<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _____ TO _____
COMMISSION FILE NUMBER: 0-21471
----------------
AURUM SOFTWARE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------
DELAWARE 77-0292260
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
3385 SCOTT BOULEVARD
SANTA CLARA, CALIFORNIA 95054
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
(408) 986-8100
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
requirements for the past 90 days.
YES [X] NO [_]
The number of issued and outstanding shares of the Registrant's Common
Stock, $0.001 par value, as of March 31, 1997, was 11,572,021.
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PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AURUM SOFTWARE, INC.
CONDENSED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1996
----------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........................... $ 42,085 $ 38,955
Accounts receivable, net............................ 10,735 13,329
Prepaid expenses and other current assets........... 1,313 893
-------- --------
Total current assets.............................. 54,133 53,177
Property and equipment, net........................... 3,666 2,899
Other assets.......................................... 691 205
-------- --------
Total assets...................................... $ 58,490 $ 56,281
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and capital lease obligations, current
portion............................................ $ 565 $ 650
Accounts payable and accrued compensation........... 3,500 3,588
Other accrued liabilities........................... 2,593 1,584
Deferred revenue.................................... 4,024 2,999
-------- --------
Total current liabilities......................... 10,682 8,821
Notes payable and capital lease obligations, less
current portion...................................... 336 451
-------- --------
Total liabilities................................. 11,018 9,272
-------- --------
Stockholders' equity:
Preferred stock, $0.001 par value, authorized:
5,000,000 shares Issued and Outstanding: None......
Common stock, $0.001 par value, authorized:
25,000,000 shares; Issued and outstanding:
11,572,021 shares (11,568,146 shares in 1996)...... 12 12
Additional paid-in capital........................ 61,565 61,561
Notes receivable from stockholders.................. (1,125) (1,117)
Accumulated deficit................................. (12,980) (13,447)
-------- --------
Total stockholders' equity........................ 47,472 47,009
-------- --------
Total liabilities and stockholders' equity........ $ 58,490 $ 56,281
======== ========
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
2
<PAGE>
AURUM SOFTWARE, INC.
CONDENSED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------
1997 1996
--------- ---------
<S> <C> <C>
Revenues
Licenses............................................... $ 6,072 $ 2,871
Services............................................... 3,273 2,012
--------- ---------
Total revenues....................................... 9,345 4,883
--------- ---------
Cost of revenues:
Licenses............................................... 440 407
Services............................................... 2,587 1,986
--------- ---------
Total cost of revenues............................... 3,027 2,393
--------- ---------
Gross profit............................................. 6,318 2,490
--------- ---------
Operating expenses:
Sales and marketing.................................... 3,568 2,201
Research and development............................... 1,738 626
General and administrative............................. 778 313
--------- ---------
Total operating expenses............................. 6,084 3,140
--------- ---------
Income (loss) from operations............................ 234 (650)
Other income, net........................................ 505 12
Interest expense......................................... (32) (25)
--------- ---------
Income (loss) before provision for income taxes...... 707 (663)
Provision for income taxes............................... 240
--------- ---------
Net income (loss).................................... $ 467 $ (663)
========= =========
Net income (loss) per share.............................. $ 0.04 $ (0.17)
========= =========
Shares used in per share calculation..................... 11,969 3,959
========= =========
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
3
<PAGE>
AURUM SOFTWARE, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------
1997 1996
--------- ---------
<S> <C> <C>
Net cash provided by (used in) operating activities....... $ 4,359 $ (195)
--------- --------
Cash flows from investing activities:
Acquisition of property and equipment................... (491) (511)
Net cash used in acquisition of Aurum U.K., and advance
to Aurum U.K........................................... (534)
--------- --------
Net cash used in investing activities................. (1,025) (511)
Cash flows from financing activities:
Proceeds from issuance of mandatorily redeemable
convertible preferred stock, net of issuance costs..... 1,489
Proceeds from issuance of common stock.................. 8
Repurchase of mandatorily redeemable convertible
preferred and common stock............................. (6) (604)
Repayments of notes payable and capital lease
obligations............................................ (198) (160)
Proceeds from notes payable and sales and leasebacks of
property and equipment................................. 609
--------- --------
Net cash provided by (used in) financing activities... (204) 1,342
--------- --------
Net increase in cash and cash equivalents................. 3,130 636
Cash and cash equivalents, beginning...................... 38,955 2,795
--------- --------
Cash and cash equivalents, ending......................... $ 42,085 $ 3,431
========= ========
Supplemental disclosure of noncash investing and financing
activities:
Property and equipment purchased included in accounts
payable................................................ $ (684)
=========
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
4
<PAGE>
AURUM SOFTWARE, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared on
substantially the same basis as the audited financial statements and in the
opinion of management include all adjustments, consisting only of normal
recurring adjustments, necessary for their fair presentation. The interim
results presented are not necessarily indicative of results for any subsequent
quarter or for the year ending December 31, 1997.
For information regarding the Company's significant accounting policies and
other financial and operating information, see the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1996. These financial
statements should be read in conjunction with the financial statements and
notes thereto included in the Form 10-K.
2. ACQUISITION
In March 1997, the Company signed a share purchase agreement (the
"Agreement") with Aurum Software U.K. Limited, a corporation organized under
the laws of England ("Aurum U.K."), to acquire all the outstanding share
capital of Aurum U.K. from such company's existing shareholders.
Prior to entering into the Agreement, Aurum U.K. had acted as a distributor
of the Company's software products in the United Kingdom and Europe and will
continue to do so subsequent to the purchase. At March 31, 1997, $534,000,
which consisted of the purchase price paid for the shares of Aurum U.K. (less
$16,000 retained by the Company to be paid to the prior majority shareholder
of Aurum U.K. in 90 days, subject to certain contingencies), and an advance to
Aurum U.K., was recorded in Other Assets. The purchase will be accounted for
under the purchase method of accounting and did not have a material effect on
the Company's operations.
3. LINE OF CREDIT
In March 1997, the Company entered into a Loan Modification Agreement with
its bank relating to its $3.0 million line of credit which, in addition to
other modifications related to financial covenants and other financial
reporting requirements, reduced the applicable interest rate to the bank's
prime rate. At March 31, 1997, the Company did not have any outstanding
borrowings under the line of credit.
4. SUBSEQUENT EVENT
On May 13, 1997, the Company entered an Agreement and Plan of Merger
pursuant to which it agreed to be acquired by Baan Company N.V. ("Baan") in a
stock-for-stock exchange with the Company's stockholders. Under the terms of
such agreement, the Company's stockholders will receive 0.3559322034 Baan
Common Shares for each outstanding share of the Company's Common Stock. The
applicable exchange ratio is subject to adjustment based on the average
closing sales price of Baan Common Shares during the 10 trading days prior to
the effectiveness of the merger. Subject to regulatory approval and approval
by the Company's stockholders, the merger is expected to close in the third
quarter of 1997.
5
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This report contains forward looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. These forward looking statements are subject to certain
risks and uncertainties that could cause actual results to differ materially
from historical results or anticipated results, including those set forth
under "Factors That May Affect Future Results" in this "Management's
Discussion and Analysis of Financial Condition and Results of Operations," in
the Company's Annual Report on Form 10-K filed with the Securities and
Exchange Commission, and elsewhere in or incorporated by reference into this
report. The following discussion should be read in conjunction with the
Company's Condensed Financial Statements and Notes thereto included elsewhere
in this report.
OVERVIEW
Aurum Software, Inc. ("Aurum" or the "Company") is a leading provider of
enterprise-wide sales and marketing information software. The Company
develops, markets and supports the Aurum Customer Enterprise, an integrated
suite of applications that helps automate the field sales, telemarketing,
telesales and customer support functions of a business. The Company's products
are based on advanced client/server and Internet/Intranet technologies and are
designed to provide businesses with integrated, adaptable and mobile software
solutions to meet their competitive business goals.
The Company derives revenues principally from licensing its software and
providing technical product support and consulting services to its customers.
License revenues for the Company's products consist of server fees for one or
more servers and software license fees based on the number of named users. The
Company also derives license revenues from sublicensing third party software
products. License revenues are recognized upon execution of a license
agreement and delivery of software if there are no significant post-delivery
vendor obligations and collection of the receivable is deemed probable. If
significant post-delivery obligations exist or if a product is subject to
customer acceptance, revenues are deferred until no significant obligations
remain or acceptance has occurred. Revenues from services consist primarily of
consulting services, including implementation and adaptation of licensed
software and training, maintenance, and support. Consulting and training
revenues are generally recognized as services are performed, except for
revenues from certain fixed-price contracts or milestone deliverables, which
are recognized on a percentage-of-completion basis or upon milestone delivery.
Maintenance revenues are recognized ratably over the term of the maintenance
period, which is typically one year. For all periods presented, the Company
has recognized revenue in accordance with the Statement of Postion 91-1 on
"Software Revenue Recognition" dated December 12, 1991, issued by the American
Institute of Certified Public Accountants.
The license of the Company's software products often involves an enterprise-
wide decision by prospective customers and generally requires the Company to
provide a significant level of education to prospective customers regarding
the use and benefits of the Company's products. In addition, the
implementation of the Company's products requires a significant commitment of
resources by prospective customers and is commonly associated with substantial
reengineering efforts which may be performed by the customer or third-party
system integrators. The cost to the customer of the Company's product is
typically only a portion of the related hardware, software, development,
training and integration costs of automating a sales and marketing system. For
these reasons, the sales and implementation cycles associated with the license
of the Company's products is often lengthy and may be subject to a variety of
significant delays beyond the Company's control. Given these factors, any
reduction or delay in sales to or implementations by prospective customers
could have a material adverse effect on the Company's business, operating
results, and financial condition.
In North America, the Company markets its software primarily through its
direct sales organization. The Company's direct sales force employs a
consultative sales process, working closely with customers to understand and
define their needs. In addition, the direct sales force works closely with
strategic systems technology and sales methodology partners to identify
specific customer opportunities and requirements.
6
<PAGE>
Outside North America, the Company has historically marketed its software
through key distribution organizations. In March 1997, the Company acquired
all the outstanding share capital of Aurum Software U.K. Limited, an English
corporation, and is now marketing and selling its products in the United
Kingdom through a direct sales force.
The Company intends to continue to grow its direct sales force in North
America and to pursue international distribution primarily through key
distribution agreements and, in selected countries where management determines
it to be appropriate, through a direct sales force. As the Company's existing
direct sales forces in the United States and the United Kingdom are relatively
small, the Company's ability to achieve revenue growth in the future will
depend largely on its success in recruiting and training sufficient direct
sales, technical, and customer support personnel, in developing distribution
relationships with third party distributors outside the United States, and
establishing and maintaining relationships with its strategic partners. Any
failure by the Company to expand its direct sales force or other distribution
channels, or to expand its technical and customer support staff, could
materially and adversely affect the Company's business, operating results and
financial condition. There can be no assurance that the Company will be
successful in attracting and retaining qualified international distributors or
that it will be successful in implementing direct sales programs in selected
international markets. If the Company is unable to obtain qualified
international distribution partners or is otherwise unable to penetrate
strategically important international markets, the Company's business,
operating results and financial condition could be materially and adversely
affected.
The Company's revenues generally reflect a relatively high amount of sales
per order. The loss or delay of an individual order, therefore, can have a
material impact on the revenue and quarterly results of operations of the
Company. The timing of license revenue is difficult to predict because of the
length of the Company's sales cycle. Because the Company's operating expenses
are based on anticipated revenue trends and because a higher percentage of the
Company's expenses are relatively fixed, a delay in the recognition of revenue
from a limited number of license transactions could cause significant
variations in operating results from one quarter to the other and could result
in losses. As a result of these and other factors, revenues for any quarter
are subject to significant fluctuations, and the Company believes that period-
to-period comparisons should not be relied upon as indicators of future
performance. It is likely that in some future quarter the Company's operating
results may be below the expectations of public market analysts and investors,
which would adversely affect the price of the Company's Common Stock.
RESULTS OF OPERATIONS
Revenues
Total revenues increased 91% from $4.9 million for the three months ended
March 31, 1996 to $9.3 million for the three months ended March 31, 1997. The
increase was due to significant growth in license revenues and growth in
service revenues.
Licenses. License revenues increased 111% from $2.9 million for the three
months ended March 31, 1996 to $6.1 million for the three months ended March
31, 1997. As a percentage of total revenues, license revenues increased to 65%
in the first quarter of 1997 from 59% in the first quarter of 1996. The
increases in license revenues in absolute dollars and as a percentage of total
revenues were due to increased market acceptance of the Company's Windows-
based products, expansion of the Company's product line, and the expansion of
the Company's direct sales force from 28 employees at March 31, 1996 to 51 at
March 31, 1997.
Services. Service revenues increased 63% from $2.0 million for the three
months ended March 31, 1996 to $3.3 million for the three months ended March
31, 1997. As a percentage of total revenues, service revenues decreased
slightly from 41% to 35% for the three month periods ended March 31, 1996 and
1997, respectively. The dollar increase in service revenues was primarily due
to increased demand for consulting and systems integration services arising
from a larger installed customer base. The decrease as a percentage of total
revenues was attributable to the higher growth rate of license revenues
relative to service revenues. The Company continues its strategy of using
third-party integration partners, which is intended to allow the Company more
time to focus on license sales, which have higher margins.
7
<PAGE>
Costs of Revenues
Cost of Licenses. Cost of licenses consists primarily of license fees and
royalties paid to third party software providers and, to a lesser extent,
product media, product duplication and shipping. Cost of license revenues
increased from $407,000 for the three months ended March 31, 1996 to $440,000
for the three months ended March 31, 1997. As a percentage of total revenues,
cost of licenses decreased from 8% for the three months ended March 31, 1996
to 5% for the three months ended March 31, 1997. As a percentage of total
license revenues, cost of licenses also decreased from 14% for the three
months ended March 31, 1996 to 7% for the three months ended March 31, 1997.
The decrease in cost of licenses as a percentage of total revenues and total
license revenues was attributable primarily to the significant period-to-
period growth in license revenues and, with respect to cost of licenses as a
percentage of total revenues, also to growth in total services revenues. In
addition, relative to the growth in total license revenues, cost of license
revenues did not increase substantially in dollar terms and decreased as a
percentage of total revenues and total license revenues due to the reduction
in sales of third party database applications and higher volume pricing
discounts from third party software providers.
Cost of Services. Cost of services consists primarily of personnel-related
costs incurred in providing consulting services, training and maintenance to
customers. Cost of services increased from $2.0 million for the three months
ended March 31, 1996 to $2.6 million for the three months ended March 31,
1997. As a percentage of total revenues, cost of services decreased from 41%
for the three months ended March 31, 1996 to 28% for the three months ended
March 31, 1997. As a percentage of total service revenues, cost of services
also decreased from 99% for the three months ended March 31, 1996 to 79% for
the three months ended March 31, 1997. The decrease in cost of services as a
percentage of total revenues was due to a higher revenue base and as a
percentage of total service revenues to economies of scale and a higher
service revenue base. In addition, cost of services for the three months ended
March 31, 1996 reflects the costs associated with the implementation of a
Consulting Development Program. The Company did not have such a program during
the three months ended March 31, 1997.
Operating Expenses
Sales and Marketing. Sales and marketing expenses include salaries,
commissions, advertising, direct mail, seminars, public relations, trade
shows, travel and other related selling and marketing expenses. Sales and
marketing expenses increased from $2.2 million for the three months ended
March 31, 1996 to $3.6 million for the three months ended March 31, 1997.
Sales and marketing expenses constituted 45% and 38% of total revenues for the
three months ended March 31, 1996 and 1997, respectively. The dollar increase
in sales and marketing expenses reflected the expansion of the Company's
direct sales force and increased expenses associated with a higher level of
marketing activity by the Company. The decrease in sales and marketing expense
as a percent of total revenues was due primarily to a higher revenue base and
economies of scale.
Research and Development. Research and development expenses relate primarily
to engineering personnel. Costs related to research and development of
products are charged to research and development expenses as incurred.
Research and development expenses increased from $626,000 for the three months
ended March 31, 1996 to $1.7 million for the three months ended March 31,
1997. Research and development expenses constituted 13% and 19% of total
revenues for the three months ended March 31, 1996 and 1997, respectively.
Both the dollar increase and the increase in research and development expenses
as a percentage of total revenues were due primarily to increased investment
in new product development accompanied by an increase in personnel.
General and Administrative. General and administrative expenses include
personnel costs for administration, finance, human resources and general
management in addition to legal and accounting expenses and other professional
services. General and administrative expenses increased from $313,000 for the
three months ended March 31, 1996 to $778,000 for the three months ended March
31, 1997. General and administrative expenses constituted 6% and 8% of total
revenues for the three months ended March 31, 1996
8
<PAGE>
and 1997, respectively. The dollar increase in general and administrative
expenses and the increase as a percentage of total revenues were attributable
primarily to increased expenses associated with becoming a publicly traded
company in October 1996.
Other Income. Other income, net, consists primarily of interest income
offset by expenses relating to sales taxes and other fees and licenses. Other
income increased from $12,000 for the three months ended March 31, 1996 to
$505,000 for the three months ended March 31, 1997. Other income constituted
less than 1% and 5% of the total revenues for the three months ended March 31,
1996 and 1997, respectively. The dollar increase in other income and the
percentage increase as a percentage of total revenues were attributable to
interest income of $527,000 arising from investment of the proceeds of the
Company's initial public offering in short-term highly liquid investments.
Provision for Income Taxes. Income taxes have been provided for at an
effective rate of approximately 34% which consists primarily of federal and
state taxes. The Company accounts for income taxes under the liability method.
The Company has established a valuation allowance against its deferred tax
assets due to the uncertainty surrounding the realization of such assets.
Management evaluates, on a quarterly basis, the recoverability of the deferred
tax assets and the level of the valuation allowance. The ultimate realization
of these deferred tax assets is dependent on the Company's ability to generate
taxable income in the future.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1997, the Company had $42.1 million in cash and cash
equivalents and $43.5 million of working capital. The Company also has
available a $3.0 million bank line of credit, which is collateralized by the
assets of the Company and requires that certain financial covenants be
maintained. The line of credit also contains a restrictive covenant that
limits the Company's ability to pay cash dividends or make stock repurchases
in excess of $350,000 without the prior written consent of the lender. The
line of credit expires on July 14, 1997 and bears interest at the lender's
prime rate. As of March 31, 1997, there were no amounts outstanding under the
line of credit agreement.
The Company believes that existing cash balances, cash available under its
line of credit and cash from operations will be sufficient to meet its working
capital and capital expenditure requirements for at least the next 12 months.
Although operating activities may provide cash in certain periods, to the
extent that the Company experiences growth in the future, the Company
anticipates that its operating and investing activities may use cash.
Consequently, any such growth may require the Company to obtain additional
equity or debt financing. There can be no assurances that any necessary
additional financing will be available to the Company on commercially
reasonable terms, if at all.
FACTORS THAT MAY AFFECT FUTURE RESULTS
This report, including this Management's Discussion and Analysis of
Financial Condition and Results of Operations, contains forward-looking
statements and other prospective information relating to future events. These
forward-looking statements and other information are subject to certain risks
and uncertainties that could cause actual results to differ materially from
historical results or anticipated results, including the following:
Although the Company has experienced significant growth in revenues during
the last three years and during the quarterly periods reported on in this
report, the Company does not believe that prior growth rates are sustainable
or indicative of future operating results. Although the Company has achieved
limited quarterly profitability in each quarter since the quarter ended June
30, 1996, there can be no assurance that the Company will be able to sustain
profitability on a quarterly basis.
The Company's quarterly results have varied significantly in the past and
may vary significantly in the future, depending on a number of factors, many
of which are beyond the Company's control and many of which could have a
material adverse effect on the Company's revenues and profitability during any
particular quarterly
9
<PAGE>
or annual period. These factors include, among others, the ability of the
Company to develop, introduce and market new and enhanced versions of its
software on a timely basis, the demand for the Company's software, the size,
timing and contractual terms of significant orders, the timing and
significance of software product enhancements and new software product
announcements by the Company or its competitors, budgeting cycles of the
Company's potential customers, customer order deferrals in anticipation of
enhancements of new software products, the cancellations of licenses or
maintenance agreements, software defects and other product quality problems,
and general domestic and international economic and political trends.
Moreover, the timing of revenue recognition can be affected by many factors,
including the timing of contract execution and delivery and customer
acceptance, if applicable. In part because of lengthy sales and implementation
cycles, the timing between initial customer contact and fulfillment of
criteria for revenue recognition can be lengthy and unpredictable, and
revenues in any given period may be adversely affected as a result of such
unpredictability. The Company has limited backlog. As a result, software
revenues in any quarter are substantially dependent on orders booked and
shipped in that quarter, cannot be accurately predicted, and may vary
significantly. The Company has also experienced seasonality in its business,
in part due to customer buying patterns. In recent years, the Company has
generally had stronger demand for its software products in the quarters ending
in June and December and weaker demand in the quarters ending in March and
September.
The Company incorporates into its products certain software and other
technologies licensed to it by third-party developers. Among the principal
developers of these licensed technologies are Business Objects, Inc., which
licenses an On- Line Analytical Processing ("OLAP") tool that enables the
analysis of sales and customer data at both the server and client sites of a
user's network; Centura Corporation, which licenses a SQL-based laptop
database that is used principally in the Company's SalesTrak product; and
First Floor Software, Inc., which licenses an intelligent agent that monitors
changes in sales and customer data accessed through the World Wide Web. The
Company's license agreements with Business Objects, Centura and First Floor
expire in March 2000, December 1997 and June 1997, respectively, and there is
no assurance that any of these agreements will be renewed following
expiration. Because the Company's products incorporate software developed and
maintained by third parties, the Company is to a certain extent dependent upon
such third parties' abilities to maintain or enhance their current products,
to develop new products on a timely and cost-effective basis and to respond to
emerging industry standards and other technological changes. In the event that
the Company's agreements with its third-party vendors should fail to be
renewed or the products licensed from such vendors should fail to address the
requirements of the Company's software products, the Company would be required
to find alternative software products or technologies of equal performance or
functionality. There can be no assurance that the Company would be able to
replace such functionality provided by the third-party software currently
offered in conjunction with the Company's products in the event that such
software becomes obsolete or incompatible with future versions of the
Company's products or is otherwise not adequately maintained or updated. The
absence of or any significant delay in the replacement of that functionality
could have a material adverse effect on the Company's business, operating
results and financial condition.
The Company believes that its continued growth and profitability will
require expanded distribution for its products, particularly internationally.
In North America, the Company has sold its products primarily through its
direct sales organization and has supported its customers with its technical
and customer support staff. International sales have been insignificant to
date, but the Company intends to expand its international operations and enter
additional international markets through partnerships with international
distributors or, in selected countries, through direct sales. Continued
expansion, domestically and internationally, will require significant
investments of management attention and financial resources, which could
adversely affect the Company's operating margins and earnings, if any. The
Company's growth to date has already challenged the Company's personnel and
management resources. Internationally, the Company's ability to achieve
revenue growth in the future will depend in part on its ability to establish
productive relationships with distributors in Europe and the Pacific Rim. The
competition for qualified international distributors is intense, however. The
Company has in the past experienced difficulty in obtaining qualified
distributors, and there can be no assurance that the Company can attract and
retain qualified distributors. Both domestically and in selected foreign
countries, the Company continues to invest significant resources to expand its
direct sales force. The Company believes the complexity
10
<PAGE>
of its products and the large-scale deployments anticipated by customers will
also require a number of highly trained support personnel. Competition for
qualified sales and consulting employees is intense, both domestically and
internationally, and the Company has at times experienced difficulty in
recruiting qualified personnel. Any failure by the Company to expand its
direct sales force or other distribution channels, or to expand its technical
and customer support staff, could materially and adversely affect the
Company's business, operating results and financial condition. There can be no
assurance that any expansion of the Company's direct or indirect distribution
channels will result in an increase in revenues or profitability. In addition,
international expansion of the Company's business poses a number of risks
which could have a material adverse effect on the Company's operating results
in the event that revenues from international operations comprise a greater
percentage of the Company's total revenues in the future. These risks include
changes in foreign currency exchange rates, longer payment cycles, greater
difficulty in accounts receivable collection, difficulties in managing and
staffing international operations, seasonal fluctuations in business
activities in various parts of the world, including the slow-down in European
business activity during the Company's third fiscal quarter, cultural
differences in the conduct of business, tariffs, duties, price controls or
other restrictions on foreign currencies, trade barriers and other factors.
As a result of the foregoing as well as other factors, the Company's
operating results and stock price may be subject to significant volatility,
particularly on a quarterly basis. The market price of the Company's Common
Stock has fluctuated significantly since its initial public offering in
October 1996 and could be subject to significant fluctuations in the future
based upon a number of factors, including any shortfall in the Company's
revenues or net income from revenues or net income expected by securities
analysts, announcements of new products by the Company or its competitors,
quarterly fluctuations in the Company's financial results or the financial
results of other software companies, including direct competitors of the
Company, changes in analysts' estimates of the Company's financial performance
or the financial performance of competitors or the financial performance of
software companies in general, general conditions in the software industry,
changes in prices for the Company's products or competitors' products, changes
in revenue growth rates for the Company or its competitors, as well as other
events or factors. In addition, the stock market has from time to time
experienced extreme price and volume fluctuations, which have particularly
affected the market price for the securities of many technology companies and
which have often been unrelated to the operating performance of the specific
companies. Such broad market fluctuations may adversely affect the market
price of the Company's Common Stock.
11
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, the Company is party to various legal proceedings or
claims, either asserted or unasserted, which arise in the ordinary course of
business. Management has reviewed pending legal matters and believes that the
resolution of such matters will not have a significant adverse affect on the
Company's financial condition or results of operations.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of the Company's stockholders during the
quarter ended March 31, 1997.
ITEM 5. OTHER INFORMATION
The Company has entered an Agreement and Plan of Reorganization dated May
13, 1997 with Baan Company N.V. ("Baan") pursuant to which it agreed to be
acquired by Baan in a merger transaction. In the merger, each holder of the
Company's Common Stock will receive 0.3559322034 Baan Common Shares for each
outstanding share of the Company's Common Stock (the "Exchange Ratio"),
representing an aggregate of 4,152,234 Baan Common Shares based on the number
of shares of Aurum Common Stock outstanding on May 12, 1997. The Exchange
Ratio was determined based on the closing price of Baan Common Shares on May
9, 1997, $59.00 per share, reflecting a purchase price of $21 per share of
Aurum Common Stock. The Exchange Ratio is subject to increase in the event
that the average closing sales price of Baan Common Shares over the 10 trading
days prior to the date of effectiveness of the merger (the "Baan Stock Value")
is less than $50 per share. In such event, the Exchange Rate increases to the
product of the initial Exchange Ratio, 0.3559322034, times a fraction, the
numerator of which is $50.00 and the denominator of which is the Baan Stock
Value. The Exchange Ratio does not adjust further below a Baan Stock Value of
$40 per share, and accordingly the maximum Exchange Ratio is 0.4449152542 and
the maximum number of Baan Common Shares issuable in respect of Aurum Common
Stock (based on the number of shares of Aurum Common Stock outstanding on May
12, 1997) is 5,190,293 Baan Common Shares.
The acquisition, which is expected to close in the third quarter of 1997,
will be accounted for as a tax free pooling of interests and is subject to the
approval of the Company's stockholders. Certain of the Company's stockholders
holding a majority of its Common Stock have entered agreements to vote in
favor of the acquisition, and the Company has granted Baan an option to
acquire 19.9% of its outstanding Common Stock which is exercisable under
certain circumstances.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NO. EXHIBIT TITLE
------- -------------
<C> <S>
2.1 Agreement and Plan of Reorganization dated March 13, 1997 by and among
Baan Company N.V., Green Software Acquisition Corporation, and the
Registrant.
2.2 Stock Option Agreement dated May 13, 1997 between Baan Company N.V.
and the Registrant.
10.3 1996 Director Option Plan and form of Director Stock Option Agreement
thereunder.
10.4 1996 Employee Stock Purchase Plan and forms of agreement thereunder.
10.16 Consent to Sublease and Assignment dated March 27, 1997 by and among
the Registrant, Regency Plaza International, Inc. and Mentor Graphics
Corporation.
11.1 Computation of Net Income (Loss) Per Share.
27.1 Financial Data Schedule.
</TABLE>
(b) Reports of Form 8-K
The Registrant filed no Current Reports on Form 8-K during the quarter ended
March 31, 1997.
12
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Santa Clara,
California.
AURUM SOFTWARE, INC.
Date: May 15, 1997 /s/ Christopher L. Dier
By: _________________________________
Christopher L. Dier
Vice President, Finance
(Duly Authorized Officer and
Principal Financial and Accounting
Officer)
13
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
2.1 Agreement and Plan of Reorganization dated March 31, 1997 by and among
Baan Company N.V., Green Software Acquisition Corporation, and the
Registrant.
2.2 Stock Option Agreement dated May 13, 1997 between Baan Company N.V.
and the Registrant
10.3 1996 Director Option Plan and form of Director Stock Option Agreement
thereunder.
10.4 1996 Employee Stock Purchase Plan and forms of agreement thereunder.
10.16 Consent to Sublease and Assignment dated March 27, 1997 by and among
the Registrant, Regency Plaza International, Inc. and Mentor Graphics
Corporation.
11.1 Computation of Net Income (Loss) Per Share.
27.1 Financial Data Schedule.
</TABLE>
14
<PAGE>
EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
BAAN COMPANY N.V.
GREEN SOFTWARE ACQUISITION CORPORATION
AND
AURUM SOFTWARE, INC.
DATED AS OF MAY 13, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I THE MERGER................................................... 2
1.1 The Merger................................................... 2
1.2 Effective Time; Closing...................................... 2
1.3 Effect of the Merger......................................... 2
1.4 Certificate of Incorporation; Bylaws......................... 2
1.5 Directors and Officers....................................... 2
1.6 Effect on Capital Stock...................................... 3
1.7 Unvested Aurum Common Stock.................................. 4
1.8 Surrender of Certificates.................................... 4
1.9 No Further Ownership Rights in Aurum Common Stock............ 6
1.10 Lost, Stolen or Destroyed Certificates....................... 6
1.11 Tax and Accounting Consequences.............................. 6
1.12 Taking of Necessary Action; Further Action................... 6
ARTICLE II REPRESENTATIONS AND WARRANTIES OF AURUM..................... 7
2.1 Organization of Aurum........................................ 7
2.2 Aurum Capital Structure...................................... 8
2.3 Obligations With Respect to Capital Stock.................... 8
2.4 Authority.................................................... 9
2.5 SEC Filings; Aurum Financial Statements...................... 10
2.6 Absence of Certain Changes or Events......................... 11
2.7 Tax.......................................................... 11
2.8 Title to Properties; Absence of Liens and Encumbrances....... 12
2.9 Intellectual Property........................................ 12
2.10 Compliance; Permits; Restrictions............................ 14
2.11 Litigation................................................... 14
2.12 Brokers' and Finders' Fees................................... 14
2.13 Employee Benefit Plans....................................... 15
2.14 Employees; Labor Matters..................................... 15
2.15 Environmental Matters........................................ 15
2.16 Agreements, Contracts and Commitments........................ 16
2.17 Pooling of Interests......................................... 17
2.18 Statements; Proxy Statement/Prospectus....................... 17
2.19 Board Approval............................................... 18
2.20 Fairness Opinion............................................. 18
2.21 Section 203 of the Delaware General Corporation Law Not
Applicable................................................... 18
ARTICLE III REPRESENTATIONS AND WARRANTIES OF BAAN AND MERGER SUB...... 18
3.1 Organization of Baan and Merger Sub.......................... 18
3.2 Baan and Merger Sub Capital Structure........................ 19
3.3 Authority.................................................... 19
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C>
3.4 SEC Filings; Baan Financial Statements....................... 20
3.5 Absence of Certain Changes or Events......................... 21
3.6 Statements; Proxy Statement/Prospectus....................... 21
ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME......................... 21
4.1 Conduct of Business by Aurum and Baan........................ 21
4.2 Certain Actions by Aurum..................................... 21
4.3 Baan Acquisitions............................................ 23
4.4 No HSR Violation............................................. 24
ARTICLE V ADDITIONAL AGREEMENTS........................................ 24
5.1 Proxy Statement/Prospectus; Registration Statement; Other
Filings; Board Recommendations............................... 24
5.2 Meeting of Stockholders...................................... 25
5.3 Confidentiality; Access to Information....................... 25
5.4 No Solicitation.............................................. 25
5.5 Public Disclosure............................................ 27
5.6 Legal Requirements........................................... 27
5.7 Third Party Consents......................................... 27
5.8 Notification of Certain Matters.............................. 27
5.9 Best Efforts and Further Assurances.......................... 28
5.10 Stock Options and Employee Stock Purchase Plan............... 28
5.11 Form S-8..................................................... 29
5.12 Indemnification.............................................. 29
5.13 NMS and Amsterdam Exchanges Listing.......................... 30
5.14 Aurum Affiliate Agreement.................................... 30
5.15 Regulatory Filings; Reasonable Efforts....................... 30
5.16 Tax-Free Reorganization...................................... 30
5.17 Aurum Rights Plan............................................ 30
5.18 Comfort Letter............................................... 31
5.19 Employee Benefit Schedules................................... 31
5.20 Employee Matters............................................. 31
ARTICLE VI CONDITIONS TO THE MERGER.................................... 32
6.1 Conditions to Obligations of Each Party to Effect the Merger. 32
6.2 Additional Conditions to Obligations of Aurum................ 32
6.3 Additional Conditions to the Obligations of Baan and Merger
Sub.......................................................... 33
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER.......................... 34
7.1 Termination.................................................. 34
</TABLE>
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<PAGE>
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
7.2 Notice of Termination; Effect of Termination................. 35
7.3 Fees and Expenses............................................ 36
7.4 Amendment.................................................... 36
7.5 Extension; Waiver............................................ 36
ARTICLE VIII GENERAL PROVISIONS........................................ 36
8.1 Non-Survival of Representations and Warranties............... 36
8.2 Notices...................................................... 37
8.3 Interpretation; Knowledge.................................... 38
8.4 Counterparts................................................. 38
8.5 Entire Agreement; Third Party Beneficiaries.................. 38
8.6 Severability................................................. 39
8.7 Other Remedies; Specific Performance......................... 39
8.8 Governing Law................................................ 39
8.9 Rules of Construction........................................ 39
8.10 Assignment................................................... 39
8.11 WAIVER OF JURY TRIAL......................................... 40
</TABLE>
-iii-
<PAGE>
INDEX OF EXHIBITS
Exhibit A Form of Aurum Software Voting Agreement
Exhibit B Form of Aurum Software Stock Option Agreement
Exhibit C Form of Aurum Software Affiliate Agreement
Exhibit D-1 Form of Employment Agreement
Exhibit D-2 Form of Non-Competition Agreement
-iv-
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (the "AGREEMENT") is made and
entered into as of May 13, 1997, among Baan Company, N.V. a corporation
organized under the laws of The Netherlands ("BAAN"), Green Software Acquisition
Corporation, a Delaware corporation and a wholly-owned subsidiary of Baan
("MERGER SUB"), and Aurum Software, Inc., a Delaware corporation ("AURUM").
