. Access to Company Employees................................. 38
Section 4.15. Company Compensation and Benefit Plans...................... 38
Section 4.16. Convertible Subordinated Notes.............................. 38
Section 4.17. Takeover Statutes........................................... 38
Section 4.18. Company Rights Agreement.................................... 38
Section 4.19. Form S-8.................................................... 39
Section 4.20. Employee Matters............................................ 39
Section 4.21. Employee Stock Purchase Plan................................ 39
Section 4.22. Parent Capital Stock........................................ 39
</TABLE>
ii
<PAGE> 103
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE 5 CONDITIONS TO CONSUMMATION OF THE MERGER........................... 40
Section 5.1. Conditions to Each Party's Obligations to Effect the
Merger...................................................... 40
Section 5.2. Conditions to the Obligations of the Company................ 40
Section 5.3. Conditions to the Obligations of Parent and Acquisition..... 41
ARTICLE 6 TERMINATION; AMENDMENT; WAIVER..................................... 42
Section 6.1. Termination................................................. 42
Section 6.2. Effect of Termination....................................... 43
Section 6.3. Fees and Expenses........................................... 43
Section 6.4. Amendment................................................... 44
Section 6.5. Extension; Waiver........................................... 44
ARTICLE 7 MISCELLANEOUS...................................................... 44
Section 7.1. Nonsurvival of Representations and Warranties............... 44
Section 7.2. Entire Agreement; Assignment................................ 44
Section 7.3. Validity.................................................... 45
Section 7.4. Notices..................................................... 45
Section 7.5. Governing Law and Venue; Waiver of Jury Trial............... 46
Section 7.6. Descriptive Headings........................................ 47
Section 7.7. Parties in Interest......................................... 47
Section 7.8. Certain Definitions......................................... 47
Section 7.9. Personal Liability.......................................... 49
Section 7.10. Specific Performance........................................ 49
Section 7.11. Counterparts................................................ 49
</TABLE>
EXHIBITS
<TABLE>
<S> <C>
Exhibit A-1.......................... Form of Letter Agreement with Company Affiliates
Exhibit A-2.......................... Form of Letter Agreement with Parent Affiliates
Exhibit B-1.......................... Form of Representations Relating to Tax Matters of the
Company
Exhibit B-2.......................... Form of Representations Relating to Tax Matters of Parent
and Acquisition
Exhibit C............................ Form of Certificate of Merger
</TABLE>
COMPANY DISCLOSURE SCHEDULE
[The Company agrees to furnish supplementally to the Securities and
Exchange Commission copies of any of the following omitted schedules upon
request of the Commission]
<TABLE>
<S> <C>
Section 2.1(a)....................... Subsidiaries
Section 2.1(c)....................... Equity Investments
Section 2.2(a)....................... Repurchase and Redemption Obligations
Section 2.2(b)....................... Options, Warrants and Similar Rights
Section 2.6.......................... Consents and Approval
Section 2.7.......................... Defaults
Section 2.8.......................... Undisclosed Liabilities; Absence of Changes
Section 2.9.......................... Litigation
Section 2.10(b)...................... Compliance with Applicable Law
</TABLE>
iii
<PAGE> 104
<TABLE>
<S> <C>
Section 2.11(b)...................... Company Employee Plans and Related Agreements
Section 2.11(c)...................... Employee Plan Compliance
Section 2.11(f)...................... Post-Employment Obligations
Section 2.11(h)...................... Plan Expenses and Amendment
Section 2.11(i)...................... Employee Benefits Affected by this Transaction
Section 2.11(j)...................... Outstanding Options
Section 2.11(k)...................... Foreign Plans
Section 2.12......................... Labor and Employment Matters
Section 2.12(d)...................... Officers, Employees and Consultants
Section 2.12(g)...................... Visas
Section 2.12(h)...................... Termination of Employees
Section 2.14(b)...................... Delinquent or Inaccurate Tax Returns
Section 2.14(c)...................... All Taxes Paid
Section 2.14(d)...................... Tax Claims
Section 2.14(e)...................... Excess Parachute Payments
Section 2.14(h)...................... Net Operating Losses
Section 2.14(i)...................... Accounting Changes
Section 2.14(j)...................... Adjustments
Section 2.15(a)...................... Intellectual Property
Section 2.15(b)...................... Trademarks
Section 2.15(d)...................... Unregistered Copyrights
Section 2.15(e)...................... Trade Secrets
Section 2.15(f)(1)................... Inbound License Agreements
Section 2.15(f)(2)................... Outbound License Agreements
Section 2.15(j)...................... Pending or Threatened Infringement Claims
Section 2.15(k)...................... Infringement
Section 2.15(l)...................... Restrictions on Assignment or Change of Control
Section 2.15(m)...................... Embedded Software
Section 2.15(n)...................... Performance of Existing Software Products
Section 2.15(p)...................... Year 2000 Compliance
Section 2.16......................... Insurance
Section 2.17......................... Restrictions on Business Activities
Section 2.18......................... Real Property Leases
Section 2.20......................... Product Warranties
Section 2.21......................... Material Contracts
Section 2.25......................... Affiliates
Section 4.1.......................... Conduct of Business
Section 4.1(b)....................... Option Grants
Section 4.1(c)....................... Dividends and Distributions
Section 4.1(g)....................... Employee Compensation Increases
Section 4.1(h)....................... Severance and Termination Obligations
Section 4.1(i)....................... Vesting Acceleration
Section 4.1(m)(v).................... Capital Budget
Section 4.1(q)....................... Summit dispute
Section 7.8(f)....................... Employees With Knowledge
</TABLE>
iv
<PAGE> 105
PARENT DISCLOSURE SCHEDULE
[The Parent agrees to furnish supplementally to the Securities and Exchange
Commission copies of any of the following omitted schedules upon request of the
Commission]
<TABLE>
<S> <C>
Section 3.2(a)....................... Repurchase and Redemption Obligations
Section 3.2(b)....................... Options, Warrants and Similar Rights
Section 3.7.......................... Litigation
Section 3.12......................... No Undisclosed Liabilities; Absence of Changes
Section 3.14......................... Affiliates
Section 3.15......................... Intellectual Property
Section 3.16......................... Defaults
Section 7.8(f)....................... Employees With Knowledge
</TABLE>
v
<PAGE> 106
TABLE OF DEFINED TERMS
<TABLE>
<CAPTION>
CROSS REFERENCE
TERM IN AGREEMENT
---- ---------------
<S> <C>
Acquiring Person............................................ Section 2.28
Acquisition................................................. Preamble
affiliate................................................... Section 7.8(a)
Agreement................................................... Preamble
Applicable Law.............................................. Section 7.8(b)
blue sky.................................................... Section 4.5
business day................................................ Section 7.8(c)
Business System............................................. Section 2.15(p)(i)
capital stock............................................... Section 7.8(d)
Certificate of Merger....................................... Section 1.2
Certificates................................................ Section 1.10(b)
Closing Date................................................ Section 1.3
Closing..................................................... Section 1.3
Code........................................................ Preamble
Company Acquisition......................................... Section 7.8(e)
Company Affiliates.......................................... Section 2.25
Company Board............................................... Section 2.3(a)
Company Disclosure Schedule................................. Article 2
Company Employee Plan....................................... Section 2.11(a)(iii)
Company Financial Advisor................................... Section 2.26
Company Permits............................................. Section 2.10
Company Plans............................................... Section 1.11(a)
Company..................................................... Preamble
Company Rights Agreement.................................... Section 2.2(a)
Company Rights.............................................. Section 2.2(a)
Company SEC Reports......................................... Section 2.4(a)
Company Securities.......................................... Section 2.2(a)
Company Stock Option or Options............................. Section 1.11(a)
consenting corporation...................................... Section 2.14(k)
Continuing Employee......................................... Section 4.20(a)
control share acquisition................................... Section 2.29
Copyrights.................................................. Section 2.15(a)
development services........................................ Section 2.8
DGCL........................................................ Section 1.1
Distribution Date........................................... Section 2.28
DOL......................................................... Section 2.11(b)
Effective Time.............................................. Section 1.2
Employee Agreement.......................................... Section 2.11(a)(v)
employee benefit plan....................................... Section 2.11(a)(iii)
employee pension benefit plan............................... Section 2.11(a)(ix)
Employee.................................................... Section 2.11(a)(iv)
employees................................................... Section 2.12(c)
Environmental Laws.......................................... Section 2.13(a)
ERISA Affiliate............................................. Section 2.11(a)(ii)
ERISA....................................................... Section 2.11(a)(i)
</TABLE>
vi
<PAGE> 107
<TABLE>
<CAPTION>
CROSS REFERENCE
TERM IN AGREEMENT
---- ---------------
<S> <C>
excess parachute payment.................................... Section 2.11(i)(ii)
excess parachute payments................................... Section 2.14(e)
Exchange Act................................................ Section 2.2(c)
Exchange Agent.............................................. Section 1.10(a)
Exchange Fund............................................... Section 1.10(a)
Exchange Ratio.............................................. Section 1.8(b)
fair price.................................................. Section 2.29
Final Date.................................................. Section 6.1(b)
Flip In Event............................................... Section 4.18
Foreign Plan................................................ Section 2.11(k)
Governmental Entity......................................... Section 2.6
Hazardous Material.......................................... Section 2.13(a)
Hazardous Substance......................................... Section 2.13(a)
hazardous substances........................................ Section 2.13(a)
hazardous waste............................................. Section 2.13(a)
HSR Act..................................................... Section 2.6
Inbound License Agreements.................................. Section 2.15(f)
include or including........................................ Section 7.8(g)
include, without limitation................................. Section 7.8(g)
including, without limitation............................... Section 7.8(g)
Indemnified Liabilities..................................... Section 4.10(a)
Indemnified Persons......................................... Section 4.10(a)
Indenture................................................... Section 2.2(a)
independent contractors..................................... Section 2.12(c)
Insurance Policies.......................................... Section 2.16
Insured Parties............................................. Section 4.10(c)
Intellectual Property....................................... Section 2.15(a)
IRS......................................................... Section 2.11(a)(vi)
knowledge or known.......................................... Section 7.8(f)
Lien........................................................ Section 7.8(h)
Material Adverse Effect on Parent........................... Section 7.8(j)
Material Adverse Effect on the Company...................... Section 7.8(i)
Meeting..................................................... Section 4.5
Merger Consideration........................................ Section 1.8(a)
Merger...................................................... Section 1.1
moratorium.................................................. Section 2.29
Multiemployer Plan.......................................... Section 2.11(a)(vii)
Multiple Employer Plan...................................... Section 2.11(a)(viii)
Notice of Superior Proposal................................. Section 4.3(b)
Opinion of Company Financial Advisor........................ Section 2.26
Opinion of Parent Financial Advisor......................... Section 3.9
Other Interests............................................. Section 2.1(c)
Outbound License Agreements................................. Section 2.15(f)
Parent 401(k) Plan.......................................... Section 4.20(a)
Parent Affiliates........................................... Section 3.14
Parent Board................................................ Section 3.3(a)
Parent Common Stock......................................... Section 1.8(a)
</TABLE>
vii
<PAGE> 108
<TABLE>
<CAPTION>
CROSS REFERENCE
TERM IN AGREEMENT
---- ---------------
<S> <C>
Parent Disclosure Schedule.................................. Article 3
Parent Employee Plans....................................... Section 4.20(a)
Parent Financial Advisor.................................... Section 3.9
Parent Option Plans......................................... Section 3.2(a)
Parent Permits.............................................. Section 3.13
Parent...................................................... Preamble
Parent Rights Agreement..................................... Section 3.2(a)
Parent Rights............................................... Section 3.2(a)
Parent SEC Reports.......................................... Section 3.4(a)
Parent Securities........................................... Section 3.2(a)
Parent Shares............................................... Section 3.2(a)
Parent Welfare Plan......................................... Section 4.20(b)
Patents..................................................... Section 2.15(a)
Pension Plan................................................ Section 2.11(a)(ix)
person...................................................... Section 7.8(k)
Pooling Transaction......................................... Section 2.24
prohibited transaction...................................... Section 2.11(c)
Proxy Statement............................................. Section 2.5
reference rate.............................................. Section 6.3(e)
S-4......................................................... Section 2.5
SEC......................................................... Section 2.4(a)
Securities Act.............................................. Section 2.4(a)
Share....................................................... Section 1.8(a)
Shares...................................................... Section 1.8(a)
Software.................................................... Section 2.15(m)
Stock Option Agreement...................................... Section 7.8(l)
Stock Purchase Plan......................................... Section 4.21
Stock Purchase Rights....................................... Section 4.21
Subordinated Notes.......................................... Section 2.2(a)
subsidiary or subsidiaries.................................. Section 7.8(m)
Superior Proposal........................................... Section 4.3(c)
Surviving Corporation....................................... Section 1.1
Takeover Statute............................................ Section 2.29
Tax or Taxes................................................ Section 2.14(a)(i)
Tax Return.................................................. Section 2.14(a)(ii)
Third Party................................................. Section 4.3(c)
Third Party Acquisition..................................... Section 4.3(c)
Trade Secrets............................................... Section 2.15(a)
Trademarks.................................................. Section 2.15(a)
Triggering Event............................................ Section 2.28
welfare benefit plan........................................ Section 4.20(b)
Welfare Plan................................................ Section 2.11(a)(x)
Year 2000 Compliant......................................... Section 2.15(p)(i)
</TABLE>
viii
<PAGE> 109
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of October
11, 1999, is by and among The Vantive Corporation, a Delaware corporation (the
"Company"), PeopleSoft, Inc., a Delaware corporation ("Parent"), and Vickers
Acquisition, Inc., a Delaware corporation and a wholly owned subsidiary of
Parent ("Acquisition"). Capitalized terms not otherwise defined herein shall
have the meanings ascribed to such terms in Section 7.8 of this Agreement.
WHEREAS, the Boards of Directors of the Company, Parent and Acquisition
have each (i) determined that the Merger (as defined below) is advisable and
fair and in the best interests of their respective stockholders and (ii)
approved the Merger upon the terms and subject to the conditions set forth in
this Agreement;
WHEREAS, the combination of the Company and Parent shall be effected by the
terms of this Agreement through a transaction in which Acquisition will merge
with and into the Company, the Company will become a wholly-owned subsidiary of
Parent and the stockholders of the Company will become stockholders of Parent;
WHEREAS, the Merger is intended to be treated as a "pooling of interests"
for financial accounting purposes; and
WHEREAS, for Federal income tax purposes it is intended that the Merger
qualify as a reorganization under the provisions of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, the Company, Parent and Acquisition hereby
agree as follows:
ARTICLE 1
THE MERGER
SECTION 1.1. The Merger. At the Effective Time (as defined below) and upon
the terms and subject to the conditions of this Agreement and in accordance with
the Delaware General Corporation Law (the "DGCL"), Acquisition shall be merged
with and into the Company (the "Merger"). Following the Merger, the Company
shall continue as the surviving corporation (the "Surviving Corporation") and
the separate corporate existence of Acquisition shall cease. The Merger is
intended to qualify as a tax-free reorganization under Section 368(a) of the
Code. Parent, as the sole stockholder of Acquisition, hereby approves the Merger
and this Agreement.
SECTION 1.2. Effective Time. Subject to the terms and conditions set forth
in this Agreement, on the Closing Date (as defined in Section 1.3), (a) a
Certificate of Merger substantially in the form of Exhibit C (the "Certificate
of Merger") shall be duly executed and acknowledged by Acquisition and the
Company and thereafter delivered for filing to the Secretary of State of the
State of Delaware for filing pursuant to Section 251 of the DGCL and (b) the
parties shall make such other filings with the Secretary of State of the State
of Delaware as shall be necessary to effect the Merger. The Merger shall become
effective at such time as a properly executed copy of the Certificate of Merger
is duly filed with the Secretary of State of the State of Delaware in accordance
with Section 251 of the DGCL, or such later time as Parent and the Company may
agree upon and as may be set forth in the Certificate of Merger (the time the
Merger becomes effective being referred to herein as the "Effective Time").
SECTION 1.3. Closing of the Merger. The closing of the Merger (the
"Closing") will take place at a time and on a date (the "Closing Date") to be
specified by the parties, which shall be no later than the second business day
after satisfaction (or waiver) of the latest to occur of the conditions set
forth in Article 5, at the
<PAGE> 110
offices of Gibson, Dunn & Crutcher LLP, One Montgomery Street, San Francisco,
California 94104, unless another time, date or place is agreed to in writing by
the parties hereto.
SECTION 1.4. Effects of the Merger. The Merger shall have the effects as
provided in this Agreement and in the applicable provisions of the DGCL. Without
limiting the generality of the foregoing and subject thereto, at the Effective
Time, all the properties, rights, privileges, powers and franchises of the
Company and Acquisition shall vest in the Surviving Corporation, and all debts,
liabilities and duties of the Company and Acquisition shall become the debts,
liabilities and duties of the Surviving Corporation.
SECTION 1.5. Certificate of Incorporation and Bylaws. The Certificate of
Incorporation of Acquisition in effect at the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation until amended in
accordance with Applicable Law. The bylaws of Acquisition in effect at the
Effective Time shall be the bylaws of the Surviving Corporation until amended in
accordance with Applicable Law.
SECTION 1.6. Directors. The directors of Acquisition at the Effective Time
shall be the initial directors of the Surviving Corporation, each to hold office
in accordance with the Certificate of Incorporation and bylaws of the Surviving
Corporation until such director's successor is duly elected or appointed and
qualified.
SECTION 1.7. Officers. The officers of Acquisition at the Effective Time
shall be the initial officers of the Surviving Corporation, each to hold office
in accordance with the Certificate of Incorporation and bylaws of the Surviving
Corporation until such officer's successor is duly elected or appointed and
qualified.
SECTION 1.8. Conversion of Shares.
(a) At the Effective Time, each share of common stock, par value $.001 per
share, of the Company (individually a "Share" and collectively the "Shares")
issued and outstanding immediately prior to the Effective Time (other than (i)
Shares held in the Company's treasury and (ii) Shares held by Parent,
Acquisition or any other subsidiary of Parent) shall, by virtue of the Merger
and without any action on the part of Acquisition, the Company or the holder
thereof, be converted into and shall become a number of fully paid and
nonassessable shares of common stock, par value $.01 per share, of Parent
("Parent Common Stock") equal to the Exchange Ratio (as defined below) (the
"Merger Consideration"). Unless the context otherwise requires, each reference
in this Agreement to shares of Parent Common Stock and to the Shares shall
include the associated Parent Rights (as such term is defined in Section 3.2(a)
hereof) and associated Company Rights (as defined in Section 2.2(a)),
respectively. Notwithstanding the foregoing, if, between the date of this
Agreement and the Effective Time, the outstanding shares of Parent Common Stock
or the Shares shall have been changed into a different number of shares or a
different class by reason of any stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares, then the Exchange
Ratio shall be correspondingly adjusted to reflect such stock dividend,
subdivision, reclassification, recapitalization, split, combination or exchange
of shares.
(b) The "Exchange Ratio" shall be 0.825.
(c) At the Effective Time, each outstanding share of the common stock of
Acquisition shall be converted into one fully paid and nonassessable share of
common stock of the Surviving Corporation.
(d) At the Effective Time, each Share held in the treasury of the Company
and each Share held by Parent, Acquisition or any subsidiary of Parent or
Acquisition immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of Acquisition, the Company or the
holder thereof, be canceled, retired and cease to exist, and no shares of Parent
Common Stock shall be delivered with respect thereto.
SECTION 1.9. Dissenters' Rights. In accordance with Section 262 of the
DGCL, the holders of the Shares shall not be entitled to dissenters' or
appraisal rights.
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<PAGE> 111
SECTION 1.10. Exchange of Certificates.
(a) From time to time following the Effective Time, as required by
subsections (b) and (c) below, Parent shall deliver to its transfer agent, or a
depository or trust institution of recognized standing selected by Parent and
Acquisition (the "Exchange Agent") for the benefit of the holders of Shares for
exchange in accordance with this Article 1: (i) certificates representing the
appropriate number of shares of Parent Common Stock issuable pursuant to Section
1.8; and (ii) cash to be paid in lieu of fractional shares of Parent Common
Stock (such shares of Parent Common Stock and such cash are hereinafter referred
to as the "Exchange Fund"), in exchange for outstanding Shares.
(b) Not later than three (3) business days after the Effective Time, the
Exchange Agent shall mail to each holder of record of a certificate or
certificates that immediately prior to the Effective Time represented
outstanding Shares (the "Certificates") and whose shares were converted into the
right to receive shares of Parent Common Stock pursuant to Section 1.8: (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 and the Company 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 and, if applicable,
cash to be paid for fractional shares of Parent Common Stock. Upon surrender of
a Certificate for cancellation to the Exchange Agent together with such letter
of transmittal duly executed, the holder of such Certificate shall be issued a
certificate representing that number of whole shares of Parent Common Stock and,
if applicable, a check representing the cash consideration to which such holder
is entitled on account of a fractional share of Parent Common Stock that such
holder has the right to receive pursuant to the provisions of this Article 1,
and the Certificate so surrendered shall forthwith be canceled. In the event of
a transfer of ownership of Shares that is not registered in the transfer records
of the Company, a certificate representing the proper number of shares of Parent
Common Stock and a check representing the amount of consideration payable in
lieu of fractional shares shall be issued to a transferee if the Certificate
representing such Shares is presented to the Exchange Agent accompanied by all
documents required to evidence and effect such transfer and by evidence that any
applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 1.10, each Certificate shall be deemed at any time
after the Effective Time to represent only the right to receive upon such
surrender the certificate representing shares of Parent Common Stock and cash in
lieu of any fractional shares of Parent Common Stock as contemplated by this
Section 1.10.
(c) No dividends or other distributions declared or made after the
Effective Time with respect to Parent Common Stock with a record date after the
Effective Time shall be paid to the holder of any unsurrendered Certificate with
respect to the shares of Parent Common Stock represented thereby, and no cash
payment in lieu of fractional shares shall be paid to any such holder pursuant
to Section 1.10(f), until the holder of record of such Certificate shall
surrender such Certificate. Subject to the effect of Applicable Law, following
surrender of any such Certificate there shall be paid to the record holder of
the certificates representing whole shares of Parent Common Stock issued in
exchange therefor without interest (i) the amount of any cash payable in lieu of
a fractional share of Parent Common Stock to which such holder is entitled
pursuant to Section 1.10(f) and the amount of dividends or other distributions
with a record date after the Effective Time theretofore paid with respect to
such number of whole shares of Parent Common Stock and (ii) at the appropriate
payment date the amount of dividends or other distributions with a record date
after the Effective Time but prior to surrender and a payment date subsequent to
surrender payable with respect to such whole shares of Parent Common Stock.
(d) In the event that any Certificate for Shares shall have been lost,
stolen or destroyed, the Exchange Agent shall issue in exchange therefor upon
the making of an affidavit of that fact by the holder thereof such shares of
Parent Common Stock and cash in lieu of fractional shares, if any, as may be
required pursuant to
3
<PAGE> 112
this Agreement; provided, however, that Parent or the Exchange Agent may, in its
discretion, require the delivery of a customary bond or indemnity reasonably
satisfactory to Parent and the Exchange Agent.
(e) All shares of Parent Common Stock issued upon the surrender for
exchange of Shares in accordance with the terms hereof (including any cash paid
pursuant to Section 1.10(c) or 1.10(f)) shall be deemed to have been issued in
full satisfaction of all rights pertaining to such Shares; subject, however, to
the Surviving Corporation's obligation to pay any dividends or make any other
distributions with a record date prior to the date hereof that remain unpaid at
the Effective Time, and there shall be no further registration of transfers on
the stock transfer books of the Surviving Corporation of the Shares that 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 1.
(f) No fractions of a share of Parent Common Stock shall be issued in the
Merger but in lieu thereof each holder of Shares otherwise entitled to a
fraction of a share of Parent Common Stock shall upon surrender of his or her
Certificate or Certificates be entitled to receive an amount of cash (without
interest) equal to such fractional part of a share of Parent Common Stock
multiplied by the average of the last reported sales prices for Parent Common
Stock as reported on the Nasdaq National Market on the ten (10) trading days
immediately preceding the Effective Time. The parties acknowledge that payment
of the cash consideration in lieu of issuing fractional shares was not
separately bargained for consideration, but merely represents a mechanical
rounding off for purposes of simplifying the corporate and accounting
complexities that would otherwise be caused by the issuance of fractional
shares.
(g) Any portion of the Exchange Fund that remains undistributed to the
stockholders of the Company upon the expiration of one (1) year after the
Effective Time shall be delivered to Parent upon demand and any stockholders of
the Company who have not theretofore complied with this Article 1 shall
thereafter look only to Parent as general creditors for payment of their claim
for Parent Common Stock and cash in lieu of fractional shares, as the case may
be, and any applicable dividends or distributions with respect to Parent Common
Stock.
(h) Neither Parent nor the Company shall be liable to any holder of Shares
or Parent Common Stock for such shares (or dividends or distributions with
respect thereto) or cash from the Exchange Fund delivered to a public official
pursuant to any applicable abandoned property, escheat or similar Applicable
Law.
SECTION 1.11. Stock Options.
(a) At the Effective Time, each outstanding option, warrant or other right
to purchase Shares (a "Company Stock Option" and collectively, "Company Stock
Options") issued pursuant to the 1991 Amended and Restated Stock Option Plan,
the 1995 Outside Directors Stock Option Plan and the 1997 Non-Statutory Stock
Option Plan, and all other agreements or arrangements other than the 1995
Employee Stock Purchase Plan, whether vested or unvested, shall be converted as
of the Effective Time into an option, warrant or right, as applicable, to
purchase shares of Parent Common Stock in accordance with the terms of this
Section 1.11. All plans or agreements described above pursuant to which any
Company Stock Option has been issued or may be issued other than outstanding
warrants or rights are referred to collectively as the "Company Plans." Each
Company Stock Option so converted shall be deemed to constitute an option to
acquire, on the same terms and conditions as were applicable under such Company
Stock Option, a number of shares of Parent Common Stock equal to the number of
shares of Parent Common Stock that the holder of such Company Stock Option would
have been entitled to receive pursuant to the Merger had such holder exercised
such Company Stock Option, whether or not vested, in full immediately prior to
the Effective Time rounded to the nearest whole share at a price per share,
rounded to the nearest whole cent, equal to the exercise price per Share
pursuant to such Company Stock Option immediately prior to the Effective Time
divided by the Exchange Ratio; provided, however, that in the case of any option
to which Section 421 of the Code applies by reason of its qualification under
Sections 422 through 424 of the Code, the option price, the number of shares
4
<PAGE> 113
purchasable pursuant to such option and the terms and conditions of exercise of
such option shall be adjusted as necessary in order to comply with Section
424(a) of the Code.
(b) As soon as practicable after the Effective Time, Parent shall deliver
to the holders of Company Stock Options appropriate notices setting forth such
holders' rights pursuant to the Company Plans and that the agreements evidencing
the grants of such Company Stock Options shall continue in effect on the same
terms and conditions (subject to the adjustments required by this Section 1.11
after giving effect to the Merger). Parent shall comply with the terms of the
Company Plans and ensure, to the extent required by and subject to the
provisions of such Plans, that Company Stock Options that qualified as incentive
stock options prior to the Effective Time continue to qualify as incentive stock
options of Parent after the Effective Time.
(c) At or before the Effective Time, Parent shall take all corporate action
necessary to reserve for issuance a sufficient number of shares of Parent Common
Stock for delivery upon exercise of Company Stock Options assumed in accordance
with this Section 1.11. Promptly following the Effective Time, Parent shall, if
no registration statement is in effect covering such Parent shares, file a
registration statement on Form S-8 (or any successor or other appropriate forms)
with respect to the shares of Parent Common Stock subject to any Company Stock
Options held by all persons with respect to whom registration on Form S-8 is
available and shall use all commercially reasonable efforts to maintain the
effectiveness of such registration statement or registration statements (and
maintain the current status of the prospectus or prospectuses contained therein)
for so long as such options remain outstanding.
(d) At or before the Effective Time, the Company shall cause to be
effected, in a manner reasonably satisfactory to Parent, such amendments, if
any, to the Company Plans that are necessary to give effect to the foregoing
provisions of this Section 1.11.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to each of Parent and
Acquisition, subject to the exceptions set forth in the Disclosure Schedule (the
"Company Disclosure Schedule") delivered by the Company to Parent in accordance
with Section 4.13 (which exceptions shall specifically identify a Section,
Subsection or clause of a single Section or Subsection hereof, as applicable, to
which such exception relates) that:
SECTION 2.1. Organization and Qualification; Subsidiaries; Investments.
(a) Section 2.1(a) of the Company Disclosure Schedule sets forth a true and
complete list of all the Company's directly or indirectly owned subsidiaries and
sales and other offices, together with the jurisdiction of incorporation of each
subsidiary and the percentage of each subsidiary's outstanding capital stock or
other equity interests owned by the Company or another subsidiary of the
Company. Each of the Company and its subsidiaries is duly organized, validly
existing and, except as set forth in Section 2.1(a) of the Company Disclosure
Schedule, in good standing under the laws of the jurisdiction of its
incorporation or organization and has all requisite power and authority to own,
lease and operate its properties and to carry on its businesses as now being
conducted. Except as set forth in Section 2.1(a) of the Company Disclosure
Schedule, the Company has heretofore delivered or made available to Acquisition
or Parent accurate and complete copies of the Certificate of Incorporation and
bylaws (or similar governing documents), as currently in full force and effect,
of the Company and each of its subsidiaries. Section 2.1(a) of the Company
Disclosure Schedule specifically identifies each subsidiary of the Company that
contains any material assets or through which the Company conducts any
operations. Except as set forth in Section 2.1(a) of the Company Disclosure
Schedule, the Company has no operating subsidiaries other than those
incorporated in a state of the United States.
5
<PAGE> 114
(b) Each of the Company and its subsidiaries is duly qualified or licensed
and in good standing to do business in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification or licensing necessary except where the failure to
obtain such qualification or license with respect to the Company or any
subsidiary would not adversely affect the Company or any such subsidiary in any
material way.
(c) Section 2.1(c) of the Company Disclosure Schedule sets forth a true and
complete list of each equity investment in an amount of Five Thousand Dollars
($5,000) or more or that represents a five percent (5%) or greater ownership
interest in the subject of such investment made by the Company or any of its
subsidiaries in any person other than the Company's subsidiaries ("Other
Interests"). Except as described in Section 2.1(c) of the Company Disclosure
Schedule, the Other Interests are owned by the Company, by one or more of the
Company's subsidiaries or by the Company and one or more of its subsidiaries, in
each case free and clear of all Liens (as defined below).
SECTION 2.2. Capitalization of the Company and its Subsidiaries.
(a) The authorized capital stock of the Company consists of Fifty-Two
Million (52,000,000) Shares, of which, as of September 30, 1999, Twenty-Seven
Million Four Hundred Eighty-Six Thousand Six Hundred Fifty-Nine (27,486,659)
Shares were issued and outstanding and Two Million (2,000,000) shares of
preferred stock, none of which is outstanding. All of the outstanding Shares
have been validly issued and are fully paid, nonassessable and free of
preemptive rights. As of September 30, 1999, approximately Three Million One
Hundred Nine Thousand Six Hundred Sixty-One (3,109,661) Shares were reserved for
issuance and, as of September 30, 1999, approximately Six Million Four Hundred
Twenty-Six Thousand Eight Hundred Fifty-Two (6,426,852) were issuable upon or
otherwise deliverable in connection with the exercise of outstanding Company
Stock Options issued pursuant to the Company Plans and the Stock Purchase Plan.
The maximum number of shares that may be issued under the Stock Purchase Plan is
Seven Hundred Thousand (700,000) shares, of which, as of October 1, 1999,
approximately Two Hundred Ninety-Four Thousand Seventy (294,070) shares have
been issued and Four Hundred Five Thousand Nine Hundred Thirty (405,930) shares
are reserved for issuance. Between September 30, 1999 and the date hereof, no
shares of the Company's capital stock have been issued other than pursuant to
Company Stock Options already in existence on such first date, and between
September 30, 1999 and the date hereof, no stock options have been granted.
Except (i) as set forth above, (ii) for the Company's 4.75% Convertible
Subordinated Notes Due 2002 (the "Subordinated Notes") issued pursuant to the
Indenture dated as of August 15, 1997, by and between the Company and Deutsche
Bank AG, New York Branch (the "Indenture") and (iii) for the rights (the
"Company Rights") issued pursuant to the Company's Rights Agreement, dated as of
November 19, 1998, between the Company and Harris Trust and Savings Bank (the
"Company Rights Agreement"), as of the date hereof, there are outstanding (i) no
shares of capital stock or other voting securities of the Company, (ii) no
securities of the Company or any of its subsidiaries convertible into or
exchangeable or exercisable for shares of capital stock or other securities of
the Company, (iii) no options, preemptive or other rights to acquire from the
Company or any of its subsidiaries, and, except as described in the Company SEC
Reports (as defined below), no obligations of the Company or any of its
subsidiaries to issue, any capital stock, voting securities or securities
convertible into or exchangeable or exercisable for capital stock or other
securities of the Company and (iv) no equity equivalent interests in the
ownership or earnings of the Company or its subsidiaries or other similar rights
(collectively "Company Securities"). Except as set forth in Section 2.2(a) of
the Company Disclosure Schedule, as of the date hereof, there are no outstanding
rights or obligations of the Company or any of its subsidiaries to repurchase,
redeem or otherwise acquire any Company Securities. There are no stockholder
agreements, voting trusts or other agreements or understandings to which the
Company is a party or by which it is bound relating to the voting or
registration of any shares of capital stock of the Company. The Company has not
voluntarily accelerated the vesting of any Company Stock Options as a result of
the Merger or any other change in control of the Company. No Shares are held by
the Company's subsidiaries.
6
<PAGE> 115
(b) All of the outstanding capital stock of the Company's subsidiaries
owned by the Company is owned, directly or indirectly, free and clear of any
Lien or any other limitation or restriction (including any restriction on the
right to vote or sell the same except as may be provided as a matter of
Applicable Law). Except for the Subordinated Notes and as set forth in Section
2.2(b) of the Company Disclosure Schedule, there are no (i) securities of the
Company or any of its subsidiaries convertible into or exchangeable or
exercisable for, (ii) options or (iii) except for the Company Rights, other
rights to acquire from the Company or any of its subsidiaries any capital stock
or other ownership interests in or any other securities of any subsidiary of the
Company, and there exists no other contract, understanding, arrangement or
obligation (whether or not contingent) providing for the issuance or sale,
directly or indirectly, of any such capital stock. There are no outstanding
contractual obligations of the Company or its subsidiaries to repurchase, redeem
or otherwise acquire any outstanding shares of capital stock or other ownership
interests in any subsidiary of the Company.
(c) The Company Rights and the Shares constitute the only classes of equity
securities of the Company or its subsidiaries registered or required to be
registered under the Securities Exchange Act of 1934, as amended (the "Exchange
Act").
SECTION 2.3. Authority Relative to this Agreement; Recommendation.
