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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
DATAWORKS CORPORATION
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(Name of Issuer)
COMMON STOCK
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(Title of Class of Securities)
72764R105
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(CUSIP Number)
L. GEORGE KLAUS, CHIEF EXECUTIVE OFFICER
PLATINUM SOFTWARE CORPORATION
195 TECHNOLOGY DRIVE
IRVINE, CALIFORNIA 92618
(949) 453-4000
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(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
October 13, 1998
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
NOTE: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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SCHEDULE 13D
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CUSIP NO. 72764R105 PAGE 2 OF 21 PAGES
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Platinum Software Corporation
I.R.S. Identification No.: 33-0277592
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
N/A
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
00
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
N/A
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
STATE OF DELAWARE
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NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY N/A
OWNED BY ----------------------------------------------------------
EACH 8 SHARED VOTING POWER
REPORTING
PERSON 1,876,583(1)
WITH ----------------------------------------------------------
9 SOLE DISPOSITIVE POWER
N/A
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10 SHARED DISPOSITIVE POWER
N/A
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,876,583(1)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES* [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
12.7%(1)
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14 TYPE OF REPORTING PERSON*
CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
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SCHEDULE 13D
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CUSIP NO. 72764R105 PAGE 3 OF 21 PAGES
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Neither the filing of this Schedule 13D nor any of its contents shall be deemed
to constitute an admission by Platinum Software Corporation that it is the
beneficial owner of any of the Common Stock referred to herein for purposes of
Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Act"), or
for any other purpose, and such beneficial ownership is expressly disclaimed.
ITEM 1. SECURITY AND ISSUER.
This statement on Schedule 13D relates to the Common Stock of DataWorks
Corporation, Inc., a Delaware corporation ("DataWorks" or "Issuer"). The
principal executive offices of DataWorks are located at 5910 Pacific
Center Boulevard, Suite 300, San Diego, California 92121.
ITEM 2. IDENTITY AND BACKGROUND.
The name of the corporation filing this statement is Platinum Software
Corporation, a Delaware corporation ("Platinum"). Platinum's principal
business is the development, marketing, and support of enterprise
resource planning software applications. The address of Platinum's
principal business is 195 Technology Drive, Irvine, California
92718-2402. The address of Platinum's executive offices is the same as
the address of its principal business. Set forth on Schedule A is the
name, present principal occupation or employment, the name, principal
business and address of any corporation or other organization in which
such employment is conducted, of each of Platinum's directors and
executive officers, as of the date hereof.
Neither Platinum, nor to Platinum's best knowledge, any person named on
Schedule A hereto is required to disclose legal proceedings pursuant to
Items 2(d) or 2(e). Each of the individuals identified on Exhibit A is a
U.S. citizen.
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(1) Based solely on information provided by DataWorks Corporation, and includes
314,942 shares of DataWorks Common Stock underlying stock options
exercisable within 60 days of October 13, 1998.
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SCHEDULE 13D
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CUSIP NO. 72764R105 PAGE 4 OF 21 PAGES
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ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Pursuant to an Agreement and Plan of Reorganization dated October 13,
1998, (the "Reorganization Agreement"), among Platinum, Zoo Acquisition
Corp., a Delaware corporation and wholly-owned subsidiary of Platinum
("Merger Sub") and DataWorks, and subject to the conditions set forth
therein (including approval by stockholders of Platinum and DataWorks),
Merger Sub will merge with and into DataWorks and DataWorks will become
a wholly-owned subsidiary of Platinum (such events constituting the
"Merger"). Once the Merger is consummated, Merger Sub will cease to
exist as a corporation and all of the business, assets, liabilities and
obligations of Merger Sub will be merged into DataWorks with DataWorks
remaining as the surviving corporation (the "Surviving Corporation"). As
a result of the Merger, each outstanding share of DataWorks Common
Stock, other than shares owned by Merger Sub, Platinum or any
wholly-owned subsidiary of Platinum, will be converted into the right to
receive 0.794 of a share (the "Exchange Ratio") of Platinum Common
Stock, and each outstanding option to purchase DataWorks Common Stock
under DataWorks' stock option plans (each, a "DataWorks Common Stock
Option") will be assumed by Platinum (each, an "Assumed Option") and
certain outstanding warrants to purchase DataWorks Common Stock (each, a
"DataWorks Warrant") will be assumed by Platinum (each, an "Assumed
Warrant"). Each Assumed Option and each Assumed Warrant will become an
option or warrant, as the case may be, to purchase that number of shares
of Platinum Common Stock as is equal (subject to rounding) to the number
of shares of DataWorks Common Stock that was subject to such option or
warrant, as the case may be, immediately prior to the Merger, multiplied
by the Exchange Ratio. The exercise price of each Assumed Option and
each Assumed Warrant will be equal to the quotient determined by
dividing the exercise price per share of DataWorks Common Stock at which
such DataWorks Common Stock Option and each DataWorks Warrant was
exercisable immediately prior to the effective time of the Merger by the
Exchange Ratio, rounded up to the nearest whole cent. The foregoing
summary of the Merger is qualified in its entirety by reference to the
copy of the Reorganization Agreement included as Exhibit 1 to this
Schedule 13D and incorporated herein in its entirety by reference.
ITEM 4. PURPOSE OF TRANSACTION.
(a) - (g) The following is a brief summary of the material provisions of
the Reorganization Agreement, a copy of which is attached as Exhibit 1 to this
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SCHEDULE 13D
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CUSIP NO. 72764R105 PAGE 5 OF 21 PAGES
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Schedule 13D and is incorporated herein by reference. This summary is qualified
in its entirety by reference to the full and complete text of the Reorganization
Agreement.
EFFECTIVE TIME
Subject to the provisions of the Reorganization Agreement, Platinum,
DataWorks and Merger Sub 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 as soon as practicable
on or after the Closing Date. 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 the Reorganization Agreement, or at such other time,
date and location as the parties to the Reorganization Agreement agree in
writing.
MANNER AND BASIS OF CONVERTING SHARES
At the Effective Time, by virtue of the Merger and without any action on
the part of Merger Sub, DataWorks or the holders of any of the following
securities each share of DataWorks Common Stock (including, with respect to each
such share of DataWorks Common Stock and the associated Rights (as defined in
that certain Rights Agreement (the "DataWorks Rights Plan") dated as of on or
about October 13, 1998, between DataWorks and Chase Mellon Shareholder Services,
L.L.C., as Rights Agent)) issued and outstanding immediately prior to the
Effective Time, other than any shares of the DataWorks Common Stock held by
DataWorks or owned by Platinum, Merger Sub or any direct or indirect
wholly-owned subsidiary to be canceled, will be canceled and extinguished and
automatically converted into the right to receive 0.794 (the "EXCHANGE RATIO")
shares of Common Stock of Platinum upon surrender of the certificate
representing such share of the DataWorks Common Stock in the manner provided
below (or in the case of a lost, stolen or destroyed certificate, upon delivery
of an affidavit).
If any shares of the DataWorks Common Stock outstanding immediately
prior to the Effective Time are unvested or are subject to a repurchase option,
risk of forfeiture or other condition under any applicable restricted stock
purchase agreement or other agreement with DataWorks, then the shares of
Platinum Common Stock issued in exchange for such shares of DataWorks Common
Stock will also be unvested to the same extent and/or be subject to the same
repurchase option, risk of forfeiture or other condition, as applicable, and the
certificates representing such shares of Platinum Common Stock may accordingly
be marked with appropriate legends.
Each share of DataWorks Common Stock held by DataWorks or owned by
Merger Sub, Platinum or any direct or indirect wholly-owned subsidiary of
DataWorks or of Platinum immediately prior to the Effective Time shall be
canceled and extinguished without any conversion thereof.
At the Effective Time, all options to purchase DataWorks Common Stock
then outstanding under DataWorks' 1995 Equity Incentive Plan, 1995 Non-Employee
Directors' Stock Option Plan, the Interactive 1997 Nonstatutory Stock Option
Plan and the Interactive 1995 Stock Option Plan (the "DataWorks Stock Option
Plans") shall be assumed by Platinum. At the Effective Time, rights outstanding
under DataWorks' 1995 Employee Stock Purchase Plan (the "DataWorks Purchase
Plan") shall be treated as described below. At the Effective Time, certain
warrants issued by DataWorks (the "Warrants") shall be, in connection with the
Merger, assumed by Platinum as described below.
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SCHEDULE 13D
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CUSIP NO. 72764R105 PAGE 6 OF 21 PAGES
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At the Effective Time, each outstanding DataWorks Option, whether or not
exercisable and regardless of the respective exercise prices thereof, will be
assumed by Platinum. Each DataWorks Option so assumed by Platinum under the
Reorganization Agreement will continue to have, and be subject to, the same
terms and conditions set forth in the applicable DataWorks Stock Option Plan
immediately prior to the Effective Time (including, without limitation, any
repurchase rights, vesting provisions and vested status of any such DataWorks
Option), except that (i) each DataWorks Option will be exercisable (or will
become exercisable in accordance with its terms) for that number of whole shares
of Platinum Common Stock equal to the product of the number of shares of
DataWorks Common Stock that were issuable upon exercise of such DataWorks Option
immediately prior to the Effective Time multiplied by the Exchange Ratio,
rounded down to the nearest whole number of shares of Platinum Common Stock and
(ii) the per share exercise price for the shares of Platinum Common Stock
issuable upon exercise of such assumed DataWorks Option will be equal to the
quotient determined by dividing the exercise price per share of DataWorks Common
Stock at which such DataWorks Option was exercisable immediately prior to the
Effective Time by the Exchange Ratio, rounded up to the nearest whole cent. It
is intended that DataWorks Options assumed by Platinum shall qualify following
the Effective Time as incentive stock options as defined in Section 422 of the
Code to the extent DataWorks Options qualified as incentive stock options
immediately prior to the Effective Time.
Rights outstanding under the DataWorks Purchase Plan shall be treated in
a manner reasonably acceptable to Platinum and DataWorks, provided that in no
event shall any such treatment interfere with Platinum's ability to account for
the Merger as a pooling of interests.
At the Effective Time, the Warrants will be assumed by Platinum. Each
Warrant so assumed by Platinum under the Reorganization Agreement will continue
to have, and be subject to, the same terms and conditions set forth in the
applicable warrant agreement immediately prior to the Effective Time (including,
without limitation, any repurchase rights or vesting provisions), except that
(i) each Warrant will be exercisable (or will become exercisable in accordance
with its terms) for that number of whole shares of Platinum Common Stock equal
to the product of the number of shares of DataWorks Common Stock that were
issuable upon exercise of such Warrant immediately prior to the Effective Time
multiplied by the Exchange Ratio, rounded down to the nearest whole number of
shares of Platinum Stock and (ii) the per share exercise price for the shares of
Platinum Common Stock issuable upon exercise of such assumed Warrant will be
equal to the quotient determined by dividing the exercise price per share of
DataWorks Common Stock at which such Warrant was exercisable immediately prior
to the Effective Time by the Exchange Ratio, rounded up to the nearest whole
cent.
The Exchange Ratio shall be adjusted to reflect appropriately the effect
of any stock split, reverse stock split, stock dividend (including any dividend
or distribution of securities convertible into Platinum Common Stock or
DataWorks Common Stock), reorganization, recapitalization, reclassification or
other like change with respect to Platinum Common Stock or DataWorks Common
Stock occurring on or after the date hereof and prior to the Effective Time.
As soon as practicable after the Effective Time, Platinum shall cause
the Exchange Agent to mail to each DataWorks stockholder of record (as of the
Effective Time) a letter of transmittal with instructions to be used by such
stockholder in surrendering certificates which, prior to the Merger, represented
shares of DataWorks Common Stock and cash in lieu of any fractional shares.
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SCHEDULE 13D
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CUSIP NO. 72764R105 PAGE 7 OF 21 PAGES
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CONDUCT FOLLOWING THE MERGER
Once the Merger is consummated, Merger Sub will cease to exist as a
corporation, and all of the business, assets, liabilities and obligations of
Merger Sub will be merged into DataWorks with DataWorks remaining as the
Surviving Corporation.
Pursuant to the Reorganization Agreement, the Certificate of
Incorporation of Merger Sub in effect immediately prior to the Effective Time
will become the Certificate of Incorporation of the Surviving Corporation and
the Bylaws of Merger Sub will become the Bylaws of the Surviving Corporation.
The Board of Directors of the Surviving Corporation will consist of the
directors who are serving as directors of Merger Sub immediately prior to the
Effective Time. The officers of DataWorks immediately prior to the Effective
Time will remain as officers of the Surviving Corporation, until their
successors are duly elected or appointed or qualified.
Pursuant to the Reorganization Agreement, the Platinum Board will take
all actions necessary to cause Stuart Clifton to be elected to the Platinum
Board immediately after the Effective Time.
CONDUCT OF PLATINUM'S AND DATAWORKS' BUSINESS PRIOR TO THE MERGER
Pursuant to the Reorganization Agreement, until the earlier of the
termination of the Reorganization Agreement pursuant to its terms or the
Effective Time, DataWorks (and each of its subsidiaries) agrees, except (i) as
indicated in the DataWorks disclosure schedules or (ii) to the extent that
Platinum shall otherwise consent in writing, to carry on its business in all
material respects, in the usual, regular and ordinary course, in substantially
the same manner as heretofore conducted and in compliance with all applicable
laws and regulations, 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 dealing. In addition, DataWorks will
promptly notify the other of any material event involving its business or
operations. In addition, except as permitted by the terms of the Reorganization
Agreement or as provided in the DataWorks disclosure schedules, without the
prior written consent of Platinum, DataWorks shall not do any of the following,
and shall not permit its subsidiaries to do any of the following:
(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, director or other 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 pursuant to agreements outstanding, or policies existing, on the date
hereof and as disclosed in the DataWorks schedules, 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 Platinum Intellectual
Property, or enter into grants to future patent rights, other than non-exclusive
licenses in the ordinary course of business and consistent with past practice;
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SCHEDULE 13D
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CUSIP NO. 72764R105 PAGE 8 OF 21 PAGES
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(d) Declare, set aside 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) Purchase, redeem or otherwise acquire, directly or indirectly, any
shares of capital stock of DataWorks or it subsidiaries, except repurchases of
unvested shares at cost in connection with the termination of the employment
relationship with any employee pursuant to stock option or purchase agreements
in effect on the date hereof;
(f) Issue, deliver, sell, authorize, pledge or otherwise encumber, any
shares of DataWorks capital stock or any securities convertible into shares of
DataWorks capital stock, or subscriptions, rights, warrants or options to
acquire any shares of DataWorks capital stock or any securities convertible into
shares of DataWorks 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 delivery and/or sale of (i) stock options in
the ordinary course of business and consistent with past practice up to 200,000
shares, (ii) shares of the DataWorks Common Stock pursuant to the exercise of
stock options therefor outstanding as of the date of the Reorganization
Agreement or granted pursuant to the foregoing clause (i), (iii) shares of
DataWorks Common Stock issuable to participants in the DataWorks Employee Stock
Purchase Plan consistent with the terms thereof and (iv) shares of DataWorks
capital stock pursuant to exercise of the Warrants;
(g) Cause, permit or propose any amendments to the Certificate of
Incorporation and Bylaws of DataWorks or the similar governing instruments of
each of its subsidiaries;
(h) Acquire or agree to acquire by merging or consolidating with, or by
purchasing any equity interest in or a portion of the assets of, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof, or otherwise acquire or agree to
acquire any assets which are material, individually or in the aggregate, to the
business of DataWorks 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 DataWorks, except sales of inventory in the ordinary course of
business consistent with past practice;
(j) Incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person, issue or sell any debt securities or options,
warrants, calls or other rights to acquire any debt securities of DataWorks,
enter into any "keep well" or other agreement to maintain any financial
statement condition or enter into any arrangement having the economic effect of
any of the foregoing other than (i) in connection with the financing of ordinary
course trade payables consistent with past practice or (ii) pursuant to existing
credit facilities in the ordinary course of business;
(k) Adopt or amend any employee benefit plan or employee stock purchase
or employee stock option plan, or enter into any employment contract or
collective bargaining agreement (other than offer letters and letter agreements
entered into in the ordinary course of business consistent with past practice
with employees who are terminable "at will"), pay any special bonus or special
remuneration to any director or employee, or increase the salaries or wage rates
or fringe benefits (including rights to severance or indemnification) of its
directors, officers, employees or consultants other than pursuant to written
agreements with such persons disclosed in the DataWorks schedules or in the
ordinary course of business, consistent with past practice, or change in any
material respect any management policies or procedures;
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SCHEDULE 13D
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CUSIP NO. 72764R105 PAGE 9 OF 21 PAGES
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(l) Make any payments outside of the ordinary course of business in
excess of $250,000 other than in connection with the Merger or commitments
preexisting the date of the Reorganization Agreement;
(m) Modify, amend or terminate any DataWorks Contract or other material
contract or agreement to which DataWorks or any subsidiary thereof is a party or
waive, release or assign any material rights or claims thereunder;
(n) Enter into any contracts, agreements, or obligations relating to the
distribution, sale, license or marketing by third parties of DataWorks' products
or products licensed by DataWorks other than in the ordinary course of business
consistent with past practice but in no event will any exclusive rights be
granted or restrictions on DataWorks' business activities be agreed to;
(o) Materially revalue any of its assets or, except as required by GAAP,
make any change in accounting methods, principles or practices;
(p) Take any action that would be reasonably likely to interfere with
Platinum's ability to account for the Merger as a pooling of interests;
(q) Agree in writing or otherwise to take any of the actions described
in (a) through (p) above.
Pursuant to the Reorganization Agreement, until the earlier of the
termination of the Reorganization Agreement pursuant to its terms or the
Effective Time, Platinum (and each of its subsidiaries) agrees, except (i) as
indicated in the Platinum disclosure schedules or (ii) to the extent that
DataWorks shall otherwise consent in writing, carry on its business, in all
material respects, in the usual, regular and ordinary course, in substantially
the same manner as heretofore conducted and in compliance with all applicable
laws and regulations, pay its debts and taxes when due, subject to good faith
disputes over such debts or taxes, 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. In addition, except as permitted
by the terms of the Reorganization Agreement or as provided in the Platinum
disclosure schedules, without the prior written consent of DataWorks, Platinum
shall not do any of the following and shall not permit its subsidiaries to do
any of the following:
(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, director or other stock plans or
authorize cash payments in exchange for any options granted under any of such
plans;
(b) Transfer or license to any person or entity or otherwise extend,
amend or modify in any material respect any rights to the Platinum Intellectual
Property, or enter into grants to future patent rights, other than in the
ordinary course of business and consistent with past practice;
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SCHEDULE 13D
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CUSIP NO. 72764R105 PAGE 10 OF 21 PAGES
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(c) Declare, set aside 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;
(d) Purchase, redeem or otherwise acquire, directly or indirectly, any
shares of capital stock of Platinum or its subsidiaries, except repurchases of
unvested shares at cost in connection with the termination of the employment
relationship with any employee pursuant to stock option or repurchase agreements
in effect on the date hereof;
(e) Issue, deliver, sell, authorize, pledge or otherwise encumber 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,
delivery and/or sale of (i) stock options in the ordinary course of business and
consistent with past practice, (ii) shares of Platinum Common Stock pursuant to
the exercise of stock options therefor outstanding as of the date of the
Reorganization Agreement or granted pursuant to the foregoing clause (i), and
(iii) shares of Platinum Common Stock issuable to participants in the Platinum
Employee Stock Purchase Plan consistent with the terms thereof.
(f) Cause, permit or propose any amendments to the Certificate of
Incorporation and Bylaws of Platinum or the similar governing instruments of
each of its subsidiaries;
(g) Acquire or agree to acquire by (i) merging or consolidating with, or
(ii) purchasing any equity in or a portion of the assets of, or (iii) any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof, for consideration in excess of $50
million in any individual acquisition or $100 million in the aggregate for all
such acquisitions;
(h) Incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person, issue or sell any debt securities or options,
warrants, calls or other rights to acquire any debt securities of Platinum,
enter into any "keep well" or other agreement to maintain any financial
statement condition or enter into any arrangement having the economic effect of
any of the foregoing other than (i) in connection with the financing of ordinary
course trade payables consistent with past practice or (ii) pursuant to existing
credit facilities in the ordinary course of business.
(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 Platinum, except sales of inventory in the ordinary course of
business consistent with past practice;
(j) Materially revalue any of its assets or, except as required by GAAP,
make any change in accounting methods, principles or practices;
(k) Take any action that would be reasonably likely to interfere with
Platinum's ability to account for the Merger as a pooling of interests; and
(l) Agree in writing or otherwise to take any of the actions described
in Section (a) through (k) above.
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SCHEDULE 13D
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CUSIP NO. 72764R105 PAGE 11 OF 21 PAGES
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NO SOLICITATION
Under the terms of the Reorganization Agreement, until the earlier of
the Effective Time or termination of the Reorganization Agreement pursuant to
its terms, DataWorks and its subsidiaries will not, nor will they authorize or
permit any of their respective officers, directors, affiliates or employees or
any investment banker, attorney or other advisor or representative retained by
any of them to, directly or indirectly, (i) solicit, initiate, encourage or
induce the making, submission or announcement of any Acquisition Proposal (as
defined below), (ii) participate in any discussions or negotiations regarding,
or furnish to any person any non-public information with respect to, or take any
other action to facilitate any inquiries or the making of any proposal that
constitutes or may reasonably be expected to lead to, any Acquisition Proposal,
(iii) engage in discussions with any person with respect to any Acquisition
Proposal, except as to the existence of the provisions regarding
non-solicitation contained in the Reorganization Agreement, (iv) subject to the
following paragraph, approve, endorse or recommend any Acquisition Proposal or
(v) enter into any letter of intent or similar document or any contract
agreement or commitment contemplating or otherwise relating to any Acquisition
Transaction (as defined below); provided, however, that prior to the approval of
the Reorganization Agreement by the required DataWorks stockholder vote, the
non-solicitation provisions contained in the Reorganization Agreement shall not
prohibit DataWorks from furnishing nonpublic information regarding DataWorks and
its subsidiaries to, entering into a confidentiality agreement with or entering
into discussions with, any person or group in response to a Superior Offer (as
hereinafter defined) submitted by such person or group (and not withdrawn) if
(1) neither DataWorks nor any representative of DataWorks and its subsidiaries
shall have violated any of the restrictions regarding non-solicitation set forth
in the Reorganization Agreement, (2) the DataWorks Board concludes in good
faith, after consultation with its outside legal counsel, that such action is
required in order for the DataWorks Board to comply with its fiduciary
obligations to the DataWorks' stockholders under applicable law, (3) prior to
furnishing any such nonpublic information to, or entering into discussions with,
such person or group, DataWorks gives Platinum written notice of the identity of
such person or group and of DataWorks' intention to furnish nonpublic
information to, or enter into discussions with, such person or group and
DataWorks receives from such person or group an executed confidentiality
agreement containing customary limitations on the use and disclosure of all
nonpublic written and oral information furnished to such person or group by or
on behalf of DataWorks, and (4) contemporaneously with furnishing any such
nonpublic information to such person or group, DataWorks furnishes such
nonpublic information to Platinum (to the extent such nonpublic information has
not been previously furnished by Platinum to DataWorks). DataWorks and its
subsidiaries will immediately cease any and all existing activities, discussions
or negotiations with any parties conducted heretofore with respect to any
Acquisition Proposal. Without limiting the foregoing, it is understood that any
violation of the restrictions set forth in the preceding two sentences by any
officer, director or employee of DataWorks or any of its subsidiaries or any
investment banker, attorney or other advisor or representative of DataWorks or
any of its subsidiaries shall be deemed to be a breach of the non-solicitation
provisions contained in the Reorganization Agreement by DataWorks. In addition
to the foregoing, DataWorks shall provide Platinum with at least 24 hours prior
notice (or such lesser prior notice as provided to the members of the DataWorks
Board but in no event less than eight hours) of any meeting of the DataWorks
Board at which the DataWorks Board is reasonably expected to consider a Superior
Offer, together with such notice a copy of the definitive documentation relating
to such Superior Offer.
Notwithstanding the terms discussed in this section, nothing in the
Reorganization Agreement prevents the DataWorks Board from withholding,
withdrawing, amending or modifying its unanimous recommendation in favor of the
Merger if (i) a Superior Offer is made to DataWorks and is not withdrawn, (ii)
neither DataWorks nor any of its representatives shall have violated any of the
restrictions regarding confidentiality contained in the Reorganization
Agreement, and (iii) the DataWorks Board or any committee thereof concludes in
good faith, after consultation with its outside
<PAGE> 12
SCHEDULE 13D
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CUSIP NO. 72764R105 PAGE 12 OF 21 PAGES
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counsel, that, in light of such Superior Offer, the withholding, withdrawal,
amendment or modification of such recommendation is required in order for the
DataWorks Board to comply with its fiduciary obligations to the DataWorks'
stockholders under applicable law. Subject to applicable laws, no provision of
the Reorganization Agreement summarized in this paragraph shall limit DataWorks'
obligation to hold and convene the DataWorks Stockholders' Meeting (regardless
of whether the unanimous recommendation of the DataWorks Board shall have been
withdrawn, amended or modified).
In addition to the obligations of DataWorks described in this section,
DataWorks as promptly as practicable shall advise Platinum orally and in writing
of any request for non-public information which DataWorks reasonably believes
would lead to an Acquisition Proposal or of any Acquisition Proposal, or any
inquiry with respect to or which DataWorks reasonably should believe would lead
to any Acquisition Proposal, the material terms and conditions of such request,
Acquisition Proposal or inquiry, and the identity of the person or group making
any such request, Acquisition Proposal or inquiry. DataWorks will keep Platinum
informed in all material respects of the status and details (including material
amendments or proposed material amendments) of any such request, Acquisition
Proposal or inquiry.