RECITALS
--------
A. Upon the terms and subject to the conditions of this Agreement (as
defined in Section 1.2 below), Baan and Aurum intend to enter into a business
combination transaction.
B. The Board of Directors of Aurum has unanimously (i) determined that
the Merger (as defined in Section 1.1) is consistent with and in furtherance of
the long-term business strategy of Aurum and fair to, and in the best interests
of, Aurum and its stockholders, (ii) approved this Agreement, the Merger and the
other transactions contemplated by this Agreement and (iii) determined to
recommend that the stockholders of Aurum adopt and approve this Agreement and
approve the Merger.
C. Concurrently with the execution of this Agreement, and as a condition
and inducement to Baan's willingness to enter into this Agreement, certain
affiliates of Aurum specified on Schedule I to the form of Voting Agreement
attached hereto as Exhibit A shall enter into Voting Agreements in substantially
---------
such form (the "AURUM VOTING AGREEMENTS").
D. Concurrently with the execution of this Agreement, and as a condition
and inducement to Baan's willingness to enter into this Agreement, Aurum shall
execute and deliver a Stock Option Agreement in favor of Baan in substantially
the form attached hereto as Exhibit B (the "AURUM STOCK OPTION AGREEMENT"). The
---------
Board of Directors of Aurum has approved the Aurum Stock Option Agreement.
E. Concurrently with the execution of this Agreement, and as a condition
and inducement to Baan's willingness to enter into this Agreement, certain
officers of Aurum shall execute and deliver Employment and Non-Competition
Agreements in favor of Aurum following the Merger.
F. The parties intend, by executing this Agreement, to adopt a plan of
reorganization within the meaning of Section 368 of the Internal Revenue Code of
1986, as amended (the "CODE").
G. It is also intended by the parties hereto that the Merger shall
qualify for accounting treatment as a pooling of interests.
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
<PAGE>
ARTICLE I
THE MERGER
1.1 The Merger. At the Effective Time (as defined in Section 1.2) and
----------
subject to and upon the terms and conditions of this Agreement and the
applicable provisions of the Delaware General Corporation Law ("Delaware Law"),
Merger Sub shall be merged with and into Aurum (the "MERGER"), the separate
corporate existence of Merger Sub shall cease and Aurum shall continue as the
surviving corporation. Aurum as the surviving corporation after the Merger is
hereinafter sometimes referred to as the "SURVIVING CORPORATION."
1.2 Effective Time; Closing. Subject to the provisions of this Agreement,
-----------------------
the parties hereto shall cause the Merger to be consummated by filing a
Certificate of Merger with the Secretary of State of the State of Delaware in
accordance with the relevant provisions of Delaware Law (the "CERTIFICATE OF
MERGER") (the time of such filing (or such later time as may be agreed in
writing by the parties and specified in the Certificate of Merger) being the
"EFFECTIVE TIME") as soon as practicable on or after the Closing Date (as herein
defined). Unless the context otherwise requires, the term "AGREEMENT" as used
herein refers collectively to this Agreement and Plan of Reorganization and the
Certificate of Merger. The closing of the Merger (the "CLOSING") shall take
place at the offices of Wilson Sonsini Goodrich & Rosati, Professional
Corporation, at a time and date to be specified by the parties, which shall be
no later than the second business day after the satisfaction or waiver of the
conditions set forth in Article VI, or at such other time, date and location as
the parties hereto agree in writing (the "CLOSING DATE").
1.3 Effect of the Merger. At the Effective Time, the effect of the Merger
--------------------
shall be as provided in this Agreement and the applicable provisions of Delaware
Law. Without limiting the generality of the foregoing, and subject thereto, at
the Effective Time all the property, rights, privileges, powers and franchises
of Aurum and Merger Sub shall vest in the Surviving Corporation, and all debts,
liabilities and duties of Aurum and Merger Sub shall become the debts,
liabilities and duties of the Surviving Corporation.
1.4 Certificate of Incorporation; Bylaws.
------------------------------------
(a) At the Effective Time, the Certificate of Incorporation of Merger
Sub, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided by law and such Certificate of Incorporation of the
Surviving Corporation; provided, however, that at the Effective Time the
-------- -------
Certificate of Incorporation of the Surviving Corporation shall be amended so
that the name of the Surviving Corporation shall be the name of Aurum prior to
the Merger.
(b) The Bylaws of Merger Sub, as in effect immediately prior to the
Effective Time, shall be, at the Effective Time, the Bylaws of the Surviving
Corporation until thereafter amended.
1.5 Directors and Officers. The initial directors of the Surviving
----------------------
Corporation shall be the directors of Merger Sub immediately prior to the
Effective Time, until their respective successors are duly
-2-
<PAGE>
elected or appointed and qualified. The initial officers of the Surviving
Corporation shall be the officers of Aurum immediately prior to the Effective
Time, until their respective successors are duly appointed.
1.6 Effect on Capital Stock. At the Effective Time, by virtue of the
-----------------------
Merger and without any action on the part of Merger Sub, Aurum or the holders of
any of the following securities:
(a) Transfer of Aurum Common Stock. (i) Each share of Common Stock,
------------------------------
$.001 par value, of Aurum (the "AURUM COMMON STOCK") issued and outstanding
immediately prior to the Effective Time, (other than any shares of Aurum Common
Stock to be transferred to Baan pursuant to Section 1.6(b)) will be
automatically assigned and transferred to Baan at the Effective Time without any
further action required on the part of Aurum or the individual shareholders of
Aurum or Baan, and in exchange therefor the holders of such shares of Aurum
Common Stock will be entitled to receive (subject to Sections 1.6(e) and (f)) a
number of Baan Common Shares (the "BAAN COMMON SHARES") equal to the Exchange
Ratio (as defined herein) upon surrender of the certificate representing such
share of Aurum Common Stock in the manner provided in Section 1.8. The
"EXCHANGE RATIO" is equal to a fraction the numerator of which is $21.00
(appropriately adjusted for any Aurum Recapitalization, as defined herein) and
the denominator of which is $59.00 (appropriately adjusted for any Baan
Recapitalization, as defined herein), subject to adjustment as provided in
paragraphs (ii), (iii) and (iv) below. Notwithstanding any failure of any
holder of Aurum Common Stock to surrender the certificate representing such
shares for exchange in the manner provided in Section 1.8, immediately following
the Effective Time Aurum shall be entitled to effect a transfer to Baan, on the
books, records and stock ledger of Aurum, of all shares of Common Stock of Aurum
issued and outstanding immediately prior to the Effective Time, and in
connection therewith to cancel on such books, records and ledger all
certificates theretofore representing such shares and to issue a new certificate
or certificates therefor in the name of and to Baan.
(ii) Notwithstanding the foregoing, if the average closing price per
share of the Baan Common Shares on the Nasdaq National Market over the ten
consecutive trading days ending on the trading day immediately preceding the
Closing Date (the "BAAN STOCK VALUE") is less than $50.00 and more than $40.00
per share (in each case, as appropriately adjusted for any Baan
Recapitalization) the Exchange Ratio shall be equal to the product of (i) a
fraction, the numerator of which is $21.00 (appropriately adjusted for any Aurum
Recapitalization) and the denominator of which is $59.00 (appropriately adjusted
for any Baan Recapitalization) and (ii) a fraction, the numerator of which is
$50.00 (appropriately adjusted for any Baan Recapitalization) and the
denominator of which shall be the Baan Stock Value.
(iii) Further notwithstanding the foregoing, if the Baan Stock Value
(calculated with reference to the scheduled Closing Date) is $40.00 or less per
share (appropriately adjusted for any Baan Recapitalization), the Exchange Ratio
shall be equal to 0.4449152542 (appropriately adjusted for any Aurum
Recapitalization or Baan Recapitalization).
(iv) A "AURUM RECAPITALIZATION" shall mean any stock split, reverse
stock split, stock dividend (including any dividend or distribution of
securities convertible into Aurum Common Stock), reorganization,
recapitalization or other like change with respect to Aurum Common Stock
occurring after the date hereof and prior to the Effective Time. A "BAAN
RECAPITALIZATION" shall mean any stock split, reverse stock split, stock
dividend (including any dividend or distribution of securities convertible
-3-
<PAGE>
into Baan Common Shares), reorganization, recapitalization or other like change
with respect to Baan Common Shares occurring after the date hereof and prior to
the Effective Time.
(b) Transfer of Baan-Owned Stock. Each share of Aurum Common Stock
----------------------------
held by Aurum or owned by Merger Sub, Baan or any direct or indirect wholly
owned subsidiary of Aurum or of Baan immediately prior to the Effective Time
shall be transferred to Baan.
(c) Stock Options. At the Effective Time, all options to purchase
-------------
Aurum Common Stock then outstanding under Aurum's 1995 Stock Option Plan, and
1996 Director Stock Option Plan (collectively, the "AURUM STOCK OPTION PLANS")
shall be assumed by Baan in accordance with Section 5.10 hereof or at Baan's
discretion otherwise substituted in a manner consistent with applicable laws.
At the Effective Time, in accordance with the terms of Aurum's Employee Stock
Purchase Plan (the "Aurum Employee Stock Purchase Plan"), all rights to purchase
shares of Aurum Common Stock under the Aurum Employee Stock Purchase Plan shall
be treated as set forth in Section 18 of the Aurum Employee Stock Purchase Plan.
(d) Capital Stock of Merger Sub. Pursuant to the Merger, each share
---------------------------
of Common Stock, $0.001, of Merger Sub (the "MERGER SUB COMMON STOCK") issued
and outstanding immediately prior to the Effective Time shall be converted into
and exchanged for one validly issued, fully paid and nonassessable share of
Common Stock of the Surviving Corporation. Each stock certificate of Merger Sub
evidencing ownership of any such shares shall continue to evidence ownership of
such shares of capital stock of the Surviving Corporation.
(e) Fractional Shares. No fraction of a share of Baan Common Shares
-----------------
will be issued by virtue of the Merger, but in lieu thereof each holder of
shares of Aurum Common Stock who would otherwise be entitled to a fraction of a
share of Baan Common Shares (after aggregating all fractional shares of Baan
Common Shares to be received by such holder) shall receive from Baan an amount
of cash (rounded to the nearest whole cent) equal to the product of (i) such
fraction, multiplied by (ii) the average closing price of one share of Baan
Common Shares for the five (5) most recent days that Baan Common Shares has
traded ending on the trading day immediately prior to the Effective Time, as
reported on the Nasdaq National Market.
1.7 Unvested Aurum Common Stock. To the extent that shares of Aurum
---------------------------
Common Stock issued prior to the Merger are subject to vesting arrangements
under which shares that are unvested as of a date of termination of employment
would be subject to repurchase by Aurum, Baan shall issue Baan Common Shares,
which upon issuance, will be subject to equivalent contractual vesting and
repurchase provisions on the same schedules and subject to the same terms,
shares to be repurchased and the repurchase price thereof shall be adjusted as
provided in Section 1.6(c).
1.8 Surrender of Certificates.
-------------------------
(a) Exchange Agent. Prior to the Effective Time, Baan shall select a
--------------
bank or trust company in New York with assets of not less than $500 million to
act as the exchange agent (the "EXCHANGE AGENT") in the Merger.
-4-
<PAGE>
(b) Baan to Provide Common Stock. Promptly after the Effective Time,
----------------------------
Baan shall make available to the Exchange Agent for the benefit of the Aurum
shareholders the aggregate number of Baan Common Shares issuable pursuant to
Section 1.6 in exchange for outstanding shares of Aurum Common Stock, and cash
in an amount sufficient for payment in lieu of fractional shares pursuant to
Section 1.6(f) and any dividends or distributions to which holders of shares of
Aurum Common Stock may be entitled pursuant to Section 1.8(d).
(c) Exchange Procedures. Promptly after the Effective Time, Baan
-------------------
shall cause the Exchange Agent to mail to each holder of record (as of the
Effective Time) of a certificate or certificates (the "CERTIFICATES"), which
immediately prior to the Effective Time represented outstanding shares of Aurum
Common Stock which, pursuant to the Merger, were exchanged for Baan Common
Shares pursuant to Section 1.6, cash in lieu of any fractional shares pursuant
to Section 1.6(f) and any dividends or other distributions pursuant to Section
1.8(d), (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 Baan may reasonably specify) and (ii) instructions
for use in effecting the surrender of the Certificates in exchange for
certificates representing shares of Baan Common Shares, cash in lieu of any
fractional shares pursuant to Section 1.6(f) and any dividends or other
distributions pursuant to Section 1.8(d). Upon surrender of Certificates for
cancellation to the Exchange Agent or to such other agent or agents as may be
appointed by Baan, together with such letter of transmittal, duly completed and
validly executed in accordance with the instructions thereto, the holders of
such Certificates shall be entitled to receive in exchange therefor certificates
representing the number of whole shares of Baan Common Shares, payment in lieu
of fractional shares which such holders have the right to receive pursuant to
Section 1.6(f) and any dividends or distributions payable pursuant to Section
1.8(d), and the Certificates so surrendered shall forthwith be transferred to
Baan. Until so surrendered, each outstanding Certificate that, prior to the
Effective Time, represented shares of Aurum Common Stock, will be deemed from
and after the Effective Time, for all corporate purposes to represent solely (i)
the right to receive upon the surrender thereof the number of full shares of
Baan Common Shares for which such shares of Aurum Common Stock shall have been
so exchanged and (ii) the right to receive an amount in cash in lieu of the
issuance of any fractional shares in accordance with Section 1.6(f) and any
dividends or distributions payable pursuant to Section 1.8(d).
(d) Distributions With Respect to Unexchanged Shares. No dividends or
------------------------------------------------
other distributions declared or made after the date of this Agreement with
respect to Baan Common Shares with a record date after the Effective Time will
be paid to the holders of any unsurrendered Certificate with respect to the
shares of Baan Common Shares represented thereby until the holder of record of
such Certificate shall surrender such Certificate pursuant to Section 1.8(c).
Subject to applicable law, following surrender of any such Certificate, the
Exchange Agent shall deliver to the record holder thereof, without interest, a
certificate representing whole shares of Baan Common Shares issued in exchange
therefor along with payment in lieu of fractional shares pursuant to Section
1.6(f) hereof and the amount of any such dividends or other distributions with a
record date after the Effective Time payable with respect to each whole share of
Baan Common Shares represented by such Certificate.
(e) Transfers of Ownership. If Certificates for shares of Baan Common
----------------------
Shares are to be issued in a name other than that in which the Certificate
surrendered in exchange therefor is
-5-
<PAGE>
registered, it will be a condition of the issuance thereof that the Certificate
so surrendered will be properly endorsed and otherwise in proper form for
transfer and that the persons requesting such exchange will have paid to Baan or
any agent designated by it any transfer or other taxes required by reason of the
issuance of certificates for shares of Baan Common Shares in any name other than
that of the registered holder of the Certificate so surrendered, or established
to the satisfaction of Baan or any agent designated by it that such tax has been
paid or is not payable.
(f) No Liability. Notwithstanding anything to the contrary in this
------------
Section 1.8, neither the Exchange Agent, Baan, the Surviving Corporation nor any
party hereto shall be liable to a holder of shares of Baan Common Shares or
Aurum Common Stock for any amount properly paid to a public official pursuant to
any applicable abandoned property, escheat or similar law.
1.9 No Further Ownership Rights in Aurum Common Stock. All shares of
-------------------------------------------------
Baan Common Shares to be issued pursuant to the Merger in exchange of shares of
Aurum Common Stock in accordance with the terms hereof (including any cash paid
in respect thereof pursuant to Section 1.6(f) and 1.8(d)) shall be deemed to
have been issued in full satisfaction of all rights pertaining to such shares of
Aurum Common Stock, and there shall be no further registration of transfers on
the records of the Surviving Corporation of shares of Aurum Common Stock which
were outstanding immediately prior to the Effective Time. If after the Effective
Time Certificates are presented to the Surviving Corporation for any reason,
they shall be transferred to Baan.
1.10 Lost, Stolen or Destroyed Certificates. In the event any certificate
--------------------------------------
evidencing shares of Aurum Common Stock shall have been lost, stolen or
destroyed, the Exchange Agent shall issue in exchange for such lost, stolen or
destroyed certificate, upon the making of an affidavit of that fact by the
holder thereof, such shares of Baan Common Shares, cash for fractional shares,
if any, as may be required pursuant to Section 1.6(f) and any dividends or
distributions payable pursuant to Section 1.8(d); provided, however, that Baan
-------- -------
may, in its discretion and as a condition precedent to the issuance thereof,
require the owner of such lost, stolen or destroyed Certificate to deliver a
bond in such sum as it may reasonably direct as indemnity against any claim that
may be made against Baan, Aurum or the Exchange Agent with respect to the
Certificate alleged to have been lost, stolen or destroyed.
1.11 Tax and Accounting Consequences.
-------------------------------
(a) It is intended by the parties hereto that the Merger shall
constitute a reorganization within the meaning of Section 368 of the Code. The
parties hereto adopt this Agreement as a "plan of reorganization" within the
meaning of Sections 1.368-2(g) and 1.368-3(a) of the United States Income Tax
Regulations.
(b) It is intended by the parties hereto that the Merger shall qualify
for accounting treatment as a pooling of interests.
1.12 Taking of Necessary Action; Further Action. If, at any time after
------------------------------------------
the Effective Time, any further action is necessary or desirable to carry out
the purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of Aurum and Merger Sub, the officers and directors of Aurum and
Merger Sub are fully
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authorized in the name of their respective corporations or otherwise to take,
and will take, all such lawful and necessary action.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF AURUM
Aurum represents and warrants to Baan and Merger Sub, subject to the
exceptions specifically disclosed in writing in the disclosure letter
(referencing specific representations) supplied by Aurum to Baan dated as of the
date hereof and certified by a duly authorized officer of Aurum (the "AURUM
SCHEDULES"), as follows:
2.1 Organization of Aurum.
---------------------
(a) Aurum and each of its subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation; has the corporate power and authority to own,
lease and operate its assets and property and to carry on its business as now
being conducted and as proposed to be conducted; and is duly qualified or
licensed to do business and is in good standing in each jurisdiction where the
character of the properties owned, leased or operated by it or the nature of its
activities makes such qualification or licensing necessary, except where the
failure to be so qualified would not have a Material Adverse Effect (as defined
below) on Aurum.
(b) Aurum has delivered to Baan a true and complete list of all of
Aurum's subsidiaries, indicating the jurisdiction of incorporation of each
subsidiary and Aurum's equity interest therein. All of the outstanding shares
of capital stock of each subsidiary of Aurum is owned by Aurum, and no third
party has any option, warrant or other right to acquire any shares of capital
stock of any such subsidiary.
(c) Aurum has delivered or made available to Baan a true and correct
copy of the Certificate of Incorporation and Bylaws of Aurum and similar
governing instruments of each of its subsidiaries, each as amended to date, and
each such instrument is in full force and effect. Neither Aurum nor any of its
subsidiaries is in violation of any of the provisions of its Certificate of
Incorporation or Bylaws or equivalent governing instruments.
(d) When used in connection with Aurum, the term "MATERIAL ADVERSE
EFFECT" means, for purposes of this Agreement, any change, event or effect that
is or reasonably likely could be materially adverse to the current or continuing
business, assets (including intangible assets), financial condition or results
of operations of Aurum and its subsidiaries taken as a whole; provided, however,
-------- -------
that, from and after the date of the public announcement of this Agreement, the
cancellation, termination or nonrenewal of arrangements with Aurum by suppliers,
distributors or customers of Aurum or the loss of key employees (other than
those key employees who have entered into signed employment agreements with Baan
as of the date of this Agreement or pursuant to Section 6.3(d)), or the
termination of negotiations or delays in ordering by prospective customers of
Aurum, and in each such case the resultant financial effects shall not be taken
into account in determining whether there shall have occurred a
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<PAGE>
"Material Adverse Effect" on or with respect to Aurum and its subsidiaries taken
as a whole to the extent (but only to the extent) such supplier, distributor,
customer, prospective customer or employee circumstances may reasonably be
attributed to the adverse reaction by suppliers, distributors, customers or
employees to the transactions contemplated by this Agreement (including the
adverse or potentially adverse impact on suppliers, distributors, customers,
prospective customers or employees that may result from uncertainties that may
be perceived as a result of such transactions).
2.2 Aurum Capital Structure. The authorized capital stock of Aurum
-----------------------
consists of 25,000,000 shares of Common Stock, $.001 par value, of which there
were approximately 11,665,801 shares issued and outstanding as of May 12, 1997
and 5,000,000 shares of Preferred Stock, $.001 par value, of which no shares are
issued or outstanding. All outstanding shares of Aurum Common Stock are duly
authorized, validly issued, fully paid and nonassessable and are not subject to
preemptive rights created by statute, the Certificate of Incorporation or Bylaws
of Aurum or any agreement or document to which Aurum is a party or by which it
is bound. All outstanding shares of Aurum Common Stock were issued in
compliance with all applicable federal and state securities laws, except any
noncompliance which would not have a Material Adverse Effect on Aurum. As of
April 30, 1997, Aurum had reserved an aggregate of 1,432,821 shares of Aurum
Common Stock, net of exercises, for issuance to employees, consultants and non-
employee directors pursuant to the Aurum Stock Option Plans. Aurum will update
the Aurum Schedules to reflect outstanding shares and options as of the
Effective Time. As of April 30, 1997, there were options outstanding to
purchase an aggregate of 1,314,663 shares of Common Stock, issued to employees,
consultants and non-employee directors pursuant to the Aurum Stock Option Plans.
Since April 30, 1997, all option grants have been made consistent with past
practices and in accordance with the Aurum Stock Option Plan and Aurum's option
grant guidelines. Aurum will update the Aurum Schedules to reflect outstanding
shares and options as of the Effective Time. All shares of Aurum Common Stock
subject to issuance as aforesaid, upon issuance on the terms and conditions
specified in the instruments pursuant to which they are issuable, would be duly
authorized, validly issued, fully paid and nonassessable. The Aurum Schedules
list as of April 30, 1997, the name of the holder of such option, the exercise
price of such option, the number of shares as to which such option will have
vested at such date, the vesting schedule for such option and whether the
exercisability of such option will be accelerated in any way by the transactions
contemplated by this Agreement, and indicate the extent of acceleration, if any.
As of April 30, 1997, there were 136 participants in the Aurum 1996 Employee
Stock Purchase Plan.
2.3 Obligations With Respect to Capital Stock. Except as set forth in
-----------------------------------------
Section 2.2, there are no equity securities, partnership interests or similar
ownership interests of any class of Aurum, or any securities exchangeable or
convertible into or exercisable for such equity securities, partnership
interests or similar ownership interests, issued, reserved for issuance or
outstanding. Except for securities Aurum owns, directly or indirectly through
one or more subsidiaries, there are no equity securities, partnership interests
or similar ownership interests of any class of any subsidiary of Aurum, or any
security exchangeable or convertible into or exercisable for such equity
securities, partnership interests or similar ownership interests, issued,
reserved for issuance or outstanding. Except as set forth in Section 2.2, there
are no options, warrants, equity securities, partnership interests or similar
ownership interests, calls, rights (including preemptive rights), commitments or
agreements of any character to which Aurum or any of its subsidiaries is a party
or by which it is bound obligating Aurum or any of its subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold, or repurchase, redeem
or otherwise acquire, or
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<PAGE>
cause the repurchase, redemption or acquisition, of any shares of capital stock,
partnership interests or similar ownership interests of Aurum or any of its
subsidiaries or obligating Aurum or any of its subsidiaries to grant, extend,
accelerate the vesting of or enter into any such option, warrant, equity
security, call, right, commitment or agreement. There are no registration rights
and, to the knowledge of Aurum, with the exception of the Aurum Voting
Agreements to be entered into hereunder, there are no voting trusts, proxies or
other agreements or understandings with respect to any equity security of any
class of Aurum or with respect to any equity security, partnership interest or
similar ownership interest of any class of any of its subsidiaries. Stockholders
of Aurum are not entitled to dissenters rights under applicable state law.
2.4 Authority.
---------
(a) Aurum has all requisite corporate power and authority to enter
into this Agreement and the Aurum Stock Option Agreement and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby, and
the execution and delivery of the Aurum Stock Option Agreement and the
consummation of the transactions contemplated thereby, have been duly authorized
by all necessary corporate action on the part of Aurum, subject only to the
approval and adoption of this Agreement and the approval of the Merger by
Aurum's stockholders and the filing and recordation of the Certificate of Merger
pursuant to Delaware Law. A vote of the holders of at least a majority of the
outstanding shares of the Aurum Common Stock is necessary and sufficient for
Aurum's stockholders to approve and adopt this Agreement and approve the Merger.
This Agreement and the Aurum Stock Option Agreement have been duly executed and
delivered by Aurum and, assuming the due authorization, execution and delivery
by Baan and, if applicable, Merger Sub, constitute valid and binding obligations
of Aurum, enforceable in accordance with their respective terms, except as
enforceability may be limited by bankruptcy and other similar laws and general
principles of equity. The execution and delivery of this Agreement and the
Aurum Stock Option Agreement by Aurum do not, and the performance of this
Agreement and the Aurum Stock Option Agreement by Aurum will not, (i) conflict
with or violate the Certificate of Incorporation or Bylaws of Aurum or the
equivalent organizational documents of any of its subsidiaries, (ii) subject to
obtaining the approval and adoption of this Agreement and the approval of the
Merger by Aurum's stockholders as contemplated by Section 5.2 and compliance
with the requirements set forth in Section 2.4(b) below, conflict with or
violate any law, rule, regulation, order, judgment or decree applicable to Aurum
or any of its subsidiaries or by which its or any of their respective properties
is bound or affected, or (iii) result in any breach of or constitute a default
(or an event that with notice or lapse of time or both would become a default)
under, or impair Aurum's rights or alter the rights or obligations of any third
party under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or
encumbrance on any of the properties or assets of Aurum or any of its
subsidiaries pursuant to, any material note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which Aurum or any of its subsidiaries is a party or by which
Aurum or any of its subsidiaries or its or any of their respective properties
are bound or affected, except with respect to clause (iii) for any such
conflicts, violations, defaults or other occurrences that would not have a
Material Adverse Effect on Aurum. The Aurum Schedules list all material
consents, waivers and approvals under any of Aurum's or any of its subsidiaries'
agreements, contracts, licenses or leases required to be obtained in connection
with the consummation of the transactions contemplated hereby.
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<PAGE>
(b) No consent, approval, order or authorization of, or registration,
declaration or filing with any court, administrative agency or commission or
other governmental authority or instrumentality, foreign or domestic
("GOVERNMENTAL ENTITY"), is required by or with respect to Aurum in connection
with the execution and delivery of this Agreement and the Aurum Stock Option
Agreement or the consummation of the Merger, except for (i) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware and
appropriate documents with the relevant authorities of other states in which
Aurum is qualified to do business, (ii) the filing of the Proxy Statement (as
defined in Section 2.19) with the Securities and Exchange Commission ("SEC") in
accordance with the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT") and any clearance thereof by the SEC, (iii) such consents, approvals,
orders, authorizations, registrations, declarations and filings as may be
required under applicable federal, foreign state securities (or related) laws
and the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR ACT"), and the securities or antitrust laws of any foreign country, and
(iv) such other consents, authorizations, filings, approvals and registrations
which if not obtained or made would not be material to Aurum or Baan or have a
material adverse effect on the ability of the parties to consummate the Merger.
2.5 SEC Filings; Aurum Financial Statements.
---------------------------------------
(a) Aurum has filed all forms, reports and documents required to be
filed with the SEC since October 28, 1996 and has made available to Baan such
forms, reports and documents in the form filed with the SEC. All such required
forms, reports and documents (including those that Aurum may file subsequent to
the date hereof) are referred to herein as the "AURUM SEC REPORTS." As of their
respective dates, or in the case of registrations statements, as of their
effective dates, the Aurum SEC Reports (i) were prepared in accordance with and
complied with the requirements of the Securities Act of 1933, as amended (the
"SECURITIES ACT"), or the Exchange Act, as the case may be, and the rules and
regulations of the SEC thereunder applicable to such Aurum SEC Reports and (ii)
did not at the time they were filed or, in the case of registrations statements,
become effective (or if amended or superseded by a filing prior to the date of
this Agreement, then on the date of such filing) contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. None of Aurum's
subsidiaries is required to file any forms, reports or other documents with the
SEC.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the Aurum SEC Reports (the "AURUM
FINANCIALS"), including any Aurum SEC Report filed after the date hereof until
the Closing, (x) complied as to form in all material respects with the published
rules and regulations of the SEC with respect thereto, (y) was prepared in
accordance with generally accepted accounting principles ("GAAP") applied on a
consistent basis throughout the periods involved (except as may be indicated in
the notes thereto) and (z) fairly presented the consolidated financial position
of Aurum and its subsidiaries as at the respective dates thereof and the
consolidated results of Aurum's operations and cash flows for the periods
indicated, except that the unaudited interim financial statements were or are
subject to normal and recurring year-end adjustments. The balance sheet of Aurum
contained in Aurum SEC Reports as of December 31, 1996 is hereinafter referred
to as the "AURUM BALANCE SHEET." Neither Aurum nor any of its subsidiaries has
any liabilities (absolute, accrued, contingent or otherwise) of a nature
required to be disclosed on a balance sheet or
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<PAGE>
in the related notes to the consolidated financial statements prepared in
accordance with GAAP which are, individually or in the aggregate, material to
the business, results of operations or financial condition of Aurum and its
subsidiaries taken as a whole, except liabilities (i) provided for in the Aurum
Balance Sheet or the Aurum Financials and the footnotes thereto, or (ii)
incurred since the date of the Aurum Balance Sheet in the ordinary course of
business consistent with past practices and in an aggregate amount not in excess
of $5,000,000.
(c) Aurum has heretofore furnished to Baan a complete and correct copy
of any amendments or modifications, which have not yet been filed with the SEC
but which are required to be filed, to agreements, documents or other
instruments which previously had been filed by Aurum with the SEC pursuant to
the Securities Act or the Exchange Act.
2.6 Absence of Certain Changes or Events. Since the date of the Aurum
------------------------------------
Balance Sheet, Aurum has conducted its business in the ordinary course
consistent with past practice and there has not occurred: (i) any Material
Adverse Effect to Aurum; (ii) any acquisition, sale or transfer of any material
asset of Aurum or any of its subsidiaries other than in the ordinary course of
business and consistent with past practice; (iii) any material change in
accounting methods or practices (including any change in depreciation or
amortization policies or rates) by Aurum or any material revaluation by Aurum of
any of its or any of its subsidiaries' assets, except as required by concurrent
changes in GAAP; (iv) any declaration, setting aside, or payment of a dividend
or other distribution with respect to the shares of Aurum, or any direct or
indirect redemption, purchase or other acquisition by Aurum of any of its shares
of capital stock, except for the repurchase at cost of unvested shares held by
Aurum employees on the termination of their employment; (v) any material
contract entered into by Aurum or any of its subsidiaries, other than in the
ordinary course of business and as provided to Baan, or any material amendment
or termination of, or default under, any material contract to which Aurum or any
of its subsidiaries is a party or by which it is bound which would result in a
Material Adverse Effect on Aurum; or (vi) any negotiation or agreement by Aurum
or any of its subsidiaries to do any of the things described in the preceding
clauses (i) through (v) (other than negotiations with Baan and its
representatives regarding the transactions contemplated by this Agreement).
2.7 Taxes.
-----
Aurum and each of its subsidiaries, and any consolidated, combined,
unitary or aggregate group for Tax (as defined below) purposes of which Aurum or
any of its subsidiaries is or has been a member, has timely filed all Returns
(as defined below) required to be filed by it (other than those that are not,
individually or in the aggregate, material), has paid all Taxes shown thereon to
be due and has provided adequate accruals in all material respects in accordance
with GAAP in its financial statements for any Taxes that have not been paid,
whether or not shown as being due on any returns. In addition, (i) no material
claim for unpaid Taxes has become a lien against the property of Aurum or any of
its subsidiaries or is being asserted against Aurum or any of its subsidiaries,
(ii) no audit of any Tax Return of Aurum or any of its subsidiaries is being
conducted by a Tax authority (A) as of the date of this Agreement and (B) which,
as of the Closing Date, has had and could reasonably be expected to have a
Material Adverse Effect on Aurum and its subsidiaries, (iii) no extension of the
statute of limitations on the assessment of any Taxes has been granted by Aurum
or any of its subsidiaries and is currently in effect (A) as of the date of this
Agreement and (B) which, as of the Closing Date, has had and could reasonably
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be expected to have a Material Adverse Effect on Aurum and its subsidiaries and
(iv) there is no agreement, contract or arrangement to which Aurum or any of its
subsidiaries is a party that may result in the payment of any amount that would
not be deductible pursuant to Sections 280G, 162 or 404 of the Code. As used
herein, "TAXES" shall mean all taxes of any kind, including, without limitation,
those on or measured by or referred to as income, gross receipts, sales, use, ad
valorem, franchise, profits, license, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, value added, property or windfall profits
taxes, customs, duties or similar fees, assessments or charges of any kind
whatsoever, together with any interest and any penalties, additions to tax or
additional amounts imposed by any governmental authority, domestic or foreign.