(a) The Company has all necessary corporate power and authority to execute
and deliver this Agreement and the Stock Option Agreement, to perform its
obligations under this Agreement and the Stock Option Agreement, and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the Stock Option Agreement, and the consummation of the
transactions contemplated hereby and thereby, have been duly and validly
authorized by the Board of Directors of the Company (the "Company Board"), and
no other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or the Stock Option Agreement, or to consummate the
transactions contemplated hereby or thereby, except the approval of this
Agreement by the holders of a majority of the outstanding Shares. This Agreement
and the Stock Option Agreement have been duly and validly executed and delivered
by the Company and, assuming the due authorization, execution and delivery of
this Agreement and the Stock Option Agreement by Parent and Acquisition,
constitute the valid, legal and binding agreements of the Company, enforceable
against the Company in accordance with their terms, subject to any applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws now or
hereafter in effect relating to creditors' rights generally or to general
principles of equity.
(b) Without limiting the generality of the foregoing, the Company Board has
unanimously (1) determined that the Merger is fair to, and in the best interests
of the Company and the Company's stockholders, (2) approved this Agreement, the
Stock Option Agreement, the Merger and the other transactions contemplated
hereby, (3) resolved to recommend approval and adoption of this Agreement, the
Merger and the other transactions contemplated hereby by the Company's
stockholders, and (4) has not withdrawn or modified such approval or resolution
to recommend (except as otherwise permitted in this Agreement).
SECTION 2.4. SEC Reports; Financial Statements.
(a) The Company has filed all required forms, reports and documents
("Company SEC Reports") with the Securities and Exchange Commission (the "SEC")
since January 1, 1996, each of which complied at the time of filing in all
material respects with all applicable requirements of the Securities Act of
1933, as amended (the "Securities Act"), and the Exchange Act, each law as in
effect on the dates such forms, reports and documents were filed. None of such
Company SEC Reports, including any financial statements or schedules included or
incorporated by reference therein, contained when filed any untrue statement of
a material fact or omitted to state a material fact required to be stated or
incorporated by reference 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 superseded or amended by a Company SEC Report filed
subsequently and prior to the date hereof. The audited consolidated financial
statements of the Company included in the
7
<PAGE> 116
Company SEC Reports fairly present, in conformity in all material respects with
generally accepted accounting principles applied on a consistent basis (except
as may be indicated in the notes thereto), the consolidated financial position
of the Company and its consolidated subsidiaries as of the dates thereof and
their consolidated results of operations and changes in financial position for
the periods then ended. Notwithstanding the foregoing, the Company shall not be
deemed to be in breach of any of the representations or warranties in this
Section 2.4(a) as a result of any changes to the Company SEC Reports that the
Company may make in response to comments received from the SEC on the S-4 or the
Proxy Statement (each as defined below).
(b) The Company has heretofore made, and hereafter will make, available to
Acquisition or Parent a complete and correct copy of any amendments or
modifications that are required to be filed with the SEC but have not yet been
filed with the SEC to agreements, documents or other instruments that previously
had been filed by the Company with the SEC pursuant to the Exchange Act.
SECTION 2.5. Information Supplied. None of the information supplied or to
be supplied by the Company in writing 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 shares of Parent Common Stock in
the Merger (the "S-4") will, at the time it becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading or (ii) the proxy statement relating to the
meeting of the Company's stockholders to be held in connection with the Merger,
which may be a joint proxy statement/ prospectus (the "Proxy Statement") will,
at the date mailed to stockholders of the Company and at the time of the meeting
of stockholders of the Company to be held in connection with the Merger, 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 insofar as it relates to the meeting of the Company's
stockholders to vote on the Merger will comply as to form in all material
respects with the provisions of the Exchange Act and the rules and regulations
thereunder. Notwithstanding the foregoing, the Company makes no representation,
warranty or covenant with respect to any information supplied or required to be
supplied by Parent or Acquisition that is contained in or omitted from any of
the foregoing documents.
SECTION 2.6. Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under
applicable requirements of the Securities Act, the Exchange Act, state
securities or blue sky laws, and the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), any filings under similar merger
notification laws or regulations of foreign Governmental Entities and the filing
and recordation of the Certificate of Merger as required by the DGCL, no
material filing with or notice to and no material permit, authorization, consent
or approval of any United States (federal, state or local) or foreign court or
tribunal, or administrative, governmental or regulatory body, agency or
authority (a "Governmental Entity") is necessary for the execution and delivery
by the Company of this Agreement or the Stock Option Agreement or the
consummation by the Company of the transactions contemplated hereby or thereby.
Neither the execution, delivery and performance of this Agreement or the Stock
Option Agreement by the Company nor the consummation by the Company of the
transactions contemplated hereby or thereby will (i) conflict with or result in
any breach of any provision of the respective Certificate of Incorporation or
bylaws (or similar governing documents) of the Company or any of its
subsidiaries, (ii) except as set forth in Section 2.6 of the Company Disclosure
Schedule, result in a material violation or breach of or constitute (with or
without due notice or lapse of time or both) a material default (or give rise to
any right of termination, amendment, cancellation or acceleration or Lien) under
any of the terms, conditions or provisions of any material note, bond, mortgage,
indenture (including the Indenture), lease, license, contract, agreement or
other instrument or obligation to which the Company or any of its subsidiaries
is a party or by which any of them or any of their respective properties or
assets are bound or (iii) except as set forth in Section 2.6 of the Company
Disclosure Schedule, materially violate any material order, writ,
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injunction, decree, law, statute, rule or regulation applicable to the Company
or any of its subsidiaries or any of their respective properties or assets.
SECTION 2.7. No Default. Except as set forth in Section 2.7 of the Company
Disclosure Schedule, neither the Company nor any of its subsidiaries is in
material breach, default or violation (and no event has occurred that with
notice or the lapse of time or both would constitute a breach, default or
violation) of any term, condition or provision of (i) its Certificate of
Incorporation or bylaws (or similar governing documents), (ii) any material
note, bond, mortgage, indenture (including the Indenture), lease, license,
contract, agreement or other instrument or obligation to which the Company or
any of its subsidiaries is now a party or by which it or any of its properties
or assets are bound or (iii) any material order, writ, injunction, decree, law,
statute, rule or regulation applicable to the Company or any of its subsidiaries
or any of its properties or assets.
SECTION 2.8. No Undisclosed Liabilities; Absence of Changes. Except as and
to the extent publicly disclosed by the Company in the Company SEC Reports or as
set forth in Section 2.8 of the Company Disclosure Schedule, neither the Company
nor any of its subsidiaries has any material liabilities or obligations of any
nature, whether or not accrued, contingent or otherwise, that would be required
by generally accepted accounting principles to be reflected on a consolidated
balance sheet of the Company (including the notes thereto), other than (i)
liabilities specifically described in this Agreement or in the Company
Disclosure Schedule, (ii) normal or recurring liabilities incurred since June
30, 1999 in the ordinary course of business consistent with past practices and
(iii) liabilities permitted by Section 4.1. Except as publicly disclosed by the
Company in the Company SEC Reports or as set forth in Section 2.8 of the Company
Disclosure Schedule, since June 30, 1999, there have been no events, changes or
effects with respect to the Company or its subsidiaries that, individually or in
the aggregate, have had or reasonably would be expected to have had a Material
Adverse Effect on the Company. Without limiting the generality of the foregoing,
except as and to the extent publicly disclosed by the Company in the Company SEC
Reports or as set forth in Section 2.8 of the Company Disclosure Schedule, since
June 30, 1999, the Company and its subsidiaries have conducted their respective
businesses in all material respects only in, and have not engaged in any
material transaction other than according to, the ordinary and usual course of
such businesses consistent with past practices, and there has not been any (i)
material adverse change in the financial condition, properties, business or
results of operations of the Company and its subsidiaries; (ii) material damage,
destruction or other casualty loss with respect to any material asset or
property owned, leased or otherwise used by the Company or any of its
subsidiaries, not covered by insurance; (iii) declaration, setting aside or
payment of any dividend or other distribution in respect of the capital stock of
the Company or any of its subsidiaries (other than wholly-owned subsidiaries) or
any repurchase, redemption or other acquisition by the Company or any of its
subsidiaries of any outstanding shares of capital stock or other securities of,
or other ownership interests in, the Company or any of its subsidiaries; (iv)
amendment of any material term of any outstanding security of the Company or any
of its subsidiaries; (v) incurrence, assumption or guarantee by the Company or
any of its subsidiaries of any indebtedness for borrowed money other than in the
ordinary course of business and in amounts and on terms consistent with past
practices; (vi) creation or assumption by the Company or any of its subsidiaries
of any Lien on any material asset other than in the ordinary course of business
consistent with past practices; (vii) loan, advance or capital contributions
made by the Company or any of its subsidiaries to, or investment in, any person
other than (1) loans or advances to employees in connection with
business-related travel, (2) loans made to employees consistent with past
practices that are not in the aggregate in excess of Fifty Thousand Dollars
($50,000), and (3) loans, advances or capital contributions to or investments in
wholly-owned subsidiaries, and in each case made in the ordinary course of
business consistent with past practices; (viii) material transaction or
commitment made, or any material contract or agreement entered into, by the
Company or any of its subsidiaries relating to its material assets or business
(including the acquisition (by sale, license or otherwise) or disposition (by
sale, license or otherwise) of any material assets) or any relinquishment by the
Company or any of its subsidiaries of any contract, agreement or other right, in
any such case, material to the Company and its subsidiaries, taken as a whole,
other than transactions and
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commitments in the ordinary course of business consistent with past practices
and those contemplated by this Agreement; (ix) labor dispute, other than routine
individual grievances, or any activity or proceeding by a labor union or
representative thereof to organize any employees of the Company or any of its
subsidiaries, or any lockouts, strikes, slowdowns, work stoppages or threats
thereof by or with respect to such employees; (x) any exclusive license,
distribution, marketing, sales or other agreement entered into or any agreement
to enter into any exclusive license, distribution, marketing, sales or other
agreement; (xi) "development services" or other similar agreement; or (xii)
change by the Company or any of its subsidiaries in its accounting principles,
practices or methods. Since June 30, 1999, except as disclosed in the Company
SEC Reports filed prior to the date hereof or increases in the ordinary course
of business consistent with past practices, there has not been any material
increase in the compensation payable or that could become payable by the Company
or any of its subsidiaries to (a) officers of the Company or any of its
subsidiaries (b) any employee of the Company or any of its subsidiaries whose
annual cash compensation is One Hundred Thousand Dollars ($100,000) or more, or
(c) any other employees, where the aggregate amount of such increases to such
other employees is more than One Hundred Thousand Dollars ($100,000).
SECTION 2.9. Litigation. Except as publicly disclosed by the Company in the
Company SEC Reports or as set forth in Section 2.9 of the Company Disclosure
Schedule, there is no suit, claim, action, arbitration, proceeding or
investigation pending or, to the knowledge of the Company, threatened against
the Company or any of its subsidiaries or any of their respective properties or
assets before any Governmental Entity or brought by any person that is material
or would reasonably be expected to prevent or delay the consummation of the
transactions contemplated by this Agreement beyond the Final Date. Except as
publicly disclosed by the Company in the Company SEC Reports, neither the
Company nor any of its subsidiaries is subject to any outstanding order, writ,
injunction or decree that would reasonably be expected to be material or would
reasonably be expected to prevent or delay the consummation of the transactions
contemplated hereby. No Governmental Entity has at any time challenged or
questioned in writing to the Company the legal right of the Company to design,
offer or sell any of its products or services in the present manner or style
thereof.
SECTION 2.10. Compliance with Applicable Law. Except as set forth in
Section 2.10(b) of the Company Disclosure Schedule or publicly disclosed by the
Company in the Company SEC Reports, the Company and its subsidiaries hold all
material permits, licenses, variances, exemptions, orders and approvals of all
Governmental Entities necessary for the lawful conduct of their respective
businesses (the "Company Permits"). Except as publicly disclosed by the Company
in the Company SEC Reports, the Company and its subsidiaries have complied and
are in material compliance with the terms of the Company Permits. Except as
publicly disclosed by the Company in the Company SEC Reports, the businesses of
the Company and its subsidiaries have been and are being conducted in material
compliance with all material Applicable Laws. Except as publicly disclosed by
the Company in the Company SEC Reports, no investigation or review by any
Governmental Entity with respect to the Company or any of its subsidiaries is
pending or, to the knowledge of the Company, threatened, nor, to the knowledge
of the Company, has any Governmental Entity indicated an intention to conduct
the same.
SECTION 2.11. Employee Benefits.
(a) Definitions. For purposes of this Agreement, the following terms shall
have the meanings set forth below:
(i) "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended;
(ii) "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 thereunder;
(iii) "Company Employee Plan" shall refer to any plan, program,
policy, practice, contract, agreement or other arrangement providing for
compensation, severance, termination pay, stock option,
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stock purchase, stock bonus, performance awards, membership interest or
membership interest-related awards, retirement, health, life, disability
insurance, dependent care, retirement, medical, fringe benefits or other
employee benefits or remuneration of any kind, funded or unfunded, written
or unwritten, including each "employee benefit plan," within the meaning of
Section 3(3) of ERISA that is or has within the last three (3) years been
maintained, contributed to, or required to be contributed to, by the
Company or any ERISA Affiliate for the benefit of any "Employee" (as
defined below) and pursuant to which the Company or any ERISA Affiliate has
or may have any liability contingent or otherwise;
(iv) "Employee" shall mean any current, former, or retired employee,
director, or officer of the Company or any ERISA Affiliate or any other
Person entitled to participate under any Company Employee Plan;
(v) "Employee Agreement" shall refer to each management, employment
and consulting agreement or contract as to which unsatisfied obligations of
the Company are greater than Fifty Thousand Dollars ($50,000) and each
severance, signing bonus, relocation, repatriation, expatriation, visa,
work permit or similar agreement or contract between the Company or any
ERISA Affiliate and any Employee or consultant, as to which unsatisfied
obligations of the Company are greater than Ten Thousand Dollars ($10,000),
except, for purposes of Section 2.11(i), the term "Employee Agreement"
shall not be limited by the Ten Thousand Dollars ($10,000) amount if the
aggregate amount of unsatisfied obligations of the Company under all such
agreements is in excess of Fifty Thousand Dollars ($50,000);
(vi) "IRS" shall mean the Internal Revenue Service;
(vii) "Multiemployer Plan" shall mean any "Pension Plan" (as defined
below) which is a "multiemployer plan," as defined in Section 3(37) of
ERISA;
(viii) "Multiple Employer Plan" shall mean any "Pension Plan" (as
defined below) which is a "multiple employer plan," as defined in Section
4063 or 4064 of ERISA;
(ix) "Pension Plan" shall refer to each Company Employee Plan which is
an "employee pension benefit plan," within the meaning of Section 3(2) of
ERISA; and
(x) "Welfare Plan" shall refer to each Company Employee Plan which is
a welfare plan as defined in ERISA Section 3(1).
(b) Employee Plans. Section 2.11(b) of the Company Disclosure Schedule
contains an accurate and complete list of each Company Employee Plan and each
Employee Agreement. The Company has never verbally represented, promised or
contracted to any Employee to maintain or sponsor any Company Employee Plan
other than those listed in Section 2.11(b) of the Company Disclosure Schedule.
To the knowledge of the Company, there is no verbal Company Employee Plan to
which the Company is a party. Except as and to the extent publicly disclosed in
the Company SEC Reports or as set forth in Section 2.11(b) of the Company
Disclosure Schedule, the Company has also made available to Parent or its
counsel, where applicable, true, complete and correct copies of (1) the most
recent plan documents, related trust documents, adoption agreements, summary
plan descriptions, and all amendments thereto for each Company Employee Plan,
(2) the three most recent annual reports on Form 5500 filed with the IRS with
respect to each Company Employee Plan, (3) each group annuity contract,
insurance policy, service agreement, and other material agreement or policy
related to any Company Employee Plan, (4) the three most recent annual
nondiscrimination test reports for each Company Employee Plan, (5) the three
most recent actuarial and audit reports for each Pension Plan, (6) all IRS
determination letters and rulings received by the Company and copies of all
applications and correspondence to or from the IRS or the Department of Labor
("DOL") with respect to any Company Employee Plan, (7) all material
communications in the Company's or its outside counsel's possession to any
Employee relating to any Company Employee Plan, or in each case, relating to any
amendments, terminations, establishments, increases or decreases in benefits,
acceleration of payments or
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vesting schedules or other events which would result in any Liability to the
Company, and (8) all registration statements and prospectuses prepared in
connection with each Company Employee Plan.
(c) Employee Plan Compliance. Except as set forth in Section 2.11(c) of the
Company Disclosure Schedule, (i) each Company Employee Plan has been established
and maintained in accordance with its terms and all Applicable Laws, including
ERISA and the Code; (ii) no "prohibited transaction," within the meaning of
Section 4975 of the Code or Section 406 of ERISA, has occurred with respect to
any Company Employee Plan; (iii) no Employee of the Company has committed a
material breach of any responsibility or obligation imposed upon fiduciaries by
Title I of ERISA with respect to any Company Employee Plan; (iv) there are no
proceedings pending, or, to the Company's knowledge, threatened or 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
can be amended, terminated or otherwise discontinued in accordance with its
terms, without liability to the Company, Parent or any of their respective ERISA
Affiliates (other than amounts for accrued benefits and ordinary administration
expenses incurred in a termination event); (vi) there are no inquiries,
investigations, audits or proceedings pending or, to the Company's knowledge,
threatened by the IRS or DOL with respect to any Company Employee Plan or any
related trust; (vii) neither the Company nor any ERISA Affiliate is subject to
any penalty or tax with respect to any Company Employee Plan under Sections 4975
through 4980 of the Code; (viii) each Pension Plan that is intended to be
qualified under Section 401(a) of the Code is and has received a favorable
determination opinion, notification or advisory letter with respect to such
status from the IRS or has time remaining to apply under applicable Treasury
Regulation or IRS pronouncement for a determination or opinion letter and to
make any necessary amendments, and no event has occurred and no condition or
circumstance has existed or exists which may reasonably be expected to result in
the disqualification of such Pension Plan; (ix) there is no violation of any
reporting or disclosure requirements imposed by ERISA or the Code with respect
to any Company Employee Plan that would result in a material liability to the
Company; (x) all contributions required to be made to any Company Employee Plan
pursuant to Section 412 of the Code (without regard to any waivers of such
requirements) or the terms of the Employee Plan, have been made on or before
their due dates (including any contractual or statutory grace periods); (xi)
neither Company nor any ERISA Affiliate is, nor do any of them expect to be,
subject to (1) a security interest pursuant to Section 412(f) of the Code or (2)
a lien pursuant to Section 412(n) of the Code or Section 4068 or 302(f) of
ERISA; and (xii) no event has occurred and there exists no condition or set of
circumstances which could reasonably be anticipated to result in any material
liability to the Parent, the Company or its ERISA Affiliates with respect to any
Company Employee Plan.
(d) Pension Plans. At no time have the Company or its ERISA Affiliates
maintained a Pension Plan subject to Code section 412 or ERISA section 302.
(e) Multiemployer and Multiple Employer Plans. At no time have the Company
or its ERISA Affiliates contributed to or been required to contribute to any
Multiemployer Plan or Multiple Employer Plan.
(f) Post-Employment Obligations. Except as set forth in Section 2.11(f) of
the Company Disclosure Schedule, no Company Employee Plan provides, or has any
liability to provide, life insurance, medical or other employee welfare benefits
to any Employee upon his or her retirement or termination of employment for any
reason, except as (i) may be required by statute, (ii) to benefits the full cost
of which are borne by Employees of the Company (or such Employees' beneficiaries
or dependents), (iii) death or disability benefits under any of the Company
Employee Plans, or (iv) life insurance benefits for any Employee who dies while
in service with the Company.
(g) Welfare Plans. With respect to any Welfare Plans maintained by the
Company or its ERISA Affiliates, the Company and its ERISA Affiliates have
complied with the provisions of Sections 4980B, 9801 and 9802 of the Code.
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(h) Plan Expenses and Amendment. Since the beginning of the current fiscal
year of any Company Employee Plan, no event had occurred and no condition or
circumstance has existed that could result in a material increase in the
benefits under or the expense of maintaining such Company Employee Plan
maintained by Company, and its subsidiaries from the level of benefits or
expense incurred for the most recently completed fiscal year of such Company
Employee Plan. Except as provided in Section 2.11(h) of the Company Disclosure
Schedule, no insurance policy nor any other contract or agreement affecting any
Company Employee Plan requires or permits a retroactive increase in premiums or
payments due thereunder. Except as set forth in Schedule 2.11(h) of the Company
Disclosure Schedule, all amendments and actions required to bring each of the
Company Employee Plans into conformity with all of the applicable provisions of
ERISA and other applicable laws have been made or taken except to the extent
that such amendments or actions are not required by law to be made or taken
until a date after the Effective Time and have been made available to Parent or
its counsel or will be provided to Parent within fourteen (14) days of the date
hereof.
(i) Effect of Transaction.
(i) Except as set forth in Section 2.11(i) of the Company 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 other than events
occurring after the Effective Time which are caused by acts or omissions of
Parent) 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.
(ii) Except as set forth in Section 2.11(i) of the Company Disclosure
Schedule, no payment or benefit which will or may be made by the Company or
Parent or any of their respective affiliates with respect to any Employee
will be characterized as an "excess parachute payment," within the meaning
of Section 280G(b)(1) of the Code.
(j) Stock Options. Section 2.11(j) of the Company Disclosure Schedule lists
all outstanding Stock Options as of October 1, 1999, identifying for each such
option: (1) the number of shares issuable, (2) the number of vested shares, (3)
the date of expiration and (4) the exercise price. Other than the automatic
vesting of Stock Options that may occur without any action on the part of the
Company or its officers or directors, the Company has not taken any action that
would result in any Stock Options that are unvested becoming vested or their
terms being extended in connection with or as a result of the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby.
(k) Foreign Plans. Except as set forth in Section 2.11(k) of the Company
Disclosure Schedule, with respect to any Company Employee Plan maintained for
Employees outside of the United States (each a "Foreign Plan"): (1) each Foreign
Plan covers only Employees of a single company and no other Employee and covers
only Employees who regularly perform services in a single country, (2) each
Foreign Plan and the manner in which it has been administered satisfies all
Applicable Laws, (3) all contributions to each Foreign Plan required through the
Closing have been and will be made by the Company, (4) each Foreign Plan is
either fully funded (or fully insured) based upon generally accepted local
actuarial and accounting practices and procedures or adequate accruals for each
Foreign Plan have been made in the Company's financial statements, (5) there are
no pending investigations by any Governmental Entity involving any Foreign Plan
nor any pending claims (except for claims for benefits payable in the normal
operation of the Foreign Plans), suits or proceedings against any Foreign Plan
or asserting any rights or claims to benefits under any Foreign Plan; and (6)
the consummation of the transactions contemplated by this Agreement will not by
itself create or otherwise result in any material liability with respect to any
Foreign Plan.
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SECTION 2.12. Labor and Employment Matters. Except as set forth in Section
2.12 of the Company Disclosure Schedule:
(a) No collective bargaining agreement exists that is binding on the
Company or any of its subsidiaries, and the Company has not been officially
apprised that any petition has been filed or proceeding instituted by an
employee or group of employees of the Company, or any of its subsidiaries,
with the National Labor Relations Board seeking recognition of a bargaining
representative.
(b)(i) To the Company's knowledge, there is no labor strike, dispute,
slow down or stoppage pending or threatened against the Company or any of
its subsidiaries; and
(ii) Neither the Company nor any of its subsidiaries has received in
the last twenty-four (24) months any demand letters, civil rights charges,
suits or drafts of suits with respect to claims made by any of their
respective employees.
(c) All individuals who are performing consulting or other services
for the Company or any of its subsidiaries are or were correctly classified
by the Company as either "independent contractors" or "employees" as the
case may be, and, at the Closing Date, will qualify for such
classification.
(d) Section 2.12(d) of the Company Disclosure Schedule contains a list
of the name of each officer, employee and consultant of the Company or any
of the Company's subsidiaries, together with such person's position or
function, annual base salary or wages and any incentives or bonus
arrangement with respect to such person and has provided to Parent or its
counsel all Form 1099s filed with the IRS. As of the date hereof, the
Company has not received any information that would lead it to believe that
any such person will or may cease to be engaged by the Company or such
subsidiary for any reason, including because of the consummation of the
transactions contemplated by this Agreement.
(e) The Company and each of its subsidiaries has in all material
respects withheld and reported all material amounts required by law or by
agreement to be withheld and reported with respect to wages, salaries and
other payments to employees.
(f) The Company is not liable for any material payment to any trust or
other fund or to 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).
(g) Section 2.12(g) of the Company Disclosure Schedule sets forth a
complete and correct list of all Employees holding visas issued by the
United States listing each such employee by name and type of visa. Within
fourteen (14) days of the date of this Agreement, the Company shall deliver
a complete and correct list of all Employees holding visas issued by
foreign countries, listing each such employer by name, and type of visa.
Except as set forth in Section 2.12(g) of the Company Disclosure Schedule,
all other Employees of the Company and its subsidiaries are citizens of the
United States or the foreign country in which such Employee performs
services for the Company and its subsidiaries.
(h) Except as set forth in Section 2.12(h) of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries is bound by any
agreement, nor has it taken or omitted to take any action, that restricts
its ability to terminate the employment of any of its Employees at any time
without payment or other liability.
SECTION 2.13. Environmental Laws and Regulations.
(a) The term "Environmental Laws" means any applicable federal, state,
local or foreign law, statute, treaty, ordinance, rule, regulation, policy,
permit, consent, approval, license, judgment, order, decree or injunction
relating to: (a) Releases (as defined in 42 U.S.C. sec. 9601(22)) or threatened
Releases of Hazardous Material (as hereinafter defined) into the environment,
(b) the generation, treatment, storage,
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disposal, use, handling, manufacturing, transportation or shipment of Hazardous
Material, (c) the health or safety of employees in the workplace, (d) protecting
or restoring natural resources or (e) the environment. The term "Hazardous
Material" means (1) "hazardous substances" (as defined in 42 U.S.C. sec.
9601(14)), including "hazardous waste" as defined in 42 U.S.C. sec. 6903, (2)
petroleum, including crude oil and any fractions thereof, (3) natural gas,
synthetic gas and any mixtures thereof, (4) asbestos and/or asbestos containing
materials, (5) PCBs or materials containing PCBs, (6) any material regulated as
a medical waste, (7) lead containing paint, (8) radioactive materials and (9)
"Hazardous Substance" or "Hazardous Material" as those terms are defined in any
indemnification provision in any contract, lease, or agreement to which the
Company or any of its subsidiaries is a party.
(b) During the period of ownership or operation by the Company and its
subsidiaries of any of their current or previously owned or leased properties,
there have been no Releases of Hazardous Material by the Company or any of its
subsidiaries in, on, under or affecting such properties or any surrounding site,
and neither the Company nor any of its subsidiaries has disposed of any
Hazardous Material in a manner that has led, or could reasonably be anticipated
to lead to a Release. There have been no Releases of Hazardous Material by the
Company or any of its subsidiaries in, on, under or affecting their current or
previously owned or leased properties or any surrounding site at times outside
of such periods of ownership, operation or lease. Since January 1, 1995, the
Company and its subsidiaries have not received any written notice of, or entered
into any order, settlement or decree relating to: (a) any violation of any
Environmental Laws or the institution or pendency of any suit, action, claim,
proceeding or investigation by any Governmental Entity or any third party in
connection with any alleged violation of Environmental Laws or (b) the response
to or remediation of Hazardous Material at or arising from any of the Company's
properties or any subsidiary's properties. There have been no material
violations of any Environmental Laws by the Company or any subsidiary.
(c) There are no past or present events, conditions, circumstances,
activities, practices, incidents, actions, omissions or plans that constitute a
violation by the Company or any of the Company's subsidiaries of, or are
reasonably likely to prevent or interfere with the Company's or any of the
Company's subsidiaries' future compliance with, any Environmental Laws.
SECTION 2.14. Taxes.
(a) Definitions. For purposes of this Agreement:
(i) the term "Tax" (including "Taxes") means (A) all federal, state,
local, foreign and other net income, gross income, gross receipts, sales,
use, ad valorem, transfer, franchise, profits, license, lease, service,
service use, withholding, payroll, employment, excise, severance, stamp,
occupation, premium, property, windfall profits, customs, duties or other
taxes, fees, assessments or charges of any kind whatsoever, together with
any interest and any penalties, additions to tax or additional amounts with
respect thereto, (B) any liability for payment of amounts described in
clause (A) whether as a result of transferee liability, of being a member
of an affiliated, consolidated, combined or unitary group for any period,
or otherwise through operation of law, and (C) any liability for the
payment of amounts described in clauses (A) or (B) as a result of any tax
sharing, tax indemnity or tax allocation agreement or any other express or
implied agreement to indemnify any other person; and
(ii) the term "Tax Return" means any return, declaration, report,
statement, information statement and other document filed or required to be
filed with respect to Taxes.
(b) Except as set forth in Section 2.14(b) of the Company Disclosure
Schedule (i) the Company and its subsidiaries have duly and timely filed all
material Tax Returns required to be filed; (ii) such Tax Returns are complete
and accurate in all material respects and correctly reflect the Tax liability
required to be reported thereon; and (iii) such Tax Returns do not contain a
disclosure statement under Section 6662 of the Code (or any predecessor
provision or comparable provision of state, local or foreign law).
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(c) Except as set forth in Section 2.14(c) of the Company Disclosure
Schedule (i) the Company and its subsidiaries have paid all Taxes due and
payable, and have adequately provided in the financial statements included in
the SEC Reports for all material Taxes (whether or not shown on any Tax Return)
accrued but not yet due and payable through the date of such Company SEC
Reports; (ii) all material Taxes the Company and its subsidiaries accrued
following the end of the most recent period covered by the Company SEC Report
have been accrued in the ordinary course of business of the Company consistent
with past practice and each such subsidiary and have been paid when due in the
ordinary course of business consistent with past practices; and (iii) no
material election has been made with respect to Taxes of the Company or its
subsidiaries in any Tax Returns that have not been provided to Parent.
(d) Except as set forth in Section 2.14(d) of the Company Disclosure
Schedule, no material claim for assessment or collection of Taxes is presently
being asserted against the Company or its subsidiaries and neither the Company
nor any of its subsidiaries is a party to any pending action, proceeding, or
investigation by any governmental taxing authority nor does the Company have
knowledge of any such threatened action, proceeding or investigation.
(e) Except as set forth in Section 2.14(e) of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries is a party to any
agreement, contract, arrangement or plan that has resulted or would result,
individually or in the aggregate, in connection with this Agreement or any
change of control of the Company or any of its subsidiaries, in the payment of
any "excess parachute payments" within the meaning of Section 280G of the Code.
(f) The Company has not made any payments since December 31, 1998, and is
not required to make any payments that will not be fully deductible under
Section 162(m) of the Code.
(g) Neither the Company nor any of its affiliates has taken or agreed to
take any action that would prevent the Merger from constituting a reorganization
qualifying under the provisions of Section 368(a) of the Code.
(h) Except as set forth in Section 2.14(h) of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries is a party to or bound
by any obligation under any Tax sharing, Tax allocation, Tax indemnity or
similar agreement or arrangement.
(i) Except as set forth in Section 2.14(i) of the Company Disclosure
Schedule, there is currently no limitation on the utilization of net operating
losses, built-in losses, tax credits or other similar items of the Company or
its subsidiaries under Section 382, 383, 384 or 1502 of the Code and the
Treasury Regulations thereunder.
(j) Except as set forth in Section 2.14(j) of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries has agreed to, or is
required to make, any adjustment under Section 481 of the Code by reason of a
change in accounting method.
(k) Neither the Company nor any of its subsidiaries is a "consenting
corporation" within the meaning of Section 341(j) of the Code.
SECTION 2.15. Intellectual Property.
(a) Section 2.15(a) of the Company Disclosure Schedule sets forth a
complete and accurate list of all: (a) patents and patent applications; (b)
Trademark registrations and applications and material unregistered Trademarks;
and (c) copyright registrations and applications, indicating for each, the
applicable jurisdiction, registration number (or application number) and date
issued (or date filed). For purposes of this Agreement, "Intellectual Property"
means: trademarks and service marks (whether registered or unregistered), trade
names, designs and general intangibles of like nature, together with all
goodwill related to the foregoing (collectively, "Trademarks"); patents
(including any continuations, continuations in part, renewals and
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applications for any of the foregoing) (collectively "Patents"); copyrights
(including any registrations and applications therefor and whether registered or
unregistered) (collectively "Copyrights"); computer software; databases; works
of authorship; mask works; trade secrets and other confidential information,
know-how, proprietary processes, formulae, algorithms, models, user interfaces,
customer lists, inventions, discoveries, concepts, ideas, techniques, methods,
source codes, object codes, methodologies and, with respect to all of the
foregoing, related confidential data or information (collectively, "Trade
Secrets").
(b) Trademarks.
(i) All Trademark registrations are currently in compliance in all
material respects with all legal requirements (including the timely
post-registration filing of affidavits of use and incontestability and
renewal applications) other than any requirement that, if not satisfied,
would not result in a cancellation of any such registration or otherwise
materially affect the priority, validity and enforceability of the
Trademark in question.
(ii) No registered Trademark has been within the last three (3) years
or is now involved in any opposition or cancellation proceeding in the
United States Patent and Trademark Office. No such action has been
threatened in writing within the two (2)-year period prior to the date of
this Agreement.
(iii) Except as set forth in Section 2.15(b) of the Company Disclosure
Schedule, the knowledge of the Company, there has been no prior use of any
material Trademark by any third party that confer upon said third party
superior rights in any such Trademark.
(iv) All material Trademarks registered in the United States have been
in continuous use by the Company or its subsidiaries.
(v) The Company and its subsidiaries have adequately policed the
Trademarks against third party infringement, and the material Trademarks
registered in the United States have been continuously used in the form
appearing in, and in connection with the goods and services listed in,
their respective registration certificates or renewal certificates, as the
case may be.
(c) Patents.
(i) All Patents are currently in compliance with legal requirements
(including payment of filing, examination, and maintenance fees and proofs
of working or use) other than any requirement that, if not satisfied, would
not result in a revocation or otherwise materially affect the
enforceability of the Patent in question.
(ii) No Patent has been or is now involved in any interference,
reissue, reexamination or opposing proceeding in the United States Patent
and Trademark Office. No such action has been threatened in writing within
the two (2)-year period prior to the date of this Agreement.
(iii) There is no patent or, to the Company's knowledge, patent
application of any person that conflicts in any material respect with any
Patent or invalidates any claim the Company, or any of the Company's
subsidiaries, has in any Patent.
(d) Copyrights.
(i) All Copyrights are currently in compliance with legal requirements
other than any requirement that, if not satisfied, would not result in a
revocation or otherwise materially affect the enforceability of the
Copyright in question. The Company is the owner of all right, title and
interest in and to each of the Copyrights, free and clear of all Liens and
other adverse claims.
(ii) Except as specified in Section 2.15(d) of the Company Disclosure
Schedule, all of the Copyrights have been registered with the U.S.
Copyright Office or, if foreign, with the appropriate foreign
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governmental authority, and are currently in compliance with all formal
legal requirements, are valid and enforceable, and are not subject to any
maintenance fees or actions.