"Acquisition Proposal" means any offer or proposal (other than an offer
or proposal by Platinum) relating to any Acquisition Transaction. "Acquisition
Transaction" means any transaction or series of related transactions other than
the transactions contemplated by the Reorganization Agreement involving: (A) any
acquisition or purchase from DataWorks by any person or "group" (as defined
under Section 13(d) of the Exchange Act and the rules and regulations
thereunder) of more than a 5% interest in the total outstanding voting
securities of DataWorks or any of its subsidiaries or any tender offer or
exchange offer that if consummated would result in any person or "group" (as
defined under Section 13(d) of the Exchange Act and the rules and regulations
thereunder) beneficially owning 5% or more of the total outstanding voting
securities of DataWorks or any of its subsidiaries or any merger, consolidation,
business combination or similar transaction involving DataWorks pursuant to
which the stockholders of DataWorks immediately preceding such transaction hold
less than 95% of the equity interests in the surviving or resulting entity of
such transaction; (B) any sale, lease (other than in the ordinary course of
business), exchange, transfer, license (other than in the ordinary course of
business), acquisition or disposition of more than 10% of the assets of
DataWorks; or (C) any liquidation or dissolution of DataWorks. "Superior Offer"
means an unsolicited, bona fide written offer made by a third party to
consummate any of the following transactions: (i) a merger, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving DataWorks pursuant to which the stockholders of DataWorks
immediately preceding such transaction hold less than 50% of the equity interest
in the surviving or resulting entity of such transaction; (ii) a sale or other
disposition by DataWorks of assets (excluding inventory and used equipment sold
in the ordinary course of business) representing in excess of 50% of the fair
market value of DataWorks business immediately prior to such sale, or (iii) the
acquisition by any person or group (including by way of a tender offer or an
exchange offer or issuance by DataWorks), directly or indirectly, of beneficial
ownership or a right to acquire beneficial ownership of shares representing in
excess of 50% of the voting power of the then outstanding shares of capital
stock of DataWorks in each case, on terms that the DataWorks Board of Directors
determines, in its reasonable judgment, after consultation with its financial
advisor, to be more favorable to the DataWorks' stockholders than the terms of
the Merger; provided, however, that any such offer shall not be deemed to be a
"Superior Offer" if any financing required to consummate the transaction
contemplated by such offer is not committed and is not likely in the judgment of
the DataWorks' Board to be obtained by such third party on a timely basis.
<PAGE> 13
SCHEDULE 13D
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CUSIP NO. 72764R105 PAGE 13 OF 21 PAGES
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BREAK UP FEES
Platinum and DataWorks have agreed that if the Reorganization Agreement
is terminated by either Platinum or DataWorks, as applicable, due to (i) the
failure of the Merger to be consummated by February 28, 1999 for any reason;
provided, however, the right to terminate the Reorganization Agreement as a
result of such failure is not available to any party to the Reorganization
agreement whose action or failure to act has been a principal cause or resulted
in the failure of the Merger to occur on or before such date and such action or
failure constitutes a material breach of the Reorganization Agreement; (ii) the
failure of DataWorks to obtain the required approval of the stockholders of
DataWorks contemplated by the Reorganization Agreement by reason of the failure
to obtain the required vote at a meeting of the DataWorks stockholders duly
convened therefore or at any adjournment thereof; provided, however, that the
right to terminate the Reorganization Agreement as a result of such failure
shall not be available to DataWorks where the failure to obtain the DataWorks
stockholder approval shall have been caused by the action or failure to act of
DataWorks and such action or failure to act constitutes a material breach by
DataWorks of the Reorganization Agreement or (iii) a DataWorks Triggering Event
(as defined below), then DataWorks shall promptly, but in no event later than
two days after the date of such termination, pay Platinum a fee equal to $3.25
million in immediately available funds; provided, that in the case of
termination as a result of the failure of the Merger to be consummated by
February 28, 1999, such payment shall be made only if following October 13, 1998
and prior to the termination of the Reorganization Agreement, a third party has
publicly announced an Acquisition Proposal for an Acquisition Transaction and
within 12 months following the termination of the Reorganization Agreement
Platinum enters into or announces an intention to enter into a Company
Acquisition (as defined below).
Platinum and DataWorks have further agreed that if the Reorganization
Agreement is terminated by either Platinum or DataWorks, as applicable, due to
(i) the failure of Platinum to obtain the required approval of the stockholders
of Platinum contemplated by the Reorganization Agreement by reason of the
failure to obtain the required vote at a meeting of the Platinum stockholders
duly convened therefore or at any adjournment thereof; provided, however, that
the right to terminate the Reorganization Agreement as a result of such failure
shall not be available to Platinum where the failure to obtain the Platinum
stockholder approval shall have been caused by the action or failure to act of
Platinum and such action or failure to act constitutes a material breach by
Platinum of the Reorganization Agreement or (ii) a Platinum Triggering Event,
then Platinum shall promptly, but in no event later than two (2) days after the
date of such termination, pay to DataWorks a fee equal to $3.25 million in
immediately available funds.
Platinum and DataWorks have agreed that the fees described above shall
not be in lieu of damages incurred in the event of breach of the Reorganization
Agreement.
Except as set forth above, Platinum and DataWorks have agreed that all
fees and expenses incurred in connection with the Reorganization Agreement and
the transactions contemplated thereby shall be paid by the party incurring such
expenses whether or not the Merger is consummated; provided, however, that
Platinum and DataWorks shall share equally all fees and expenses, other than
attorneys' and accountants fees and expenses, incurred in relation to the
printing and filing (with the SEC) of this Joint Proxy Statement/Prospectus.
<PAGE> 14
SCHEDULE 13D
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CUSIP NO. 72764R105 PAGE 14 OF 21 PAGES
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"Company Acquisition" shall mean any of the following transactions
(other than the transactions contemplated by the reorganization Agreement); (i)
a merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving DataWorks pursuant to which the
stockholders of DataWorks immediately preceding such transaction hold less than
50% of the aggregate equity interests in the surviving or resulting entity of
such transaction or (ii) a sale or other disposition by DataWorks of assets
(excluding inventory and used equipment sold in the ordinary course of business)
representing in excess of 50% of the aggregate fair market value of DataWorks'
business immediately prior to such sale. "DataWorks Triggering Event" shall be
deemed to have occurred if: (i) the DataWorks Board or any committee thereof
shall for any reason have withdrawn or shall have amended or modified in a
manner adverse to Platinum its unanimous recommendation in favor of, the
adoption and approval of the Reorganization Agreement or the approval of the
Merger; (ii) Platinum shall have failed to include in this Joint Proxy
Statement/Prospectus the unanimous recommendation of the DataWorks Board in
favor of the adoption and approval of the Reorganization Agreement and the
approval of the Merger; (iii) the DataWorks Board fails to reaffirm its
unanimous recommendation in favor of the adoption and approval of the
Reorganization Agreement and the approval of the Merger within ten (10) business
days after Platinum requests in writing that such recommendation be reaffirmed;
(iv) the DataWorks Board or any committee thereof shall have approved or
publicly recommended any Acquisition Proposal; or (v) a tender or exchange offer
relating to securities of DataWorks shall have been commenced by a Person
unaffiliated with Platinum and DataWorks shall not have sent to its
securityholders pursuant to Rule 14e-2 promulgated under the Securities Act,
within ten (10) business days after such tender or exchange offer is first
published sent or given, a statement disclosing that DataWorks recommends
rejection of such tender or exchange offer.
"Platinum Triggering Event" shall be deemed to have occurred if: (i) the
Platinum Board for any committee thereof shall for any reason have withdrawn or
shall have amended or modified in a manner adverse to DataWorks its unanimous
recommendation in favor of, the issuance of shares of Platinum Common Stock
pursuant to the Merger; (ii) Platinum shall have failed to include in the
Prospectus/Proxy Statement the unanimous recommendation of the Platinum Board in
favor of the issuance of shares of Platinum Common Stock pursuant to the Merger;
or (iii) the Platinum Board of fails to reaffirm its unanimous recommendation in
favor of the issuance of the shares of Platinum Common Stock pursuant to the
Merger within ten (10) business days after DataWorks requests in writing that
such recommendation be reaffirmed.
CONDITIONS TO THE MERGER
The respective obligations of each party to the Reorganization Agreement
to effect the Merger are subject to the satisfaction at or prior to the Closing
Date of the following conditions: (i) the Reorganization 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 DataWorks; (ii) the
issuance of the shares of Platinum Common Stock pursuant to the Merger shall
have been duly approved by the requisite vote under applicable Nasdaq rules by
the stockholders of Platinum; (iii) the SEC shall have declared the Registration
Statement effective and 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 this Joint
Proxy Statement/ Prospectus, shall have been initiated or threatened in writing
by the SEC; (iv) 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 and all waiting periods, if any, under
the HSR Act relating to the transactions contemplated hereby shall have expired
or terminated early and all material foreign antitrust approvals required to be
obtained prior to the Merger in connection with the transactions contemplated
hereby shall have been obtained; (v) Platinum and DataWorks shall each have
received written opinions from their respective tax counsel (Wilson Sonsini
Goodrich & Rosati, Professional Corporation, and Cooley Godward LLP,
respectively), in form and
<PAGE> 15
SCHEDULE 13D
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CUSIP NO. 72764R105 PAGE 15 OF 21 PAGES
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substance reasonably satisfactory to them, to the effect that the Merger will
constitute a tax-free 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 Platinum or DataWorks 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
the Reorganization Agreement have agreed to make representations as requested by
such counsel for the purpose of rendering the Tax Opinions and have further
agreed to confirm the accuracy and completeness of such representations as of
the Effective Time as requested by such counsel for the purpose of rendering
those opinions discussed in this paragraph.
In addition, the obligation of DataWorks to consummate and effect the
Merger is subject to the satisfaction at or prior to the Closing Date of each of
the following conditions, any of which may be waived, in writing, exclusively by
DataWorks: (i) each representation and warranty of Platinum and Merger Sub
contained in the Reorganization Agreement shall have been true and correct as of
October 13, 1998 and as of the Closing date (subject to certain materiality
qualifications) and DataWorks shall have received a certificate with respect to
the foregoing signed on behalf of Platinum by an authorized officer of Platinum;
(ii) Platinum and Merger Sub shall have performed or complied in all material
respects with all agreements and covenants required by the Reorganization
Agreement to be performed or complied with by them on or prior to the Closing
Date, and DataWorks shall have received a certificate to such effect signed on
behalf of Platinum by an authorized officer of Platinum; (iii) no material
adverse effect with respect to Platinum shall have occurred since the date of
the Reorganization Agreement; (iv) each of the Platinum Affiliates shall have
entered into an affiliate agreement and each of such agreements will be in full
force and effect as of the Effective Time; (v) DataWorks shall have received
letters from Ernst & Young LLP, dated within two (2) business days prior to the
Effective Time, regarding that firm's concurrence with Platinum management's and
the DataWorks management's conclusions as to the appropriateness of pooling of
interest accounting for the Merger and (vi) the shares of Platinum Common Stock
to be issued in the Merger shall have been authorized for listing on the Nasdaq
National Market, subject to notice of issuance.
Further, the obligations of Platinum and Merger Sub to consummate and
effect the Merger are 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 Platinum: (i) each representation and warranty of
DataWorks contained in the Reorganization Agreement shall be true and correct as
of October 13, 1998 and as of the Closing Date (subject to certain materiality
qualifications) and Platinum shall have received a certificate with respect to
the foregoing signed on behalf of DataWorks by an authorized officer of
DataWorks; (ii) DataWorks shall have performed or complied in all material
respects with all agreements and covenants required by the Reorganization
Agreement to be performed or complied with by it at or prior to the Closing
Date, and Platinum shall have received a certificate to such effect signed on
behalf of DataWorks by the Chief Executive Officer and Chief Financial Officer
of DataWorks; (iii) no material adverse effect with respect to DataWorks and its
subsidiaries shall have occurred since the date of the Reorganization Agreement;
(iv) each of the DataWorks Affiliates shall have entered into affiliate
agreements and each of such agreements will be in full force and effect as of
the Effective Time; (v) Platinum shall have received letters from Ernst & Young
LLP, dated within two (2) business days prior to the Effective Time, regarding
that firm's concurrence with Platinum management's and DataWorks' management's
conclusions as to the appropriateness of pooling of interest accounting for the
Merger; (vi) all necessary actions shall have been taken to extinguish and
cancel all outstanding Rights under the DataWorks Rights Plan or render such
Rights inapplicable to the Merger and the other transactions contemplated by the
Reorganization Agreement.
<PAGE> 16
SCHEDULE 13D
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CUSIP NO. 72764R105 PAGE 16 OF 21 PAGES
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TERMINATION OF THE REORGANIZATION AGREEMENT
The Reorganization Agreement provides that it may be terminated at any
time prior to the Effective Time, whether before or after the requisite
approvals of the stockholders of Platinum or DataWorks: (i) by mutual written
consent duly authorized by the Platinum and DataWorks Boards; (ii) by either
DataWorks or Platinum if the Merger shall not have been consummated by February
28, 1999 for any reason; provided, however, that the right to terminate the
Reorganization Agreement pursuant to this right of termination 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 material breach of the
Reorganization Agreement; (iii) by either DataWorks or Parent if a Governmental
Entity shall have issued an order, decree or ruling or taken any other action,
in any case having the effect of permanently restraining, enjoining or otherwise
prohibiting the Merger, which order, decree, ruling or other action is final and
nonappealable; (iv) by DataWorks or Platinum if the required approval of the
stockholders of Platinum contemplated by the Reorganization Agreement shall not
have been obtained by reason of the failure to obtain the required vote at a
meeting of Platinum stockholders duly convened therefor or at any adjournment
thereof; provided, however, that the right to terminate the Reorganization
Agreement pursuant to this right of termination shall not be available to
Platinum where the failure to obtain Platinum stockholder approval shall have
been caused by the action or failure to act of Platinum and such action or
failure to act constitutes a material breach by Platinum of the Reorganization
Agreement; (v) by DataWorks or Platinum if the required approval of the
stockholders of DataWorks contemplated by the Reorganization Agreement shall not
have been obtained by reason of the failure to obtain the required vote at a
meeting of DataWorks stockholders duly convened therefore or at any adjournment
thereof; provided, however, that the right to terminate the Reorganization
Agreement pursuant to this right of termination shall not be available to
DataWorks where the failure to obtain the DataWorks stockholder approval shall
have been caused by the action or failure to act of DataWorks and such action or
failure to act constitutes a material breach by DataWorks of the Reorganization
Agreement; (vi) by Platinum (at any time prior to the adoption and approval of
the Reorganization Agreement and the Merger by the required vote of the
stockholders of DataWorks) if a DataWorks Triggering Event shall have occurred;
(vii) by DataWorks (at any time prior to the adoption and approval of the
Reorganization Agreement and the Merger by the required vote of the stockholders
of Platinum) if a Platinum Triggering Event shall have occurred; (viii) by
DataWorks, upon a breach of any representation, warranty, covenant or agreement
on the part of Platinum set forth in the Reorganization Agreement, or if any
representation or warranty of Platinum shall have become untrue (provided that
if such inaccuracy in Platinum's representations and warranties or breach by
Platinum is curable by Platinum through the exercise of commercially reasonable
efforts, then DataWorks may not terminate the Reorganization Agreement provided
Platinum continues to exercise such commercially reasonably efforts to cure such
breach); (ix) by Platinum, upon a breach of any representation, warranty,
covenant or agreement on the part of DataWorks set forth in the Reorganization
Agreement, or if any representation or warranty of DataWorks shall have become
untrue (provided that if such inaccuracy in DataWorks' representations and
warranties or breach by DataWorks is curable by DataWorks through the exercise
of commercially reasonable efforts, then Platinum may not terminate the
Reorganization Agreement provided DataWorks continues to exercise such
commercially reasonably efforts to cure such breach).
Indemnification
From and after the Effective Time, Platinum will cause the Surviving
Corporation to fulfill and honor in all respects the obligations of DataWorks
pursuant to any indemnification agreements between DataWorks and its directors
and officers as of the Effective Time (the "Indemnified Parties") and any
<PAGE> 17
SCHEDULE 13D
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CUSIP NO. 72764R105 PAGE 17 OF 21 PAGES
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indemnification provisions under DataWorks Certificate of Incorporation or
Bylaws as in effect on the date hereof. The Certificate of Incorporation and
Bylaws of the Surviving Corporation will contain provisions with respect to
exculpation and indemnification that are at least as favorable to the
Indemnified Parties as those contained in the Certificate of Incorporation and
Bylaws of DataWorks as in effect on the date hereof, which provisions will not
be amended, repealed or otherwise modified for a period of six years 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 DataWorks, unless such modification is required
by law.
For a period of six years after the Effective Time, Platinum will cause
the Surviving Corporation to use its commercially reasonable efforts to maintain
in effect, if available, directors' and officers' liability insurance covering
those persons who are currently covered by DataWorks' directors' and officers'
liability insurance policy on terms comparable to those applicable to the
current directors and officers of DataWorks; provided, however, that in no event
will Platinum or the Surviving Corporation be required to expend in excess of
150% of the annual premium currently paid by DataWorks for such coverage (or
such coverage as is available for such 150% of such annual premium).
VOTING AGREEMENTS
DataWorks Voting Agreements. Pursuant to certain agreements (each a
"DataWorks Voting Agreement" and, collectively, the "DataWorks Voting
Agreements") certain stockholders of DataWorks (each a "DataWorks Voting
Agreement Stockholder"), who beneficially own an aggregate of 1,876,583
outstanding shares of DataWorks Common Stock (representing approximately 12.7%
of shares of DataWorks Common Stock as of October 13, 1998) have agreed that,
prior to the termination of the DataWorks Voting Agreement pursuant to its
terms, they will vote their shares of DataWorks Common Stock in favor of the
approval of the Reorganization Agreement and the Merger. The DataWorks Voting
Agreement Stockholders have also delivered to Platinum irrevocable proxies with
respect to the matters covered by the DataWorks Voting Agreements. In addition,
the DataWorks Voting Agreement Stockholders have agreed not to transfer any
securities of DataWorks owned by them, unless such transfer is in accordance
with the DataWorks Affiliate Agreement between the DataWorks Voting Agreement
Stockholder and Platinum, and provided that the proposed transferee of such
DataWorks securities shall have (i) executed a counterpart of the DataWorks
Voting Agreement and an irrevocable proxy and (ii) agreed to hold such DataWorks
securities subject to all of the terms and provisions of the DataWorks Voting
Agreement.
Platinum Voting Agreements. Pursuant to certain agreements (each a
"Platinum Voting Agreement" and, collectively, the "Platinum Voting Agreements")
certain stockholders of Platinum (each a "Platinum Voting Agreement
Stockholder"), who beneficially own an aggregate of 5,558,116 outstanding shares
of Platinum Common Stock and Platinum Series C Preferred Stock on an
as-converted basis (representing approximately 18.9% of the shares of Platinum
Common Stock as of October 13, 1998) have agreed that, prior to the termination
of the Platinum Voting Agreement pursuant to its terms, they will vote their
shares of Platinum Common Stock and Platinum Series C Preferred Stock on an
as-converted basis in favor of the issuance of the shares of Platinum Common
Stock to the stockholders of DataWorks pursuant to the Reorganization Agreement.
The Platinum Voting Agreement Stockholders have also delivered to DataWorks
irrevocable proxies with respect to the matters covered by the Platinum Voting
Agreements. In addition, the Platinum Voting Agreement Stockholders have also
agreed not to transfer any securities of Platinum owned by them, unless such
transfer is in accordance with the Platinum Affiliate Agreement between the
Platinum Voting Agreement Stockholder and Platinum, and provided that the
proposed transferee of such Platinum securities shall have (i) executed a
counterpart of the Platinum Voting Agreement and an irrevocable proxy and (ii)
agreed to hold such Platinum securities subject to all of the terms and
provisions of the Platinum Voting Agreement.
<PAGE> 18
SCHEDULE 13D
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CUSIP NO. 72764R105 PAGE 18 OF 21 PAGES
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AFFILIATE AGREEMENTS
DataWorks Affiliate Agreements. Pursuant to certain agreements (each a
"DataWorks Affiliate Agreement"), certain individuals and entities that may be
deemed affiliates of DataWorks (each, a "DataWorks Affiliate") have agreed not
to effect any sale, transfer or other disposition of the Platinum Common Stock
received by such DataWorks Affiliate in the Merger unless: (i) such sale,
transfer or other disposition is made in conformity with the volume and other
requirements of Rule 145 under the Securities Act of 1933, as amended, as
evidenced by a broker's letter and a representation letter executed by the
DataWorks Affiliate (reasonably satisfactory in form and content to Platinum),
each stating that such requirements have been met; (ii) legal counsel reasonably
satisfactory to Platinum shall have advised Platinum in a written opinion letter
(reasonably satisfactory in form and content to Platinum), upon which Platinum
may rely, that such sale, transfer or other disposition will be exempt from
registration under the Securities Act; (iii) such sale, transfer or other
disposition is effected pursuant to an effective registration statement under
the Securities Act; or (iv) an authorized representative of the SEC shall
rendered written advice to such DataWorks Affiliate to the effect that the SEC
would take no action, or that the staff of the SEC would not recommend that the
SEC take action, with respect to such proposed sale, transfer or other
disposition, and a copy of such written advice and all other related
communications with the SEC shall have been delivered to Platinum.
In addition, so as to help ensure that the Merger may qualify as a
pooling of interests for accounting and financial reporting purposes, the
DataWorks Affiliate Agreements provide that during the period contemplated by
the SEC's Staff Accounting Bulletin Number 65 until the earlier of (i)
Platinum's public announcement of financial results covering at least 30 days of
combined operations of Platinum and DataWorks or (ii) the Reorganization
Agreement is terminated in accordance with its terms, no DataWorks Affiliate
will sell, exchange, transfer, pledge, distribute or otherwise dispose of or
grant any option, establish any "short" or put-equivalent position with respect
to or enter into any similar transaction (through derivatives or otherwise)
intended or having the effect, directly or indirectly, to reduce such DataWorks
Affiliate's risk relative to: (i) any DataWorks Common Stock (except pursuant to
and upon consummation of the Merger); or (ii) any Platinum Common Stock received
by such DataWorks Affiliate in the Merger or upon exercise of options assumed by
Platinum in the Merger. Provided certain conditions are met, the DataWorks
Affiliate Agreements provide for certain exceptions to the foregoing
restrictions on transfer relating to: (i) certain de minimis transfers; (ii)
transfers in payment of the exercise price of options to purchase Platinum
Common Stock; (iii) charitable donations; and (iv) transfers to trusts
established for the benefit of members of such DataWorks Affiliate's family or
gifts to members of such DataWorks Affiliate's family.
Platinum Affiliate Agreements. Pursuant to certain agreements (each a
"Platinum Affiliate Agreement" and, collectively, the "Platinum Affiliate
Agreements"), certain individuals and entities that may be deemed affiliates of
Platinum (each a "Platinum Affiliate") have agreed that, during the period
contemplated by the SEC's Staff Accounting Bulletin Number 65 until the earlier
of (i) Platinum's public announcement of financial results covering at least 30
days of combined operations of Platinum and DataWorks or (ii) the Reorganization
Agreement is terminated in accordance with its terms, such Platinum Affiliate
shall not, subject to certain exceptions, sell, exchange, transfer, pledge,
distribute or otherwise dispose of or grant any option, establish any "short" or
put-equivalent position with respect to or enter into any similar transaction
(through derivative's or otherwise) intended or having the effect, directly or
indirectly, to reduce such Platinum Affiliate's risk relative to any Platinum
Common Stock or Platinum Series C Preferred Stock. Provided certain conditions
are met, the Platinum Affiliate Agreements provide for certain exceptions to the
foregoing restrictions on transfer relating to: (i) certain de minimis
transfers; (ii) transfers in payment of the exercise price of options to
purchase Platinum Common Stock; (iii) charitable donations; and (iv) transfers
to trusts established for the benefit of members of such Platinum Affiliate's
family or gifts to members of such Platinum Affiliate's family.
<PAGE> 19
SCHEDULE 13D
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(h) - (i) If the Merger is consummated as planned, the DataWorks Common
Stock will be deregistered under the Act and delisted from The
Nasdaq National Market.
(j) Other than described above, Platinum currently has no plan or
proposals which relate to, or may result in, any of the matters
listed in Items 4(a) - (i) of Schedule 13D (although Platinum
reserves the right to develop such plans).
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) - (b) As a result of the Voting Agreements, Platinum may be deemed
to be the beneficial owner of at least 1,876,583(1) shares of Issuer
Common Stock. Such Issuer Common Stock constitutes approximately
12.7%(1) of the issued and outstanding shares of Issuer Common
Stock.
Platinum has shared power to vote all of the Shares for the limited
purposes described above. Platinum does not have the sole power to
vote or to direct the vote or to dispose or to direct the
disposition of any shares of Issuer Common Stock.
(c) No transactions in the class of securities reported have been
effected during the past sixty days.
(d) To the knowledge of Platinum, except as set forth in this Item 5, no
person is known to have the right to receive or the power to direct
the receipt of dividends from, or the proceeds from the sale of,
such securities.
(e) N/A.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDING OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER.
Other than the Merger Agreement and the exhibits thereto, including the
Voting Agreements, to the best knowledge of Platinum, there are no
contracts, arrangements, understandings or relationships (legal or
otherwise) among the persons named in Item 2 and between such persons
and any person with respect to any securities of DataWorks, including
but not limited to transfer or voting of any of the securities, finder's
fees, joint ventures, loan or option arrangement, puts or calls,
guarantees of profits, division of profits or loss, or the giving or
withholding of proxies.
<PAGE> 20
SCHEDULE 13D
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CUSIP NO. 72764R105 PAGE 20 OF 21 PAGES
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ITEM 7. MATERIALS TO BE FILED AS EXHIBITS.
The following documents are filed as exhibits:
1. Agreement and Plan of Reorganization, dated October 13, 1998 by and
among Platinum, Merger Sub, and DataWorks.
2. Form of Voting Agreement, dated October 13, 1998, by and among
Platinum and certain stockholders of DataWorks - See Exhibit A-1 to
the Merger Agreement filed as Exhibit 1 to this Schedule 13D.