As used herein, "RETURN" shall mean any return, report or statement required to
be filed with any governmental authority with respect to Taxes.
2.8 Title to Properties; Absence of Liens and Encumbrances.
------------------------------------------------------
(a) The Aurum Schedules list the real property owned by Aurum. The
Aurum Schedules list each real property lease with annual lease payments of
$100,000 or more to which Aurum is a party and each amendment thereto. All such
current leases are in full force and effect, are valid and effective in
accordance with their respective terms, and there is not, under any of such
leases, any existing default or event of default (or event which with notice or
lapse of time, or both, would constitute a default) that would give rise to a
claim in an amount greater than $100,000.
(b) Aurum has good and valid title to, or, in the case of leased
properties and assets, valid leasehold interests in, all of its tangible
properties and assets, real, personal and mixed, used or held for use in its
business, free and clear of any liens, pledges, charges, claims, security
interests or other encumbrances of any sort ("LIENS"), except as reflected in
the Aurum Financials, the Aurum SEC Reports or in the Aurum Schedules and
except for liens for taxes not yet due and payable or liens imposed by law and
incurred in the ordinary course of business for obligations not yet due to
carriers, warehousemen, laborers, materials men and the like and such
imperfections of title and encumbrances, if any, which are not material in
character, amount or extent, and which do not materially detract from the value,
or materially interfere with the present use, of the property subject thereto or
affected thereby.
2.9 Intellectual Property.
---------------------
(a) Aurum (including, for all purposes under this Section 2.9, all of
Aurum's subsidiaries) owns, or has a valid and perpetual license under, all
patents, trademarks, trade names, service marks, copyrights, any applications
for all of the foregoing, trade secrets and know-how that are required for the
conduct of business of Aurum (including, without limitation, the development,
production and marketing of Aurum's products) as currently conducted (the "AURUM
IP RIGHTS"), with sufficient rights for the conduct of Aurum's business as
currently conducted.
(b) Schedule 2.9(b) of the Aurum Schedules sets forth a complete list
of all patents, registered copyrights, registered trademarks, trade names and
service marks and any applications for all of the foregoing, included in Aurum
IP Rights, and specifies, where applicable, the jurisdictions in which each such
Aurum IP Right has been issued or registered or in which an application for such
issuance and registration has been filed, including the respective registration
or application numbers and the names of all registered owners. Schedule 2.9(b)
of Aurum Schedules sets forth the list of all material licenses,
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sublicenses and other agreements to which Aurum is a party (with subsidiaries
clearly identified) and pursuant to which Aurum or any other person is licensed
or otherwise has rights under any Aurum IP Right (excluding object code licenses
granted by Aurum to end-users in the ordinary course of business that permit use
of software products without a right to modify, distribute or sublicense the
same ("END-USER LICENSES") and excluding standard licenses granted to Aurum by
software vendors covering software which is broadly distributed by such
licensors). The execution and delivery of this Agreement by Aurum, and the
consummation of the transactions contemplated hereby, will neither cause Aurum
to be in material violation or default under any such license, sublicense or
other agreement, nor entitle any other party to any such license, sublicense or
agreement to terminate or modify such license, sublicense or agreement. Except
as set forth in Schedule 2.9(a) or 2.9(b) of the Aurum Schedules, Aurum (i) is
the sole and exclusive owner of, with all right, title and interest in and to
(free and clear of any liens or encumbrances), Aurum IP Rights, or (ii) is a
licensee under or otherwise possesses legally enforceable rights under the Aurum
IP Rights under valid and binding agreements listed in Schedule 2.9(b) of the
Aurum Schedules or excluded therefrom as permitted by this Section 2.9.
(c) No claims against Aurum, or to Aurum's knowledge, its licensors or
licensees with respect to Aurum IP Rights have been asserted or are, to Aurum's
knowledge, threatened by any person, nor to Aurum's knowledge, are there any
valid grounds for any claims, (i) to the effect that the manufacture, sale, use,
offer for sale, importation, reproduction, distribution or preparation of
derivative works of any of the products of Aurum infringes on any copyright,
patent issued at least 60 days prior to the date hereof, trademark, service
mark, trade secret or other proprietary right, (ii) against the manufacture,
sale, use, offer for sale, importation, reproduction, distribution or
preparation of derivative works by Aurum of any computer software programs and
applications and tangible or intangible proprietary information or material used
in Aurum's business as currently conducted or as currently proposed to be
conducted by Aurum, or (iii) challenging the ownership by Aurum, or the validity
or effectiveness of any, of Aurum IP Rights. To Aurum's knowledge, there is no
material unauthorized use, infringement or misappropriation under any Aurum IP
Rights by any third party, including any employee or former employee of Aurum.
To the knowledge of Aurum, no Aurum IP Right or product of Aurum is subject to
any outstanding decree, order, judgment, or stipulation restricting in any
manner the licensing thereof by or to Aurum. It is Aurum's policy to have each
employee, consultant or contractor of Aurum execute a proprietary information
and confidentiality agreement substantially in the form of Aurum's standard
forms of such agreement, and substantially all of Aurum's employees, consultants
and contractors have executed such an agreement. All computer software included
in Aurum's products (i) has been either created by employees of Aurum within the
scope of their employment or otherwise on a work-for-hire basis or by
consultants or contractors who have created such software themselves and have
assigned all right, title and interest they have in such software to Aurum or
(ii) is licensed to Aurum pursuant to valid and binding agreements.
(d) Aurum has taken reasonable and practicable steps designed to
safeguard and maintain the secrecy and confidentiality of, and its proprietary
rights in, all Aurum IP Rights and the intellectual property rights of third
parties entrusted to them.
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2.10 Compliance; Permits; Restrictions.
---------------------------------
(a) Except as disclosed in the Aurum SEC Reports filed prior to the
date hereof, neither Aurum nor any of its subsidiaries is, in any material
respect, in conflict with, or in default or violation of (i) to the knowledge of
Aurum, any law, rule, regulation, order, judgment or decree applicable to Aurum
or any of its subsidiaries or by which Aurum or any of its subsidiaries or any
of their respective properties is bound or affected, or (ii) any material note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Aurum or any of its
subsidiaries is a party or by which Aurum or any of its subsidiaries or its or
any of their respective properties is bound or affected. Except as disclosed in
the Aurum SEC Reports filed prior to the date hereof, to the knowledge of Aurum,
no investigation or review by any Governmental Entity is pending or threatened
against Aurum or any of its subsidiaries, nor has any Governmental Entity
indicated an intention to conduct the same, which investigation or review is
reasonably likely to have a Material Adverse Effect on Aurum. There is no
material agreement, judgment, injunction, order or decree binding upon Aurum or
any of its subsidiaries which has or could reasonably be expected to have the
effect of prohibiting or materially impairing any business practice of Aurum or
any of its subsidiaries, any acquisition of material property by Aurum or any of
its subsidiaries or the conduct of business by Aurum as currently conducted.
(b) Aurum and its subsidiaries hold all permits, licenses, variances,
exemptions, orders and approvals from governmental authorities that are material
to the operation of the business of Aurum (collectively, the "AURUM PERMITS").
Aurum and its subsidiaries are in compliance in all material respects with the
terms of the Aurum Permits.
2.11 Litigation. Except as disclosed in the Aurum SEC Reports filed prior
----------
to the date hereof, there is no action, suit, proceeding, claim, arbitration or
investigation pending, or as to which Aurum or any of its subsidiaries has
received any notice of assertion nor, to Aurum's knowledge, is there a
threatened action, suit, proceeding, claim, arbitration or investigation against
Aurum or any of its subsidiaries which is reasonably likely to have a Material
Adverse Effect on Aurum. Aurum is not aware of any basis for any action, suit,
proceeding, claim, arbitration or proceeding of the type described in the
preceding sentence, and Aurum has no knowledge of any unasserted claim, the
assertion of which is likely, and which, if asserted, will seek damages, an
injunction or other legal, equitable, monetary or nonmonetary relief, which
claim individually or collectively with other such unasserted claims if granted
would have a Material Adverse Effect on Aurum. To Aurum's knowledge, no
Governmental Entity has at any time challenged or questioned in writing the
legal right of Aurum to develop, offer or sell any of its products in the
present manner or style thereof.
2.12 Brokers' and Finders' Fees. Except for fees payable to Cowen &
--------------------------
Company pursuant to an engagement letter dated May 6, 1997, a copy of which has
been provided to Baan, Aurum has not incurred, nor will it incur, directly or
indirectly, any liability for brokerage or finders' fees or agents' commissions
or any similar charges in connection with this Agreement or any transaction
contemplated hereby.
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2.13 Employee Benefit Plans.
----------------------
(a) With respect to each material employee benefit plan, program,
arrangement and contract (including, without limitation, any "employee benefit
plan" as defined in Section 3(3) of ERISA) maintained or contributed to by Aurum
or any trade or business which is under common control with Aurum within the
meaning of Section 414 of the Code (the "AURUM EMPLOYEE PLANS"), Aurum has made
available or will make available by May 31, 1997 to Baan a true and complete
copy of, to the extent applicable, (i) such Aurum Employee Plan, (ii) the most
recent annual report (Form 5500), (iii) each trust agreement related to such
Aurum Employee Plan, (iv) the most recent summary plan description for each
Aurum Employee Plan for which such a description is required, (v) the most
recent actuarial report relating to any Aurum Employee Plan subject to Title IV
of ERISA and (vi) the most recent IRS determination letter issued with respect
to any Aurum Employee Plan.
(b) Each Aurum Employee Plan which is intended to be qualified under
Section 401(a) of the Code has received a favorable determination from the IRS
covering the provisions of the Tax Reform Act of 1986 stating that such Aurum
Employee Plan is so qualified and nothing has occurred since the date of such
letter that could reasonably be expected to affect the qualified status of such
plan. Each Aurum Employee Plan has been operated in all material respects in
accordance with its terms and the requirements of applicable law. Neither Aurum
nor any ERISA Affiliate of Aurum has incurred or is reasonably expected to incur
any material liability under Title IV of ERISA in connection with any Aurum
Employee Plan.
2.14 Employees; Labor Matters. Between January 1, 1996 and the date of this
------------------------
Agreement, to Aurum's knowledge, no employee of Aurum (i) has violated any
employment contract, patent disclosure agreement or non competition agreement
between such employee and any former employer of such employee due to such
employee being employed by Aurum and disclosing to Aurum trade secrets or
proprietary information of such employer or (ii) has given notice to Aurum, nor
is Aurum otherwise aware that any employee intends to terminate his or her
employment with Aurum except for terminations of a nature and number that are
consistent with Aurum's prior experience. To Aurum's knowledge, there are no
activities or proceedings of any labor union to organize any employees of Aurum
or any of its subsidiaries and there are no strikes, or material slowdowns, work
stoppages or lockouts, or threats thereof by or with respect to any employees of
Aurum or any of its subsidiaries. Aurum is not, and has never been, a party to
any collective bargaining agreement. Aurum and its subsidiaries are, and since
January 1, 1996, Aurum and its subsidiaries have been in compliance in all
material respects with all applicable laws regarding employment practices, terms
and conditions of employment, and wages and hours (including, without
limitation, ERISA, WARN or any similar state or local law).
2.15 Environmental Matters.
---------------------
(a) Hazardous Material. Except as would not reasonably be likely to
------------------
result in a material liability to Aurum, no underground storage tanks and no
amount of any substance that has been designated by any Governmental Entity or
by applicable federal, state or local law to be radioactive, toxic, hazardous or
otherwise a danger to health or the environment, including, without limitation,
PCBs, asbestos, petroleum, urea-formaldehyde and all substances listed as
hazardous substances pursuant to the
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Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended, or defined as a hazardous waste pursuant to the United States
Resource Conservation and Recovery Act of 1976, as amended, and the regulations
promulgated pursuant to said laws, (a "HAZARDOUS MATERIAL"), but excluding
office and janitorial supplies, are present, as a result of the actions of Aurum
or any of its subsidiaries or, to Aurum's knowledge, as a result of any actions
of any third party or otherwise, in, on or under any property, including the
land and the improvements, ground water and surface water thereof, that Aurum or
any of its subsidiaries has at any time owned, operated, occupied or leased.
(b) Hazardous Materials Activities. Except as would not reasonably be
------------------------------
likely to result in a material liability to Aurum, neither Aurum nor any of its
subsidiaries has transported, stored, used, manufactured, disposed of, released
or exposed its employees or others to Hazardous Materials in violation of any
law in effect on or before the Closing Date, nor has Aurum or any of its
subsidiaries disposed of, transported, sold, used, released, exposed its
employees or others to or manufactured any product containing a Hazardous
Material (collectively "HAZARDOUS MATERIALS ACTIVITIES") in violation of any
rule, regulation, treaty or statute promulgated by any Governmental Entity in
effect prior to or as of the date hereof to prohibit, regulate or control
Hazardous Materials or any Hazardous Material Activity.
(c) Permits. Aurum and its subsidiaries currently hold all
-------
environmental approvals, permits, licenses, clearances and consents (the "AURUM
ENVIRONMENTAL PERMITS") necessary for the conduct of Aurum's and its
subsidiaries' Hazardous Material Activities and other businesses of Aurum and
its subsidiaries as such activities and businesses are currently being
conducted.
(d) Environmental Liabilities. No material action, proceeding,
-------------------------
revocation proceeding, amendment procedure, writ, injunction or claim is
pending, or to Aurum's knowledge, threatened concerning any Aurum Environmental
Permit, Hazardous Material or any Hazardous Materials Activity of Aurum or any
of its subsidiaries. Aurum is not aware of any fact or circumstance which could
involve Aurum or any of its subsidiaries in any material environmental
litigation or impose upon Aurum any material environmental liability.
2.16 Agreements, Contracts and Commitments. Except as set forth in the
-------------------------------------
Aurum Schedules, neither Aurum nor any of its subsidiaries is a party to or is
bound by:
(a) any employment or consulting agreement, contract or commitment
with any officer or director level employee or member of Aurum's Board of
Directors, other than those that are terminable by Aurum 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 Aurum's or any of its subsidiaries' ability to terminate employees at
will;
(b) any agreement or plan, including without limitation any stock
option plan, stock appreciation right plan or stock purchase plan, any of the
benefits of which will be increased, or the vesting of benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be calculated on the
basis of any of the transactions contemplated by this Agreement;
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<PAGE>
(c) any agreement of indemnification or guaranty not entered into in
the ordinary course of business other than indemnification agreements between
Aurum or any of its subsidiaries and any of its officers or directors;
(d) any agreement, contract or commitment containing any covenant
limiting the freedom of Aurum or any of its subsidiaries to engage in any line
of business or compete with any person or granting any exclusive distribution
rights;
(e) any agreement, contract or commitment currently in force relating
to the disposition or acquisition of assets not in the ordinary course of
business or any ownership interest in any corporation, partnership, joint
venture or other business enterprise;
(f) any material joint marketing or development agreement;
(g) any agreement, contract or commitment currently in force to
provide or receive source code for any product, service or technology; or
(h) any agreement, contract or commitment currently in force to
license any third party to manufacture or reproduce any Aurum product, service
or technology except as a distributor in the normal course of business.
Neither Aurum nor any of its subsidiaries, nor to Aurum's knowledge any
other party to a Aurum Contract (as defined below), has breached, violated or
defaulted under, or received notice that it has breached violated or defaulted
under, any of the material terms or conditions of any of the agreements,
contracts or commitments to which Aurum or any of its subsidiaries is a party or
by which it is bound of the type described in clauses (a) through (h) above (any
such agreement, contract or commitment, a "AURUM CONTRACT") in such a manner as
would permit any other party to cancel or terminate any such Aurum Contract, or
would permit any other party to seek damages, which would be reasonably likely
to cause a Material Adverse Effect on Aurum.
2.17 Pooling of Interests. To the knowledge of Aurum, based on
--------------------
consultation with its independent accountants, neither Aurum nor any of its
directors, officers, affiliates or stockholders has taken any action which would
preclude Baan's ability to account for the Merger as a pooling of interests.
2.18 Statements; Proxy Statement/Prospectus. The information supplied by
--------------------------------------
Aurum for inclusion in the Registration Statement (as defined in Section 3.4(b))
shall not at the time the Registration Statement becomes effective under the
Securities Act contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein not, in light of the circumstances under which they were
made, misleading. The information supplied by Aurum for inclusion in the proxy
statement/prospectus to be sent to the stockholders of Aurum in connection with
the meeting of Aurum's stockholders to consider the approval and adoption of
this Agreement and the approval of the Merger (the "AURUM STOCKHOLDERS'
MEETING") (such proxy statement/prospectus as amended or supplemented is
referred to herein as the "PROXY STATEMENT") shall not, on the date the Proxy
Statement is first mailed to Aurum's stockholders, at the time of the Aurum
Stockholders' Meeting or at the Effective Time, contain any untrue statement of
a material fact or omit
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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
were made, not false or misleading; or omit to state any material fact necessary
to correct any statement in any earlier communication with respect to the
solicitation of proxies for the Aurum Stockholders' Meeting which has become
false or misleading. The Proxy Statement will comply as to form in all material
respects with the provisions of the Exchange Act and the rules and regulations
thereunder. If at any time prior to the Effective Time any event relating to
Aurum or any of its affiliates, officers or directors should be discovered by
Aurum which should be set forth in an amendment to the Registration Statement or
a supplement to the Proxy Statement, Aurum shall promptly inform Baan.
Notwithstanding the foregoing, Aurum makes no representation or warranty with
respect to any information supplied by Baan or Merger Sub which is contained in
any of the foregoing documents.
2.19 Board Approval. The Board of Directors of Aurum has, as of the date
--------------
of this Agreement, unanimously determined (i) that the Merger is fair to, and in
the best interests of Aurum and its stockholders, and (ii) to recommend that the
stockholders of Aurum approve and adopt this Agreement and approve the Merger.
2.20 Fairness Opinion. Aurum's Board of Directors has received a written
----------------
opinion from Cowen & Company dated as of the date of the Agreement, to the
effect that as of such date, the Exchange Ratio is fair to Aurum's stockholders
from a financial point of view and has delivered to Baan a copy of such opinion.
2.21 Section 203 of the Delaware General Corporation Law Not Applicable.
------------------------------------------------------------------
The Board of Directors of Aurum has taken all actions so that the restrictions
contained in Section 203 of the Delaware General Corporation Law applicable to a
"business combination" (as defined in such Section 203) will not apply to the
execution, delivery or performance of this Agreement or the Stock Option
Agreement or to the consummation of the Merger or the other transactions
contemplated by this Agreement or the Stock Option Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BAAN AND MERGER SUB
Baan and Merger Sub represent and warrant to Aurum, subject to the
exceptions specifically disclosed in writing in the disclosure letter
(indicating the relevant Section of this Agreement) supplied by Baan to Aurum
dated as of the date hereof and certified by a duly authorized officer of Baan
(the "BAAN SCHEDULES"), as follows:
3.1 Organization of Baan and Merger Sub.
-----------------------------------
(a) Each of Baan and Merger Sub is a corporation duly organized,
validly existing and in good standing, or its equivalent if any, under the laws
of the jurisdiction of its incorporation; has the corporate power and authority
to own, lease and operate its assets and property and to carry on its business
as now being conducted and as proposed to be conducted; and is duly qualified or
licensed to
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do business and is in good standing in each jurisdiction where the character of
the properties owned, leased or operated by it or the nature of its activities
makes such qualification or licensing necessary, except where the failure to be
so qualified would not have a Material Adverse Effect (as defined below) on
Baan.
(b) Baan has delivered or made available to Aurum a true and correct
copy of the constitutive documents of Baan and Merger Sub, each as amended to
date, and each such instrument is in full force and effect. Baan is not in
violation of any of the provisions of its constitutive documents.
(c) When used in connection with Baan, the term "MATERIAL ADVERSE
EFFECT" means, for purposes of this Agreement, any change, event or effect that
is materially adverse to the business, assets (including intangible assets),
financial condition or results of operations of Baan and its subsidiaries taken
as a whole.
3.2 Baan and Merger Sub Capital Structure.
-------------------------------------
(a) The authorized capital stock of Baan consists of 350,000,000
Common Shares, of which approximately 90,885,678 shares were issued and
outstanding as of March 31, 1997. The authorized capital stock of Merger Sub
consists of 100 shares of Common Stock, $.01 par value, all of which, as of the
date hereof, are issued and outstanding and are held by Baan. Merger Sub was
formed on May 7, 1997, for the purpose of consummating a merger and has no
material assets or liabilities except as necessary for such purpose. All
outstanding Baan Common Shares are duly authorized, validly issued, fully paid
and nonassessable and have not been issued in violation of any preemptive or
other statutory right of shareholders.
(b) The shares of Baan Common Shares to be issued pursuant to the
Merger, when issued in accordance with the terms and provisions of this
Agreement, will be duly authorized, validly issued, fully paid and non-
assessable and will not be subject to any preemptive or other statutory right of
shareholders and will be issued in compliance with applicable U.S. federal and
state and Netherlands securities laws.
3.3 Authority.
---------
(a) Each of Baan and Merger Sub has all requisite corporate power and
authority to enter into 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 authorized
by all necessary corporate action on the part of Baan and Merger Sub, subject
only to the filing and recordation of the Certificate of Merger pursuant to
Delaware Law. This Agreement has been duly executed and delivered by each of
Baan and Merger Sub and, assuming the due authorization, execution and delivery
by Aurum, constitutes the valid and binding obligation of Baan and Merger Sub,
enforceable in accordance with its terms, except as enforceability may be
limited by bankruptcy and other similar laws and general principles of equity.
The execution and delivery of this Agreement by each of Baan and Merger Sub does
not, and the performance of this Agreement by each of Baan and Merger Sub will
not, (i) conflict with or violate the Articles of Association of Baan or the
Certificate of Incorporation or Bylaws of Merger Sub, (ii) conflict with or
violate any law, rule, regulation, order, judgment or decree
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<PAGE>
applicable to Baan or Merger Sub or by which any of their respective properties
is bound or affected or (iii) result in any breach of or constitute a default
(or an event that with notice or lapse of time or both would become a default)
under, or impair Baan's rights or alter the rights or obligations of any third
party under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or
encumbrance on any of the properties or assets of Baan or Merger Sub pursuant
to, any material note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which Baan or
Merger Sub is a party or by which Baan or Merger Sub or any of their respective
properties are bound or affected.
(b) No consent, approval, order or authorization of, or registration,
declaration or filing with any Governmental Entity is required by or with
respect to Baan or Merger Sub in connection with the execution and delivery of
this Agreement or the consummation of the Merger, except for (i) the filing of a
Form F-4 Registration Statement (the "REGISTRATION STATEMENT") with the SEC in
accordance with the Securities Act and the declaration of effectiveness of such
Registration Statement by the SEC, (ii) the filing of the Certificate of Merger
with the Secretary of State of the State of Delaware, (iii) such consents,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under applicable federal and state securities laws and the HSR
Act and the securities or antitrust laws of any foreign country (including, for
the avoidance of doubt, the rules and regulations of the Amsterdam Exchanges
N.V.), and (iv) such other consents, authorizations, filings, approvals and
registrations which if not obtained or made would not be material to Baan or
Aurum or have a material adverse effect on the ability of the parties to
consummate the Merger.
3.4 SEC Filings; Baan Financial Statements.
--------------------------------------
(a) Baan has filed all forms, reports and documents required to be
filed with the SEC since January 1, 1996, and has made available to Aurum such
forms, reports and documents in the form filed with the SEC. All such required
forms, reports and documents (including those that Baan may file subsequent to
the date hereof) are referred to herein as the "BAAN SEC REPORTS." As of their
respective dates, the Baan SEC Reports (i) were prepared in accordance with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
the rules and regulations of the SEC thereunder applicable to such Baan SEC
Reports, and (ii) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. None of Baan' subsidiaries is required to file any forms,
reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in Baan SEC Reports (the "BAAN
FINANCIALS"), including any Baan SEC Reports filed after the date hereof until
the Closing, (x) complied as to form in all material respects with the published
rules and regulations of the SEC with respect thereto, (y) was prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto or, in the case of
unaudited interim financial statements, as may be permitted by the SEC on Form
10-Q under the Exchange Act) and (z) fairly presented the consolidated financial
position of Baan and its subsidiaries as at the respective dates thereof and the
consolidated results of Baan'
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<PAGE>
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements were or are subject to normal and recurring year-
end adjustments. The balance sheet of Baan contained in Baan SEC Reports as of
March 31, 1997 is hereinafter referred to as the "BAAN BALANCE SHEET."
3.5 Absence of Certain Changes or Events. Since the date of the Baan
------------------------------------
Balance Sheet through the date of this Agreement, there has not been any
Material Adverse Effect on Baan.
3.6 Statements; Proxy Statement/Prospectus. The information supplied by
--------------------------------------
Baan for inclusion in the Registration Statement shall not at the time the
Registration Statement becomes effective under the Securities Act, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein not
misleading. The information supplied by Baan for inclusion in the Proxy
Statement shall not, on the date the Proxy Statement is first mailed to Aurum's
stockholders, at the time of the Aurum Stockholders' Meeting or at the Effective
Time, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
false or misleading; or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for the Aurum Stockholders' Meeting which has become false or
misleading. If at any time prior to the Effective Time, any event relating to
Baan or any of its affiliates, officers or directors should be discovered by
Baan which should be set forth in an amendment to the Registration Statement or
a supplement to the Proxy Statement, Baan shall promptly inform Aurum.
Notwithstanding the foregoing, Baan makes no representation or warranty with
respect to any information supplied by Aurum which is contained in any of the
foregoing documents.
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 Conduct of Business by Aurum and Baan. During the period from the
-------------------------------------
date of this Agreement and continuing until the earlier of the termination of
this Agreement pursuant to its terms or the Effective Time, Aurum (which for the
purposes of this Article 4 shall include Aurum and each of its subsidiaries) and
Baan agree, except (i) as otherwise contemplated by this Agreement, or (ii) to
the extent that the other party shall otherwise consent in writing, to carry on
its business in the usual, regular and ordinary course, in substantially the
same manner as heretofore conducted, to pay its debts and taxes when due subject
to good faith disputes over such debts or taxes, to pay or perform other
material obligations when due, and use its commercially reasonable efforts
consistent with past practices and policies to preserve intact its present
business organization, keep available the services of its present officers and
employees and preserve its relationships with customers, suppliers,
distributors, licensors, licensees, and others with which it has business
dealings. Baan agrees to cause its material subsidiaries to act in accordance
with the foregoing provisions.
4.2 Certain Actions by Aurum. In addition notwithstanding Section 4.1
------------------------
above, without the prior consent of Baan, Aurum shall not do any of the
following, nor shall Aurum permit its subsidiaries to do any of the following:
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(a) Waive any stock repurchase rights, accelerate, amend or change the
period of exercisability of options or restricted stock, or reprice options
granted under any employee, consultant or director stock plans or authorize cash
payments in exchange for any options granted under any of such plans;
(b) Grant any severance or termination pay to any officer or employee
except payments in amounts consistent with policies and past practices or
pursuant to written agreements outstanding, or policies existing, on the date
hereof and as previously disclosed in writing to Baan, or adopt any new
severance plan;
(c) Transfer or license to any person or entity or otherwise extend,
amend or modify in any material respect any rights to the Aurum IP Rights (other
than in the ordinary course of business and in the best interests of Aurum), or
enter into grants of future patent rights, other than licenses in the ordinary
course of business and consistent with past practice;
(d) Declare or pay any dividends on or make any other distributions
(whether in cash, stock, equity securities or property) in respect of any
capital stock or split, combine or reclassify any capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu of or in
substitution for any capital stock;
(e) Repurchase or otherwise acquire, directly or indirectly, any
shares of capital stock, or any securities convertible into shares of capital
stock, or subscriptions, rights, warrants or options to acquire any shares of
capital stock or any securities convertible into shares of capital stock, or
enter into other agreements or commitments of any character obligating it to
repurchase any such shares, warrants, options or convertible securities, except
for the repurchase at cost of unvested shares held by Aurum employees on the
termination of their employment;
(f) Issue, deliver, sell, authorize or propose the issuance, delivery
or sale of, any shares of capital stock or any securities convertible into
shares of capital stock, or subscriptions, rights, warrants or options to
acquire any shares of capital stock or any securities convertible into shares of
capital stock, or enter into other agreements or commitments of any character
obligating it to issue any such shares or convertible securities, other than the
issuance of (i) shares of Aurum Common Stock pursuant to the exercise of stock
options therefor outstanding as of the date of this Agreement or granted
pursuant to clause (iv), (ii) shares of Aurum Common Stock issuable to
participants in the Aurum Employee Stock Purchase Plan, consistent with past
practice, and the terms thereof, (iii) shares of the Aurum Common Stock issuable
pursuant to the Aurum Stock Option Agreement, and (iv) options to purchase Aurum
Common Stock granted at fair market value, consistent with past practices and in
accordance with the Aurum Stock Option Plans and Aurum's option grant
guidelines;
(g) Cause, permit or propose any amendments to any charter document or
Bylaw (or similar governing instruments of any subsidiaries);
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<PAGE>
(h) Acquire or agree to acquire by merging or consolidating with, or
by purchasing any equity interest in or a material portion of the assets of, or
by any other manner, any business or any corporation, partnership interest,
association or other business organization or division thereof, or otherwise
acquire or agree to acquire any assets which are material, individually or in
the aggregate, to the business of Aurum or enter into any material joint
ventures, strategic partnerships or alliances;
(i) Sell, lease, license, encumber or otherwise dispose of any
properties or assets which are material, individually or in the aggregate, to
the business of Aurum, except in the ordinary course of business consistent with
past practice;
(j) Incur any indebtedness for borrowed money (other than ordinary
course trade payables or pursuant to existing credit facilities in the ordinary
course of business) or guarantee any such indebtedness or issue or sell any debt
securities or warrants or rights to acquire debt securities of Aurum or
guarantee any debt securities of others;
(k) Adopt or amend any employee benefit or employee stock purchase or
employee option plan, or enter into any employment contract, pay any special
bonus or special remuneration to any director or employee other than in the
ordinary course of business consistent with past practice, or increase the
salaries or wage rates of its officers or employees other than in the ordinary
course of business, consistent with past practice;
(l) Pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
any such payment, discharge or satisfaction in the ordinary course of business;
(m) Make any grant of exclusive rights to any third party;
(n) Enter into any material partnership arrangements, joint
development agreements or strategic alliances, agreements to create standards or
agreements with "Standards" bodies;
(o) Take any action that would be reasonably likely to interfere with
Baan's ability to account for the Merger as a pooling of interests whether or
not otherwise permitted by the provisions of this Article IV; or
(p) Agree in writing or otherwise to take any of the actions described
in Article 4 (a) through (o) above.
For purposes of the provisions of this Section 4.2, the prior consent of Baan
shall be deemed to have been received if, prior to the taking of any of the
foregoing actions, such action shall have been discussed with Amal Johnson,
Baan's Executive Vice President, and she shall have received such additional
information as she may have reasonably requested and, after such discussion and
receipt of any such additional information, she shall have not objected to the
taking of the proposed action.
4.3 Baan Acquisitions. During the period from the date of this Agreement
-----------------
and until the earlier of the termination of this Agreement pursuant to its terms
or the Effective Time, Baan shall not acquire
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or agree to acquire by merging or consolidating with, or by purchasing any
equity interest in or a material portion of the assets of, any direct competitor
of Aurum in the United States if such acquisition would have a reasonable
likelihood of preventing or materially delaying the consummation of the
transactions contemplated hereby or would result in a Material Adverse Effect on
Aurum or Baan.
4.4 No HSR Violation. During the period from the date of this Agreement
----------------
and until the earlier of the termination of this Agreement pursuant to its terms
or the Effective Time, neither party is required to take any action pursuant to
Article IV that would cause a violation of HSR.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Proxy Statement/Prospectus; Registration Statement; Other Filings;
------------------------------------------------------------------
Board Recommendations.
- ---------------------
(a) As promptly as practicable after the execution of this Agreement,
Aurum and Baan will prepare and file with the SEC the Proxy Statement, and Baan
will prepare and file with the SEC the Registration Statement in which the Proxy
Statement will be included as a prospectus. Each of Aurum and Baan will respond
to any comments of the SEC, will use its respective reasonable best efforts to
have the Registration Statement declared effective under the Securities Act as
promptly as practicable after such filing and will cause the Proxy Statement to
be mailed to the Aurum stockholders at the earliest practicable time. As
promptly as practicable after the date of this Agreement, Aurum and Baan will
prepare and file any other filings required under the Exchange Act, the
Securities Act or any other U.S. federal, U.S. State or non-U.S. laws relating
to the Merger and the transactions contemplated by this Agreement (the "OTHER
FILINGS"). Each of Aurum and Baan will notify the other promptly upon the
receipt of any comments from the SEC or its staff and of any request by the SEC
or its staff or any other government officials for amendments or supplements to
the Registration Statement, the Proxy Statement or any Other Filing or for
additional information and will supply the other with copies of all
correspondence between such party or any of its representatives, on the one
hand, and the SEC, or its staff or any other government officials, on the other
hand, with respect to the Registration Statement, the Proxy Statement, the
Merger or any Other Filing. The Proxy Statement, the Registration Statement and
the Other Filings will comply in all material respects with all applicable
requirements of law and the rules and regulations promulgated thereunder.