(iii) No Copyright is infringed or, to the Company's knowledge, has
been challenged or threatened in any way. None of the subject matter of any
of the Copyrights infringes or is alleged to infringe any copyright of any
third party.
(e) Trade Secrets.
(i) Except as set forth in Section 2.15(e) of the Company Disclosure
Schedule, the Company and each of its subsidiaries has taken reasonable
steps in accordance with normal industry practice to protect their
respective rights in its Trade Secrets.
(ii) Without limiting the generality of Section 2.15(e)(i) and except
as would not be materially adverse to the Company or its business, the
Company and each subsidiary enforces a policy of requiring each relevant
employee, consultant and contractor to execute proprietary information,
confidentiality and assignment agreements substantially in the Company's
standard forms (which are valid and enforceable under applicable law) that
assign to the Company all rights to any Intellectual Property rights
relating to the Company's business that are developed by the employee,
consultant or contractor, as applicable, in the course of his or her
activities for the Company or are developed during working hours or using
Company resources and that otherwise appropriately protect the Intellectual
Property of the Company and its subsidiaries, and, except under
confidentiality obligations, there has been no disclosure by the Company or
any subsidiary of material confidential information or Trade Secrets.
(f) License Agreements.
Other than software commercially available on reasonable terms to any
person for a license fee of no more than One Hundred Thousand Dollars ($100,000)
that is not material to the Company or any of its subsidiaries, Section
2.15(f)(1) of the Company Disclosure Schedule sets forth a complete and accurate
list of all license agreements granting to the Company or any of its
subsidiaries any material right to use or practice any rights under any
Intellectual Property (collectively, the "Inbound License Agreements"),
indicating for each the title, date and the parties thereto. Other than licenses
with customers that, in the twelve-month period prior to the date hereof, have
purchased or licensed products for which the total payments to the Company and
its subsidiaries did not exceed One Hundred Thousand Dollars ($100,000) and that
otherwise are not material to the Company, Section 2.15(f)(2) of the Company
Disclosure Schedule sets forth a complete and accurate list of all license
agreements under which the Company or any of its subsidiaries licenses software
or grants other rights to use or practice any rights under any Intellectual
Property (collectively, the "Outbound License Agreements"), indicating for each
the title, date and the parties thereto. There is no material outstanding or, to
the Company's knowledge, threatened dispute or disagreement with respect to any
Inbound License Agreement or any Outbound License Agreement.
(g) Ownership; Sufficiency of IP Assets. The Company or one of its
subsidiaries owns or possesses adequate licenses or other rights to use, free
and clear of Liens, orders and arbitration awards, all of the Intellectual
Property used in and material to its business. The Company's Intellectual
Property, together with the Company's and its subsidiaries' unregistered
copyrights and the Company's and its subsidiaries' rights under the licenses
granted to the Company or any of its subsidiaries under the Inbound License
Agreements, constitute all the material Intellectual Property rights used in the
operation of the Company's and its subsidiaries' businesses as they are
currently conducted and are all the Intellectual Property rights necessary to
operate such businesses after the Effective Time in substantially the same
manner as such businesses have been operated by the Company prior thereto.
(h) Protection of IP. The Company has taken reasonable steps to protect the
Intellectual Property of the Company and its subsidiaries.
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(i) No Infringement by the Company. Except as set forth in Section 2.15(d)
of the Company Disclosure Schedule, the products used, manufactured, marketed,
sold or licensed by the Company and its subsidiaries, and all Intellectual
Property used in the conduct of the Company's and its subsidiaries' businesses
as currently conducted, do not infringe upon, violate or constitute the
unauthorized use of any valid and enforceable rights owned or controlled by any
third party, including any Intellectual Property of any third party.
(j) No Pending or Threatened Infringement Claims. Except and to the extent
publicly disclosed in the Company SEC Reports, no litigation is now or, within
the three (3) years prior to the date of this Agreement, was pending and, to the
Company's knowledge, no notice or other claim has been made against the Company
within the one (1) year prior to the date of this Agreement, (A) alleging that
the Company any of its subsidiaries has engaged in any activity or conduct that
infringes upon, violates or constitutes the unauthorized use of the Intellectual
Property rights of any third party or (B) challenging the ownership, use,
validity or enforceability of any Intellectual Property owned or licensed by or
to the Company. Except as specifically disclosed in one or more Sections of the
Company Disclosure Schedule pursuant to this Section 2.15, no Intellectual
Property (a) that is owned by the Company or any of its subsidiaries or the
subject of an Inbound License Agreement, is subject to any outstanding order,
judgment, decree, stipulation or agreement restricting the use thereof by the
Company or any such subsidiary, except as may be provided in an Inbound License
Agreement, or (b) that is the subject of an Outbound License Agreement, is
subject to any outstanding order, judgment, decree, stipulation or agreement
restricting the sale, transfer, assignment or licensing thereof by the Company
or any of its subsidiaries to any person.
(k) No Infringement by Third Parties. Except as and to the extent publicly
disclosed in the Company SEC Reports or as set forth in Section 2.15(k) of the
Company Disclosure Schedule, to the knowledge of the Company, no third party is
misappropriating, infringing, diluting or violating any Intellectual Property
owned or licensed by the Company or any of its subsidiaries, and no such claims
have been brought against any third party by the Company or any of its
subsidiaries.
(l) Assignment; Change of Control. Except as set forth in Section 2.15(l)
to the Company Disclosure Schedule, the execution, delivery and performance by
the Company of this Agreement, and the consummation of the transactions
contemplated hereby, will not: (1) cause (whether or not with the passage of
time or at the election of any third party) any payment to become due and
payable by the Company or any of its subsidiaries, or Parent or any of its
subsidiaries, that would not otherwise have become due and payable if this
Agreement had not been executed, delivered or performed, under any Inbound
License Agreement or Outbound License Agreement, (2) result in the loss or
impairment of, or give rise to any right of any third party to terminate or
modify, any of the Company's or any of its subsidiaries' rights to own any of
its Intellectual Property or their respective rights under any Inbound License
Agreement or Outbound License Agreement, or (3) require the consent of any
Governmental Authority or third party in respect of any Inbound License
Agreement or Outbound License Agreement.
(m) Software. The Software owned or purported to be owned by the Company or
any of its subsidiaries, was either (i) developed by employees of the Company or
any of its subsidiaries within the scope of their employment; (ii) developed by
independent contractors who have assigned their rights to the Company or any of
its subsidiaries pursuant to legal, valid and enforceable written agreements; or
(iii) otherwise acquired by the Company or a subsidiary from a third party.
Except as set forth in Section 2.15(m) of the Company Disclosure Schedule, the
Software does not contain any programming code, documentation or other materials
or development environments that embody Intellectual Property rights of any
person other than the Company or any of its subsidiaries. For purposes of this
Section 2.15(m), "Software" means any and all (i) computer programs, including
any and all software implementations of algorithms, models and methodologies,
whether in source code or object code, (ii) databases and compilations,
including any and all data and collections of data, whether machine readable or
otherwise, (iii) descriptions, schematics, flow-charts and other work
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product used to design, plan, organize and develop any of the foregoing, and
(iv) all documentation, including user manuals and training materials, relating
to any of the foregoing.
(n) Performance of Existing Software Products. The Company's and its
subsidiaries' existing and currently manufactured and marketed Software products
listed and described on Section 2.15(n) of the Company Disclosure Schedule
perform in all material respects, free of significant bugs, viruses or
programming errors, the functions described in any agreed specifications, end
user documentation or warranties provided to customers or other information
provided to customers of the Company or its subsidiaries on which such customers
relied when licensing or otherwise acquiring such products.
(o) Documentation. The Company and its subsidiaries have taken all actions
customary in the software industry to document the Software and its operation,
such that the materials comprising the Software, including the source code and
documentation, have been written in a clear and professional manner as customary
for the industry so that they may be understood, modified and maintained in an
efficient manner by reasonably competent programmers.
(p) Year 2000 Compliance.
(i) Except as set forth in Section 2.15(p) of the Company Disclosure
Schedule, all of the Company's and its subsidiaries' material products
(including products currently under development) will record, store,
process and calculate and present calendar dates falling on and after
December 31, 1998, 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, 1998, or
calculate any information dependent on or relating to such dates
(collectively "Year 2000 Compliant"). Except as set forth in Section
2.15(p) of the Company Disclosure Schedule, (A) all of the Company's and
its subsidiaries' material products will lose no significant functionality
with respect to the introduction of records containing dates falling on or
after December 31, 1998; and (B) all of the Company's and its subsidiaries'
internal computer systems comprised of software, hardware, databases or
embedded control systems (microprocessor controlled, robotic or other
device) related to the Company's and its subsidiaries' businesses
(collectively, a "Business System"), that constitutes any part of, or is
used in connection with the use, operation or enjoyment of, any tangible or
intangible asset or real property of the Company and its subsidiaries,
including its accounting systems, are Year 2000 Compliant. Except as set
forth in Section 2.15(p) of the Company Disclosure Schedule, the current
versions of the Company's and its subsidiaries' Software and all other
Intellectual Property may be used prior to, during and after December 31,
1998, such that such Software and Intellectual Property will operate prior
to, during and after such time period without error caused by date data
that represents or references different centuries or more than one century.
(ii) All of the Company's and its subsidiaries' material products
conform to all representations and warranties made by the Company and its
subsidiaries to customers with respect to the introduction of records
containing dates falling on or after December 31, 1998, the advent of the
year 2000, the advent of the twenty-first century or the transition from
the twentieth century through the year 2000 and into the twenty-first
century. Except as set forth in Section 2.15(p) of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries is reasonably
likely to incur material expenses arising from or relating to the failure
of any of its Business Systems or any products (including all products sold
on or prior to the date hereof) as a result of the advent of the year 2000,
the advent of the twenty-first century or the transition from the twentieth
century through the year 2000.
SECTION 2.16. Insurance. Each of the Company and its subsidiaries maintains
insurance policies (the "Insurance Policies") against all risks of a character
and in such amounts as are customarily insured against by similarly situated
companies in the same or similar businesses. Each material Insurance Policy is
in full force and effect and is valid, outstanding and enforceable, and all
premiums due thereon have been paid in full.
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The Company has recently renewed its Directors, Officers and Corporate Liability
and Company Reimbursement policies on substantially the same terms and
conditions as contained in the policies provided to Parent or its counsel.
Except as set forth in Section 2.16 of the Company Disclosure Schedule, none of
the material Insurance Policies will terminate or lapse (or be affected in any
other materially adverse manner) by reason of the transactions contemplated by
this Agreement. Each of the Company and its subsidiaries has complied in all
material respects with the provisions of each Insurance Policy under which it is
the insured party. No insurer under any Insurance Policy has canceled or
generally disclaimed liability under any such policy or, to the Company's
knowledge, indicated any intent to do so or not to renew any such policy. All
material claims of which the Company has knowledge under the Insurance Policies
have been filed in a timely fashion.
SECTION 2.17. Restrictions on Business Activities. Except as set forth in
Section 2.17 of the Company Disclosure Schedule, there is no agreement
(noncompete or otherwise), judgment, injunction, order or decree to which the
Company is a party or otherwise binding upon the Company that has or is
reasonably likely to 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 the
Company is restricted from selling, licensing or otherwise distributing any of
its products or providing services to any class of customers, in any geographic
area, during any period of time or in any segment of the market.
SECTION 2.18. Title to Properties; Absence of Liens and Encumbrances.
(a) The Company owns no real property, nor has it ever owned any real
property. Section 2.18 of the Company Disclosure Schedule sets forth a list of
all real property currently leased by the Company. 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
material default or event of default (or event which with notice or lapse of
time, or both, would constitute a default). Complete and correct copies of such
leases have been made available to Parent or its counsel.
(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 properties and
assets, tangible and intangible, real, personal and mixed, used or held for use
in its business, free and clear of any Liens, except as reflected in the Company
SEC Reports except for Liens for Taxes not yet due and payable and such
imperfections of title, if any, that do not materially interfere with the
present value of the subject property or as may be reflected in Section 2.18 of
the Company Disclosure Schedule.
SECTION 2.19. Certain Business Practices. None of the Company, any of its
subsidiaries or any directors or officers or, to the Company's knowledge, agents
or employees of the Company or any of its subsidiaries has (i) used any funds
for unlawful contributions, gifts, entertainment or other unlawful expenses
related to political activity, (ii) made any unlawful payment to foreign or
domestic government officials or employees or to foreign or domestic political
parties or campaigns or violated any provision of the Foreign Corrupt Practices
Act of 1977, as amended, or (iii) made any other unlawful payment.
SECTION 2.20. Product Warranties. Section 2.20 of the Company Disclosure
Schedule sets forth complete and accurate copies of the forms of written
warranties and guaranties by the Company or any of its subsidiaries currently in
effect with respect to its products. There have not been any material deviations
(written or oral) from such warranties and guaranties, and neither the Company,
any of its subsidiaries nor any of their respective salesmen, employees,
distributors and agents is authorized to undertake obligations to any customer
or to other third parties materially in excess of such warranties or guaranties.
Neither the Company nor any of its subsidiaries has made any material oral
warranty or guaranty with respect to its products not described on such
schedule.
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SECTION 2.21. Agreements, Scheduled Contracts and Commitments. Except as
set forth in Section 2.21 of the Company Disclosure Schedule, the Company does
not have, is not a party to nor is it bound by:
(i) any collective bargaining agreements;
(ii) any employment or consulting agreement with an employee or
individual consultant, or any consulting or sales agreement under which a
firm or other organization provides services to the Company other than
those that are terminable by the Company or any of its subsidiaries on no
more than thirty days notice without liability or financial obligation,
except to the extent general principles of wrongful termination law may
limit the Company's or any of its subsidiaries' ability to terminate
employees at will, or any consulting agreement;
(iii) any fidelity or surety bond or completion bond;
(iv) any agreement of indemnification other than in the ordinary
course of business consistent with past practice or any guaranty;
(v) any agreement pursuant to which the Company has granted or may
grant in the future, to any party a source-code license or option or other
right to use or acquire source-code;
(vi) any agreement relating to the disposition or acquisition of
assets or any interest in any business enterprise outside the ordinary
course of the Company's business consistent with past practices;
(vii) any material distribution, joint marketing or development
agreement;
(viii) any customer agreement, or group of related agreements that
relate to any single customer together with its affiliated entities, that
provides for aggregate revenue to the Company of more than Nine Hundred
Thousand Dollars ($900,000); or
(ix) any other material agreement or commitment, whether written or
oral that has not otherwise been disclosed to Parent and Acquisition.
Neither the Company nor any of its subsidiaries has in any material respect
breached, violated or defaulted under, or received notice that it has materially
breached, violated or defaulted under, any of the terms or conditions of any
agreement, contract or commitment required to be set forth in Section 2.21 of
the Company Disclosure Schedule and each such agreement, contract or commitment
is in full force and effect and is not subject to any material default
thereunder of which the Company has knowledge by any party obligated to the
Company pursuant thereto.
SECTION 2.22. Suppliers and Customers. The documents and information
supplied by the Company to Parent or any of its representatives with respect to
relationships and volumes of business done with its significant suppliers and
customers are accurate in all material respects. During the last twelve (12)
months, neither the Company nor any of its subsidiaries has received notices of
termination or written threats of termination from any of the ten (10) largest
suppliers or the twenty-five (25) largest customers of the Company and its
subsidiaries.
SECTION 2.23. Vote Required. The affirmative vote of the holders of a
majority of the outstanding Shares is the only vote of the holders of any class
or series of the Company's capital stock necessary to approve and adopt this
Agreement.
SECTION 2.24. Pooling. Neither the Company nor, to the knowledge of the
Company, any of its affiliates has taken or agreed to take action that would
prevent the Merger from being treated for financial accounting purposes as a
pooling of interests in accordance with generally accepted accounting principles
and the rules regulations and interpretations of the SEC (a "Pooling
Transaction").
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SECTION 2.25. Affiliates. Except for the directors and executive officers
of the Company, each of whom is listed in Section 2.25 of the Company Disclosure
Schedule, there are no persons who, to the knowledge of the Company, may be
deemed to be affiliates of the Company within the meaning of Rule 145 of the
Securities Act ("Company Affiliates").
SECTION 2.26. Opinion of Financial Advisor. Credit Suisse First Boston
Corporation (the "Company Financial Advisor") has delivered to the Company Board
its written opinion dated the date of this Agreement to the effect that as of
such date the Exchange Ratio is fair, from a financial point of view, to the
holders of Shares (the "Opinion of Company Financial Advisor"). A true and
complete copy of such opinion has been delivered or made available to Parent.
SECTION 2.27. Brokers. No broker, finder or investment banker (other than
the Company Financial Advisor, a true and correct copy of whose engagement
agreement has been provided to Parent) is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Company.
SECTION 2.28. Company Rights Agreement. The Company has taken all necessary
action to ensure that neither its entering into this Agreement or the Stock
Option Agreement, nor the consummation of the Merger, nor exercise of Parent's
rights under such Stock Option Agreement in accordance with its terms, will
cause the Company Rights to become exercisable, cause Parent or Acquisition to
become an "Acquiring Person" (as defined in the Company Rights Agreement), or
cause there to occur a "Triggering Event" or a "Distribution Date" (each as
defined in the Company Rights Agreement). The Company has not taken any action
to prevent the Company Rights from becoming exercisable in connection with any
Company Acquisition nor to prevent any third party from becoming an Acquiring
Person or to cause there to occur a Triggering Event or a Distribution Date in
connection with any Company Acquisition.
SECTION 2.29. Takeover Statutes. No "fair price," "moratorium," "control
share acquisition" or other similar anti-takeover statute or regulation (each a
"Takeover Statute") is applicable to the Company, the Shares, the Merger or any
of the other transactions contemplated by this Agreement. The Company Board has
approved the Merger and this Agreement, and such approval is sufficient to
render inapplicable to the Merger, this Agreement, and the Stock Option
Agreement the transactions contemplated by this Agreement and the Stock Option
Agreement the provisions of DGCL Section 203 to the extent, if any, such Section
is applicable to the Merger, this Agreement, the Stock Option Agreement or any
of the transactions contemplated by this Agreement and the Stock Option
Agreement.
SECTION 2.30. Representations Complete. The representations and warranties
made by the Company in this Agreement, the statements made in any Schedules or
certificates furnished by the Company pursuant to this Agreement, and the
statements made by the Company in any documents mailed, delivered or furnished
to the Company's stockholders in connection with soliciting their proxy or
consent to this Agreement and the Merger, do not contain and will not contain,
as of their respective dates and as of the Effective Time, any untrue statement
of a material fact, nor do they omit or will they omit, as of their respective
dates or as of 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 they were made, not misleading.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION
Parent and Acquisition hereby jointly and severally represent and warrant
to the Company, subject to the exceptions set forth in the Disclosure Schedule
(the "Parent Disclosure Schedule") delivered by Parent to the
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Company in accordance with Section 4.13 (which exceptions shall specifically
identify a Section, Subsection or clause of a single Section or Subsection
hereof, as applicable, to which such exception relates) that:
SECTION 3.1. Organization. Each of Parent and Acquisition is duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite power and authority to own, lease and operate its
properties and to carry on its business as now being conducted. Parent has
heretofore made available to the Company accurate and complete copies of the
Certificates of Incorporation and bylaws as currently in full force and effect,
of Parent and Acquisition.
SECTION 3.2. Capitalization of Parent and its Subsidiaries.
(a) The authorized capital stock of the Parent consists of Seven Hundred
Million (700,000,000) shares of Parent Common Stock ("Parent Shares"), of which,
as of September 30, 1999, Two Hundred Forty-Three Million Seven Hundred
Ninety-Four Thousand Eight Hundred Sixty-Five (243,794,865) Parent Shares were
issued and outstanding, and Two Million (2,000,000) shares of preferred stock,
none of which is outstanding. All of the outstanding Parent Shares have been
validly issued and are fully paid, nonassessable and free of preemptive rights.
As of September 30, 1999, approximately One Hundred Thirty-One Million Two
Hundred Seventy-Seven Thousand Five Hundred Eighty-Six (131,277,586) Parent
Shares were reserved for issuance and, as of September 30, 1999, approximately
Fifty-Two Million Two Hundred Seventy-Four Thousand One Hundred Ten (52,274,110)
were issuable upon or otherwise deliverable in connection with the exercise of
outstanding options to purchase Parent Common Stock issued pursuant to the
following plans ("Parent Option Plans"): 1992 Directors' Stock Option Plan, 1992
Employee Stock Purchase Plan, 1989 Stock Plan, 1993 Red Pepper Software Company
Plan, 1992 Intrepid Systems, Inc. Plan, TriMark Technology, Inc. 1998 Director
and Executive Officer Non-Statutory Stock Option Plan, TriMark Technology, Inc.
1995 Director and Executive Officer Stock Option Plan, TriMark Technology, Inc.
1995 Employees and Consultants Stock Option Plan, TriMark Technology, Inc. 1993
Stock Option Plan, and the Distinction Software, Inc. Stock Option Plan. Except
as set forth in Section 3.2(a) of the Parent Disclosure Schedule, between
September 30, 1999 and the date hereof, no shares of the Parent's capital stock
have been issued other than pursuant to options already in existence on such
first date issued under Parent Option Plans, and between September 30, 1999 and
the date hereof, no stock options have been granted. Except (i) as set forth
above, (ii) for Parent's warrants issued pursuant to the Warrant Agreement
between Parent and the First National Bank of Boston, as warrant agent, dated
October 30, 1995, and (iii) for the rights (the "Parent Rights") issued pursuant
to Parent's First Amended and Restated Preferred Share Rights Agreement,
effective as of December 16, 1997, between Parent and BankBoston, N.A. (the
"Parent Rights Agreement"), as of the date hereof, there are outstanding (i) no
shares of capital stock or other voting securities of Parent, (ii) no securities
of Parent or any of its subsidiaries convertible into or exchangeable or
exercisable for shares of capital stock or other securities of Parent, (iii) no
options, preemptive or other rights to acquire from Parent or any of its
subsidiaries, and, except as described in the Parent SEC Reports (as defined
below), no obligations of Parent or any of its subsidiaries to issue, any
capital stock, voting securities or securities convertible into or exchangeable
or exercisable for capital stock or other securities of Parent, and (iv) no
equity equivalent interests in the ownership or earnings of the Company or its
subsidiaries or other similar rights (collectively "Parent Securities"). Except
as set forth in Section 3.2(a) of the Parent Disclosure Schedule, as of the date
hereof, there are no outstanding rights or obligations of the Parent or any of
its subsidiaries to repurchase, redeem or otherwise acquire any Parent
Securities. There are no stockholder agreements, voting trusts or other
agreements or understandings to which the Parent is a party or by which it is
bound relating to the voting or registration of any shares of capital stock of
Parent.
(b) All of the outstanding capital stock of Parent's subsidiaries owned by
Parent is owned, directly or indirectly, free and clear of any Lien or any other
limitation or restriction (including any restriction on the right to vote or
sell the same except as may be provided as a matter of Applicable Law). Except
as set forth in Section 3.2(b) of the Parent Disclosure Schedule, there are no
(i) securities of Parent or any of its
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subsidiaries convertible into or exchangeable or exercisable for, (ii) options
or (iii) except for the Parent Rights, other rights to acquire from Parent or
any of its subsidiaries any capital stock or other ownership interests in or any
other securities of any subsidiary of Parent, and there exists no other
contract, understanding, arrangement or obligation (whether or not contingent)
providing for the issuance or sale, directly or indirectly, of any such capital
stock. There are no outstanding contractual obligations of Parent or its
subsidiaries to repurchase, redeem or otherwise acquire any outstanding shares
of capital stock or other ownership interests in any subsidiary of Parent.
(c) The Parent Rights and Parent Shares constitute the only classes of
equity securities of Parent or its subsidiaries registered or required to be
registered under the Exchange Act.
SECTION 3.3. Authority Relative to this Agreement.
(a) Each of Parent and Acquisition has all necessary corporate power and
authority to execute and deliver this Agreement, to perform its obligations
under this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
boards of directors of Parent (the "Parent Board") and Acquisition and by Parent
as the sole stockholder of Acquisition, and no other corporate proceedings on
the part of Parent or Acquisition are necessary to authorize this Agreement or
to consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by each of Parent and Acquisition and
constitutes, assuming the due authorization, execution and delivery hereof by
the Company, a valid, legal and binding agreement of each of Parent and
Acquisition enforceable against each of Parent and Acquisition in accordance
with its terms, subject to any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in effect relating
to creditors' rights generally or to general principles of equity.
(b) Without limiting the generality of the foregoing, the Parent Board has
(1) determined that the Merger is fair to, and in the best interests of Parent
and Parent's stockholders, (2) approved this Agreement, the Stock Option
Agreement, the Merger and the other transactions contemplated hereby, and (3)
has not withdrawn or modified such approval.
SECTION 3.4. SEC Reports; Financial Statements.
(a) Parent has filed all required forms, reports and documents ("Parent SEC
Reports") with the SEC since January 1, 1996, each of which complied at the time
of filing in all material respects with all applicable requirements of the
Securities Act and the Exchange Act, each law as in effect on the dates such
forms, reports and documents were filed. None of such Parent SEC Reports,
including any financial statements or schedules included or incorporated by
reference therein, contained when filed any untrue statement of a material fact
or omitted to state a material fact required to be stated or incorporated by
reference 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 superseded or amended by a Parent SEC Report filed subsequently and prior
to the date hereof. The audited consolidated financial statements of Parent
included in the Parent SEC Reports fairly present in conformity in all material
respects with generally accepted accounting principles applied on a consistent
basis (except as may be indicated in the notes thereto) the consolidated
financial position of Parent and its consolidated subsidiaries as of the dates
thereof and their consolidated results of operations and changes in financial
position for the periods then ended. Notwithstanding the foregoing, Parent shall
not be deemed to be in breach of any of the representations or warranties in
this Section 3.4 as a result of any changes to the Parent SEC Reports that
Parent may make in response to comments received from the SEC on the S-4 or the
Proxy Statement.
(b) Parent has heretofore made, and hereafter will make, available to the
Company a complete and correct copy of any amendments or modifications that are
required to be filed with the SEC but have not yet
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been filed with the SEC to agreements, documents or other instruments that
previously had been filed by Parent with the SEC pursuant to the Exchange Act.
SECTION 3.5. Information Supplied. None of the information supplied or to
be supplied by Parent or Acquisition in writing for inclusion or incorporation
by reference in (i) the S-4 will at the time the S-4 is filed with the SEC and
at the time it becomes effective under the Securities Act contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading or
(ii) the Proxy Statement will at the date mailed to stockholders of the Company
and at the times of the meeting or meetings of stockholders of the Company to be
held in connection with the Merger 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 rules and
regulations thereunder. Notwithstanding the foregoing, Parent makes no
representation, warranty or covenant with respect to any information supplied or
required to be supplied by the Company that is contained in or omitted from any
of the foregoing documents.
SECTION 3.6. Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under and
other applicable requirements of the Securities Act, the Exchange Act, state
securities or blue sky laws, the HSR Act, and any filings under similar merger
notification laws or regulations of foreign Governmental Entities and the filing
and recordation of the Certificate of Merger as required by the DGCL, no
material filing with or notice to, and no material permit, authorization,
consent or approval of any Governmental Entity is necessary for the execution
and delivery by Parent or Acquisition of this Agreement or the consummation by
Parent or Acquisition of the transactions contemplated hereby. Neither the
execution, delivery and performance of this Agreement by Parent or Acquisition
nor the consummation by Parent or Acquisition of the transactions contemplated
hereby will (i) conflict with or result in any breach of any provision of the
respective Certificates of Incorporation or bylaws (or similar governing
documents) of Parent or Acquisition, (ii) result in a violation or breach of or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, amendment, cancellation or acceleration
or Lien) under any of the terms, conditions or provisions of any material note,
bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which Parent or Acquisition or any of Parent's other
subsidiaries is a party or by which any of them or any of their respective
properties or assets are bound or (iii) violate any material order, writ,
injunction, decree, law, statute, rule or regulation applicable to Parent or
Acquisition or any of Parent's other subsidiaries or any of their respective
properties or assets.
SECTION 3.7. Litigation. Except as publicly disclosed by the Parent in the
Parent SEC Reports or as set forth in Section 3.7 of the Parent Disclosure
Schedule, there is no suit, claim, action, arbitration, proceeding or
investigation pending or, to the knowledge of Parent, threatened against Parent
or any of its subsidiaries or any of their respective properties or assets
before any Governmental Entity or brought by any person that is material or
would reasonably be expected to prevent or delay the consummation of the
transactions contemplated by this Agreement beyond the Final Date. Except as
publicly disclosed by Parent in the Parent SEC Reports, neither Parent nor any
of its subsidiaries is subject to any outstanding order, writ, injunction or
decree that would reasonably be expected to be material or would reasonably be
expected to prevent or delay the consummation of the transactions contemplated
hereby.
SECTION 3.8. Tax Treatment; Pooling. Neither Parent, Acquisition nor, to
the knowledge of Parent, any of its affiliates has taken, proposes to take, or
has agreed to take any action that would prevent the Merger (a) from
constituting a reorganization qualifying under the provisions of Section 368(a)
of the Code or (b) from being treated as a Pooling Transaction for financial
accounting purposes.
SECTION 3.9. Opinion of Financial Advisor. Goldman Sachs & Co. (the "Parent
Financial Advisor") has delivered to the Board of Directors of Parent its
opinion to the effect that, as of the date hereof, the
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Merger Consideration is fair, from a financial point of view, to Parent
("Opinion of Parent Financial Advisor").
SECTION 3.10. Brokers. Other than the Parent Financial Advisor, no broker,
finder or investment banker is entitled to any brokerage, finder's or other fee
or commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of Parent or Acquisition.
SECTION 3.11. No Prior Activities. Except for obligations incurred in
connection with its incorporation or organization or the negotiation and
consummation of this Agreement and the transactions contemplated hereby,
Acquisition has neither incurred any obligation or liability nor engaged in any
business or activity of any type or kind or entered into any agreement or
arrangement with any person.
SECTION 3.12. No Undisclosed Liabilities; Absence of Changes. Except as and
to the extent publicly disclosed by Parent in the Parent SEC Reports, neither
Parent nor any of its subsidiaries has any material liabilities or obligations
of any nature, whether or not accrued, contingent or otherwise, that would be
required by generally accepted accounting principles to be reflected on a
consolidated balance sheet of Parent (including the notes thereto) other than
(i) liabilities specifically described in this Agreement or in the Parent
Disclosure Schedule, and (ii) normal or recurring liabilities incurred since
June 30, 1999 in the ordinary course of business consistent with past practices.
Except as publicly disclosed by Parent in the Parent SEC Reports or as set forth
in Section 3.12 of the Parent Disclosure Schedule, since June 30, 1999, there
have been no events, changes or effects with respect to Parent or its
subsidiaries that, individually or in the aggregate, have had or reasonably
would be expected to have had a Material Adverse Effect on Parent.
SECTION 3.13. Compliance with Applicable Law. Except as publicly disclosed
by Parent in the Parent SEC Reports, Parent and its subsidiaries hold all
material permits, licenses, variances, exemptions, orders and approvals of all
Governmental Entities necessary for the lawful conduct of their respective
businesses (the "Parent Permits"). Except as publicly disclosed by Parent in the
Parent SEC Reports, Parent and its subsidiaries are in material compliance with
the terms of the Parent Permits. Except as publicly disclosed by Parent in the
Parent SEC Reports, to the knowledge of Parent, the businesses of Parent and its
subsidiaries have been and are being conducted in material compliance with all
material Applicable Laws. Except as publicly disclosed by Parent in the Parent
SEC Reports, no investigation or review by any Governmental Entity with respect
to Parent or any of its subsidiaries is pending or, to the knowledge of Parent,
threatened, nor, to the knowledge of Parent, has any Governmental Entity
indicated an intention to conduct the same.
SECTION 3.14. Affiliates. Except for the directors and executive officers
of Parent, each of whom is listed in Section 3.14 of the Parent Disclosure
Schedule, there are no persons who, to the knowledge of Parent, may be deemed to
be affiliates of Parent within the meaning of Rule 145 of the Securities Act
("Parent Affiliates").
SECTION 3.15. Intellectual Property. Parent (or one of its subsidiaries)
owns all of the material Intellectual Property, or has a valid and enforceable
right to use all of the material Intellectual Property that is not owned
exclusively by it, that is used in Parent's business. Except as set forth in
Section 3.15 of the Parent Disclosure Schedule, the products used, manufactured,
marketed, sold or licensed by Parent and its subsidiaries, and all Intellectual
Property used in the conduct of Parent's businesses as currently conducted, do
not infringe upon, violate or constitute the unauthorized use of any valid and
enforceable rights owned or controlled by any third party, including any
Intellectual Property of any third party. All of Parent's and its subsidiaries'
material products conform to all representations and warranties made by Parent
and its subsidiaries to customers with respect to the introduction of records
containing dates falling on or after December 31, 1998, the advent of the year
2000, the advent of the twenty-first century or the transition from the
twentieth century through the year 2000 and into the twenty-first century.
SECTION 3.16. No Default. Except as set forth in Section 3.16 of the Parent
Disclosure Schedule, neither Parent nor any of its subsidiaries is in material
breach, default or violation (and no event has occurred
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that with notice or the lapse of time or both would constitute a breach, default
or violation) of any term, condition or provision of (i) its Certificate of
Incorporation or bylaws (or similar governing documents), (ii) any material
note, bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which Parent or any of its subsidiaries is now a
party or by which it or any of its properties or assets are bound or (iii) any
material order, writ, injunction, decree, law, statute, rule or regulation
applicable to Parent or any of its subsidiaries or any of its properties or
assets.
SECTION 3.17. Representations Complete. The representations and warranties
made by Parent and Acquisition in this Agreement, the statements made in any
certificates furnished by Parent and Acquisition pursuant to this Agreement, and
the statements made by Parent and Acquisition in any documents mailed, delivered
or furnished to the Company's stockholders in connection with soliciting their
proxy or consent to this Agreement and the Merger, do not contain and will not
contain, as of their respective dates and as of the Effective Time, any untrue
statement of a material fact, nor do they omit or will they omit, as of their
respective dates or as of 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 they were made, not misleading.