<PAGE> 21
SCHEDULE 13D
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CUSIP NO. 72764R105 PAGE 21 OF 21 PAGES
- ------------------- -------------------
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: October 19, 1998
PLATINUM SOFTWARE CORPORATION
By: /s/ PERRY TARNOFSKY
-----------------------------
<PAGE> 22
SCHEDULE A
DIRECTORS AND EXECUTIVE OFFICERS OF
PLATINUM SOFTWARE CORPORATION
<TABLE>
<CAPTION>
Present Principal Occupation Including
Name and Title Name of Employer
- -------------- --------------------------------------
<S> <C>
L. George Klaus Platinum Software Corporation
President, Chief Executive Officer 195 Technology Drive
and Chairman of the Irvine, CA 92718-2402
Board of Directors
Donald R. Dixon President
Director Trident Capital Partners Fund I, LP
2480 Sand Hill Road
Suite 100
Menlo Park, CA 94025
L. John Doerr General Partner
Director Kleiner, Perkins Caufield & Byers VII
2750 Sand Hill Road
Menlo Park, CA 94025
W. Douglas Hajjar Platinum Software Corporation
Director 195 Technology Drive
Irvine, CA 92718-2402
Arthur J. Marks General Partner
Director New Enterprise Associates VI
Limited Partnership
Arthur J. Marks
1119 St. Paul Street
Baltimore, MD 21202
William R. Pieser Platinum Software Corporation
Executive Vice President, 195 Technology Drive
Product Operations and Marketing Irvine, CA 92718-2402
Ken Lally Platinum Software Corporation
Executive Vice President, 195 Technology Drive
Field and Customer Operations Irvine, CA 92718-2402
</TABLE>
<PAGE> 23
SCHEDULE B
<TABLE>
<CAPTION>
Stockholder Shares Beneficially Owned
- ----------- -------------------------
<S> <C>
Stuart W. Clifton 1,040,422
Norman R. Farquhar 134,854
Bradley J. Thies 0
Rick E. Russo 37,412
Nathan W. Bell 299,555
Tony N. Domit 16,309
Ronald S. Parker 34,979
Roy Thiele-Sardina 16,109
William P. Folley III 296,943
---------
Total: 1,876,583(1)
=========
</TABLE>
<PAGE> 24
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
1. Agreement and Plan of Reorganization, dated October 13, 1998 by and
among Platinum, Merger Sub, and DataWorks.
2. Form of Voting Agreement, dated October 13, 1998, by and among
Platinum and certain stockholders of DataWorks - See Exhibit A-1 to
the Merger Agreement filed as Exhibit 1 to this Schedule 13D.
<PAGE> 1
EXHIBIT 1
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
PLATINUM SOFTWARE CORPORATION
ZOO ACQUISITION CORP.
AND
DATAWORKS CORPORATION
Dated as of October 13, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I THE MERGER................................................................................ 1
1.1 The Merger........................................................................ 1
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........................................................... 2
1.7 Surrender of Certificates......................................................... 4
1.8 No Further Ownership Rights in Company Common Stock............................... 6
1.9 Lost, Stolen or Destroyed Certificates............................................ 6
1.10 Tax Consequences.................................................................. 7
1.11 Taking of Necessary Action; Further Action........................................ 7
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................................ 7
2.1 Organization of the Company....................................................... 7
2.2 Company Capital Structure......................................................... 8
2.3 Obligations With Respect to Capital Stock......................................... 10
2.4 Authority; Non-Contravention...................................................... 10
2.5 SEC Filings; Company Financial Statements......................................... 11
2.6 Absence of Certain Changes or Events.............................................. 12
2.7 Taxes............................................................................. 13
2.8 Title to Properties; Absence of Liens and Encumbrances............................ 15
2.9 Intellectual Property............................................................. 15
2.10 Compliance; Permits; Restrictions................................................. 18
2.11 Litigation........................................................................ 19
2.12 Brokers' and Finders' Fees........................................................ 19
2.13 Transactions with Affiliates...................................................... 19
2.14 Employee Benefit Plans............................................................ 20
2.15 Environmental Matters............................................................. 24
2.16 Year 2000 Compliance.............................................................. 25
2.17 Agreements, Contracts and Commitments............................................. 27
2.18 Pooling of Interests.............................................................. 27
2.19 Change of Control Payments........................................................ 27
2.20 Disclosure........................................................................ 27
2.21 Board Approval.................................................................... 27
2.22 Fairness Opinion.................................................................. 27
2.23 Section 203 of the Delaware General Corporation Law Not Applicable................ 27
2.24 Customs........................................................................... 27
2.25 Company Rights Plan............................................................... 28
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C>
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB................................. 28
3.1 Organization of Parent............................................................ 28
3.2 Parent Capital Structure.......................................................... 29
3.3 Obligations With Respect to Capital Stock......................................... 30
3.4 Authority; Non-Contravention...................................................... 30
3.5 SEC Filings; Parent Financial Statements.......................................... 32
3.6 Absence of Certain Changes or Events.............................................. 33
3.7 Taxes............................................................................. 33
3.8 Title to Properties; Absence of Liens and Encumbrances............................ 35
3.9 Intellectual Property............................................................. 35
3.10 Compliance; Permits; Restrictions................................................. 37
3.11 Litigation........................................................................ 38
3.12 Brokers' and Finders' Fees........................................................ 38
3.13 Environmental Matters............................................................. 38
3.14 Year 2000 Compliance.............................................................. 39
3.15 Agreements, Contracts and Commitments............................................. 39
3.16 Pooling of Interests.............................................................. 39
3.17 Disclosure........................................................................ 40
3.18 Board Approval.................................................................... 40
3.19 Fairness Opinion.................................................................. 40
3.20 Customs........................................................................... 40
3.21 Organization of Merger Sub........................................................ 40
ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME...................................................... 41
4.1 Conduct of Business by the Company................................................ 41
4.2 Conduct of Business by Parent..................................................... 43
ARTICLE V ADDITIONAL AGREEMENTS..................................................................... 45
5.1 Prospectus/Proxy Statement; Registration Statement; Other Filings; Board
Recommendations................................................................... 45
5.2 Meeting of Company Stockholders................................................... 46
5.3 Meeting of Parent Stockholders.................................................... 48
5.4 Confidentiality; Access to Information............................................ 49
5.5 No Solicitation................................................................... 49
5.6 Public Disclosure................................................................. 51
5.7 Reasonable Efforts; Notification.................................................. 51
5.8 Third Party Consents.............................................................. 52
5.9 Stock Options and Employee Benefits............................................... 52
5.10 Form S-8.......................................................................... 53
5.11 Indemnification................................................................... 53
5.12 Board of Directors of Parent...................................................... 53
5.13 Nasdaq Listing.................................................................... 54
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C>
5.14 Company Affiliate Agreement....................................................... 54
5.15 Parent Affiliate Agreement........................................................ 54
5.16 Regulatory Filings; Reasonable Efforts............................................ 54
5.17 Company 401(K) Plan and Benefit Arrangements...................................... 55
5.18 Tax Matters. ..................................................................... 55
ARTICLE VI CONDITIONS TO THE MERGER................................................................. 55
6.1 Conditions to Obligations of Each Party to Effect the Merger...................... 55
6.2 Additional Conditions to Obligations of the Company............................... 56
6.3 Additional Conditions to the Obligations of Parent and Merger Sub................. 57
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER....................................................... 59
7.1 Termination....................................................................... 59
7.2 Notice of Termination; Effect of Termination...................................... 61
7.3 Fees and Expenses................................................................. 61
7.4 Amendment......................................................................... 62
7.5 Extension; Waiver................................................................. 62
ARTICLE VIII GENERAL PROVISIONS..................................................................... 62
8.1 Non-Survival of Representations and Warranties.................................... 62
8.2 Notices........................................................................... 63
8.3 Interpretation; Knowledge......................................................... 64
8.4 Counterparts...................................................................... 65
8.5 Entire Agreement; Third Party Beneficiaries....................................... 65
8.6 Severability...................................................................... 65
8.7 Other Remedies; Specific Performance.............................................. 65
8.8 Governing Law..................................................................... 66
8.9 Rules of Construction............................................................. 66
8.10 Assignment........................................................................ 66
8.11 Waiver of Jury Trial.............................................................. 66
</TABLE>
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<PAGE> 5
INDEX OF EXHIBITS
<TABLE>
<S> <C>
Exhibit A-1 Company Voting Agreement
Exhibit A-2 Parent Voting Agreement
Exhibit B Company Year 2000 Definition
Exhibit C Parent Year 2000 Definition
Exhibit D-1 List of Company Affiliates
Exhibit D-2 Company Affiliates Agreement
Exhibit E-1 List of Parent Affiliates
Exhibit E-2 Parent Affiliates Agreement
</TABLE>
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<PAGE> 6
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION is made and entered into as of
October 13, 1998, among Platinum Software Corporation, a Delaware corporation
("PARENT"), Zoo Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of Parent ("MERGER SUB"), and DataWorks Corporation, a Delaware
corporation (the "COMPANY").
RECITALS
A. Upon the terms and subject to the conditions of this Agreement (as
defined in Section 1.2 below) and in accordance with the Delaware General
Corporation Law ("DELAWARE LAW"), Parent, Merger Sub and the Company intend to
enter into a business combination transaction.
B. The Boards of Directors of Parent and the Company (i) have determined
that the Merger (as defined in Section 1.1) is consistent with and in
furtherance of the long-term business strategies of Parent and the Company and
fair to, and in the best interests of, Parent and the Company and their
stockholders, (ii) have approved this Agreement, the Merger and the other
transactions contemplated by this Agreement and (iii) have determined to
recommend that the stockholders of Parent and the Company adopt and approve this
Agreement and approve the Merger.
C. Concurrently with the execution of this Agreement, and as a condition
and inducement to Parent's willingness to enter into this Agreement, certain
affiliates of the Company are entering into Voting Agreements in substantially
the form attached hereto as Exhibit A-1 (the "COMPANY VOTING AGREEMENTS"). In
addition, concurrently with the execution of this Agreement and as a condition
and inducement to the Company's willingness to enter into this Agreement,
certain affiliates of Parent are entering into Voting Agreements in
substantially the form attached hereto as Exhibit A-2 (the "PARENT VOTING
AGREEMENTS").
D. 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").
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:
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 Delaware Law, Merger Sub shall be merged with and into
the Company (the "MERGER"), the separate corporate existence of Merger Sub shall
cease and the Company shall continue as the surviving corporation. The Company
as the
<PAGE> 7
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 with the Secretary of State of the State of
Delaware (or such later time as may be agreed in writing by the Company and
Parent 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 the Company and Merger Sub shall vest in the Surviving Corporation, and all
debts, liabilities and duties of the Company 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 "DataWorks Corporation".
(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 elected or appointed
and qualified. The initial officers of the Surviving Corporation shall be the
officers of the Company 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, the Company or the
holders of any of the following securities:
-2-
<PAGE> 8
(a) Conversion of Company Common Stock. Each share of Common Stock,
$0.001 par value per share, of the Company (including, with respect to each such
share of Company Common Stock and the associated Rights (as defined in that
certain Rights Agreement (the "Company Rights Plan") dated as of on or about
October 13, 1998, between the Company and Chase Mellon Shareholder Services,
L.L.C., as Rights Agent) (the "COMPANY COMMON STOCK") issued and outstanding
immediately prior to the Effective Time, other than any shares of the Company
Common Stock to be canceled pursuant to Section 1.6(b), will be canceled and
extinguished and automatically converted (subject to Sections 1.6(e) and (f))
into the right to receive 0.794 (the "EXCHANGE RATIO") shares of Common Stock of
Parent (the "PARENT COMMON STOCK") upon surrender of the certificate
representing such share of the Company Common Stock in the manner provided in
Section 1.7 (or in the case of a lost, stolen or destroyed certificate, upon
delivery of an affidavit in the manner provided in Section 1.9). If any shares
of the Company Common Stock outstanding immediately prior to the Effective Time
are unvested or are subject to a repurchase option, risk of forfeiture or other
condition under any applicable restricted stock purchase agreement or other
agreement with the Company, then the shares of Parent Common Stock issued in
exchange for such shares of Company Common Stock will also be unvested to the
same extent and/or be subject to the same repurchase option, risk of forfeiture
or other condition, as applicable, and the certificates representing such shares
of Parent Common Stock may accordingly be marked with appropriate legends. The
Company shall take all action that may be necessary to ensure that, from and
after the Effective Time, Parent is entitled to exercise any such repurchase
option or other right set forth in any such restricted stock purchase agreement
or other agreement.
(b) Cancellation of Parent-Owned Stock. Each share of Company Common
Stock held by the Company or owned by Merger Sub, Parent or any direct or
indirect wholly-owned subsidiary of the Company or of Parent immediately prior
to the Effective Time shall be canceled and extinguished without any conversion
thereof.
(c) Stock Options; Employee Stock Purchase Plans; Warrants.
(i) At the Effective Time, all options to purchase Company
Common Stock then outstanding under the Company's 1995 Equity Incentive Plan
(the "1995 PLAN"), 1995 Non-Employee Directors' Stock Option Plan (the "DIRECTOR
PLAN"), the Interactive 1997 Nonstatutory Stock Option Plan (the "INTERACTIVE
1997 PLAN"), the Interactive 1995 Stock Option Plan (the "INTERACTIVE 1995 PLAN"
and together with the 1995 Plan, the Director Plan and the Interactive 1997 Plan
the "COMPANY STOCK OPTION PLANS") shall be assumed by Parent in accordance with
Section 5.9 hereof. Rights outstanding under the Company's 1995 Employee Stock
Purchase Plan (the "COMPANY PURCHASE PLAN") shall be treated as set forth in
Section 5.9.
(ii) At the Effective Time, the warrants issued by the Company
and set forth on Part 2.3 of the Company Schedules (which warrants entitle the
holders thereof as set forth on such Part 2.3 to purchase the number of shares
Company Common Stock set forth on such Part 2.3) (collectively the "WARRANTS")
shall be, in connection with the Merger, assumed by Parent in accordance with
Section 5.9.
-3-
<PAGE> 9
(d) Capital Stock of Merger Sub. Each share of Common Stock, $0.001
par value per share, of Merger Sub (the "MERGER SUB COMMON STOCK") issued and
outstanding immediately prior to the Effective Time shall be converted into one
validly issued, fully paid and nonassessable share of Common Stock, $0.001 par
value per share, of the Surviving Corporation. Each certificate evidencing
ownership of shares of Merger Sub Common Stock shall evidence ownership of such
shares of capital stock of the Surviving Corporation.
(e) Adjustments to Exchange Ratio. The Exchange Ratio shall be
adjusted to reflect appropriately the effect of any stock split, reverse stock
split, stock dividend (including any dividend or distribution of securities
convertible into Parent Common Stock or Company Common Stock), reorganization,
recapitalization, reclassification or other like change with respect to Parent
Common Stock or Company Common Stock occurring on or after the date hereof and
prior to the Effective Time.
(f) Fractional Shares. No fraction of a share of Parent Common Stock
will be issued by virtue of the Merger, but in lieu thereof each holder of
shares of Company Common Stock who would otherwise be entitled to a fraction of
a share of Parent Common Stock (after aggregating all fractional shares of
Parent Common Stock that otherwise would be received by such holder) shall, upon
surrender of such holder's Certificate(s) (as defined in Section 1.7(c))
(subject in any case to Section 1.9), receive from Parent an amount of cash
(rounded to the nearest whole cent), without interest, equal to the product of
(i) such fraction, multiplied by (ii) the average closing price of one share of
Parent Common Stock for the five (5) most recent days that Parent Common Stock
has traded ending on the trading day immediately prior to the Effective Time, as
reported on the Nasdaq National Market System ("NASDAQ").
(g) Closing of the Company's Transfer Books. At the Effective Time:
(a) all shares of the Company Common Stock outstanding immediately prior to the
Effective Time shall automatically be canceled and retired and shall cease to
exist, and all holders of certificates representing shares of Company Common
Stock that were outstanding immediately prior to the Effective Time shall cease
to have any rights as stockholders of the Company; and (b) the stock transfer
books of the Company shall be closed with respect to all shares of Company
Common Stock outstanding immediately prior to the Effective Time. No further
transfer of any such shares of Company Common Stock shall be made on such stock
transfer books after the Effective Time. If, after the Effective Time, a
Certificate (as defined in Section 1.7(c)) is presented to the Exchange Agent
(as defined in Section 1.7) or to the Surviving Corporation or Parent, such
Company Stock Certificate shall be canceled and shall be exchanged as provided
in Section 1.7.
1.7 Surrender of Certificates.
(a) Exchange Agent. Parent shall select a bank or trust company
reasonably acceptable to the Company to act as the exchange agent in the Merger
(the "EXCHANGE AGENT").
-4-
<PAGE> 10
(b) Parent to Provide Common Stock. Promptly after the Effective
Time, Parent shall make available to the Exchange Agent for exchange in
accordance with this Article I, certificates representing the shares of Parent
Common Stock issuable pursuant to Section 1.6 in exchange for outstanding shares
of Company 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 Company Common Stock may be entitled pursuant to
Section 1.7(d).
(c) Exchange Procedures. As soon as practicable after the Effective
Time, Parent 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
Company Common Stock whose shares were converted into shares of Parent Common
Stock 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
1.7(d), (i) a letter of transmittal in customary form (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 (or affidavit pursuant to Section
1.9) to the Exchange Agent and shall contain such other provisions as Parent may
reasonably specify) and (ii) instructions for use in effecting the surrender of
the Certificates (or affidavit pursuant to Section 1.9) in exchange for
certificates representing shares of Parent Common Stock, cash in lieu of any
fractional shares pursuant to Section 1.6(f) and any dividends or other
distributions pursuant to Section 1.7(d). Upon surrender of Certificates for
cancellation (or affidavit pursuant to Section 1.9) to the Exchange Agent or to
such other agent or agents as may be appointed by Parent, together with such
letter of transmittal, duly completed and validly executed in accordance with
the instructions thereto, the holders of such outstanding shares of Company
Common Stock shall be entitled to receive in exchange therefor certificates
representing the number of whole shares of Parent Common Stock into which their
shares of Company Common Stock were converted at the Effective Time, 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
1.7(d), and the Certificates so surrendered shall forthwith be canceled. Until
so surrendered, outstanding Certificates will be deemed from and after the
Effective Time, for all corporate purposes, subject to Section 1.7(d) as to the
payment of dividends, to evidence only the ownership of the number of full
shares of Parent Common Stock into which such shares of Company Common Stock
shall have been so converted and 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 1.7(d).
(d) Distributions With Respect to Unexchanged Shares. No dividends
or other distributions declared or made after the date of this Agreement with
respect to Parent Common Stock with a record date after the Effective Time will
be paid to the holders of any unsurrendered Certificates with respect to the
shares of Parent Common Stock represented thereby (subject to Section 1.9) until
the holders of record of such Certificates shall surrender such Certificates in
accordance with this Section 1.7 (subject to Section 1.9). Subject to applicable
law, following surrender of any such Certificates (or affidavit pursuant to
Section 1.9), the Exchange Agent shall deliver to the record holders thereof,
without interest, certificates representing whole shares of Parent Common Stock
issued in exchange therefor, along with payment in lieu of fractional shares
pursuant to Section 1.6(f) hereof and
-5-
<PAGE> 11
the amount of any such dividends or other distributions with a record date after
the Effective Time payable with respect to such whole shares of Parent Common
Stock.
(e) Transfers of Ownership. If certificates representing shares of
Parent Common Stock are to be issued in a name other than that in which the
Certificates surrendered in exchange therefor are registered, it will be a
condition of the issuance thereof that the Certificates so surrendered will be
properly endorsed and otherwise in proper form for transfer and that the persons
requesting such exchange will have paid to Parent or any agent designated by it
any transfer or other taxes required by reason of the issuance of certificates
representing shares of Parent Common Stock in any name other than that of the
registered holder of the Certificates surrendered, or established to the
reasonable satisfaction of Parent or any agent designated by it that such tax
has been paid or is not payable.
(f) Required Withholding. Each of the Exchange Agent, Parent and the
Surviving Corporation shall be entitled to deduct and withhold from any
consideration payable or otherwise deliverable pursuant to this Agreement to any
holder or former holder of Company Common Stock such amounts as may be required
to be deducted or withheld therefrom under the Code or under any provision of
state, local or foreign tax law or under any other applicable Legal Requirement
(as defined in Section 2.2(c)); provided that Parent shall timely deliver any
amount so deducted or withheld to the appropriate tax or other authority on
behalf of each such holder or former holder of Company Common Stock in
accordance with such Legal Requirements. To the extent such amounts are so
deducted or withheld, such amounts shall be treated for all purposes under this
Agreement as having been paid to the person to whom such amounts would otherwise
have been paid.
(g) No Liability. Notwithstanding anything to the contrary in this
Section 1.7, neither the Exchange Agent, Parent, the Surviving Corporation nor
any party hereto shall be liable to a holder of shares of Parent Common Stock or
Company Common Stock for any amount properly paid to a public official pursuant
to any applicable abandoned property, escheat or similar law.
1.8 No Further Ownership Rights in Company Common Stock. All shares of
Parent Common Stock issued in accordance with the terms hereof (including any
cash paid in respect thereof pursuant to Section 1.6(f) and 1.7(d)) shall be
deemed to have been issued in full satisfaction of all rights pertaining to such
shares of Company Common Stock, and there shall be no further registration of
transfers on the records of the Surviving Corporation of shares of Company
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 canceled and exchanged as provided in this Article
I.
1.9 Lost, Stolen or Destroyed Certificates. In the event that any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
issue in exchange for such lost, stolen or destroyed Certificates, upon the
making of a reasonable affidavit of that fact by the holder thereof,
certificates representing the shares of Parent Common Stock into which the
shares of Company Common Stock represented by such Certificates were converted
pursuant to Section 1.6, cash for fractional shares, if any, as may be required
pursuant to Section 1.6(f) and any dividends or distributions payable pursuant
to
-6-
<PAGE> 12
Section 1.7(d); provided, however, that Parent may, in its discretion and as a
condition precedent to the issuance of such certificates representing shares of
Parent Common Stock, cash and other distributions, require the owner of such
lost, stolen or destroyed Certificates to agree to indemnify Parent against any
claim that may be made against Parent, the Surviving Corporation or the Exchange
Agent with respect to the Certificates alleged to have been lost, stolen or
destroyed.
1.10 Tax Consequences. 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
Treasury Regulations.
1.11 Taking of Necessary Action; Further Action. If, at any time after the
Effective Time, any further action is necessary or desirable to carry out the
purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of the Company and Merger Sub, the Company and Merger Sub will
take all such lawful and necessary action. Parent shall cause Merger Sub to
perform all of its obligations relating to this Agreement and the transactions
contemplated thereby.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub, subject to
the exceptions specifically disclosed in writing in the disclosure letter and
referencing a specific representation supplied by the Company to Parent dated as
of the date hereof and certified on behalf of the Company by a duly authorized
officer of the Company (the "COMPANY SCHEDULES"), as follows:
2.1 Organization of the Company.
(a) The Company has no subsidiaries, except for the corporations
identified in Part 2.1(a)(i) of the Company Schedules; and neither the Company
nor any of the other corporations identified in Part 2.1(a)(i) of the Company
Schedules owns any capital stock of, or any equity interest of any nature in,
any other entity, other than the entities identified in Part 2.1(a)(ii) of the
Company Schedules, except for passive investments in equity interests of public
companies as part of the cash management program of the Company. (Where
appropriate, the Company and each of its subsidiaries are referred to singularly
and/or collectively in this Agreement as the "COMPANY"). The Company has not
agreed and is not obligated to make, nor is bound by any written, oral or other
agreement, contract, subcontract, lease, binding understanding, instrument,
note, option, warranty, purchase order, license, sublicense, insurance policy,
benefit plan or legally binding commitment or undertaking of any nature, as in
effect as of the date hereof or as may hereinafter be amended or in effect
("CONTRACT") under which Contract it may become obligated to make, any future
investment in or capital contribution to any other entity. The Company has not,
at any time, been a general partner of any general partnership, limited
partnership or other entity.
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(b) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation and
has all necessary power and authority: (i) to conduct its business in the manner
in which its business is currently being conducted; (ii) to own and use its
assets in the manner in which its assets are currently owned and used; and (iii)
to perform its obligations under all Contracts by which it is bound. The
Company, as a newly incorporated Delaware corporation has substantially the same
rights under all Contracts to which its predecessor California corporation was a
party immediately prior to such reincorporation, except for those rights which
have terminated according to their terms (not by virtue of the reincorporation).
(c) The Company is qualified to do business as a foreign
corporation, and is in good standing, under the laws of all jurisdictions where
the nature of its business requires such qualification and where the failure to
so qualify would have a Material Adverse Effect (as defined in Section 8.3) on
the Company.
(d) The Company has delivered or made available to Parent a true and
correct copy of the Certificate of Incorporation and Bylaws of the Company and
similar governing instruments of each of its subsidiaries, each as amended to
date (collectively, the "COMPANY CHARTER DOCUMENTS"), and each such instrument
is in full force and effect. The Company is not in violation of any of the
provisions of the Company Charter Documents.
(e) The Company has delivered or made available to parent all
proposed or considered amendments to the Company Charter Documents.
2.2 Company Capital Structure.
(a) The authorized capital stock of the Company consists of: (i)
50,000,000 shares of Company Common Stock, $0.001 par value, of which 14,399,602
shares had been issued and were outstanding as of October 12, 1998; and (ii)
5,000,000 shares of preferred stock, $0.001 par value per share (the "COMPANY
PREFERRED STOCK" and together with the Company Common Stock, the "COMPANY
CAPITAL STOCK"), of which no shares are outstanding as of the date of this
Agreement. All of the outstanding shares of Company Common Stock have been duly
authorized and validly issued, and are fully paid and nonassessable. As of the
date of this Agreement, there are no shares of Company Common Stock held in
treasury by the Company. Upon consummation of the Merger, (A) the shares of
Parent Common Stock issued in exchange for any shares of Company Common Stock
that are subject to a Contract pursuant to which the Company has the right to
repurchase, redeem or otherwise reacquire any shares of Company Common Stock
will, without any further act of Parent, the Company or any other person, become
subject to the restrictions, conditions and other provisions contained in such
Contract, and (B) Parent will automatically succeed to and become entitled to
exercise the Company's rights and remedies under any such Contract.
(b) As of October 12, 1998: (i) 2,256,453 shares of Company Common
Stock are subject to issuance pursuant to outstanding options to purchase
Company Common Stock under the Company Stock Option Plans; (ii) 1,050,000 shares
of Company Common Stock are reserved for future
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issuance under the Company Purchase Plan; and (iii) a number of shares of
Company Company Common Stock are subject to issuance pursuant to warrants to
purchase Company Common Stock as set forth on Part 2.3 of the Company Schedules.