Whenever any event occurs which is required to be set forth in an amendment or
supplement to the Proxy Statement, the Registration Statement or any Other
Filing, Aurum or Baan, 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 Aurum, such amendment or
supplement.
(b) Subject to the provisions of Section 5.4(b), the Proxy Statement
will include the recommendation of the Board of Directors of Aurum in favor of
adoption and approval of this Agreement and approval of the Merger (except that
the Board of Directors of Aurum may withdraw, modify or refrain from making such
recommendation to the extent that the Board determines, in good faith, after
consultation with outside legal counsel, that compliance with the Board's
fiduciary duties under applicable law would require it to do so).
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5.2 Meeting of Stockholders. Promptly after the date hereof, Aurum will
-----------------------
take all action necessary in accordance with the Delaware General Corporation
Law and its Certificate of Incorporation and Bylaws to convene the Aurum
Stockholders' Meeting to be held as promptly as practicable, and in any event
(to the extent permissible under applicable law) within 45 days after the
declaration of effectiveness of the Registration Statement, for the purpose of
voting upon this Agreement and the Merger. Subject to the provisions of Section
5.4(b), Aurum will use its reasonable best efforts to solicit from its
stockholders proxies in favor of the adoption and approval of this Agreement and
the approval of the Merger and will take all other action necessary or advisable
to secure the vote or consent of its stockholders required by the rules of the
National Association of Securities Dealers, Inc. or Delaware Law to obtain such
approvals.
5.3 Confidentiality; Access to Information.
--------------------------------------
(a) The parties acknowledge that Aurum and Baan have previously
executed a Confidential Disclosure Agreement, dated as of May 8, 1997 (the
"CONFIDENTIALITY AGREEMENT"), which Confidentiality Agreement will continue in
full force and effect in accordance with its terms.
(b) Access to Information. Each of Aurum and Baan will afford the
---------------------
other party and its accountants, counsel and other representatives reasonable
access during normal business hours to the properties, books, records and
personnel of such party during the period prior to the Effective Time to obtain
all information concerning the business, including the status of product
development efforts, properties, results of operations and personnel of such
party, as the other party may reasonably request. No information or knowledge
obtained in any investigation pursuant to this Section 5.3 will affect or be
deemed to modify any representation or warranty contained herein or the
conditions to the obligations of the parties to consummate the Merger.
5.4 No Solicitation.
---------------
(a) Subject to the provisions of Section 5.4(b), from and after the
date of this Agreement until the earlier of the Effective Time or termination of
this Agreement pursuant to its terms, Aurum and its subsidiaries will not, and
will instruct their respective directors, officers, employees, representatives,
investment bankers, agents and affiliates not to, directly or indirectly, (i)
solicit or knowingly encourage submission of, any Acquisition Proposal (as
defined below) by any person, entity or group (other than Baan and its
affiliates, agents and representatives), or (ii) participate in any discussions
or negotiations with, or disclose any non-public information concerning Aurum or
any of its subsidiaries to, or afford any access to the properties, books or
records of Aurum or any of its subsidiaries to, or otherwise assist or
facilitate, or enter into any agreement or understanding with, any person,
entity or group (other than Baan and its affiliates, agents and
representatives), in connection with any Acquisition Proposal with respect to
Aurum. For the purposes of this Agreement, an "ACQUISITION PROPOSAL" means any
proposal or offer relating to (i) any merger, consolidation, sale or license of
substantial assets or similar transactions involving Aurum or any of its
subsidiaries (other than sales or licenses of assets or inventory in the
ordinary course of business or as permitted under the terms of this Agreement),
(ii) sale by Aurum of any shares of capital stock of Aurum (including without
limitation by way of a tender offer or an exchange offer) except as may be
permitted pursuant to Article 4, (iii) the acquisition by any person of
beneficial ownership or a right to acquire beneficial ownership of, or the
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formation of any "group" (as defined under Section 13(d) of the Exchange Act and
the rules and regulations thereunder) which beneficially owns, or has the right
to acquire beneficial ownership of, 10% or more of the then outstanding shares
of capital stock of Aurum (except for acquisitions for passive investment
purposes of not more than 15% of the then outstanding shares of capital stock of
Aurum only in circumstances where the person or group qualifies for and files a
Schedule 13G with respect thereto and does not become obligated to file a
Schedule 13D); or (iv) any public announcement of a proposal, plan or intention
to do any of the foregoing or any agreement to engage in any of the foregoing.
Aurum will immediately cease any and all existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any of the
foregoing. Aurum will (i) notify Baan as promptly as practicable if it receives
any proposal or written inquiry or written request for information in connection
with an Acquisition Proposal or potential Acquisition Proposal and (ii) as
promptly as practicable notify Baan of the significant terms and conditions of
any such Acquisition Proposal. In addition, subject to the other provisions of
this Section 5.4, from and after the date of this Agreement until the earlier of
the Effective Time and termination of this Agreement pursuant to its terms,
Aurum and its subsidiaries will not, and will instruct their respective
directors, officers, employees, representatives, investment bankers, agents and
affiliates not to, directly or indirectly, make or authorize any public
statement, recommendation or solicitation in support of any Acquisition Proposal
made by any person, entity or group (other than Baan); provided, however, that
-------- -------
nothing herein shall prohibit Aurum's Board of Directors from taking and
disclosing to Aurum's stockholders a position with respect to a tender offer
pursuant to Rules 14d-9 and 14e-2 promulgated under the Exchange Act.
(b) Notwithstanding the provisions of paragraph (a) above, prior to
the Effective Time, Aurum may, to the extent the Board of Directors of Aurum
determines, in good faith, after consultation with outside legal counsel, that
the Board's fiduciary duties under applicable law require it to do so,
participate in discussions or negotiations with, and, subject to the
requirements of paragraph (c), below, furnish information to any person, entity
or group after such person, entity or group has delivered to Aurum in writing,
an unsolicited bona fide Acquisition Proposal which the Board of Directors of
Aurum in its good faith reasonable judgment determines, after consultation with
its independent legal and financial advisors, would result in a transaction more
favorable than the Merger to the stockholders of Aurum (a "AURUM ALTERNATIVE
PROPOSAL"). In addition, notwithstanding the provisions of paragraph (a) above,
in connection with a possible Acquisition Proposal, Aurum may refer any third
party to this Section 5.4 or make a copy of this Section 5.4 available to a
third party. In the event Aurum receives a Aurum Alternative Proposal, nothing
contained in this Agreement (but subject to the terms hereof) will prevent the
Board of Directors of Aurum from recommending such Aurum Alternative Proposal to
its Stockholders, if the Board determines, in good faith, after consultation
with outside legal counsel, that such action is required by its fiduciary duties
under applicable law; in such case, the Board of Directors of Aurum may
withdraw, modify or refrain from making its recommendation set forth in Section
5.1(b), and, to the extent it does so, Aurum may refrain from soliciting proxies
to secure the vote of its stockholders as may be required by Section 5.2;
provided, however, that Aurum shall (i) provide at least forty-eight (48) hours
- -------- -------
prior notice of any Aurum Board meeting at which it is reasonably expected to
contemplate a Alternative Proposal and (ii) not recommend to its stockholders a
Aurum Alternative Proposal for a period of not less than 5 business days after
Baan's receipt of a copy of such Aurum Alternative Proposal (or a description
of the significant terms and conditions thereof, if not in writing); and
provided further, that nothing contained in this Section shall limit Aurum's
- -------- -------
obligation to hold and convene the Aurum Stockholders' Meeting (regardless of
whether the recommendation of
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the Board of Directors of Aurum shall have been withdrawn, modified or not yet
made) or to provide the Aurum stockholders with material information relating to
such meeting.
(c) Notwithstanding anything to the contrary in this Section 5.4,
Aurum will not provide any non-public information to a third party unless: (i)
Aurum provides such non-public information pursuant to a nondisclosure agreement
with terms regarding the protection of confidential information at least as
restrictive as such terms in the Confidentiality Agreement; (ii) such non-public
information has been previously delivered to Baan and (iii) Aurum advises Baan
in writing of such disclosure, including the party to whom disclosed.
5.5 Public Disclosure. Baan and Aurum will consult with each other, and
-----------------
to the extent practicable, agree, before issuing any press release or otherwise
making any public statement with respect to the Merger, this Agreement or an
Acquisition Proposal and will not issue any such press release or make any such
public statement prior to such consultation, except as may be required by law or
any listing agreement with a national securities exchange or association or the
rules and regulations of the Amsterdam Exchanges N.V. The parties have agreed
to the text of the joint press release announcing the signing of this Agreement.
5.6 Legal Requirements. Each of Baan, Merger Sub and Aurum will take all
------------------
reasonable actions necessary or desirable to comply promptly with all legal
requirements which may be imposed on them with respect to the consummation of
the transactions contemplated by this Agreement (including furnishing all
information required in connection with approvals by or filings with any
Governmental Entity, and prompt resolution of any litigation prompted hereby)
and will promptly cooperate with and furnish information to any party hereto
necessary in connection with any such filings with or investigations by any
Governmental Entity, and any other such requirements imposed upon any of them or
their respective subsidiaries in connection with the consummation of the
transactions contemplated by this Agreement. Baan will use all reasonable
efforts to take such steps as may be necessary to comply with the securities and
blue sky laws of all jurisdictions which are applicable to the issuance of Baan
Common Shares pursuant hereto. Aurum will use its commercially reasonable
efforts to assist Baan as may be necessary to comply with the securities and
blue sky laws of all jurisdictions which are applicable in connection with the
issuance of Baan Common Shares pursuant hereto.
5.7 Third Party Consents. As soon as practicable following the date
--------------------
hereof, Baan and Aurum will each use its commercially reasonable efforts to
obtain all material consents, waivers and approvals under any of its or its
subsidiaries' agreements, contracts, licenses or leases required to be obtained
in connection with the consummation of the transactions contemplated hereby.
5.8 Notification of Certain Matters. Baan and Merger Sub will give prompt
-------------------------------
notice to Aurum, and Aurum will give prompt notice to Baan, of the occurrence,
or failure to occur, of any event, which occurrence or failure to occur would be
reasonably likely to cause (a) any representation or warranty contained in this
Agreement and made by it to be untrue or inaccurate in any material respect at
any time from the date of this Agreement to the Effective Time such that the
conditions set forth in Section 6.2(a) or 6.3(a), as the case may be, would not
be satisfied as a result thereof or (b) any material failure of Baan and Merger
Sub or Aurum, as the case may be, or of any officer, director, employee or agent
thereof, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it under
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this Agreement. Notwithstanding the above, the delivery of any notice pursuant
to this section will not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
5.9 Best Efforts and Further Assurances. Subject to the respective rights
-----------------------------------
and obligations of Baan and Aurum under this Agreement, each of the parties to
this Agreement will use its reasonable best efforts to effectuate the Merger and
the other transactions contemplated hereby and to fulfill and cause to be
fulfilled the conditions to closing under this Agreement; provided that neither
Baan nor Aurum nor any subsidiary or affiliate thereof will be required to agree
to any divestiture by itself or any of its affiliates of shares of capital stock
or of any business, assets or property, or the imposition of any material
limitation on the ability of any of them to conduct their businesses or to own
or exercise control of such assets, properties and stock. Subject to the
foregoing, each party hereto, at the reasonable request of another party hereto,
will execute and deliver such other instruments and do and perform such other
acts and things as may be necessary or desirable for effecting completely the
consummation of the transactions contemplated hereby.
5.10 Stock Options and Employee Stock Purchase Plan.
----------------------------------------------
(a) At the Effective Time, each outstanding option to purchase shares
of Aurum Common Stock (each a "AURUM STOCK OPTION") under the Aurum Stock Option
Plans, whether or not exercisable, will be assumed or substituted in a manner
consistent with applicable laws by Baan. Each Aurum Stock Option so assumed or
substituted in a manner consistent with the applicable laws by Baan under this
Agreement will continue to have, and be subject to, the same terms and
conditions set forth in the applicable Aurum Stock Option Plan immediately prior
to the Effective Time (including, without limitation, any repurchase rights),
except that (i) each Aurum Stock Option will be exercisable (or will become
exercisable in accordance with its terms) for that number of whole shares of
Baan Common Shares equal to the product of the number of shares of Aurum Common
Stock that were issuable upon exercise of such Aurum Stock Option immediately
prior to the Effective Time multiplied by the Exchange Ratio, rounded to the
nearest whole number of Baan Common Shares and (ii) the per share exercise price
for the Baan Common Shares issuable upon exercise of such assumed Aurum Stock
Option will be equal to the quotient determined by dividing the exercise price
per share of Aurum Common Stock at which such Aurum Stock Option was exercisable
immediately prior to the Effective Time by the Exchange Ratio, rounded up to the
nearest whole cent. As soon as reasonably practicable, after the Effective
Time, Baan will issue to each holder of an outstanding Aurum Stock Option a
notice describing the foregoing assumption of such Aurum Stock Option by Baan.
(b) It is intended that Aurum Stock Options assumed by Baan shall
qualify following the Effective Time as incentive stock options as defined in
Section 422 of the Code to the extent Aurum Stock Options qualified as incentive
stock options immediately prior to the Effective Time and the provisions of this
Section 5.10 shall be applied consistent with such intent.
(c) Baan will reserve a sufficient number of Baan Common Shares for
issuance under Section 5.10(a) and under Section 1.6(c) hereof.
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(d) Subject to the foregoing provisions requiring Baan to assume each
outstanding Aurum Stock Option, it is understood and agreed that Baan shall not
be required to assume any Stock Option Plan if impracticable or legally
impossible for Baan to do so under the laws of the Netherlands.
5.11 Form S-8. Baan agrees to file a registration statement on Form S-8
--------
for the Baan Common Shares issuable with respect to assumed Aurum Stock Options
promptly after the Closing Date and no later than five days after the Closing
Date.
5.12 Indemnification.
---------------
(a) From and after the Effective Time, Baan shall cause the Surviving
Corporation to fulfill and honor in all respects the obligations of Aurum
pursuant to any indemnification agreements between Aurum and its directors and
officers existing prior to the date hereof whether or not such persons continue
in their position with the Surviving Corporation following the Effective Time.
The Certificate of Incorporation and By-laws of the Surviving Corporation will
contain provisions providing for indemnification and the limitation of liability
which are substantially equivalent to those set forth in Aurum's Certificate of
Incorporation and By-laws, which provisions will not be amended, repealed or
otherwise modified from the Effective Time in any manner that would adversely
affect the rights thereunder of individuals who, immediately prior to the
Effective Time, were directors, officers, employees or agents of Aurum, unless
such modification is required by law.
(b) After the Effective Time, the Surviving Corporation will to the
fullest extent permitted under applicable law, indemnify and hold harmless, each
present and former director or officer of Aurum or any Aurum subsidiary
(collectively, the "INDEMNIFIED PARTIES") against any costs or expenses
(including attorneys' fees), judgments, fines, losses, claims, damages,
liabilities and amounts paid in settlement in connection with any claim, action,
suit, proceeding or investigation, whether civil, criminal administrative or
investigative, to the extent arising out of or pertaining to any action or
omission in his or her capacity as a director or officer of Aurum or any Aurum
subsidiary arising out of or pertaining to the transactions contemplated by this
Agreement for a period of six years after the date hereof. In the event of any
such claim, action, suit, proceeding or investigation (whether arising before or
after the Effective Time), (a) any counsel retained for the defense of the
Indemnified Parties for any period after the Effective Time will be reasonably
satisfactory to the Indemnified Parties, (b) after the Effective Time, the
Surviving Corporation will pay the reasonable fees and expenses of such counsel
promptly after statements therefor are received, and (c) the Surviving
Corporation will cooperate in the defense of any such matter; provided, however,
that the Surviving Corporation will not be liable for any settlement effected
without its written consent (which consent will not be unreasonably withheld);
and provided, further, that, in the event that any claim or claims for
indemnification are asserted or made within such six-year period, all rights to
indemnification in respect of any such claim or claims will continue until the
disposition of any and all such claims. The Indemnified Parties as a group may
be defended by only one law firm (in addition to local counsel) with respect to
any single action unless there is, under applicable standards of professional
conduct, a conflict on any significant issue between the positions of any two or
more Indemnified Parties.
(c) Baan will or will cause the Surviving Corporation to maintain in
effect directors' and officers' liability insurance covering those persons who
are currently covered by Aurum's directors'
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and officers' liability insurance covering those persons who are currently
covered by Aurum's directors' and officers' liability insurance policy, to the
extent and in such amounts that Baan provides such coverage to its directors and
officers.
(d) The Surviving Corporation shall pay all expenses, including
attorneys' fees, that may be incurred by any Indemnified Parties in enforcing
the indemnity and other obligations provided for in this Section 5.12.
(e) This Section 5.12 will survive any termination of this Agreement
and the consummation of the Merger at the Effective Time, is intended to benefit
Aurum, the Surviving Corporation and the indemnified parties, and will be
binding on all successors and assigns of the Surviving Corporation.
5.13 NMS and Amsterdam Exchanges Listing. Baan agrees to authorize for
-----------------------------------
listing on the Nasdaq National Market and the Official Market of the Amsterdam
Exchanges N.V. the Baan Common Shares issuable, and those required to be
reserved for issuance, in connection with the Merger, upon official notice of
issuance.
5.14 Aurum Affiliate Agreement. Set forth on the Aurum Schedules is a list
-------------------------
of those persons who may be deemed to be, in Aurum's reasonable judgment,
affiliates of Aurum within the meaning of Rule 145 promulgated under the
Securities Act (each a "AURUM AFFILIATE"). Aurum will provide Baan with such
information and documents as Baan reasonably requests for purposes of reviewing
such list. Aurum will use its reasonable best efforts to deliver or cause to be
delivered to Baan, as promptly as practicable on or following the date hereof,
from each Aurum Affiliate an executed affiliate agreement in substantially the
form attached hereto as Exhibit C (the "AURUM AFFILIATE AGREEMENT"), each of
---------
which will be in full force and effect as of the Effective Time. Baan will be
entitled to place appropriate legends on the certificates evidencing any Baan
Common Shares to be received by a Aurum Affiliate pursuant to the terms of this
Agreement, and to issue appropriate stop transfer instructions to the transfer
agent for the Baan Common Shares, consistent with the terms of the Aurum
Affiliate Agreement.
5.15 Regulatory Filings; Reasonable Efforts. As soon as may be reasonably
--------------------------------------
practicable, Aurum and Baan each shall file with the United States Federal Trade
Commission (the "FTC") and the Antitrust Division of the United States
Department of Justice ("DOJ") Notification and Report Forms relating to the
transactions contemplated herein as required by the HSR Act, as well as
comparable pre-merger notification forms required by the merger notification or
control laws and regulations of any applicable jurisdiction, as agreed to by the
parties. Aurum and Baan each shall promptly (a) supply the other with any
information which may be required in order to effectuate such filings and (b)
supply any additional information which reasonably may be required by the FTC,
the DOJ or the competition or merger control authorities of any other
jurisdiction and which the parties may reasonably deem appropriate.
5.16 Tax-Free Reorganization. No party shall take any action either prior
-----------------------
to or after the Effective Time that could reasonably be expected to cause the
merger to fail to qualify as a "reorganization" under Section 368(a) of the
Code.
5.17 Aurum Rights Plan. Prior to the Effective Time, without the prior
-----------------
written consent of Baan, Aurum shall not adopt a shareholders rights plan.
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5.18 Comfort Letter. Coopers & Lybrand L.L.P., certified public
--------------
accountants to Aurum, shall provide a letter reasonably acceptable to Baan,
relating to their review of the financial statements relating to Aurum contained
in or incorporated by reference in the Registration Statement.
5.19 Employee Benefit Schedules.
--------------------------
(a) On or before May 31, 1997, Aurum will provide to Baan, for
inclusion in the Aurum Schedules, an accurate and complete list of each Aurum
Employee Plan (as defined in Section 2.13) and any other plan, program, policy,
practice, contract, or agreement in effect as of the date of this Agreement
providing for compensation, severance, termination pay, performance awards,
stock or stock-related awards, fringe benefits or other employee benefits of any
kind, whether formal or informal, written or otherwise, funded or unfunded and
whether or not legally binding, which is being maintained or contributed to by
Aurum or any ERISA Affiliate (or which has been maintained or contributed to and
under which Aurum has, as of the date of this Agreement, material obligations
under) for the benefit of any current, former, or retired employee, officer, or
director of Aurum or any ERISA Affiliate.
(b) On or before May 31, 1997, Aurum will provide to Baan, for
inclusion in the Aurum Schedules, (i) correct and complete copies of all
documents embodying each Aurum Employee Plan including all amendments thereto;
(ii) the most recent annual actuarial valuations, if any, prepared for each
Aurum Employee Plan; (iii) the three most recent annual reports (Series 5500 and
all schedules thereto), if any, required under ERISA or the Code in connection
with each Aurum Employee Plan or related trust; (iv) if the Aurum Employee Plan
is funded, the most recent annual and periodic accounting of Aurum Employee Plan
assets; (v) the most recent summary plan description together with the most
recent summary of material modifications, if any, required under ERISA with
respect to each Aurum Employee Plan; (vi) all IRS determination letters and
rulings issued to Aurum relating to Aurum Employee Plans; (vii) all material
agreements and contracts relating to each Aurum Employee Plan, including but not
limited to, administration service agreements, group annuity contracts and group
insurance contracts; (viii) all material communications from Aurum to any
Employees relating to any amendments, terminations, establishments, increases or
decreases in benefits, acceleration of payments or vesting schedules or other
events with respect to any Aurum Employee Plan which would result in any
material liability to Aurum; and (ix) all registration statements and the most
recent prospectuses prepared in connection with each Aurum Employee Plan.
5.20 Employee Matters. Prior to the Effective Time, Baan and Aurum shall
----------------
mutually agree upon an integration plan relating to the Merger which shall
include, among other things, provisions relating to compensation, other equity
incentive and severance for employees of Aurum. The Surviving Corporation will
not substitute any employee's health, life or disability insurance coverage
without first obtaining a waiver by the substitute carrier of any preexisting
condition that such employee may have (but only to the extent that such
condition was not a preexisting condition under the previous health care, life
or disability coverage, as applicable).
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ARTICLE VI
CONDITIONS TO THE MERGER
6.1 Conditions to Obligations of Each Party to Effect the Merger. The
------------------------------------------------------------
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) Aurum Stockholder Approval. This Agreement shall have been
--------------------------
approved and adopted, and the Merger shall have been duly approved, by the
requisite vote under applicable law, by the stockholders of Aurum.
(b) Registration Statement Effective; Proxy Statement. The SEC shall
-------------------------------------------------
have declared the Registration Statement effective. No stop order suspending
the effectiveness of the Registration Statement or any part thereof shall have
been issued and no proceeding for that purpose, and no similar proceeding in
respect of the Proxy Statement, shall have been initiated or threatened in
writing by the SEC.
(c) No Order; HSR Act. No Governmental Entity shall have enacted,
-----------------
issued, promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and which has the effect of making
the Merger illegal or otherwise prohibiting consummation of the Merger. All
waiting periods, if any, under the HSR Act relating to the transactions
contemplated hereby will have expired or terminated early.
(d) Tax Opinions. Baan and Aurum shall each have received written
------------
opinions from their respective counsel, Wilson Sonsini Goodrich & Rosati,
Professional Corporation, and Fenwick & West LLP, in form and substance
reasonably satisfactory to them, to the effect that the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Code and such
opinions shall not have been withdrawn; provided, however, that if the counsel
-------- -------
to either Baan or Aurum does not render such opinion, this condition shall
nonetheless be deemed to be satisfied with respect to such party if counsel to
the other party renders such opinion to such party. The parties to this
Agreement agree to make reasonable representations as requested by such counsel
for the purpose of rendering such opinions.
(e) NMS Listing. The Baan Common Shares issuable to stockholders of
-----------
Aurum pursuant to this Agreement and such other shares required to be reserved
for issuance in connection with the Merger shall have been authorized for
listing on the Nasdaq National Market upon official notice of issuance.
6.2 Additional Conditions to Obligations of Aurum. The obligation of
---------------------------------------------
Aurum to consummate and effect the Merger shall be subject to the satisfaction
at or prior to the Effective Time of each of the following conditions, any of
which may be waived, in writing, exclusively by Aurum:
(a) Representations and Warranties. The representations and
------------------------------
warranties of Baan and Merger Sub contained in this Agreement shall be true and
correct in all material respects as of the date
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of this Agreement. In addition, the representations and warranties of Baan and
Merger Sub contained in this Agreement shall be true and correct in all material
respects on and as of the Effective Time except for changes contemplated by this
Agreement and except for those representations and warranties which address
matters only as of a particular date (which shall remain true and correct as of
such particular date), with the same force and effect as if made on and as of
the Effective Time, except in such cases (other than the representation in
Section 3.2) where the failure to be so true and correct would not have a
Material Adverse Effect on Baan. Aurum shall have received a certificate with
respect to the foregoing signed on behalf of Baan by an authorized officer of
Baan;
(b) Agreements and Covenants. Baan and Merger Sub shall have
------------------------
performed or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by them on or prior
to the Effective Time, and Aurum shall have received a certificate to such
effect signed on behalf of Baan by an authorized officer of Baan; and
(c) Material Adverse Effect. No Material Adverse Effect with respect
-----------------------
to Baan shall have occurred since the date of this Agreement.
6.3 Additional Conditions to the Obligations of Baan and Merger Sub. The
---------------------------------------------------------------
obligations of Baan and Merger Sub to consummate and effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of each of the
following conditions, any of which may be waived, in writing, exclusively by
Baan:
(a) Representations and Warranties. The representations and warranties
------------------------------
of Aurum contained in this Agreement shall have been true and correct in all
material respects as of the date of this Agreement. The representations and
warranties of Aurum hereunder shall be deemed not to be true and correct in all
material respects on the date of this Agreement only if the aggregate amount of
losses or damages reasonably related to, arising out of or expected to arise out
of any breach of such representations and warranties are reasonably expected to
exceed $5,000,000 (it being understood that any losses or damages as a result of
the adverse or potentially adverse impact of the transactions contemplated
hereby on the relationship between Aurum and Beologics, or any uncertainties
created with Beologics as a result of the transactions contemplated hereby,
including without limitation any resultant writeoffs, shall not be measured
against such $5,000,000 threshold). In addition, the representations and
warranties of Aurum contained in this Agreement shall be true and correct in all
material respects on and as of the Effective Time except for changes
contemplated by this Agreement and except for those representations and
warranties which address matters only as of a particular date (which shall
remain true and correct as of such particular date), with the same force and
effect as if made on and as of the Effective Time, except in such cases (other
than the representations in Sections 2.2, 2.3 and 2.20) where the failure to be
so true and correct would not have a Material Adverse Effect on Aurum. Baan
shall have received a certificate with respect to the foregoing signed on behalf
of Aurum by the Chief Executive Officer and the Chief Financial Officer of
Aurum;
(b) Agreements and Covenants. Aurum shall have performed or complied
------------------------
in all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by it on or prior to the Effective
Time, and the Baan shall have received a certificate to such effect signed on
behalf of Aurum by the President and the Chief Financial Officer of Aurum; and
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(c) Material Adverse Effect. No Material Adverse Effect with respect
-----------------------
to Aurum shall have occurred since the date of this Agreement.
(d) Employment and Noncompetition Agreements. Employment and
----------------------------------------
Noncompetition Agreements substantially in the forms attached hereto as Exhibit
D-1 and D-2 shall have been entered into by the individuals set forth on Exhibit
I thereto and such agreements shall be in full force and effect.
(e) Opinion of Accountants. Each of Baan and Aurum shall have
----------------------
received letters from each of Moret Ernst & Young and Coopers & Lybrand L.L.P.,
each dated within two (2) business days prior to the Effective Time, regarding
those firms' concurrence with Baan's managements' and Aurum's managements'
conclusions as to the appropriateness of pooling of interest accounting for the
Merger under Accounting Principles Board Opinion No. 16, if the Merger is
consummated in accordance with this Agreement.
(f) Consents. Aurum shall have obtained all material consents,
---------
waivers and approvals required in connection with the consummation of the
transactions contemplated hereby under the agreements, contracts, licenses or
leases set forth on Schedule 6.3(f).
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated at any time prior to
-----------
the Effective Time of the Merger, whether before or after approval of the Merger
by the stockholders of Aurum:
(a) by mutual written consent duly authorized by the Boards of
Directors of Baan and Aurum;
(b) by either Aurum or Baan if the Merger shall not have been
consummated by October 14, 1997 for any reason; provided, however, that (i) if
-------- -------
the failure of the Merger to occur prior to such date shall have resulted solely
from the failure to obtain any necessary governmental approval, clearance or
consent (including termination or waiver of all HSR waiting periods and
clearance of the Registration Statement by the SEC) such date for termination
shall be automatically extended to the date upon which such governmental
approval, clearance or consent is obtained (but not beyond December 13, 1997)
and (ii) the right to terminate this Agreement under this Section 7.1(b) shall
not be available to any party whose action or failure to act has been a
principal cause of or resulted in the failure of the Merger to occur on or
before such date and such action or failure to act constitutes a breach of this
Agreement;
(c) by either Aurum or Baan if a Governmental Entity shall have issued
an order, decree or ruling or taken any other action (an "ORDER"), in any case
having the effect of permanently restraining, enjoining or otherwise prohibiting
the Merger, which order, decree or ruling is final and nonappealable;
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<PAGE>
(d) by either Aurum or Baan if the required approval of the
stockholders of Aurum contemplated by this Agreement shall not have been
obtained by reason of the failure to obtain the required vote at a meeting of
Aurum stockholders duly convened therefor or at any adjournment thereof
(provided that the right to terminate this Agreement under this Section 7.1(d)
--------
shall not be available to Aurum where the failure to obtain Aurum stockholder
approval shall have been caused by the action or failure to act of Aurum in
breach of this Agreement);
(e) by Baan, if the Board of Directors of Aurum accepts or recommends
a Aurum Alternative Proposal to the stockholders of Aurum, or if the Board of
Directors of Aurum shall have withheld, withdrawn or modified in a manner
adverse to Baan its recommendation in favor of adoption and approval of this
Agreement and approval of the Merger;
(f) by Aurum, upon a breach of any representation, warranty, covenant
or agreement on the part of Baan set forth in this Agreement, or if any
representation or warranty of Baan shall have become untrue, in either case such
that the conditions set forth in Section 6.2(a) or Section 6.2(b) would not be
satisfied as of the time of such breach or as of the time such representation or
warranty shall have become untrue, provided that if such inaccuracy in Baan's
--------
representations and warranties or breach by Baan is curable by Baan through the
exercise of its commercially reasonable efforts, then Aurum may only terminate
this Agreement under this Section 7.1(f) if the breach is not cured within ten
(10) days following the date of written notice from Aurum of such breach,
provided that Baan continues to exercise such commercially reasonable efforts to
cure such breach; or
(g) by Baan, upon a breach of any representation, warranty, covenant
or agreement on the part of Aurum set forth in this Agreement, or if any
representation or warranty of Aurum shall have become untrue, in either case
such that the conditions set forth in Section 6.3(a) or Section 6.3(b) would not
be satisfied as of the time of such breach or as of the time such representation
or warranty shall have become untrue, provided, that if such inaccuracy in
--------
Aurum's representations and warranties or breach by Aurum is curable by Aurum
through the exercise of its commercially reasonable efforts, then Baan may only
terminate this Agreement under this Section 7.1(g) if the breach is not cured
within ten (10) days the date of written notice from Baan of such breach,
provided that Aurum continues to exercise such commercially reasonable efforts
to cure such breach.
7.2 Notice of Termination; Effect of Termination. Any termination of this
--------------------------------------------
Agreement under Section 7.1 above will be effective immediately upon the
delivery of written notice of the terminating party to the other parties hereto.
In the event of the termination of this Agreement as provided in Section 7.1,
this Agreement shall be of no further force or effect, except (i) as set forth
in this Section 7.2, Section 7.3 and Article 8 (miscellaneous), each of which
shall survive the termination of this Agreement, and (ii) nothing herein shall
relieve any party from liability for any breach of this Agreement. No
termination of this Agreement shall affect the obligations of the parties
contained in the Confidentiality Agreement or the Stock Option Agreement, all of
which obligations shall survive termination of this Agreement in accordance with
their terms. A party seeking to terminate this Agreement based on a Material
Adverse Effect on the other party shall have the burden of proof to demonstrate
all elements of the Material Adverse Effect, on the terms set forth herein,
shall have occurred.
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<PAGE>
7.3 Fees and Expenses.
-----------------
(a) General. Except as set forth in this Section 7.3, all fees and
-------
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses whether
or not the Merger is consummated; provided, however, that Baan and Aurum shall
-------- -------
share equally all fees and expenses, other than attorneys' and accountants fees
and expenses, incurred in relation to the printing and filing of the Proxy
Statement (including any preliminary materials related thereto) and the
Registration Statement (including financial statements and exhibits) and any
amendments or supplements thereto.
(b) Aurum Payments. In the event that this Agreement is terminated
--------------
pursuant to either Section 7.1(d), 7.1(e) or 7.1(g), Aurum shall immediately pay
to Baan (by wire transfer or cashier's check) the sum of $2,500,000; provided
--------
that such payment shall not be due if (i) in the case of termination under
Section 7.1(d), the failure to obtain the required stockholder approval is
primarily the result of a Material Adverse Effect on Baan or (ii) in the case of
termination under Section 7.1(e), Aurum accepts or recommends a Aurum
Alternative Proposal, or the Board of Directors of Aurum withholds, withdraws or
modifies its recommendation in favor of adoption and approval of this Agreement
and approval of the Merger, primarily as a result of a Material Adverse Effect
on Baan.
7.4 Amendment. Subject to applicable law, this Agreement may be amended
---------
by the parties hereto at any time by execution of an instrument in writing
signed on behalf of each of the parties hereto.
7.5 Extension; Waiver. At any time prior to the Effective Time any party
-----------------
hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto and (iii)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. Delay in exercising any right under
this Agreement shall not constitute a waiver of such right.