ARTICLE 4
COVENANTS
SECTION 4.1. Conduct of Business of the Company. Except as contemplated by
this Agreement or as described in Section 4.1 of the Company Disclosure
Schedule, during the period from the date hereof to the Effective Time, the
Company will, and will cause each of its subsidiaries to, conduct its operations
in the ordinary course of business consistent with past practice with no less
diligence and effort than would be applied in the absence of this Agreement, use
commercially reasonable efforts to preserve intact its current business
organizations, keep available the service of its current officers and key
employees and preserve its relationships with customers, suppliers,
distributors, lessors, creditors, employees, contractors and others having
business dealings with it with the intention that its goodwill and ongoing
businesses shall be unimpaired at the Effective Time. Without limiting the
generality of the foregoing, except as otherwise expressly provided in this
Agreement and except as described in Section 4.1 of the Company Disclosure
Schedule, prior to the Effective Time, neither the Company nor any of its
subsidiaries will, without the prior written consent of Parent, which consent
shall not unreasonably be withheld:
(a) amend its Certificate of Incorporation or bylaws (or other similar
governing instrument);
(b) authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or granting of
options, warrants, commitments, subscriptions, rights to purchase or
otherwise) any stock of any class or any other debt or equity securities or
equity equivalents (including any stock options or stock appreciation
rights) except for (i) grants of options under the Company Plans up to the
amounts set forth on Section 4.1(b) of the Company Disclosure Schedule, or
(ii) the issuance and sale of Shares pursuant to options granted under the
Company Plans prior to the date hereof;
(c) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its
capital stock, make any other actual, constructive or deemed distribution
in respect of its capital stock or otherwise make any payments to
stockholders in their capacity as such, or redeem or otherwise acquire any
of its securities or any securities of any of its subsidiaries except as
may be required under any Company Option or any other agreement set forth
in Section 4.1(c) of the Company Disclosure Schedule;
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(d) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any of its subsidiaries (other than the
Merger);
(e) alter through merger, liquidation, reorganization, restructuring
or any other fashion the corporate structure of any subsidiary;
(f)(i) incur or assume any long-term or short-term debt or issue any
debt securities in each case, except for borrowings under existing lines of
credit in the ordinary course of business consistent with past practices,
or modify or agree to any amendment of the terms of any of the foregoing;
(ii) assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any
other person except for obligations of subsidiaries of the Company incurred
in the ordinary course of business consistent with past practices; (iii)
make any loans, advances or capital contributions to or investments in any
other person (other than to subsidiaries of the Company or customary loans
or advances to employees in each case in the ordinary course of business
consistent with past practice); (iv) pledge or otherwise encumber shares of
capital stock of the Company or any of its subsidiaries; or (v) mortgage or
pledge any of its material assets, tangible or intangible, or create or
suffer to exist any material Lien thereupon;
(g) except as may be required by Applicable Law, enter into, adopt or
amend or terminate any bonus, special remuneration, compensation,
severance, stock option, stock purchase agreement, retirement, health,
life, or disability insurance, severance or other employee benefit plan
agreement, trust, fund or other arrangement for the benefit or welfare of
any director, officer, employee or consultant in any manner or increase in
any manner the compensation or fringe benefits of any director, officer or
employee or pay any benefit not required by any plan and arrangement as in
effect as of the date hereof (including the granting of stock appreciation
rights or performance units), except as set forth in Section 4.1(g) of the
Company Disclosure Schedule;
(h) grant any severance or termination pay to any director, officer,
employee or consultant, except payments made pursuant to written agreements
outstanding on the date hereof, the material terms of which are disclosed
on Section 4.1(h) of the Company Disclosure Schedule or as required by
applicable federal, state or local law or regulations;
(i) except as set forth in Section 4.1(i) of the Company Disclosure
Schedule, exercise its discretion or otherwise voluntarily accelerate the
vesting of any Company Stock Option as a result of the Merger, any other
change of control of the Company (as defined in the Company Plans) or
otherwise.
(j)(1) acquire, sell, lease, license, transfer or otherwise dispose of
any material assets in any single transaction or series of related
transactions (including in any transaction or series of related
transactions having a fair market value in excess of Two Hundred Thousand
Dollars ($200,000) in the aggregate), other than sales of its products and
licenses of software in the ordinary course of business consistent with
past practices, (2) enter into any exclusive license, distribution,
marketing, sales or other agreement, (3) enter into any agreement with a
person whereby such person would provide product development or similar
services if the term of such agreement exceeds forty-five (45) days or
provides for payments that could exceed Fifty Thousand Dollars ($50,000)
for any single agreement or One Hundred Thousand Dollars ($100,000) for all
such agreements, or (4) sell, transfer or otherwise dispose of any
Intellectual Property;
(k) except as may be required as a result of a change in law or in
generally accepted accounting principles, materially change any of the
accounting principles, practices or methods used by it;
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(l) revalue in any material respect any of its assets, including
writing down the value of inventory or writing-off notes or accounts
receivable, other than in the ordinary course of business consistent with
past practices;
(m)(i) acquire (by merger, consolidation or acquisition of stock or
assets) any corporation, partnership or other entity or division thereof or
any equity interest therein; (ii) enter into any contract or agreement that
would be material to the Company and its subsidiaries, taken as a whole
other than a non-exclusive license agreement or a service agreement with
end-users entered into in the ordinary course of business consistent with
past practices; (iii) amend, modify or waive any material right under any
material contract of the Company or any of its subsidiaries; (iv) modify
its standard warranty terms for its products or amend or modify any product
warranties in effect as of the date hereof in any material manner that is
adverse to the Company or any of its subsidiaries; (v) authorize any
additional or new capital expenditure or expenditures in excess of Two
Hundred Thousand Dollars ($200,000) in the aggregate in any calendar
quarter, if any such expenditure or expenditures are not listed in the
capital budget attached as Section 4.1(m)(v) of the Company Disclosure
Schedule; provided that nothing in the foregoing clause (v) shall limit any
capital expenditure required pursuant to existing customer contracts; or
(vi) authorize any new or additional manufacturing capacity expenditure or
expenditures for any manufacturing capacity contracts or arrangements;
(n) make or revoke any material tax election or settle or compromise
any material income tax liability or permit any material insurance policy
naming it as a beneficiary or loss-payable to expire, or to be canceled or
terminated, unless a comparable insurance policy reasonably acceptable to
Parent is obtained and in effect;
(o) fail to file any Tax Returns when due (or, alternatively, fail to
file for available extensions) or fail to cause such Tax Returns when filed
to be complete and accurate in all material respects;
(p) fail to pay any material Taxes or other material debts when due;
(q) settle or compromise any pending or threatened suit, action or
claim that (i) relates to the transactions contemplated hereby or (ii) the
settlement or compromise of suits, actions, or claims which would involve
more than One Hundred Thousand Dollars ($100,000) in the aggregate, or that
would otherwise be material to the Company or relates to any Intellectual
Property matters, provided that the Company may settle the dispute with
Summit Software for up to the amount disclosed in Section 4.1(q) of the
Company Disclosure Schedule;
(r) take any action or fail to take any action that could reasonably
be expected to (i) limit the utilization of any of the net operating
losses, built-in losses, tax credits or other similar items of the Company
or its subsidiaries under Section 382, 383, 384 or 1502 of the Code and the
Treasury Regulations thereunder, or (ii) cause any transaction in which the
Company or any of its subsidiaries was a party that was intended to be
treated as a reorganization under Section 368(a) of the Code to fail to
qualify as a reorganization under Section 368(a) of the Code; or
(s) other than licensing and distribution contracts and agreements
with end-user customers entered into in the ordinary course of business
consistent with past practice, enter into any licensing, distribution,
sponsorship, advertising or other similar contracts, agreements, or
obligations which may not be canceled without penalty by the Company or its
subsidiaries upon notice of 45 days or less or which provide for payments
by or to the Company or its subsidiaries in an amount in excess of One
Hundred Thousand Dollars ($100,000) over the term of the agreement;
(t) Take any action, or omit to take any action, that would be
reasonably likely to interfere with Parent's ability to account for the
Merger as a pooling of interests, whether or not otherwise permitted by the
provisions of this Article 4;
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(u) Fail to make in a timely manner any filings with the SEC required
under the Securities Act or the Exchange Act or the rules and regulations
promulgated thereunder;
(v) Engage in any willful action with the intent to directly or
indirectly adversely impact any of the transactions contemplated by this
Agreement; or
(w) take or agree in writing or otherwise to take any of the actions
described in Sections 4.1(a) through 4.1(v) (and it shall use all
reasonable efforts not to take any action that would make any of the
representations or warranties of the Company contained in this Agreement
(including the exhibits hereto) untrue or incorrect).
SECTION 4.2. Preparation of S-4 and the Proxy Statement. The Company and
Parent shall diligently work together and promptly prepare and file with the SEC
the Proxy Statement and the S-4, respectively. Each of Parent and the Company
shall use all reasonable efforts to have the S-4 declared effective under the
Securities Act as promptly as practicable after such filing. Parent shall also
take any action (other than qualifying to do business in any jurisdiction in
which it is now not so qualified) required to be taken under any applicable
state securities laws in connection with the issuance of Parent Common Stock in
the Merger and upon the exercise of Company Stock Options, and the Company shall
furnish all information concerning the Company and the holders of Shares as may
be reasonably requested in connection with any such action.
SECTION 4.3. No Solicitation or Negotiation.
(a) The Company shall, and shall cause its subsidiaries, its affiliates and
their respective officers and other employees, directors, representatives
(including the Company Financial Advisor and any other investment banker and any
attorneys and accountants) and agents to, immediately cease any discussions or
negotiations with any parties with respect to any Third Party Acquisition (as
defined below). The Company also agrees promptly to request each person that has
at any time heretofore executed a confidentiality agreement that governs such
person's discussions with the Company or any of its representatives, at any time
on or after January 1, 1999, of acquiring (whether by merger, acquisition of
stock or assets or otherwise) the Company or any of its subsidiaries, if any, to
return all confidential information heretofore furnished to such person by or on
behalf of the Company or any of its subsidiaries and, if requested by Parent, to
enforce such person's obligation to do so. Neither the Company nor any of its
affiliates shall, nor shall the Company authorize or permit any of its or their
respective officers, directors, employees, representatives or agents to,
directly or indirectly, encourage, solicit, participate in or initiate
discussions or negotiations with or provide any non-public information to any
person or group (other than Parent and Acquisition or any designees of Parent
and Acquisition) concerning any Third Party Acquisition; provided, however, that
if the Company Board determines in good faith, acting only after consultation
with legal counsel of nationally recognized standing and in a manner consistent
therewith, that the failure to do so would be a breach of its fiduciary duties
to the Company's stockholders under the DGCL, the Company may, in response to a
proposal or offer for a Company Acquisition that was not solicited and that the
Company Board determines, based upon the opinion of the Company Financial
Advisor (or another financial advisor of nationally recognized standing), is
from a Third Party that is capable of consummating a Superior Proposal and only
for so long as the Board of Directors so determines that its actions are likely
to lead to a Superior Proposal, (i) furnish information to any such person only
pursuant to a confidentiality agreement substantially in the same form as was
executed by Parent prior to the execution of this Agreement and only if copies
of such information are concurrently provided to Parent, and (ii) participate in
discussions and negotiations regarding such proposal or offer; provided,
further, nothing herein shall prevent the Company Board from taking and
disclosing to the Company's stockholders a position contemplated by Rules 14d-9
and 14e-2 promulgated under the Exchange Act with regard to any tender or
exchange offer. The Company shall promptly (and in any event within twenty-four
(24) hours after becoming aware thereof) (i) notify Parent in the event the
Company or any of its subsidiaries or other affiliates or any of their
respective officers, directors, employees and agents receives any proposal or
inquiry concerning a Third Party Acquisition, including the material terms and
conditions thereof
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and the identity of the party submitting such proposal, and any request for
confidential information in connection with a potential Third Party Acquisition,
(ii) provide a copy of any written agreements, proposals or other materials the
Company receives from any such person or group (or its representatives), (iii)
provide Parent with copies of all information furnished to any such Person
pursuant to Clause (i) of the preceding sentence if such information has not
been previously furnished to Parent and (iv) notify Parent of any material
changes or developments with respect to any of the matters described in clauses
(i) or (ii). The Company shall also advise Parent from time to time of the
status, at any time upon Parent's request, of any such matters.
(b) Except as set forth in this Section 4.3(b), the Company Board shall not
withdraw or modify its recommendation of the transactions contemplated hereby or
approve or recommend, or cause or permit the Company to enter into any letter of
intent, agreement or obligation with respect to, any Third Party Acquisition.
Notwithstanding the foregoing, if the Company Board by a majority vote
determines in its good faith judgment, acting only after consultation with legal
counsel of nationally recognized standing and in a manner consistent therewith,
that it is required to do so in order to comply with its fiduciary duties, the
Company Board may withdraw its recommendation of the transactions contemplated
hereby and approve or recommend a Superior Proposal (as defined in subsection
(c) below), but only (i) after providing written notice to Parent (a "Notice of
Superior Proposal") advising Parent that the Company Board has received a
Superior Proposal, specifying the material terms and conditions of such Superior
Proposal and identifying the person making such Superior Proposal and (ii) if
Parent does not, within three (3) business days of Parent's receipt of the
Notice of Superior Proposal, make an offer that the Company Board by a majority
vote determines in its good faith judgment (based on the opinion of a financial
advisor of nationally recognized reputation, which may be the Company Financial
Advisor) to be at least as favorable to the Company's stockholders as such
Superior Proposal; provided, however, that the Company shall not be entitled to
enter into any binding agreement with respect to a Superior Proposal unless
concurrently therewith this Agreement is terminated by its terms pursuant to
Section 6.1 and the Company pays all amounts due to Parent pursuant to Section
6.3. Any disclosure that the Company Board may be compelled to make with respect
to the receipt of a proposal for a Third Party Acquisition or otherwise in order
to comply with its fiduciary duties or Rule 14d-9 or 14e-2 will not constitute a
violation of this Agreement, provided that such disclosure does not contain any
statements that violate this Section 4.3(b).
(c) For the purposes of this Agreement, "Third Party Acquisition" means the
occurrence of any of the following events: (i) the acquisition of the Company by
tender offer, exchange offer, merger or otherwise by any person (which includes
a "person" as such term is defined in Section 13(d)(3) of the Exchange Act)
other than Parent, Acquisition or any affiliate thereof (a "Third Party"); (ii)
the acquisition by a Third Party of any material portion (which shall include
fifteen percent (15%) or more) of the assets of the Company and its subsidiaries
taken as a whole, other than the sale of its products in the ordinary course of
business consistent with past practices consistent with past practices; (iii)
the acquisition by a Third Party of fifteen percent (15%) or more of the
outstanding Shares; (iv) the adoption by the Company of a plan of liquidation or
the declaration or payment of an extraordinary dividend; (v) the repurchase by
the Company or any of its subsidiaries of more than ten percent (10%) of the
outstanding Shares; or (vi) the acquisition (or any group of acquisitions) by
the Company or any of its subsidiaries by merger, purchase of stock or assets,
joint venture or otherwise of a direct or indirect ownership interest or
investment in any business (or businesses) whose annual revenues, net income or
assets is equal or greater than ten percent (10%) of the annual revenues, net
income or assets of the Company. For purposes of this Agreement, a "Superior
Proposal" means any bona fide proposal (1) to acquire, directly or indirectly,
for consideration consisting solely of cash and/or securities, all of the Shares
then outstanding, or all or substantially all the assets, of the Company, (2)
that contains terms that the Company Board by a majority vote determines in its
good faith judgment (taking into account, as to the financial terms, the opinion
of the Company Financial Advisor or another financial advisor of nationally
recognized reputation) to be more favorable to the Company's stockholders than
the Merger, provided that any financing required to consummate the transaction
contemplated by the offer is either in the possession of
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the Third Party or committed or in the good faith determination of the Company
Board, based upon the opinion of the Company Financial Advisor (or another
financial advisor of nationally recognized standing), is likely to be obtained
by such Third Party on a timely basis, (3) that the Company Board by a majority
vote determines in its good faith judgment (following and based on consultation
with the Company Financial Advisor or another financial advisor of nationally
recognized reputation and its legal and other advisors) to be reasonably capable
of being completed (taking into account all legal, financial, regulatory and
other aspects of the proposal and the person making the proposal) and (4) that
does not contain a "right of first refusal" or "right of first offer" with
respect to any counter-proposal that Parent might make.
SECTION 4.4. Comfort Letters.
(a) The Company shall use all reasonable efforts to cause Arthur Andersen
LLP to deliver a letter dated not more than five (5) days prior to the date on
which the S-4 shall become effective and addressed to itself and Parent and
their respective Boards of Directors in form and substance reasonably
satisfactory to Parent and customary in scope and substance for agreed-upon
procedures letters delivered by independent public accountants in connection
with registration statements and proxy statements similar to the S-4 and the
Proxy Statement.
(b) Parent shall use all reasonable efforts to cause Ernst & Young LLP to
deliver a letter dated not more than five (5) days prior to the date on which
the S-4 shall become effective and addressed to itself and the Company and their
respective Boards of Directors in form and substance reasonably satisfactory to
the Company and customary in scope and substance for agreed-upon procedures
letters delivered by independent accountants in connection with registration
statements and proxy statements similar to the S-4 and the Proxy Statement.
SECTION 4.5. Meeting of Stockholders. The Company shall take all actions
necessary in accordance with the DGCL and its Certificate of Incorporation and
bylaws to duly call, give notice of, convene and hold a meeting of its
stockholders as promptly as practicable to consider and vote upon the adoption
and approval of this Agreement and the transactions contemplated hereby (the
"Meeting"). The Company's obligation to call, give notice of, convene and hold
the Meeting in accordance with this Section 4.5 shall not be limited to or
otherwise affected by the commencement, disclosure, announcement or submission
to the Company of any proposal for a Third Party Acquisition (as defined in
Section 4.3), or by any withdrawal, amendment or modification of the
recommendation of the Company Board with respect to the Merger. The stockholder
vote required for the adoption and approval of the transactions contemplated by
this Agreement shall be the vote required by the DGCL and the Company's
Certificate of Incorporation and bylaws. The Company will, through the Company
Board, recommend to its stockholders approval of such matters subject to the
provisions of Section 4.3(b). The Company and the Parent shall promptly prepare
and file with the SEC the Proxy Statement and the S-4 for the solicitation of a
vote of the holders of Shares approving the Merger, which, subject to the
provisions of Section 4.3(b), shall include the recommendation of the Company
Board that stockholders of the Company vote in favor of the approval and
adoption of this Agreement and the written opinion of the Company Financial
Advisor that the Exchange Ratio is fair from a financial point of view to the
holders of the Shares. The Company shall use all reasonable efforts to have the
Proxy Statement cleared by the SEC as promptly as practicable after filing, and
promptly thereafter mail the Proxy Statement to the stockholders of the Company.
Parent shall use all reasonable efforts to have the S-4 declared effective by
the SEC as promptly as practicable after such filing. Whenever any event occurs
which is required to be set forth in an amendment or supplement to the S-4
and/or the Proxy Statement, the Company or Parent, as the case may be, will
promptly inform the other of such occurrence and cooperate in filing with the
SEC or its staff or any other government officials, and/or mailing to
stockholders of the Company, such amendment or supplement. Notwithstanding
anything to the contrary contained in this Agreement, the Company may adjourn or
postpone (i) the Meeting to the extent necessary to ensure that any necessary
supplement or amendment to the S-4 and/or the Proxy Statement is provided to the
Company's stockholders in advance of a
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vote on the Merger and this Agreement or (ii) the time for which the Meeting is
originally scheduled (as set forth in the S-4 and the Proxy Statement), if there
are insufficient Shares represented, either in person or by proxy, to constitute
a quorum necessary to conduct the business of the Meeting. Parent shall use all
reasonable efforts to obtain all necessary state securities law or "blue sky"
permits and approvals required in connection with the Merger and to consummate
the other transactions contemplated by this Agreement and will pay all expenses
incident thereto, provided that the Company shall cooperate with Parent in
obtaining such permits and approvals as reasonably requested.
SECTION 4.6. Nasdaq National Market. Parent shall use all reasonable
efforts to cause the shares of Parent Common Stock to be issued in the Merger
and the shares of Parent Common Stock to be reserved for issuance upon exercise
of Company Stock Options to be approved for listing on the Nasdaq National
Market, subject to official notice of issuance, prior to the Effective Time.
SECTION 4.7. Access to Information.
(a) Between the date hereof and the Effective Time, upon reasonable notice,
the Company will give Parent and its authorized representatives reasonable
access to all employees, plants, offices, warehouses and other facilities and to
all books and records and personnel files of current employees of the Company
and its subsidiaries as Parent may reasonably require, and will cause its
officers and those of its subsidiaries to furnish Parent with such financial and
operating data and other information with respect to the business and properties
of the Company and its subsidiaries as Parent may from time to time reasonably
request. Between the date hereof and the Effective Time, Parent shall make
available to the Company such executive officers and key employees of Parent as
are reasonably requested by the Company to answer questions and make available
such information and books and records regarding Parent and its subsidiaries as
are reasonably requested by the Company taking into account the nature of the
transactions contemplated by this Agreement.
(b)(1) Between the date hereof and the Effective Time, the Company shall
furnish to Parent (I) within two (2) business days following preparation thereof
(and in any event within twenty (20) business days after the end of each fiscal
quarter) an unaudited balance sheet as of the end of such quarter and the
related statements of earnings, stockholders' equity (deficit) and cash flows
for the quarter then ended, and (II) within two (2) business days following
preparation thereof (and in any event within ninety (90) calendar days after the
end of each fiscal year) an audited balance sheet as of the end of such year and
the related statements of earnings, stockholders' equity (deficit) and cash
flows, all of such financial statements referred to in clauses (I), and (II) to
prepared in accordance with generally accepted accounting principles in
conformity with the practices consistently applied by the Company with respect
to such financial statements. All the foregoing shall be in accordance with the
books and records of the Company and shall fairly present its financial position
(taking into account the differences between the monthly, quarterly and annual
financial statements prepared by the Company in conformity with its past
practices) as of the last day of the period then ended.
(2) Between the date hereof and the Effective Time, Parent shall furnish to
the Company (I) within two (2) business days following preparation thereof (and
in any event within twenty (20) business days after the end of each fiscal
quarter) an unaudited balance sheet as of the end of such quarter and the
related statements of earnings, stockholders' equity (deficit) and cash flows
for the quarter then ended, and (II) within two (2) business days following
preparation thereof (and in any event within ninety (90) calendar days after the
end of each fiscal year) an audited balance sheet as of the end of such year and
the related statements of earnings, stockholders' equity (deficit) and cash
flows, all of such financial statements referred to in clauses (I) and (II) to
prepared in accordance with generally accepted accounting principles in
conformity with the practices consistently applied by Parent with respect to
such financial statements. All the foregoing shall be in accordance with the
books and records of Parent and shall fairly present its financial position
(taking into account the differences between the monthly, quarterly and annual
financial statements prepared by Parent in conformity with its past practices)
as of the last day of the period then ended.
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(c) Each of the parties hereto will hold, and will cause its consultants
and advisors to hold, in confidence all documents and information furnished to
it by or on behalf of another party to this Agreement in connection with the
transactions contemplated by this Agreement pursuant to the terms of that
certain Confidentiality Agreement entered into between the Company and Parent
dated as of October 5, 1999.
SECTION 4.8. Certain Filings; Reasonable Efforts.
(a) Subject to the terms and conditions herein provided, including Section
4.3(b), each of the parties hereto agrees to use all reasonable efforts to take
or cause to be taken all action and to do or cause to be done all things
reasonably necessary, proper or advisable under Applicable Law to consummate and
make effective the transactions contemplated by this Agreement, including using
all reasonable efforts to do the following, (i) cooperate in the preparation and
filing of the Proxy Statement and the S-4 and any amendments thereto, any
filings that may be required under the HSR Act and any filings under similar
merger notification laws or regulations of foreign Governmental Entities; (ii)
obtain consents of all third parties and Governmental Entities necessary,
proper, advisable or reasonably requested by Parent or the Company, for the
consummation of the transactions contemplated by this Agreement; (iii) contest
any legal proceeding relating to the Merger; and (iv) execute any additional
instruments necessary to consummate the transactions contemplated hereby.
Subject to the terms and conditions of this Agreement, Parent and Acquisition
agree to use all reasonable efforts to cause the Effective Time to occur as soon
as practicable after the Company stockholder vote with respect to the Merger.
The Company agrees to use all reasonable efforts to encourage its employees to
accept any offers of employment extended by Parent. If at any time after the
Effective Time any further action is necessary to carry out the purposes of this
Agreement the proper officers and directors of each party hereto shall take all
such necessary action.
(b) Parent and the Company will consult and cooperate with one another, and
consider in good faith the views of one another, in connection with any
analyses, appearances, presentations, letters, white papers, memoranda, briefs,
arguments, opinions or proposals made or submitted by or on behalf of any party
hereto in connection with proceedings under or relating to the HSR Act or any
other foreign, federal, or state antitrust, competition, or fair trade law. In
this regard, each party hereto shall promptly inform the other of any material
communication between such party and the Federal Trade Commission, the Antitrust
Division of the United States Department of Justice, or any other federal,
foreign or state antitrust or competition Governmental Entity regarding the
transactions contemplated herein.
SECTION 4.9. Public Announcements. Neither Parent, Acquisition nor the
Company shall issue any press release or otherwise make any public statements
with respect to the transactions contemplated by this Agreement, including the
Merger, or any Third Party Acquisition, without the prior consent of Parent (in
the case of the Company) or the Company (in the case of Parent or Acquisition),
except (i) as may be required by Applicable Law, or by the rules and regulations
of, or pursuant to any agreement with, the Nasdaq National Market, or (ii)
following a change, if any, of the Company Board's recommendation of the Merger
(in accordance with Section 4.3(b)). The first public announcement of this
Agreement and the Merger shall be a joint press release agreed upon by Parent,
Acquisition and the Company.
SECTION 4.10. Indemnification and Directors' and Officers' Insurance.
(a) From and after the Effective Time, Parent shall cause the Surviving
Corporation to indemnify, defend and hold harmless (and shall also cause the
Surviving Corporation to advance expenses as incurred to the fullest extent
permitted under Applicable Law to), to the extent not covered by insurance, each
person who is now or has been prior to the date hereof or who becomes prior to
the Effective Time an officer or director of the Company or any of the Company's
subsidiaries (the "Indemnified Persons") against (i) all losses, claims,
damages, costs, expenses (including counsel fees and expenses), settlement,
payments or liabilities arising out of or in connection with any claim, demand,
action, suit, proceeding or investigation based in whole or in part on or
arising in whole or in part out of the fact that such person is or was an
officer or
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director of the Company or any of its subsidiaries, whether or not pertaining to
any matter existing or occurring at or prior to the Effective Time and whether
or not asserted or claimed prior to or at or after the Effective Time
("Indemnified Liabilities"); and (ii) all Indemnified Liabilities based in whole
or in part on or arising in whole or in part out of or pertaining to this
Agreement, the Stock Option Agreement or the transactions contemplated hereby or
thereby, in each case to the fullest extent required or permitted under
Applicable Law. Nothing contained herein shall make Parent, Acquisition, the
Company or the Surviving Corporation, an insurer, a co-insurer or an excess
insurer in respect of any insurance policies that may provide coverage for
Indemnified Liabilities, nor shall this Section 4.10 relieve the obligations of
any insurer in respect thereto. The parties hereto intend, to the extent not
prohibited by Applicable Law, that the indemnification provided for in this
Section 4.10 shall apply to negligent acts or omissions by an Indemnified
Person. Each Indemnified Person is intended to be a third party beneficiary of
this Section 4.10 and may specifically enforce its terms. This Section 4.10
shall not limit or otherwise adversely affect any rights any Indemnified Person
may have under any agreement with the Company or under the Company's Certificate
of Incorporation or bylaws as presently in effect.
(b) From and after the Effective Time, Parent shall cause the Surviving
Corporation to fulfill and honor in all respects the obligations of the Company
pursuant to any indemnification agreements between the Company and its directors
and officers as of or prior to the date hereof (or indemnification agreements in
the Company's customary form for directors joining the Company Board prior to
the Effective Time) and any indemnification provisions under the Company's
certificate of incorporation or bylaws as in effect immediately prior to the
Effective Time; provided, however, that Parent's aggregate obligation to
indemnify and hold harmless all Indemnified Persons for all matters to which
such Indemnified Persons may be entitled to be indemnified or held harmless
under subsections (a) and (b) of this Section 4.10 shall in no event exceed the
Company's net worth as of June 30, 1999.
(c) For a period of six years after the Effective Time, Parent will
maintain or cause the Surviving Corporation to maintain in effect, if available,
directors' and officers' liability insurance covering those persons who, as of
immediately prior to the Effective Time, are covered by the Company's directors'
and officers' liability insurance policy (the "Insured Parties") on terms no
less favorable to the Insured Parties than those of the Company's present
directors' and officers' liability insurance policy; provided, however, that in
no event shall Parent or the Company be required to expend on an annual basis in
excess of 200% of the annual premium currently paid by the Company for such
coverage (or such coverage as is available for 200% of such annual premium);
provided further, that, in lieu of maintaining such existing insurance as
provided above, Parent, at its election, may cause coverage to be provided under
any policy maintained for the benefit of Parent or any of its subsidiaries, so
long as the terms are not materially less advantageous to the intended
beneficiaries thereof than such existing insurance.
(d) Neither Parent nor any of its affiliates shall be obligated to
guarantee the payment or performance of the Company's obligations under
subsection (a) or (b) of this Section 4.10, so long as the Surviving Corporation
honors such obligations to the extent of the Company's net worth at June 30,
1999. In no event, however, shall Parent or any such affiliate have any
liability or obligation to any Indemnified Person arising from the Company's
breach of, or inability to perform its obligations under, subsection (a) or (b)
of this Section 4.10 in excess of the difference between the net worth of the
Company at June 30, 1999 and the aggregate of all amounts paid by the Company in
satisfaction of such obligation. The provisions of this Section 4.10 are
intended to be for the benefit of, and will be enforceable by, each person
entitled to indemnification hereunder and the heirs and representatives of such
person. Parent will not permit the Company to merge or consolidate with any
other Person (including Parent) unless Parent ensures that the surviving or
resulting entity assumes the obligations imposed by this Section 4.10, provided
that if the Company shall be merged with Parent, the net worth limitations
contained above shall no longer apply.
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SECTION 4.11. Notification of Certain Matters. The Company shall give
prompt notice to Parent, and Parent shall give prompt notice to the Company, of
(i) the occurrence or nonoccurrence of any event the occurrence or nonoccurrence
of which has caused or would be likely to cause any condition contained in
Article 5 to not be satisfied at or prior to the Effective Time and (ii) any
material failure by such first party to comply with or satisfy in any material
respect 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 4.11 shall not cure such breach or non-compliance or limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.
SECTION 4.12. Affiliates; Pooling; Tax-Free Reorganization.
(a) The Company shall use all reasonable efforts to obtain from all Company
Affiliates, and from each person who becomes a Company Affiliate after the date
of this Agreement and on or prior to the Effective Time, a letter agreement
substantially in the form of Exhibit A-1 hereto as soon as practicable.
(b) Parent shall use all reasonable efforts to obtain from all persons who
are affiliates of Parent within the meaning of Rule 145 of the Securities Act,
and from each person who becomes such an affiliate of Parent after the date of
this Agreement and on or prior to the Effective Time, a letter agreement
substantially in the form of Exhibit A-2 hereto.
(c) Parent shall not be required to maintain the effectiveness of the S-4
for the purpose of resale of shares of Parent Common Stock by stockholders of
the Company who may be affiliates of the Company or Parent pursuant to Rule 145
under the Securities Act.
(d) Each party hereto shall use all reasonable efforts to cause the Merger
to be treated for financial accounting purposes as a Pooling Transaction and
shall not take and shall use all reasonable efforts to prevent any affiliate of
such party from taking any actions that could prevent the Merger from being
treated for financial accounting purposes as a Pooling Transaction, and shall
take all reasonable actions to remedy the effects of any prior actions so as to
permit such treatment.
(e) The Company, on the one hand, and Parent and Acquisition, on the other
hand, shall execute and deliver to legal counsel to the Company and Parent
certificates substantially in the form attached hereto as Exhibits B-1 and B-2,
respectively, at such time or times as reasonably requested by such legal
counsel in connection with its delivery of an opinion with respect to the
transactions contemplated hereby, and the Company and Parent shall each provide
a copy thereof to the other parties hereto. Prior to the Effective Time, none of
the Company, Parent or Acquisition shall take or cause to be taken any action
that would cause to be untrue (or fail to take or cause not to be taken any
action that would cause to be untrue) any of the representations in Exhibits B-1
or B-2.
SECTION 4.13. Additions to and Modification of Company Disclosure Schedule
and Parent Disclosure Schedule.
(a) Concurrently with the execution and delivery of this Agreement, the
Company has delivered a Company Disclosure Schedule that includes all of the
information required by the relevant provisions of this Agreement. In addition,
the Company shall deliver to Parent and Acquisition such additions to or
modifications of any Sections of the Company Disclosure Schedule necessary to
make the information set forth therein true, accurate and complete in all
material respects as soon as practicable after such information is available to
the Company after the date of execution and delivery of this Agreement;
provided, however, that such disclosure shall not be deemed to constitute an
exception to its representations and warranties under Article 2, nor limit the
rights and remedies of Parent and Acquisition under this Agreement for any
breach by the Company of such representation and warranties.
(b) Concurrently with the execution and delivery of this Agreement, Parent
has delivered a Parent Disclosure Schedule that includes all of the information
required by the relevant provisions of this Agreement.
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In addition, Parent shall deliver to the Company such additions to or
modifications of any Sections of the Parent Disclosure Schedule necessary to
make the information set forth therein true, accurate and complete in all
material respects as soon as practicable after such information is available to
Parent or Acquisition after the date of execution and delivery of this
Agreement; provided, however, that such disclosure shall not be deemed to
constitute an exception to its representations and warranties under Article 3,
nor limit the rights and remedies of the Company under this Agreement for any
breach by Parent or Acquisition of such representation and warranties.
SECTION 4.14. Access to Company Employees. The Company agrees to provide
Parent with, and to cause each of its subsidiaries to provide Parent with,
reasonable access to its employees during normal working hours following the
date of this Agreement, to among other things, deliver offers of continued
employment and to provide information to such employees about Parent. All
communications by Parent with Company employees shall be conducted in a manner
that does not disrupt or interfere with the Company's efficient and orderly
operation of its business.
SECTION 4.15. Company Compensation and Benefit Plans. The Company agrees to
take all reasonable actions, subject to Applicable Law, necessary to amend,
merge, freeze or terminate all compensation and benefit plans, effective at the
Closing Date, as requested in writing by Parent.
SECTION 4.16. Convertible Subordinated Notes. Parent, Acquisition and the
Company shall take all necessary actions to ensure that the Surviving
Corporation shall (i) assume the due and punctual payment of the principal of,
premium, if any, and interest (including liquidated damages, if any) on all the
Subordinated Notes and the performance or observance of every covenant of the
Indenture and in the Subordinated Notes on the part of the Company to be
performed or observed, and (ii) have provided for the applicable conversion
rights set forth in Section 12.11 of the Indenture and the repurchase rights set
forth in Article XIV of the Indenture. The Company shall take no actions that
would result in an event of default under the Indenture.
SECTION 4.17. Takeover Statutes. If any Takeover Statute or any similar
statute, law, rule or regulation in any State of the United States (including
under the DGCL or any other law of the State of Delaware) is or may become
applicable to the Merger or any of the other transactions contemplated by this
Agreement or the Stock Option Agreement, the Company and the Company Board shall
promptly grant such approvals and use all reasonable efforts to take such lawful
actions as are necessary so that such transactions may be consummated as
promptly as practicable on the terms contemplated by this Agreement or the Stock
Option Agreement, as the case may be, or by the Merger and use all reasonable
efforts to otherwise take such lawful actions to eliminate or minimize the
effects of such statute, law, rule or regulation, on such transactions.