(Stock options granted by the Company pursuant to the Company Stock Option Plans
are referred to in this Agreement as "COMPANY OPTIONS"). Part 2.2(b) of the
Company Schedules sets forth the following information with respect to each
Company Option outstanding as of October 12, 1998: (i) the name and address of
the optionee; (ii) the particular plan or agreement pursuant to which such
Company Option was granted; (iii) the name of the optionee; (iv) the number of
shares of Company Common Stock subject to such Company Option; (v) the exercise
price of such Company Option; (vi) the date on which such Company Option was
granted; (vii) the applicable vesting schedule; (viii) the date on which such
Company Option expires and (ix) whether the exercisability of such option will
be accelerated in any way by the transactions contemplated by this Agreement,
and indicates the extent of acceleration. The Company has made available to
Parent accurate and complete copies of all stock option plans pursuant to which
the Company has granted stock options that are currently outstanding and the
form of all stock option agreements evidencing such options. All shares of
Company 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. Except as set forth in Part 2.2(b)(i) of the Company Schedules,
there are no commitments or agreements of any character to which the Company is
bound obligating the Company to accelerate the vesting of any Company Option as
a result of the Merger.
(c) All outstanding shares of Company Common Stock, all outstanding
Company Options, and all outstanding shares of capital stock of each subsidiary
of the Company have been issued and granted in compliance with (i) all
applicable securities laws and other applicable Legal Requirements (as defined
below) and (ii) all requirements set forth in applicable Contracts. For the
purposes of this Agreement, "LEGAL REQUIREMENTS" means any federal, state,
local, municipal, foreign or other law, statute, constitution, principle of
common law, resolution, ordinance, code, edict, decree, rule, regulation, ruling
or requirement issued, enacted, adopted, promulgated, implemented or otherwise
put into effect by or under the authority of any Governmental Entity.
(d) All of the outstanding shares of capital stock of each of the
entities identified in Part 2.1(a)(i) of the Company Schedules are validly
issued, fully paid and nonassessable and are owned beneficially and of record by
the Company, free and clear of any material Encumbrances. For the purposes of
this Agreement "ENCUMBRANCES" means any lien, pledge, hypothecation, charge,
mortgage, security interest, encumbrance, claim, infringement, interference,
option, right of first refusal, preemptive right, community property interest or
restriction of any nature (including any restriction on the voting of any
security, any restriction on the transfer of any security or other asset, any
restriction on the receipt of any income derived from any asset, any restriction
on the use of any asset and any restriction on the possession, exercise or
transfer of any other attribute of ownership of any asset).
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2.3 Obligations With Respect to Capital Stock. Except as set forth in
Section 2.2 or Part 2.3 of the Company Schedules, there are no equity
securities, partnership interests or similar ownership interests of any class of
the Company equity security, 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 the Company owns free and clear of all claims and material
Encumbrances, directly or indirectly through one or more subsidiaries, and
except for shares of capital stock or other similar ownership interests of
certain subsidiaries of the Company that are owned by certain nominee equity
holders as required by the applicable law of the jurisdiction of organization of
such subsidiaries, as of the date of this Agreement, there are no equity
securities, partnership interests or similar ownership interests of any class of
equity security of any subsidiary of the Company, 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 Part 2.3 of the Company Schedules, there are
no subscriptions, options, warrants, equity securities, partnership interests or
similar ownership interests, calls, rights (including preemptive rights),
commitments or agreements of any character to which the Company or any of its
subsidiaries is a party or by which it is bound obligating the Company 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 cause the repurchase,
redemption or acquisition of, any shares of capital stock, partnership interests
or similar ownership interests of the Company or any of its subsidiaries or
obligating the Company or any of its subsidiaries to grant, extend, accelerate
the vesting of or enter into any such subscription, option, warrant, equity
security, call, right, commitment or agreement. As of the date of this
Agreement, except as contemplated by this Agreement, there are no registration
rights and there is no voting trust, proxy, rights plan, antitakeover plan or
other agreement or understanding to which the Company is a party or by which it
is bound with respect to any equity security of any class of the Company or with
respect to any equity security, partnership interest or similar ownership
interest of any class of any of its subsidiaries. Stockholders of the Company
will not be entitled to dissenters' rights under applicable state law in
connection with the Merger.
2.4 Authority; Non-Contravention.
(a) The Company 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 the Company, subject only to the approval and
adoption of this Agreement and the approval of the Merger by the Company's
stockholders and the filing of the Certificate of Merger pursuant to Delaware
Law. A vote of the holders of a majority of the outstanding shares of the
Company Common Stock is sufficient for the Company's stockholders to approve and
adopt this Agreement and approve the Merger. This Agreement has been duly
executed and delivered by the Company and, upon due execution and delivery by
Parent and Merger Sub, constitutes a valid and binding obligation of the
Company, enforceable against the Company 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 the
Company does not, and the performance of this Agreement by the Company will not,
(i) conflict with or violate the Company Charter Documents,
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(ii) subject to obtaining the approval and adoption of this Agreement and the
approval of the Merger by the Company's stockholders as contemplated in 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 the Company or any of its subsidiaries or by which the Company or
any of its subsidiaries or any of their respective properties is bound or
affected, or (iii) result in any material breach of or constitute a material
default (or an event that with notice or lapse of time or both would become a
material default) under, or impair the Company'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 material Encumbrance on any of the material properties or assets
of the Company or any of its subsidiaries pursuant to, any material note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise,
concession, or other instrument or obligation to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries or
its or any of their respective assets are bound or affected. Part 2.4(b) of the
Company Schedules lists all consents, waivers and approvals under any of the
Company'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, which, if individually or in the aggregate not obtained,
would result in a material loss of benefits to the Company, Parent or the
Surviving Corporation as a result of the Merger.
(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 to be obtained or made by the
Company in connection with the execution and delivery of this 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, (ii) the filing of
the Prospectus/Proxy Statement (as defined in Section 2.20) with the Securities
and Exchange Commission ("SEC") in accordance with the Securities Exchange Act
of 1934, as amended (the "EXCHANGE ACT"), (iii) such consents, approvals,
orders, authorizations, registrations, declarations and filings as may be
required under applicable federal, foreign and 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 the Company
or Parent or materially effect the ability of the parties hereto to consummate
the Merger.
2.5 SEC Filings; Company Financial Statements.
(a) The Company has filed all forms, reports and documents required
to be filed by the Company with the SEC since January 1, 1997 and has made
available to Parent such forms, reports and documents in the form filed with the
SEC. All such required forms, reports and documents (including those that the
Company may file subsequent to the date hereof) are referred to herein as the
"COMPANY SEC REPORTS." As of their respective dates, the Company SEC Reports (i)
were prepared in accordance and complied in all material respects 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 Company 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
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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 the Company'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 Company SEC Reports (the
"COMPANY FINANCIALS"), including each Company SEC Report filed after the date
hereof until the Closing, (i) complied as to form in all material respects with
the published rules and regulations of the SEC with respect thereto, (ii) was
prepared in accordance with United States generally accepted accounting
principles ("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 (iii) fairly presented the consolidated
financial position of the Company and its subsidiaries as at the respective
dates thereof and the consolidated results of the Company's operations and cash
flows for the periods indicated, except that the unaudited interim financial
statements may not contain footnotes and were or are subject to normal and
recurring year-end adjustments. The balance sheet of the Company contained in
the Company's Annual Report on Form 10-K for the year ended December 31, 1997 is
hereinafter referred to as the "COMPANY BALANCE SHEET." Except as disclosed in
the Company Financials, since the date of the Company Balance Sheet neither the
Company nor any of its subsidiaries has any liabilities required under GAAP to
be set forth on a balance sheet (absolute, accrued, contingent or otherwise)
which are, individually or in the aggregate, material to the business, results
of operations or financial condition of the Company and its subsidiaries taken
as a whole, except for liabilities incurred since the date of the Company
Balance Sheet in the ordinary course of business consistent with past practices.
(c) The Company has heretofore furnished to Parent 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 the Company with the SEC
pursuant to the Securities Act or the Exchange Act.
(d) The Company has recognized revenues in accordance with GAAP and
Statement of Position 97-2, as amended by Statement of Position 98-4, issued by
the American Institute of Certified Public Accountants. The Company has
recognized (i) initial license fee revenues only after delivery of software
products and upon satisfaction of all significant post-delivery obligations;
(ii) revenues associated with the grant of additional licenses to the Company's
existing customers upon shipment and upon satisfaction of all significant
post-delivery obligations; (iii) maintenance revenues ratably over the term of
the maintenance period; and (iv) consulting and training revenues when the
services were performed.
2.6 Absence of Certain Changes or Events. Since the date of the Company
Balance Sheet there has not been: (i) any Material Adverse Effect (as defined in
Section 8.3(c)) on the Company, (ii) any declaration, setting aside or payment
of any dividend on, or other distribution (whether in cash, stock or property)
in respect of, any of the Company's or any of its subsidiaries' capital stock,
or any
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purchase, redemption or other acquisition by the Company of any of the Company's
capital stock or any other securities of the Company or its subsidiaries or any
options, warrants, calls or rights to acquire any such shares or other
securities except for repurchases from employees following their termination
pursuant to the terms of their pre-existing stock option or purchase agreements,
(iii) any split, combination or reclassification of any of the Company's or any
of its subsidiaries' capital stock, (iv) any granting by the Company or any of
its subsidiaries of any increase in compensation or fringe benefits, except for
normal increases of cash compensation in the ordinary course of business
consistent with past practice, or any payment by the Company or any of its
subsidiaries of any bonus, except for bonuses made in the ordinary course of
business consistent with past practice, or any granting by the Company or any of
its subsidiaries of any increase in severance or termination pay or any entry by
the Company or any of its subsidiaries into any currently effective employment,
severance, termination or indemnification agreement or any agreement the
benefits of which are contingent or the terms of which are materially altered
upon the occurrence of a transaction involving the Company of the nature
contemplated hereby, (v) entry by the Company or any of its subsidiaries into
any licensing or other agreement with regard to the acquisition or disposition
of any material Intellectual Property (as defined in Section 2.9) other than
licenses in the ordinary course of business consistent with past practice or any
amendment or consent with respect to any licensing agreement filed or required
to be filed by the Company with the SEC, (vi) any material change by the Company
in its accounting methods, principles or practices, except as required by
concurrent changes in GAAP, or (vii) any revaluation by the Company of any of
its assets, including, without limitation, writing down the value of capitalized
inventory or writing off notes or accounts receivable other than in the ordinary
course of business.
2.7 Taxes.
(a) Definition of Taxes. For the purposes of this Agreement, "TAX"
or "TAXES" refers to any and all federal, state, local and foreign taxes,
assessments and other governmental charges, duties, impositions and liabilities
relating to taxes, including taxes based upon or measured by gross receipts,
income, profits, sales, use and occupation, and value added, ad valorem,
transfer, franchise, withholding, payroll, recapture, employment, excise and
property taxes, together with all interest, penalties and additions imposed with
respect to such amounts and any obligations under any agreements or arrangements
with any other person with respect to such amounts and including any liability
for taxes of a predecessor entity.
(b) Tax Returns and Audits.
(i) The Company and each of its subsidiaries have timely filed
all federal, state, local and foreign returns, estimates, information statements
and reports ("RETURNS") relating to Taxes required to be filed by the Company
and each of its subsidiaries with any Tax authority, except such Returns which
are not material to the Company, and have paid all Taxes shown to be due on such
Returns on a timely basis.
(ii) The Company and each of its subsidiaries as of the
Effective Time will have withheld with respect to its employees all federal and
state income taxes, Taxes pursuant to the
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Federal Insurance Contribution Act ("FICA"), Taxes pursuant to the Federal
Unemployment Tax Act ("FUTA") and other Taxes required to be withheld.
(iii) Neither the Company nor any of its subsidiaries has any
Tax deficiency outstanding, proposed in writing (or otherwise to the Company's
knowledge proposed) or assessed against the Company or any of its subsidiaries,
nor has the Company or any of its subsidiaries executed any unexpired waiver of
any statute of limitations on or extending the period for the assessment or
collection of any Tax.
(iv) No audit or other examination of any Return of the
Company or any of its subsidiaries by any Tax authority is presently in
progress, nor has the Company or any of its subsidiaries been notified in
writing (or otherwise to the Company's knowledge notified) of any request for
such an audit or other examination.
(v) No adjustment relating to any Returns filed by the Company
or any of its subsidiaries has been proposed in writing by any Tax authority to
the Company or any of its subsidiaries.
(vi) Neither the Company nor any of its subsidiaries has any
liability for unpaid Taxes which has not been accrued for or reserved in
accordance with GAAP on the Company Balance Sheet (or in any Company SEC Report
filed prior to the date hereof, or for liabilities accruing following the date
hereof, in any Company SEC Report filed prior to the date of the Closing),
whether asserted or unasserted, contingent or otherwise, which is material to
the Company, other than any liability for unpaid Taxes that may have accrued
since the date of the Company Balance Sheet in connection with the operation of
the business of the Company and its subsidiaries in the ordinary course.
(vii) There is no contract, agreement, plan or arrangement to
which the Company is a party as of the date of this Agreement, including but not
limited to the provisions of this Agreement, covering any employee or former
employee of the Company or any of its subsidiaries that, individually or
collectively, could give rise to the payment of any amount that would not be
deductible pursuant to Sections 280G, 404 or 162(m) of the Code.
(viii) Neither the Company nor any of its subsidiaries has
filed any consent agreement under Section 341(f) of the Code or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a subsection (f) asset
(as defined in Section 341(f)(4) of the Code) owned by the Company.
(ix) Neither the Company nor any of its subsidiaries is party
to, or has any obligation under, or will have any obligation as a result of the
Merger under any tax-sharing, tax indemnity or tax allocation agreement or
arrangement.
(x) Except as may be required as a result of the Merger, the
Company and its subsidiaries have not been and will not be required to include
any material adjustment in Taxable income for any Tax period (or portion
thereof) pursuant to Section 481 or Section 263A of the Code or any
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comparable provision under state or foreign Tax laws as a result of
transactions, events or accounting methods employed prior to the Closing and
with respect to which the applicable statute of limitations has not passed.
(xi) None of the Company's or its subsidiaries' assets are tax
exempt use property within the meaning of Section 168(h) of the Code.
(xii) Part 2.7 of the Company Schedules lists (A) any foreign
Tax holidays, (B) any intercompany transfer pricing agreements, or other
arrangements that have been established by the Company or any of its
subsidiaries with any Tax authority and (C) any expatriate programs or policies
affecting the Company or any of its subsidiaries.
2.8 Title to Properties; Absence of Liens and Encumbrances.
(a) Part 2.8(a)(i) of the Company Schedules lists all real property
leases to which the Company is a party as of the date of this Agreement and each
amendment thereto that is in effect as of the date of this Agreement. 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 $50,000. Other than the leaseholds created under
the real property leases identified in Part 2.8(a)(i) of the Company Schedules,
the Company owns no interest in real property.
(b) The Company has good and valid title to, or, in the case of
leased properties and assets, valid leasehold interests in, all of its tangible
properties and assets, real, personal and mixed, used or held for use in its
business, free and clear of any liens, pledges, charges, claims, security
interests or other encumbrances of any sort ("LIENS"), except as reflected in
the Company Financials and except for Liens for taxes not yet due and payable
and such Liens or other 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. For the purposes of this Agreement, the
following terms have the following definitions:
"INTELLECTUAL PROPERTY" shall mean any or all of the following and
all rights in, arising out of, or associated therewith: (i) all
United States, international and foreign patents and applications
therefor and all reissues, divisions, renewals, extensions,
provisionals, continuations and continuations-in-part thereof; (ii)
all inventions (whether patentable or not), invention disclosures,
improvements, trade secrets, proprietary information, know how,
technology, technical data and customer lists, and all documentation
relating to any of the foregoing; (iii) all copyrights, copyrights
registrations and applications therefor, and all other rights
corresponding thereto throughout the world; (iv) all industrial
designs and any registrations and applications therefor throughout
the world;
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(v) all trade names, logos, common law trademarks and service marks,
trademark and service mark registrations and applications therefor
throughout the world; (vi) all databases and data collections and
all rights therein throughout the world; (vii) all moral and
economic rights of authors and inventors, however denominated,
throughout the world, and (viii) any similar or equivalent rights to
any of the foregoing anywhere in the world.
"COMPANY INTELLECTUAL PROPERTY" shall mean any Intellectual Property
that is owned by, or exclusively licensed to, the Company.
"REGISTERED INTELLECTUAL PROPERTY" means all United States,
international and foreign: (i) patents and patent applications
(including provisional applications); (ii) registered trademarks,
applications to register trademarks, intent-to-use applications, or
other registrations or applications related to trademarks; (iii)
registered copyrights and applications for copyright registration;
and (iv) any other Intellectual Property that is the subject of an
application, certificate, filing, registration or other document
issued, filed with, or recorded by any state, government or other
public legal authority.
"COMPANY REGISTERED INTELLECTUAL PROPERTY" means all of the
Registered Intellectual Property owned by, or filed in the name of,
the Company.
(a) No material Company Intellectual Property or product or service
of the Company is subject to any proceeding or outstanding decree, order,
judgment, agreement, or stipulation restricting in any manner the use, transfer,
or licensing thereof by the Company, or which may affect the validity, use or
enforceability of any Company Intellectual Property.
(b) Part 2.9(b) of the Company Schedules is a complete and accurate
list of all Company Registered Intellectual Property and specifies, where
applicable, the jurisdictions in which each such item of Company Registered
Intellectual Property 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. Each material item of Company Registered
Intellectual Property is valid and subsisting, all necessary registration,
maintenance and renewal fees currently due in connection with such Registered
Intellectual Property have been made and all necessary documents, recordations
and certificates in connection with such Registered Intellectual Property have
been filed with the relevant patent, copyright, trademark or other authorities
in the United States or foreign jurisdictions, as the case may be, for the
purposes of maintaining such Registered Intellectual Property.
(c) The Company owns and has good and exclusive title to, each
material item of Company Intellectual Property free and clear of any Lien or
Encumbrance (excluding licenses entered into in the ordinary course of the
Company's business); and the Company is the exclusive owner of all trademarks
and trade names used in connection with the operation or conduct of the business
of the Company, including the sale of any products or the provision of any
services by the Company.
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(d) The Company owns exclusively, and has good title to, all
copyrighted works that are material Company products or which are material and
which the Company otherwise expressly purports to own.
(e) To the extent that any material Intellectual Property has been
developed or created by a third party for the Company, the Company has a written
agreement with such third party with respect thereto and the Company thereby
either (i) has obtained ownership of, and is the exclusive owner of, or (ii) has
obtained a license (sufficient for the conduct of its business as currently
conducted and as proposed to be conducted) to all such third party's
Intellectual Property in such work, material or invention by operation of law or
by valid assignment, to the fullest extent it is legally possible to do so.
(f) The Company has not transferred ownership of, or granted any
exclusive license with respect to, any Intellectual Property that is or was
material to the Company Intellectual Property, to any third party.
(g) The Company Schedules list all material contracts, licenses and
agreements to which the Company is a party (i) with respect to Company
Intellectual Property licensed or transferred to any third party (other than
end-user licenses in the ordinary course); or (ii) pursuant to which a third
party has licensed or transferred any material Intellectual Property to the
Company.
(h) All material contracts, licenses and agreements relating to the
Company Intellectual Property are in full force and effect. The consummation of
the transactions contemplated by this Agreement will neither violate nor result
in the breach, modification, cancellation, termination, or suspension of such
material contracts, licenses and agreements. The Company is in material
compliance with, and has not materially breached any term any of such material
contracts, licenses and agreements and, to the knowledge of the Company, all
other parties to such material contracts, licenses and agreements are in
compliance with, and have not materially breached any term of, such contracts,
licenses and agreements. Following the Closing Date, the Surviving Corporation
will be permitted to exercise all of the Company's rights under such contracts,
licenses and agreements to the same extent the Company would have been able to
had the transactions contemplated by this Agreement not occurred and without the
payment of any additional amounts or consideration other than ongoing fees,
royalties or payments which the Company would otherwise be required to pay.
Neither this Agreement nor the transactions contemplated by this Agreement,
including the assignment by operation of law or otherwise of any Contracts which
the Company is a party will result in the Parent or the Merger Sub granting to
any third party any rights to, or with respect to, any Intellectual Property
owned by, or licensed to, either of them, or will result in either the Parent or
the Merger Sub being bound by, or subject to, any non-compete or other
restriction on the operation or scope of their respective businesses.
(i) The operation of the business of the Company as such business
currently is conducted, including the Company's design, development,
manufacture, marketing and sale of the products or services of the Company
(including with respect to products currently under development) has not and
does not, and will not, by virtue of the Merger, infringe or misappropriate the
Intellectual
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<PAGE> 23
Property of any third party or, to its knowledge, constitute unfair competition
or trade practices under the laws of any jurisdiction.
(j) The Company has not received written notice from any third party
that the operation of the business of the Company or any act, product or service
of the Company, infringes or misappropriates the Intellectual Property of any
third party or constitutes unfair competition or trade practices under the laws
of any jurisdiction.
(k) To the knowledge of the Company, no person has or is infringing
or misappropriating any Company Intellectual Property.
(l) The Company has taken reasonable steps to protect the Company's
rights in the Company's confidential information and trade secrets that it
wishes to protect or any trade secrets or confidential information of third
parties provided to the Company, and, without limiting the foregoing, the
Company has and enforces a policy requiring each employee and contractor to
execute a proprietary information/confidentiality agreement substantially in the
form provided to Parent and all current and former employees and contractors of
the Company have executed such an agreement, except where the failure to do so
would not have a Material Adverse Effect on the Company.
2.10 Compliance; Permits; Restrictions.
(a) Neither the Company nor any of its subsidiaries is, in any
material respect, in conflict with, or in default or in violation of (i) any
law, rule, regulation, order, judgment or decree applicable to the Company or
any of its subsidiaries or by which the Company 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 the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries or
its or any of their respective properties is bound or affected, except for
conflicts, violations and defaults that (individually or in the aggregate) would
not cause the Company to lose any material benefit or incur any material
liability. No investigation or review by any Governmental Entity is pending or,
to the Company's knowledge, has been threatened in a writing delivered to the
Company against the Company or any of its subsidiaries, nor, to the Company's
knowledge, has any Governmental Entity indicated an intention to conduct an
investigation of the Company or any of its subsidiaries. There is no material
agreement, judgment, injunction, order or decree binding upon the Company 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 the Company or
any of its subsidiaries, any acquisition of material property by the Company or
any of its subsidiaries or the conduct of business by the Company as currently
conducted.
(b) The Company and its subsidiaries hold, to the extent legally
required, all permits, licenses, variances, exemptions, orders and approvals
from Governmental Entities that are material to and required for the operation
of the business of the Company as currently conducted (collectively, the
"COMPANY PERMITS") and the Company and its subsidiaries are in compliance in all
material respects
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<PAGE> 24
with the terms of the Company Permits, except where the failure to so hold or be
in compliance with the terms of the Company Permits would not be material to the
Company.
2.11 Litigation. Except as disclosed in Part 2.11 of the Company
Schedules, there are no claims, suits, actions or proceedings pending or, to the
knowledge of the Company, threatened against, relating to or affecting the
Company or any of its subsidiaries, before any court, governmental department,
commission, agency, instrumentality or authority, or any arbitrator that seeks
to restrain or enjoin the consummation of the transactions contemplated by this
Agreement or which could reasonably be expected, either singularly or in the
aggregate with all such claims, actions or proceedings, to be material to the
Company. No Governmental Entity has at any time challenged or questioned in a
writing delivered to the Company the legal right of the Company to design,
manufacture, offer or sell any of its products in the present manner or style
thereof. As of the date hereof, to the knowledge of the Company, no event has
occurred, and no claim, dispute or other condition or circumstance exists, that
will, or that would reasonably be expected to, cause or provide a bona fide
basis for a director or executive officer of the Company to seek indemnification
from the Company.
Except as disclosed in Part 2.11 of the Company Schedules, the Company has
never been subject to an audit, compliance review, investigation or like
contract review by the GSA office of the Inspector General or other Governmental
Entity or agent thereof in connection with any government contract (a
"GOVERNMENT AUDIT"), to the Company's knowledge no Government Audit is
threatened or reasonably anticipated, and in the event of such Government Audit,
to the knowledge of the Company no basis exists for a finding of noncompliance
with any material provision of any government contract or a refund of any
amounts paid or owed by any Governmental Entity pursuant to such government
contract. For each item disclosed in the Company Schedule pursuant to this
Section 2.11 a true and complete copy of all correspondence and documentation
with respect thereto has been provided to Parent.
2.12 Brokers' and Finders' Fees. Except for fees payable to Batchelder &
Partners, Inc. and SoundView Technology Group, Inc. pursuant to engagement
letters dated June 8, 1998, as amended by letter agreement dated September 16,
1998, and October 5, 1998, respectively, copies of which have been provided to
Parent, the Company has not incurred, nor will it incur, directly or indirectly,
any liability for brokerage or finders' fees or agents' commissions or any
similar charges in connection with this Agreement or any transaction
contemplated hereby.
2.13 Transactions with Affiliates. Except as set forth in the Company SEC
Reports, since the date of the Company's last proxy statement filed with the
SEC, no event has occurred as of the date of this Agreement that would be
required to be reported by the Company pursuant to Item 404 of Regulation S-K
promulgated by the SEC. Part 2.13 of the Company Schedules identifies each
person who is an "affiliate" (as that term is used in Rule 145 promulgated under
the Securities Act) of the Company as of the date of this Agreement.