ARTICLE VII
GENERAL PROVISIONS
8.1 Non-Survival of Representations and Warranties. The representations
----------------------------------------------
and warranties of Aurum, Baan and Merger Sub contained in this Agreement shall
terminate at the Effective Time, and only the covenants that by their terms
survive the Effective Time shall survive the Effective Time.
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<PAGE>
8.2 Notices. All notices and other communications hereunder shall be in
-------
writing, shall be effective when received, and shall in any event be deemed to
have been received (i) when delivered, if delivered personally or by commercial
delivery service, (ii) five (5) business days after deposit with U.S. Mail, if
mailed by registered or certified mail (return receipt requested), (iii) one (1)
business day after the business day of deposit in the United States with Federal
Express or similar overnight courier, for next day delivery (or, two (2)
business days after such deposit if deposited for second business day delivery),
if delivered by such means, or (iv) one (1) business day after delivery by
facsimile transmission with copy by U.S. Mail, if sent via facsimile plus mail
copy (with acknowledgment of complete transmission), to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) Baan Company N.V.
Zonneoordlaan 17
P.O. Box 250
6710 BG Ede
THE NETHERLANDS
Attention: General Counsel and Secretary of the Board
Telephone No.: 31-318-696606
Facsimile No.: 31-318-651751
with a copy to:
Amal Johnson
Baan U.S.A. Inc.
4600 Bohannon Drive
Suite 105
Menlo Park, CA 94025
and a copy to:
Wilson Sonsini Goodrich & Rosati, P.C.
650 Page Mill Road
Palo Alto, California 94304-1050
Attention: Mark Bertelsen, Esq.
Howard Zeprun, Esq.
Telephone No.: (415) 493-9300
Telecopy No.: (415) 493-6811
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<PAGE>
(a) if to Aurum to:
Aurum Software, Inc.
3385 Scott Boulevard
Santa Clara, California 95054-3115
Attention: Mary E. Coleman
Telephone No.: (408) 986-8100
Telecopy No.: (408) 654-3400
with a copy to:
Fenwick & West LLP
Two Palo Alto Square
Palo Alto, CA 94305
Attention: Jacqueline Daunt, Esq.
Telephone No.: (415) 494-0600
Telecopy No.: (415) 494-1417
8.3 Interpretation; Knowledge.
-------------------------
(a) When a reference is made in this Agreement to Exhibits, such
reference shall be to an Exhibit to this Agreement unless otherwise indicated.
The words "INCLUDE," "INCLUDES" and "INCLUDING" when used herein shall be deemed
in each case to be followed by the words "without limitation." The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. When reference is made herein to "THE BUSINESS OF" an entity, such
reference shall be deemed to include the business of all direct and indirect
subsidiaries of such entity. Reference to the subsidiaries of an entity shall
be deemed to include all direct and indirect subsidiaries of such entity.
(b) As it relates to Aurum, the term "KNOWLEDGE" means, with respect
to any matter in question, that any of the Chief Executive Officer, Chief
Financial Officer, Controller or Chief Technology Officer, as have actual
knowledge of such matter; and (b) as it relates to Baan, the term "KNOWLEDGE"
means, with respect to any matter in question that any of the Chief Executive
Officer, Chief Financial Officer, General Counsel, Staff Counsel, Executive Vice
President or any manager who in the ordinary course of his duties, have
knowledge of a specific matter.
8.4 Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
8.5 Entire Agreement; Third Party Beneficiaries. This Agreement and the
-------------------------------------------
documents and instruments and other agreements among the parties hereto as
contemplated by or referred to herein, including Aurum Schedules (a) constitute
the entire agreement among the parties with respect to the subject matter hereof
and supersede all prior agreements and understandings, both written and oral,
-38-
<PAGE>
among the parties with respect to the subject matter hereof, it being understood
that the Confidentiality Agreement shall continue in full force and effect until
the Closing and shall survive any termination of this Agreement; and (b) are not
intended to confer upon any other person any rights or remedies hereunder,
except as specifically provided in Sections 1.6(c), 5.10, 5.11, 5.12 and 5.13.
8.6 Severability. In the event that any provision of this Agreement or
------------
the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to
replace such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.
8.7 Other Remedies; Specific Performance. Except as otherwise provided
------------------------------------
herein, any and all remedies herein expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy conferred hereby,
or by law or equity upon such party, and the exercise by a party of any one
remedy will not preclude the exercise of any other remedy. The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to seek an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
8.8 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of law thereof;
provided that issues involving the corporate governance of any of the parties
hereto shall be governed by their respective jurisdictions of incorporation.
Each of the parties hereto irrevocably consents to the exclusive jurisdiction of
any state or federal court within the Northern District of California, in
connection with any matter based upon or arising out of this Agreement or the
matters contemplated herein, other than issues involving the corporate
governance of any of the parties hereto, agrees that process may be served upon
them in any manner authorized by the laws of the State of California for such
persons and waives and covenants not to assert or plead any objection which they
might otherwise have to such jurisdiction and such process.
8.9 Rules of Construction. The parties hereto agree that they have been
---------------------
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.
8.10 Assignment. No party may assign either this Agreement or any of its
----------
rights, interests, or obligations hereunder without the prior written approval
of the of the other party. Subject to the preceding sentence, this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and permitted assigns.
-39-
<PAGE>
8.11 WAIVER OF JURY TRIAL. EACH OF BAAN, AURUM AND MERGER SUB HEREBY
--------------------
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE ACTIONS OF BAAN, AURUM OR MERGER SUB IN THE
NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.
*****
-40-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized respective officers as of the date first
written above.
BAAN COMPANY N.V.
By: /s/ Amal M. Johnson
------------------------------------------
Name: Amal M. Johnson
Title: Executive Vice President, Baan
Affiliates and Marketing
GREEN SOFTWARE ACQUISITION CORPORATION
By: /s/ Susanne Hereford
------------------------------------------
Name: Susanne Hereford
Title: Secretary
AURUM SOFTWARE, INC.
By: /s/ Mary Coleman
------------------------------------------
Name: Mary Coleman
Title: President and Chief Executive Officer
**** REORGANIZATION AGREEMENT ****
<PAGE>
EXHIBIT A
FORM OF AURUM SOFTWARE VOTING AGREEMENT
<PAGE>
STOCKHOLDER VOTING AGREEMENT
This Stockholder Voting Agreement entered into as of May 13, 1997 (the
"Agreement") by and among Baan Company N.V., a corporation organized under the
- ----------
law of The Netherlands ("Acquiror"), Green Software Acquisition Corporation, a
--------
Delaware corporation and a wholly-owned subsidiary of Acquiror ("Merger Sub"),
----------
and the undersigned stockholders (the "Major Stockholders") of Aurum Software,
------------------
Inc., a Delaware corporation ("Target"). Capitalized terms not defined herein
------
have the meanings assigned to them in the Agreement and Plan of Reorganization
(the "Merger Agreement") dated the date hereof by and among Acquiror, Merger Sub
----------------
and Target.
RECITALS:
WHEREAS, pursuant to the Merger Agreement, Acquiror, Merger Sub and Target
have agreed to merge (the "Merger") Merger Sub with and into Target on the terms
------
and conditions set forth therein; and
WHEREAS, to induce Acquiror to enter into the Merger Agreement, each of the
Major Stockholders, as a principal stockholder of Target, has agreed to enter
into this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual agreements,
provisions and covenants contained in this Agreement, the parties hereby agree
as follows:
1.1. Covenants and Agreements. Each of the Major Stockholders hereby
------------------------
covenants and agrees with Acquiror and Merger Sub as follows:
1.1(a) Other Negotiations. It agrees to comply with the provisions
------------------
of Section 5.4 (Solicitation) of the Merger Agreement.
1.1(b) Agreement to Vote Shares. At every meeting of the
------------------------
stockholders of Target held on or prior to the Expiration Date (which shall mean
the earliest to occur of (i) the closing, consummation and effectiveness of the
Merger or (ii) such time as the Merger Agreement is terminated in accordance
with its terms), and at every adjournment thereof, and on every action or
approval by written consent of the stockholders of Target, unless otherwise
directed in writing by Acquiror, it shall vote all shares of Target capital
stock owned by it in favor of approval and adoption of the Merger Agreement and
the Merger and any matter that could reasonably be expected to facilitate the
Merger.
1.1(c) Agreement to Grant Proxy. It shall execute and deliver to
------------------------
Acquiror concurrently with the signing of this Agreement a valid and binding
irrevocable proxy in the form attached hereto as Exhibit A granting Acquiror (or
its designees) the authority to vote its shares of capital stock of Target in
accordance with and subject to the limitations of Section 1.1(b), which shall
expire on the Expiration Date.
1.1(d) No Proxy Solicitations. Except as required by law,
----------------------
including actions which it determines upon the written advice of legal counsel
are required pursuant to its fiduciary duties as a Director (as defined below)
under applicable law, it shall not, and will not permit any person under its
control to (i) solicit proxies or become a "participant" in a "solicitation" (as
such terms are defined in Regulation 14A under the Exchange Act) with respect to
an Acquisition Proposal; or (ii) initiate a stockholders' vote or action by
consent of Target stockholders with respect to an Acquisition Proposal.
<PAGE>
1.1(e) Obligations as Director and/or Officer. If at any time
--------------------------------------
prior to the expiration of this Agreement, the Major Stockholder or a
representative of the Major Stockholder is a member of the Board of Directors of
Target ("Director") or an officer of Target, nothing in this Agreement shall
limit or restrict the Director or officer in acting in his capacity as a
Director or officer, as the case may be, of Target and exercising his fiduciary
duties and responsibilities, it being agreed and understood that this Agreement
shall apply to the Major Stockholder solely in its capacity as a stockholder and
shall not apply to the Director's or officer's actions, judgments or decisions
as a Director or officer of Target.
1.1(f) Cooperation. It shall cooperate fully with Target, Acquiror
-----------
and Merger Sub in furnishing any information or performing any action reasonably
requested by any such party, which information or action is necessary or
appropriate for the speedy and successful consummation of the transactions
contemplated by the Merger Agreement or is necessary or appropriate for the
corporate purposes of Acquiror and is consistent with the obligations herein.
2.1 Representations and Warranties of Major Stockholders. Each of the
----------------------------------------------------
Major Stockholders hereby represents and warrants to Acquiror and Merger Sub as
follows:
2.1(a) Existence; Authorization; Binding Agreement; Ownership of
---------------------------------------------------------
Stock. If the Major Stockholder is a corporation, partnership, limited
- -----
liability company or trust, (i) it is duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization and (ii) the
execution, delivery and performance by the Major Stockholder of this Agreement
are within its power and authority and have been duly authorized by all
necessary action on the part of the Major Stockholder. The Agreement
constitutes a valid and binding agreement of the Major Stockholder, enforceable
against the Major Stockholder in accordance with its terms. The Major
Stockholder is the record and beneficial owner of the shares of Target Common
Stock set forth in the Affiliate Agreement, and owns all such shares free and
clear of any and all liens, pledges, charges, security interests, restrictions
or encumbrances of any kind or any rights of first refusal (other than in favor
of Target), voting trusts, proxies or other arrangements or understandings,
whether written or oral, and the Major Stockholder has the sole and exclusive
right and power to exercise all voting rights and other rights with respect to
such shares.
3.1 Survival; Termination.
---------------------
(a) All representations and warranties in this Agreement shall expire
upon the Closing. Any investigation or other examination that may have been
made or may be made at any time by or on behalf of the party to whom
representations and warranties are made shall not limit, diminish or in any way
affect the representations and warranties in this Agreement, and the parties may
rely on the representations and warranties in this Agreement regardless of any
information obtained by them by any investigation, examination or otherwise.
(b) The covenants contained in Sections 1.1(a), 1.1(b), 1.1(c), 1.1(d)
and 1.1(f), (but not any liability for any breach thereof) shall terminate on
the Expiration Date. All other covenants contained in this Agreement shall
survive the Merger.
(c) This Agreement shall terminate in all respects upon termination of
the Merger Agreement (but not any liability for any breach hereof).
-2-
<PAGE>
3.2 Specific Performance. Each of the parties to this Agreement hereby
--------------------
acknowledges that the other party will have no adequate remedy at law if it
fails to perform any of its obligations under this Agreement. In such event,
each of the parties agrees that the other party shall have the right, in
addition to any other rights it may have (whether at law or in equity), to
specific performance of this Agreement.
3.3 Binding Effect and Assignment. This Agreement and all of the
-----------------------------
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns, but, except as
otherwise specifically provided herein, neither this Agreement nor any of the
rights, interests or obligations of the parties hereto may be assigned by either
of the parties without prior written consent of the other.
3.4 Partnership. Acquiror and Merger Sub agree that if the Major
-----------
Stockholder is a limited partnership, in no event shall the Major Stockholder's
general and limited partners be liable for any of the Major Stockholder's
obligations under this Agreement.
3.5 Entire Agreement. This Agreement and the Merger Agreement (together
----------------
with all other documents delivered pursuant thereto) constitute the entire
agreement between the parties and supersede all prior agreements and
understandings between the parties with respect to the subject matter hereof.
3.6 Amendment or Modification. This Agreement may not be modified,
-------------------------
amended, altered or supplemented except upon the execution and delivery of a
written agreement executed by the parties hereto.
3.7 No Waiver. The failure of any party hereto to enforce at any time any
---------
of the provisions of this Agreement shall in no way be construed to be a waiver
of any such provision, nor in any way to affect the validity of this Agreement
or any part hereof or the right of such party thereafter to enforce each and
every such provision. No waiver of any breach of or non-compliance with this
Agreement shall be held to be a waiver of any other or subsequent breach or non-
compliance.
3.8 Notices. All notices, requests, claims, demands and other
-------
communications under this Agreement shall be in writing and shall be deemed to
have been duly given when received at the addresses set forth in the Merger
Agreement, in the case of Acquiror, Merger Sub, and the books and records of
Target, in the case of the Major Stockholder, or to such other address as any
party may have furnished to the others in writing in accordance herewith, except
that notices of change of address shall only be effective upon receipt.
3.9 Law Governing. This Agreement shall be governed by and construed and
-------------
enforced in accordance with the laws of the State of Delaware, without giving
effect to the principles of conflicts of law thereof. Each of the parties
hereto irrevocably consents to the exclusive jurisdiction of the courts located
within the State of Delaware in connection with any matter based upon or arising
out of this Agreement or the matters contemplated herein, agrees that process
may be served upon them in any authorized manner authorized and covenants not to
assert or plead any objection which they might otherwise have to such
jurisdiction or process.
3.10 Invalidity of Provisions. Each of the provisions contained in this
------------------------
Agreement is distinct and severable and a declaration of invalidity or
unenforceability of any such provision or part thereof by a court of competent
jurisdiction shall not affect the validity or enforceability of any other
provision hereof.
3.11 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
together shall constitute one and the same instrument.
-3-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the parties on the date first above written.
ACQUIROR
By: _____________________________________________
Name:
Title:
MERGER SUB
By: _____________________________________________
Name:
Title:
MAJOR STOCKHOLDER
________________________________________________
(print name of stockholder above)
By:_____________________________________________
Name:
Title:
(if applicable)
-4-
<PAGE>
Exhibit A
IRREVOCABLE PROXY
The undersigned stockholder of Aurum Software, Inc., a Delaware corporation
("Company"), hereby irrevocably (to the extent provided in Section 212 of the
Delaware General Corporation Law) appoints the directors on the Board of
Directors of Baan Company N.V., a corporation organized under the laws of The
Netherlands ("Baan"), and each of them individually, as the sole and exclusive
attorneys and proxies of the undersigned, with full power of substitution and
resubstitution, to the full extent of the undersigned's rights with respect to
the shares of capital stock of the Company beneficially owned by the
undersigned, which shares are listed on the final page of this Proxy (the
"Shares"), and any and all other shares or securities issued or issuable in
respect thereof on or after the date hereof, until such time as that certain
Agreement and Plan of Reorganization dated as of May 13, 1997 (the "Merger
Agreement"), among Baan, Green Software Acquisition Corporation, a Delaware
corporation and a wholly-owned subsidiary of Baan ("Merger Sub"), and Company,
shall be terminated in accordance with its terms or the Merger (as defined in
the Merger Agreement) is effective. Upon the execution hereof, all prior
proxies given by the undersigned with respect to the Shares and any and all
other shares or securities issued or issuable in respect thereof on or after the
date hereof are hereby revoked and no subsequent proxies will be given.
This proxy is irrevocable (to the extent provided in Section 212 of the
Delaware General Corporation Law), is granted pursuant to the Stockholder Voting
Agreement dated as of May 13, 1997 between Baan, Merger Sub and the undersigned
stockholder (the "Voting Agreement"), and is granted in consideration of Baan
entering into the Merger Agreement. The attorneys and proxies named above will
be empowered at any time prior to termination of the Merger Agreement to
exercise all voting rights (including, without limitation, the power to execute
and deliver written consents with respect to the Shares) of the undersigned at
every annual, special or adjourned meeting of Company stockholders, and in every
written consent in lieu of such a meeting, or otherwise, in favor of approval of
the Merger and the Merger Agreement and any matter that could reasonably be
expected to facilitate the Merger.
The attorneys and proxies named above may only exercise this proxy to vote
the Shares subject hereto at any time prior to termination of the Merger
Agreement at every annual, special or adjourned meeting of the stockholders of
Company and in every written consent in lieu of such meeting, in favor of
approval of the Merger and the Merger Agreement and any matter that could
reasonably be expected to facilitate the Merger, and may not exercise this proxy
on any other matter. The undersigned stockholder may vote the Shares on all
other matters.
Any obligation of the undersigned hereunder shall be binding upon the
successors and assigns of the undersigned.
Dated: May 13, 1997
Signature of Stockholder: ________________________________________________
Print Name of Stockholder: _______________________________________________
Shares beneficially owned:__________________________ shares of Common Stock
-5-
<PAGE>
EXHIBIT B
AURUM SOFTWARE STOCK OPTION AGREEMENT
<PAGE>
[Option from Target to Acquiror]
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT dated as of May 13, 1997 (the "AGREEMENT") is
entered into by and between Aurum Software, Inc., a Delaware corporation
("TARGET"), and Baan Company N.V., a corporation incorporated in the Netherlands
("ACQUIROR"). Capitalized terms used in this Agreement but not defined herein
shall have the meanings ascribed thereto in the Merger Agreement (as defined
below).
RECITALS
--------
WHEREAS, concurrently with the execution and delivery of this Agreement,
Target, Acquiror and Green Software Acquisition Corp., a Delaware corporation
and a wholly owned subsidiary of Acquiror ("SUB"), are entering into an
Agreement and Plan of Reorganization (the "MERGER AGREEMENT"), which provides
that, among other things, upon the terms and subject to the conditions thereof,
Target, Acquiror and Sub will enter into a business combination transaction (the
"MERGER"); and
WHEREAS, as a condition to Acquiror's willingness to enter into the Merger
Agreement, Acquiror has requested that Target agree, and Target has so agreed,
to grant to Acquiror an option to acquire shares of Target's Common Stock,
$0.001 par value, upon the terms and subject to the conditions set forth herein;
AGREEMENT
---------
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements set forth herein and in the Merger Agreement and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto agree as follows:
1. GRANT OF OPTION
---------------
Target hereby grants to Acquiror an irrevocable option (the "OPTION")
to acquire up to a number of shares of the Common Stock, $0.001 par value, of
Target ("TARGET SHARES") equal to 19.9% of the issued and outstanding shares as
of the first date, if any, upon which an Exercise Event (as defined in Section
2(a) below) shall occur (the "OPTION SHARES"), in the manner set forth below
(i) by paying cash at a price of $21.00 per share (the "EXERCISE PRICE") and/or,
at Acquiror's election, (ii) by exchanging therefor shares of the Common Stock,
0.01 par value, of Acquiror ("ACQUIROR SHARES") at a rate (the "EXERCISE
RATIO"), for each Option Share, of a number of Acquiror Shares equal to the
Exercise Price divided by the average closing sale prices during the previous 30
trading days of Acquiror Shares on the Nasdaq National Market immediately
preceding the date of the Closing (as defined below) of the particular Option
exercise.
<PAGE>
2. EXERCISE OF OPTION; MAXIMUM PROCEEDS
------------------------------------
(a) For all purposes of this Agreement, an "EXERCISE EVENT" shall have
occurred upon the occurrence of both: (i) the individuals or entities entering
into Voting Agreements and providing the related proxies on the date hereof
having ceased to own, in the aggregate, at least a majority of the capital stock
of the Target or (ii) any of such Voting Agreements or the related proxies
having been declared invalid or unenforceable and (x) the earlier of the
consummation of, or the record date, if any, for a meeting of Target's
stockholders with regard to an Acquisition Proposal with respect to Target with
any party other than Acquiror (or an affiliate of Acquiror) if the Board of
Directors of Target shall have withheld, withdrawn, or modified in a manner
adverse to Acquiror its recommendation in favor of adoption and approval of the
Merger Agreement and approval of the Merger (and at that time there shall not
have occurred a Material Adverse Effect on Acquiror) after receipt of and in
connection with an Acquisition Proposal with respect to Target, (y) the
commencement of a tender or exchange offer for 20% or more of any class of
Target's capital stock (and/or during any time which such a tender or exchange
offer remains open or has been consummated), or (z) pursuant to a Termination
under Section 7.1(e) or (g) of the Merger Agreement.
(b) Acquiror may deliver to Target a written notice (an "EXERCISE
NOTICE") specifying that it wishes to exercise and close a purchase of Option
Shares at any time within 30 days following the occurrence of an Exercise Event,
specifying the total number of Option Shares it wishes to acquire. Each closing
of a purchase of Option Shares (a "CLOSING") shall occur on the date and at a
time designated by the Acquiror in an Exercise Notice delivered at least five
(5) business days prior to the date of such Closing, which Closing shall be held
at the offices of counsel to Acquiror upon the occurrence of an Exercise Event
prior to the termination of the Option as may be designated by Acquiror in
writing. In the event that no Exercise Event shall occur prior to termination
of the Option, such Exercise Notice shall be void and of no further force and
effect.
(c) The Option shall terminate upon the earlier of (i) the Effective
Time and (ii) 12 months following the termination of the Merger Agreement
pursuant to Article VII thereof if an Exercise Event shall have occurred on or
prior to the date of such termination, and (iii) the date on which the Merger
Agreement is terminated pursuant to Article VII thereof if no Exercise Event
shall have occurred on or prior to such date; provided, however, that if the
-------- -------
Option is exercisable but cannot be exercised by reason of any applicable
government order or because the waiting period related to the issuance of the
Option Shares under the HSR Act shall not have expired or been terminated, then
the Option shall not terminate until the tenth business day after such
impediment to exercise shall have been removed or shall have become final and
not subject to appeal. Notwithstanding the foregoing, the Option may not be
exercised if (i) Acquiror shall have breached in any material respect any of its
covenants or agreements contained in the Merger Agreement or (ii) the
representations and warranties of Acquiror contained in the Merger Agreement
shall not have been true and correct in all material respects on and as of the
date when made.
-2-
<PAGE>
3. CONDITIONS TO CLOSING
---------------------
The obligation of Target to issue Option Shares to Acquiror hereunder
is subject to the conditions that (a) any waiting period under the HSR Act
applicable to the issuance of the Option Shares hereunder shall have expired or
been terminated; (b) all material consents, approvals, orders or authorizations
of, or registrations, declarations or filings with, any Federal, state or local
administrative agency or commission or other Federal state or local governmental
authority or instrumentality, if any, required in connection with the issuance
of the Option Shares hereunder shall have been obtained or made, as the case may
be; and (c) no preliminary or permanent injunction or other order by any court
of competent jurisdiction prohibiting or otherwise restraining such issuance
shall be in effect. It is understood and agreed that at any time during which
Acquiror shall be entitled to deliver to Target an Exercise Notice, the parties
will use their respective best efforts to satisfy all conditions to Closing, so
that a Closing may take place as promptly as practicable, and in any event, upon
the occurrence of an Exercise Event.
4. CLOSING
-------
At any Closing, (a) Target shall deliver to Acquiror a single
certificate in definitive form representing the number of Target Shares
designated by Acquiror in its Exercise Notice, such certificate to be registered
in the name of Acquiror and to bear the legend set forth in Section 10 hereof,
against delivery of (b) payment by Acquiror to Target of the aggregate purchase
price for the Target Shares so designated and being purchased by delivery of (i)
a certified check or bank check and/or, at Acquiror's election, (ii) a single
certificate in definitive form representing the number of Acquiror Shares being
issued by Acquiror in consideration therefor (based on the Exercise Ratio), such
certificate to be registered in the name of Target and to bear the legend set
forth in Section 10 hereof.
5. REPRESENTATIONS AND WARRANTIES OF TARGET
----------------------------------------
Target represents and warrants to Acquiror that (a) Target is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has the corporate power and authority to enter into
this Agreement and to carry out its obligations hereunder; (b) the execution and
delivery of this Agreement by Target and consummation by Target of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Target and no other corporate proceedings on the
part of Target are necessary to authorize this Agreement or any of the
transactions contemplated hereby; (c) this Agreement has been duly executed and
delivered by Target and constitutes a legal, valid and binding obligation of
Target and, assuming this Agreement constitutes a legal, valid and binding
obligation of Acquiror, is enforceable against Target in accordance with its
terms, except as enforceability may be limited by bankruptcy and other laws
affecting the rights and remedies of creditors generally and general principles
of equity; (d) except for any filings required under the HSR Act, Target has
taken all necessary corporate and other action to authorize and reserve for
issuance and to permit it to issue upon exercise of the Option, and at all times
from the date hereof until the termination of the Option will have reserved for
issuance, a sufficient number of unissued Target Shares for Acquiror to exercise
the Option in full and
-3-
<PAGE>
will take all necessary corporate or other action to authorize and reserve for
issuance all additional Target Shares or other securities which may be issuable
pursuant to Section 9(a) upon exercise of the Option, all of which, upon their
issuance and delivery in accordance with the terms of this Agreement, will be
validly issued, fully paid and nonassessable; (e) upon delivery of the Target
Shares and any other securities to Acquiror upon exercise of the Option,
Acquiror will acquire such Target Shares or other securities free and clear of
all material claims, liens, charges, encumbrances and security interests of any
kind or nature whatsoever, excluding those imposed by Acquiror; (f) the
execution and delivery of this Agreement by Target do not, and the performance
of this Agreement by Target will not, (i) violate the Certificate of
Incorporation or Bylaws of Target, (ii) conflict with or violate any order
applicable to Target or any of its subsidiaries or by which they or any of their
property is bound or affected or (iii) result in any breach of or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give rise to any right of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or
encumbrance on any property or assets of Target or any of its subsidiaries
pursuant to, any contract or agreement to which Target or any of its
subsidiaries is a party or by which Target or any of its subsidiaries or any of
their property is bound or affected, except, in the case of clauses (ii) and
(iii) above, for violations, conflicts, breaches, defaults, rights of
termination, amendment, acceleration or cancellation, liens or encumbrances
which would not, individually or in the aggregate, have a Material Adverse
Effect on Target; and (g) the execution and delivery of this Agreement by Target
does not, and the performance of this Agreement by Target will not, require any
consent, approval, authorization or permit of, or filing with, or notification
to, any Governmental Entity except pursuant to the HSR Act.
6. REPRESENTATIONS AND WARRANTIES OF ACQUIROR
------------------------------------------
Acquiror represents and warrants to Target that (a) Acquiror is a
corporation duly incorporated, validly existing and in good standing under the
laws of The Netherlands and has the corporate power and authority to enter into
this Agreement and to carry out its obligations hereunder; (b) the execution and
delivery of this Agreement by Acquiror and the consummation by Acquiror of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Acquiror and no other corporate proceedings on
the part of Acquiror are necessary to authorize this Agreement or any of the
transactions contemplated hereby; (c) this Agreement has been duly executed and
delivered by Acquiror and constitutes a legal, valid and binding obligation of
Acquiror and, assuming this Agreement constitutes a legal, valid and binding
obligation of Target, is enforceable against Acquiror in accordance with its
terms, except as enforceability may be limited by bankruptcy and other laws
affecting the rights and remedies of creditors generally and general principles
of equity; and (d) except for any filings required under the HSR Act, Acquiror
has taken (or will in a timely manner take) all necessary corporate and other
action in connection with any exercise of the Option; (e) upon delivery of
Acquiror Shares to Target in consideration of any acquisition of Target Shares
pursuant hereto, Target will acquire such Acquiror Shares free and clear of all
material claims, liens, charges, encumbrances and security interests of any kind
or nature whatsoever, excluding those imposed by Target; (f) the execution and
delivery of this Agreement by Acquiror do not, and the performance of this
Agreement by Acquiror will not, (i) violate the Articles of Association of
Acquiror, (ii) conflict with or violate any order applicable to Acquiror or any
of its subsidiaries or by which they or any of their property is bound or
affected or (iii) result in any breach
-4-
<PAGE>
of or constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give rise to any right of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or encumbrance on any of the property or assets of Acquiror or any of its
subsidiaries pursuant to, any contract or agreement to which Acquiror or any of
its subsidiaries is a party or by which Acquiror or any of its subsidiaries or
any of their property is bound or affected, except, in the case of clauses (ii)
and (iii) above, for violations, conflicts, breaches, defaults, rights of
termination, amendment, acceleration or cancellation, liens or encumbrances
which would not, individually or in the aggregate, have a Material Adverse
Effect on Acquiror; (g) the execution and delivery of this Agreement by Acquiror
does not, and the performance of this Agreement by Acquiror will not, require
any consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Entity except pursuant to the HSR Act; and (h)
any Target Shares acquired upon exercise of the Option will not be acquired by
Acquiror with a view to the public distribution thereof and Acquiror will not
sell or otherwise dispose of such shares in violation of applicable law or this
Agreement.
7. CERTAIN RIGHTS
--------------
(a) ACQUIROR PUT. If Acquiror shall have exercised the Option,
------------
Acquiror may thereafter deliver to Target a written notice (a "PUT NOTICE"), at
any time during which Acquiror may exercise the Option, specifying that it
wishes to sell (as specified in such Put Notice) all or a portion of the Option
Shares acquired as a result of such exercise at the price, and in the form, set
forth in paragraph (b) below. At any time after delivery of a Put Notice,
unless such Put Notice is withdrawn by Acquiror, the closing of the Put (the
"PUT CLOSING") shall take place at the principal offices of Target on the date
specified in the Put Notice (which shall be at least 5 days after the date of
such Put Notice).
(b) PAYMENT AND REDELIVERY OF CASH OR ACQUIROR SHARES. At the Put
--------------------------------------------------
Closing, (i) Acquiror shall surrender to Target the certificates evidencing the
Option Shares to be purchased by Target at such Put Closing and (ii) Target
shall deliver to Acquiror a proportionate amount of the aggregate consideration
paid by Acquiror in connection with any exercise of the Option. In addition,
the consideration to be paid by Target to Acquiror at any Put Closing shall be
in the form that is proportionate to the form previously paid by Acquiror to
Target. By way of example only, if (x) one third of the aggregate Option Shares
shall have been acquired for cash and two-thirds shall have been acquired for
Acquiror Shares, then (y) the consideration to be paid by Target to Acquiror at
such Put Closing shall consist of one-third cash and two-thirds Acquiror Shares.
Any cash payment required to be made by Target to Acquiror shall be paid a
certified check or bank check. In connection with any Acquiror Shares returned
to Acquiror at a Put Closing, Target shall represent and warrant that such
shares are then free and clear of all claims, liens, charges, encumbrances and
security interests of any kind or nature whatsoever, other than those imposed by
Acquiror.
(c) EFFECT OF CERTAIN ACTIONS. The amount of Option Shares and
--------------------------
Acquiror Shares delivered or required to be delivered hereunder shall reflect
appropriately the effect of any stock split, reverse stock split, stock dividend
(including any dividend or distribution of securities convertible into Acquiror
Common Shares or Target Common Stock), reorganization,
-5-
<PAGE>
recapitalization or other like change with respect to Acquiror Common Shares or
Target Common Stock occurring after the date of Closing and prior to the date of
the Put Closing.
(d) RESTRICTIONS ON TRANSFER. Until the termination of the Option,
------------------------
Target shall not sell, transfer or otherwise dispose of any Acquiror Shares
acquired by it pursuant to this Agreement.
8. REGISTRATION RIGHTS
-------------------
(a) Following the termination of the Merger Agreement, Acquiror may by
written notice (a "REGISTRATION NOTICE") to Target request Target to register
under the Securities Act, in accordance with Target's existing Amended and
Restated Registration Rights Agreement, dated August 22, 1995 (the "REGISTRATION
---------------
RIGHTS AGREEMENT"), all or any part of the shares acquired by Acquiror pursuant
to this Agreement (the "REGISTRABLE SECURITIES") in order to permit the sale or
other disposition of such shares pursuant to a bona fide firm commitment
underwritten public offering in which the Acquiror and the underwriters shall
effect as wide a distribution of such Registrable Securities as is reasonably
practicable; provided, however, that any such Registration Notice must relate to
-------- -------
a number of shares equal to at least 2% of the outstanding shares of Common
Stock of the Target on a fully diluted basis and that any rights to require
registration hereunder shall terminate with respect to any shares that may be
sold pursuant to Rule 144(k) under the Securities Act.
(b) The registration rights set forth in this Section 8 are subject to
the condition that Acquiror shall provide Target with such information with
respect to Acquiror's Registrable Securities, the plan for distribution thereof,
and such other information with respect to such Acquiror, in the reasonable
judgment of counsel for Target, is necessary to enable Acquiror to include in a
registration statement all material facts required to be disclosed with respect
to a registration thereunder.
(c) A registration effected under this Section 8 shall be effected at
Target's expense, except for underwriting discounts and commissions and the fees
and expenses of counsel to Acquiror, and Target shall provide to the
underwriters such documentation (including certificates, opinions of counsel and
"comfort" letters from auditors) as are customary in connection with
underwritten public offerings and as such underwriters may reasonably require.