SECTION 4.18. Company Rights Agreement. The Company shall not (a) redeem
any of the Company Rights issued pursuant to the Company Rights Agreement nor
will the Company take any action to amend the Company Rights Agreement or take
any action to cause the Company Rights to become exercisable in connection with
the Merger, cause Parent or Acquisition to become an "Acquiring Person" (as
defined in the Company Rights Agreement), or cause there to occur a "Flip In
Event" (or any other "Triggering Event") or a "Distribution Date" (each as
defined in the Company Rights Agreement) as a result of the Merger, or (b) take
any action to amend the Company Rights Agreement or take any other action to
prevent the Company Rights from becoming exercisable in connection with any
Company Acquisition or to facilitate the acquisition of Shares by any Person
other than Parent or Acquisition, to prevent any person other than Parent or
Acquisition from becoming an "Acquiring Person" in connection with a Company
Acquisition, or to prevent a "Flip In Event" (or any other "Triggering Event")
or a "Distribution Date" from occurring in connection with any Company
Acquisition unless in each case, this Agreement is first terminated in
accordance with Section 6.1 of this Agreement and the Company pays all amounts
due to Parent pursuant to Section 6.3.
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SECTION 4.19. Form S-8. Parent agrees to file a registration statement on
Form S-8 for the shares of Parent Common Stock issuable with respect to assumed
Company Stock Options as soon as is reasonably practicable after the Effective
Time, and in any event within ten (10) days after the Effective Time, and shall
use its best efforts to maintain the effectiveness of such registration
statement thereafter for so long as any of such options or other rights remain
outstanding.
SECTION 4.20. EMPLOYEE MATTERS.
(a) After the Closing Date, Parent will use all reasonable efforts to give
each employee of Parent domiciled in the United States, who immediately prior to
the Closing Date was on the payroll of the Company (each such employee, a
"Continuing Employee"), full credit for services performed for the Company prior
to the Closing Date, for purposes of eligibility, vesting, benefit accrual and
determination of the level of benefits under Parent benefit plans and employee
arrangements under which such Continuing Employee is entitled to participate
("Parent Employee Plans") (with the exception of Parent's Vision Plan and any
defined benefit plan maintained by Parent), if and to the extent permitted by
such Parent Employee Plans. Pursuant to the terms of Parent's 401(k) plan (the
"Parent 401(k) Plan"), any matching contributions made by Parent under the
Parent 401(k) Plan for any Continuing Employee shall be calculated based only
with respect to such Continuing Employee's contributions to the Parent 401(k)
Plan after the Effective Time and not with respect to contributions made by the
Continuing Employee to the Company's 401(k) plan prior to the Effective Time. No
Continuing Employee nor any dependent of such Continuing Employee who is covered
by the Company's group health plan prior to the Closing Date will experience a
gap in medical coverage as a result of the transaction contemplated by this
Agreement, provided such Continuing Employee or dependent of such Continuing
Employee complies with all terms and procedures necessary to ensure continued
coverage.
(b) Parent will use reasonable efforts to the extent permitted by any
Parent "welfare benefit plan" (as defined in Section 3(1) of ERISA) ("Parent
Welfare Plan") to (i) waive all limitations as to pre-existing condition
exclusions and waiting periods with respect to participation and coverage
requirements applicable to Continuing Employees under any Parent Welfare Plan in
which such Continuing Employees are eligible to participate after the Closing
Date, and (ii) provide each Continuing Employee with credit for the remaining
short plan year for any co-payments and deductibles paid under each comparable
welfare benefit plan maintained by the Company prior to the Closing Date in
satisfying any applicable deductible or co-payment requirements under any of
Parent Welfare Plan that such Continuing Employees are eligible to participate
in after the Closing Date.
SECTION 4.21. Employee Stock Purchase Plan. The Company shall take all
actions necessary, including the satisfaction of any notice requirements, to
provide that each outstanding and valid option or right to purchase shares of
Company Common Stock (the "Stock Purchase Rights") granted or provided under the
Company's 1995 Employee Stock Purchase Plan (the "Stock Purchase Plan") shall be
exercised immediately before the Closing Date and the Stock Purchase Plan shall
be terminated effective immediately thereafter. The Company represents and
warrants that the Stock Purchase Plan provides that the Company can take the
actions contemplated in this Agreement, including those contemplated in this
Section 4.21, without obtaining the consent of any holders of Stock Purchase
Rights or Company Common Stock and without resulting in the acceleration of the
exercisability provisions in effect with respect to such Stock Purchase Rights.
SECTION 4.22. Parent Capital Stock. Except as contemplated by this
Agreement, during the period from the date hereof to the Effective Time, Parent
will not declare, set aside or pay any dividend or other distribution (whether
in cash, stock or property or any combination thereof) in respect of its capital
stock, make any other actual, constructive or deemed distribution in respect of
its capital stock or otherwise make any payments to stockholders in their
capacity as such, or redeem or otherwise acquire any of its securities except as
may be required under any Parent Options or pursuant to any agreements with
former employees, directors or consultants providing for the repurchase of
unvested stock.
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ARTICLE 5
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 5.1. Conditions to Each Party's Obligations to Effect the
Merger. The respective obligations of each party hereto to effect the Merger are
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) this Agreement shall have been approved and adopted by the
requisite vote of the stockholders of the Company;
(b) no statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or enforced by any
United States federal or state or foreign court or United States federal or
state or foreign Governmental Entity that prohibits, restrains, enjoins or
restricts the consummation of the Merger;
(c) any waiting period applicable to the Merger under the HSR Act and
any foreign antitrust or similar laws shall have terminated or expired;
(d) any other governmental or regulatory notices, approvals or other
requirements necessary to consummate the transactions contemplated hereby
and to operate the Company's business after the Effective Time in all
material respects as it is presently conducted, shall have been given,
obtained or complied with, as applicable;
(e) the S-4 shall have become effective under the Securities Act and
shall not be the subject of any stop order or proceedings seeking a stop
order, and Parent shall have received all state securities laws or "blue
sky" permits and authorizations necessary to issue shares of Parent Common
Stock in exchange for Shares in the Merger; and
(f) the Company shall have received from Arthur Andersen LLP, and
Parent shall have received from Ernst & Young LLP, independent accountants
for the Company and Parent, respectively, a copy of a letter addressed to
the Company and Parent, respectively, each dated the Closing Date, in
substance reasonably satisfactory to Parent and the Company (and which may
contain customary qualifications and assumptions), to the effect that such
independent accountants concur with the Company's and Parent's
management's' conclusions that no conditions exist related to the Company
or Parent, respectively, that would preclude Parent from accounting for the
Merger as a "pooling of interests"; provided, however, that this condition
shall be deemed waived by any party if any action taken by, or omitted to
be taken by, such party or any of its employees or affiliates after the
date hereof shall have been the proximate cause of the inability of Parent
to account for the Merger as a "pooling of interests."
SECTION 5.2. Conditions to the Obligations of the Company. The obligation
of the Company to effect the Merger is subject to the satisfaction at or prior
to the Effective Time of the following conditions:
(a) the representations and warranties of Parent and Acquisition
contained in this Agreement (other than those contained in Section 3.10)
shall be true and correct as of the date hereof (except to the extent that
the aggregate of all breaches thereof would not have a Material Adverse
Effect on Parent) and as of the Effective Time with the same effect as if
made at and as of the Effective Time (except to the extent such
representations specifically relate to an earlier date, in which case such
representations shall be true and correct as of such earlier date, and in
any event, subject to the foregoing Material Adverse Effect qualification)
and the representations and warranties of Parent and Acquisition contained
in Section 3.10 shall be true and correct in all respects at and as of the
Effective Time, and, at the Closing, Parent and Acquisition shall have
delivered to the Company a certificate to that effect, executed by two (2)
executive officers of Parent and Acquisition;
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(b) each of the covenants and obligations of Parent and Acquisition to
be performed at or before the Effective Time pursuant to the terms of this
Agreement shall have been duly performed in all material respects at or
before the Effective Time, and, at the Closing, Parent and Acquisition
shall have delivered to the Company a certificate to that effect, executed
by two (2) executive officers of Parent and Acquisition; provided, however,
that in connection with the compliance by Parent or Acquisition with any
Applicable Law (including the HSR Act) or obtaining the consent or approval
of any Governmental Entity whose consent or approval may be required to
consummate the transactions contemplated by this Agreement, Parent shall
not be (i) required, or be construed to be required, to sell or divest any
material assets or business or to restrict in any material respect any
business operations in order to obtain the consent or successful
termination of any review of any such Governmental Entity regarding the
transactions contemplated hereby or (ii) prohibited from owning, and no
material limitation shall be imposed on Parent's ownership of, any material
portion of the Company's business or assets;
(c) the shares of Parent Common Stock issuable to the Company's
stockholders pursuant to this Agreement and such other shares required to
be reserved for issuance in connection with the Merger shall have been
approved for quotation on the Nasdaq National Market, upon official notice
of issuance;
(d) the Company shall have received the opinion of tax counsel to the
Company or tax counsel to Parent to the effect that (i) the Merger will be
treated for Federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code and (ii) each of Parent, Acquisition
and the Company will be a party to the reorganization within the meaning of
Section 368(b) of the Code, which opinion may rely on the representations
set forth in Exhibits B-1 and B-2 and such other representations as such
counsel reasonably deems appropriate and such opinion shall not have been
withdrawn or modified in any material respect; and
(e) there shall have been no events, changes or effects, individually
or in the aggregate, with respect to Parent or its subsidiaries having, or
that would reasonably be expected to have, a Material Adverse Effect on
Parent.
SECTION 5.3. Conditions to the Obligations of Parent and Acquisition. The
respective obligations of Parent and Acquisition to effect the Merger are
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) the representations and warranties of the Company contained in
this Agreement (other than those contained in Section 2.27) shall be true
and correct as of the date hereof (except to the extent that the aggregate
of all breaches thereof would not have a Material Adverse Effect on the
Company) and as of the Effective Time with the same effect as if made at
and as of the Effective Time (except to the extent such representations
specifically relate to an earlier date, in which case such representations
shall be true and correct as of such earlier date, and in any event,
subject to the foregoing Material Adverse Effect qualification) and the
representations and warranties of the Company contained in Section 2.27
shall be true and correct in all respects at and as of the Effective Time,
and, at the Closing, the Company shall have delivered to Parent and
Acquisition a certificate to that effect, executed by two (2) executive
officers of the Company;
(b) each of the covenants and obligations of the Company to be
performed at or before the Effective Time pursuant to the terms of this
Agreement shall have been duly performed in all material respects at or
before the Effective Time and, at the Closing, the Company shall have
delivered to Parent and Acquisition a certificate to that effect, executed
by two (2) executive officers of the Company;
(c) Parent shall have received from each Affiliate of the Company
referred to in Sections 2.21 and 4.13(a) an executed copy of the letter
attached hereto as Exhibit A-1;
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(d) there shall have been no events, changes or effects, individually
or in the aggregate, with respect to the Company or its subsidiaries
having, or that would reasonably be expected to have, a Material Adverse
Effect on the Company;
(e) the shares of Parent Common Stock issuable to the Company's
stockholders pursuant to this Agreement and such other shares required to
be reserved for issuance in connection with the Merger shall have been
approved for quotation on the Nasdaq National Market, upon official notice
of issuance;
(f) Parent shall have received the opinion of tax counsel to Parent or
tax counsel to the Company to the effect that (i) the Merger will be
treated for Federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code and (ii) each of Parent, Acquisition
and the Company will be a party to the reorganization within the meaning of
Section 368(b) of the Code, which opinion may rely on the representations
set forth in Exhibits B-1 and B-2 and such other representations as such
counsel reasonably deems appropriate, and such opinion shall not have been
withdrawn or modified in any material respect; and
(g) the Opinion of the Company Financial Advisor shall not have been
withdrawn, revoked or amended.
ARTICLE 6
TERMINATION; AMENDMENT; WAIVER
SECTION 6.1. Termination. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time whether before or after
approval and adoption of this Agreement by the Company's stockholders:
(a) by mutual written consent of Parent, Acquisition and the Company;
(b) by Parent and Acquisition or the Company if (i) any court of
competent jurisdiction in the United States or other United States federal
or state Governmental Entity shall have issued a final order, decree or
ruling, or taken any other final action, restraining, enjoining or
otherwise prohibiting the Merger and such order, decree, ruling or other
action is or shall have become nonappealable or (ii) the Merger has not
been consummated by March 31, 2000 (the "Final Date"); provided that no
party may terminate this Agreement pursuant to this clause (ii) if such
party's failure to fulfill any of its obligations under this Agreement
shall have been a principal reason that the Effective Time shall not have
occurred on or before said date;
(c) by the Company if (i) there shall have been a breach of any
representations or warranties on the part of Parent or Acquisition set
forth in this Agreement or if any representations or warranties of Parent
or Acquisition shall have become untrue, such that the conditions set forth
in Section 5.2(a) would be incapable of being satisfied by the Final Date,
provided that the Company has not breached any of its obligations hereunder
in any material respect; (ii) there shall have been a breach by Parent or
Acquisition of any of their respective covenants or agreements hereunder
having, in the aggregate, a Material Adverse Effect on Parent (or, in the
case of Sections 4.2 and 4.8, any material breach thereof) or materially
adversely affecting (or materially delaying) the ability of Parent,
Acquisition or the Company to consummate the Merger, and Parent or
Acquisition, as the case may be, has not cured such breach within thirty
(30) business days after notice by the Company thereof, provided that the
Company has not breached any of its obligations hereunder in any material
respect; (iii) the Company shall have convened a meeting of its
stockholders to vote upon the Merger in accordance with this Agreement and
shall have failed to obtain the requisite vote of its stockholders at such
meeting (including any adjournments thereof); or (iv) the Company Board has
received a Superior Proposal, has complied with the provisions of Section
4.3(b), and has made the payment called for by Section 6.3(a); or
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(d) by Parent and Acquisition if (i) there shall have been a breach of
any representations or warranties on the part of the Company set forth in
this Agreement or if any representations or warranties of the Company shall
have become untrue, such that the conditions set forth in Section 5.3(a)
would be incapable of being satisfied by the Final Date, provided that
neither Parent nor Acquisition has breached any of their respective
obligations hereunder in any material respect; (ii) there shall have been a
breach by the Company of one or more of its covenants or agreements
hereunder having, in the aggregate, a Material Adverse Effect on the
Company (or, in the case of Sections 4.2, 4.3, 4.5 or 4.8, any material
breach thereof) or materially adversely affecting (or materially delaying)
the ability of Parent, Acquisition or the Company to consummate the Merger,
and the Company has not cured such breach within thirty (30) business days
after notice by Parent or Acquisition thereof, provided that neither Parent
nor Acquisition has breached any of their respective obligations hereunder
in any material respect; (iii) the Company Board shall have recommended to
the Company's stockholders a Superior Proposal; (iv) the Company Board
shall have withdrawn or adversely modified its approval or recommendation
of this Agreement or the Merger; or (v) the Company shall have convened a
meeting of its stockholders to vote upon the Merger and shall have failed
to obtain the requisite vote of its stockholders at such meeting (including
any adjournments thereof).
SECTION 6.2. Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 6.1, this Agreement shall
forthwith become void and have no effect without any liability on the part of
any party hereto or its affiliates, directors, officers or stockholders other
than the provisions of this Section 6.2 and Sections 4.7(c) and 6.3 and the
provisions of all of Article 7 (other than Section 7.8, in which case the only
clauses that shall survive shall be the clauses in such section that contain
defined terms that are referenced in the foregoing surviving sections). Nothing
contained in this Section 6.2 shall relieve any party from liability for any
fraudulent misconduct or willful breach of this Agreement prior to such
termination.
SECTION 6.3. Fees and Expenses.
(a) In the event that this Agreement shall be terminated pursuant to:
(i) Section 6.1(c)(iv) or 6.1(d)(iii) or (iv);
(ii) Section 6.1(d)(ii) and either (I) prior to the termination of
this Agreement a proposal for a Company Acquisition has been publicly
announced, or (II) within six (6) months after termination of this
Agreement the Company enters into an agreement with respect to a Company
Acquisition or a Company Acquisition occurs involving any Third Party
(or any affiliate thereof); or
(iii) Section 6.1(c)(iii) or 6.1(d)(v) if (I) prior to the vote of
the Company's stockholders at the stockholders' meeting referred to in
either such clause a proposal for a Company Acquisition has been
publicly announced, and (II) within twelve (12) months following the
stockholders' meeting referred to in either such clause, the Company
enters into an agreement with respect to a Company Acquisition or a
Company Acquisition occurs involving any Third Party (or an affiliate
thereof);
Parent and Acquisition would suffer direct and substantial damages, which
damages cannot be determined with reasonable certainty. To compensate Parent and
Acquisition for such damages, the Company shall pay to Parent the amount of
Twelve Million Dollars ($12,000,000) immediately upon the occurrence of the
event described in this Section 6.3(a) giving rise to such damages.
(b) Upon the termination of this Agreement pursuant to Section
6.1(c)(iv), or Section 6.1(d)(i), (ii), (iii) or (iv), in addition to any
other remedies that Parent, Acquisition or their affiliates may have as a
result of such termination (including pursuant to Section 6.3(a)), the
Company shall pay to Parent the amount of Two Million Dollars ($2,000,000)
as reimbursement for the costs, fees and expenses incurred by any of them
or on their behalf in connection with this Agreement, the Merger and the
consummation
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of all transactions contemplated by this Agreement (including fees payable
to investment bankers, counsel to any of the foregoing and accountants).
(c) Upon the termination of this Agreement pursuant to Section
6.1(c)(i) or (ii), in addition to any other remedies that the Company or
its affiliates may have as a result of such termination, Parent shall pay
to the Company the amount of Two Million Dollars ($2,000,000) as
reimbursement for the costs, fees and expenses incurred by any of them or
on their behalf in connection with this Agreement, the Merger and the
consummation of all transactions contemplated by this Agreement (including
fees payable to investment bankers, counsel to any of the foregoing and
accountants).
(d) Except as specifically provided in this Section 6.3, each party
shall bear its own expenses in connection with this Agreement and the
transactions contemplated hereby.
(e) Each of the Company, Parent and Acquisition acknowledge that the
agreements contained in this Article 6 (including this Section 6.3) are an
integral part of the transactions contemplated by this Agreement and that,
without these agreements, Company, Parent and Acquisition would not enter
into this Agreement. Accordingly, if the Company, or Parent and
Acquisition, fails promptly to pay the amounts required pursuant to Section
6.3 when due (including circumstances where, in order to obtain such
payment the party owed such payment commences a suit that results in a
final nonappealable judgment for such amounts against the party that failed
to make such payment), the party that failed to make such payment shall pay
to the party owed such payment (i) its costs and expenses (including
attorneys' fees) in connection with such suit and (ii) interest on the
amount that was determined to be due and payable hereunder at the rate
announced by Chase Manhattan Bank as its "reference rate" in effect on the
date such payment was required to be made from the date such payment first
became due until paid.
SECTION 6.4. Amendment. This Agreement may be amended by action taken by
the Company, Parent and Acquisition at any time before or after approval of the
Merger by the stockholders of the Company but after any such approval no
amendment shall be made that requires the approval of such stockholders under
Applicable Law without such approval. This Agreement (including, subject to
Section 4.13, the Company Disclosure Schedule and the Parent Disclosure
Schedule) may be amended only by an instrument in writing signed on behalf of
the parties hereto.
SECTION 6.5. Extension; Waiver. At any time prior to the Effective Time,
each party hereto may (i) extend the time for the performance of any of the
obligations or other acts of the other party, (ii) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document certificate or writing delivered pursuant hereto or (iii) waive
compliance by the other party with any of the agreements or conditions contained
herein. Any agreement on the part of any 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. The failure of any party hereto to assert any of its
rights hereunder shall not constitute a waiver of such rights.
ARTICLE 7
MISCELLANEOUS
SECTION 7.1. Nonsurvival of Representations and Warranties. The
representations and warranties made herein shall not survive beyond the
Effective Time or a termination of this Agreement. This Section 7.1 shall not
limit any covenant or agreement of the parties hereto that by its terms requires
performance after the Effective Time.
SECTION 7.2. Entire Agreement; Assignment. This Agreement (including the
Company Disclosure Schedule and the Parent Disclosure Schedule) (a) constitutes
the entire agreement between the parties hereto with respect to the subject
matter hereof and supersedes all other prior and contemporaneous
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agreements and understandings both written and oral between the parties with
respect to the subject matter hereof and (b) shall not be assigned by operation
of law or otherwise; provided, however, that Acquisition may assign any or all
of its rights and obligations under this Agreement to any direct or indirect
wholly owned subsidiary of Parent, but no such assignment shall relieve
Acquisition of its obligations hereunder if such assignee does not perform such
obligations.
SECTION 7.3. Validity. If any provision of this Agreement or the
application thereof to any person or circumstance is held invalid or
unenforceable, the remainder of this Agreement and the application of such
provision to other persons or circumstances shall not be affected thereby and to
such end the provisions of this Agreement are agreed to be severable.
SECTION 7.4. Notices. All notices and other communications pursuant to this
Agreement shall be in writing 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 addresses set forth below or to such other address as the party
to whom notice is to be given may have furnished to the other parties hereto in
writing in accordance herewith. Any such notice or communication shall be deemed
to have been delivered and received (A) in the case of personal delivery, on the
date of such delivery, (B) in the case of telecopier, on the date sent if
confirmation of receipt is received and such notice is also promptly mailed by
registered or certified mail (return receipt requested), (C) in the case of a
nationally-recognized overnight courier in circumstances under which such
courier guarantees next business day delivery, on the next business day after
the date when sent and (D) in the case of mailing, on the third business day
following that on which the piece of mail containing such communication is
posted:
if to Parent or Acquisition:
PeopleSoft, Inc.
4460 Hacienda Drive
Pleasanton, CA 94588
Telecopier: (925) 694-5152
Attention: General Counsel
and
PeopleSoft, Inc.
4460 Hacienda Drive
Pleasanton, CA 94588
Telecopier: (925) 694-5152
Attention: Chief Financial Officer
with a copy to:
Gibson, Dunn & Crutcher LLP
One Montgomery Street
Telesis Tower
San Francisco, California 94104
Telecopier: (415) 364-8427
Attention: Kenneth R. Lamb
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if to the Company to:
The Vantive Corporation
2525 Augustine Drive
Santa Clara, CA 95054
Telecopier: (408) 367-4126
Attention: General Counsel
with a copy to:
Gray Cary Ware & Freidenrich LLP
400 Hamilton Avenue
Palo Alto, California 94301
Telecopier: (650) 327-3699
Attention: Gregory M. Gallo
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
SECTION 7.5. Governing Law and Venue; Waiver of Jury Trial.
(a) THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS
SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE
LAW OF THE STATE OF CALIFORNIA WITHOUT REGARD TO THE CONFLICT OF LAW
PRINCIPLES THEREOF. The parties hereby irrevocably submit to the
jurisdiction of the courts of the State of California and the Federal
courts of the United States of America located in the State of California
solely in respect of the interpretation and enforcement of the provisions
of this Agreement and of the documents referred to in this Agreement, and
in respect of the transactions contemplated hereby, and hereby waive, and
agree not to assert, as a defense in any action, suit or proceeding for the
interpretation or enforcement hereof or of any such document, that it is
not subject thereto or that such action, suit or proceeding may not be
brought or is not maintainable in said courts or that the venue thereof may
not be appropriate or that this Agreement or any such document may not be
enforced in or by such courts, and the parties hereto irrevocably agree
that all claims with respect to such action or proceeding shall be heard
and determined in such a California State or Federal court. The parties
hereby consent to and grant any such court jurisdiction over the person of
such parties and over the subject matter of such dispute and agree that
mailing of process or other papers in connection with any such action or
proceeding in the manner provided in Section 7.4 or in such other manner as
may be permitted by Applicable Law, shall be valid and sufficient service
thereof.
(b) The parties agree that irreparable damage would occur and that the
parties would not have any adequate remedy at law in the event that any of
the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached. It is accordingly agreed
that the parties shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically the terms
and provisions of this Agreement in any Federal court located in the State
of California or in California state court, this being in addition to any
other remedy to which they are entitled at law or in equity.
(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH
PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER, (II) EACH SUCH PARTY UNDERSTANDS AND HAS
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CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH SUCH PARTY MAKES
THIS WAIVER VOLUNTARILY, AND (IV) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS
IN THIS SECTION 7.5.
SECTION 7.6. Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
SECTION 7.7. Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto and its successors and
permitted assigns and, except as expressly provided herein, nothing in this
Agreement is intended to or shall confer upon any other person any rights,
benefits or remedies of any nature whatsoever under or by reason of this
Agreement nor shall any such person be entitled to assert any claim hereunder.
In no event shall this Agreement constitute a third party beneficiary contract.
SECTION 7.8. Certain Definitions. For the purposes of this Agreement the
term:
(a) "affiliate" means (except as otherwise provided in Sections 2.25
and 4.12) a person that, directly or indirectly, through one or more
intermediaries controls, is controlled by or is under common control with
the first-mentioned person;
(b) "Applicable Law" means, with respect to any person, any domestic
or foreign, federal, state or local statute, law, ordinance, rule,
regulation, order, writ, injunction, judgment, decree or other requirement
of any Governmental Entity existing as of the date hereof or as of the
Effective Time applicable to such Person or any of its respective
properties, assets, officers, directors, employees, consultants or agents.
(c) "business day" means any day other than a day on which the Nasdaq
National Market is closed;
(d) "capital stock" means common stock, preferred stock, partnership
interests, limited liability company interests or other ownership interests
entitling the holder thereof to vote with respect to matters involving the
issuer thereof;
(e) "Company Acquisition" means the occurrence of any of the following
events: (i) the acquisition by a Third Party of twenty-five percent (25%)
or more of the assets of the Company and its subsidiaries taken as a whole;
(ii) the acquisition by a Third Party of twenty-five percent (25%) or more
of the outstanding Shares, or any securities convertible into or
exchangeable for Shares that would constitute twenty-five percent (25%) or
more of the outstanding Shares upon such conversion or exchange, or any
combination of the foregoing; or (iii) the acquisition by the Company of
the assets or stock of a Third Party if, as a result of which the
outstanding shares of the Company immediately prior thereto are increased
by thirty-three and one-third percent (33 1/3%) or more, or (iv) the
merger, consolidation or business combination of the Company with or into a
Third Party, where, following such merger, consolidation or business
combination, the stockholders of the Company prior to such transaction do
not hold, immediately after such transaction, securities of the surviving
entity constituting more than seventy-five percent (75%) of the total
voting power of the surviving entity.
(f) "knowledge" or "known" means, with respect to any matter in
question, the actual knowledge of such matter of (i) with respect to the
Company, those persons listed on Section 7.8(f)(i) of the Company
Disclosure Schedule and (ii) with respect to Parent, those persons listed
on Section 7.8(f)(ii) of the Parent Disclosure Schedule. Any such
individual will be deemed to have knowledge of a particular fact,
circumstance, event or other matter if (1) such individual has actual
knowledge of such fact, circumstance, event or other matter, (2) such fact,
circumstance, event or other matter is reflected in one or more documents
(whether written or electronic, including e-mails sent to or by such
individual) in, or that have been in, such individual's possession,
including personal files of such person, or (3) such fact, circumstance,
event or other matter is reflected in one or more documents (whether
written or electronic) contained in books and records of the Company (in
the case of knowledge of the Company)
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or Parent (in the case of knowledge of Parent) that would reasonably be
expected to be reviewed by a person who has the duties and responsibilities
of such individual in the customary performance of such duties and
responsibilities.
(g) "include" or "including" means "include, without limitation" or
"including, without limitation," as the case may be, and the language
following "include" or "including" shall not be deemed to set forth an
exhaustive list.
(h) "Lien" means, with respect to any asset (including any security),
any mortgage, lien, pledge, charge, security interest or encumbrance of any
kind in respect of such asset; provided, however, that the term "Lien"
shall not include (i) statutory liens for Taxes that are not yet due and
payable or are being contested in good faith by appropriate proceedings and
are disclosed in Section 2.14 of the Company Disclosure Schedule or that
are otherwise not material, (ii) statutory or common law liens to secure
obligations to landlords, lessors or renters under leases or rental
agreements confined to the premises rented, (iii) deposits or pledges made
in connection with, or to secure payment of, workers' compensation,
unemployment insurance, old age pension or other social security programs
mandated under Applicable Laws, (iv) statutory or common law liens in favor
of carriers, warehousemen, mechanics and materialmen, to secure claims for
labor, materials or supplies and other like liens, and (v) restrictions on
transfer of securities imposed by applicable state and federal securities
laws.
(i) "Material Adverse Effect on the Company" means any circumstance,
change in, or effect on the Company and its subsidiaries, taken as a whole,
that is, or is reasonably likely in the future to be, materially adverse to
the financial condition, earnings, results of operations, or the business
or operations (financial or otherwise), of the Company and its
subsidiaries, taken as a whole, provided that none of the following shall
be deemed, either alone or in combination, to constitute a Material Adverse
Effect on the Company: (i) a change in the market price or trading volume
of the Company Common Stock, (ii) a failure by the Company to meet the
revenue or earnings predictions of equity analysts as reflected in the
First Call consensus estimate, or any other revenue or earnings predictions
or expectations, for any period ending (or for which earnings are released)
on or after the date of this Agreement and prior to the Effective Date,
provided further that this Section 7.8(i)(ii) shall not exclude any
underlying change, effect, event, occurrence, state of facts or
developments that resulted in such failure to meet such estimates,
predictions or expectations, (iii) general industry or economic conditions
affecting the U.S. or world economy as a whole, (iv) conditions affecting
the computer software application industry, so long as such conditions do
not affect the Company in a disproportionate manner as compared to
companies of a similar size, (v) any disruption of customer, supplier or
employee relationships resulting primarily from the announcement of this
Agreement or the consummation of the Merger, to the extent so attributable,
or (vi) any litigation brought or threatened by stockholders of the Company
against any member of the Company Board or any officer of the Company in
respect of the announcement of this Agreement or the consummation of the
Merger.
(j) "Material Adverse Effect on Parent" means any circumstance, change
in, or effect on Parent and its subsidiaries, taken as a whole, that is, or
is reasonably likely in the future to be, materially adverse to the
financial condition, earnings, results of operations, or the business or
operations (financial or otherwise), of Parent and its subsidiaries, taken
as a whole, provided that none of the following shall be deemed, either
alone or in combination, to constitute a Material Adverse Effect on the
Parent: (i) a change in the market price or trading volume of the Parent
Common Stock, (ii) a failure by the Parent to meet the revenue or earnings
predictions of equity analysts as reflected in the First Call consensus
estimate, or any other revenue or earnings predictions or expectations, for
any period ending (or for which earnings are released) on or after the date
of this Agreement and prior to the Effective Date, provided further that
this Section 7.8(j)(ii) shall not exclude any underlying change, effect,
event, occurrence, state of facts or developments that resulted in such
failure to meet such estimates, predictions or
48
<PAGE> 157
expectations, (iii) general industry or economic conditions affecting the
U.S. or world economy as a whole, (iv) conditions affecting the computer
software application industry, so long as such conditions do not affect the
Parent in a disproportionate manner as compared to companies of a similar
size, (v) any disruption of customer, supplier or employee relationships
resulting primarily from the announcement of this Agreement or the
consummation of the Merger, to the extent so attributable, or (vi) any
litigation brought or threatened by stockholders of Parent against any
member of Parent Board or any officer of Parent in respect of the
announcement of this Agreement or the consummation of the Merger.
(k) "person" means an individual, corporation, partnership, limited
liability company, association, trust, unincorporated organization or other
legal entity including any Governmental Entity;
(l) "Stock Option Agreement" means that certain Stock Option Agreement
of even date herewith between the Company and Parent; and
(m) "subsidiary" or "subsidiaries" of the Company, Parent, the
Surviving Corporation or any other person means any corporation,
partnership, limited liability company, association, trust, unincorporated
association or other legal entity of which the Company, Parent, the
Surviving Corporation or any such other person, as the case may be (either
alone or through or together with any other subsidiary), owns, directly or
indirectly, 50% or more of the capital stock the holders of which are
generally entitled to vote for the election of the board of directors or
other governing body of such corporation or other legal entity.
SECTION 7.9. Personal Liability. This Agreement shall not create or be
deemed to create or permit any personal liability or obligation on the part of
any direct or indirect stockholder of the Company or Parent or Acquisition or
any officer, director, employee, agent, representative or investor of any party
hereto.
SECTION 7.10. Specific Performance. The parties hereby acknowledge and
agree that the failure of any party to perform its agreements and covenants
hereunder, including its failure to take all actions as are necessary on its
part to the consummation of the Merger, will cause irreparable injury to the
other parties, for which damages, even if available, will not be an adequate
remedy. Accordingly, each party hereby consents to the issuance of injunctive
relief by any court of competent jurisdiction to compel performance of such
party's obligations and to the granting by any court of the remedy of specific
performance of its obligations hereunder; provided, however, that if a party
hereto receives all payments and reimbursements of expenses to which it is
entitled pursuant to Section 6.3(a), (b) or (c) it shall not be entitled to
specific performance to compel the consummation of the Merger.
SECTION 7.11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
shall constitute one and the same agreement.
(Remainder of page intentionally left blank)
49
<PAGE> 158
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed on its behalf as of the day and year first above written.
PEOPLESOFT, INC.
By: /s/ CRAIG CONWAY
------------------------------------
Name: Craig Conway
Title: President and Chief Executive
Officer
Date: October 11, 1999
THE VANTIVE CORPORATION
By: /s/ THOMAS L. THOMAS
------------------------------------
Name: Thomas L. Thomas
Title: Chief Executive Officer
Date: October 11, 1999
VICKERS ACQUISITION, INC.
By: /s/ STEPHEN F. HILL
------------------------------------
Name: Stephen F. Hill
Title: President
Date: October 11, 1999
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER BY AND AMONG
PEOPLESOFT, INC., THE VANTIVE CORPORATION AND
VICKERS ACQUISITION, INC.]
50
<PAGE> 159
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
EXHIBITS TO
AGREEMENT AND PLAN OF MERGER
DATED AS OF OCTOBER 11, 1999
BY AND AMONG
PEOPLESOFT, INC.,
THE VANTIVE CORPORATION
AND
VICKERS ACQUISITION, INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 160
EXHIBIT A-1
FORM OF AFFILIATE LETTER AGREEMENT-COMPANY
, 1999
PeopleSoft, Inc.
4460 Hacienda Drive
Pleasanton, CA 94588
Dear Sirs:
Reference is made to the provisions of the Agreement and Plan of Merger,
dated as of October 11, 1999 (together with any amendments thereto, the "Merger
Agreement"), among The Vantive Corporation, a Delaware corporation (the
"Company"), PeopleSoft, Inc., a Delaware corporation ("Parent"), and Vickers
Acquisition, Inc., Delaware corporation and a wholly owned subsidiary of Parent
("Acquisition"), pursuant to which Acquisition will be merged with and into the
Company, with the Company continuing as the surviving corporation (the
"Merger"). This letter constitutes the undertakings of the undersigned
contemplated by the Merger Agreement.