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<PAGE> 25
2.14 Employee Benefit Plans.
(a) Definitions. With the exception of the definition of "Affiliate"
set forth in Section 2.14(a)(i) below (which definition shall apply only to
Section 2.14), for purposes of this Agreement, the following terms shall have
the meanings set forth below:
(i) "AFFILIATE" shall mean any other person or entity under
common control with the Company within the meaning of Section 414(b), (c), (m)
or (o) of the Code and the regulations issued thereunder;
(ii) "COMPANY EMPLOYEE PLAN" shall mean any plan, program,
policy, practice, contract, agreement or other arrangement providing for
compensation, severance, termination pay, performance awards, stock or
stock-related awards, fringe benefits or other employee benefits, other than any
International Employee Plan, whether written or unwritten, funded or unfunded,
including, without limitation, each "employee benefit plan" (within the meaning
of Section 3(3) of ERISA) which is or has been maintained, contributed to, or
required to be contributed to, by the Company or any Affiliate for the benefit
of any Employee;
(iii) "COBRA" shall mean the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended;
(iv) "DOL" shall mean the Department of Labor;
(v) "EMPLOYEE" shall mean any current, former, or retired
employee, officer, or director of the Company or any Affiliate;
(vi) "EMPLOYEE AGREEMENT" shall mean each written management,
employment, severance, consulting, relocation, repatriation, expatriation, or
similar agreement or contract between the Company or any Affiliate and any
Employee or consultant;
(vii) "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended;
(viii) "FMLA" shall mean the Family Medical Leave Act of 1993,
as amended;
(ix) "INTERNATIONAL EMPLOYEE PLAN" shall mean each plan,
program, policy, practice, contract or other agreement that has been adopted or
is maintained by the Company for the benefit of Employees outside the United
States that would constitute a Company Employee Plan if maintained in the United
States;
(x) "IRS" shall mean the Internal Revenue Service;
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<PAGE> 26
(xi) "MULTIEMPLOYER PLAN" shall mean any "Pension Plan" (as
defined below) which is a "multiemployer plan," as defined in Section 3(37) of
ERISA;
(xii) "PBGC" shall mean the Pension Benefit Guaranty
Corporation; and
(xiii) "PENSION PLAN" shall mean each Company Employee Plan
which is an "employee pension benefit plan," within the meaning of Section 3(2)
of ERISA.
(b) Schedule. Part 2.14(b) of the Company Schedules contain an
accurate and complete list of each Company Employee Plan, each material Employee
Agreement and each material International Employee Plan. The Company does not
have any plan or commitment to establish any new Company Employee Plan, to
modify any Company Employee Plan or material Employee Agreement (except to the
extent required by law or to conform any such Company Employee Plan or Employee
Agreement to the requirements of any applicable law, or as required by this
Agreement), or to enter into any Company Employee Plan or material Employee
Agreement, nor does it have any intention or commitment to do any of the
foregoing.
(c) Documents. The Company has provided to Parent: (i) correct and
complete copies of all documents embodying each Company Employee Plan, each
material Employee Agreement and each material International Employee Plan,
including all amendments thereto; (ii) the most recent annual actuarial
valuations, if any, prepared for each Company Employee Plan and each material
International Employee Plan; (iii) the two (2) most recent annual reports (Form
Series 5500 and all schedules and financial statements attached thereto), if
any, required under ERISA or the Code in connection with each Company Employee
Plan or related trust; (iv) if the Company Employee Plan or International
Employee Plan is funded, the most recent annual and periodic accounting of
Company Employee Plan assets; (v) the most recent summary plan description
together with the summary of material modifications thereto, if any, required
under ERISA with respect to each Company Employee Plan; (vi) all IRS
determination, opinion, notification and advisory letters, and rulings relating
to Company Employee Plans and copies of all applications and correspondence to
or from the IRS or the DOL with respect to any Company Employee Plan; (vii) all
material written agreements and contracts under each Company Employee Plan and
International Employee Plan, including, but not limited to, administrative
service agreements, group annuity contracts and group insurance contracts;
(viii) all written communications material to any Employee or Employees relating
to any Company Employee Plan or International Employee Plan and any proposed
Company Employee Plans or International Employee Plans, in each case, relating
to any amendments, terminations, establishments, increases or decreases in
benefits, acceleration of payments or vesting schedules or other events which
would result in any material liability to the Company; (ix) all COBRA forms and
related notices; and (x) all registration statements and prospectuses prepared
in connection with each Company Employee Plan and International Employee Plan.
(d) Employee Plan Compliance. (i) The Company has performed in all
material respects all obligations required to be performed by it under, is not
in material default or violation of, and has no knowledge of any default or
violation by any other party to each Company Employee Plan,
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<PAGE> 27
and each Company Employee Plan has been established and maintained in all
material respects in accordance with its terms and in compliance with all
applicable laws, statutes, orders, rules and regulations, including but not
limited to ERISA or the Code; (ii) each Company Employee Plan intended to
qualify under Section 401(a) of the Code and each trust intended to qualify
under Section 501(a) of the Code has either received a favorable determination
letter from the IRS with respect to each such Plan as to its qualified status
under the Code, including all amendments to the Code effected by the Tax Reform
Act of 1986 and subsequent legislation, or has remaining a period of time under
applicable Treasury regulations or IRS pronouncements in which to apply for such
a determination letter and make any amendments necessary to obtain a favorable
determination; (iii) to the Company's knowledge, no "prohibited transaction,"
within the meaning of Section 4975 of the Code or Sections 406 and 407 of ERISA,
and not otherwise exempt under the Code or Section 408 of ERISA, has occurred
with respect to any Company Employee Plan; (iv) there are no actions, suits or
claims pending, or, to the knowledge of the Company, threatened or reasonably
anticipated (other than routine claims for benefits) against any Company
Employee Plan or against the assets of any Company Employee Plan; (v) each
Company Employee Plan can be amended, terminated or otherwise discontinued after
the Effective Time in accordance with its terms, without liability to Parent,
the Company or any of its Affiliates (other than ordinary administration
expenses typically incurred in a termination event); (vi) there are no audits,
inquiries or proceedings pending or, to the knowledge of the Company or any
Affiliates, threatened by the IRS or DOL with respect to any Company Employee
Plan; and (vii) neither the Company nor any Affiliate is subject to any penalty
or tax with respect to any Company Employee Plan under Section 502(i) of ERISA
or Sections 4975 through 4980 of the Code.
(e) Pension Plans. The Company does not now, nor has it ever,
maintained, established, sponsored, participated in, or contributed to, any
Pension Plan which is subject to Title IV of ERISA or Section 412 of the Code.
(f) Multiemployer Plans. At no time has the Company contributed to
or been requested to contribute to any Multiemployer Plan.
(g) No Post-Employment Obligations. No Company Employee Plan
provides, or has any liability to provide, retiree life insurance, retiree
health or other retiree employee welfare benefits to any person for any reason,
except as may be required by COBRA or other applicable statute, and the Company
has never represented, promised or contracted (whether in oral or written form)
to any Employee (either individually or to Employees as a group) or any other
person that such Employee(s) or other person would be provided with retiree life
insurance, retiree health or other retiree employee welfare benefit, except to
the extent required by statute.
(h) Neither the Company nor any Affiliate has, prior to the
Effective Time, violated any of the health care continuation requirements of
COBRA, the requirements of FMLA or any similar provisions of state law
applicable to its Employees, except where any such violation would not have a
Material Adverse Effect on the Company.
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<PAGE> 28
(i) Effect of Transaction.
(i) The execution of this Agreement and the consummation of
the transactions contemplated hereby will not (either alone or upon the
occurrence of any additional or subsequent events) constitute an event under any
Company Employee Plan, Employee Agreement, trust or loan that will or may result
in any payment (whether of severance pay or otherwise), acceleration,
forgiveness of indebtedness, vesting, distribution, increase in benefits or
obligation to fund benefits with respect to any Employee.
(ii) No payment or benefit which will or may be made by the
Company or its Affiliates with respect to any Employee as a result of the
transactions contemplated by this Agreement will be characterized as an "excess
parachute payment," within the meaning of Section 280G(b)(1) of the Code.
(j) Employment Matters. The Company in all material respects: (i) is
in compliance in all material respects with all applicable foreign, federal,
state and local laws, rules and regulations respecting employment, employment
practices, terms and conditions of employment and wages and hours, in each case,
with respect to Employees; (ii) has withheld all amounts required by law or by
agreement to be withheld from the wages, salaries and other payments to
Employees; (iii) is not liable for any arrears of wages or any taxes or any
penalty for failure to comply with any of the foregoing; and (iv) is not liable
for any material payment to any trust or other fund or to any governmental or
administrative authority, with respect to unemployment compensation benefits,
social security or other benefits or obligations for Employees (other than
routine payments to be made in the normal course of business and consistent with
past practice). There are no material pending, threatened or reasonably
anticipated claims or actions against the Company under any worker's
compensation policy or long-term disability policy. To the Company's knowledge,
no employee of the Company has violated any material employment contract,
nondisclosure agreement or noncompetition agreement by which such employee is
bound due to such employee being employed by the Company and disclosing to the
Company or using trade secrets or proprietary information of any other person or
entity.
(k) Labor. No work stoppage or labor strike against the Company is
pending, threatened or reasonably anticipated. The Company does not know of any
activities or proceedings of any labor union to organize any Employees. There
are no actions, suits, claims, labor disputes or grievances pending, or, to the
knowledge of the Company, threatened or reasonably anticipated relating to any
labor, safety or discrimination matters involving any Employee, including,
without limitation, charges of unfair labor practices or discrimination
complaints, which, if adversely determined, would, individually or in the
aggregate, have a Material Adverse Effect on the Company. Neither the Company
nor any of its subsidiaries has engaged in any unfair labor practices within the
meaning of the National Labor Relations Act. The Company is not presently, nor
has it been in the past, a party to, or bound by, any collective bargaining
agreement or union contract with respect to Employees and no collective
bargaining agreement is being negotiated by the Company.
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<PAGE> 29
(l) International Employee Plan. Each International Employee Plan
has been established, maintained and administered in material compliance with
its terms and conditions and with the requirements prescribed by any and all
statutory or regulatory laws that are applicable to such International Employee
Plan. Furthermore, no International Employee Plan has unfunded liabilities, that
as of the Effective Time, will not be offset by insurance or have not been fully
accrued. Each International Employee Plan can be amended, terminated or
otherwise discontinued after the Effective Time in accordance with its terms.
2.15 Environmental Matters.
(a) Hazardous Material. Except as would not result in material
liability to the Company, 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 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, but excluding office and
janitorial supplies, (a "HAZARDOUS MATERIAL") are present, as a result of the
actions of the Company or any of its subsidiaries or any affiliate of the
Company, or, to the Company'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 the Company or any of
its subsidiaries has at any time owned, operated, occupied or leased.
(b) Hazardous Materials Activities. Except as would not result in a
material liability to the Company (in any individual case or in the aggregate)
(i) neither the Company 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, and (ii) neither the Company nor any of its subsidiaries has 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. The Company and its subsidiaries currently hold all
environmental approvals, permits, licenses, clearances and consents (the
"COMPANY ENVIRONMENTAL PERMITS") necessary for the conduct of the Company's and
its subsidiaries' Hazardous Material Activities and other businesses of the
Company and its subsidiaries as such activities and businesses are currently
being conducted.
(d) Environmental Liabilities. No action, proceeding, revocation
proceeding, amendment procedure, writ or injunction is pending, and to the
Company's knowledge, no action, proceeding, revocation proceeding, amendment
procedure, writ or injunction has been threatened by any
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<PAGE> 30
Governmental Entity against the Company or any of its subsidiaries in a writing
delivered to the Company concerning any Company Environmental Permit, Hazardous
Material or any Hazardous Materials Activity of the Company or any of its
subsidiaries. The Company is not aware of any fact or circumstance which could
involve the Company or any of its subsidiaries in any environmental litigation
or impose upon the Company any material environmental liability.
2.16 Year 2000 Compliance.
(a) All of the Company's products and internal systems fully comply
with the "YEAR 2000 QUALIFICATION" requirements definition attached as Exhibit B
(the "COMPANY DEFINITION"). At Parent's request, the Company will provide
evidence demonstrating adequate testing of the products and internal systems to
assure compliance with the Definition.
(b) The Company's products and internal systems have been designed
to ensure Year 2000 Qualification, including date and time entry recognition,
calculations that accommodate same century and multi-century formulas and date
values, leap year recognition and calculations, and date data interface values
that reflect the century. The Company's products and internal systems manage and
manipulate data involving dates and times, including single century formulas and
multi-century formulas, and do not cause an abnormal ending scenario within the
application or generate incorrect values or invalid results involving such
dates.
2.17 Agreements, Contracts and Commitments. Except as otherwise set forth
in Part 2.17 of the Company Schedules, as of the date hereof neither the Company
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 higher or member of the Company's
Board of Directors, other than those that are terminable by the Company or any
of its subsidiaries on no more than thirty days notice without liability or
financial obligation, except to the extent general principles of wrongful
termination law may limit the Company's or any of its subsidiaries' ability to
terminate employees at will;
(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;
(c) any agreement of indemnification or any guaranty other than any
agreement of indemnification entered into in connection with the sale or license
of software products in the ordinary course of business;
(d) any agreement, contract or commitment containing any covenant
limiting (or which would limit following the Merger) in any respect the right of
the Company or any of its
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<PAGE> 31
subsidiaries or affiliates to engage in any line of business or to 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 by the Company or any of its
subsidiaries after the date of this Agreement of a material amount of assets not
in the ordinary course of business or pursuant to which the Company has any
material ownership interest in any corporation, partnership, joint venture or
other business enterprise other than the Company's subsidiaries;
(f) any joint marketing or development agreement currently in force
under which the Company or any of its subsidiaries has continuing material
obligations to jointly market any product, technology or service and which may
not be canceled without penalty upon notice of 90 days or less, or any material
agreement pursuant to which the Company or any of its subsidiaries has
continuing material obligations to jointly develop any intellectual property
that will not be owned, in whole or in part, by the Company or any of its
subsidiaries and which may not be canceled without penalty upon notice of 90
days or less;
(g) any agreement, contract or commitment currently in force to
provide source code to any third party for any product or technology that is
material to the Company and its subsidiaries taken as a whole; or
(h) any agreement, contract or commitment currently in force to
license any third party to manufacture or reproduce any Company product, service
or technology except as a non-exclusive partner, non-exclusive distributor or
non-exclusive reseller in the normal course of business.
Neither the Company nor any of its subsidiaries, nor to the Company's
knowledge any other party to a Company Contract (as defined below), is in
breach, violation or default under, and neither the Company nor any of its
subsidiaries has received written 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 the Company or any of its
subsidiaries is a party or by which it is bound that are required to be
disclosed in the Company Schedules pursuant to clauses (a) through (h) above or
pursuant to Section 2.9 hereof (any such agreement, contract or commitment, a
"COMPANY CONTRACT") in such a manner as would permit any other party to cancel
or terminate any such Company Contract, or would permit any other party to seek
material damages or other remedies (for any or all of such breaches, violations
or defaults, in the aggregate).
2.18 Pooling of Interests. To the knowledge of the Company, based on
consultation with its independent accountants, neither the Company nor any of
its directors, officers, affiliates or stockholders has taken or agreed to take
any action which would preclude Parent's ability to account for the Merger as a
pooling of interests.
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<PAGE> 32
2.19 Change of Control Payments. Part 2.19 of the Company Schedules sets
forth each plan or agreement pursuant to which any amounts may become payable
(whether currently or in the future) to current or former officers and directors
of the Company as a result of or in connection with the Merger.
2.20 Disclosure. None of the information supplied or to be supplied by or
on behalf of the Company for inclusion or incorporation by reference in the
registration statement on Form S-4 (or similar successor form) to be filed with
the SEC by Parent in connection with the issuance of Parent Common Stock in the
Merger (the "REGISTRATION STATEMENT") will, at the time the Registration
Statement is filed with the SEC or at the time it becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under which they are
made, not misleading. None of the information supplied or to be supplied by or
on behalf of the Company for inclusion or incorporation by reference in the
Prospectus/Proxy Statement to be filed with the SEC as part of the Registration
Statement (the "PROSPECTUS/PROXY STATEMENT"), will, at the time the
Prospectus/Proxy Statement is mailed to the stockholders of the Company or
Parent, at the time of the Company Stockholders' Meeting or Parent Stockholders'
Meeting or as of the Effective Time, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading. The Prospectus/Proxy
Statement will comply as to form in all material respects with the provisions of
the Exchange Act and the rules and regulations promulgated by the SEC
thereunder, except that no representation or warranty is made by the Company
with respect to statements made or incorporated by reference therein based on
information supplied by Parent for inclusion or incorporation by reference in
the Prospectus/Proxy Statement.
2.21 Board Approval. The Board of Directors of the Company has, as of the
date of this Agreement, determined (i) that the Merger is fair to, and in the
best interests of the Company and its stockholders, and (ii) to recommend that
the stockholders of the Company approve and adopt this Agreement and approve the
Merger.
2.22 Fairness Opinion. The Company's Board of Directors has received a
written opinion from SoundView Technology Group, Inc. dated as of or prior to
the date hereof, to the effect that as of the date hereof, the Merger and the
Exchange Ratio are fair to the Company's stockholders from a financial point of
view and has delivered to Parent a copy of such opinion.
2.23 Section 203 of the Delaware General Corporation Law Not Applicable.
The Board of Directors of the Company 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), and all
other similar state laws and regulations, will not apply to the execution,
delivery or performance of this Agreement or to the consummation of the Merger
or the other transactions contemplated by this Agreement.
2.24 Customs. The Company has acted with reasonable care to properly value
and classify, in accordance with applicable tariff laws, rules and regulations,
all goods that the Company or any of
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<PAGE> 33
its subsidiaries import into the United States or into any other country (the
"IMPORTED GOODS"). To the Company's knowledge, there are currently no material
claims pending against the Company by the U.S. Customs Service (or other foreign
customs authorities) relating to the valuation, classification or marking of the
Imported Goods.
2.25 Company Rights Plan. The execution, delivery and performance of this
Agreement and the consummation of the Merger will not cause any change, effect
or result under the Company Rights Plan which is adverse to the interests of
Parent. Without limiting the generality of the foregoing, if necessary to
accomplish the foregoing, the Company Rights Plan has been amended. The Company
has taken all actions to (i) render the Company Rights Plan inapplicable to the
Merger and the other transactions contemplated by this Agreement, the Company
Affiliate Agreements and the Company Voting Agreements, (ii) ensure that (y)
neither Parent nor Merger Sub, nor any of their affiliates shall be deemed to
have become an Acquiring Person or a Transaction Person (as such terms are
defined in the Company Rights Plan) pursuant to the Company Rights Plan by
virtue of the execution of this Agreement, the Company Affiliate Agreements or
the Company Voting Agreements, the consummation of the Merger or the
consummation of the other transactions contemplated hereby and (z) a
Distribution Date, or a Transaction (as such terms are defined in the Company
Rights Plan) or similar event does not occur by reason of the execution of this
Agreement, the Company Affiliate Agreements and the Company Voting Agreements,
the consummation of the Merger, or the consummation of the other transactions,
contemplated hereby and (iii) provide that the Final Expiration Date (as defined
in the Company Rights Plan) shall be immediately prior to the Effective Time.
The Company hereby covenants and agrees that it will take all action to cause
this representation to remain true and will not take any action to cause this
representation to become untrue.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company, subject to the
exceptions specifically disclosed in writing in the disclosure letter and
referencing a specific representation supplied by Parent and Merger Sub to the
Company dated as of the date hereof and certified on behalf of Parent and Merger
Sub by a duly authorized officer of Parent (the "PARENT SCHEDULES"), as follows:
3.1 Organization of Parent.
(a) Parent has no subsidiaries, except for the corporations
identified in Part 3.1(a)(i) of the Parent Schedules; and neither Parent nor any
of the corporations identified in Part 3.1(a)(i) of the Parent Schedules owns
any capital stock of, or any equity interest of any nature in, any other entity,
other than the entities identified in Part 3.1(a)(ii) of the Parent Schedules,
except for passive investments in equity interests of public companies as part
of the cash management program of Parent. (Where appropriate, Parent and each of
its subsidiaries are referred to singularly and/or collectively in this
Agreement as the "PARENT"). Parent has not agreed and is not obligated to make,
nor bound by any Contract under which Contract it may become obligated to make,
any future investment in or capital
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contribution to any other entity. Parent has not, at any time, been a general
partner of any general partnership, limited partnership or other entity.
(b) Parent is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and has
all necessary power and authority: (i) to conduct its business in the manner in
which its business is currently being conducted; (ii) to own and use its assets
in the manner in which its assets are currently owned and used; and (iii) to
perform its obligations under all Contracts by which it is bound.
(c) Parent is qualified to do business as a foreign corporation, and
is in good standing, under the laws of all jurisdictions where the nature of its
business requires such qualification and where the failure to so qualify would
have a Material Adverse Effect on Parent.
(d) Parent has delivered or made available to the Company a true and
correct copy of the Certificate of Incorporation and Bylaws of Parent and
similar governing instruments of each of its subsidiaries, each as amended to
date (collectively, the "PARENT CHARTER DOCUMENTS"), and each such instrument is
in full force and effect. Parent is not in violation of any of the provisions of
the Parent Charter Documents.
(e) Parent has delivered or made available to parent all proposed or
considered amendments to the Parent Charter Documents.
3.2 Parent Capital Structure.
(a) The authorized capital stock of Parent consists of: (i)
60,000,000 shares of Common Stock, $0.001 par value per share ("PARENT COMMON
STOCK"), of which 28,376,789 shares had been issued and were outstanding as of
October 12, 1998; and (ii) 5,000,000 shares of Preferred Stock, $0.001 par value
per share ("PARENT PREFERRED STOCK"), of which 500,000 shares are designated as
Series A Jr. Participating Preferred Stock, 2,490,000 shares are designated as
Series B Preferred Stock and 231,915 are designated as Series C Preferred Stock.
As of October 12, 1998, no shares of Series A Jr. Participating Preferred Stock
or Series B Preferred Stock were issued and outstanding and 95,305 shares of
Series C Preferred Stock were issued and outstanding. All of the outstanding
shares of Parent Common Stock and Parent Preferred Stock have been duly
authorized and validly issued, and are fully paid and nonassessable.
(b) As of October 12, 1998: (i) 4,933,703 shares of Parent Common
Stock were subject to issuance pursuant to outstanding options to purchase
Common Stock under Parent's stock option plans; and (ii) 141,896 shares of
Common Stock were reserved for future issuance under Parent's Employee Stock
Purchase Plan (the "PARENT PURCHASE PLAN"). (Stock options granted by Parent
pursuant to Parent's stock option plans are referred to in this Agreement as
"PARENT OPTIONS"). Parent has made available to the Company accurate and
complete copies of all stock option plans pursuant to which Parent has granted
stock options that are currently outstanding and the form of all stock option
agreements evidencing such options. All shares of Parent Common Stock subject to
issuance as
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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.
(c) All outstanding shares of Parent Common Stock, all outstanding
Parent Options, and all outstanding shares of capital stock of each subsidiary
of Parent have been issued and granted in compliance with (i) all applicable
securities laws and other applicable Legal Requirements and (ii) all
requirements set forth in applicable Contracts.
(d) All of the outstanding shares of capital stock of each of
Parent's subsidiaries are validly issued, fully paid and nonassessable and are
owned beneficially and of record by Parent, free and clear of any Encumbrances.
3.3 Obligations With Respect to Capital Stock. Except as set forth in Part
3.3 of the Parent Schedules, there are no equity securities, partnership
interests or similar ownership interests of any class of Parent equity security,
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 Parent owns free and
clear of all claims and Encumbrances, directly or indirectly through one or more
subsidiaries, and except for shares of capital stock or other similar ownership
interests of certain subsidiaries of Parent that are owned by certain nominee
equity holders as required by the applicable law of the jurisdiction of
organization of such subsidiaries, as of the date of this Agreement, there are
no equity securities, partnership interests or similar ownership interests of
any class of equity security of any subsidiary of Parent, 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 Part 3.3 of the Parent
Schedules, there are no subscriptions, options, warrants, equity securities,
partnership interests or similar ownership interests, calls, rights (including
preemptive rights), commitments or agreements of any character to which Parent
or any of its subsidiaries is a party or by which it is bound obligating Parent
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 cause the
repurchase, redemption or acquisition of, any shares of capital stock,
partnership interests or similar ownership interests of Parent or any of its
subsidiaries or obligating Parent or any of its subsidiaries to grant, extend,
accelerate the vesting of or enter into any such subscription, option, warrant,
equity security, call, right, commitment or agreement. As of the date of this
Agreement, except as contemplated by this Agreement, there are no registration
rights and there is no voting trust, proxy, rights plan, antitakeover plan or
other agreement or understanding to which Parent is a party or by which it is
bound with respect to any equity security of any class of Parent or with respect
to any equity security, partnership interest or similar ownership interest of
any class of any of its subsidiaries. Stockholders of Parent will not be
entitled to dissenters' rights under applicable state law in connection with the
Merger.
3.4 Authority; Non-Contravention.
(a) Parent 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
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and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Parent, subject only
to the approval of the issuance of the shares of Parent Common Stock, pursuant
to the Merger by Parent's stockholders and the filing of the Certificate of
Merger pursuant to Delaware Law. A vote of the holders of a majority of the
outstanding shares of Parent Common Stock and Parent Preferred Stock voting
together as a single class on an as-converted basis is sufficient for Parent's
stockholders to approve the issuance of Parent Common Stock pursuant to the
Merger. This Agreement has been duly executed and delivered by Parent and Merger
Sub, and upon execution and delivery by the Company constitutes a valid and
binding obligation of Parent and Merger Sub, enforceable against Parent and
Merger Sub 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 Parent and Merger Sub does not, and
the performance of this Agreement by Parent and Merger Sub will not, (i)
conflict with or violate the Parent Charter Documents, (ii) subject to obtaining
the approval of the issuance of the shares of Parent Common Stock pursuant to
the Merger by Parent's stockholders as contemplated in Section 5.3 and
compliance with the requirements set forth in Section 3.4(b) below, conflict
with or violate any law, rule, regulation, order, judgment or decree applicable
to Parent or any of its subsidiaries or by which Parent or any of its
subsidiaries or any of their respective properties are bound or affected, or
(iii) result in any material breach of or constitute a material default (or an
event that with notice or lapse of time or both would become a material default)
under, or impair Parent'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 material Lien or
Encumbrance on any of the material properties or assets of Parent or any of its
subsidiaries pursuant to, any material note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise, concession, or other
instrument or obligation to which Parent or any of its subsidiaries is a party
or by which Parent or any of its subsidiaries or its or any of their respective
assets are bound or affected. Part 3.4(b) of the Parent Schedules lists all
consents, waivers, and approvals under any of Parent'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,
which, if individually or in the aggregate not obtained, would result in a
Material Adverse Effect on Parent as a result of the Merger.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with any Governmental Entity, is required to
be obtained or made by Parent 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 the Certificate of Merger with the Secretary of State of the State of
Delaware, (ii) the filing of the Registration Statement in accordance with the
Exchange Act, (iii) such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable
federal, foreign and state securities (or related) laws and 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 Parent or materially effect the
ability of the parties hereto to consummate the Merger.
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3.5 SEC Filings; Parent Financial Statements.