In connection with any registration, Target shall agree to enter into an
underwriting agreement reasonably acceptable to each such party, in form and
substance customary for transactions of this type with the underwriters
participating in such offering.
(d) Indemnification
---------------
(i) Target will indemnify Acquiror, each of its directors and
officers and each person who controls Acquiror within the meaning of Section 15
of the Securities Act, and each underwriter of Target's securities, with respect
to any registration, qualification or compliance which has been effected
pursuant to this Agreement, in accordance with the terms and conditions of
Target's existing Registration Rights Agreement and Acquiror will indemnify
Target in accordance with the
-6-
<PAGE>
terms and conditions of Target's existing Registration Rights Agreement;
provided, however that such terms and conditions may not be modified, altered,
or amended without Acquiror's consent.
9. ADJUSTMENT UPON CHANGES IN CAPITALIZATION; RIGHTS PLANS
-------------------------------------------------------
(a) In the event of any change in the Target Shares by reason of stock
dividends, stock splits, reverse stock splits, mergers (other than the Merger),
recapitalizations, combinations, exchanges of shares and the like, the type and
number of shares or securities subject to the Option, the Exercise Ratio and the
Exercise Price shall be adjusted appropriately, and proper provision shall be
made in the agreements governing such transaction so that Acquiror shall
receive, upon exercise of the Option, the number and class of shares or other
securities or property that Acquiror would have received in respect of the
Target Shares if the Option had been exercised immediately prior to such event
or the record date therefor, as applicable.
(b) At any time during which the Option is exercisable, and at any
time after the Option is exercised (in whole or in part, if at all), Target
shall not adopt a stockholders rights plan (a so-called "poison pill") that
contains provisions for the distribution of rights thereunder as a result of
Acquiror being the beneficial owner of shares of the first party by virtue of
the Option being exercisable or having been exercised (or as a result of such
other party beneficially owning shares issuable in respect of any Option
Shares). It is understood, however, that following termination (if any) of the
Merger Agreement, a party may adopt a stockholders rights plan, that contains
provisions for the distribution of rights thereunder as a result of the other
party being the beneficial owner of shares of the first party in addition to
those that may be beneficially owned by virtue of the Option being exercisable
or having been exercised (or as a result of such other party beneficially owning
shares issuable in respect of any Option Shares).
10. RESTRICTIVE LEGENDS
-------------------
Each certificate representing Option Shares issued to Acquiror
hereunder, and each certificate representing Acquiror Shares delivered to Target
at a Closing, shall include a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE REOFFERED OR SOLD
ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE. SUCH SECURITIES ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON
TRANSFER AS SET FORTH IN THE STOCK OPTION AGREEMENT DATED AS OF MAY 13,
1997, A COPY OF WHICH MAY BE OBTAINED FROM ACQUIROR.
11. LISTING AND HSR FILING
----------------------
Target, upon the request of Acquiror, shall promptly file an
application to list the Target Shares to be acquired upon exercise of the Option
for quotation on the Nasdaq National
-7-
<PAGE>
Market and shall use its best efforts to obtain approval of such listing as soon
as practicable. Promptly after the date hereof, each of the parties hereto shall
promptly file with the Federal Trade Commission and the Antitrust Division of
the United States Department of Justice all required premerger notification and
report forms and other documents and exhibits required to be filed under the HSR
Act to permit the acquisition of the Target Shares subject to the Option at the
earliest possible date.
12. BINDING EFFECT
--------------
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns. Nothing
contained in this Agreement, express or implied, is intended to confer upon any
person other than the parties hereto and their respective successors and
permitted assigns any rights or remedies of any nature whatsoever by reason of
this Agreement. Any shares sold by a party in compliance with the provisions of
Section 8 shall, upon consummation of such sale, be free of the restrictions
imposed with respect to such shares by this Agreement and any transferee of such
shares shall not be entitled to the rights of such party. Certificates
representing shares sold in a registered public offering pursuant to Section 8
shall not be required to bear the legend set forth in Section 10.
13. SPECIFIC PERFORMANCE
--------------------
The parties recognize and agree that if for any reason any of the
provisions of this Agreement are not performed in accordance with their specific
terms or are otherwise breached, immediate and irreparable harm or injury would
be caused for which money damages would not be an adequate remedy. Accordingly,
each party agrees that in addition to other remedies the other party shall be
entitled to an injunction restraining any violation or threatened violation of
the provisions of this Agreement. In the event that any action shall be brought
in equity to enforce the provisions of the Agreement, neither party will allege,
and each party hereby waives the defense, that there is an adequate remedy at
law.
-8-
<PAGE>
14. ENTIRE AGREEMENT
----------------
This Agreement and the Merger Agreement (including the appendices
thereto) constitute the entire agreement between the parties with respect to the
subject matter hereof and supersede all other prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof.
15. FURTHER ASSURANCES
------------------
Each party will execute and deliver all such further documents and
instruments and take all such further action as may be necessary in order to
consummate the transactions contemplated hereby.
16. VALIDITY
--------
The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of the other provisions of this
Agreement, which shall remain in full force and effect. In the event any
Governmental Entity of competent jurisdiction holds any provision of this
Agreement to be null, void or unenforceable, the parties hereto shall negotiate
in good faith and shall execute and deliver an amendment to this Agreement in
order, as nearly as possible, to effectuate, to the extent permitted by law, the
intent of the parties hereto with respect to such provision.
17. NOTICES
-------
All notices and other communications hereunder shall be in writing and
shall be deemed given if delivered personally or by commercial delivery service,
or sent via telecopy (receipt confirmed) to the parties at the following
addresses or telecopy numbers (or at such other address or telecopy numbers for
a party as shall be specified by like notice):
(a) if to Target, to:
Aurum Software, Inc.
3385 Scott Boulevard
Santa Clara, California 95054
Attn: President and Chief Executive Officer
with a copy to:
Fenwick & West LLP
Two Palo Alto Square, Suite 700
Palo Alto, California 94306
Attn: Jacqueline Daunt, Esq.
-9-
<PAGE>
(b) if to Acquiror, to:
Baan Company N.V.
Baron van Nagellstraat 89
3771 LK Barneveld
P. O. Box 143
3770 AC Barneveld
The Netherlands
Attn: President and Chief Executive Officer
with a copy to each of:
Amal Johnson
Managing Director
Baan USA Inc.
4600 Bohannon Drive #105
Menlo Park, CA 94025
Wilson Sonsini Goodrich & Rosati, P.C.
650 Page Mill Road
Palo Alto, California 94304-1050
Attn: Mark A. Bertelsen, Esq.
Howard S. Zeprun, Esq.
18. GOVERNING LAW
-------------
This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware applicable to agreements made and to be
performed entirely within such State.
19. COUNTERPARTS
------------
This Agreement may be executed in two counterparts, each of which
shall be deemed to be an original, but both of which, taken together, shall
constitute one and the same instrument.
20. EXPENSES
--------
Except as otherwise expressly provided herein or in the Merger
Agreement, all costs and expenses incurred in connection with the transactions
contemplated by this Agreement shall be paid by the party incurring such
expenses.
-10-
<PAGE>
21. AMENDMENTS; WAIVER
------------------
This Agreement may be amended by the parties hereto and the terms and
conditions hereof may be waived only by an instrument in writing signed on
behalf of each of the parties hereto, or, in the case of a waiver, by an
instrument signed on behalf of the party waiving compliance.
22. ASSIGNMENT
----------
Neither of the parties hereto may sell, transfer, assign or otherwise
dispose of any of its rights or obligations under this Agreement or the Option
created hereunder to any other person, without the express written consent of
the other party, except that the rights and obligations hereunder shall inure to
the benefit of and be binding upon any successor of a party hereto.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective duly authorized officers as of the date first
above written.
ACQUIROR:
BAAN COMPANY N.V.
By: /s/ Amal M. Johnson
----------------------------------------------
Name: Amal M. Johnson
Title: Executive Vice President,
Baan Affiliates and Marketing
TARGET:
AURUM SOFTWARE, INC.
By: /s/ Mary Coleman
-----------------------------------------------
Name: Mary Coleman
Title: President and Chief Executive Officer
***STOCK OPTION AGREEMENT***
(Target option to Acquiror)
<PAGE>
EXHIBIT C
FORM OF AURUM SOFTWARE AFFILIATE AGREEMENT
<PAGE>
AURUM SOFTWARE, INC.
AFFILIATE AGREEMENT
This AFFILIATE AGREEMENT ("Agreement") dated as of May ___, 1997, is
entered into between Baan Company N.V., a corporation organized under the laws
of The Netherlands ("Baan") and the undersigned affiliate ("Affiliate") of Aurum
Software, Inc., a Delaware corporation ("Company").
WHEREAS, Baan and Company have entered into an Agreement and Plan of
Reorganization dated May 13, 1997 ("Merger Agreement") pursuant to which a
subsidiary of Baan will merge with and into Company ("Merger"), and Company will
become a subsidiary of Baan (capitalized terms not otherwise defined herein
shall have the meanings ascribed to them in the Merger Agreement);
WHEREAS, pursuant to the Merger, at the Effective Time outstanding shares
of Common Stock of the Company ("Company Common Stock"), including any shares
owned by Affiliate, will be converted into the right to receive Baan Common
Shares;
WHEREAS, it is intended that the Merger will constitute a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986 as
amended (the "Code"), and that it will be a condition to effectiveness of the
Merger that legal counsel for each of Company and Baan will have delivered
written opinions to such effect;
WHEREAS, it is further intended that the Merger will qualify for "pooling-
of-interests" accounting treatment;
WHEREAS, the execution and delivery of this Agreement by Affiliate is a
material inducement to Baan to enter into the Merger Agreement; and
WHEREAS, Affiliate has been advised that Affiliate may be deemed to be an
"affiliate" of Company, as the term "affiliate" is used (i) for purposes of
paragraphs (c) and (d) of Rule 145 of the Rules and Regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the "Commission") and
(ii) in the Commission's Accounting Series Releases 130 and 135, as amended,
although nothing contained herein shall be construed as an admission by
Affiliate that Affiliate is in fact an "affiliate" of Company.
NOW, THEREFORE, intending to be legally bound, the parties hereby agree as
follows:
1. Acknowledgments by Affiliate. Affiliate has been informed that a
----------------------------
reorganization for federal income tax purposes requires that a sufficient number
of former shareholders of the Company maintain a meaningful continuing equity
ownership interest in Baan following the Merger. Affiliate acknowledges and
understands that the representations, warranties and covenants by Affiliate set
<PAGE>
forth herein will be relied upon by Baan, Company, and their respective
"affiliates", counsel and accountants, and that substantial losses and damages
may be incurred by these persons if Affiliate's representations, warranties or
covenants are breached. Affiliate has carefully read this Agreement and the
Merger Agreement and has had the opportunity to discuss the requirements of this
Agreement with his, her or its professional advisors, who are qualified to
advise him, her or it with regard to such matters.
2. Compliance with Rule 145 and the Securities Act.
-----------------------------------------------
(a) Affiliate has been advised that (i) the issuance of shares of Baan
Common Stock in connection with the Merger is expected to be effected pursuant
to a Registration Statement on Form F-4 to be filed to register the shares of
Baan Common Shares under the Securities Act of 1933, as amended (the "Securities
Act"), and as such will not be deemed "restricted securities" within the meaning
of Rule 144 promulgated under the Securities Act, and resale of such shares will
not be subject to any restrictions other than as set forth in Rule 145
promulgated under the Securities Act (which will not apply if such shares are
otherwise transferred pursuant to an effective registration statement under the
Securities Act or an appropriate exemption from registration), and (ii)
Affiliate may be deemed to be an "affiliate" of the Company within the meaning
of the Securities Act and, in particular, Rule 145 promulgated thereunder.
Affiliate accordingly agrees not to sell, transfer or otherwise dispose of any
Baan Common Shares issued to Affiliate in the Merger unless (i) such sale,
transfer or other disposition is made in conformity with the requirements of
Rule 145(d) promulgated under the Securities Act, or (ii) such sale, transfer or
other disposition is made pursuant to an effective registration statement under
the Securities Act or an appropriate exemption from registration, or (iii)
Affiliate delivers to Baan a written opinion of counsel, reasonably acceptable
to Baan in form and substance, that such sale, transfer or other disposition is
otherwise exempt from registration under the Securities Act.
(b) Baan will give stop transfer instructions to its transfer agent
with respect to any Baan Common Shares received by Affiliate pursuant to the
Merger and there will be placed on the certificates representing such Common
Shares, or any substitutions therefor, a legend stating in substance:
"The shares represented by this certificate were issued in a
transaction to which Rule 145 promulgated under the Securities Act of
1933, as amended (the "Securities Act") applies and may only be
transferred in conformity with Rule 145(d) or pursuant to an effective
registration statement under the Securities Act, or in accordance with
a written opinion of counsel, reasonably acceptable to the issuer in
form and substance, that such transfer is exempt from registration
under the Securities Act."
The legend set forth above shall be removed (by delivery of a substitute
certificate without such legend) and Baan shall so instruct its transfer agent,
if Affiliate delivers to Baan satisfactory written evidence that (i) the shares
have been sold in compliance with Rule 145 (in which case, the substitute
-2-
<PAGE>
certificate will be issued in the name of the transferee), or (ii) any of the
other conditions specified in Section 2(a) hereof have been satisfied.
3. Covenants Related to Pooling of Interests. Notwithstanding any other
-----------------------------------------
provision of this Affiliate Agreement to the contrary, during the period
commencing on the date hereof, consistent with Accounting Standards Release
("ASR") No. 135, which period the parties agree will continue until such date
after the Effective Time as shall be the first market trading day following the
date Baan publishes financial results covering at least 30 days of combined
operations of Baan and Company, Affiliate will not sell, exchange, transfer,
pledge, distribute, make any gift or otherwise dispose of or grant any option,
establish any "short" or put-equivalent position with respect to or enter into
any similar transaction (through derivatives or otherwise) intended to reduce or
having the effect, directly or indirectly, of reducing his risk relative to any
shares of Company Securities (as hereinafter defined), or any rights, options or
warrants to purchase Company Securities, or Merger Securities (as hereinafter
defined) or other securities of Baan received by Affiliate in connection with
the Merger. For the purposes of this Agreement, (i) "Company Securities" shall
mean, collectively, all shares of Company Common Stock and any other securities
of the Company held by Affiliate, including all securities as to which Affiliate
has sole or shared voting or investment power, and all rights, options and
warrants to acquire shares of capital stock or other securities of Company
granted to or held by Affiliate, and (ii) "Merger Securities" shall mean,
collectively, all Baan Common Shares that are or may be issued by Baan in
connection with the Merger or the transactions contemplated by the Merger
Agreement, and any Securities that may be paid as a dividend or otherwise
distributed thereon or with respect thereto or issued or delivered in exchange
or substitution therefor or upon conversion thereof. Baan may, at its
discretion, cause a restrictive legend to the foregoing effect to be placed on
certificates representing Merger Securities issued to Affiliate in the Merger
and place a stop transfer notice consistent with the foregoing with its transfer
agent with respect to the certificates. Notwithstanding the foregoing,
Affiliate is entitled to sell or dispose of shares so long as such sale or
disposition is in accordance with ASR No. 135 and the "de minimis" test set
forth in Commission Staff Accounting Bulletin No. 76; provided that Shareholder
--------
has first obtained Baan's prior written approval of any such proposed sale or
disposition.
4. Representations, Warranties and Covenants Related to Tax Effects of
-------------------------------------------------------------------
the Merger.
- ----------
(a) Affiliate is the beneficial owner of Company Securities and did
not acquire any of the Company Securities in contemplation of the Merger;
(b) Affiliate has not engaged in a Sale (as defined below) of any
shares of Company Common Stock in contemplation of the Merger;
(c) Affiliate does not now have, and as of the Effective Time of the
Merger will not have, any current plan or intention (a "Plan") to engage in a
sale, exchange, transfer, redemption or reduction in any way of the
undersigned's risk of ownership by short sale or otherwise, or other
disposition, directly or indirectly (such actions being collectively referred to
herein as a "Sale") of more than fifty percent (50%) of the Baan Common Shares
(or other Merger Securities) (on a fully diluted basis, giving effect to all
options) to be received by Affiliate in the Merger;
-3-
<PAGE>
(d) If Affiliate is a partnership, then the term "Sale" as used in
paragraph (c) above shall not be deemed to include any distribution to the
undersigned's partners, provided that if any recipient of any such distribution
will receive Baan Common Shares (or other Merger Securities) having a fair
market value of 1% or more of the fair market value of all the shares of the
capital stock of Company presently outstanding, the undersigned is not aware of
any Plan on the part of such recipient to engage in a Sale of more than fifty
percent (50%) of Baan Common Shares (or other Merger Securities) (on a fully
diluted basis, giving effect to all options) to be received by such recipient in
such distribution;
(e) Affiliate is not aware of, or participating in, any Plan to engage
in a Sale or Sales of Baan Common Shares (or other Merger Securities) to be
received in the Merger such that the aggregate fair market value, as of the
Effective Time of the Merger, of the shares subject to such Sales would exceed
fifty percent (50%) of the aggregate fair market value of all shares of
outstanding capital stock of Company immediately prior to the Merger;
(f) Affiliate understands that Company, Baan and their respective
affiliates, as well as legal counsel to Company and Baan (in connection with
rendering their opinions that the Merger will be a "reorganization" within the
meaning of Section 368(a) of the Code) will be relying on (a) the truth and
accuracy of the representations contained herein and (b) Affiliate's performance
of the obligations set forth herein.
5. Miscellaneous.
-------------
(a) The Affiliate agrees that, upon receipt of signatures representing
holders of 66 2/3% of Registrable Securities (as such term is defined in the
Registration Rights Agreement dated August 22, 1995 (as amended March 29, 1996)
among the Company and the holders of its then-outstanding shares of Preferred
Stock) and upon consummation of the Merger, such Registration Rights Agreement
shall terminate and cease to be of any effect.
(b) For the convenience of the parties hereto, this Agreement may be
executed in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same document.
(c) This Agreement shall be enforceable by, and shall inure to the
benefit of and be binding upon, the parties hereto and their respective
successors and assigns. As used herein, the term "successors and assigns" shall
mean, where the context so permits, heirs, executors, administrators, trustees
and successor trustees, and personal and other representatives.
(d) This Agreement shall be governed by and construed, interpreted and
enforced in accordance with the internal laws of the State of Delaware.
(e) If a court of competent jurisdiction determines that any provision
of this Agreement is not enforceable or enforceable only if limited in time or
scope, this Agreement shall continue in full force and effect with such
provision stricken or so limited.
-4-
<PAGE>
(f) Counsel to the parties and each of the parties' accountants to the
Agreement shall be entitled to rely upon this Agreement as appropriate.
(g) This Agreement shall not be modified or amended, or any right
hereunder waived or any obligation excused, except by a written agreement signed
by both parties.
(h) This Affiliate Agreement shall be terminated and of no further
force and effect upon termination of the Merger Agreement pursuant to its terms.
[Remainder of this page intentionally left blank]
-5-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
set forth on the first page of this Agreement.
BAAN COMPANY N.V.
By: _____________________________________________
Title: __________________________________________
AFFILIATE
By:______________________________________________
Name of Affiliate: ______________________________
Name of Signatory (if different from name of
Affiliate): _____________________________________
Title of Signatory
(if applicable): ________________________________
Company shares beneficially owned:
_______________ shares of Common Stock
Company shares subject to outstanding options:
_______________ shares of Common Stock
***AURUM SOFTWARE, INC. AFFILIATE AGREEMENT***
-6-
<PAGE>
EXHIBIT D-1
FORM OF EMPLOYMENT AGREEMENT
NOT YET COMPLETED
<PAGE>
EXHIBIT D-2
FORM OF NON-COMPETITION AGREEMENT
NOT YET COMPLETED
<PAGE>
EXHIBIT 2.2
[Option from Target to Acquiror]
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT dated as of May 13, 1997 (the "AGREEMENT") is
entered into by and between Aurum Software, Inc., a Delaware corporation
("TARGET"), and Baan Company N.V., a corporation incorporated in the Netherlands
("ACQUIROR"). Capitalized terms used in this Agreement but not defined herein
shall have the meanings ascribed thereto in the Merger Agreement (as defined
below).
RECITALS
--------
WHEREAS, concurrently with the execution and delivery of this Agreement,
Target, Acquiror and Green Software Acquisition Corp., a Delaware corporation
and a wholly owned subsidiary of Acquiror ("SUB"), are entering into an
Agreement and Plan of Reorganization (the "MERGER AGREEMENT"), which provides
that, among other things, upon the terms and subject to the conditions thereof,
Target, Acquiror and Sub will enter into a business combination transaction (the
"MERGER"); and
WHEREAS, as a condition to Acquiror's willingness to enter into the Merger
Agreement, Acquiror has requested that Target agree, and Target has so agreed,
to grant to Acquiror an option to acquire shares of Target's Common Stock,
$0.001 par value, upon the terms and subject to the conditions set forth herein;
AGREEMENT
---------
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements set forth herein and in the Merger Agreement and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto agree as follows:
1. GRANT OF OPTION
---------------
Target hereby grants to Acquiror an irrevocable option (the "OPTION")
to acquire up to a number of shares of the Common Stock, $0.001 par value, of
Target ("TARGET SHARES") equal to 19.9% of the issued and outstanding shares as
of the first date, if any, upon which an Exercise Event (as defined in Section
2(a) below) shall occur (the "OPTION SHARES"), in the manner set forth below
(i) by paying cash at a price of $21.00 per share (the "EXERCISE PRICE") and/or,
at Acquiror's election, (ii) by exchanging therefor shares of the Common Stock,
0.01 par value, of Acquiror ("ACQUIROR SHARES") at a rate (the "EXERCISE
RATIO"), for each Option Share, of a number of Acquiror Shares equal to the
Exercise Price divided by the average closing sale prices during the previous 30
trading days of Acquiror Shares on the Nasdaq National Market immediately
preceding the date of the Closing (as defined below) of the particular Option
exercise.
<PAGE>
2. EXERCISE OF OPTION; MAXIMUM PROCEEDS
------------------------------------
(a) For all purposes of this Agreement, an "EXERCISE EVENT" shall have
occurred upon the occurrence of both: (i) the individuals or entities entering
into Voting Agreements and providing the related proxies on the date hereof
having ceased to own, in the aggregate, at least a majority of the capital stock
of the Target or (ii) any of such Voting Agreements or the related proxies
having been declared invalid or unenforceable and (x) the earlier of the
consummation of, or the record date, if any, for a meeting of Target's
stockholders with regard to an Acquisition Proposal with respect to Target with
any party other than Acquiror (or an affiliate of Acquiror) if the Board of
Directors of Target shall have withheld, withdrawn, or modified in a manner
adverse to Acquiror its recommendation in favor of adoption and approval of the
Merger Agreement and approval of the Merger (and at that time there shall not
have occurred a Material Adverse Effect on Acquiror) after receipt of and in
connection with an Acquisition Proposal with respect to Target, (y) the
commencement of a tender or exchange offer for 20% or more of any class of
Target's capital stock (and/or during any time which such a tender or exchange
offer remains open or has been consummated), or (z) pursuant to a Termination
under Section 7.1(e) or (g) of the Merger Agreement.
(b) Acquiror may deliver to Target a written notice (an "EXERCISE
NOTICE") specifying that it wishes to exercise and close a purchase of Option
Shares at any time within 30 days following the occurrence of an Exercise Event,
specifying the total number of Option Shares it wishes to acquire. Each closing
of a purchase of Option Shares (a "CLOSING") shall occur on the date and at a
time designated by the Acquiror in an Exercise Notice delivered at least five
(5) business days prior to the date of such Closing, which Closing shall be held
at the offices of counsel to Acquiror upon the occurrence of an Exercise Event
prior to the termination of the Option as may be designated by Acquiror in
writing. In the event that no Exercise Event shall occur prior to termination
of the Option, such Exercise Notice shall be void and of no further force and
effect.
(c) The Option shall terminate upon the earlier of (i) the Effective
Time and (ii) 12 months following the termination of the Merger Agreement
pursuant to Article VII thereof if an Exercise Event shall have occurred on or
prior to the date of such termination, and (iii) the date on which the Merger
Agreement is terminated pursuant to Article VII thereof if no Exercise Event
shall have occurred on or prior to such date; provided, however, that if the
-------- -------
Option is exercisable but cannot be exercised by reason of any applicable
government order or because the waiting period related to the issuance of the
Option Shares under the HSR Act shall not have expired or been terminated, then
the Option shall not terminate until the tenth business day after such
impediment to exercise shall have been removed or shall have become final and
not subject to appeal. Notwithstanding the foregoing, the Option may not be
exercised if (i) Acquiror shall have breached in any material respect any of its
covenants or agreements contained in the Merger Agreement or (ii) the
representations and warranties of Acquiror contained in the Merger Agreement
shall not have been true and correct in all material respects on and as of the
date when made.
-2-
<PAGE>
3. CONDITIONS TO CLOSING
---------------------
The obligation of Target to issue Option Shares to Acquiror hereunder
is subject to the conditions that (a) any waiting period under the HSR Act
applicable to the issuance of the Option Shares hereunder shall have expired or
been terminated; (b) all material consents, approvals, orders or authorizations
of, or registrations, declarations or filings with, any Federal, state or local
administrative agency or commission or other Federal state or local governmental
authority or instrumentality, if any, required in connection with the issuance
of the Option Shares hereunder shall have been obtained or made, as the case may
be; and (c) no preliminary or permanent injunction or other order by any court
of competent jurisdiction prohibiting or otherwise restraining such issuance
shall be in effect. It is understood and agreed that at any time during which
Acquiror shall be entitled to deliver to Target an Exercise Notice, the parties
will use their respective best efforts to satisfy all conditions to Closing, so
that a Closing may take place as promptly as practicable, and in any event, upon
the occurrence of an Exercise Event.
4. CLOSING
-------
At any Closing, (a) Target shall deliver to Acquiror a single
certificate in definitive form representing the number of Target Shares
designated by Acquiror in its Exercise Notice, such certificate to be registered
in the name of Acquiror and to bear the legend set forth in Section 10 hereof,
against delivery of (b) payment by Acquiror to Target of the aggregate purchase
price for the Target Shares so designated and being purchased by delivery of (i)
a certified check or bank check and/or, at Acquiror's election, (ii) a single
certificate in definitive form representing the number of Acquiror Shares being
issued by Acquiror in consideration therefor (based on the Exercise Ratio), such
certificate to be registered in the name of Target and to bear the legend set
forth in Section 10 hereof.
5. REPRESENTATIONS AND WARRANTIES OF TARGET
----------------------------------------
Target represents and warrants to Acquiror that (a) Target is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has the corporate power and authority to enter into
this Agreement and to carry out its obligations hereunder; (b) the execution and
delivery of this Agreement by Target and consummation by Target of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Target and no other corporate proceedings on the
part of Target are necessary to authorize this Agreement or any of the
transactions contemplated hereby; (c) this Agreement has been duly executed and
delivered by Target and constitutes a legal, valid and binding obligation of
Target and, assuming this Agreement constitutes a legal, valid and binding
obligation of Acquiror, is enforceable against Target in accordance with its
terms, except as enforceability may be limited by bankruptcy and other laws
affecting the rights and remedies of creditors generally and general principles
of equity; (d) except for any filings required under the HSR Act, Target has
taken all necessary corporate and other action to authorize and reserve for
issuance and to permit it to issue upon exercise of the Option, and at all times
from the date hereof until the termination of the Option will have reserved for
issuance, a sufficient number of unissued Target Shares for Acquiror to exercise
the Option in full and
-3-
<PAGE>
will take all necessary corporate or other action to authorize and reserve for
issuance all additional Target Shares or other securities which may be issuable
pursuant to Section 9(a) upon exercise of the Option, all of which, upon their
issuance and delivery in accordance with the terms of this Agreement, will be
validly issued, fully paid and nonassessable; (e) upon delivery of the Target
Shares and any other securities to Acquiror upon exercise of the Option,
Acquiror will acquire such Target Shares or other securities free and clear of
all material claims, liens, charges, encumbrances and security interests of any
kind or nature whatsoever, excluding those imposed by Acquiror; (f) the
execution and delivery of this Agreement by Target do not, and the performance
of this Agreement by Target will not, (i) violate the Certificate of
Incorporation or Bylaws of Target, (ii) conflict with or violate any order
applicable to Target or any of its subsidiaries or by which they or any of their
property is bound or affected or (iii) result in any breach of or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give rise to any right of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or
encumbrance on any property or assets of Target or any of its subsidiaries
pursuant to, any contract or agreement to which Target or any of its
subsidiaries is a party or by which Target or any of its subsidiaries or any of
their property is bound or affected, except, in the case of clauses (ii) and
(iii) above, for violations, conflicts, breaches, defaults, rights of
termination, amendment, acceleration or cancellation, liens or encumbrances
which would not, individually or in the aggregate, have a Material Adverse
Effect on Target; and (g) the execution and delivery of this Agreement by Target
does not, and the performance of this Agreement by Target will not, require any
consent, approval, authorization or permit of, or filing with, or notification
to, any Governmental Entity except pursuant to the HSR Act.
6. REPRESENTATIONS AND WARRANTIES OF ACQUIROR
------------------------------------------
Acquiror represents and warrants to Target that (a) Acquiror is a
corporation duly incorporated, validly existing and in good standing under the
laws of The Netherlands and has the corporate power and authority to enter into
this Agreement and to carry out its obligations hereunder; (b) the execution and
delivery of this Agreement by Acquiror and the consummation by Acquiror of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Acquiror and no other corporate proceedings on
the part of Acquiror are necessary to authorize this Agreement or any of the
transactions contemplated hereby; (c) this Agreement has been duly executed and
delivered by Acquiror and constitutes a legal, valid and binding obligation of
Acquiror and, assuming this Agreement constitutes a legal, valid and binding
obligation of Target, is enforceable against Acquiror in accordance with its
terms, except as enforceability may be limited by bankruptcy and other laws
affecting the rights and remedies of creditors generally and general principles
of equity; and (d) except for any filings required under the HSR Act, Acquiror
has taken (or will in a timely manner take) all necessary corporate and other
action in connection with any exercise of the Option; (e) upon delivery of
Acquiror Shares to Target in consideration of any acquisition of Target Shares
pursuant hereto, Target will acquire such Acquiror Shares free and clear of all
material claims, liens, charges, encumbrances and security interests of any kind
or nature whatsoever, excluding those imposed by Target; (f) the execution and
delivery of this Agreement by Acquiror do not, and the performance of this
Agreement by Acquiror will not, (i) violate the Articles of Association of
Acquiror, (ii) conflict with or violate any order applicable to Acquiror or any
of its subsidiaries or by which they or any of their property is bound or
affected or (iii) result in any breach
-4-
<PAGE>
of or constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give rise to any right of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or encumbrance on any of the property or assets of Acquiror or any of its
subsidiaries pursuant to, any contract or agreement to which Acquiror or any of
its subsidiaries is a party or by which Acquiror or any of its subsidiaries or
any of their property is bound or affected, except, in the case of clauses (ii)
and (iii) above, for violations, conflicts, breaches, defaults, rights of
termination, amendment, acceleration or cancellation, liens or encumbrances
which would not, individually or in the aggregate, have a Material Adverse
Effect on Acquiror; (g) the execution and delivery of this Agreement by Acquiror
does not, and the performance of this Agreement by Acquiror will not, require
any consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Entity except pursuant to the HSR Act; and (h)
any Target Shares acquired upon exercise of the Option will not be acquired by
Acquiror with a view to the public distribution thereof and Acquiror will not
sell or otherwise dispose of such shares in violation of applicable law or this
Agreement.
7. CERTAIN RIGHTS
--------------
(a) ACQUIROR PUT. If Acquiror shall have exercised the Option,
------------
Acquiror may thereafter deliver to Target a written notice (a "PUT NOTICE"), at
any time during which Acquiror may exercise the Option, specifying that it
wishes to sell (as specified in such Put Notice) all or a portion of the Option
Shares acquired as a result of such exercise at the price, and in the form, set
forth in paragraph (b) below. At any time after delivery of a Put Notice,
unless such Put Notice is withdrawn by Acquiror, the closing of the Put (the
"PUT CLOSING") shall take place at the principal offices of Target on the date
specified in the Put Notice (which shall be at least 5 days after the date of
such Put Notice).
(b) PAYMENT AND REDELIVERY OF CASH OR ACQUIROR SHARES. At the Put
--------------------------------------------------
Closing, (i) Acquiror shall surrender to Target the certificates evidencing the
Option Shares to be purchased by Target at such Put Closing and (ii) Target
shall deliver to Acquiror a proportionate amount of the aggregate consideration
paid by Acquiror in connection with any exercise of the Option. In addition,
the consideration to be paid by Target to Acquiror at any Put Closing shall be
in the form that is proportionate to the form previously paid by Acquiror to
Target. By way of example only, if (x) one third of the aggregate Option Shares
shall have been acquired for cash and two-thirds shall have been acquired for
Acquiror Shares, then (y) the consideration to be paid by Target to Acquiror at
such Put Closing shall consist of one-third cash and two-thirds Acquiror Shares.
Any cash payment required to be made by Target to Acquiror shall be paid a
certified check or bank check. In connection with any Acquiror Shares returned
to Acquiror at a Put Closing, Target shall represent and warrant that such
shares are then free and clear of all claims, liens, charges, encumbrances and
security interests of any kind or nature whatsoever, other than those imposed by
Acquiror.
(c) EFFECT OF CERTAIN ACTIONS. The amount of Option Shares and
--------------------------
Acquiror Shares delivered or required to be delivered hereunder shall reflect
appropriately the effect of any stock split, reverse stock split, stock dividend
(including any dividend or distribution of securities convertible into Acquiror
Common Shares or Target Common Stock), reorganization,
-5-
<PAGE>
recapitalization or other like change with respect to Acquiror Common Shares or
Target Common Stock occurring after the date of Closing and prior to the date of
the Put Closing.