I understand that I may be deemed to be an "affiliate" of the Company, as
such term is defined for purposes of Rule 145 ("Rule 145") promulgated under the
Securities Act of 1933, as amended (the "Securities Act"), and that the
transferability of the shares of common stock, par value $.01 per share, of
Parent (including the associated stock purchase rights, the "Parent Common
Stock") that I will receive upon the consummation of the Merger in exchange for
my shares of common stock, par value $.001 per share, of the Company (including
the associated stock purchase rights, the "Company Common Stock") or upon
exercise of certain options I hold to purchase Shares (as defined in the Merger
Agreement), is restricted. Nothing herein shall be construed as an admission
that I am an affiliate of the Company.
I hereby represent, warrant and covenant to Parent that:
(a) I will not transfer, sell or otherwise dispose of any shares of
Parent Common Stock, except (i) pursuant to an effective registration
statement under the Securities Act or (ii) as permitted by, and in
accordance with, Rule 145, if applicable, or another applicable exemption
under the Securities Act; and
(b) I will not (i) transfer, sell, pledge or otherwise dispose of any
shares of Company Common Stock prior to the Effective Time (as defined in
the Merger Agreement) or (ii) without Parent's and the Company's
permission, transfer, sell, pledge or otherwise reduce my risk (within the
meaning of the Securities and Exchange Commission's Financial Reporting
Release No. L, "Codification of Financial Reporting Policies," Section
201.01 [47 F.R. 210281] (May 17, 1982)) with respect to any shares of
Parent Common Stock until after such time (the "Delivery Time") as
financial results reflecting at least 30 days of post-Merger combined
operations of Parent and the Company have been published by Parent, except
as permitted by Staff Accounting Bulletin No. 76 issued by the Securities
and Exchange Commission; and
(c) I have not taken and will not take or agree to take any action
that would prevent the Merger from qualifying, or being accounted for under
generally accepted accounting principles, as a pooling-of-interests.
I hereby acknowledge that, except as otherwise provided in the Merger
Agreement, Parent is under no obligation to register the sale, transfer, pledge
or other disposition of the shares of Parent Common or to take any other action
necessary for the purpose of making an exemption from registration available
except that Parent agrees to use its reasonable commercial efforts, for a period
of two years from the date of the closing of the Merger, to file with the
Securities and Exchange Commission in a timely manner all reports and other
documents required of Parent under the Securities Act and the Securities
Exchange Act of 1934, as amended.
A(1)-1
<PAGE> 161
I understand that Parent will issue stop transfer instructions to its
transfer agent with respect to the shares of Parent Common Stock and that a
restrictive legend will be placed on the certificates delivered to me evidencing
the shares of Parent Common Stock in substantially the following form:
"This certificate and the shares represented hereby have been issued
pursuant to a transaction governed by Rule 145 ("Rule 145") promulgated
under the Securities Act of 1933, as amended (the "Securities Act"), and
may not be sold or otherwise disposed of unless registered under the
Securities Act pursuant to a Registration Statement in effect at the time
or unless the proposed sale or other disposition can be made in compliance
with Rule 145 or without registration in reliance on another exemption
therefrom. Reference is made to that certain letter agreement dated
, 1999 between the Holder and the Issuer, a copy of which is on
file in the principal office of the Issuer that contains further
restrictions on the transferability of this certificate and the shares
represented hereby."
Parent agrees to cause this legend to be removed from the certificates
delivered to me evidencing the shares of Parent Common Stock promptly after the
restrictions on transferability of the shares of Parent Common Stock are no
longer applicable and after I have surrendered such certificates to the transfer
agent with a request for such removal.
The term "Parent Common Stock" as used in this letter shall mean and
include not only the common stock of Parent as presently constituted, but also
any other stock that may be issued in exchange for, in lieu of, or in addition
to, all or any part of such Parent Common Stock.
I hereby acknowledge that the receipt of this letter by Parent is an
inducement and a condition to Parent's obligation to consummate the Merger under
the Merger Agreement, and I understand the requirements of this letter and the
limitations imposed upon the transfer, sale, pledge or other disposition of
shares of Company Common Stock and Parent Common Stock.
Very truly yours,
--------------------------------------
ACKNOWLEDGED AND ACCEPTED:
PEOPLESOFT, INC.
By:
Name:
Title:
A(1)-2
<PAGE> 162
EXHIBIT A-2
FORM OF AFFILIATE LETTER AGREEMENT -- PARENT
, 1999
PeopleSoft, Inc.
4460 Hacienda Drive
Pleasanton, CA 94588
Dear Sirs:
Reference is made to the provisions of the Agreement and Plan of Merger,
dated as of October 11, 1999 (together with any amendments thereto, the "Merger
Agreement"), among The Vantive Corporation, Delaware corporation (the
"Company"), PeopleSoft, Inc., a Delaware corporation ("Parent"), and Vickers
Acquisition Corporation, Delaware corporation and a wholly owned subsidiary of
Parent ("Acquisition"), pursuant to which Acquisition will be merged with and
into the Company, with the Company continuing as the surviving corporation (the
"Merger"). This letter constitutes the undertakings of the undersigned
contemplated by the Merger Agreement.
I hereby represent, warrant and covenant to Parent that:
(a) Without Parent's permission, I will not transfer, sell, pledge or
otherwise reduce my risk (within the meaning of the Securities and Exchange
Commission's Financial Reporting Release No. L, "Codification of Financial
Reporting Policies," Section 201.01 [47 F.R. 210281] (May 17, 1982)) with
respect to any shares of common stock, par value $.01 per share, of Parent
(including the associated stock purchase rights, the "Parent Common Stock")
owned by me until after such time (the "Delivery Time") as financial
results reflecting at least 30 days of post-merger combined operations of
Parent and the Company have been published by Parent, except as permitted
by Staff Accounting Bulletin No. 76 issued by the Securities and Exchange
Commission; and
(b) I have not taken and will not take or agree to take any action
that would prevent the Merger from qualifying, or being accounted for under
generally accepted accounting principles, as a pooling-of-interests.
I further understand that Parent shall not be bound by any attempted
transfer, sale, pledge or other disposition of any Parent Common Stock, and will
issue stop transfer instructions to its transfer agent with respect to the
shares of Parent Common Stock.
The term "Parent Common Stock" as used in this letter shall mean and
include not only the common stock of Parent as presently constituted, but also
any other stock that may be issued in exchange for, in lieu of, or in addition
to, all or any part of such Parent Common Stock.
Nothing herein shall be construed as an admission that I am an affiliate of
Parent.
A(2)-1
<PAGE> 163
I hereby acknowledge that the receipt of this letter by Parent is an
inducement and a condition to Parent's obligation to consummate the Merger under
the Merger Agreement and that I understand the requirements of this letter and
the limitations imposed upon the transfer, sale, pledge or other disposition of
the shares of Parent Common Stock.
Very truly yours,
--------------------------------------
Acknowledged and Accepted:
PeopleSoft, Inc.
By:
Name:
Title:
A(2)-2
<PAGE> 164
EXHIBIT B-1
FORM OF REPRESENTATIONS RELATING TO TAX MATTERS OF THE COMPANY
1. As of the Effective Time, the Company will hold at least ninety percent
(90%) of the fair market value of the net assets and at least seventy percent
(70%) of the fair market value of the gross assets held by it immediately prior
to the Merger. For the purpose of determining the percentage of the Company's
net and gross assets held immediately prior to the Merger, the following assets
will be treated as property immediately prior to the Merger: (i) assets used by
the Company to pay expenses or liabilities incurred in connection with the
Merger and (ii) assets used by the Company to make distributions, redemptions or
other payments in respect of stock of the Company (except for regular, normal
distributions) or in respect of rights to acquire such stock (including payments
treated as such for tax purposes) that are made in contemplation of the Merger
or that are related thereto;
2. Other than in the ordinary course of business or pursuant to its
obligations under the Agreement, the Company has not disposed of any of its
assets (including any distribution of assets with respect to, or in redemption
of, stock) since January 1, 1999;
3. The Company's principal reasons for participating in the Merger are bona
fide business purposes unrelated to taxes;
4. In the Merger, Shares representing "Control" of the Company will be
exchanged solely for voting stock of Parent. For purposes of this paragraph,
Shares exchanged in the Merger for cash and other property (including, without
limitation, cash paid to stockholders of the Company in lieu of fractional
shares of Parent Common Stock) will be treated as outstanding Shares on the date
of the Merger but not exchanged for shares of Parent Common Stock. As used in
these representations, "Control" shall consist of direct ownership of shares of
stock possessing at least eighty percent (80%) of the total combined voting
power of shares of all classes of stock entitled to vote and at least eighty
percent (80%) of the total number of shares of all other classes of stock of the
corporation. For purposes of determining Control, a person shall not be
considered to own shares of voting stock if rights to vote such shares (or to
restrict or otherwise control the voting of such shares) are held by a third
party (including a voting trust) other than an agent of such person;
5. The Company has no outstanding warrants, options, convertible securities
or any other type of right to acquire capital stock of the Company (or any other
equity interest in the Company) or to vote (or restrict or otherwise control the
vote of) shares of the Company's capital stock that, if exercised, would affect
Parent's acquisition and retention of Control of the Company;
6. The payment of cash in lieu of fractional shares of Parent Common Stock
is solely for the purpose of avoiding the expense and inconvenience to Parent of
issuing fractional shares and does not represent separately bargained for
consideration;
7. The Company has no plan or intention to issue additional shares of
capital stock after the Merger, or take any other action, that would result in
Parent losing Control of the Company;
8. The Company has no plan or intention to sell or otherwise dispose of any
of its assets or of any of the assets acquired from Acquisition in the Merger
except for dispositions made in the ordinary course of business and except for
transfers of its assets or assets of Acquisition to a corporation controlled by
the Company;
9. The fair market value of the Company's assets will, at the Effective
Time of the Merger, exceed the aggregate liabilities of the Company plus the
amount of liabilities, if any, to which such assets are subject;
10. The fair market value of the shares of Parent Common Stock received by
each stockholder of the Company will be approximately equal to the fair market
value of the Shares surrendered in exchange therefor and the aggregate
consideration received by stockholders of the Company in exchange for their
Shares will be approximately equal to the fair market value of all of the
outstanding Shares immediately prior to the Merger;
B(1)-1
<PAGE> 165
11. The Company is not an "investment company" within the meaning of
Section 368(a)(2)(F)(iii) and (iv) of the Code;
12. The Company is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code;
13. There is no plan or intention by the shareholders of the Company who
own five percent (5%) or more of the Company stock, and to the best knowledge of
the management of the Company, there is no plan or intention on the part of the
remaining shareholders of the Company to sell, exchange, or otherwise dispose of
a number of shares of Parent Common Stock received in the Merger that would
reduce the Company shareholders' ownership of Parent Common Stock to a number of
shares having a value, as of the date of the Merger, of less than fifty percent
(50%) of the value of all of the formerly outstanding stock of the Company as of
the same date. For purposes of the preceding sentence the only transactions that
shall be taken into account are (i) future sales, exchanges or dispositions of
Company stock to or with the Parent or a "related person" as to the Parent or
(ii) future sales, exchanges or dispositions of Company stock for any
consideration that in substance is furnished by the Parent. For purposes of this
representation, any shares of the Company stock exchanged in the Merger for cash
or other property or exchanged for cash in lieu of fractional shares of the
Parent Common Stock will be treated as outstanding stock on the date of the
Merger. For purposes of the foregoing, two corporations are "related persons" if
either (i) the corporations are members of the same affiliated group as defined
in Section 1504 without regard to section 1504(b), or (ii) one corporation owns,
directly or indirectly, stock possessing at least fifty percent (50%) of the
total combined voting power of all classes of stock entitled to vote, or at
least fifty percent (50%) of the total value of shares of all classes of stock
(determined by taking into account the constructive ownership of stock rules
under Section 318(a) as modified by Section 304(c)) of the other corporation. In
addition, (i) two corporations will be related if either of the foregoing
relationships exist immediately before the Merger, immediately after the Merger,
or is created in connection with the Merger, and (ii) a partner of a partnership
is treated as owning or acquiring any stock owned or acquired by the partnership
in accordance with that partner's interest in the partnership;
14. Neither the Company nor a corporation "related" (as defined above) to
the Company has within the last two years redeemed or acquired any shares of
Company stock or entered into any agreement, arrangement, or understanding to
redeem or acquire any shares of Company stock; nor will it redeem or acquire, or
enter into any such agreement, arrangement or understanding to redeem or
acquire, any such shares at anytime during the period commencing on the
execution hereof and through the Effective Time;
15. Dividends, if any, that the Company has paid or will pay to its
shareholders prior to the Effective Time have been and will be regular and
normal distributions made in accordance with the Company's past practices, and
the Company has not made any extraordinary distributions (as determined under
Treasury Regulation Section 1.368-1T(e)(1)(ii)(A)) in connection with the
Merger;
16. There is no intercorporate indebtedness existing between Parent and the
Company or between Acquisition and the Company that was issued, acquired, or
will be settled at a discount as a result of the Merger;
17. None of the compensation received by any shareholder-employee of the
Company will be separate consideration for, or allocable to, any of Shares owned
by such shareholder-employee; none of the shares of Parent Common Stock received
by any shareholder-employee of the Company will be separate consideration for,
or allocable to, any employment agreement or any covenants not to compete; and
the compensation paid to any shareholder-employee of the Company will be for
services actually rendered and will be commensurate with amounts paid to third
parties bargaining at arm's length for similar services; and
18. Parent, Acquisition, the Company, and the Company's stockholders will
pay their respective expenses, if any, incurred in connection with the Merger.
B(1)-2
<PAGE> 166
EXHIBIT B-2
FORM OF REPRESENTATIONS RELATING TO TAX MATTERS
OF PARENT AND ACQUISITION
1. Pursuant to the Merger, Acquisition will merge with and into the
Company, and the Company will acquire all of the assets and liabilities of
Acquisition. Specifically, the assets transferred to the Company pursuant to the
Merger will represent at least ninety percent (90%) of the fair market value of
the net assets and at least seventy percent (70%) of the fair market value of
the gross assets held by Acquisition immediately prior to the Merger. In
addition, at least ninety percent (90%) of the fair market value of the net
assets and at least seventy percent (70%) of the fair market value of the gross
assets held by the Company immediately prior to the Merger will continue to be
held by the Company immediately after the Merger. For the purpose of determining
the percentage of the Company's and Acquisition's net and gross assets held by
the Company immediately following the Merger, the following assets will be
treated as property held by Acquisition or the Company, as the case may be,
immediately prior but not subsequent to the Merger: (i) assets used by the
Company or Acquisition (other than assets transferred from Parent to Acquisition
for such purpose) to pay stockholders perfecting dissenters' rights or other
expenses or liabilities incurred in connection with the Merger and (ii) assets
used to make distributions, redemptions or other payments in respect of stock of
the Company (except for regular, normal distributions) or in respect of rights
to acquire such stock (including payments treated as such for tax purposes) that
are made in contemplation of the Merger or that are related thereto;
2. Acquisition was formed solely for the purpose of consummating the
transactions contemplated by the Agreement and at no time will Acquisition
conduct any business activities or other operations, or dispose of any of its
assets, other than pursuant to its obligations under the Agreement;
3. Parent's principal reasons for participating in the Merger are bona fide
business purposes not related to taxes;
4. No shares of Acquisition (or, following the Effective Time, the Company)
have been or will be used as consideration or issued to stockholders of the
Company pursuant to the Merger;
5. Prior to and at the Effective Time, Parent will be in "Control" of
Acquisition. As used in these representations, "Control" shall consist of direct
ownership of shares of stock possessing at least eighty percent (80%) of the
total combined voting power of all classes of stock entitled to vote and at
least eighty percent (80%) of the total number of shares of all other classes of
stock of the corporation. For purposes of determining Control, a person shall
not be considered to own shares of voting stock if rights to vote such shares
(or to restrict or otherwise control the voting of such shares) are held by a
third party (including a voting trust) other than an agent of such person;
6. In the Merger, Shares representing Control of the Company will be
exchanged solely for shares of voting stock of Parent. For purposes of this
paragraph, Shares exchanged in the Merger for cash and other property
(including, without limitation, cash paid to shareholders of the Company in lieu
of fractional shares of Parent Common Stock) will be treated as Shares
outstanding on the date of the Merger but not exchanged for shares of voting
stock of Parent. Parent has no plan or intention to cause the Company to issue
additional Shares after the Merger, or take any other action, that would result
in Parent losing Control of the Company;
7. The payment of cash in lieu of fractional shares of Parent Common Stock
is solely for the purpose of avoiding the expense and inconvenience to Parent of
issuing fractional shares and does not represent separately bargained for
consideration;
8. Parent has no plan or intention to reacquire any of its stock issued in
the Merger. Neither Parent nor any "Related Person" will, in connection with the
Merger, directly or indirectly reacquire any of Parent's stock
B(2)-1
<PAGE> 167
issued in the Merger. For purposes of the foregoing, two corporations are
related if either (i) the corporations are members of the same affiliated group
as defined in Section 1504 without regard to section 1504(b), or (ii) one
corporation owns, directly or indirectly, stock possessing at least fifty
percent (50%) of the total combined voting power of all classes of stock
entitled to vote, or at least fifty percent (50%) of the total value of shares
of all classes of stock (determined by taking into account the constructive
ownership of stock rules under Section 318(a) as modified by Section 304(c)) of
the other corporation. In addition, (i) two corporations will be related if
either of the foregoing relationships exist immediately before the Merger,
immediately after the Merger, or is created in connection with the Merger, and
(ii) a partner of a partnership is treated as owning or acquiring any stock
owned or acquired by the partnership in accordance with that partner's interest
in the partnership.
9. Parent has no plan or intention to liquidate the Company; to merge the
Company with or into another corporation (other than a statutory merger of
Company with and into Parent pursuant to the merger statute of the state of
incorporation of Parent and Company); to sell, distribute or otherwise dispose
of the stock of the Company, including by means of a spin-off; to spin-off any
other Subsidiary of Parent; or to cause the Company to sell or otherwise dispose
of any of its assets, including by means of a spin-off, or of any assets
acquired from Acquisition, except for dispositions made in the ordinary course
of business or payment of expenses incurred by the Company pursuant to the
Merger and except for transfers of stock of the Company to a corporation
controlled by Parent or of assets of the Company or Acquisition to a corporation
controlled by the Company;
10. Following the Merger, Parent will either continue the historic business
of the Company or use a significant portion of the historic business assets of
the Company in a business. For purposes of this representation, Parent will be
treated (i) as holding all of the businesses and assets of all of the members of
the "qualified group" and (ii) as conducting the business of a partnership if
members of the "qualified group" own (in the aggregate) more than a thirty three
and one-third percentage (33 1/3%) interest in the capital and profits of the
partnership or own more than a twenty percent (20%) interest in the capital and
profits of the partnership and have active and substantial management functions
as a partner with respect to the business of the partnership. The "qualified
group" is one or more chains of corporations connected through stock ownership
with the Parent, but only if the Parent owns directly an amount of stock meeting
the control requirements of Section 368(c) in at least one of the corporations,
and stock meeting the control requirements of Section 368(c) in each of the
corporations (except the Parent) is owned directly by one of the other
corporations.
11. In the Merger, Acquisition will have no liabilities assumed by the
Company and will not transfer to the Company any assets subject to liabilities,
except to the extent incurred in connection with the transactions contemplated
by the Agreement;
12. During the past five (5) years, none of the outstanding shares of
Company capital stock, including the right to acquire or vote any such shares,
have directly or indirectly been owned by Parent;
13. Neither Parent nor Acquisition is an "investment company" within the
meaning of Sections 368(a)(2)(F)(iii) and (iv) of the Code;
14. Neither Parent nor Acquisition is under the jurisdiction of a court in
a Title 11 or similar case within the meaning of Section 368(a)(3)(A) of the
Code;
15. The fair market value of the Parent Common Stock received by each
stockholder of the Company will be approximately equal to the fair market value
of the Shares surrendered in exchange therefor, and the aggregate consideration
received by stockholders of the Company in exchange for their Shares will be
approximately equal to the fair market value of all of the outstanding Shares
immediately prior to the Merger;
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16. Acquisition, Parent, the Company and the stockholders of the Company
will each pay separately its or their own expenses relating to the Merger;
17. There is no intercorporate indebtedness existing between Parent and the
Company or between Acquisition and the Company that was issued, acquired or will
be settled at a discount as a result of the Merger;
18. Other than as specifically provided in the Agreement, Parent will not
reimburse any stockholder of the Company for the Company's capital stock such
stockholder may have purchased or for other obligations such stockholder may
have incurred.
B(2)-3
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EXHIBIT C
FORM OF CERTIFICATE OF MERGER
OF
VICKERS ACQUISITION, INC.
(A DELAWARE CORPORATION)
WITH AND INTO
THE VANTIVE CORPORATION
(A DELAWARE CORPORATION)
UNDER SECTION 251 OF THE GENERAL
CORPORATION LAW OF THE STATE OF DELAWARE
The undersigned corporation, The Vantive Corporation, hereby certifies
that:
FIRST: The name and state of incorporation of each of the constituent
corporations is: Vickers Acquisition, Inc., a Delaware corporation (the
"Disappearing Corporation") and The Vantive Corporation, a Delaware
corporation (the "Surviving Corporation").
SECOND: An agreement of merger has been approved, adopted, certified,
executed and acknowledged by the Disappearing Corporation and by the
Surviving Corporation in accordance with the provisions of Section 251 of
the General Corporation Law of the State of Delaware.
THIRD: The name of the surviving corporation is .
FOURTH: Upon the effectiveness of the merger, the Certificate of
Incorporation of the Surviving Corporation shall be the Certificate of
Incorporation of Vickers Acquisition, Inc.
FIFTH: The executed agreement of merger is on file at the principal
place of business of the Surviving Corporation at 2455 Augustine Drive,
Santa Clara, CA 95054.
SIXTH: A copy of the agreement of merger will be furnished by the
Surviving Corporation on request and without cost, to any stockholder of
the Disappearing Corporation or the Surviving Corporation.
IN WITNESS WHEREOF, the undersigned has executed and subscribed to this
Certificate of Merger on behalf of The Vantive Corporation as its authorized
officer and hereby affirms, under penalties of perjury, that this Certificate of
Merger is the act and deed of such corporation and that the facts stated herein
are true.
Dated:____________
The Vantive Corporation,
a Delaware corporation
By:
--------------------------------------
Name:
Title: President and Chief Executive
Officer
C-1
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APPENDIX B
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Stock Option Agreement"), dated as of
October 11, 1999, is by and between PeopleSoft, Inc., a Delaware corporation
("Grantee"), and The Vantive Corporation, a Delaware corporation ("Issuer").
RECITALS
A. Grantee, Vickers Acquisition, Inc., a Delaware corporation and
wholly-owned subsidiary of Grantee ("Acquisition"), and Issuer are
simultaneously entering into an Agreement and Plan of Merger (the "Merger
Agreement") that provides, among other things, that upon the terms and subject
to the conditions thereof, Acquisition will merge with and into Issuer, with
Issuer being the survivor of that merger (the "Merger"), and the stockholders of
Issuer would receive shares of Common Stock of Grantee in connection therewith
(the "Merger").
B. As a condition and essential inducement to its willingness to enter into
the Merger Agreement, Grantee has required that Issuer agree, and Issuer has
agreed, to enter into this Stock Option Agreement, which provides, among other
things, that Issuer grant to Grantee an option to purchase shares of Issuer
Common Stock, upon the terms and subject to the conditions provided for herein.
NOW, THEREFORE, in consideration of the premises and mutual covenants and
agreements contained in this Stock Option Agreement and the Merger Agreement,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:
1. Grant of Option. Issuer hereby grants to Grantee an irrevocable option
(the "Option") to purchase Five Million Four Hundred Ninety-Seven Thousand Three
Hundred (5,497,300) shares of Issuer Common Stock (the "Option Shares"), in the
manner set forth below, at an exercise price of Fourteen and 23,125/100,000
Dollars ($14.23125) per share of Issuer Common Stock, subject to adjustment as
provided below (the "Option Price"). Initially capitalized terms used but not
defined herein shall have the meanings set forth in the Merger Agreement. Issuer
represents and warrants to Grantee that the number of Option Shares constitutes
less than twenty percent (20%) of the number of issued and outstanding shares of
Issuer's Common Stock on the date hereof.
2. Exercise of Option.
(a) Subject to the satisfaction or waiver of the conditions set forth in
Section 9 of this Stock Option Agreement, prior to the termination of this Stock
Option Agreement in accordance with its terms, Grantee may exercise the Option,
in whole or in part, at any time or from time to time on or after the occurrence
of a Triggering Event (as defined below). The Option shall terminate and not be
exercisable at any time following the Expiration Date (as defined in Section
11). The term "Triggering Event" means the time immediately prior to the
occurrence of any of the events (or series of events) specified in Section
6.3(a) of the Merger Agreement giving rise to the obligation of the Company to
pay the fee specified in Section 6.3(a). Notwithstanding the foregoing, the
Option will not be exercisable if Grantee has materially breached the Merger
Agreement and such breach remains uncured at the time of exercise.
(b) If Grantee wishes to exercise the Option at such time as the Option is
exercisable and has not terminated, Grantee shall deliver written notice (the
"Exercise Notice") to Issuer specifying Grantee's intention to exercise the
Option, the total number of Option Shares it wishes to purchase and a date and
time for the closing of such purchase (a "Closing"), which date shall not be
less than two (2) nor more than thirty (30) business days after the later of (i)
the date such Exercise Notice is given and (ii) the expiration or
<PAGE> 171
termination of any applicable waiting period under the HSR Act. If (1) any Third
Party shall, after the date hereof, acquire fifteen percent (15%) or more of the
then outstanding shares of Issuer Common Stock (a "Share Acquisition"), and a
Triggering Event shall occur subsequent to such Share Acquisition, (2) a
Triggering Event shall occur prior to a Share Acquisition and such Share
Acquisition occurs prior to the Expiration Date, or (3) subsequent to a
Triggering Event and prior to the Expiration Date, Issuer shall enter into a
written definitive agreement with any Third Party providing for a Company
Acquisition, then Grantee, in lieu of exercising the Option, shall have the
right at any time thereafter (for so long as the Option is exercisable under
Section 2(a) hereof) to request in writing that Issuer pay, and promptly (but in
any event not more than ten (10) business days) after the giving by Grantee of
such request, Issuer shall pay to Grantee, in cancellation of the Option, an
amount in cash (the "Cancellation Amount") equal to the lesser of:
(i) (1) the excess over the Option Price of the greater of (A) the
last sale price of a share of Issuer Common Stock as reported on the Nasdaq
National Market on the last trading day prior to the date of the Exercise
Notice, and (B)(I) the highest price per share of Issuer Common Stock
offered to be paid or paid by any Third Party pursuant to or in connection
with such Share Acquisition or Company Acquisition or (II) if such Company
Acquisition consists of a purchase and sale of assets, the sum of (a) the
aggregate consideration offered to be paid or paid in any transaction or
proposed transaction in connection with a Company Acquisition and (b) the
amount of cash receivable by Issuer upon the exercise or conversion of
outstanding in-the-money options, warrants, rights or convertible
securities, divided by the sum of (x) the number of shares of Issuer Common
Stock then outstanding plus (y) the number of shares issuable upon exercise
or conversion of outstanding in-the-money options, warrants, rights or
convertible securities, multiplied by (2) the number of Option Shares then
covered by the Option, or
(ii) Four Million Dollars ($4,000,000).
If all or a portion of the price per share of Issuer Common Stock offered,
paid or payable or the aggregate consideration offered, paid or payable for the
stock or assets of Issuer, each as contemplated by the immediately preceding
sentence, consists of non-cash consideration, such price or aggregate
consideration shall be the cash consideration, if any, plus the fair market
value of the non-cash consideration as determined jointly in good faith by the
investment bankers of Issuer and the investment bankers of Grantee.
(c) Notwithstanding anything to the contrary herein, if Grantee receives
proceeds in connection with any sale or other disposition of Option Shares (or
any rights thereto or thereof), together with any proceeds in connection with
any dividends or distributions received by Grantee on any Option Shares, in an
aggregate amount that exceeds the sum of (x) Four Million Dollars ($4,000,000),
plus (y) the Option Price multiplied by the number of Option Shares purchased
hereunder, then all proceeds to Grantee in excess of such sum shall be remitted
to Issuer promptly following receipt thereof.
(d) "Company Acquisition" means the occurrence of any of the following
events: (i) the acquisition by a Third Party of twenty-five percent (25%) or
more of the assets of the Company and its subsidiaries taken as a whole; (ii)
the acquisition by a Third Party of twenty-five percent (25%) or more of the
outstanding Shares, or any securities convertible into or exchangeable for
Shares that would constitute twenty-five percent (25%) or more of the
outstanding Shares upon such conversion or exchange, or any combination of the
foregoing; or (iii) the acquisition by the Company of the assets or stock of a
Third Party if, as a result of which the outstanding shares of the Company
immediately prior thereto are increased by thirty-three and one-third percent
(33 1/3%) or more, or (iv) the merger, consolidation or business combination of
the Company with or into a Third Party, where, following such merger,
consolidation or business combination, the stockholders of the Company prior to
such transaction do not hold, immediately after such transaction, securities of
the surviving entity constituting more than seventy-five percent (75%) of the
total voting power of the surviving entity.
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3. Payment of Option Price and Delivery of Certificate. Any Closings under
Section 2 of this Stock Option Agreement shall be held at the principal
executive offices of Issuer, or at such other place as Issuer and Grantee may
agree. At any Closing hereunder, (a) Grantee or its designee shall make payment
to Issuer of the aggregate price for the Option Shares being so purchased by
delivery of a certified check, official bank check or wire transfer of funds
pursuant to Issuer's instructions payable to Issuer in an amount equal to the
product obtained by multiplying the Option Price by the number of Option Shares
to be purchased, and (b) upon receipt of such payment, Issuer shall deliver to
Grantee or its designee a certificate or certificates representing the number of
validly issued, fully paid and non-assessable Option Shares so purchased, in the
denominations and registered in such names designated to Issuer in writing by
Grantee.
4. Registration and Listing of Option Shares.
(a) Grantee may, by written notice (a "Registration Notice"), request at
any time or from time to time within two (2) years following a Triggering Event
(the "Registration Period"), in order to permit the sale, transfer or other
disposition of the Option Shares that have been acquired by or are issuable to
Grantee upon exercise of the Option ("Registrable Securities"), that Issuer
register under the Securities Act of 1933, as amended (the "Act"), the offering,
sale and delivery, or other transfer or disposition, of the Registrable
Securities by Grantee. Any such Registration Notice must relate to a number of
Registrable Securities equal to at least twenty percent (20%) of the Option
Shares, unless the remaining number of Registrable Securities is less than such
amount, in which case Grantee shall be entitled to exercise its rights hereunder
but only for all of the remaining Registrable Securities (a "Permitted
Offering"). Any rights to require registration hereunder shall terminate with
respect to any Option Shares that may be sold pursuant to Rule 144(k) under the
Act. Issuer shall use all reasonable efforts to qualify any Registrable
Securities Grantee desires to sell or otherwise dispose of under applicable
state securities or "blue sky" laws; provided, however, that Issuer shall not be
required to qualify to do business, consent to general service of process or
submit to taxation in any jurisdiction by reason of this provision. Except as
otherwise required pursuant to agreements disclosed to Grantee on or before the
date hereof, without Grantee's prior written consent (which may be withheld in
its sole discretion), no other securities may be included in any such
registration. Issuer will use all reasonable efforts to cause each such
registration statement to become effective as promptly as possible, to obtain
all consents or waivers of other persons that are required therefor and to keep
such registration statement effective for a period of at least ninety (90) days
from the day such registration statement first becomes effective. The
obligations of Issuer hereunder to file a registration statement and to maintain
its effectiveness may be suspended for one or more periods not exceeding ninety
(90) days in the aggregate if the Board of Directors of Issuer shall have
determined in good faith that the filing of such registration statement or the
maintenance of its effectiveness would require disclosure of nonpublic
information that would materially and adversely affect Issuer, or Issuer is
required under the Act to include audited financial statements for any period in
such registration statement and such financial statements are not yet available
for inclusion in such registration statement. Grantee shall be entitled to make
up to two (2) requests for registration of Options Shares under this Section
4(a). For purposes of determining whether the two (2) requests have been made
under this Section 4(a), only requests relating to a registration statement that
has become effective under the Act will be counted.
(b) If, during the Registration Period, Issuer shall propose to register
under the Act the offering, sale and delivery of Issuer Common Stock for cash
for its own account or for any other stockholder of Issuer pursuant to a firm
commitment underwriting, it will, in addition to Issuer's other obligations
under this Section 4, allow Grantee the right to participate in such
registration so long as Grantee participates in such underwriting on terms
reasonably satisfactory to the managing underwriters of such offering; provided,
however, that, if the managing underwriter of such offering advises Issuer in
writing that in its opinion the number of shares of Issuer Common Stock
requested to be included in such registration exceeds the number that it would
be in the best interests of Issuer to sell in such offering, Issuer will, after
fully including therein all shares of Issuer Common Stock to be sold by Issuer,
include the shares of Issuer Common Stock requested to be included
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therein by Grantee pro rata (based on the number of shares of Issuer Common
Stock requested to be included therein) with the shares of Issuer Common Stock
requested to be included therein by persons to whom Issuer currently owes a
contractual obligation (other than any director, officer or employee of Issuer,
who may not include any shares of Issuer Common Stock therein unless all of the
shares of Issuer Common Stock that Grantee has requested be included, are so
included).
(c) The expenses associated with the preparation and filing of any
registration statement pursuant to this Section 4 and any sale covered thereby
(including any fees related to blue sky qualifications and filing fees in
respect of SEC or the National Association of Securities Dealers, Inc.)
("Registration Expenses") will be paid by Issuer, except for underwriting
discounts or commissions or brokers' fees in respect of Option Shares to be sold
by Grantee and the fees and disbursements of Grantee's counsel; provided,
however, that Issuer will not be required to pay for any Registration Expenses
with respect to such registration if the registration request is subsequently
withdrawn at the request of Grantee unless Grantee agrees to forfeit its right
to request one registration; provided further, however, that, if at the time of
such withdrawal Grantee has learned of a material adverse change in the results
of operations, condition, business or prospects of Issuer not known to Grantee
at the time of the request and has withdrawn the request within a reasonable
period of time following disclosure by Issuer to Grantee of such material
adverse change, then Grantee shall not be required to pay any of such expenses
and shall not forfeit such right to request one registration. Grantee will
provide all information reasonably requested by Issuer for inclusion in any
registration statement to be filed hereunder.
(d) In connection with each registration under this Section 4, Issuer shall
indemnify and hold each holder of the Option or Option Shares participating in
such offering (a "Holder"), its underwriters and each of their respective
affiliates harmless against any and all losses, claims, damage, liabilities and
expenses (including, without limitation, investigation expenses and fees and
disbursements of counsel and accountants), joint or several, to which such
Holder, its underwriters and each of their respective affiliates may become
subject, under the Act or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) arise out of or are
based upon an untrue statement or alleged untrue statement of a material fact
contained in any registration statement (including any prospectus therein), or
any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, other
than such losses, claims, damages, liabilities or expenses (or actions in
respect thereof) that arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in written information
furnished by a Holder to Issuer expressly for use in such registration
statement.