(a) Parent has filed all forms, reports and documents required to be
filed by Parent with the SEC since January 1, 1997 and has made available to the
Company such forms, reports and documents in the form filed with the SEC. All
such required forms, reports and documents (including those that Parent may file
subsequent to the date hereof) are referred to herein as the "PARENT SEC
REPORTS"). As of their respective dates, the Parent SEC Reports (i) were
prepared in accordance and complied in all material respects with the
requirements of the Securities Act, or the Exchange Act, as the case may be, and
the rules and regulations of the SEC thereunder applicable to such Parent 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 Parent's subsidiaries is required to file any
forms, reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including, in
each case, any related notes thereto) contained in the Parent SEC Reports (the
"PARENT FINANCIALS"), including each Parent SEC Report filed after the date
hereof until the Closing, (i) complied as to form in all material respects with
the published rules and regulations of the SEC with respect thereto, (ii) 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 (iii) fairly presented the consolidated
financial position of Parent and its subsidiaries as at the respective dates
thereof and the consolidated results of Parent's operations and cash flows for
the periods indicated, except that the unaudited interim financial statements
may not contain footnotes and were or are subject to normal and recurring
year-end adjustments. The balance sheet of Parent contained in Parent's Annual
Report on Form 10-K for the year ended June 30, 1998 is hereinafter referred to
as (the "PARENT BALANCE SHEET"). Except as disclosed in the Parent Financials,
since the date of the Parent Balance Sheet neither Parent nor any of its
subsidiaries has any liabilities required under GAAP to be set forth on a
balance sheet (absolute, accrued, contingent or otherwise) which are,
individually or in the aggregate, material to the business, results of
operations or financial condition of Parent and its subsidiaries taken as a
whole, except for liabilities incurred since the date of the Parent Balance
Sheet in the ordinary course of business consistent with past practices.
(c) Parent has heretofore furnished to the Company 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 Parent with the SEC
pursuant to the Securities Act or the Exchange Act.
(d) Parent has recognized revenues in accordance with GAAP and
Statement of Position 97-2, as amended by Statement of Position 98-4, issued by
the American Institute of Certified Public Accountants. Parent has recognized
(i) initial license fee revenues only after delivery of software products and
upon satisfaction of all significant post-delivery obligations; (ii) revenues
associated with the grant of additional licenses to Parent's existing customers
upon shipment and upon satisfaction of
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all significant post-delivery obligations; (iii) maintenance revenues ratably
over the term of the maintenance period; and (iv) consulting and training
revenues when the services were performed.
3.6 Absence of Certain Changes or Events. Since the date of the Parent
Balance Sheet there has not been: (i) any Material Adverse Effect (as defined in
Section 8.3(c)) on Parent, (ii) any declaration, setting aside or payment of any
dividend on, or other distribution (whether in cash, stock or property) in
respect of, any of Parent's or any of its subsidiaries' capital stock, or any
purchase, redemption or other acquisition by Parent of any of Parent's capital
stock or any other securities of Parent or its subsidiaries or any options,
warrants, calls or rights to acquire any such shares or other securities except
for repurchases from employees following their termination pursuant to the terms
of their pre-existing stock option or purchase agreements, (iii) any split,
combination or reclassification of any of Parent's or any of its subsidiaries'
capital stock, (iv) any granting by Parent or any of its subsidiaries of any
increase in compensation or fringe benefits, except for normal increases of cash
compensation in the ordinary course of business consistent with past practice,
or any payment by Parent or any of its subsidiaries of any bonus, except for
bonuses made in the ordinary course of business consistent with past practice,
or any granting by Parent or any of its subsidiaries of any increase in
severance or termination pay or any entry by Parent or any of its subsidiaries
into any currently effective employment, severance, termination or
indemnification agreement or any agreement the benefits of which are contingent
or the terms of which are materially altered upon the occurrence of a
transaction involving Parent of the nature contemplated hereby, (v) entry by
Parent or any of its subsidiaries into any licensing or other agreement with
regard to the acquisition or disposition of any material Intellectual Property
(as defined in Section 2.9) other than licenses in the ordinary course of
business consistent with past practice or any amendment or consent with respect
to any licensing agreement filed or required to be filed by Parent with the SEC,
(vi) any material change by Parent in its accounting methods, principles or
practices, except as required by concurrent changes in GAAP, or (vii) any
revaluation by Parent of any of its assets, including, without limitation,
writing down the value of capitalized inventory or writing off notes or accounts
receivable other than in the ordinary course of business.
3.7 Taxes.
(a) Tax Returns and Audits.
(i) Parent and each of its subsidiaries have timely filed all
Returns relating to Taxes required to be filed by Parent and each of its
subsidiaries with any Tax authority, except such Returns which are not material
to Parent, and have paid all Taxes shown to be due on such Returns on a timely
basis.
(ii) Parent and each of its subsidiaries as of the Effective
Time will have withheld with respect to its employees all federal and state
income taxes, Taxes pursuant to FICA, Taxes pursuant to the FUTA and other Taxes
required to be withheld.
(iii) There is no Tax deficiency outstanding, proposed in
writing (or otherwise to Parent's knowledge proposed) or assessed against Parent
or any of its subsidiaries, nor has Parent or
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any of its subsidiaries executed any unexpired waiver of any statute of
limitations on or extending the period for the assessment or collection of any
Tax.
(iv) No audit or other examination of any Return of Parent or
any of its subsidiaries by any Tax authority is presently in progress, nor has
Parent or any of its subsidiaries been notified in writing (or otherwise to
Parent's knowledge notified) of any request for such an audit or other
examination.
(v) No adjustment relating to any Returns filed by Parent or
any of its subsidiaries has been proposed in writing by any Tax authority to
Parent or any of its subsidiaries.
(vi) Neither Parent nor any of its subsidiaries has any
liability for unpaid Taxes which has not been accrued for or reserved in
accordance with GAAP on Parent Balance Sheet (or in any Parent SEC Report filed
prior to the date hereof, or for liabilities accruing following the date hereof,
in any Parent SEC Report filed prior to the date of the Closing), whether
asserted or unasserted, contingent or otherwise, which is material to Parent,
other than any liability for unpaid Taxes that may have accrued since the date
of Parent Balance Sheet in connection with the operation of the business of
Parent and its subsidiaries in the ordinary course.
(vii) There is no contract, agreement, plan or arrangement to
which Parent is a party as of the date of this Agreement, including but not
limited to the provisions of this Agreement, covering any employee or former
employee of Parent or any of its subsidiaries that, individually or
collectively, could give rise to the payment of any amount that would not be
deductible pursuant to Sections 280G, 404 or 162(m) of the Code.
(viii) Neither Parent nor any of its subsidiaries has filed
any consent agreement under Section 341(f) of the Code or agreed to have Section
341(f)(2) of the Code apply to any disposition of a subsection (f) asset (as
defined in Section 341(f)(4) of the Code) owned by Parent.
(ix) Neither Parent nor any of its subsidiaries is party to,
or has any obligation under, or will have any obligation as a result of the
Merger under, any tax-sharing, tax indemnity or tax allocation agreement or
arrangement.
(x) Except as may be required as a result of the Merger,
Parent and its subsidiaries have not been and will not be required to include
any material adjustment in Taxable income for any Tax period (or portion
thereof) pursuant to Section 481 or Section 263A of the Code or any comparable
provision under state or foreign Tax laws as a result of transactions, events or
accounting methods employed prior to the Closing and with respect to which the
applicable statute of limitations has not passed.
(xi) None of Parent's or its subsidiaries' assets are tax
exempt use property within the meaning of Section 168(h) of the Code.
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(xii) Parent Schedules list (A) any foreign Tax holidays, (B)
any intercompany transfer pricing agreements, or other arrangements that have
been established by Parent or any of its subsidiaries with any Tax authority and
(C) any expatriate programs or policies affecting Parent or any of its
subsidiaries.
3.8 Title to Properties; Absence of Liens and Encumbrances.
(a) All of Parent's current leases with respect to real property 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 $50,000. Other than the leaseholds created under real property
leases, Parent owns no interest in real property.
(b) Parent has good and valid title to, or, in the case of leased
properties and assets, valid leasehold interests in, all of its tangible
properties and assets, real, personal and mixed, used or held for use in its
business, free and clear of any Liens, except as reflected in Parent Financials
and except for Liens for taxes not yet due and payable and such Liens or other
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.
3.9 Intellectual Property. For the purposes of this Agreement, the
following terms have the following definitions:
"PARENT INTELLECTUAL PROPERTY" means any Intellectual Property that
is owned by, or exclusively licensed to, Parent.
"PARENT REGISTERED INTELLECTUAL PROPERTY" means all of the
Registered Intellectual Property owned by, or filed in the name of,
Parent.
(a) No material Parent Intellectual Property or product or service
of Parent is subject to any proceeding or outstanding decree, order, judgment,
agreement, or stipulation restricting in any manner the use, transfer, or
licensing thereof by Parent, or which may affect the validity, use or
enforceability of material Parent Intellectual Property.
(b) Each material item of Parent Registered Intellectual Property is
valid and subsisting, all necessary registration, maintenance and renewal fees
currently due in connection with such Registered Intellectual Property have been
made and all necessary documents, recordations and certificates in connection
with such Registered Intellectual Property have been filed with the relevant
patent, copyright, trademark or other authorities in the United States or
foreign jurisdictions, as the case may be, for the purposes of maintaining such
Registered Intellectual Property.
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(c) Parent owns and has good and exclusive title to, each material
item of Parent Intellectual Property free and clear of any Lien or Encumbrance
(excluding licenses entered into in the ordinary course of Parent's business);
and Parent is the exclusive owner of all trademarks and trade names used in
connection with the operation or conduct of the business of Parent, including
the sale of any products or the provision of any services by Parent.
(d) Parent owns exclusively, and has good title to, all copyrighted
works that are material Parent products or which are material and which Parent
otherwise expressly purports to own.
(e) To the extent that any material Intellectual Property has been
developed or created by a third party for Parent, Parent has a written agreement
with such third party with respect thereto and Parent thereby either (i) has
obtained ownership of, and is the exclusive owner of, or (ii) has obtained a
license (sufficient for the conduct of its business as currently conducted and
as proposed to be conducted) to all such third party's Intellectual Property in
such work, material or invention.
(f) Except as would not result in a Material Adverse Effect on
Parent, Parent has not transferred ownership of, or granted any exclusive
license with respect to, any Intellectual Property that is or was material to
the Parent Intellectual Property, to any third party.
(g) All material contracts, licenses and agreements relating to
Parent Intellectual Property are in full force and effect. Except as would not
have a Material Adverse Effect on Parent, the consummation of the transactions
contemplated by this Agreement will neither violate nor result in the breach,
modification, cancellation, termination, or suspension of such material
contracts, licenses and agreements. Parent is in material compliance with, and
has not materially breached any term any of such material contracts, licenses
and agreements and, to the knowledge of Parent, all other parties to such
material contracts, licenses and agreements are in compliance with, and have not
materially breached any term of, such contracts, licenses and agreements.
(h) The operation of the business of Parent as such business
currently is conducted, including Parent's design, development, manufacture,
marketing and sale of the products or services of Parent (including with respect
to products currently under development) has not and does not and will not, by
virtue of the Merger, infringe or misappropriate the Intellectual Property of
any third party or, to its knowledge, constitute unfair competition or trade
practices under the laws of any jurisdiction.
(i) Parent has not received written notice from any third party that
the operation of the business of Parent or any act, product or service written
of Parent, infringes or misappropriates the Intellectual Property of any third
party or constitutes unfair competition or trade practices under the laws of any
jurisdiction.
(j) To the knowledge of Parent, no person has or is infringing or
misappropriating any Parent Intellectual Property.
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(k) Parent has taken reasonable steps to protect Parent's rights in
Parent's confidential information and trade secrets that it wishes to protect or
any trade secrets or confidential information of third parties provided to
Parent, and, without limiting the foregoing, Parent has and enforces a policy
requiring each employee and contractor to execute a proprietary
information/confidentiality agreement substantially in the form provided to the
Company and all current and former employees and contractors of Parent have
executed such an agreement, except where the failure to do so is not reasonably
expected to be material to Parent.
3.10 Compliance; Permits; Restrictions.
(a) Neither Parent nor any of its subsidiaries is, in any material
respect, in conflict with, or in default or in violation of (i) any law, rule,
regulation, order, judgment or decree applicable to Parent or any of its
subsidiaries or by which Parent or any of its subsidiaries or any of their
respective properties is bound or affected (including without limitation ERISA),
or (ii) any material note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which
Parent or any of its subsidiaries is a party or by which Parent or any of its
subsidiaries or its or any of their respective properties is bound or affected
(including without limitation any Parent Employee Plan), except for conflicts,
violations and defaults that (individually or in the aggregate) would not cause
Parent to lose any material benefit or incur any material liability. No
investigation or review by any Governmental Entity is pending or, to Parent's
knowledge, has been threatened in a writing delivered to Parent against Parent
or any of its subsidiaries, nor, to Parent's knowledge, has any Governmental
Entity indicated an intention to conduct an investigation of Parent or any of
its subsidiaries. There is no material agreement, judgment, injunction, order or
decree binding upon Parent 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 Parent or any of its subsidiaries, any acquisition of
material property by Parent or any of its subsidiaries or the conduct of
business by Parent as currently conducted. For the purposes of this Section
3.10(a), (i) "PARENT EMPLOYEE PLAN" shall mean any plan, program, policy,
practice, contract, agreement or other arrangement providing for compensation,
severance, termination pay, performance awards, stock or stock-related awards,
fringe benefits or other employee benefits, other than any International
Employee Plan of Parent, whether written or unwritten, funded or unfunded,
including, without limitation, each "employee benefit plan" (within the meaning
of Section 3(3) of ERISA) which is or has been maintained, contributed to, or
required to be contributed to, by Parent or any Affiliate for the benefit of any
Employee and (ii) "INTERNATIONAL EMPLOYEE PLAN OF PARENT" shall mean each plan,
program, policy, practice, contract or other agreement that has been adopted or
is maintained by Parent for the benefit of Employees outside the United States
that would constitute a Parent Employee Plan if maintained in the United States.
(b) Parent and its subsidiaries hold, to the extent legally
required, all permits, licenses, variances, exemptions, orders and approvals
from Governmental Entities that are material to and required for the operation
of the business of Parent as currently conducted (collectively, the "PARENT
PERMITS"). Parent and its subsidiaries are in compliance in all material
respects with the terms of Parent Permits, except where the failure to be in
compliance with the terms of Parent Permits would not be material to Parent.
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3.11 Litigation. Except as disclosed in Part 3.11 of the Parent Schedules,
there are no claims, suits, actions or proceedings pending or, to the knowledge
of Parent, threatened against, relating to or affecting Parent or any of its
subsidiaries, before any court, governmental department, commission, agency,
instrumentality or authority, or any arbitrator that seeks to restrain or enjoin
the consummation of the transactions contemplated by this Agreement or which
could reasonably be expected, either singularly or in the aggregate with all
such claims, actions or proceedings, to be material to Parent. No Governmental
Entity has at any time challenged or questioned in a writing delivered to Parent
the legal right of Parent to design, manufacture, offer or sell any of its
products in the present manner or style thereof. As of the date hereof, to the
knowledge of Parent, no event has occurred, and no claim, dispute or other
condition or circumstance exists, that will, or that would reasonably be
expected to, cause or provide a bona fide basis for a director or executive
officer of Parent to seek indemnification from Parent.
Except as disclosed in Part 3.11 of the Parent Schedules, Parent has never
been subject to a Government Audit, to Parent's knowledge no Government Audit is
threatened or reasonably anticipated, and in the event of such Government Audit,
to the knowledge of Parent no basis exists for a finding of noncompliance with
any material provision of any government contract or a refund of any amounts
paid or owed by any Governmental Entity pursuant to such government contract.
For each item disclosed in the Parent Schedules pursuant to this Section 3.11 a
true and complete copy of all correspondence and documentation with respect
thereto has been provided to the Company.
3.12 Brokers' and Finders' Fees. Except for fees payable to Broadview
International LLC pursuant to an engagement letter dated February 24, 1997, as
amended by letter dated September 8, 1998, copies of which have been provided to
the Company, Parent has not incurred, nor will it incur, directly or indirectly,
any liability for brokerage or finders' fees or agents' commissions or any
similar charges in connection with this Agreement or any transaction
contemplated hereby.
3.13 Environmental Matters.
(a) Hazardous Material. Except as would not result in material
liability to Parent, no Hazardous Materials are present, as a result of the
actions of Parent or any of its subsidiaries or any affiliate of Parent, or, to
Parent'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 Parent or any of its subsidiaries has at
any time owned, operated, occupied or leased.
(b) Hazardous Materials Activities. Except as would not result in a
material liability to Parent (in any individual case or in the aggregate) (i)
neither Parent 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, and (ii) neither Parent nor any of its subsidiaries has disposed of,
transported, sold, used, released, exposed its employees or others to or
manufactured any product containing a Hazardous Material 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.
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(c) Permits. Parent and its subsidiaries currently hold all
environmental approvals, permits, licenses, clearances and consents (the "PARENT
ENVIRONMENTAL PERMITS") necessary for the conduct of Parent's and its
subsidiaries' Hazardous Material Activities and other businesses of Parent and
its subsidiaries as such activities and businesses are currently being
conducted.
(d) Environmental Liabilities. No action, proceeding, revocation
proceeding, amendment procedure, writ or injunction is pending, and to Parent's
knowledge, no action, proceeding, revocation proceeding, amendment procedure,
writ or injunction has been threatened by any Governmental Entity against Parent
or any of its subsidiaries in a writing delivered to Parent concerning any
Parent Environmental Permit, Hazardous Material or any Hazardous Materials
Activity of Parent or any of its subsidiaries. Parent is not aware of any fact
or circumstance which could involve Parent or any of its subsidiaries in any
environmental litigation or impose upon Parent any material environmental
liability.
3.14 Year 2000 Compliance.
(a) All of Parent's products and internal systems fully comply with
the "YEAR 2000 QUALIFICATION" requirements definition attached as Exhibit C (the
"PARENT DEFINITION"). At the Company's request, Parent will provide evidence
demonstrating adequate testing of the products and internal systems to assure
compliance with the Definition.
(b) Parent's Products and internal systems have been designed to
ensure Year 2000 Qualification, including date and time entry recognition,
calculations that accommodate same century and multi-century formulas and date
values, leap year recognition and calculations, and date data interface values
that reflect the century. Parent's products and internal systems manage and
manipulate data involving dates and times, including single century formulas and
multi-century formulas, and do not cause an abnormal ending scenario within the
application or generate incorrect values or invalid results involving such
dates.
3.15 Agreements, Contracts and Commitments. Neither Parent nor any of its
subsidiaries, nor to Parent's knowledge any other party to a material Contract
of Parent, is in breach, violation or default under, and neither Parent nor any
of its subsidiaries has received written notice that it has breached, violated
or defaulted under, any of the material terms or conditions of any material
Contract of Parent in such a manner as would permit any other party to cancel or
terminate any such material Contract of Parent, or would permit any other party
to seek material damages or other remedies (for any or all of such breaches,
violations or defaults, in the aggregate).
3.16 Pooling of Interests. To the knowledge of Parent, based on
consultation with its independent accountants, neither Parent nor any of its
directors, officers, affiliates, or stockholders has taken or agreed to take any
action which would preclude Parent's ability to account for the Merger as a
pooling of interests.
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3.17 Disclosure. None of the information to be supplied by or on behalf of
Parent for inclusion in the Registration Statement will, 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, in
the light of the circumstances under which they are made, not misleading. None
of the information to be supplied by or on behalf of Parent for inclusion or
incorporation by reference in the Prospectus/Proxy Statement will, at the time
the Prospectus/Proxy Statement is mailed to the stockholders of the Company or
Parent, at the time of the Company or Parent Stockholders' Meeting or as of the
Effective Time, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under which they are
made, not misleading. The Registration Statement will comply as to form in all
material respects with the provisions of the Securities Act and the rules and
regulations promulgated by the SEC thereunder and the Prospectus/Proxy Statement
will comply as to form in all material respects with the provisions of the
Exchange Act and the rules and regulations promulgated by the SEC thereunder,
except that no representation or warranty is made by Parent with respect to
statements made or incorporated by reference therein based on information
supplied by the Company for inclusion or incorporation by reference in the
Prospectus/Proxy Statement.
3.18 Board Approval. The Board of Directors of Parent has, at or prior to
the date of this Agreement (i) determined that the Merger is fair to, and in the
best interests of Parent and its stockholders, (ii) determined to recommend that
the stockholders of Parent approve the issuance of Parent Common Stock in
connection with the Merger and (iii) approved the issuance of shares of Parent
Common Stock in connection with the Merger.
3.19 Fairness Opinion. Parent's Board of Directors has received a written
opinion from Broadview International LLC, dated as of or prior to the date
hereof, to the effect that as of the date of such opinion the Exchange Ratio is
fair, from a financial point of view, to Parent's shareholders and has delivered
to the Company a copy of such opinion.
3.20 Customs. Parent has acted with reasonable care to properly value and
classify, in accordance with applicable tariff laws, rules and regulations, all
goods that Parent or any of its subsidiaries import into the United States or
into any other country (the "PARENT IMPORTED GOODS"). To the Parent's knowledge,
there are currently no material claims pending against Parent by the U.S.
Customs Service (or other foreign customs authorities) relating to the
valuation, classification or marking of the Parent Imported Goods.
3.21 Organization of Merger Sub.
(a) Merger Sub is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation.
(b) Merger Sub was formed in order to effect the consummation of the
Merger, and as of the date of this Agreement has performed no other operations.
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ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 Conduct of Business by the Company. 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, the Company and each of
its subsidiaries shall, except to the extent that Parent shall otherwise consent
in writing, carry on its business, in all material respects, in the usual,
regular and ordinary course, in substantially the same manner as heretofore
conducted and in compliance with all applicable laws and regulations, pay its
debts and taxes when due subject to good faith disputes over such debts or
taxes, pay or perform other material obligations when due, and use its
commercially reasonable efforts consistent with past practices and policies to
(i) preserve intact its present business organization, (ii) keep available the
services of its present officers and employees and (iii) preserve its
relationships with customers, suppliers, distributors, licensors, licensees, and
others with which it has business dealings.
In addition, except as permitted by the terms of this Agreement, and
except as provided in Article 4 of the Company Schedules, without the prior
written consent of Parent, 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, the Company shall not do any of the following
and shall not permit its subsidiaries to do any of the following:
(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, director or other 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 pursuant to agreements outstanding, or policies existing, on the
date hereof and as disclosed in the Company Schedules, 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 Company Intellectual
Property, or enter into grants to future patent rights, other than non-exclusive
licenses in the ordinary course of business and consistent with past practice;
(d) Declare, set aside 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) Purchase, redeem or otherwise acquire, directly or indirectly,
any shares of capital stock of the Company or its subsidiaries, except
repurchases of unvested shares at cost in connection
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with the termination of the employment relationship with any employee pursuant
to stock option or purchase agreements in effect on the date hereof;
(f) Issue, deliver, sell, authorize, pledge or otherwise encumber,
any shares of Company Capital Stock or any securities convertible into shares of
Company Capital Stock, or subscriptions, rights, warrants or options to acquire
any shares of Company Capital Stock or any securities convertible into shares of
Company 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 delivery and/or sale of (i) stock options in the
ordinary course of business and consistent with past practice up to 200,000
shares, (ii) shares of the Company Common Stock pursuant to the exercise of
stock options therefor outstanding as of the date of this Agreement or granted
pursuant to the foregoing clause (i), (iii) shares of the Company Common Stock
issuable to participants in the Company Purchase Plan consistent with the terms
thereof and (iv) shares of Company Capital Stock pursuant to exercise of the
Warrants;
(g) Cause, permit or propose any amendments to the Company Charter
Documents;
(h) Acquire or agree to acquire by merging or consolidating with, or
by purchasing any equity interest in or a portion of the assets of, or by any
other manner, any business or any corporation, partnership, association or other
business organization or division thereof, or otherwise acquire or agree to
acquire any assets which are material, individually or in the aggregate, to the
business of the Company 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 the Company, except sales of inventory in the ordinary course of
business consistent with past practice;
(j) Incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person, issue or sell any debt securities or options,
warrants, calls or other rights to acquire any debt securities of the Company,
enter into any "keep well" or other agreement to maintain any financial
statement condition or enter into any arrangement having the economic effect of
any of the foregoing other than (i) in connection with the financing of ordinary
course trade payables consistent with past practice or (ii) pursuant to existing
credit facilities in the ordinary course of business;
(k) Adopt or amend any employee benefit plan or employee stock
purchase or employee stock option plan, or enter into any employment contract or
collective bargaining agreement (other than offer letters and letter agreements
entered into in the ordinary course of business consistent with past practice
with employees who are terminable "at will"), pay any special bonus or special
remuneration to any director or employee, or increase the salaries or wage rates
or fringe benefits (including rights to severance or indemnification) of its
directors, officers, employees or consultants other than pursuant to written
agreements with such persons disclosed in the Company Schedules or in the
ordinary course of business, consistent with past practice, or change in any
material respect any management policies or procedures;
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(l) Make any payments outside of the ordinary course of business in
excess of $250,000 other than in connection with the Merger or commitments
preexisting the date of this Agreement;
(m) Modify, amend or terminate any Company Contract or other
material contract or agreement to which the Company or any subsidiary thereof is
a party or waive, release or assign any material rights or claims thereunder;
(n) Enter into any contracts, agreements, or obligations relating to
the distribution, sale, license or marketing by third parties of the Company's
products or products licensed by the Company other than in the ordinary course
of business consistent with past practice but in no event will any exclusive
rights be granted or restrictions on the Company's business activities be agreed
to;
(o) Materially revalue any of its assets or, except as required by
GAAP, make any change in accounting methods, principles or practices;
(p) Take any action that would be reasonably likely to interfere
with Parent's ability to account for the Merger as a pooling of interests
whether or not otherwise permitted by the provisions of this Article IV;
(q) Agree in writing or otherwise to take any of the actions
described in (a) through (p) above.