(d) RESTRICTIONS ON TRANSFER. Until the termination of the Option,
------------------------
Target shall not sell, transfer or otherwise dispose of any Acquiror Shares
acquired by it pursuant to this Agreement.
8. REGISTRATION RIGHTS
-------------------
(a) Following the termination of the Merger Agreement, Acquiror may by
written notice (a "REGISTRATION NOTICE") to Target request Target to register
under the Securities Act, in accordance with Target's existing Amended and
Restated Registration Rights Agreement, dated August 22, 1995 (the "REGISTRATION
---------------
RIGHTS AGREEMENT"), all or any part of the shares acquired by Acquiror pursuant
to this Agreement (the "REGISTRABLE SECURITIES") in order to permit the sale or
other disposition of such shares pursuant to a bona fide firm commitment
underwritten public offering in which the Acquiror and the underwriters shall
effect as wide a distribution of such Registrable Securities as is reasonably
practicable; provided, however, that any such Registration Notice must relate to
-------- -------
a number of shares equal to at least 2% of the outstanding shares of Common
Stock of the Target on a fully diluted basis and that any rights to require
registration hereunder shall terminate with respect to any shares that may be
sold pursuant to Rule 144(k) under the Securities Act.
(b) The registration rights set forth in this Section 8 are subject to
the condition that Acquiror shall provide Target with such information with
respect to Acquiror's Registrable Securities, the plan for distribution thereof,
and such other information with respect to such Acquiror, in the reasonable
judgment of counsel for Target, is necessary to enable Acquiror to include in a
registration statement all material facts required to be disclosed with respect
to a registration thereunder.
(c) A registration effected under this Section 8 shall be effected at
Target's expense, except for underwriting discounts and commissions and the fees
and expenses of counsel to Acquiror, and Target shall provide to the
underwriters such documentation (including certificates, opinions of counsel and
"comfort" letters from auditors) as are customary in connection with
underwritten public offerings and as such underwriters may reasonably require.
In connection with any registration, Target shall agree to enter into an
underwriting agreement reasonably acceptable to each such party, in form and
substance customary for transactions of this type with the underwriters
participating in such offering.
(d) Indemnification
---------------
(i) Target will indemnify Acquiror, each of its directors and
officers and each person who controls Acquiror within the meaning of Section 15
of the Securities Act, and each underwriter of Target's securities, with respect
to any registration, qualification or compliance which has been effected
pursuant to this Agreement, in accordance with the terms and conditions of
Target's existing Registration Rights Agreement and Acquiror will indemnify
Target in accordance with the
-6-
<PAGE>
terms and conditions of Target's existing Registration Rights Agreement;
provided, however that such terms and conditions may not be modified, altered,
or amended without Acquiror's consent.
9. ADJUSTMENT UPON CHANGES IN CAPITALIZATION; RIGHTS PLANS
-------------------------------------------------------
(a) In the event of any change in the Target Shares by reason of stock
dividends, stock splits, reverse stock splits, mergers (other than the Merger),
recapitalizations, combinations, exchanges of shares and the like, the type and
number of shares or securities subject to the Option, the Exercise Ratio and the
Exercise Price shall be adjusted appropriately, and proper provision shall be
made in the agreements governing such transaction so that Acquiror shall
receive, upon exercise of the Option, the number and class of shares or other
securities or property that Acquiror would have received in respect of the
Target Shares if the Option had been exercised immediately prior to such event
or the record date therefor, as applicable.
(b) At any time during which the Option is exercisable, and at any
time after the Option is exercised (in whole or in part, if at all), Target
shall not adopt a stockholders rights plan (a so-called "poison pill") that
contains provisions for the distribution of rights thereunder as a result of
Acquiror being the beneficial owner of shares of the first party by virtue of
the Option being exercisable or having been exercised (or as a result of such
other party beneficially owning shares issuable in respect of any Option
Shares). It is understood, however, that following termination (if any) of the
Merger Agreement, a party may adopt a stockholders rights plan, that contains
provisions for the distribution of rights thereunder as a result of the other
party being the beneficial owner of shares of the first party in addition to
those that may be beneficially owned by virtue of the Option being exercisable
or having been exercised (or as a result of such other party beneficially owning
shares issuable in respect of any Option Shares).
10. RESTRICTIVE LEGENDS
-------------------
Each certificate representing Option Shares issued to Acquiror
hereunder, and each certificate representing Acquiror Shares delivered to Target
at a Closing, shall include a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE REOFFERED OR SOLD
ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE. SUCH SECURITIES ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON
TRANSFER AS SET FORTH IN THE STOCK OPTION AGREEMENT DATED AS OF MAY 13,
1997, A COPY OF WHICH MAY BE OBTAINED FROM ACQUIROR.
11. LISTING AND HSR FILING
----------------------
Target, upon the request of Acquiror, shall promptly file an
application to list the Target Shares to be acquired upon exercise of the Option
for quotation on the Nasdaq National
-7-
<PAGE>
Market and shall use its best efforts to obtain approval of such listing as soon
as practicable. Promptly after the date hereof, each of the parties hereto shall
promptly file with the Federal Trade Commission and the Antitrust Division of
the United States Department of Justice all required premerger notification and
report forms and other documents and exhibits required to be filed under the HSR
Act to permit the acquisition of the Target Shares subject to the Option at the
earliest possible date.
12. BINDING EFFECT
--------------
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns. Nothing
contained in this Agreement, express or implied, is intended to confer upon any
person other than the parties hereto and their respective successors and
permitted assigns any rights or remedies of any nature whatsoever by reason of
this Agreement. Any shares sold by a party in compliance with the provisions of
Section 8 shall, upon consummation of such sale, be free of the restrictions
imposed with respect to such shares by this Agreement and any transferee of such
shares shall not be entitled to the rights of such party. Certificates
representing shares sold in a registered public offering pursuant to Section 8
shall not be required to bear the legend set forth in Section 10.
13. SPECIFIC PERFORMANCE
--------------------
The parties recognize and agree that if for any reason any of the
provisions of this Agreement are not performed in accordance with their specific
terms or are otherwise breached, immediate and irreparable harm or injury would
be caused for which money damages would not be an adequate remedy. Accordingly,
each party agrees that in addition to other remedies the other party shall be
entitled to an injunction restraining any violation or threatened violation of
the provisions of this Agreement. In the event that any action shall be brought
in equity to enforce the provisions of the Agreement, neither party will allege,
and each party hereby waives the defense, that there is an adequate remedy at
law.
-8-
<PAGE>
14. ENTIRE AGREEMENT
----------------
This Agreement and the Merger Agreement (including the appendices
thereto) constitute the entire agreement between the parties with respect to the
subject matter hereof and supersede all other prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof.
15. FURTHER ASSURANCES
------------------
Each party will execute and deliver all such further documents and
instruments and take all such further action as may be necessary in order to
consummate the transactions contemplated hereby.
16. VALIDITY
--------
The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of the other provisions of this
Agreement, which shall remain in full force and effect. In the event any
Governmental Entity of competent jurisdiction holds any provision of this
Agreement to be null, void or unenforceable, the parties hereto shall negotiate
in good faith and shall execute and deliver an amendment to this Agreement in
order, as nearly as possible, to effectuate, to the extent permitted by law, the
intent of the parties hereto with respect to such provision.
17. NOTICES
-------
All notices and other communications hereunder shall be in writing and
shall be deemed given if delivered personally or by commercial delivery service,
or sent via telecopy (receipt confirmed) to the parties at the following
addresses or telecopy numbers (or at such other address or telecopy numbers for
a party as shall be specified by like notice):
(a) if to Target, to:
Aurum Software, Inc.
3385 Scott Boulevard
Santa Clara, California 95054
Attn: President and Chief Executive Officer
with a copy to:
Fenwick & West LLP
Two Palo Alto Square, Suite 700
Palo Alto, California 94306
Attn: Jacqueline Daunt, Esq.
-9-
<PAGE>
(b) if to Acquiror, to:
Baan Company N.V.
Baron van Nagellstraat 89
3771 LK Barneveld
P. O. Box 143
3770 AC Barneveld
The Netherlands
Attn: President and Chief Executive Officer
with a copy to each of:
Amal Johnson
Managing Director
Baan USA Inc.
4600 Bohannon Drive #105
Menlo Park, CA 94025
Wilson Sonsini Goodrich & Rosati, P.C.
650 Page Mill Road
Palo Alto, California 94304-1050
Attn: Mark A. Bertelsen, Esq.
Howard S. Zeprun, Esq.
18. GOVERNING LAW
-------------
This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware applicable to agreements made and to be
performed entirely within such State.
19. COUNTERPARTS
------------
This Agreement may be executed in two counterparts, each of which
shall be deemed to be an original, but both of which, taken together, shall
constitute one and the same instrument.
20. EXPENSES
--------
Except as otherwise expressly provided herein or in the Merger
Agreement, all costs and expenses incurred in connection with the transactions
contemplated by this Agreement shall be paid by the party incurring such
expenses.
-10-
<PAGE>
21. AMENDMENTS; WAIVER
------------------
This Agreement may be amended by the parties hereto and the terms and
conditions hereof may be waived only by an instrument in writing signed on
behalf of each of the parties hereto, or, in the case of a waiver, by an
instrument signed on behalf of the party waiving compliance.
22. ASSIGNMENT
----------
Neither of the parties hereto may sell, transfer, assign or otherwise
dispose of any of its rights or obligations under this Agreement or the Option
created hereunder to any other person, without the express written consent of
the other party, except that the rights and obligations hereunder shall inure to
the benefit of and be binding upon any successor of a party hereto.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective duly authorized officers as of the date first
above written.
ACQUIROR:
BAAN COMPANY N.V.
By: /s/ Amal M. Johnson
----------------------------------------------
Name: Amal M. Johnson
Title: Executive Vice President,
Baan Affiliates and Marketing
TARGET:
AURUM SOFTWARE, INC.
By: /s/ Mary Coleman
-----------------------------------------------
Name: Mary Coleman
Title: President and Chief Executive Officer
***STOCK OPTION AGREEMENT***
(Target option to Acquiror)
<PAGE>
EXHIBIT 10.3
AURUM SOFTWARE, INC.
1996 DIRECTOR OPTION PLAN
1. Purposes of the Plan. The purposes of this Aurum Software, Inc., 1996
--------------------
Director Option Plan are to attract and retain the best available personnel for
service as Outside Directors (as defined herein) of the Company, to provide
additional incentive to the Outside Directors of the Company to serve as
Directors, and to encourage their continued service on the Board.
All options granted hereunder shall be nonstatutory stock options.
2. Definitions. As used herein, the following definitions shall apply:
-----------
(a) "Board" shall mean the Board of Directors of the Company.
-----
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
----
(c) "Common Stock" shall mean the Common Stock of the Company.
------------
(d) "Company" shall mean Aurum Software, Inc., a Delaware
-------
corporation.
(e) "Director" shall mean a member of the Board.
--------
(f) "Employee" shall mean any person, including officers and
--------
Directors, employed by the Company or any Parent or Subsidiary of the Company.
The payment of a Director's fee by the Company shall not be sufficient in and of
itself to constitute "employment" by the Company.
(g) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
------------
amended.
(h) "Fair Market Value" shall mean, as of any date, the value of
-----------------
Common Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including, without limitation, the
National Market of The Nasdaq Stock Market, the Fair Market Value of a Share of
Common Stock shall be the closing sales price for such stock (or the closing
bid, if no sales were reported) as quoted on such system or exchange (or the
exchange with the greatest volume of trading in Common Stock) on the date of
determination, as reported in The Wall Street Journal or such other source as
the Board deems reliable;
(ii) If the Common Stock is quoted on The Nasdaq Stock Market
(but not on the National Market thereof) or regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of
a Share of Common Stock shall be the mean between the high bid and low asked
prices for the Common Stock on the date of determination, as reported in The
Wall Street Journal or such other source as the Board deems reliable, or;
<PAGE>
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Board.
(i) "Inside Director" shall mean a Director who is an Employee.
---------------
(j) "Option" shall mean a stock option granted pursuant to the Plan.
------
(k) "Optioned Stock" shall mean the Common Stock subject to an
--------------
Option.
(l) "Optionee" shall mean a Director who holds an Option.
--------
(m) "Outside Director" shall mean a Director who is not an Employee.
----------------
(n) "Parent" shall mean a "parent corporation," whether now or
------
hereafter existing, as defined in Section 424(e) of the Code.
(o) "Plan" shall mean this 1996 Director Option Plan.
----
(p) "Share" shall mean a share of Common Stock, as adjusted in
-----
accordance with Section 10 of the Plan.
(q) "Subsidiary" shall mean a "subsidiary corporation," whether now
----------
or hereafter existing, as defined in Section 424(f) of the Internal Revenue Code
of 1986.
3. Stock Subject to the Plan. Subject to the provisions of Section 10 of
-------------------------
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 150,000/*/ Shares of Common Stock (the "Pool"). The Shares may
be authorized, but unissued, or reacquired Common Stock.
If an Option expires or becomes unexercisable without having been
exercised in full, the unpurchased Shares which were subject thereto shall
become available for future grant or sale under the Plan (unless the Plan has
terminated). Shares that have actually been issued under the Plan shall not be
returned to the Plan and shall not become available for future distribution
under the Plan.
4. Administration and Grants of Options under the Plan.
---------------------------------------------------
(a) Procedure for Grants. All grants of Options to Outside Directors
--------------------
under this Plan shall be automatic and nondiscretionary and shall be made
strictly in accordance with the following provisions:
_____________________
/*/ After adjustment for the one-for-four reverse split of the Common
Stock in September 1996.
-2-
<PAGE>
(i) No person shall have any discretion to select which
Outside Directors shall be granted Options or to determine the number of Shares
to be covered by Options granted to Outside Directors.
(ii) Each Outside Director shall be automatically granted an
Option to purchase 18,750 Shares/*/ (the "First Option") on the date on which
such person first becomes an Outside Director, whether through election by the
stockholders of the Company or appointment by the Board to fill a vacancy;
provided, however, that an Inside Director who ceases to be an Inside Director
- -------- -------
but who remains a Director shall not receive a First Option; and provided
--------
further, that any Outside Director who already serves in such capacity on the
- -------
date of adoption of the Plan by the Board shall not receive a First Option.
(iii) Each Outside Director shall be automatically granted an
Option to purchase 4,688 Shares/*/ (a "Subsequent Option") at the next meeting
of the Board of Directors following the Annual Meeting of Stockholders in each
year commencing with the 1997 Annual Meeting of Stockholders provided he or she
is then an Outside Director and if as of such date, he or she shall have served
on the Board for at least the preceding six (6) months.
(iv) Notwithstanding the provisions of subsections (ii) and
(iii) hereof, any exercise of an Option made before the Company has obtained
stockholder approval of the Plan in accordance with Section 16 hereof shall be
conditioned upon the Company's obtaining such stockholder approval of the Plan
in accordance with Section 16 hereof.
(v) The terms of a First Option granted hereunder shall be as
follows:
(A) the term of the First Option shall be ten (10) years.
(B) the First Option shall be exercisable only while the
Outside Director remains a Director of the Company, except as set forth in
Sections 8 and 10 hereof.
(C) the exercise price per Share shall be one hundred
percent (100%) of the Fair Market Value per Share on the date of grant of the
First Option. In the event that the date of grant of the First Option is not a
trading day, the exercise price per Share shall be one hundred percent (100%) of
the Fair Market Value on the next trading day immediately following the date of
grant of the First Option; provided, however, that in connection with the grant
-------- -------
of a First Option upon effectiveness of the Plan as a result of the initial
public offering of the Company's Common Stock, the exercise price per Share for
such First Option shall equal the initial public offering price.
_____________________
/*/ After adjustment for the one-for-four revenue split of the Common
Stock in September 1996.
-3-
<PAGE>
(D) subject to Section 10 hereof, the First Option shall
become exercisable as to twenty-five percent (25%) of the Shares subject to the
First Option one year after its date of grant and as to 1/48th of the shares
each month thereafter so that the first Option shall be fully exercisable four
(4) years after the date of grant, provided that the Optionee continues to serve
as a Director on such dates.
(vi) The terms of a Subsequent Option granted hereunder shall
be as follows:
(A) the term of the Subsequent Option shall be ten (10)
years.
(B) the Subsequent Option shall be exercisable only while
the Outside Director remains a Director of the Company, except as set forth in
Sections 8 and 10 hereof.
(C) the exercise price per Share shall be one hundred
percent (100%) of the Fair Market Value per Share on the date of grant of the
Subsequent Option. In the event that the date of grant of the Subsequent Option
is not a trading day, the exercise price per Share shall be one hundred percent
(100%) of the Fair Market Value on the next trading day immediately following
the date of grant of the Subsequent Option.
(D) subject to Section 10 hereof, the Subsequent Option
shall become exercisable as to 1/48th of the Shares subject to the Subsequent
Option on each monthly anniversary of its date of grant, provided that the
Optionee continues to serve as a Director on such dates.
(vii) In the event that any Option granted under the Plan would
cause the number of Shares subject to outstanding Options plus the number of
Shares previously purchased under Options to exceed the Pool, then the remaining
Shares available for Option grant shall be granted under Options to the Outside
Directors on a pro rata basis. No further grants shall be made until such time,
if any, as additional Shares become available for grant under the Plan through
action of the Board or the stockholders to increase the number of Shares which
may be issued under the Plan or through cancellation or expiration of Options
previously granted hereunder.
5. Eligibility. Options may be granted only to Outside Directors. All
-----------
Options shall be automatically granted in accordance with the terms set forth in
Section 4 hereof.
The Plan shall not confer upon any Optionee any right with respect to
continuation of service as a Director or nomination to serve as a Director, nor
shall it interfere in any way with any rights which the Director or the Company
may have to terminate the Director's relationship with the Company at any time.
6. Term of Plan. The Plan shall become effective upon the later to occur
------------
of its approval by the stockholders of the Company as described in Section 16 of
the Plan or the effective date of the Company's initial public offering of its
Common Stock that is registered with the Securities and
-4-
<PAGE>
Exchange Commission. It shall continue in effect for a term of ten (10) years
unless sooner terminated under Section 11 of the Plan.
7. Form of Consideration. The consideration to be paid for the Shares to
---------------------
be issued upon exercise of an Option, including the method of payment, shall
consist of (i) cash, (ii) check, (iii) other shares which (x) in the case of
Shares acquired upon exercise of an Option, have been owned by the Optionee for
more than six (6) months on the date of surrender, and (y) have a Fair Market
Value on the date of surrender equal to the aggregate exercise price of the
Shares as to which said Option shall be exercised, (iv) delivery of a properly
executed exercise notice together with such other documentation as the Company
and the broker, if applicable, shall require to effect an exercise of the Option
and delivery to the Company of the sale or loan proceeds required to pay the
exercise price, or (v) any combination of the foregoing methods of payment.
8. Exercise of Option.
------------------
(a) Procedure for Exercise; Rights as a Stockholder. Any Option
-----------------------------------------------
granted hereunder shall be exercisable at such times as are set forth in Section
4 hereof; provided, however, that no Options shall be exercisable until
-------- -------
stockholder approval of the Plan in accordance with Section 16 hereof has been
obtained.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may consist of any consideration and method of payment
allowable under Section 7 of the Plan. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the stock certificate evidencing such Shares, no right
to vote or receive dividends or any other rights as a stockholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
A share certificate for the number of Shares so acquired shall be issued to the
Optionee as soon as practicable after exercise of the Option. No adjustment
shall be made for a dividend or other right for which the record date is prior
to the date the stock certificate is issued, except as provided in Section 10 of
the Plan.
Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) Termination of Continuous Status as a Director. Subject to
----------------------------------------------
Section 10 hereof, in the event an Optionee's status as a Director terminates
(other than upon the Optionee's death or total and permanent disability (as
defined in Section 22(e)(3) of the Code)), the Optionee may exercise his or her
Option, but only within three (3) months following the date of such termination,
and only to the extent that the Optionee was entitled to exercise it on the date
of such termination (but in no event later than
-5-
<PAGE>
the expiration of its ten (10) year term). To the extent that the Optionee was
not entitled to exercise an Option on the date of such termination, and to the
extent that the Optionee does not exercise such Option (to the extent otherwise
so entitled) within the time specified herein, the Option shall terminate.
(c) Disability of Optionee. In the event Optionee's status as a
----------------------
Director terminates as a result of total and permanent disability (as defined in
Section 22(e)(3) of the Code), the Optionee may exercise his or her Option, but
only within twelve (12) months following the date of such termination, and only
to the extent that the Optionee was entitled to exercise it on the date of such
termination (but in no event later than the expiration of its ten (10) year
term). To the extent that the Optionee was not entitled to exercise an Option
on the date of termination, or if he or she does not exercise such Option (to
the extent otherwise so entitled) within the time specified herein, the Option
shall terminate.
(d) Death of Optionee. In the event of an Optionee's death, the
-----------------
Optionee's estate or a person who acquired the right to exercise the Option by
bequest or inheritance may exercise the Option, but only within twelve (12)
months following the date of death, and only to the extent that the Optionee was
entitled to exercise it on the date of death (but in no event later than the
expiration of its ten (10) year term). To the extent that the Optionee was not
entitled to exercise an Option on the date of death, and to the extent that the
Optionee's estate or a person who acquired the right to exercise such Option
does not exercise such Option (to the extent otherwise so entitled) within the
time specified herein, the Option shall terminate.
9. Non-Transferability of Options. The Option may not be sold, pledged,
------------------------------
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.
10. Adjustments Upon Changes in Capitalization, Dissolution, Merger, Asset
----------------------------------------------------------------------
Sale or Change of Control.
-------------------------
(a) Changes in Capitalization. Subject to any required action by the
-------------------------
stockholders of the Company, the number of Shares covered by each outstanding
Option, the number of Shares which have been authorized for issuance under the
Plan but as to which no Options have yet been granted or which have been
returned to the Plan upon cancellation or expiration of an Option, as well as
the price per Share covered by each such outstanding Option, and the number of
Shares issuable pursuant to the automatic grant provisions of Section 4 hereof
shall be proportionately adjusted for any increase or decrease in the number of
issued Shares resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued Shares effected without receipt of
consideration by the Company; provided, however, that conversion of any
-------- -------
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of Shares
subject to an Option.
-6-
<PAGE>
(b) Dissolution or Liquidation. In the event of the proposed
--------------------------
dissolution or liquidation of the Company, to the extent that an Option has not
been previously exercised, it shall terminate immediately prior to the
consummation of such proposed action.
(c) Merger or Asset Sale. In the event of a merger of the Company
--------------------
with or into another corporation, or the sale of all or substantially all of the
assets of the Company, each outstanding Option may be assumed or an equivalent
option may be substituted by the successor corporation or a Parent or Subsidiary
thereof (the "Successor Corporation"). If the Successor Corporation assumes or
substitutes an equivalent option for the Option, the Option or equivalent option
shall continue to become exercisable as provided in Section 4 hereof for so long
as Optionee remains a Director or the Optionee serves as a director of the
Successor Corporation. Following such assumption or substitution, if the
Optionee's status as a Director or director of the Successor Corporation, as
applicable, is terminated other than upon a voluntary resignation by the
Optionee, the Option or option shall become fully exercisable, including as to
Shares for which it would not otherwise be exercisable. Thereafter, the Option
or option shall remain exercisable in accordance with Sections 8(c) through (e)
above.
In the event that the Successor Corporation does not agree to assume the
Option or to substitute an equivalent option, each outstanding Option shall
become fully vested and exercisable, including as to Shares as to which it would
not otherwise be exercisable. In such event, the Board shall notify the Optionee
that the Option shall be fully exercisable for a period of thirty (30) days from
the date of such notice, and the Option shall terminate upon the expiration of
such period. For the purposes of this Section 10(c), the Option shall be
considered assumed if, following the merger or sale of assets, the Option
confers the right to purchase, for each Share of Optioned Stock subject to the
Option immediately prior to the merger or sale of assets, the consideration
(whether stock, cash, or other securities or property) received in the merger or
sale of assets by holders of Common Stock for each Share held on the effective
date of the transaction (and if holders were offered a choice of consideration,
the type of consideration chosen by the holders of a majority of the outstanding
Shares).
11. Amendment and Termination of the Plan.
-------------------------------------
(a) Amendment and Termination. Except as set forth in Section 4, the
-------------------------
Board may at any time amend, alter, suspend, or discontinue the Plan, but no
amendment, alteration, suspension, or discontinuation shall be made which would
impair the rights of any Optionee under any grant theretofore made, without his
or her consent. In addition, to the extent necessary and desirable to comply
with Rule 16b-3 under the Exchange Act (or any other applicable law or
regulation), the Company shall obtain stockholder approval of any Plan amendment
in such a manner and to such a degree as required.
(b) Effect of Amendment or Termination. Any such amendment or
----------------------------------
termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated.
12. Time of Granting Options. The date of grant of an Option shall, for
------------------------
all purposes, be the date determined in accordance with Section 4 hereof.
-7-
<PAGE>
13. Conditions Upon Issuance of Shares. Shares shall not be issued
----------------------------------
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, state securities laws, and the requirements of any stock exchange
upon which the Shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.
As a condition to the exercise of an Option, the Company may require
the person exercising such Option to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares, if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.
Inability of the Company to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by the Company's counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall relieve
the Company of any liability in respect of the failure to issue or sell such
Shares as to which such requisite authority shall not have been obtained.
14. Reservation of Shares. The Company, during the term of this Plan,
---------------------
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
15. Option Agreement. Options shall be evidenced by written option
----------------
agreements in such form as the Board shall approve.
16. Stockholder Approval. Continuance of the Plan shall be subject to
--------------------
approval by the stockholders of the Company at or prior to the first annual
meeting of stockholders held subsequent to the granting of an Option hereunder.
Such stockholder approval shall be obtained in the degree and manner required
under applicable state and federal law.
-8-
<PAGE>
EXHIBIT A
AURUM SOFTWARE, INC.
FORM OF DIRECTOR STOCK OPTION AGREEMENT
<PAGE>
AURUM SOFTWARE, INC.
DIRECTOR STOCK OPTION AGREEMENT
Aurum Software, Inc., a Delaware corporation (the "Company"), has granted
to ______________________________________ (the "Optionee"), an option to
purchase a total of __________________ (_________) shares of the Company's
Common Stock (the "Optioned Stock"), at the price determined as provided herein,
and in all respects subject to the terms, definitions, and provisions of the
Company's 1996 Director Option Plan (the "Plan") adopted by the Company, which
is incorporated herein by reference. The terms defined in the Plan shall have
the same defined meanings herein.
1. Nature of the Option. This Option is a nonstatutory option and is not
--------------------
intended to qualify for any special tax benefits to the Optionee.
2. Exercise Price. The exercise price is $_______ for each share of
--------------
Common Stock.
3. Exercise of Option. This Option shall be exercisable during its term
------------------
in accordance with the provisions of Section 8 of the Plan as follows:
(i) Right to Exercise.
-----------------
(a) This Option shall become exercisable in installments
cumulatively [with respect to twenty-five percent (25%) of the Optioned Stock on
the first anniversary of the date of grant, and 1/48th of the Shares each month
thereafter so that one hundred percent (100%) of the Optioned Stock shall be
exercisable four (4) years after the date of grant][or][with respect to 1/48th
of the Shares of the Optioned Stock on each monthly anniversary of its date of
grant.] In no event shall any Option be exercisable prior to the date the
shareholders of the Company approve the Plan.
(b) This Option may not be exercised for a fraction of a
share.
(c) In the event of Optionee's death, disability, or other
termination of service as a Director, the exercisability of the Option shall be
governed by Section 8 of the Plan.
(ii) Method of Exercise. This Option shall be exercisable by
------------------
written notice which shall state the election to exercise the Option and the
number of Shares in respect of which the Option is being exercised. Such written
notice, in the form attached hereto as Exhibit A, shall be signed by the
---------
Optionee and shall be delivered in person or by certified mail to the Secretary
of the Company. The written notice shall be accompanied by payment of the
exercise price.
<PAGE>
4. Method of Payment. Payment of the exercise price shall be by any of
-----------------
the following, or a combination thereof, at the election of the Optionee:
(i) cash;
(ii) check;
(iii) surrender of other shares which (x) in the case of Shares
acquired upon exercise of an Option, have been owned by the Optionee for more
than six (6) months on the date of surrender, and (y) have a Fair Market Value
on the date of surrender equal to the aggregate exercise price of the Shares as
to which said Option shall be exercised; or
(iv) delivery of a properly executed exercise notice together with
such other documentation as the Company and the broker, if applicable, shall
require to effect an exercise of the Option and delivery to the Company of the
sale or loan proceeds required to pay the exercise price.
5. Restrictions on Exercise. This Option may not be exercised if the
------------------------
issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulations, or if such issuance
would not comply with the requirements of any stock exchange upon which the
Shares may then be listed. As a condition to the exercise of this Option, the
Company may require Optionee to make any representation and warranty to the
Company as may be required by any applicable law or regulation.
6. Non-Transferability of Option. This Option may not be transferred in
-----------------------------
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by the Optionee. The terms
of this Option shall be binding upon the executors, administrators, heirs,
successors and assigns of the Optionee.
7. Term of Option. This Option may not be exercised more than ten (10)
--------------
years from the date of grant of this Option, and may be exercised during such
period only in accordance with the Plan and the terms of this Option.
8. Taxation Upon Exercise of Option. Optionee understands that, upon
--------------------------------
exercise of this Option, he or she will recognize income for tax purposes in an
amount equal to the excess of the then Fair Market Value of the Shares purchased
over the exercise price paid for such Shares. Since the Optionee is subject to
Section 16(b) of the Securities Exchange Act of 1934, as amended, under certain
limited circumstances the measurement and timing of such income (and the
commencement of any capital gain holding period) may be deferred, and the
Optionee is advised to contact a tax advisor concerning the application of
Section 83 in general and the availability a Section 83(b) election in
particular in connection with the exercise of the Option. Upon a resale of such
Shares by the Optionee, any difference
-2-
<PAGE>
between the sale price and the Fair Market Value of the Shares on the date of
exercise of the Option, to the extent not included in income as described above,
will be treated as capital gain or loss.
DATE OF GRANT: ______________
AURUM SOFTWARE, INC.
a Delaware corporation
By:_____________________________________
Name:___________________________________
Title:__________________________________
Optionee acknowledges receipt of a copy of the Plan, a copy of which is
attached hereto, and represents that he or she is familiar with the terms and
provisions thereof, and hereby accepts this Option subject to all of the terms
and provisions thereof. Optionee hereby agrees to accept as binding,
conclusive, and final all decisions or interpretations of the Board upon any
questions arising under the Plan.
Dated:_________________
______________________________
Optionee
-3-
<PAGE>
EXHIBIT A
DIRECTOR STOCK OPTION EXERCISE NOTICE
Aurum Software, Inc.
3385 Scott Boulevard
Santa Clara, CA 95054
Attention: Corporate Secretary
1. Exercise of Option. The undersigned ("Optionee") hereby elects to
------------------
exercise Optionee's option to purchase ______ shares of the Common Stock (the
"Shares") of Aurum Software, Inc. (the "Company") under and pursuant to the
Company's 1996 Director Option Plan and the Director Option Agreement dated
_______________ (the "Agreement").
2. Representations of Optionee. Optionee acknowledges that Optionee has
---------------------------
received, read, and understood the Agreement.
3. Federal Restrictions on Transfer. Optionee understands that the
--------------------------------
Shares must be held indefinitely unless they are registered under the Securities
Act of 1933, as amended (the "1933 Act"), or unless an exemption from such
registration is available, and that the certificate(s) representing the Shares
may bear a legend to that effect. Optionee understands that the Company is under
no obligation to register the Shares and that an exemption may not be available
or may not permit Optionee to transfer Shares in the amounts or at the times
proposed by Optionee.
4. Tax Consequences. Optionee understands that Optionee may suffer
----------------
adverse tax consequences as a result of Optionee's purchase or disposition of
the Shares. Optionee represents that Optionee has consulted with any tax
consultant(s) Optionee deems advisable in connection with the purchase or
disposition of the Shares and that Optionee is not relying on the Company for
any tax advice.
5. Delivery of Payment. Optionee herewith delivers to the Company the
-------------------
aggregate purchase price for the Shares that Optionee has elected to purchase
and has made provision for the payment of any federal or state withholding taxes
required to be paid or withheld by the Company.
6. Entire Agreement. The Agreement is incorporated herein by reference.
----------------
This Exercise Notice and the Agreement constitute the entire agreement of the
parties and supersede in their entirety all prior undertakings and agreements of
the Company and Optionee with respect to the subject matter hereof.
<PAGE>
This Exercise Notice and the Agreement are governed by California law except for
that body of law pertaining to conflict of laws.
Submitted by: Accepted by:
OPTIONEE: AURUM SOFTWARE, INC.
_____________________ By:_____________________________________
Name:___________________________________
Title:__________________________________
Address: Address:
_____________________________ 3385 Scott Boulevard
_____________________________ Santa Clara, CA 95054
_____________________________
Dated:_______________________ Dated:__________________________________
-2-
<PAGE>
EXHIBIT 10.4
AURUM SOFTWARE SOFTWARE, INC.
1996 EMPLOYEE STOCK PURCHASE PLAN
The following constitute the provisions of the 1996 Employee Stock Purchase
Plan of Aurum Software, Inc.
1. Purpose. The purpose of the Plan is to provide employees of the
-------
Company and its Designated Subsidiaries with an opportunity to purchase Common
Stock of the Company through accumulated payroll deductions. It is the
intention of the Company to have the Plan qualify as an "Employee Stock Purchase
Plan" under Section 423 of the Internal Revenue Code of 1986, as amended. The
provisions of the Plan, accordingly, shall be construed so as to extend and
limit participation in a manner consistent with the requirements of that section
of the Code.