(e) In connection with any registration statement pursuant to this Section
4, Grantee shall cause each Holder to contractually agree to furnish Issuer with
such information concerning itself and the proposed sale or distribution as
shall reasonably be required in order to ensure compliance with the requirements
of the Act and to provide representations and warranties customary for selling
stockholders who are unaffiliated with the issuer. In addition, Grantee shall,
and Grantee shall cause each Holder to contractually agree to, indemnify and
hold Issuer, its underwriters and each of their respective affiliates harmless
against any and all losses, claims, damages, liabilities and expenses
(including, without limitation, investigation expenses and fees and disbursement
of counsel and accountants), joint or several, to which Issuer, its underwriters
and each of their respective affiliates may become subject under the Act or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) arise out of or are based upon an untrue statement
or alleged untrue statement of a material fact contained in written information
furnished by any Holder to Issuer expressly for use in such registration
statement; provided, however, that in no event shall any indemnification amount
contributed by a Holder hereunder exceed the net proceeds of the offering
received by such Holder.
(f) Upon the issuance of Option Shares hereunder, Issuer will use all
commercially reasonable efforts to promptly list such Option Shares on the
Nasdaq National Market or with such national or other exchange on which the
shares of Issuer Common Stock are at the time listed.
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5. Representations and Warranties of Issuer. Issuer hereby represents and
warrants to Grantee as follows:
(a) Issuer is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all requisite
corporate power and authority to enter into and perform its obligations
under this Stock Option Agreement.
(b) The execution and delivery of this Stock Option Agreement and the
consummation of the transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of Issuer and no other
corporate proceedings on the part of Issuer are necessary to authorized
this Stock Option Agreement or to consummate the transactions contemplated
hereby. The Board of Directors of Issuer has duly approved the issuance and
sale of the Option Shares, upon the terms and subject to the conditions
contained in this Stock Option Agreement, and the consummation of the
transactions contemplated hereby. This Stock Option Agreement has been duly
and validly executed and delivered by Issuer and, assuming this Stock
Option Agreement has been duly executed and delivered by Grantee,
constitutes a valid and binding obligation of Issuer enforceable against
Issuer in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting or relating to
creditors' rights generally; the availability of injunctive relief and
other equitable remedies; and limitations imposed by law on indemnification
for liability under federal securities laws.
(c) Issuer has taken all necessary action to authorize and reserve for
issuance and to permit it to issue, and at all times from the date of this
Stock Option Agreement through the date of expiration of the Option will
have reserved for issuance upon exercise of the Option, a sufficient number
of authorized shares of Issuer Common Stock for issuance upon exercise of
the Option, each of which shares, upon issuance pursuant to this Stock
Option Agreement and when paid for as provided herein, will be validly
issued, fully paid and nonassessable, and shall be delivered free and clear
of all claims, liens, charges, encumbrances and security interests (other
than those imposed by Grantee, its affiliates or by Applicable Law).
(d) The execution, delivery and performance of this Stock Option
Agreement by Issuer and the consummation by it of the transactions
contemplated hereby, except as required by the HSR Act and any material
foreign competition authorities (if applicable), and, with respect to
Section 4 hereof, compliance with the provisions of the Act and any
applicable state securities laws, do not require the consent, waiver,
approval, license or authorization of or result in the acceleration of any
obligation under, or constitute a default under, any term, condition or
provision of the Certificate of Incorporation or bylaws, or any indenture,
mortgage, lien, lease, agreement, contract, instrument, order, judgment,
ordinance, regulation or decree or any restriction to which Issuer or any
property of Issuer or its subsidiaries is bound, except where failure to
obtain such consents, waivers, approvals, licenses or authorizations or
where such acceleration or defaults could not, individually or in the
aggregate, reasonably be expected to materially and adversely affect
Grantee's rights hereunder.
6. Representations and Warranties of Grantee. Grantee hereby represents and
warrants to Issuer that:
(a) Grantee is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, and has all
requisite corporate power and authority to enter into and perform its
obligations under this Stock Option Agreement.
(b) The execution and delivery of this Stock Option Agreement and the
consummation of the transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of Grantee and no other
corporate proceedings on the part of Grantee are necessary to authorize
this Stock Option Agreement or to consummate the transactions contemplated
hereby. This Stock Option Agreement has been duly and validly executed and
delivered by Grantee and, assuming this Stock Option Agreement has been
duly executed and delivered by Issuer, constitutes a valid and binding
obligation of
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Grantee enforceable against Grantee in accordance with its terms, subject
to bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting or relating to creditors' rights generally; the availability of
injunctive relief and other equitable remedies; and limitations imposed by
law on indemnification for liability under federal securities laws.
(c) Grantee is acquiring the Option and it will acquire the Option
Shares issuable upon the exercise thereof for its own account and not with
a view to the distribution or resale thereof in any manner not in
accordance with Applicable Law.
7. Covenants of Grantee. Grantee agrees not to transfer or otherwise
dispose of the Option or the Option Shares, or any interest therein, except in
compliance with the Act and any applicable state securities laws. Grantee
further agrees to the placement of the following legend on the certificates
representing the Option Shares (in addition to any legend required under
applicable state securities laws):
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
EITHER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY
APPLICABLE STATE LAW GOVERNING THE OFFER AND SALE OF SECURITIES. NO
TRANSFER OR OTHER DISPOSITION OF THESE SHARES, OR OF ANY INTEREST THEREIN,
MAY BE MADE EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE ACT AND SUCH OTHER STATE LAWS OR PURSUANT TO EXEMPTIONS FROM
REGISTRATION UNDER THE ACT, SUCH OTHER STATE LAWS, AND THE RULES AND
REGULATIONS PROMULGATED THEREUNDER."
8. HSR Compliance Efforts. Grantee and Issuer shall take, or cause to be
taken, all actions necessary to consummate and make effective the transactions
contemplated by this Stock Option Agreement, including, without limitation,
obtaining any necessary consents of third parties and Governmental Entities and
the filing by Grantee and Issuer promptly of any required HSR Act notification
forms and the documents required to comply with the HSR Act.
9. Certain Conditions. The obligation of Issuer to issue Option Shares
under this Stock Option Agreement upon exercise of the Option shall be subject
to the satisfaction or waiver of the following conditions:
(a) any waiting periods applicable to the acquisition of the Option
Shares by Grantee pursuant to this Stock Option Agreement under the HSR Act
shall have expired or been terminated; and
(b) no statute, rule or regulation shall be in effect, and no order,
decree or injunction entered by any court of competent jurisdiction or
Governmental Entity in the United States shall be in effect that prohibits
the exercise of the Option or acquisition or issuance of Option Shares
pursuant to this Stock Option Agreement.
10. Adjustments Upon Changes in Capitalization. In the event of any change
in the number of issued and outstanding shares of Issuer Common Stock by reason
of any stock dividend, stock split, recapitalization, merger, rights offering,
share exchange or other change in the corporate or capital structure of Issuer,
Grantee shall receive, upon exercise of the Option, the stock or other
securities, cash or property to which Grantee would have been entitled if
Grantee had exercised the Option and had been a holder of record of shares of
Issuer Common Stock on the record date fixed for determination of holders of
shares of Issuer Common Stock entitled to receive such stock or other
securities, cash or property at the same aggregate price as the aggregate Option
Price of the Option Shares.
11. Expiration. The Option shall expire at the earliest of (x) the
Effective Time, (y) 5:00 p.m., California time, on the day that is the one year
anniversary of the date on which the Merger Agreement has been terminated in
accordance with the terms thereof other than pursuant to Section 6.1(d)(ii), and
(z) 5:00 p.m., California time, on the day that is the sixth month anniversary
of the date on which the Merger
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Agreement is terminated pursuant to Section 6.1(d)(ii) (such expiration date is
referred to as the "Expiration Date").
12. General Provisions.
(a) Survival. All of the representations, warranties and covenants
contained herein shall survive a Closing and shall be deemed to have been made
as of the date hereof and as of the date of each Closing.
(b) Further Assurances. If Grantee exercises the Option, or any portion
thereof, in accordance with the terms of this Stock Option Agreement, Issuer and
Grantee will execute and deliver all such further documents and instruments and
use all reasonable efforts to take all such further action as may be necessary
in order to consummate the transactions contemplated thereby.
(c) Severability. It is the desire and intent of the parties that the
provisions of this Stock Option Agreement be enforced to the fullest extent
permissible under the law and public policies applied in each jurisdiction in
which enforcement is sought. Accordingly, in the event that any provision of
this Stock Option Agreement would be held in any jurisdiction to be invalid,
prohibited or unenforceable for any reason, such provision, as to such
jurisdiction, shall be ineffective, without invalidating the remaining
provisions of this Stock Option Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction. Notwithstanding the
foregoing, if such provision could be more narrowly drawn so as not be invalid,
prohibited or unenforceable in such jurisdiction, it shall, as to such
jurisdiction, be so narrowly drawn, without invalidating the remaining
provisions of this Stock Option Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction.
(d) Assignment; Transfer of Stock Option. This Stock Option Agreement shall
be binding on and inure to the benefit of the parties hereto and their
respective successors and permitted assigns; provided, however, that Issuer and
Grantee, without the prior written consent of the other party, shall not be
entitled to assign or otherwise transfer any of its rights or obligations
hereunder and any such attempted assignment or transfer shall be void; provided
further, that Grantee shall be entitled to assign or transfer this Stock Option
Agreement or any rights hereunder to any wholly-owned subsidiary of Grantee
without Issuer's consent so long as such wholly-owned subsidiary agrees in
writing to be bound by the terms and provisions hereof.
(e) Specific Performance. The parties acknowledge and agree that in the
event of a breach of any provision of this Stock Option Agreement, the aggrieved
party would be without an adequate remedy at law. The parties therefore agree
that in the event of a breach of any provision of this Stock Option Agreement,
the aggrieved party may elect to institute and prosecute proceedings in any
court of competent jurisdiction to enforce specific performance or to enjoin the
continuing breach of such provisions, as well as to obtain damages for breach of
this Stock Option Agreement. By seeking or obtaining any such relief, the
aggrieved party will not be precluded from seeking or obtaining any other relief
to which it may be entitled.
(f) Amendments. This Stock Option Agreement may not be modified, amended,
altered or supplemented except upon the execution and delivery of a written
agreement executed by Grantee and Issuer.
(g) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be 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
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certified mail (return receipt requested), postage prepaid, to the other party
at the following addresses (or such other address for a party as shall be
specified by like notice):
If to Grantee:
PeopleSoft, Inc.
4460 Hacienda Drive
Pleasanton, CA 94588
Telecopier: (925) 694-5152
Attention: General Counsel
with a copy to:
Gibson, Dunn & Crutcher LLP
One Montgomery Street
Telesis Tower
San Francisco, CA 94104
Telecopier: (415) 374-8427
Attention: Kenneth R. Lamb, Esq.
If to Issuer:
The Vantive Corporation
2525 Augustine Drive
Santa Clara, CA 95054
Telecopier: (408) 367-4126
Attention: General Counsel
with a copy to:
Gray Cary Ware & Freidenrich
400 Hamilton Avenue
Palo Alto, California 94301
Telecopier: (650) 327-3699
Attention: Gregory Gallo, Esq.
(h) Headings. The headings contained in this Stock Option Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Stock Option Agreement.
(i) Counterparts. This Stock Option Agreement may be executed in one or
more counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
(j) Governing Law and Venue; Waiver of Jury Trial.
(1) THIS STOCK OPTION AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN
ALL RESPECTS SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN
ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE WITHOUT REGARD TO THE
CONFLICT OF LAW PRINCIPLES THEREOF. The parties hereby irrevocably submit
to the jurisdiction of the courts of the State of Delaware and the Federal
courts of the United States of America located in the State of Delaware
solely in respect of the interpretation and enforcement of the provisions
of this Stock Option Agreement and of the documents referred to in this
Stock Option Agreement, and in respect of the transactions contemplated
hereby, and hereby waive, and agree not to assert, as a defense in any
action, suit or proceeding for the interpretation or enforcement hereof or
of any such document, that it is not subject thereto or that such action,
suit or proceeding may not be brought or is not maintainable in said courts
or that the venue thereof may not be appropriate or that this Stock Option
Agreement or any such document may not be enforced in or by such courts,
and the parties hereto irrevocably agree
8
<PAGE> 178
that all claims with respect to such action or proceeding shall be heard
and determined in such a Delaware State or Federal court. The parties
hereby consent to and grant any such court jurisdiction over the person of
such parties and over the subject matter of such dispute.
(2) The parties agree that irreparable damage would occur and that the
parties would not have any adequate remedy at law in the event that any of
the provisions of this Stock Option Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Stock Option Agreement and to
enforce specifically the terms and provisions of this Stock Option
Agreement in any Federal court located in the State of Delaware or in
Delaware state court, this being in addition to any other remedy to which
they are entitled at law or in equity.
(3) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS STOCK OPTION AGREEMENT IS LIKELY TO INVOLVE COMPLICATED
AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH
PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER, (II) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE
IMPLICATIONS OF THIS WAIVER, (III) EACH SUCH PARTY MAKES THIS WAIVER
VOLUNTARILY, AND (IV) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS
STOCK OPTION AGREEMENT BY, AMONG OTHER THINGS, THE WAIVERS AND
CERTIFICATIONS IN THIS SECTION 12(J).
(k) Entire Agreement. This Stock Option Agreement and the Merger Agreement,
and any documents and instruments referred to herein and therein, constitute the
entire agreement between the parties hereto and thereto with respect to the
subject matter hereof and thereof and supersede all other prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof and thereof. Nothing in this Stock Option Agreement shall
be construed to give any person other than the parties to this Stock Option
Agreement or their respective successors or permitted assigns any legal or
equitable right, remedy or claim under or in respect of this Stock Option
Agreement or any provision contained herein.
(l) Expenses. Except as otherwise provided in this Stock Option Agreement,
each party shall pay its own expenses incurred in connection with this Stock
Option Agreement and the transactions contemplated hereby.
9
<PAGE> 179
IN WITNESS WHEREOF, the parties have caused this Stock Option Agreement to
be signed by their respective officers thereunto duly authorized as of the date
first written above.
PeopleSoft, Inc., a Delaware
corporation
By: /s/ CRAIG CONWAY
------------------------------------
Name: Craig Conway
Title: President & Chief Executive
Officer
The Vantive Corporation, a Delaware
corporation
By: /s/ THOMAS L. THOMAS
------------------------------------
Name: Thomas L. Thomas
Title: Chief Executive Officer
[SIGNATURE PAGE TO PEOPLESOFT, INC./THE VANTIVE CORPORATION
STOCK OPTION AGREEMENT]
10
<PAGE> 180
APPENDIX C
[LETTERHEAD OF CREDIT SUISSE FIRST BOSTON CORPORATION]
October 11, 1999
Board of Directors
The Vantive Corporation
2525 Augustine Drive
Santa Clara, California 95054
Members of the Board:
You have asked us to advise you with respect to the fairness to the holders of
the common stock of The Vantive Corporation ("Vantive") from a financial point
of view of the Exchange Ratio (as defined below) set forth in the Agreement and
Plan of Merger, dated as of October 11, 1999 (the "Merger Agreement"), by and
among Vantive, PeopleSoft, Inc. ("PeopleSoft") and Vickers Acquisition, Inc., a
wholly owned subsidiary of PeopleSoft ("Sub"). The Merger Agreement provides
for, among other things, the merger of Sub with and into Vantive (the "Merger")
pursuant to which each outstanding share of the common stock, par value $.001
per share, of Vantive (the "Vantive Common Stock") will be converted into the
right to receive 0.825 (the "Exchange Ratio") of a share of the common stock,
par value $.01 per share, of PeopleSoft (the "PeopleSoft Common Stock").
In arriving at our opinion, we have reviewed the Merger Agreement and certain
publicly available business and financial information relating to Vantive and
PeopleSoft. We have also reviewed certain other information relating to Vantive
and PeopleSoft, including publicly available financial forecasts, and have met
with the managements of Vantive and PeopleSoft to discuss the businesses and
prospects of Vantive and PeopleSoft. We have also considered certain financial
and stock market data of Vantive and PeopleSoft, and we have compared those data
with similar data for other publicly held companies in businesses we deemed
similar to those of Vantive and PeopleSoft, respectively. We have considered, to
the extent publicly available, the financial terms of certain other business
combinations and other transactions which have recently been effected. We also
considered such other information, financial studies, analyses and
investigations and financial, economic and market criteria which we deemed
relevant.
In connection with our review, we have not assumed any responsibility for
independent verification of any of the foregoing information and have relied on
such information being complete and accurate in all material respects. With
respect to the publicly available financial forecasts, the managements of
Vantive and PeopleSoft have reviewed such forecasts and informed us that they
believe that such forecasts represent reasonable estimates and judgments as to
the future financial performance of Vantive and PeopleSoft, respectively. We
also have assumed, with your consent, that the Merger will be treated as a
pooling of interests in accordance with generally accepted accounting principles
and as a tax-free reorganization for federal income tax purposes. In addition,
we have not been requested to make, and have not made, an independent evaluation
or appraisal of the assets or liabilities (contingent or otherwise) of Vantive
or PeopleSoft, nor have we been furnished with any such evaluations or
appraisals. Our opinion is necessarily based upon information available to us,
and financial, economic, market and other conditions as they exist and can be
evaluated, on the date hereof. We are not expressing any opinion as to the
actual value of the PeopleSoft Common Stock when issued pursuant to the Merger
or the prices at which the PeopleSoft Common Stock will trade subsequent to the
Merger. In connection with our engagement, we were not requested to, and did
not, solicit third party indications of interest regarding the possible
acquisition of all or a part of Vantive or its assets.
C-1
<PAGE> 181
The Vantive Corporation
October 11, 1999
Page 2
We have acted as financial advisor to Vantive in connection with the Merger and
will receive a fee for such services, a significant portion of which is
contingent upon the consummation of the Merger. We have in the past provided
financial services to Vantive unrelated to the proposed Merger, for which
services we have received compensation. In the ordinary course of business,
Credit Suisse First Boston and its affiliates may actively trade the debt and
equity securities of Vantive and PeopleSoft for their own accounts and for the
accounts of customers and, accordingly, may at any time hold long or short
positions in such securities.
It is understood that this letter is for the information of the Board of
Directors of Vantive in connection with its evaluation of the Merger, does not
constitute a recommendation to any stockholder as to how such stockholder should
vote with respect to any matter relating to the Merger, and is not to be quoted
or referred to, in whole or in part, in any registration statement, prospectus
or proxy statement, or in any other document used in connection with the
offering or sale of securities, nor shall this letter be used for any other
purposes, without our prior written consent.
Based upon and subject to the foregoing, it is our opinion that, as of the date
hereof, the Exchange Ratio is fair to the holders of Vantive Common Stock from a
financial point of view.
Very truly yours,
CREDIT SUISSE FIRST BOSTON CORPORATION
C-2
<PAGE> 182
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law authorizes a court to
award, or a corporation's Board of Directors to grant, indemnity to directors
and officers in terms sufficiently broad to permit such indemnification under
certain circumstances for liabilities (including reimbursement for expenses
incurred) arising under the Securities Act of 1933 (the "1933 Act"). As
permitted by the Delaware General Corporation Law, PeopleSoft has included in
its Certificate of Incorporation a provision to eliminate the personal liability
of its directors for monetary damages for breach or alleged breach of their
fiduciary duties as directors, subject to certain exceptions. In addition, the
Bylaws of PeopleSoft require it to (i) indemnify the officers and directors
under certain circumstances, including those circumstances in which
indemnification would otherwise be discretionary, and (ii) advance expenses to
the officers and directors as incurred in connection with proceedings against
them for which they may be indemnified. PeopleSoft has entered into
indemnification agreements with its officers and directors containing provisions
that are in some respects broader than the specific indemnification provisions
contained in the Delaware General Corporation Law. The indemnification
agreements may require PeopleSoft, among other things, to indemnify such
officers and directors against certain liabilities that may arise by reason of
their status or service as directors or officers (other than liabilities arising
from willful misconduct of a culpable nature), to advance expenses incurred as a
result of any proceeding against them as to which they may be indemnified, and
to obtain directors' and officers' insurance if available on reasonable terms.
PeopleSoft believes that these charter provisions and indemnification agreements
are necessary to attract and retain qualified persons as directors and officers.
PeopleSoft understands that the staff of the Securities and Exchange
Commission is of the opinion that statutory, charter and contractual provisions
as are described above have no effect on claims arising under the federal
securities laws.
Commencing with the effectiveness of the merger, PeopleSoft will either
cause Vantive to, or will itself directly indemnify the current officers and
directors of Vantive in accordance with Vantive's Certificate of Incorporation,
Bylaws and indemnification agreements in effect immediately before the merger to
any action or inaction by such person prior to the merger.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULE
(a) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE
------- -------------
<C> <S>
2.1 Agreement and Plan of Merger dated as of October 11, 1999
between the Registrant and Vantive (included as Appendix A
to the prospectus/proxy statement included as a part of this
Registration Statement).
2.2 Agreement and Plan of Reorganization between the Registrant
and Red Pepper Company dated as of September 4, 1996
(incorporated by reference to Exhibit 2.1 filed with the
Registrant's Form S-4 filed with the Securities and Exchange
Commission on October 2, 1996).
2.3 Agreement and Plan of Merger dated September 30, 1998
between the Registrant and Intrepid Systems, Inc.
(incorporated by reference to Exhibit 10.37 filed with the
Registrant's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1998).
2.4 Agreement and Plan of Reorganization, dated November 19,
1998, by and among the Registrant, Certain Principal
Shareholders and Distinction Software, Inc. and amendment
dated May 17, 1999 (incorporated by reference to Exhibit 2.1
filed with the Registrant's Registration Statement on Form
S-3 (No. 333-86135) filed with the Securities and Exchange
Commission on August 27, 1999).
</TABLE>
II-1
<PAGE> 183
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE
------- -------------
<C> <S>
2.5 Stock Option Agreement between the Registrant and Vantive
dated October 11, 1999. (included as Appendix B to the
prospectus/proxy statement included as a part of this
Registration Statement).
3.1 Restated Certificate of Incorporation of Registrant filed
with the Secretary of State of the State of Delaware on May
24, 1995 (incorporated by reference to Exhibit 4.1 filed
with the Registrant's Form S-8 (No. 333-08575) filed with
the Securities and Exchange Commission on July 22, 1996).
3.2 Certificate of Amendment to Certificate of Incorporation of
Registrant, as filed with the Secretary of State of the
State of Delaware on June 17, 1996 (incorporated by
reference to Exhibit 4.2 filed with the Registrant's Form
S-8 (No. 333-08575) filed with the Securities and Exchange
Commission on July 22, 1996).
3.3 Certificate of Amendment to Certificate of Incorporation of
Registrant, as filed with the Secretary of State of the
State of Delaware on July 3, 1997 (incorporated by reference
to Exhibit 3.3 filed with the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1997).
3.4 Certificate of Amendment to Certificate of Incorporation of
Registrant, as filed with the Secretary of State of the
State of Delaware on June 29, 1998.
3.5 Certificate of Designation as filed with the Secretary of
State of the State of Delaware on March 24, 1998
(incorporated by reference to Exhibit 3.4 filed with the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1997).
3.6 Bylaws of Registrant as amended to date (incorporated by
reference to Exhibit 3.5 filed with the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1998).
3.7 Specimen Certificate of the Registrant's Common Stock
(incorporated by reference to Exhibit 1 filed with Amendment
No. 1 to the Registrant's Form 8-A filed with the Securities
and Exchange Commission on November 6, 1992).
4.2 First Amended and Restated Preferred Shares Rights Agreement
dated December 16, 1997 (incorporated by reference to
Exhibit 1 filed with the Registrant's Form 8-A/A filed with
the Securities and Exchange Commission on March 25, 1998).
5.1 Opinion of Gibson, Dunn & Crutcher LLP.
8.1 Opinion of Gibson, Dunn & Crutcher LLP as to tax matters.
8.2 Opinion of Gray Cary Ware & Freidenrich LLP as to tax
matters.
10.1(1) Amended and Restated 1989 Stock Option Plan and forms of
option agreements thereunder (incorporated by reference to
Exhibit 10.1 filed with the Registrant's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1999).
10.2 1992 Employee Stock Purchase Plan as amended to date, and
form of subscription agreement thereunder (incorporated by
reference to Exhibit 10.2 filed with the Registrant's
Quarterly Report on Form 10-Q for the quarter ended March
31, 1999).
10.3 1992 Directors' Stock Option Plan and forms of option
agreements thereunder (incorporated by reference to Exhibit
10.3 filed with the Registrant's Registration Statement on
Form S-1 (No. 33-53000) filed October 7, 1992, Amendment No.
1 thereto filed October 26, 1992, Amendment No. 2 thereto
filed November 10, 1992 and Amendment No. 3 thereto filed
November 18, 1992, which Registration Statement became
effective November 18, 1992 and the Registrant's
Registration Statement on Form S-1 (No. 33-62356) filed on
May 7, 1993, which Registration Statement became effective
May 24, 1993 (collectively, the "Original S-1, as
amended")).
</TABLE>
II-2
<PAGE> 184
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE
------- -------------
<C> <S>
10.4(1) Executive Bonus Plan (incorporated by reference to Exhibit
10.4 filed with the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1994).
10.5 Amendment and Restatement of PeopleSoft, Inc. 401(K) Plan,
dated December 13, 1995, Amendment No. 1 dated December 30,
1994, and Amendment No. 2, dated August 25, 1995
(incorporated by reference to Exhibit 2.1 filed with the
Registrant's Form 8-K filed with the Securities and Exchange
Commission on December 15, 1995).
10.6 Form of Indemnification Agreement entered into between the
Registrant and each of its directors and officers
(incorporated by reference to Exhibit 10.6 filed with the
Original S-1, as amended).
10.7 Loan Agreement between the Registrant and West America Bank,
N.A. dated October 31, 1995 (incorporated by reference to
Exhibit 2.1 filed with the Registrant's Form 8-K filed with
the Securities and Exchange Commission on December 15,
1995).
10.8 Office Lease for 1331 North California Boulevard dated July
23, 1990 between the Registrant and 1333 North California
Boulevard, a California limited partnership, as amended by
the First Amendment to Lease dated April 24, 1991 and the
Second Amendment to Lease dated June 17, 1992 and related
Lease Guarantees dated July 26, 1990 and June 14, 1991
between 1333 North California Boulevard and David A.
Duffield (incorporated by reference to Exhibit 10.8 filed
with the Original S-1, as amended).
10.9 Lease dated July 24, 1992 between the Registrant and Glen
Pointe Associates (incorporated by reference to Exhibit 10.9
filed with the Original S-1, as amended).
10.10(2) Software License and Support Agreement dated June 23, 1992
between the Registrant and ADP, Inc., as amended by
Amendment No. 1 dated September 30, 1992 (incorporated by
reference to Exhibit 10.12 filed with the Original S-1, as
amended).
10.11 Lease dated June 23, 1993 between the Registrant and
Westbrook Corporate Center (incorporated by reference to
Exhibit 10.18 filed with the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1994).
10.12 Lease dated January 17, 1994 between the Registrant and R-H
Associates Bldg. III Corp. (incorporated by reference to
Exhibit 10.19 filed with the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1994).
10.13 Lease dated March 10, 1994 between the Registrant and
Rosewood Associates (incorporated by reference to Exhibit
10.20 filed with the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1994).
10.14 Contract of Sale and Escrow Instructions between the
Registrant and Rosewood Owner of California (B) LLC, a
California limited liability company, dated October 4, 1995
(incorporated by reference to Exhibit 2.1 filed with the
Registrant's Form 8-K filed with the Securities and Exchange
Commission on December 15, 1995).
10.15 Warrant Agreement between the Registrant and The First
National Bank of Boston, as Warrant Agent, dated October 30,
1995 (incorporated by reference to Exhibit 10.1 filed with
the Registrant's Registration Statement on Form S-3 (No.
33-80755) filed with the Securities and Exchange Commission
on December 22, 1995).
10.16 Warrant Purchase Agreement between the Registrant and
Goldman, Sachs & Co. dated October 30, 1995 (incorporated by
reference to Exhibit 10.2 filed with the Registrant's
Registration Statement on Form S-3 (No. 33-80755) filed with
the Securities and Exchange Commission on December 22,
1995).
</TABLE>
II-3
<PAGE> 185
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE
------- -------------
<C> <S>
10.17 Registration Rights Agreement between the Registrant and
Goldman, Sachs & Co. dated October 30, 1995 (incorporated by
reference to Exhibit 10.3 filed with the Registrant's
Registration Statement on Form S-3 (No. 33-80755) filed with
the Securities and Exchange Commission on December 22,
1995).
10.18 Amendment No. 2 dated September 28, 1994, Amendment No. 3
dated September 21, 1995 and Amendment No. 4 dated December
28, 1995 to the Software License and Support Agreement dated
June 23, 1992 between the Registrant and ADP, Inc.
(incorporated by reference to Exhibit 10.25 filed with the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1995).
10.19 Amended Software Development Agreement dated December 22,
1995 between the Registrant and Solutions for Education
Administrators, Inc. (incorporated by reference to Exhibit
10.26 filed with the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1995).
10.20 Exclusive Marketing and Distribution Agreement dated
December 22, 1995 between the Registrant and SIS Development
LLC ("SIS") (incorporated by reference to Exhibit 10.27 with
the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1995).
10.21 Amendment No. 1 dated September 19, 1994, Amendment No. 2
dated May 15, 1995 and Amendment No. 3 dated June 19, 1995
to the Lease dated March 10, 1994 between the Registrant and
Rosewood Associates (incorporated by reference to Exhibit
10.28 filed with the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1996).
10.22 Systems Integrator Agreement dated August 25, 1995 between
the Registrant and Shared Medical Systems Corporation
(incorporated by reference to Exhibit 10.29 filed with the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1995).
10.23 Lease dated December 4, 1996 between the Registrant and
Lease Plan North America, Inc. (incorporated by reference to
Exhibit 10.32 filed with the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1996).
10.24 Purchase Agreement dated October 22, 1996 between the
Registrant and Norwest Equity Partners IV, L.P.
(incorporated by reference to the Exhibit 10.33 filed with
the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1996).
10.25 Red Pepper Software Company 1993 Stock Option Plan, and
forms of stock option agreement thereunder (incorporated by
reference to Exhibit 2.1 filed with the Registrant's Form
S-8 filed with the Securities and Exchange Commission on
October 24, 1996).
10.26 Agreement of Purchase and Sale dated July 22, 1998 between
the Registrant and William Willson & Associates
(incorporated by reference to Exhibit 10.35 filed with the
Registrant's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1998).
10.27 Lease dated September 14, 1998 between the Registrant and
Hacienda Plaza Associates, LLC (incorporated by reference to
Exhibit 10.36 filed with the Registrant's Quarterly Report
on Form 10-Q for the quarter ended September 30, 1998).
10.28 Development and License Agreement dated December 30, 1998
between the Registrant and Momentum Business Applications,
Inc. (incorporated by reference to Exhibit 10.37 filed with
the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1998).
10.29 Marketing and Distribution Agreement dated December 30, 1998
between the Registrant and Momentum Business Applications,
Inc. (incorporated by reference to Exhibit 10.38 filed with
the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1998).
</TABLE>
II-4
<PAGE> 186
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE
------- -------------
<C> <S>
10.30 Distribution Agreement dated December 30, 1998 between the
Registrant and Momentum Business Applications, Inc.
(incorporated by reference to Exhibit 10.39 filed with the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1998).
10.31 First Amendment to Participation Agreement and Appendix 1 to
Participation Agreement, Master Lease and Construction Deed
of Trust dated February 20, 1998 between the Registrant and
Lease Plan North America, Inc. (incorporated by reference to
Exhibit 10.40 filed with the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1998).
10.32 Second Amendment to Participation Agreement, Master Lease,
Guarantee, Construction Deed of Trust, Cash Collateral
Agreement, Assignment of Lease and Appendix 1 to
Participation Agreement, Master Lease and Construction Deed
of Trust dated September 28, 1998 between the Registrant and
Lease Plan North America, Inc (incorporated by reference to
Exhibit 10.41 filed with the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1998).
10.33 Participation Agreement dated September 28, 1998 between the
Registrant and Wilmington Trust Company, ABN AMRO Leasing,
Inc., ABN AMRO Bank N.V., and Financial Institutions listed
in Schedule I of the Participation Agreement (incorporated
by reference to Exhibit 10.42 filed with the Registrant's
Annual Report on Form 10-K for the year ended December 31,
1998).
10.34 Master Lease dated September 28, 1998 between the Registrant
and Wilmington Trust Company (incorporated by reference to
Exhibit 10.43 filed with the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1998).
10.35 Appendix 1 to the Participation Agreement and Master Lease
dated September 28, 1998 (incorporated by reference to
Exhibit 10.44 filed with the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1998).
21.18 Subsidiaries of the Registrant (incorporated by reference to
Exhibit 21.1 to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1998).
23.1 Consent of Ernst & Young LLP, independent auditors.
23.2 Consent of Arthur Andersen LLP, independent public
accountants.
23.3 Consent of Gibson, Dunn & Crutcher LLP (included in Exhibit
5.1 and Exhibit 8.1).
23.4 Consent of Gray Cary Ware & Freidenrich LLP (included in
Exhibit 8.2).
24 Power of Attorney (see the signature page to this
Registration Statement).
99.1 Form of Proxy for holders of Vantive common stock.
99.2 Consent of Credit Suisse First Boston Corporation.
</TABLE>
- ---------------
(1) This agreement is a compensatory plan or arrangement.
(2) Confidential treatment previously granted.
(b) FINANCIAL STATEMENT SCHEDULE
All schedules have been omitted because the required information is not
applicable or is shown in the financial statements or the notes attached
thereto.
II-5
<PAGE> 187
ITEM 22. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
(b) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(c) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(d) (1) That for purposes of determining any liability under the
Securities Act of 1933 each filing of the Registrant's annual report
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934
(and where applicable each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act of 1934)
that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities
offered therein and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(2) That prior to any public reoffering of the securities
registered hereunder through use of a prospectus which is a part of this
registration statement by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c) such reoffering prospectus
will contain the information called for by the applicable registration
form with respect to reofferings by persons who may be deemed
underwriters in addition to the information called for by the other
items of the applicable form.
(3) That every prospectus (i) that is filed pursuant to paragraph
(2) immediately preceding or (ii) that purports to meet the requirements
of Section 10(a)(3) of the Securities Act of 1933 and is used in
connection with an offering of securities subject to Rule 415 will be
filed as a part of an amendment to the registration statement and will
not be used until such amendment is effective and that for purposes of
determining any liability under the Securities Act of 1933 each such
post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.
(e) To respond to requests for information that is incorporated by
reference into the proxy statement/prospectus pursuant to Item 4, 10(b), 11
or 13 of this Form within one business day of receipt
II-6
<PAGE> 188
of such request and to send the incorporated documents by first class mail
or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the registration
statement through the date of responding to the request.
(f) To supply by means of a post-effective amendment all information
concerning a transaction and the company being acquired involved therein
that was not the subject of and included in the registration statement when
it became effective.
(g) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in
the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of
such issue.