4.2 Conduct of Business by Parent. 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, Parent shall, except to the extent
that the Company shall otherwise consent in writing, carry on its business, in
all material respects, in the usual, regular and ordinary course, in
substantially the same manner as heretofore conducted and in compliance with all
applicable laws and regulations, pay its debts and taxes when due, subject to
good faith disputes over such debts or taxes, pay or perform other material
obligations when due, and use its commercially reasonable efforts consistent
with past practices and policies to (i) preserve intact its present business
organization, (ii) keep available the services of its present officers and
employees and (iii) preserve its relationships with customers, suppliers,
distributors, licensors, licensees, and others with which it has business
dealings.
In addition, except as permitted by the terms of this Agreement and except
as provided in Article 4 of the Parent Schedules, without the prior written
consent of the Company, 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, Parent shall not do any of the following:
(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, director or other stock plans or
authorize cash payments in exchange for any options granted under any of such
plans;
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(b) Transfer or license to any person or entity or otherwise extend,
amend or modify in any material respect any rights to the Parent Intellectual
Property, or enter into grants to future patent rights, other than in the
ordinary course of business and consistent with past practice;
(c) Declare, set aside 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;
(d) Purchase, redeem or otherwise acquire, directly or indirectly,
any shares of capital stock of Parent or its subsidiaries, except repurchases of
unvested shares at cost in connection with the termination of the employment
relationship with any employee pursuant to stock option or repurchase agreements
in effect on the date hereof;
(e) Issue, deliver, sell, authorize, pledge or otherwise encumber
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,
delivery and/or sale of (i) stock options in the ordinary course of business and
consistent with past practice, (ii) shares of Parent Common Stock pursuant to
the exercise of stock options therefor outstanding as of the date of this
Agreement or granted pursuant to the foregoing clause (i), and (iii) shares of
Parent Common Stock issuable to participants in the Parent Purchase Plan
consistent with the terms thereof.
(f) Cause, permit or propose any amendments to the Parent Charter
Documents;
(g) (x) Acquire or agree to acquire by (i) merging or consolidating
with, or (ii) purchasing any equity in or a portion of the assets of, or (iii)
any other manner, any business or any corporation, partnership, association or
other business organization or division thereof, for consideration in excess of
$50 million in any individual acquisition or $100 million in the aggregate for
all such acquisitions;
(h) Incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person, issue or sell any debt securities or options,
warrants, calls or other rights to acquire any debt securities of Parent, enter
into any "keep well" or other agreement to maintain any financial statement
condition or enter into any arrangement having the economic effect of any of the
foregoing other than (i) in connection with the financing of ordinary course
trade payables consistent with past practice or (ii) pursuant to existing credit
facilities in the ordinary course of business.
(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 Parent, except sales of inventory in the ordinary course of
business consistent with past practice;
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(j) Materially revalue any of its assets or, except as required by
GAAP, make any change in accounting methods, principles or practices;
(k) Take any action that would be reasonably likely to interfere
with Parent's ability to account for the Merger as a pooling of interests
whether or not otherwise permitted by the provisions of this Article IV; and
(l) Agree in writing or otherwise to take any of the actions
described in Section 4.2 (a) through (k) above.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Prospectus/Proxy Statement; Registration Statement; Other Filings;
Board Recommendations.
(a) As promptly as practicable after the execution of this
Agreement, the Company and Parent will prepare, and file with the SEC, the
Prospectus/Proxy Statement and Parent will prepare and file with the SEC the
Registration Statement in which the Prospectus/Proxy Statement will be included
as a prospectus. Each of the Company and Parent will respond to any comments of
the SEC, will use its respective commercially reasonable efforts to have the
Registration Statement declared effective under the Securities Act as promptly
as practicable after such filing and the Company and Parent will cause the
Prospectus/Proxy Statement to be mailed to their respective stockholders at the
earliest practicable time after the Registration Statement is declared effective
by the SEC. As promptly as practicable after the date of this Agreement, each of
the Company and Parent will prepare and file any other filings required to be
filed by it under the Exchange Act, the Securities Act or any other Federal,
foreign or Blue Sky or related laws relating to the Merger and the transactions
contemplated by this Agreement (the "OTHER FILINGS"). Each of the Company and
Parent will notify the other promptly upon the receipt of any comments from the
SEC or its staff or any other government officials and of any request by the SEC
or its staff or any other government officials for amendments or supplements to
the Registration Statement, the Prospectus/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 Prospectus/Proxy
Statement, the Merger or any Other Filing. Each of the Company and Parent will
cause all documents that it is responsible for filing with the SEC or other
regulatory authorities under this Section 5.1(a) to 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 Prospectus/Proxy Statement, the
Registration Statement or any Other Filing, the Company or Parent, as the case
may be, will promptly inform the other of such occurrence and cooperate in
filing with the SEC or its staff or any other government officials, and/or
mailing to stockholders of the Company, such amendment or supplement.
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(b) Subject to Section 5.2(c), the Prospectus/Proxy Statement will
include the recommendation of the Board of Directors of the Company in favor of
adoption and approval of this Agreement and approval of the Merger and the
recommendation of the Board of Directors of Parent in favor of the foregoing and
the issuance of shares of Parent Common Stock in connection with the Merger.
5.2 Meeting of Company Stockholders.
(a) Promptly after the date hereof, the Company will take all action
necessary in accordance with the Delaware Law and its Certificate of
Incorporation and Bylaws to convene the Company 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. The Company will use its commercially reasonable 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 Nasdaq or Delaware Law to obtain such approvals. Notwithstanding
anything to the contrary contained in this Agreement, the Company may adjourn or
postpone the Company Stockholders' Meeting to the extent necessary to ensure
that any necessary supplement or amendment to the Prospectus/Proxy Statement is
provided to the Company's stockholders in advance of a vote on the Merger and
this Agreement or, if as of the time for which the Company Stockholders' Meeting
is originally scheduled (as set forth in the Prospectus/Proxy Statement) there
are insufficient shares of Company Common Stock represented (either in person or
by proxy) to constitute a quorum necessary to conduct the business of the
Company's Stockholders' Meeting. The Company shall ensure that the Company
Stockholders' Meeting is called, noticed, convened, held and conducted, and
subject to Section 5.2(c) that all proxies solicited by the Company in
connection with the Company Stockholders' Meeting are solicited, in compliance
with the Delaware Law, its Certificate of Incorporation and Bylaws, the rules of
Nasdaq and all other applicable legal requirements. The Company's obligation to
call, give notice of, convene and hold the Company Stockholders' Meeting in
accordance with this Section 5.2(a) shall not be limited to or otherwise
affected by the commencement, disclosure, announcement or submission to the
Company of any Acquisition Proposal, or by any withdrawal, amendment or
modification of the recommendation of the Board of Directors of the Company with
respect to the Merger.
(b) Subject to Section 5.2(c): (i) the Board of Directors of the
Company shall unanimously recommend that the Company's stockholders vote in
favor of and adopt and approve this Agreement and the Merger at the Company
Stockholders' Meeting; (ii) the Prospectus/Proxy Statement shall include a
statement to the effect that the Board of Directors of the Company has
unanimously recommended that the Company's stockholders vote in favor of and
adopt and approve this Agreement and the Merger at the Company Stockholders'
Meeting; and (iii) neither the Board of Directors of the Company nor any
committee thereof shall withdraw, amend or modify, or propose or resolve to
withdraw, amend or modify in a manner adverse to Parent, the unanimous
recommendation of the Board of Directors of the Company that the Company's
stockholders vote in favor of and adopt and approve this Agreement and the
Merger. For purposes of this Agreement, said recommendation of the Board of
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Directors shall be deemed to have been modified in a manner adverse to Parent if
said recommendation shall no longer be unanimous.
(c) Nothing in this Agreement shall prevent the Board of Directors
of the Company from withholding, withdrawing, amending or modifying its
unanimous recommendation in favor of the Merger if (i) a Superior Offer (as
defined below) is made to the Company and is not withdrawn, (ii) neither the
Company nor any of its representatives shall have violated any of the
restrictions set forth in Section 5.4, and (iii) the Board of Directors of the
Company or any committee thereof concludes in good faith, after consultation
with its outside counsel, that, in light of such Superior Offer, the
withholding, withdrawal, amendment or modification of such recommendation is
required in order for the Board of Directors of the Company or any committee
thereof to comply with its fiduciary obligations to the Company's stockholders
under applicable law. Subject to applicable laws, nothing contained in this
Section 5.2 shall limit the Company's obligation to hold and convene the Company
Stockholders' Meeting (regardless of whether the unanimous recommendation of the
Board of Directors of the Company shall have been withdrawn, amended or
modified). For purposes of this Agreement ("SUPERIOR OFFER") shall mean an
unsolicited, bona fide written offer made by a third party to consummate any of
the following transactions: (i) a merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving the
Company pursuant to which the stockholders of the Company immediately preceding
such transaction hold less than 50% of the equity interest in the surviving or
resulting entity of such transaction; (ii) a sale or other disposition by the
Company of assets (excluding inventory and used equipment sold in the ordinary
course of business) representing in excess of 50% of the fair market value of
the Company's business immediately prior to such sale, or (iii) the acquisition
by any person or group (including by way of a tender offer or an exchange offer
or issuance by the Company), directly or indirectly, of beneficial ownership or
a right to acquire beneficial ownership of shares representing in excess of 50%
of the voting power of the then outstanding shares of capital stock of the
Company in each case, on terms that the Board of Directors of the Company
determines, in its reasonable judgment, after consultation with its financial
advisor, to be more favorable to the Company's stockholders than the terms of
the Merger; provided, however, that any such offer shall not be deemed to be a
"Superior Offer" if any financing required to consummate the transaction
contemplated by such offer is not committed and is not likely in the judgment of
the Company's Board of Directors to be obtained by such third party on a timely
basis.
(d) Nothing contained in this Agreement shall prohibit the Company
or its Board of Directors from (x) taking and disclosing to its stockholders a
position contemplated by Rules 14d-9 and 14e-2(a) promulgated under the Exchange
Act or (y) making any disclosure to the Company's stockholders if, in the good
faith judgment of the majority of the members of the Board of Directors of the
Company, after consultation with independent legal counsel, failure to so
disclose would be inconsistent with applicable laws.
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5.3 Meeting of Parent Stockholders.
(a) Promptly after the date hereof, Parent will take all action
necessary in accordance with the Delaware Law and its Certificate of
Incorporation and Bylaws to convene the Parent 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 the issuance of the
shares of Parent Common Stock pursuant to the Merger. Parent will use its
commercially reasonable efforts to solicit from its stockholders proxies in
favor of the issuance of the shares of Parent Common stock pursuant to 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 Nasdaq or Delaware Law
to obtain such approvals. Notwithstanding anything to the contrary contained in
this Agreement, Parent may adjourn or postpone the Parent Stockholders' Meeting
to the extent necessary to ensure that any necessary supplement or amendment to
the Prospectus/Proxy Statement is provided to Parent's stockholders in advance
of a vote on the issuance of the shares of Parent Common Stock pursuant to the
Merger or, if as of the time for which Parent Stockholders' Meeting is
originally scheduled (as set forth in the Prospectus/Proxy Statement) there are
insufficient shares of Parent Common Stock represented (either in person or by
proxy) to constitute a quorum necessary to conduct the business of the Parent's
Stockholders' Meeting. Parent shall ensure that the Parent Stockholders' Meeting
is called, noticed, convened, held and conducted, that all proxies solicited by
the Company in connection with the Parent Stockholders' Meeting are solicited,
in compliance with the Delaware Law, its Certificate of Incorporation and
Bylaws, the rules of Nasdaq and all other applicable legal requirements.
Parent's obligation to call, give notice of, convene and hold the Parent's
Stockholders' Meeting in accordance with this Section 5.3(a) shall not be
limited to or otherwise affected by the commencement, disclosure, announcement
or submission to the Company of any Acquisition Proposal, or by any withdrawal,
amendment or modification of the recommendation of the Board of Directors of
Parent with respect to the adoption and approval of this Agreement, the approval
of the Merger or the issuance of the shares of Parent Common Stock pursuant to
the Merger.
(b) The Board of Directors of Parent shall unanimously recommend
that Parent's stockholders vote in favor of the issuance of the shares of Parent
Common Stock pursuant to the Merger at the Parent Stockholders' Meeting. The
Prospectus/Proxy Statement shall include a statement to the effect that the
Board of Directors of the Parent has unanimously approved and adopted this
Agreement and approved the Merger and has unanimously recommended that Parent's
stockholders vote in favor of the issuance of the shares of Parent Common Stock
pursuant to the Merger at the Parent Stockholders' Meeting. Neither the Board of
Directors of Parent nor any committee thereof shall withdraw, amend or modify,
or propose or resolve to withdraw, amend or modify in a manner adverse to the
Company, the unanimous approval and adoption of this Agreement and approval of
the Merger or the unanimous recommendation of the Board of Directors of Parent
that Parent's stockholders vote in favor of the issuance of the shares of Parent
Common Stock pursuant to the Merger. For purposes of this Agreement, said
recommendation of the Board of Directors shall be deemed to have been modified
in a manner adverse to the Company if said recommendation shall no longer be
unanimous.
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(c) Nothing contained in this Agreement shall prohibit Parent or its
Board of Directors from (x) taking and disclosing to its stockholders a position
contemplated by Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act or
(y) making any disclosure to Parent's stockholders if, in the good faith
judgment of the majority of the members of the Board of Directors of Parent,
after consultation with independent legal counsel, failure to so disclose would
be inconsistent with applicable laws.
5.4 Confidentiality; Access to Information.
(a) The parties acknowledge that the Company and Parent have
previously executed a Mutual Confidentiality Agreement, dated as of September
17, 1998 (the "CONFIDENTIALITY AGREEMENT"), which Confidentiality Agreement will
continue in full force and effect in accordance with its terms.
(b) Access to Information. Each of the Company and Parent will
afford the other and their respective accountants, counsel and other
representatives reasonable access during normal business hours to the
properties, books, records and personnel of the Company or Parent, as the case
may be, 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 the Company or Parent, as the
case may be, as Parent or the Company may reasonably request. No information or
knowledge obtained by Parent or the Company in any investigation pursuant to
this Section 5.4 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.
5.5 No Solicitation.
(a) From and after the date of this Agreement until the Effective
Time or termination of this Agreement pursuant to Article VII, the Company and
its subsidiaries will not, nor will they authorize or permit any of their
respective officers, directors, affiliates or employees or any investment
banker, attorney or other advisor or representative retained by any of them to,
directly or indirectly, (i) solicit, initiate, encourage or induce the making,
submission or announcement of any Acquisition Proposal (as hereinafter defined),
(ii) participate in any discussions or negotiations regarding, or furnish to any
person any non-public information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes or may
reasonably be expected to lead to, any Acquisition Proposal, (iii) engage in
discussions with any person with respect to any Acquisition Proposal, except as
to the existence of these provisions, (iv) subject to Section 5.2(c), approve,
endorse or recommend any Acquisition Proposal or (v) enter into any letter of
intent or similar document or any contract agreement or commitment contemplating
or otherwise relating to any Acquisition Transaction; provided, however, that
prior to the approval of this Agreement by the required Company stockholder
vote, this Section 5.5(a) shall not prohibit the Company from furnishing
nonpublic information regarding the Company and its subsidiaries to, entering
into a confidentiality agreement with or entering into discussions with, any
person or group in response to a Superior Offer submitted by such person or
group (and not withdrawn) if (1) neither the Company nor any representative of
the Company and its
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subsidiaries shall have violated any of the restrictions set forth in this
Section 5.5, (2) the Board of Directors of the Company concludes in good faith,
after consultation with its outside legal counsel, that such action is required
in order for the Board of Directors of the Company to comply with its fiduciary
obligations to the Company's stockholders under applicable law, (3) prior to
furnishing any such nonpublic information to, or entering into discussions with,
such person or group, the Company gives Parent written notice of the identity of
such person or group and of the Company's intention to furnish nonpublic
information to, or enter into discussions with, such person or group and the
Company receives from such person or group an executed confidentiality agreement
containing customary limitations on the use and disclosure of all nonpublic
written and oral information furnished to such person or group by or on behalf
of the Company, and (4) contemporaneously with furnishing any such nonpublic
information to such person or group, the Company furnishes such nonpublic
information to Parent (to the extent such nonpublic information has not been
previously furnished by the Company to Parent). The Company and its subsidiaries
will immediately cease any and all existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any
Acquisition Proposal. Without limiting the foregoing, it is understood that any
violation of the restrictions set forth in the preceding two sentences by any
officer, director or employee of the Company or any of its subsidiaries or any
investment banker, attorney or other advisor or representative of the Company or
any of its subsidiaries shall be deemed to be a breach of this Section 5.5 by
the Company. In addition to the foregoing, the Company shall provide Parent with
at least 24 hours prior notice (or such lesser prior notice as provided to the
members of the Company's Board of Directors but in no event less than eight
hours) of any meeting of the Company's Board of Directors at which the Company's
Board of Directors is reasonably expected to consider a Superior Offer, together
with such notice a copy of the definitive documentation relating to such
Superior Offer.
For purposes of this Agreement, "ACQUISITION PROPOSAL" shall mean any
offer or proposal (other than an offer or proposal by Parent) relating to any
Acquisition Transaction. For the purposes of this Agreement, "ACQUISITION
TRANSACTION" shall mean any transaction or series of related transactions other
than the transactions contemplated by this Agreement involving: (A) any
acquisition or purchase from the Company by any person or "group" (as defined
under Section 13(d) of the Exchange Act and the rules and regulations
thereunder) of more than a 5% interest in the total outstanding voting
securities of the Company or any of its subsidiaries or any tender offer or
exchange offer that if consummated would result in any person or "group" (as
defined under Section 13(d) of the Exchange Act and the rules and regulations
thereunder) beneficially owning 5% or more of the total outstanding voting
securities of the Company or any of its subsidiaries or any merger,
consolidation, business combination or similar transaction involving the Company
pursuant to which the stockholders of the Company immediately preceding such
transaction hold less than 95% of the equity interests in the surviving or
resulting entity of such transaction; (B) any sale, lease (other than in the
ordinary course of business), exchange, transfer, license (other than in the
ordinary course of business), acquisition or disposition of more than 10% of the
assets of the Company; or (C) any liquidation or dissolution of the Company.
(b) In addition to the obligations of the Company set forth in
paragraph (a) of this Section 5.5, the Company as promptly as practicable shall
advise Parent orally and in writing of any request for non-public information
which the Company reasonably believes would lead to an Acquisition
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Proposal or of any Acquisition Proposal, or any inquiry with respect to or which
the Company reasonably should believe would lead to any Acquisition Proposal,
the material terms and conditions of such request, Acquisition Proposal or
inquiry, and the identity of the person or group making any such request,
Acquisition Proposal or inquiry. The Company will keep Parent informed in all
material respects of the status and details (including material amendments or
proposed material amendments) of any such request, Acquisition Proposal or
inquiry.
5.6 Public Disclosure. Parent and the Company 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 Nasdaq. The parties have agreed to the text of
the joint press release announcing the signing of this Agreement.
5.7 Reasonable Efforts; Notification.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use all reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Merger and the other transactions contemplated by this
Agreement, including using reasonable efforts to accomplish the following: (i)
the taking of all reasonable acts necessary to cause the conditions precedent
set forth in Article VI to be satisfied, (ii) the obtaining of all necessary
actions or nonactions, waivers, consents, approvals, orders and authorizations
from Governmental Entities and the making of all necessary registrations,
declarations and filings (including registrations, declarations and filings with
Governmental Entities, if any) and the taking of all reasonable steps as may be
necessary to avoid any suit, claim, action, investigation or proceeding by any
Governmental Entity, (iii) the obtaining of all necessary consents, approvals or
waivers from third parties, (iv) the defending of any suits, claims, actions,
investigations or proceedings, whether judicial or administrative, challenging
this Agreement or the consummation of the transactions contemplated hereby,
including seeking to have any stay or temporary restraining order entered by any
court or other Governmental Entity vacated or reversed and (v) the execution or
delivery of any additional instruments necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of, this Agreement. In
connection with and without limiting the foregoing, the Company and its Board of
Directors shall, if any state takeover statute or similar statute or regulation
is or becomes applicable to the Merger, this Agreement or any of the
transactions contemplated by this Agreement, use all reasonable efforts to
ensure that the Merger and the other transactions contemplated by this Agreement
may be consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effect of such statute or regulation on
the Merger, this Agreement and the transactions contemplated hereby.
Notwithstanding anything herein to the contrary, nothing in this Agreement shall
be deemed to require Parent or the Company or any subsidiary or affiliate
thereof 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
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limitation on the ability of any of them to conduct their businesses or to own
or exercise control of such assets, properties and stock.
(b) The Company shall give prompt notice to Parent of any
representation or warranty made by it contained in this Agreement becoming
untrue or inaccurate in any material respect, or any failure of the Company to
comply with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it under this Agreement, in each
case, such that the conditions set forth in Section 6.3(a) or 6.3(b) would not
be satisfied, provided, however, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
(c) Parent shall give prompt notice to the Company of any
representation or warranty made by it or Merger Sub contained in this Agreement
becoming untrue or inaccurate in any material respect, or any failure of Parent
or Merger Sub to comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by it under this
Agreement, in each case, such that the conditions set forth in Section 6.2(a) or
6.2(b) would not be satisfied, provided, however, that no such notification
shall affect the representations, warranties, covenants or agreements of the
parties or the conditions to the obligations of the parties under this
Agreement.
5.8 Third Party Consents. As soon as practicable following the date
hereof, Parent and the Company will each use its commercially reasonable efforts
to obtain any consents, waivers and approvals under any of its or its
subsidiaries' respective agreements, contracts, licenses or leases required to
be obtained in connection with the consummation of the transactions contemplated
hereby.
5.9 Stock Options and Employee Benefits.
(a) At the Effective Time, each outstanding Company Option, whether
or not exercisable and regardless of the respective exercise prices thereof,
will be assumed by Parent. Each Company Option so assumed by Parent under this
Agreement will continue to have, and be subject to, the same terms and
conditions set forth in the applicable Company Stock Option Plan immediately
prior to the Effective Time (including, without limitation, any repurchase
rights, vesting provisions and vested status of any such Company Option), except
that (i) each Company Option will be exercisable (or will become exercisable in
accordance with its terms) for that number of whole shares of Parent Common
Stock equal to the product of the number of shares of Company Common Stock that
were issuable upon exercise of such Company Option immediately prior to the
Effective Time multiplied by the Exchange Ratio, rounded down to the nearest
whole number of shares of Parent Common Stock and (ii) the per share exercise
price for the shares of Parent Common Stock issuable upon exercise of such
assumed Company Option will be equal to the quotient determined by dividing the
exercise price per share of Company Common Stock at which such Company Option
was exercisable immediately prior to the Effective Time by the Exchange Ratio,
rounded up to the nearest whole cent.
(b) It is intended that Company Options assumed by Parent shall
qualify following the Effective Time as incentive stock options as defined in
Section 422 of the Code to the extent
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Company Options qualified as incentive stock options immediately prior to the
Effective Time and the provisions of this Section 5.9 shall be applied
consistent with such intent.
(c) Rights outstanding under the Company Purchase Plan shall be
treated in a manner reasonably acceptable to Parent and the Company, provided
that in no event shall any such treatment interfere with Parent's ability to
account for the Merger as a pooling of interests.
(d) At the Effective Time, the Warrants will be assumed by Parent.
Each Warrant so assumed by Parent under this Agreement will continue to have,
and be subject to, the same terms and conditions set forth in the applicable
warrant agreement immediately prior to the Effective Time (including, without
limitation, any repurchase rights or vesting provisions), except that (i) each
Warrant will be exercisable (or will become exercisable in accordance with its
terms) for that number of whole shares of Parent Common Stock equal to the
product of the number of shares of Company Common Stock that were issuable upon
exercise of such Warrant immediately prior to the Effective Time multiplied by
the Exchange Ratio, rounded down to the nearest whole number of shares of Parent
Common Stock and (ii) the per share exercise price for the shares of Parent
Common Stock issuable upon exercise of such assumed Warrant will be equal to the
quotient determined by dividing the exercise price per share of Company Common
Stock at which such Warrant was exercisable immediately prior to the Effective
Time by the Exchange Ratio, rounded up to the nearest whole cent.
5.10 Form S-8. Parent agrees to file a registration statement on Form S-8
for the shares of Parent Common Stock issuable with respect to assumed Company
Options within ten (10) days after the Effective Time and intends to maintain
the effectiveness of such registration statement thereafter for so long as any
of such options or other rights remain outstanding. Parent further agrees to
reserve a sufficient number of shares of Parent Common Stock for issuance upon
exercise of assumed Company Options and the Warrants.
5.11 Indemnification.
(a) From and after the Effective Time, Parent will cause the
Surviving Corporation to fulfill and honor in all respects the obligations of
the Company pursuant to any indemnification agreements between the Company and
its directors and officers as of the Effective Time (the "INDEMNIFIED PARTIES")
and any indemnification provisions under the Company's Certificate of
Incorporation or Bylaws as in effect on the date hereof. The Certificate of
Incorporation and Bylaws of the Surviving Corporation will contain provisions
with respect to exculpation and indemnification that are at least as favorable
to the Indemnified Parties as those contained in the Certificate of
Incorporation and Bylaws of the Company as in effect on the date hereof, which
provisions will not be amended, repealed or otherwise modified for a period of
six years 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 the Company, unless such
modification is required by law.
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(b) For a period of six years after the Effective Time, Parent will
cause the Surviving Corporation to use its commercially reasonable efforts to
maintain in effect, if available, directors' and officers' liability insurance
covering those persons who are currently covered by the Company's directors' and
officers' liability insurance policy on terms comparable to those applicable to
the current directors and officers of the Company; provided, however, that in no
event will Parent or the Surviving Corporation be required to expend in excess
of 150% of the annual premium currently paid by the Company for such coverage
(or such coverage as is available for such 150% of such annual premium).
5.12 Board of Directors of Parent. The Board of Directors of Parent will
take all actions necessary to cause Stuart Clifton to be elected to the Board of
Directors of Parent immediately after the Effective Time.
5.13 Nasdaq Listing. Parent agrees to authorize for listing on the Nasdaq
National Market the shares of Parent Common Stock issuable, and those required
to be reserved for issuance, in connection with the Merger, upon official notice
of issuance.