2. Definitions.
-----------
(a) "Board" shall mean the Board of Directors of the Company.
-----
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
----
(c) "Common Stock" shall mean the Common Stock of the Company.
------------
(d) "Company" shall mean Aurum Software, Inc. and any Designated
-------
Subsidiary of the Company.
(e) "Compensation" shall mean all base straight time gross earnings
------------
and commissions, but exclusive of payments for overtime, shift premium,
incentive compensation, incentive payments, bonuses and any other compensation
paid by the Company.
(f) "Designated Subsidiaries" shall mean the Subsidiaries which have
-----------------------
been designated by the Board from time to time in its sole discretion as
eligible to participate in the Plan.
(g) "Employee" shall mean any individual who is an Employee of the
--------
Company for tax purposes whose customary employment with the Company is at least
twenty (20) hours per week and more than five (5) months in any calendar year.
For purposes of the Plan, the employment relationship shall be treated as
continuing intact while the individual is on sick leave or other leave of
absence approved by the Company. Where the period of leave exceeds 90 days and
the individual's right to reemployment is not guaranteed either by statute or by
contract, the employment relationship shall be deemed to have terminated on the
91st day of such leave.
(h) "Enrollment Date" shall mean the first day of each Offering
---------------
Period.
<PAGE>
(i) "Exercise Date" shall mean the last day of each Purchase Period.
-------------
The Exercise Date of the first Purchase Period shall be the last Trading Day on
or before April 30, 1997.
(j) "Fair Market Value" shall mean, as of any date, the value of
-----------------
Common Stock determined as follows:
(1) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the National
Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing
sales price for the Common Stock (or the mean of the closing bid and asked
prices, if no sales were reported) as quoted on such exchange (or the exchange
with the greatest volume of trading in Common Stock) or system on the date of
such determination, as reported in The Wall Street Journal or such other source
as the Board deems reliable; or
(2) If the Common Stock is quoted on The Nasdaq Stock Market
(but not on the National Market thereof) or is regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean of the closing bid and asked prices for the Common Stock on
the date of such determination, as reported in The Wall Street Journal or such
other source as the Board deems reliable; or
(3) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Board;
provided, however, for purposes of the Enrollment Date under the first Offering
- -------- -------
Period, the Fair Market Value shall be the inital price to the public as set
forth in the final Prospectus included within the Registration Statement on Form
SB-2 filed with the Securities and Exchange commission for the inital public
offering of the Company's Common Stock.
(k) "Offering Periods" shall mean the periods of approximately
----------------
twenty-four (24) months during which an option granted pursuant to the Plan may
be exercised, commencing on the first Trading Day on or after May 1 and November
1 of each year and terminating on the last Trading Day in the periods ending
twenty-four months later. The first Offering Period shall being on the date the
registration statement covering the Company's initial public offering of its
Common Stock is declared effective by the Securities and Exchange Commission and
shall end on the last Trading Day on or before [October 31, 1998]. The duration
and timing of Offering Periods may be changed pursuant to Section 4 of this
Plan.
(l) "Plan" shall mean this Employee Stock Purchase Plan.
----
(m) "Purchase Price" shall mean an amount equal to 85% of the Fair
--------------
Market Value of a share of Common Stock on the Enrollment Date or on the
Exercise Date, whichever is lower.
-2-
<PAGE>
(n) "Purchase Period" shall mean the approximately six month period
---------------
commencing after one Exercise Date and ending with the next Exercise Date,
except that the first Purchase Period of any Offering Period shall commence on
the Enrollment Date and end with the next Exercise Date.
(o) "Reserves" shall mean the number of shares of Common Stock
--------
covered by each option under the Plan which have not yet been exercised and the
number of shares of Common Stock which have been authorized for issuance under
the Plan but not yet placed under option.
(p) "Subsidiary" shall mean a corporation, domestic or foreign, of
----------
which not less than 50% of the voting shares are held by the Company or a
Subsidiary, whether or not such corporation now exists or is hereafter organized
or acquired by the Company or a Subsidiary.
(q) "Trading Day" shall mean a day on which national stock exchanges
-----------
and the Nasdaq Stock Market are open for trading.
3. Eligibility.
-----------
(a) Any Employee (as defined in Section 2(g)), who shall be employed
by the Company on a given Enrollment Date shall be eligible to participate in
the Plan.
(b) Any provisions of the Plan to the contrary notwithstanding, no
Employee shall be granted an option under the Plan (i) if, immediately after the
grant, such Employee (or any other person whose stock would be attributed to
such Employee pursuant to Section 424(d) of the Code) would own capital stock of
the Company and/or hold outstanding options to purchase such stock possessing
five percent (5%) or more of the total combined voting power or value of all
classes of the capital stock of the Company or of any Subsidiary, or (ii) which
permits his or her rights to purchase stock under all employee stock purchase
plans of the Company and its subsidiaries to accrue at a rate which exceeds
Twenty-Five Thousand Dollars ($25,000) worth of stock (determined at the fair
market value of the shares at the time such option is granted) for each calendar
year in which such option is outstanding at any time.
4. Offering Periods. The Plan shall be implemented by consecutive,
----------------
overlapping Offering Periods with a new Offering Period commencing on the first
Trading Day on or after January 1 and July 1 each year, or on such other date as
the Board shall determine, and continuing thereafter until terminated in
accordance with Section 19 hereof. The Board shall have the power to change the
duration of Offering Periods (including the commencement dates thereof) with
respect to future offerings without stockholder approval if such change is
announced at least five (5) days prior to the scheduled beginning of the first
Offering Period to be affected thereafter.
5. Participation.
-------------
-3-
<PAGE>
(a) An eligible Employee may become a participant in the Plan by
completing a subscription agreement authorizing payroll deductions in the form
of Exhibit A to this Plan and filing it with the Company's payroll office prior
---------
to the applicable Enrollment Date.
(b) Payroll deductions for a participant shall commence on the first
payroll following the Enrollment Date and shall end on the last payroll in the
Offering Period to which such authorization is applicable, unless sooner
terminated by the participant as provided in Section 10 hereof.
6. Payroll Deductions.
------------------
(a) At the time a participant files his or her subscription
agreement, he or she shall elect to have payroll deductions made on each pay day
during the Offering Period in an amount not exceeding twenty percent (20%) of
the Compensation which he or she receives on each pay day during the Offering
Period, and the aggregate of such payroll deductions during the Offering Period
shall not exceed twenty percent (20%) of the participant's Compensation during
said Offering Period.
(b) All payroll deductions made for a participant shall be credited
to his or her account under the Plan and shall be withheld in whole percentages
only. A participant may not make any additional payments into such account.
(c) A participant may discontinue his or her participation in the
Plan as provided in Section 10 hereof, or may increase or decrease the rate of
his or her payroll deductions during the Offering Period by completing or filing
with the Company a new subscription agreement authorizing a change in payroll
deduction rate. The Board may, in its discretion, limit the number of
participation rate changes during any Offering Period. The change in rate shall
be effective with the first full payroll period following five (5) business days
after the Company's receipt of the new subscription agreement unless the Company
elects to process a given change in participation more quickly. A participant's
subscription agreement shall remain in effect for successive Offering Periods
unless terminated as provided in Section 10 hereof.
(d) Notwithstanding the foregoing, to the extent necessary to comply
with Section 423(b)(8) of the Code and Section 3(b) hereof, a participant's
payroll deductions may be decreased to zero percent (0%) at such time during any
Purchase Period which is scheduled to end during the current calendar year (the
"Current Purchase Period") that the aggregate of all payroll deductions which
were previously used to purchase stock under the Plan in a prior Purchase Period
which ended during that calendar year plus all payroll deductions accumulated
with respect to the Current Purchase Period equal Twenty Five Thousand Dollars
($25,000). Payroll deductions shall recommence at the rate provided in such
participant's subscription agreement at the beginning of the first Purchase
Period which is scheduled to end in the following calendar year, unless
terminated by the participant as provided in Section 10 hereof.
(e) At the time the option is exercised, in whole or in part, or at
the time some or all of the Company's Common Stock issued under the Plan is
disposed of, the participant must make
-4-
<PAGE>
adequate provision for the Company's federal, state, or other tax withholding
obligations, if any, which arise upon the exercise of the option or the
disposition of the Common Stock. At any time, the Company may, but shall not be
obligated to, withhold from the participant's compensation the amount necessary
for the Company to meet applicable withholding obligations, including any
withholding required to make available to the Company any tax deductions or
benefits attributable to sale or early disposition of Common Stock by the
Employee.
7. Grant of Option. On the Enrollment Date of each Offering Period, each
---------------
eligible Employee participating in such Offering Period shall be granted an
option to purchase on each Exercise Date during such Offering Period (at the
applicable Purchase Price) up to a number of shares of the Company's Common
Stock determined by dividing such Employee's payroll deductions accumulated
prior to such Exercise Date and retained in the Participant's account as of the
Exercise Date by the applicable Purchase Price; provided that in no event shall
an Employee be permitted to purchase during each Purchase Period more than a
number of shares determined by dividing $12,500 by the Fair Market Value of a
share of the Company's Common Stock on the Enrollment Date, and provided further
that such purchase shall be subject to the limitations set forth in Sections
3(b) and 12 hereof. Exercise of the option shall occur as provided in Section 8
hereof, unless the participant has withdrawn pursuant to Section 10 hereof. The
option shall expire on the last day of the Offering Period.
8. Exercise of Option. Unless a participant withdraws from the Plan as
------------------
provided in Section 10 hereof, his or her option for the purchase of shares
shall be exercised automatically on the Exercise Date, and the maximum number of
full shares subject to option shall be purchased for such participant at the
applicable Purchase Price with the accumulated payroll deductions in his or her
account. No fractional shares shall be purchased; any payroll deductions
accumulated in a participant's account which are not sufficient to purchase a
full share shall be retained in the participant's account for the subsequent
Purchase Period or Offering Period, subject to earlier withdrawal by the
participant as provided in Section 10 hereof. Any other monies left over in a
participant's account after the Exercise Date shall be returned to the
participant. During a participant's lifetime, a participant's option to
purchase shares hereunder is exercisable only by him or her.
9. Delivery. As promptly as practicable after each Exercise Date on
--------
which a purchase of shares occurs, the Company shall arrange the delivery to
each participant, as appropriate, of a certificate representing the shares
purchased upon exercise of his or her option.
10. Withdrawal; Termination of Employment.
-------------------------------------
(a) A participant may withdraw all but not less than all the payroll
deductions credited to his or her account and not yet used to exercise his or
her option under the Plan at any time by giving written notice to the Company in
the form of Exhibit B to this Plan. All of the participant's payroll deductions
---------
credited to his or her account shall be paid to such participant promptly after
receipt of notice of withdrawal and such participant's option for the Offering
Period shall be automatically terminated, and no further payroll deductions for
the purchase of shares shall be made for such Offering Period. If a participant
withdraws from an Offering Period, payroll deductions shall not resume at the
-5-
<PAGE>
beginning of the succeeding Offering Period unless the participant delivers to
the Company a new subscription agreement.
(b) Upon a participant's ceasing to be an Employee (as defined in
Section 2(g) hereof), for any reason, he or she shall be deemed to have elected
to withdraw from the Plan and the payroll deductions credited to such
participant's account during the Offering Period but not yet used to exercise
the option shall be returned to such participant or, in the case of his or her
death, to the person or persons entitled thereto under Section 14 hereof, and
such participant's option shall be automatically terminated. The preceding
sentence notwithstanding, a participant who receives payment in lieu of notice
of termination of employment shall be treated as continuing to be an Employee
for the participant's customary number of hours per week of employment during
the period in which the participant is subject to such payment in lieu of
notice.
(c) A participant's withdrawal from an Offering Period shall not have
any effect upon his or her eligibility to participate in any similar plan which
may hereafter be adopted by the Company or in succeeding Offering Periods which
commence after the termination of the Offering Period from which the participant
withdraws.
11. Interest. No interest shall accrue on the payroll deductions of a
--------
participant in the Plan.
12. Stock.
-----
(a) The maximum number of shares of the Company's Common Stock which
shall be made available for sale under the Plan shall be Three Hundred Thousand
(300,000) shares*, subject to adjustment upon changes in capitalization of the
Company as provided in Section 18 hereof. If, on a given Exercise Date, the
number of shares with respect to which options are to be exercised exceeds the
number of shares then available under the Plan, the Company shall make a pro
rata allocation of the shares remaining available for purchase in as uniform a
manner as shall be practicable and as it shall determine to be equitable.
(b) The participant shall have no interest or voting right in shares
covered by his option until such option has been exercised.
(c) Shares to be delivered to a participant under the Plan shall be
registered in the name of the participant or in the name of the participant and
his or her spouse.
___________________
* After adjustment of the one-for-four reverse split of the Common Stock
in September 1996.
-6-
<PAGE>
13. Administration.
--------------
(a) Administrative Body. The Plan shall be administered by the Board
-------------------
or a committee of members of the Board appointed by the Board. The Board or its
committee shall have full and exclusive discretionary authority to construe,
interpret and apply the terms of the Plan, to determine eligibility and to
adjudicate all disputed claims filed under the Plan. Every finding, decision
and determination made by the Board or its committee shall, to the full extent
permitted by law, be final and binding upon all parties.
\
(b) Rule 16b-3 Limitations. Notwithstanding the provisions of
----------------------
Subsection (a) of this Section 13, in the event that Rule 16b-3 promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or
any successor provision ("Rule 16b-3") provides specific requirements for the
administrators of plans of this type, the Plan shall be administered only by
such a body and in such a manner as shall comply with the applicable
requirements of Rule 16b-3.
14. Designation of Beneficiary.
--------------------------
(a) A participant may file a written designation of a beneficiary who
is to receive any shares and cash, if any, from the participant's account under
the Plan in the event of such participant's death subsequent to an Exercise Date
on which the option is exercised but prior to delivery to such participant of
such shares and cash. In addition, a participant may file a written designation
of a beneficiary who is to receive any cash from the participant's account under
the Plan in the event of such participant's death prior to exercise of the
option. If a participant is married and the designated beneficiary is not the
spouse, spousal consent shall be required for such designation to be effective.
(b) Such designation of beneficiary may be changed by the participant
at any time by written notice. In the event of the death of a participant and
in the absence of a beneficiary validly designated under the Plan who is living
at the time of such participant's death, the Company shall deliver such shares
and/or cash to the executor or administrator of the estate of the participant,
or if no such executor or administrator has been appointed (to the knowledge of
the Company), the Company, in its discretion, may deliver such shares and/or
cash to the spouse or to any one or more dependents or relatives of the
participant, or if no spouse, dependent or relative is known to the Company,
then to such other person as the Company may designate.
15. Transferability. Neither payroll deductions credited to a
---------------
participant's account nor any rights with regard to the exercise of an option or
to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 14 hereof) by the participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Company may treat such act as an election to withdraw
funds from an Offering Period in accordance with Section 10 hereof.
-7-
<PAGE>
16. Use of Funds. All payroll deductions received or held by the Company
------------
under the Plan may be used by the Company for any corporate purpose, and the
Company shall not be obligated to segregate such payroll deductions.
17. Reports. Individual accounts shall be maintained for each participant
-------
in the Plan. Statements of account shall be given to participating Employees at
least annually, which statements shall set forth the amounts of payroll
deductions, the Purchase Price, the number of shares purchased and the remaining
cash balance, if any.
18. Adjustments Upon Changes in Capitalization, Dissolution, Liquidation,
---------------------------------------------------------------------
Merger or Asset Sale.
--------------------
(a) Changes in Capitalization. Subject to any required action by the
-------------------------
stockholders of the Company, the Reserves, as well as the price per share and
the number of shares of Common Stock covered by each option under the Plan which
has not yet been exercised, shall be proportionately adjusted for any increase
or decrease in the number of issued shares of Common Stock resulting from a
stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of shares of Common Stock effected without receipt of consideration by
the Company; provided, however, that conversion of any convertible securities of
the Company shall not be deemed to have been "effected without receipt of
consideration". Such adjustment shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. Except as expressly
provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to an option.
(b) Dissolution or Liquidation. In the event of the proposed
--------------------------
dissolution or liquidation of the Company, the Offering Periods shall terminate
immediately prior to the consummation of such proposed action, unless otherwise
provided by the Board.
(c) Merger or Asset Sale. In the event of a proposed sale of all or
--------------------
substantially all of the assets of the Company, or the merger of the Company
with or into another corporation, any Purchase Periods then in progress shall be
shortened by setting a new Exercise Date (the "New Exercise Date") and any
Offering Periods then in progress shall end on the New Exercise Date. The New
Exercise Date shall be before the date of the Company's proposed sale or merger.
The Board shall notify each participant in writing, at least ten (10) business
days prior to the New Exercise Date, that the Exercise Date for the
participant's option has been changed to the New Exercise Date and that the
participant's option shall be exercised automatically on the New Exercise Date,
unless prior to such date the participant has withdrawn from the Offering Period
as provided in Section 10 hereof.
19. Amendment or Termination.
------------------------
(a) The Board of Directors of the Company may at any time and for any
reason terminate or amend the Plan. Except as provided in Section 18 hereof, no
such termination can affect
-8-
<PAGE>
options previously granted, provided that an Offering Period may be terminated
by the Board of Directors on any Exercise Date if the Board determines that the
termination of the Plan is in the best interests of the Company and its
stockholders. Except as provided in Section 18 hereof, no amendment may make any
change in any option theretofore granted which adversely affects the rights of
any participant. To the extent necessary to comply with Rule 16b-3 or under
Section 423 of the Code (or any successor rule or provision or any other
applicable law or regulation), the Company shall obtain stockholder approval in
such a manner and to such a degree as required.
(b) Without stockholder consent and without regard to whether any
participant rights may be considered to have been "adversely affected," the
Board (or its committee) shall be entitled to change the Offering Periods, limit
the frequency and/or number of changes in the amount withheld during an Offering
Period, establish the exchange ratio applicable to amounts withheld in a
currency other than U.S. dollars, permit payroll withholding in excess of the
amount designated by a participant in order to adjust for delays or mistakes in
the Company's processing of properly completed withholding elections, establish
reasonable waiting and adjustment periods and/or accounting and crediting
procedures to ensure that amounts applied toward the purchase of Common Stock
for each participant properly correspond with amounts withheld from the
participant's Compensation, and establish such other limitations or procedures
as the Board (or its committee) determines in its sole discretion advisable
which are consistent with the Plan.
20. Notices. All notices or other communications by a participant to the
-------
Company under or in connection with the Plan shall be deemed to have been duly
given when received in the form specified by the Company at the location, or by
the person, designated by the Company for the receipt thereof.
21. Conditions Upon Issuance of Shares. Shares shall not be issued with
----------------------------------
respect to an option unless the exercise of such option and the issuance and
delivery of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, the rules and regulations promulgated thereunder, and the requirements
of any stock exchange upon which the shares may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.
As a condition to the exercise of an option, the Company may require
the person exercising such option to represent and warrant at the time of any
such exercise that the shares are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned applicable provisions of law.
22. Term of Plan. The Plan shall become effective upon the earlier to
------------
occur of its adoption by the Board of Directors or its approval by the
stockholders of the Company. It shall continue in effect for a term of ten (10)
years unless sooner terminated under Section 19 hereof.
-9-
<PAGE>
23. Automatic Transfer to Low Price Offering Period. To the extent
-----------------------------------------------
permitted by Rule 16b-3 of the Exchange Act, if the Fair Market Value of the
Common Stock on any Exercise Date in an Offering Period is lower than the Fair
Market Value of the Common Stock on the Enrollment Date of such Offering Period,
then all participants in such Offering Period shall be automatically withdrawn
from such Offering Period immediately after the exercise of their option on such
Exercise Date and automatically re-enrolled in the immediately following
Offering Period as of the first day thereof.
-10-
<PAGE>
EXHIBIT A
AURUM SOFTWARE, INC.
1996 EMPLOYEE STOCK PURCHASE PLAN
FORM OF SUBSCRIPTION AGREEMENT
<PAGE>
EXHIBIT A
---------
AURUM SOFTWARE, INC.
1996 EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
_____ Original Application Enrollment Date: ___________
_____ Change in Payroll Deduction Rate
_____ Change of Beneficiary(ies)
1. _________________________ hereby elects to participate in the Aurum
Software, Inc. 1996 Employee Stock Purchase Plan (the "Employee Stock
Purchase Plan") and subscribes to purchase shares of the Company's Common
Stock in accordance with this Subscription Agreement and the Employee Stock
Purchase Plan.
2. I hereby authorize payroll deductions from each paycheck in the amount of
____% of my Compensation on each payday (from 1 to 20%) during the Offering
Period in accordance with the Employee Stock Purchase Plan. (Please note
that no fractional percentages are permitted.)
3. I understand that said payroll deductions shall be accumulated for the
purchase of shares of Common Stock at the applicable Purchase Price
determined in accordance with the Employee Stock Purchase Plan. I
understand that if I do not withdraw from an Offering Period, any
accumulated payroll deductions will be used to automatically exercise my
option.
4. I have received a copy of the complete "Aurum Software, Inc. 1996 Employee
Stock Purchase Plan." I understand that my participation in the Employee
Stock Purchase Plan is in all respects subject to the terms of the Plan. I
understand that my ability to exercise the option under this Subscription
Agreement is subject to stockholder approval of the Employee Stock Purchase
Plan.
5. Shares purchased for me under the Employee Stock Purchase Plan should be
issued in the name(s) of (Employee or Employee and Spouse only):
___________________________________________________________________________
___________.
6. I understand that if I dispose of any shares received by me pursuant to the
Plan within 2 years after the Enrollment Date (the first day of the
Offering Period during which I purchased such shares) or one year after the
Exercise Date, I will be treated for federal income tax purposes as having
received ordinary income at the time of such disposition in an amount equal
to the excess
<PAGE>
of the fair market value of the shares at the time such shares were
purchased by me over the price which I paid for the shares. I HEREBY AGREE
--------------
TO NOTIFY THE COMPANY IN WRITING WITHIN 30 DAYS AFTER THE DATE OF ANY
---------------------------------------------------------------------
DISPOSITION OF MY SHARES AND I WILL MAKE ADEQUATE PROVISION FOR FEDERAL,
------------------------------------------------------------------------
STATE OR OTHER TAX WITHHOLDING OBLIGATIONS, IF ANY, WHICH ARISE UPON THE
------------------------------------------------------------------------
DISPOSITION OF THE COMMON STOCK. The Company may, but will not be obligated
--------------------------------
to, withhold from my compensation the amount necessary to meet any
applicable withholding obligation including any withholding necessary to
make available to the Company any tax deductions or benefits attributable
to sale or early disposition of Common Stock by me. If I dispose of such
shares at any time after the expiration of the 2-year and 1-year holding
periods, I understand that I will be treated for federal income tax
purposes as having received income only at the time of such disposition,
and that such income will be taxed as ordinary income only to the extent of
an amount equal to the lesser of (1) the excess of the fair market value of
the shares at the time of such disposition over the purchase price which I
paid for the shares, or (2) 15% of the fair market value of the shares on
the first day of the Offering Period. The remainder of the gain, if any,
recognized on such disposition will be taxed as capital gain.
7. I hereby agree to be bound by the terms of the Employee Stock Purchase
Plan. The effectiveness of this Subscription Agreement is dependent upon
my eligibility to participate in the Employee Stock Purchase Plan.
8. In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due me under the
Employee Stock Purchase Plan:
NAME: (Please print)______________________________________________
(First) (Middle) (Last)
_______________________________________ ____________________________________
Relationship
____________________________________
(Address)
-2-
<PAGE>
Employee's Social
Security Number: ____________________________________
Employee's Address: ____________________________________
____________________________________
____________________________________
I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT THROUGHOUT
SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME.
Dated:_________________________ ________________________________________
Signature of Employee
_______________________________________
Spouse's Signature (If beneficiary
other than spouse)
-3-
<PAGE>
EXHIBIT B
AURUM SOFTWARE, INC.
1996 EMPLOYEE STOCK PURCHASE PLAN
FORM OF NOTICE OF WITHDRAWAL
<PAGE>
EXHIBIT B
---------
AURUM SOFTWARE, INC.
1996 EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
The undersigned participant in the Offering Period of the Aurum Software,
Inc. 1996 Employee Stock Purchase Plan which began on ____________, 19____ (the
"Enrollment Date") hereby notifies the Company that he or she hereby withdraws
from the Offering Period. He or she hereby directs the Company to pay to the
undersigned as promptly as practicable all the payroll deductions credited to
his or her account with respect to such Offering Period. The undersigned
understands and agrees that his or her option for such Offering Period will be
automatically terminated. The undersigned understands further that no further
payroll deductions will be made for the purchase of shares in the current
Offering Period and the undersigned shall be eligible to participate in
succeeding Offering Periods only by delivering to the Company a new Subscription
Agreement.
Name and Address of Participant:
________________________________
________________________________
________________________________
Signature:
________________________________
Date:__________________________
<PAGE>
EXHIBIT 10.16
REGENCY PLAZA
CONSENT TO SUBLEASE AND AGREEMENT
This Consent to Sublease and Agreement ("Agreement") is made on this 27 day
of March 1997, by and among Regency Plaza International, Inc., as successor in
interest to Maskatiya, Suri and Co., Inc. ("Master Landlord"), Mentor Graphics
Corporation as successor in interest to Microtec Research ("Master Tenant"), and
Aurum Software, Inc. ("Subtenant").
WHEREAS, Master Tenant and Master Landlord entered into a lease agreement
dated June 23, 1988 hereinafter referred to as "Master Lease" for certain
premises commonly known as 2350 Mission College Blvd., Suite 500 and Suite 1300,
located in the City of Santa Clara, County of Santa Clara, California
("Premises), which Premises are more particularly described in the Lease;
WHEREAS, Master Tenant and Subtenant have entered into a sublease agreement
("Sublease") dated January 21, 1997, for a portion of the Premises ("Sublet
Space"), which Sublet Space is more particularly described in the Sublease; and
WHEREAS, Master Tenant has requested, pursuant to paragraph 9 of the Master
Lease, that Master Landlord give its written consent to the subletting by Master
Tenant to Subtenant;
NOW, THEREFORE, Master Landlord hereby consents to said subletting, subject
to and upon the following terms and conditions, to each of which Master Tenant
and Subtenant expressly agree:
1. Nothing herein contained shall either:
(a) be construed to modify, waive or affect any of the provision,
covenants or conditions in the Master Lease, or to waive any breach thereof or
any rights of Master Landlord thereunder, or to enlarge or increase Master
Landlord's obligations thereunder, to waive or reduce any of Master Tenant's
obligations thereunder; or
(b) operate as a consent to or approval by Master Landlord of any
provisions, covenants or conditions of the Sublease. Master Landlord shall not
be bound to or by any of the provisions of the Sublease.
2. This consent is not assignable.
3. Pursuant to Paragraph 10 of the Addendum to Lease dated June 23, 1988
by and between Maskatiya, Suri & Company, Inc., as Landlord, and Microtec
Research, as Tenant, as additional consideration for the consent of Landlord to
the sublease agreement contemplated herein, Subtenant shall pay monthly Base
Rent based on the following schedule:
<PAGE>
<TABLE>
<CAPTION>
"50% OF TOTAL DUE TOTAL DUE TO
MONTHS BASE RENT EXCESS RENT" TO LANDLORD MASTER TENANT
------ --------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C>
1-2 See below*
3-9 (8/97-2/98) $67,004 $7,111 $74,115 $13,281.52
10-24 (3/98-5/99) $70,833 $ 5196 $76,029 $11,367.52
25-48 (6/99-5/01) $70,833 $7,111 $77,944 $13,281.32
49-69 (6/01-2/03) $70,833 $9,025 $79,858 $15,196.12
</TABLE>
- ---------
*The Base Rent for months 1 and 2 (June, 1997 and July, 1997) shall be paid by
Master Tenant to Master Landlord under the terms and conditions under the Master
Lease.
4. The Sublease shall be subject and subordinate at all times to the
Master Lease and to all of the provisions, covenants and conditions thereof and
all matters affecting Master Landlord's estate or interest in the land and
building of which the Premises form a part.
5. Subtenant hereby expressly assumes and agrees to perform and comply
with for the benefit of Master Landlord and Master Tenant, each and every
obligation of the Subtenant which arises during the term of the Sublease,
pertaining to the Sublet Space. Neither the assumption by Subtenant, nor the
Sublease, nor this Agreement, shall release or discharge Master Tenant from any
liability under the Master Lease, and Master Tenant shall remain liable and
responsible for the full performance and observance of all of the provisions,
covenants and conditions set forth in the Master Lease to be performed and
observed by Master Tenant. Any breach or violation of any provision of the
Master Lease by Subtenant shall be deemed to be and shall constitute a default
by Master Tenant in fulfilling such provision, and Master Landlord may proceed
directly against Master Tenant without first exhausting Master Landlord's
remedies against Subtenant.
6. This consent by Master Landlord shall not be construed as a consent by
Master Landlord to any further subletting either by Master Tenant or Subtenant
all of which is expressly prohibited. The Sublease may not be assigned,
amended, modified, renewed or extended nor shall the Premises or Sublet Space,
or any part thereof, be further sublet without the proper written consent of
Master Landlord in each instance.
7. Upon the expiration or any earlier termination of the term of the
Master Lease, or upon Master Tenant's surrender of the Master Lease to Master
Landlord, the Sublease and its term shall expire and come to an end as of the
effective date of such expiration, termination or surrender, and Subtenant shall
vacate the Sublet Space on or before such date. Master Landlord shall be
entitled to all of the rights and remedies available to a Landlord against a
tenant holding over after the expiration of a term. Subtenant shall have no
claim or offset against Master Landlord for any reason whatsoever, it being
expressly understood that Master Landlord is under no contractual obligation
whatsoever to Subtenant by virtue of this Agreement, the Sublease, or Master
Lease; that in the event of a dispute Subtenant's sole remedies shall be to go
against Master Tenant. Subtenant expressly waives any and all claims of third
party beneficiary status for all purposes.
-2-
<PAGE>
8. Master Tenant and Subtenant shall be and continue to be liable,
jointly and severally, for all bills rendered by Master Landlord for charges
incurred by or imposed upon Subtenant for services rendered and materials
supplied to the Sublet Space.
9. Master Tenant hereby specifically agrees that prior to commencing any
alterations, repairs, installations, additions, improvements or other work in,
to or affecting the Sublet Space, it shall adhere to the provisions of the
Master Lease.
10. Any notice or communication which any party hereto desires or is
required to give to any other party with respect to this Agreement shall be
given by prepaid certified or registered mail addressed to such other party at
its address set forth below, or at such other address as such other party may
have designated by notice given in accordance with the provisions herein. Such
notice or communication shall be deemed to have been given at the time the same
is so mailed.
11. Master Landlord acknowledges that Master Landlord does not think
Master Tenant is presently in default under the Master Lease, and the Master
Lease is in full force and effect; but this acknowledgment shall not act as a
waiver or estoppel of any nature or sort by or against Master Landlord, all of
whose rights, privileges and remedies are preserved intact without modification
by this Agreement, and if any prior or current facts or circumstances give rise
to rights, privileges, or remedies in Master Landlord's favor, all the aforesaid
shall be deemed reserved to Master Landlord, unaffected by this Agreement.
12. As a clarification to the Master Lease and its respective
modifications, each party herein acknowledges the following:
(a) Article 2. k. Parking: Subtenant shall be entitled to park on a
non-exclusive basis 118 spaces, subject to all the terms and conditions
contained in Exhibit D of the Master Lease.
(b) Addendum 8: Deleted in its entirety.
(c) Article 12. Alterations: Subtenant agrees to use Landlord's
general contractor for any modifications or alterations to the Premises.
-3-
<PAGE>
13. /*
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
"MASTER LANDLORD"
By: /s/ Sunil Suri
--------------
"MASTER TENANT"
By: /s/ James Pond
--------------
"SUBTENANT"
By: /s/ Chris L. Dier
-----------------
- --------
* If Master Tenant and Subtenant are corporations, each individual signing
this Agreement on behalf thereof represents and warrants that he is duly
authorized to execute and deliver this Agreement on behalf of the
corporation.
-4-
<PAGE>
EXHIBIT 11.1
AURUM SOFTWARE, INC.
COMPUTATION OF NET INCOME (LOSS) PER SHARE
(in thousands, except share data)
THREE MONTHS ENDED
MARCH 31,
1997 1996
------- -------
Net Income (loss)................................... $ 467 $ (663)
======= ======
Weighted average common shares outstanding.......... 11,570 2,804
Common stock equivalents relating to options and
preferred stock.................................... 399
Common stock and common stock options issued during
the 12-month period prior to the initial public
offering in accordance with Staff Accounting
Bulletin No. 83 (using the treasury stock method).. 1,155
------- ------
11,969 3,959
======= ======
Net income (loss) per share(1)...................... $ 0.04 $(0.17)
======= ======
- ----
(1) There is no difference between primary and fully diluted net income (loss)
per share.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 42,085
<SECURITIES> 0
<RECEIVABLES> 11,050
<ALLOWANCES> (315)
<INVENTORY> 1,313
<CURRENT-ASSETS> 54,133
<PP&E> 6,759
<DEPRECIATION> (3,093)
<TOTAL-ASSETS> 58,490
<CURRENT-LIABILITIES> 10,682
<BONDS> 0
0
0
<COMMON> 12
<OTHER-SE> 47,460
<TOTAL-LIABILITY-AND-EQUITY> 58,490
<SALES> 9,345
<TOTAL-REVENUES> 9,345
<CGS> (3,027)
<TOTAL-COSTS> (6,084)
<OTHER-EXPENSES> 505
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (32)
<INCOME-PRETAX> 707
<INCOME-TAX> (240)
<INCOME-CONTINUING> 467
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 467
<EPS-PRIMARY> 0.04
<EPS-DILUTED> 0.04
</TABLE>