II-7
<PAGE> 189
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned thereunto duly authorized in the City of
Pleasanton, State of California, on November 17, 1999.
PEOPLESOFT, INC.
By: /s/ CRAIG CONWAY
------------------------------------
Craig Conway
President, Chief Executive Officer
and Director
POWER OF ATTORNEY
Each person whose individual signature appears below hereby constitutes and
appoints Craig Conway, Stephen F. Hill and Anne Jordan and each of them
severally, as his or her true and lawful attorney-in-fact with full power of
substitution to execute in the name and on behalf of such person, individually
and in each capacity stated below, and to file, any and all amendments to this
Registration Statement on Form S-4, including any and all post-effective
amendments.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement on Form S-4 has been signed below by the following
persons in the capacities indicated below.
<TABLE>
<S> <C>
/s/ DAVID A. DUFFIELD /s/ CRAIG CONWAY
- -------------------------------------------- --------------------------------------------
David A. Duffield November 17, 1999 Craig Conway November 17, 1999
Chairman of the Board of Directors President, Chief Executive Officer and
Director (Principal Executive Officer)
/s/ STEPHEN F. HILL
- -------------------------------------------- --------------------------------------------
Stephen F. Hill November 17, 1999 A. George Battle November , 1999
Vice President and Acting Chief Financial Director
Officer (Principal Financial Officer and
Principal Accounting Officer)
/s/ ANEEL BHUSRI /s/ CYRIL J. YANSOUNI
- -------------------------------------------- --------------------------------------------
Aneel Bhusri November 17, 1999 Cyril J. Yansouni November 17, 1999
Vice Chairman of the Board of Directors Director
/s/ GEORGE J. STILL JR.
- --------------------------------------------
George J. Still Jr. November 17, 1999
Director
</TABLE>
II-8
<PAGE> 190
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE
------- -------------
<C> <S>
2.1 Agreement and Plan of Merger dated as of October 11, 1999
between the Registrant and Vantive (included as Appendix A
to the prospectus/proxy statement included as a part of this
Registration Statement).
2.2 Agreement and Plan of Reorganization between the Registrant
and Red Pepper Company dated as of September 4, 1996
(incorporated by reference to Exhibit 2.1 filed with the
Registrant's Form S-4 filed with the Securities and Exchange
Commission on October 2, 1996).
2.3 Agreement and Plan of Merger dated September 30, 1998
between the Registrant and Intrepid Systems, Inc.
(incorporated by reference to Exhibit 10.37 filed with the
Registrant's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1998).
2.4 Agreement and Plan of Reorganization, dated November 19,
1998, by and among the Registrant, Certain Principal
Shareholders and Distinction Software, Inc. and amendment
dated May 17, 1999 (incorporated by reference to Exhibit 2.1
filed with the Registrant's Registration Statement on Form
S-3 (No. 333-86135) filed with the Securities and Exchange
Commission on August 27, 1999).
2.5 Stock Option Agreement between the Registrant and Vantive
dated October 11, 1999. (included as Appendix B to the
prospectus/proxy statement included as a part of this
Registration Statement).
3.1 Restated Certificate of Incorporation of Registrant filed
with the Secretary of State of the State of Delaware on May
24, 1995 (incorporated by reference to Exhibit 4.1 filed
with the Registrant's Form S-8 (No. 333-08575) filed with
the Securities and Exchange Commission on July 22, 1996).
3.2 Certificate of Amendment to Certificate of Incorporation of
Registrant, as filed with the Secretary of State of the
State of Delaware on June 17, 1996 (incorporated by
reference to Exhibit 4.2 filed with the Registrant's Form
S-8 (No. 333-08575) filed with the Securities and Exchange
Commission on July 22, 1996).
3.3 Certificate of Amendment to Certificate of Incorporation of
Registrant, as filed with the Secretary of State of the
State of Delaware on July 3, 1997 (incorporated by reference
to Exhibit 3.3 filed with the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1997).
3.4 Certificate of Amendment to Certificate of Incorporation of
Registrant, as filed with the Secretary of State of the
State of Delaware on June 29, 1998.
3.5 Certificate of Designation as filed with the Secretary of
State of the State of Delaware on March 24, 1998
(incorporated by reference to Exhibit 3.4 filed with the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1997).
3.6 Bylaws of Registrant as amended to date (incorporated by
reference to Exhibit 3.5 filed with the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1998).
3.7 Specimen Certificate of the Registrant's Common Stock
(incorporated by reference to Exhibit 1 filed with Amendment
No. 1 to the Registrant's Form 8-A filed with the Securities
and Exchange Commission on November 6, 1992).
4.2 First Amended and Restated Preferred Shares Rights Agreement
dated December 16, 1997 (incorporated by reference to
Exhibit 1 filed with the Registrant's Form 8-A/A filed with
the Securities and Exchange Commission on March 25, 1998).
5.1 Opinion of Gibson, Dunn & Crutcher LLP.
8.1 Opinion of Gibson, Dunn & Crutcher LLP as to tax matters.
</TABLE>
<PAGE> 191
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE
------- -------------
<C> <S>
8.2 Opinion of Gray Cary Ware & Freidenrich LLP as to tax
matters.
10.1(1) Amended and Restated 1989 Stock Option Plan and forms of
option agreements thereunder (incorporated by reference to
Exhibit 10.1 filed with the Registrant's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1999).
10.2 1992 Employee Stock Purchase Plan as amended to date, and
form of subscription agreement thereunder (incorporated by
reference to Exhibit 10.2 filed with the Registrant's
Quarterly Report on Form 10-Q for the quarter ended March
31, 1999).
10.3 1992 Directors' Stock Option Plan and forms of option
agreements thereunder (incorporated by reference to Exhibit
10.3 filed with the Registrant's Registration Statement on
Form S-1 (No. 33-53000) filed October 7, 1992, Amendment No.
1 thereto filed October 26, 1992, Amendment No. 2 thereto
filed November 10, 1992 and Amendment No. 3 thereto filed
November 18, 1992, which Registration Statement became
effective November 18, 1992 and the Registrant's
Registration Statement on Form S-1 (No. 33-62356) filed on
May 7, 1993, which Registration Statement became effective
May 24, 1993 (collectively, the "Original S-1, as
amended")).
10.4(1) Executive Bonus Plan (incorporated by reference to Exhibit
10.4 filed with the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1994).
10.5 Amendment and Restatement of PeopleSoft, Inc. 401(K) Plan,
dated December 13, 1995, Amendment No. 1 dated December 30,
1994, and Amendment No. 2, dated August 25, 1995
(incorporated by reference to Exhibit 2.1 filed with the
Registrant's Form 8-K filed with the Securities and Exchange
Commission on December 15, 1995).
10.6 Form of Indemnification Agreement entered into between the
Registrant and each of its directors and officers
(incorporated by reference to Exhibit 10.6 filed with the
Original S-1, as amended).
10.7 Loan Agreement between the Registrant and West America Bank,
N.A. dated October 31, 1995 (incorporated by reference to
Exhibit 2.1 filed with the Registrant's Form 8-K filed with
the Securities and Exchange Commission on December 15,
1995).
10.8 Office Lease for 1331 North California Boulevard dated July
23, 1990 between the Registrant and 1333 North California
Boulevard, a California limited partnership, as amended by
the First Amendment to Lease dated April 24, 1991 and the
Second Amendment to Lease dated June 17, 1992 and related
Lease Guarantees dated July 26, 1990 and June 14, 1991
between 1333 North California Boulevard and David A.
Duffield (incorporated by reference to Exhibit 10.8 filed
with the Original S-1, as amended).
10.9 Lease dated July 24, 1992 between the Registrant and Glen
Pointe Associates (incorporated by reference to Exhibit 10.9
filed with the Original S-1, as amended).
10.10(2) Software License and Support Agreement dated June 23, 1992
between the Registrant and ADP, Inc., as amended by
Amendment No. 1 dated September 30, 1992 (incorporated by
reference to Exhibit 10.12 filed with the Original S-1, as
amended).
10.11 Lease dated June 23, 1993 between the Registrant and
Westbrook Corporate Center (incorporated by reference to
Exhibit 10.18 filed with the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1994).
10.12 Lease dated January 17, 1994 between the Registrant and R-H
Associates Bldg. III Corp. (incorporated by reference to
Exhibit 10.19 filed with the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1994).
10.13 Lease dated March 10, 1994 between the Registrant and
Rosewood Associates (incorporated by reference to Exhibit
10.20 filed with the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1994).
</TABLE>
<PAGE> 192
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE
------- -------------
<C> <S>
10.14 Contract of Sale and Escrow Instructions between the
Registrant and Rosewood Owner of California (B) LLC, a
California limited liability company, dated October 4, 1995
(incorporated by reference to Exhibit 2.1 filed with the
Registrant's Form 8-K filed with the Securities and Exchange
Commission on December 15, 1995).
10.15 Warrant Agreement between the Registrant and The First
National Bank of Boston, as Warrant Agent, dated October 30,
1995 (incorporated by reference to Exhibit 10.1 filed with
the Registrant's Registration Statement on Form S-3 (No.
33-80755) filed with the Securities and Exchange Commission
on December 22, 1995).
10.16 Warrant Purchase Agreement between the Registrant and
Goldman, Sachs & Co. dated October 30, 1995 (incorporated by
reference to Exhibit 10.2 filed with the Registrant's
Registration Statement on Form S-3 (No. 33-80755) filed with
the Securities and Exchange Commission on December 22,
1995).
10.17 Registration Rights Agreement between the Registrant and
Goldman, Sachs & Co. dated October 30, 1995 (incorporated by
reference to Exhibit 10.3 filed with the Registrant's
Registration Statement on Form S-3 (No. 33-80755) filed with
the Securities and Exchange Commission on December 22,
1995).
10.18 Amendment No. 2 dated September 28, 1994, Amendment No. 3
dated September 21, 1995 and Amendment No. 4 dated December
28, 1995 to the Software License and Support Agreement dated
June 23, 1992 between the Registrant and ADP, Inc.
(incorporated by reference to Exhibit 10.25 filed with the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1995).
10.19 Amended Software Development Agreement dated December 22,
1995 between the Registrant and Solutions for Education
Administrators, Inc. (incorporated by reference to Exhibit
10.26 filed with the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1995).
10.20 Exclusive Marketing and Distribution Agreement dated
December 22, 1995 between the Registrant and SIS Development
LLC ("SIS") (incorporated by reference to Exhibit 10.27 with
the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1995).
10.21 Amendment No. 1 dated September 19, 1994, Amendment No. 2
dated May 15, 1995 and Amendment No. 3 dated June 19, 1995
to the Lease dated March 10, 1994 between the Registrant and
Rosewood Associates (incorporated by reference to Exhibit
10.28 filed with the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1996).
10.22 Systems Integrator Agreement dated August 25, 1995 between
the Registrant and Shared Medical Systems Corporation
(incorporated by reference to Exhibit 10.29 filed with the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1995).
10.23 Lease dated December 4, 1996 between the Registrant and
Lease Plan North America, Inc. (incorporated by reference to
Exhibit 10.32 filed with the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1996).
10.24 Purchase Agreement dated October 22, 1996 between the
Registrant and Norwest Equity Partners IV, L.P.
(incorporated by reference to the Exhibit 10.33 filed with
the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1996).
10.25 Red Pepper Software Company 1993 Stock Option Plan, and
forms of stock option agreement thereunder (incorporated by
reference to Exhibit 2.1 filed with the Registrant's Form
S-8 filed with the Securities and Exchange Commission on
October 24, 1996).
10.26 Agreement of Purchase and Sale dated July 22, 1998 between
the Registrant and William Willson & Associates
(incorporated by reference to Exhibit 10.35 filed with the
Registrant's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1998).
</TABLE>
<PAGE> 193
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE
------- -------------
<C> <S>
10.27 Lease dated September 14, 1998 between the Registrant and
Hacienda Plaza Associates, LLC (incorporated by reference to
Exhibit 10.36 filed with the Registrant's Quarterly Report
on Form 10-Q for the quarter ended September 30, 1998).
10.28 Development and License Agreement dated December 30, 1998
between the Registrant and Momentum Business Applications,
Inc. (incorporated by reference to Exhibit 10.37 filed with
the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1998).
10.29 Marketing and Distribution Agreement dated December 30, 1998
between the Registrant and Momentum Business Applications,
Inc. (incorporated by reference to Exhibit 10.38 filed with
the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1998).
10.30 Distribution Agreement dated December 30, 1998 between the
Registrant and Momentum Business Applications, Inc.
(incorporated by reference to Exhibit 10.39 filed with the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1998).
10.31 First Amendment to Participation Agreement and Appendix 1 to
Participation Agreement, Master Lease and Construction Deed
of Trust dated February 20, 1998 between the Registrant and
Lease Plan North America, Inc. (incorporated by reference to
Exhibit 10.40 filed with the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1998).
10.32 Second Amendment to Participation Agreement, Master Lease,
Guarantee, Construction Deed of Trust, Cash Collateral
Agreement, Assignment of Lease and Appendix 1 to
Participation Agreement, Master Lease and Construction Deed
of Trust dated September 28, 1998 between the Registrant and
Lease Plan North America, Inc (incorporated by reference to
Exhibit 10.41 filed with the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1998).
10.33 Participation Agreement dated September 28, 1998 between the
Registrant and Wilmington Trust Company, ABN AMRO Leasing,
Inc., ABN AMRO Bank N.V., and Financial Institutions listed
in Schedule I of the Participation Agreement (incorporated
by reference to Exhibit 10.42 filed with the Registrant's
Annual Report on Form 10-K for the year ended December 31,
1998).
10.34 Master Lease dated September 28, 1998 between the Registrant
and Wilmington Trust Company (incorporated by reference to
Exhibit 10.43 filed with the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1998).
10.35 Appendix 1 to the Participation Agreement and Master Lease
dated September 28, 1998 (incorporated by reference to
Exhibit 10.44 filed with the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1998).
21.18 Subsidiaries of the Registrant (incorporated by reference to
Exhibit 21.1 to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1998).
23.1 Consent of Ernst & Young LLP, independent auditors.
23.2 Consent of Arthur Andersen LLP, independent public
accountants.
23.3 Consent of Gibson, Dunn & Crutcher LLP (included in Exhibit
5.1 and Exhibit 8.1).
23.4 Consent of Gray Cary Ware & Freidenrich LLP (included in
Exhibit 8.2).
24 Power of Attorney (see the signature page to this
Registration Statement).
99.1 Form of Proxy for holders of Vantive common stock.
</TABLE>
<PAGE> 194
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE
------- -------------
<C> <S>
99.2 Consent of Credit Suisse First Boston Corporation.
</TABLE>
- ---------------
(1) This agreement is a compensatory plan or arrangement.
(2) Confidential treatment previously granted.
<PAGE> 1
EXHIBIT 3.4
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
PeopleSoft, Inc., a corporation organized and existing under and by virtue
of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of PeopleSoft, Inc.,
resolutions were duly adopted setting forth a proposed amendment of the
Certificate of Incorporation of said corporation, declaring said amendment to
be advisable and authorizing and directing the officers and directors of the
corporation to solicit the consent of stockholders of said corporation for
consideration thereof. The resolution setting forth said amendment is as
follows:
RESOLVED: That the Certificate of Incorporation of this corporation be
amended by changing the first paragraph of Article III thereof so that, as
amended said paragraph shall be and read as follows:
"THIRD. The Corporation is authorized to issue two classes of stock to
be designed, respectively, "Common Stock" and "Preferred Stock". The
total number of shares which the corporation is authorized to issue
is Seven Hundred Two Million (702,000,000) shares. Seven Hundred
Million (700,000,000) shares shall be Common Stock and Two Million
(2,000,000) shares shall be Preferred Stock, each with a par value of
One Cent ($0.01)."
SECOND: That thereafter, the necessary number of shares of this
corporation's capital stock as required by Section 216 of the General
Corporation Law of Delaware voted in favor of such amendment at the
corporation's Annual Meeting of Stockholders.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, PeopleSoft, Inc. has caused this certificate to be
signed by Ronald E.F. Codd, its Senior Vice President of Finance and
Administration, Chief Financial Officer and Secretary, this 25th day of June,
1998.
/s/ RONALD E.F. CODD
----------------------
Ronald E.F. Codd
Senior Vice President of Finance and Administration,
Chief Financial Officer and Secretary
<PAGE> 1
EXHIBIT 5.1
[Letterhead of Gibson, Dunn & Crutcher LLP]
November 17, 1999
(415) 393-8200 C 72711-00023
PeopleSoft, Inc.
4460 Hacienda Drive
Pleasanton, California 94588
Re: Registration Statement on Form S-4 of PeopleSoft, Inc.
Ladies and Gentlemen:
We refer to the registration statement on Form S-4 filed on the date
hereof, including amendments and exhibits thereto (the "Registration
Statement"), filed by PeopleSoft, Inc., a Delaware corporation (the
"Corporation"), under the Securities Act of 1933, as amended (the "Securities
Act"), with respect to the issuance by the Corporation of up to an aggregate of
25,892,462 shares (the "Shares") of its common stock, par value $.01 per share
("Common Stock"), upon consummation of the proposed merger of Vickers
Acquisition, Inc., a Delaware corporation and wholly-owned subsidiary of the
Corporation, with and into The Vantive Corporation, a Delaware corporation, (the
"Merger").
We have examined the originals or certified copies of such corporate
records, certificates of officers of the Corporation and/or public officials and
such other documents, and have made such other factual and legal investigations,
as we have deemed relevant and necessary as the basis for the opinions set forth
below. In such examination, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals, the conformity
to original documents of all documents submitted to us as conformed or
photostatic copies and the authenticity of the originals of such copies.
Based on our examination described above, subject to the assumptions
stated above and relying on the statements of fact contained in the documents
that we have examined, we are of the opinion that (i) the issuance by the
Corporation of the Shares in connection with the Merger
<PAGE> 2
PeopleSoft, Inc.
November 17, 1999
Page 2
has been duly authorized and (ii) when issued as described in the Registration
Statement, the Shares will be legally and validly issued, fully paid and
non-assessable shares of Common Stock.
We are admitted to practice in the State of California and are not
admitted to practice in the State of Delaware. However, for the limited purpose
of our above opinions, we are generally familiar with the General Corporation
Law of the State of Delaware (the "DGCL") as presently in effect and have made
such inquiries as we consider necessary to render these opinions with respect to
a Delaware corporation. This opinion is limited to the law of the State of
California, United States federal law and, to the limited extent set forth
above, the DGCL as such laws presently exist and to the facts as they presently
exist. We express no opinion with respect to the effect or applicability of the
laws of any other jurisdiction. We assume no obligation to revise or supplement
this opinion letter should the laws of such jurisdictions be changed after the
date hereof by legislative action, judicial decision or otherwise.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our name under the captions
"Background of the Merger," "Material Federal Income Tax Consequences," and
"Legal Matters" in the Proxy Statement/Prospectus which forms a part of the
Registration Statement filed on the date hereof. In giving this consent, we do
not admit that we are within the category of persons whose consent is required
under Section 7 of the Securities Act or the General Rules and Regulations of
the Securities and Exchange Commission.
Very truly yours,
/s/ GIBSON, DUNN & CRUTCHER LLP
GIBSON, DUNN & CRUTCHER LLP
<PAGE> 1
EXHIBIT 8.1
[LETTERHEAD OF GIBSON, DUNN & CRUTCHER LLP]
November 17, 1999
(213) 229-7000 C 72711-00023
PeopleSoft, Inc.
4460 Hacienda Drive
Pleasanton, California 94588
Re: Registration Statement on Form S-4
Ladies and Gentlemen:
We have acted as counsel to PeopleSoft, Inc., a Delaware corporation
("Parent"), in connection with the preparation and execution of the Agreement
and Plan of Merger (the "Merger Agreement"), dated as of October 11, 1999, by
and among Parent, Vickers Acquisition, Inc., a Delaware corporation and a wholly
owned subsidiary of Parent ("Sub"), and The Vantive Corporation, a Delaware
corporation ("Company"). Pursuant to the Merger Agreement, Sub will merge with
and into Company (the "Merger"), and Company will become a wholly owned
subsidiary of Parent. At your request, we have examined the form of Registration
Statement on Form S-4 of even date herewith to be filed by Parent with the U.S.
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933
(the "Registration Statement") on the date hereof.
You have requested our opinion regarding the accuracy of the discussion
of federal income tax matters included in the Registration Statement under the
caption "Material Federal Income Tax Consequences".
In connection with rendering this opinion, we have assumed and relied
upon (without any independent investigation):
1. The truth and accuracy of the statements, covenants, representations
and
<PAGE> 2
PeopleSoft, Inc.
Page 2
November 17, 1999
warranties contained in the Merger Agreement, in the representations received
from Parent, Sub and Company (the "Tax Representation Letters") that have been
provided to us and that were issued in support of this opinion, and in the
Registration Statement and other documents related to Parent, Sub and Company as
we have deemed necessary or appropriate for purposes of issuing this opinion;
2. consummation of the Merger in accordance with the Merger Agreement,
without any waiver, breach or amendment of any material provisions of the Merger
Agreement, the effectiveness of the Merger under applicable state law, and the
performance of all covenants contained in the Merger Agreement and the Tax
Representation Letters without waiver or breach of any material provisions
thereof;
3. the accuracy of any representation or statement made "to the
knowledge of" or similarly qualified without such qualification, and as to all
matters in which a person or entity is making a representation, that such person
or entity is not a party to, does not have, or is not aware of, any plan,
intention, understanding or agreement inconsistent with such representation, and
there is no such plan, intention, understanding, or agreement inconsistent with
such representation;
4. the reporting of the Merger as a reorganization, within the meaning
of Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
by Parent and Company in their respective federal income returns; and
5. the authenticity of original documents (including signatures),
conformity to the originals of documents submitted to us as copies, and due
execution and delivery of all documents where due execution and delivery are
prerequisites to effectiveness thereof.
Based upon the foregoing, it is our opinion that the discussion in the
Joint Proxy Statement/Prospectus, which forms part of the Registration
Statement, under the caption "Material Federal Income Tax Consequences," to the
extent it constitutes descriptions of legal matters or legal conclusions
regarding the federal income tax laws of the United States, is accurate in all
material respects.
This opinion represents our best judgment regarding the application of
federal income tax laws under the Code, existing judicial decisions,
administrative regulations and published rulings and procedures. Our opinion is
not binding upon the Internal Revenue Service or the courts, and there is no
assurance that the Internal Revenue Service will not successfully assert a
contrary position. Furthermore, no assurance can be given that future
legislative, judicial or administrative changes, on either a prospective or
retroactive basis, would not adversely affect the accuracy of the conclusions
stated herein. We undertake no responsibility to advise you of any new
developments in the application or interpretation of the federal income tax
laws.
<PAGE> 3
PeopleSoft, Inc.
Page 3
November 17, 1999
Furthermore, in the event any one of the statements, covenants, representations,
warranties or assumptions upon which we have relied to issue this opinion is
incorrect, our opinion might be adversely affected and may not be relied upon.
This opinion addresses only the matters described above, and does not
address any other federal, state, local or foreign tax consequences that may
result from the Merger or any other transaction undertaken in connection with
the Merger.
This opinion is rendered only to you and is solely for your benefit in
connection with filing the Registration Statement with the SEC. This opinion may
not be relied upon for any other purpose or by any other person or entity, and
may not be furnished to, quoted to or by or relied upon by any other person or
entity, without our prior written consent. We hereby consent to the use of this
opinion as an exhibit to the Registration Statement and to the use of our name
under the caption "Material Federal Income Tax Consequences" in the Joint Proxy
Statement/Prospectus, which forms a part of the Registration Statement. In
giving such consent, we do not thereby admit that we are in the category of
persons whose consent is required under Section 7 of the Securities Act of 1933,
as amended.
Very truly yours,
/s/ Gibson, Dunn & Crutcher LLP
Gibson, Dunn & Crutcher LLP
<PAGE> 1
EXHIBIT 8.2
[GRAY CARY WARE & FREIDENRICH LLP LETTERHEAD]
November 17, 1999
The Vantive Corporation
2525 Augustine Drive
Santa Clara, CA 95054
Ladies and Gentlemen:
This opinion is being delivered to you in accordance with the requirements of
Item 601(b)(8) of Regulation S-K under the Securities Act of 1933, as amended,
in connection with the filing of a registration statement on Form S-4 of a Proxy
Statement/Prospectus (the "Registration Statement") pursuant to the Agreement
and Plan of Merger dated as of October 11, 1999 (the "Merger Agreement") by and
among PeopleSoft, Inc., a Delaware corporation ("Parent"), Vickers Acquisition,
Inc., a Delaware corporation and a wholly-owned subsidiary of Parent
("Acquisition") and The Vantive Corporation, a Delaware corporation (the
"Company"). Pursuant to the Merger Agreement, Acquisition will merge with and
into the Company (the "Merger").
Unless otherwise defined, capitalized terms referred to herein have the meanings
set forth in the Merger Agreement. All section references, unless otherwise
indicated, are to the Internal Revenue Code of 1986, as amended (the "Code").
We have acted as legal counsel to the Company in connection with the preparation
and execution of the Merger Agreement. As such, and for the purpose of rendering
this opinion, we have examined and are relying upon (without any independent
investigation or review thereof) the truth and accuracy, at all relevant times,
of the statements, covenants, representations and warranties contained in the
following documents (including all schedules and exhibits thereto): (1) the
Merger Agreement; (2) representations and warranties made to us by Parent,
Acquisition and the Company substantially in the forms contained in exhibits to
the Merger Agreement (the "Tax Representation Letters"); (3) the facts,
statements, descriptions and representations set forth in the Registration
Statement; and (4) such other instruments and documents related to the
formation, organization and operation of Parent, Acquisition and the Company or
to the consummation of the Merger and the transactions contemplated thereby as
we have deemed
<PAGE> 2
necessary or appropriate.
In connection with rendering this opinion, we have assumed (and are relying
thereon, without any independent investigation or review thereof):
1. the truth and accuracy, as of the date hereof and at the Effective
Time, of the statements, covenants, representations and warranties contained in
the Merger Agreement, in the Tax Representation Letters that have been provided
to us and that were issued in support of this opinion, and in the Registration
Statement and other documents related to Parent, Acquisition and Company as we
have deemed necessary or appropriate for purposes of issuing this opinion;
2. consummation of the Merger in accordance with the Merger Agreement,
without any waiver, breach or amendment of any material provisions of the Merger
Agreement, the effectiveness of the Merger under applicable state law, and the
performance of all covenants contained in the Merger Agreement and the Tax
Representation Letters without waiver or breach of any material provisions
thereof;
3. the accuracy, without qualification, of any representation or
statement made "to the knowledge of" or similarly qualified, and as to all
matters in which a person or entity is making a representation, that such person
or entity is not a party to, does not have, or is not aware of, any plan or
intention, understanding or agreement inconsistent with such representation, and
there is no such plan, intention, understanding, or agreement inconsistent with
such representation;
4. the reporting of the Merger as a reorganization, within the meaning
of Section 368(a) of the Code, by Parent and Company in their respective federal
income returns; and
5. the authenticity of original documents (including signatures),
conformity to the originals of documents submitted to us as copies, and due
execution and delivery of all documents where due execution and delivery are
prerequisites to effectiveness thereof.
Based on the foregoing, we are of the opinion that the discussion in the Joint
Proxy Statement/Prospectus, which forms part of the Registration Statement,
under the caption "Material Federal Income Tax Consequences," to the extent it
constitutes descriptions of legal matters or legal conclusions regarding the
federal income tax laws of the United States, is accurate in all material
respects.
This opinion addresses only the matters described above. No opinion is expressed
as to any other matter, including any other tax consequences of the Merger or
any other transaction (including any transaction undertaken in connection with
the Merger) under any foreign, federal, state or local tax law.
<PAGE> 3
No opinion is expressed as to any transaction other than the Merger as described
in the Merger Agreement or to any transaction whatsoever, including the Merger,
if any of the transactions described in the Merger Agreement are not consummated
in accordance with the terms of such Merger Agreement and without waiver or
breach of any material provision thereof or if any of the representations,
warranties, statements and assumptions upon which we relied are not true and
accurate at all relevant times. In the event any one of the statements,
covenants, representations, warranties or assumptions upon which we have relied
to issue this opinion is incorrect, our opinion might be adversely affected and
may not be relied upon.
This opinion represents and is based upon our best judgment regarding the
application of federal income tax laws arising under the Code, existing judicial
decisions, administrative regulations and published rulings and procedures. Our
opinion is not binding upon the Internal Revenue Service or the courts, and the
Internal Revenue Service is not precluded from successfully asserting a contrary
position. Furthermore, no assurance can be given that future legislative,
judicial or administrative changes, on either a prospective or retroactive
basis, would not adversely affect the accuracy of the conclusions stated herein.
Nevertheless, we undertake no responsibility to advise you of any new
developments in the application or interpretation of the federal income tax
laws.
This opinion has been delivered to you only for the purpose stated. It is
intended for the benefit of the Company and the stockholders of the Company and
may not be relied upon for any other purpose or by any other person or entity,
and may not be made available to any other person or entity without our prior
written consent. We hereby consent, however, to the use of this opinion as an
exhibit to the Registration Statement and further consent to the use of our name
wherever appearing in the Registration Statement, including the Proxy
Statement/Prospectus constituting a part thereof, and any amendments thereto. In
giving such consent, we do not thereby admit that we are in the category of
persons whose consent is required under Section 7 of the Securities Act of 1933,
as amended.
Very truly yours,
GRAY CARY WARE & FREIDENRICH LLP
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the references to our firm under the captions "Selected
Consolidated Financial Data" and "Experts" in the Registration Statement (Form
S-4) and related Prospectus of PeopleSoft Inc. for the registration of
25,892,462 shares of its common stock and to the incorporation by reference
therein of our report dated January 26, 1999, with respect to the consolidated
financial statements of PeopleSoft Inc. included in its Annual Report (Form
10-K) for the year ended December 31, 1998, filed with the Securities and
Exchange Commission.
Walnut Creek, California
November 16, 1999
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement on Form S-4 and related Proxy
Statement/Prospectus of The Vantive Corporation of our report dated January 22,
1999, included in The Vantive Corporation's Form 10-K for the year ended
December 31, 1998. We also consent to the reference to our Firm under the
heading "Selected Financial Data" and to all other references to our Firm
included in this Registration Statement.
/s/ ARTHUR ANDERSEN LLP
- -----------------------------
San Jose, California
November 16, 1999
<PAGE> 1
EXHIBIT 99.1
PROXY PROXY
THE VANTIVE CORPORATION
PROXY FOR SPECIAL MEETING OF STOCKHOLDERS
SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Thomas L. Thomas, Leonard J. LeBlanc, and David
R. Schellhase, and each of them, with full power of substitution, to represent
the undersigned and to vote all the shares of the stock of The Vantive
Corporation which the undersigned is entitled to vote at the Special Meeting of
Stockholders of the Corporation and at any adjournment thereof (1) as
hereinafter specified upon the proposals listed below and as more particularly
described in the Corporation's Proxy Statement. and (2) in their discretion upon
such other matters as may properly come before the meeting.
1. To adopt the Merger Agreement and to approve the transactions contemplated by
the Merger Agreement.
2. To approve the postponement or adjournment of the Special Meeting to solicit
additional votes to approve the Merger Agreement.
The Special Meeting of the Stockholders of the Corporation will be held on
December 29, 1999, at 9 a.m., local time, at the Santa Clara TechMart, 5201
Great America Parkway, Santa Clara, CA 95054.
The undersigned hereby acknowledges receipt of (1) Notice of Special Meeting of
Stockholders of The Vantive Corporation and (2) accompanying Combined Proxy
Statement/Prospectus relating to Corporation's combination with PeopleSoft, Inc.
through the merger of Vickers Acquisition, Inc., with and into The Vantive
Corporation.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO SIGN
AND PROMPTLY MAIL THIS PROXY IN THE RETURN ENVELOPE SO THAT YOUR STOCK
MAY BE REPRESENTED AT THE MEETING.
(Continued and to be signed on reverse side.)
<PAGE> 2
THE VANTIVE CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [X]
THE SHARES REPRESENTED HEREBY SHALL BE VOTED AS SPECIFIED. IF NO SPECIFICATION
IS MADE, SUCH SHARES SHALL BE VOTED FOR PROPOSALS 1 AND 2.
The Board of Directors recommends a vote FOR adoption of the Merger Agreement
and approval of the transactions contemplated by the Merger Agreement.
For Against Abstain
1. Adoption of the merger
Agreement. (See reverse) [ ] [ ] [ ]
For Against Abstain
2. Approval of the adjournment
or postponement of the Special
Meeting [ ] [ ] [ ]
Check here if you plan to attend the special meeting [ ]
Check here for address change and note at left. [ ]
Dated: _______________, 1999
Signature(s) _________________________________
______________________________________________
Sign exactly as your name appears on your
stock certificate. If shares of stock stand of
record in the names of two or more persons or
in the name of husband and wife, whether as
joint tenants or otherwise, both or all of
such persons should sign the Proxy. If shares
of stock are held of record by a corporation,
the Proxy should be executed by the President
or Vice President and Secretary or Assistant
Secretary and the corporate seal should be
affixed thereto. Executors or administrators
or other fiduciaries who execute the above
Proxy for a deceased stockholder should give
their full title. Please date the Proxy.
* FOLD AND DETACH HERE *
YOUR VOTE IS IMPORTANT!
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY
USING THE ENCLOSED ENVELOPE
DETACH & RETURN PROXY CARD; RETAIN ADMISSION CARD
ADMISSION CARD
SPECIAL MEETING OF STOCKHOLDERS
December, 29 1999
9:00 A.M.
The Santa Clara TechMart
5201 Great America Parkway
Santa Clara, California
Presentation of this card is required for admission to the Special Meeting
PLEASE PRESENT THIS CARD TO THE VANTIVE CORPORATION REPRESENTATIVE
AT THE ENTRANCE TO THE SPECIAL MEETING
<PAGE> 1
EXHIBIT 99.2
[LETTERHEAD OF CREDIT SUISSE FIRST BOSTON CORPORATION]
Board of Directors
The Vantive Corporation
2525 Augustine Drive
Santa Clara, California 95054
Members of the Board:
We hereby consent to the inclusion of our opinion letter to the Board of
Directors of The Vantive Corporation ("Vantive") as Appendix C to the Proxy
Statement/Prospectus of Vantive and PeopleSoft, Inc. ("PeopleSoft"), which is
included in PeopleSoft's Registration Statement on Form S-4, relating to the
proposed merger transaction involving Vantive and PeopleSoft and references
thereto in such Proxy Statement/Prospectus under the captions "SUMMARY --
Opinion of Vantive's Financial Advisor", "THE MERGER -- Background of the
Merger", "THE MERGER -- Recommendation of the Vantive Board of Directors and
Vantive's Reasons for the Merger" and "THE MERGER -- Opinion of Vantive's
Financial Advisor." In giving such consent, we do not admit that we come within
the category of persons whose consent is required under, and we do not admit
that we are "experts" for purposes of, the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
By: /s/ Credit Suisse First Boston Corporation
------------------------------------------
CREDIT SUISSE FIRST BOSTON CORPORATION
New York, New York
November 17, 1999