5.14 Company Affiliate Agreement. Set forth on Exhibit D-1 is a list of
those persons who may be deemed to be, in the Company's reasonable judgment,
affiliates of the Company within the meaning of Rule 145 promulgated under the
Securities Act (each a "COMPANY AFFILIATE"). The Company will provide Parent
with such information and documents as Parent reasonably requests for purposes
of reviewing such list. The Company will use its commercially reasonable efforts
to deliver or cause to be delivered to Parent, as promptly as practicable on or
following the date hereof, from each Company Affiliate an executed affiliate
agreement in substantially the form attached hereto as Exhibit D-2 (the "COMPANY
AFFILIATE AGREEMENT"), each of which will be in full force and effect as of the
Effective Time. Parent will be entitled to place appropriate legends on the
certificates evidencing any Parent Common Stock to be received by a Company
Affiliate pursuant to the terms of this Agreement, and to issue appropriate stop
transfer instructions to the transfer agent for the Parent Common Stock,
consistent with the terms of the Company Affiliate Agreement.
5.15 Parent Affiliate Agreement. Set forth on Exhibit E-1 is a list of
those persons who may be deemed in Parent's reasonable judgement affiliates of
Parent within the meaning of Rule 145 promulgated under the Securities Act (each
a "PARENT AFFILIATE"). Parent will provide the Company with such information and
documents as the Company reasonably requests for purposes of reviewing such
list. Parent will use commercially reasonable efforts to deliver or cause to be
delivered to the Company, as promptly on or following the date hereof, from each
Parent Affiliate an executed affiliate agreement in substantially the from
attached hereto as Exhibit E-2 (the "PARENT AFFILIATE AGREEMENT"), each of which
will be in full force and effect as of the Effective Time.
5.16 Regulatory Filings; Reasonable Efforts. As soon as may be reasonably
practicable, the Company and Parent 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
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regulations of any applicable jurisdiction, as agreed to by the parties. The
Company and Parent 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.
5.17 Company 401(K) Plan and Benefit Arrangements. The Company and its
affiliates, as applicable, each agrees to terminate its 401(k) plan immediately
prior to the Closing, unless Parent, in its sole discretion, agrees to sponsor
and maintain such plans by providing Company with written notice of such
election at least three (3) days prior to the Effective Time. For the purpose of
employment plans or arrangements which Parent or the Surviving Corporation may
extend to Continuing Employees (as defined below), to the extent practicable,
Parent shall give full credit to each Continuing Employee for such Continuing
Employee's period of service with the Company prior to the Effective Time to the
extent such service was recognized under any comparable employment plans or
arrangements of the Company prior to the Effective Time. For purposes of this
Section 5.17, "Continuing Employee" shall mean any employee of the Company who
continues as an employee of the Surviving Corporation or Parent or any of its
subsidiaries immediately after the Effective Time.
5.18 Tax Matters. At or prior to the filing of the Registration Statement,
the Company and Parent shall deliver to Cooley Godward LLP and to Wilson Sonsini
Goodrich & Rosati, Professional Corporation, tax representation letters,
including such reasonable representations as requested by such counsel for the
purpose of delivering the Tax Opinions (defined below). Parent, Merger Sub and
the Company shall each confirm to Cooley Godward LLP and to Wilson Sonsini
Goodrich & Rosati, Professional Corporation, the accuracy and completeness as of
the Effective Time of the tax representation letters delivered pursuant to the
prior sentence. Parent and the Company shall use all reasonable efforts prior to
the Effective Time to cause the Merger to qualify as a tax-free reorganization
under Section 368(a) of the Code. Following delivery of the tax representation
letters pursuant to the first sentence of this Section 5.18, each of the Company
and Parent shall use its reasonable efforts to cause Cooley Godward LLP and
Wilson Sonsini Goodrich & Rosati, Professional Corporation, respectively, to
deliver to it a tax opinion (a "TAX OPINION") satisfying the requirements of
Item 601 of the Regulation S-K promulgated under the Securities Act. In
rendering such Tax Opinions and the opinions referred to in Section 6.1(e), each
of such counsel shall be entitled to rely on the tax representation letters
described in this Section 5.18.
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 Closing Date of the
following conditions:
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(a) Company 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 the Company.
(b) Parent Stockholder Approval. The issuance of the shares of
Parent Common Stock pursuant to the Merger shall have been duly approved by the
requisite vote under applicable Nasdaq rules by the stockholders of the Parent.
(c) 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 Prospectus/Proxy Statement, shall have been initiated or threatened in
writing by the SEC.
(d) No Order; HSR Act. No Governmental Entity shall have enacted,
issued, promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and which has the effect of making
the Merger illegal or otherwise prohibiting consummation of the Merger. All
waiting periods, if any, under the HSR Act relating to the transactions
contemplated hereby shall have expired or terminated early and all material
foreign antitrust approvals required to be obtained prior to the Merger in
connection with the transactions contemplated hereby shall have been obtained.
(e) Tax Opinions. Parent and the Company shall each have received
written opinions from their respective tax counsel (Wilson Sonsini Goodrich &
Rosati, Professional Corporation, and Cooley Godward LLP, respectively), in form
and substance reasonably satisfactory to them, to the effect that the Merger
will constitute a tax-free 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 Parent or the Company 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 representations as requested by such
counsel for the purpose of rendering the Tax Opinions and further agree to
confirm the accuracy and completeness of such representations as of the
Effective Time as requested by such counsel for the purpose of rendering those
opinions discussed in this Section 6.1(e).
6.2 Additional Conditions to Obligations of the Company. The obligation of
the Company to consummate and effect the Merger shall be subject to the
satisfaction at or prior to the Closing Date of each of the following
conditions, any of which may be waived, in writing, exclusively by the Company:
(a) Representations and Warranties. Each representation and warranty
of Parent and Merger Sub contained in this Agreement (i) shall have been true
and correct as of the date of this Agreement and (ii) shall be true and correct
on and as of the Closing Date with the same force and effect
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as if made on the Closing Date except with regard to the foregoing clauses (i)
and (ii), (A) in each case, or in the aggregate, as does not constitute a
Material Adverse Effect on Parent and Merger Sub; provided, however, such
Material Adverse Effect qualification shall be inapplicable with respect to the
representations and warranties contained in Sections 3.2(a), 3.16, 3.18, 3.19,
the first and last sentences of Section 3.2(b) and the first four sentences of
Section 3.4(a), and (B) for those representations and warranties which address
matters only as of a particular date (which representations shall have been true
and correct except as does not constitute a Material Adverse Effect on Parent
and Merger Sub as of such particular date) (it being understood that, for
purposes of determining the accuracy of such representations and warranties, (i)
all "Material Adverse Effect" qualifications and other qualifications based on
the word "material" or similar phrases contained in such representations and
warranties shall be disregarded and (ii) any update of or modification to the
Parent Schedules made or purported to have been made after the date of this
Agreement shall be disregarded). The Company shall have received a certificate
with respect to the foregoing signed on behalf of Parent by an authorized
officer of Parent.
(b) Agreements and Covenants. Parent 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 Closing Date, and the Company shall have received a certificate to such
effect signed on behalf of Parent by an authorized officer of Parent.
(c) Material Adverse Effect. No Material Adverse Effect with respect
to Parent shall have occurred since the date of this Agreement.
(d) Affiliate Agreements. Each of the Parent Affiliates shall have
entered into the Parent Affiliate Agreement and each of such agreements will be
in full force and effect as of the Effective Time.
(e) Opinion of Accountants. The Company shall have received letters
from Ernst & Young LLP, dated within two (2) business days prior to the
Effective Time, regarding that firm's concurrence with Parent's management's and
the Company's management's conclusions as to the appropriateness of pooling of
interest accounting for the Merger under the Accounting Principles Board Opinion
No. 16, if the Merger is consummated in accordance with this Agreement.
(f) Nasdaq Listing. The shares of Parent Common Stock to be issued
in the Merger shall have been authorized for listing on the Nasdaq National
Market, subject to notice of issuance.
6.3 Additional Conditions to the Obligations of Parent and Merger Sub. The
obligations of Parent and Merger Sub to consummate and effect the Merger shall
be subject to the satisfaction at or prior to the Closing Date of each of the
following conditions, any of which may be waived, in writing, exclusively by
Parent:
(a) Representations and Warranties. Each representation and warranty
of the Company contained in this Agreement (i) shall have been true and correct
as of the date of this
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Agreement and (ii) shall be true and correct on and as of the Closing Date with
the same force and effect as if made on and as of the Closing Date except, with
regard to the foregoing clauses (i) and (ii), (A) in each case, or in the
aggregate, as does not constitute a Material Adverse Effect on the Company;
provided, however, such Material Adverse Effect qualification shall be
inapplicable with respect to the representations and warranties contained in
Sections 2.2(a), 2.18, 2.21, 2,22, 2,25, the first and last sentences of Section
2.2(b) and the first four sentences of Section 2.4(a), and (B) for those
representations and warranties which address matters only as of a particular
date (which representations shall have been true and correct except as does not
constitute a Material Adverse Effect on the Company as of such particular date)
(it being understood that, for purposes of determining the accuracy of such
representations and warranties, (i) all "Material Adverse Effect" qualifications
and other qualifications based on the word "material" or similar phrases
contained in such representations and warranties shall be disregarded and (ii)
any update of or modification to the Company Schedules made or purported to have
been made after the date of this Agreement shall be disregarded). Parent shall
have received a certificate with respect to the foregoing signed on behalf of
the Company by an authorized officer of the Company.
(b) Agreements and Covenants. The Company 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 at or prior to the Closing
Date, and Parent shall have received a certificate to such effect signed on
behalf of the Company by the Chief Executive Officer and the Chief Financial
Officer of the Company.
(c) Material Adverse Effect. No Material Adverse Effect with respect
to the Company and its subsidiaries shall have occurred since the date of this
Agreement.
(d) Affiliate Agreements. Each of the Company Affiliates shall have
entered into the Company Affiliate Agreement and each of such agreements will be
in full force and effect as of the Effective Time.
(e) Opinion of Accountants. Parent shall have received letters from
Ernst & Young LLP, dated within two (2) business days prior to the Effective
Time, regarding that firm's concurrence with Parent's management's and the
Company's management's 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) Company Rights Plan. All necessary actions shall have been taken
to extinguish and cancel all outstanding Rights under the Company Rights Plan or
render such Rights inapplicable to the Merger and the other transactions
contemplated by this Agreement.
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ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated at any time prior to the
Effective Time, whether before or after the requisite approvals of the
stockholders of the Company or Parent:
(a) by mutual written consent duly authorized by the Boards of
Directors of Parent and the Company;
(b) by either the Company or Parent if the Merger shall not have
been consummated by February 28, 1999 (the "END DATE") for any reason; provided,
however, that 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 material breach
of this Agreement;
(c) by either the Company or Parent if a Governmental Entity shall
have issued an order, decree or ruling or taken any other action, in any case
having the effect of permanently restraining, enjoining or otherwise prohibiting
the Merger, which order, decree, ruling or other action is final and
nonappealable;
(d) by the Company or Parent if the required approval of the
stockholders of Parent contemplated by this Agreement shall not have been
obtained by reason of the failure to obtain the required vote at a meeting of
Parent stockholders duly convened therefor or at any adjournment thereof;
provided, however, that the right to terminate this Agreement under this Section
7.1(d) shall not be available to Parent where the failure to obtain Parent
stockholder approval shall have been caused by the action or failure to act of
Parent and such action or failure to act constitutes a material breach by Parent
of this Agreement.
(e) by the Company or Parent if the required approval of the
stockholders of the Company contemplated by this Agreement shall not have been
obtained by reason of the failure to obtain the required vote at a meeting of
the Company stockholders duly convened therefore or at any adjournment thereof;
provided, however, that the right to terminate this Agreement under this Section
7.1(e) shall not be available to the Company where the failure to obtain the
Company stockholder approval shall have been caused by the action or failure to
act of the Company and such action or failure to act constitutes a material
breach by the Company of this Agreement.
(f) by Parent (at any time prior to the adoption and approval of
this Agreement and the Merger by the required vote of the stockholders of the
Company) if a Company Triggering Event (as defined below) shall have occurred;
(g) by the Company (at any time prior to the adoption and approval
of this Agreement and the Merger by the required vote of the stockholders of the
Parent) if a Parent Triggering Event shall have occurred;
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(h) by the Company, upon a breach of any representation, warranty,
covenant or agreement on the part of Parent set forth in this Agreement, or if
any representation or warranty of Parent 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 Parent's representations and warranties or breach by Parent is
curable by Parent through the exercise of its commercially reasonable efforts,
then the Company may not terminate this Agreement under this Section 7.1(h)
prior to the End Date, provided Parent continues to exercise commercially
reasonable efforts to cure such breach (it being understood that the Company may
not terminate this Agreement pursuant to this paragraph (h) if it shall have
materially breached this Agreement or if such breach by Parent is cured prior to
the End Date);
(i) by Parent, upon a breach of any representation, warranty,
covenant or agreement on the part of the Company set forth in this Agreement, or
if any representation or warranty of the Company 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 the Company's representations and warranties or breach by the
Company is curable by the Company through the exercise of its commercially
reasonable efforts, then Parent may not terminate this Agreement under this
Section 7.1(i) prior to the End Date, provided the Company continues to exercise
commercially reasonable efforts to cure such breach (it being understood that
Parent may not terminate this Agreement pursuant to this paragraph (i) if it
shall have materially breached this Agreement or if such breach by the Company
is cured prior to the End Date).
For the purposes of this Agreement, a "COMPANY TRIGGERING EVENT" shall be
deemed to have occurred if: (i) the Board of Directors of the Company or any
committee thereof shall for any reason have withdrawn or shall have amended or
modified in a manner adverse to Parent its unanimous recommendation in favor of,
the adoption and approval of the Agreement or the approval of the Merger; (ii)
the Company shall have failed to include in the Prospectus/Proxy Statement the
unanimous recommendation of the Board of Directors of the Company in favor of
the adoption and approval of the Agreement and the approval of the Merger; (iii)
the Board of Directors of the Company fails to reaffirm its unanimous
recommendation in favor of the adoption and approval of the Agreement and the
approval of the Merger within ten (10) business days after Parent requests in
writing that such recommendation be reaffirmed; (iv) the Board of Directors of
the Company or any committee thereof shall have approved or publicly recommended
any Acquisition Proposal; or (v) a tender or exchange offer relating to
securities of the Company shall have been commenced by a Person unaffiliated
with Parent and the Company shall not have sent to its securityholders pursuant
to Rule 14e-2 promulgated under the Securities Act, within ten (10) business
days after such tender or exchange offer is first published sent or given, a
statement disclosing that the Company recommends rejection of such tender or
exchange offer.
For the purposes of this Agreement, a "PARENT TRIGGERING EVENT" shall be
deemed to have occurred if: (i) the Board of Directors of Parent or any
committee thereof shall for any reason have withdrawn or shall have amended or
modified in a manner adverse to the Company its unanimous
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recommendation in favor of, the issuance of shares of Parent Common Stock
pursuant to the Merger; (ii) Parent shall have failed to include in the
Prospectus/Proxy Statement the unanimous recommendation of the Board of
Directors of Parent in favor of the issuance of shares of Parent Common Stock
pursuant to the Merger; or (iii) the Board of Directors of Parent fails to
reaffirm its unanimous recommendation in favor of the issuance of the shares of
Parent Common Stock pursuant to the Merger within ten (10) business days after
the Company requests in writing that such recommendation be reaffirmed.
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 Section 5.4, 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, all of which obligations shall
survive termination of this Agreement in accordance with their terms.
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 Parent and the Company
shall share equally all fees and expenses, other than attorneys' and accountants
fees and expenses, incurred in relation to the printing and filing (with the
SEC) of the Prospectus/Proxy Statement (including any preliminary materials
related thereto) and the Registration Statement (including financial statements
and exhibits) and any amendments or supplements thereto.
(b) Company Payments. In the event that this Agreement is terminated
by Parent or the Company, as applicable, pursuant to Sections 7.1(b), (e) or
(f), the Company shall promptly, but in no event later than two days after the
date of such termination, pay Parent a fee equal to $3.25 million in immediately
available funds (the "TERMINATION FEE"); provided, that in the case of
termination under Section 7.1(b), such payment shall be made only if following
the date hereof and prior to the termination of this Agreement, a third party
has publicly announced an Acquisition Proposal for an Acquisition Transaction
and within 12 months following the termination of this Agreement the Company
enters into or announces an intention to enter into a Company Acquisition (as
defined below). The Company acknowledges that the agreements contained in this
Section 7.3(b) are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, Parent would not enter into this
Agreement; accordingly, if the Company fails promptly to pay the amounts due
pursuant to this Section 7.3(b) , and, in order to obtain such payment, Parent
commences a suit which results in a judgment against the Company for the amounts
set forth in this Section 7.3(b), the Company shall pay to Parent its reasonable
costs and expenses (including attorneys' fees and expenses) in connection with
such suit, together with interest on the amounts set forth in this Section
7.3(b) at the prime rate of The Chase Manhattan Bank in effect on the date such
payment was required to be made. For the purposes
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of this Agreement "COMPANY ACQUISITION" shall mean any of the following
transactions (other than the transactions contemplated by this Agreement); (i) a
merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving the Company pursuant to which the
stockholders of the Company immediately preceding such transaction hold less
than 50% of the aggregate equity interests in the surviving or resulting entity
of such transaction or (ii) a sale or other disposition by the Company of assets
(excluding inventory and used equipment sold in the ordinary course of business)
representing in excess of 50% of the aggregate fair market value of the
Company's business immediately prior to such sale.
(c) Parent Payments. In the event that this Agreement is terminated
by Parent or the Company, as applicable, pursuant to Sections 7.1(d) or (g),
Parent shall promptly, but in no event later than two (2) days after the date of
such termination, pay to the Company the Termination Fee. Parent acknowledges
that the agreements contained in this Section 7.3(c) are an integral part of the
transactions contemplated by this Agreement, and that, without these agreements,
the Company would not enter into this Agreement; accordingly, if Parent fails
promptly to pay the amounts due pursuant to this Section 7.3(c) , and, in order
to obtain such payment, the Company commences a suit which results in a judgment
against Parent for the amounts set forth in this Section 7.3(c), Parent shall
pay to the Company its reasonable costs and expenses (including attorneys' fees
and expenses) in connection with such suit, together with interest on the
amounts set forth in this Section 7.3(c) at the prime rate of The Chase
Manhattan Bank in effect on the date such payment was required to be made.
(d) Payment of the fees described in Sections 7.3(b) and (c) above
shall not be in lieu of damages incurred in the event of breach of this
Agreement.
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 Parent and the Company.
7.5 Extension; Waiver. At any time prior to the Effective Time any party
hereto may (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 VIII
GENERAL PROVISIONS
8.1 Non-Survival of Representations and Warranties. The representations
and warranties of the Company, Parent 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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8.2 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 Parent or Merger Sub, to:
Platinum Software Corporation
195 Technology Drive
Irvine, California 92618
Attention: Chief Executive Officer
Telephone No.: (800) 999-1809
Telecopy No.: (949) 450-4496
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with a copy to:
Wilson Sonsini Goodrich & Rosati
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304-1050
Attention: Larry W. Sonsini, Esq.
Marty Korman, Esq.
Telephone No.: (650) 493-9300
Telecopy No.: (650) 493-6811
(b) if to the Company, to:
DataWorks Corporation
5910 Pacific Center Boulevard
San Diego, California 92121
Attention: Chief Executive Officer
Telephone No.: (619) 546-9600
Telecopy No.: (619) 546-0682
with a copy to:
Cooley Godward LLP
4365 Executive Drive
Suite 1100
San Diego, CA 92121
Attention: Frederick T. Muto, Esq.
Telephone No.: (619) 550-6000
Telecopy No.: (619) 453-3555
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.
When a reference is made in this Agreement to Sections, such reference shall be
to a Section of 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.
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(b) For purposes of this Agreement the term "KNOWLEDGE" means with
respect to a party hereto, with respect to any matter in question, that any of
the Chief Executive Officer, Chief Financial Officer, General Counsel or
Controller of such party, has actual knowledge of such matter.
(c) For purposes of this Agreement, the term "MATERIAL ADVERSE
EFFECT" when used in connection with an entity means any change, event,
violation, inaccuracy, circumstance or effect that is materially adverse to the
business, material assets (including intangible assets), capitalization,
financial condition or results of operations of such entity and its subsidiaries
taken as a whole.
(d) For purposes of this Agreement, the term "PERSON" shall mean any
individual, corporation (including any non-profit corporation), general
partnership, limited partnership, limited liability partnership, joint venture,
estate, trust, company (including any limited liability company or joint stock
company), firm or other enterprise, association, organization, entity or
Governmental Entity.
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 the Company Schedules and the
Parent 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, 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 1.7, 5.9(a), 5.9(d) and 5.11.
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
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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.
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 other parties. 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.
8.11 Waiver of Jury Trial. EACH OF PARENT, THE COMPANY 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 PARENT, THE COMPANY OR MERGER SUB
IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.
*****
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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.
PLATINUM SOFTWARE CORPORATION
By:
-------------------------------------------
Name:
-------------------------------------------
Title:
-------------------------------------------
ZOO ACQUISITION CORP.
By:
-------------------------------------------
Name:
-------------------------------------------
Title:
-------------------------------------------
DATAWORKS CORPORATION
By:
-------------------------------------------
Name:
-------------------------------------------
Title:
-------------------------------------------
**** REORGANIZATION AGREEMENT ****
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EXHIBIT A-1
COMPANY VOTING AGREEMENT
This Company Voting Agreement ("AGREEMENT") is made and entered into as of
October 13, 1998, between Platinum Software Corporation, a Delaware corporation
("PARENT"), and the undersigned stockholder ("STOCKHOLDER") of DataWorks
Corporation, a Delaware corporation (the "COMPANY").
RECITALS
A. Concurrently with the execution of this Agreement, Parent, the Company
and Zoo Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary
of Parent ("MERGER SUB"), are entering into an Agreement and Plan of
Reorganization (the "MERGER AGREEMENT") which provides for the merger (the
"MERGER") of Merger Sub with and into the Company. Pursuant to the Merger,
shares of capital stock of the Company will be converted into Common Stock of
Parent on the basis described in the Merger Agreement.
B. The Stockholder is the record holder of such number of outstanding
shares of Common Stock of the Company as is indicated on the final page of this
Agreement. In addition, the Stockholder holds options to purchase such number of
shares of Common Stock of the Company as is indicated on the final page of this
Agreement.
C. As a material inducement to enter into the Merger Agreement, Parent
desires the Stockholder to agree, and the Stockholder is willing to agree, to
vote the Shares (as defined below) and other such shares of capital stock of the
Company over which Stockholder has voting power so as to facilitate consummation
of the Merger.
NOW, THEREFORE, intending to be legally bound, the parties agree as
follows:
1. Agreement to Vote Shares; Additional Purchases.
1.1 Agreement to Vote Shares. Until the termination of this
Agreement pursuant to Section 6 below, at every meeting of the stockholders of
the Company called with respect to any of the following, and at every
adjournment thereof, and on every action or approval by written consent of the
stockholders of the Company with respect to any of the following, Stockholder
shall cause the Shares and any New Shares (as defined below) to be voted in
favor of approval of the Merger Agreement and the Merger.
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1.2 Definitions. For purposes of this Agreement:
"Shares" shall mean all issued and outstanding shares of Common Stock of
the Company owned of record or beneficially (over which beneficially-owned
shares the Stockholder exercises voting power) by the Stockholder as of the
record date for persons entitled (a) to receive notice of, and to vote at the
meeting of the stockholders of the Company called for the purpose of voting on
the matter referred to in Section 1.1, or (b) to take action by written consent
of the stockholders of the Company with respect to the matter referred to in
Section 1.1
"Subject Securities" shall mean: (i) all securities of Company (including
all shares of Company Common Stock and all options, warrants and other rights to
acquire shares of Company Common Stock) beneficially owned by Stockholder as of
the date of this Agreement; and (ii) all additional securities of Company
(including all additional shares of Company Common Stock and all additional
options, warrants and other rights to acquire shares of Company Common Stock) of
which Stockholder acquires ownership during the period from the date of this
Agreement through the termination of this Agreement pursuant to Section 6 below.
A person shall be deemed to have effected a "Transfer" of a security if
such person directly or indirectly: (i) sells, pledges, encumbers, grants an
option with respect to, transfers or disposes of such security or any interest
in such security; or (ii) enters into an agreement or commitment providing for
the sale of, pledge of, encumbrance of, grant of an option with respect to,
transfer of or disposition of such security or any interest therein.
1.3 Additional Purchases. Stockholder agrees that any shares of
capital stock of the Company that Stockholder purchases or with respect to which
Stockholder otherwise acquires beneficial ownership (over which
beneficially-owned shares the Stockholder exercises voting power) after the
execution of this Agreement and prior to the date of termination of this
Agreement ("New Shares") shall be subject to the terms and conditions of this
Agreement to the same extent as if they constituted Shares.
1.4 Transferee of Subject Securities to be Bound by this Agreement.
Stockholder agrees that, during the period from the date of this Agreement
through the termination of this Agreement pursuant to Section 6 below,
Stockholder shall not cause or permit any Transfer of any of the Subject
Securities to be effected unless such Transfer is in accordance with any
affiliate agreement between Stockholder and Parent contemplated by the Merger
Agreement to which such Stockholder is bound and each person to which any of
such Subject Securities, or any interest in any of such Subject Securities, is
or may be transferred shall have: (a) executed a counterpart of this Agreement
and the Proxy (defined below) (with such modifications as Parent may reasonably
request); and (b) agreed in writing to hold such Subject Securities (or interest
in such Subject Securities) subject to all of the terms and provisions of this
Agreement.
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2. Irrevocable Proxy. Concurrently with the execution of this Agreement,
Stockholder agrees to deliver to Parent a proxy in the form attached hereto as
Exhibit A (the "PROXY"), which shall be irrevocable, with respect to the Shares.
3. Representations and Warranties of the Stockholder. Stockholder (i) is
the owner of the shares of Common Stock of the Company, and the options to
purchase shares of Common Stock of the Company, indicated on the final page of
this Agreement, which at the date hereof are free and clear of any liens,
claims, options, charges or other encumbrances; (ii) does not beneficially own
any securities of the Company other than the shares of Common Stock of the
Company, and options to purchase shares of Common Stock of the Company,
indicated on the final page of this Agreement; and (iii) has full power and
authority to make, enter into and carry out the terms of this Agreement.
4. Additional Documents. Stockholder and Parent hereby covenant and agree
to execute and deliver any additional documents necessary or desirable, in the
reasonable opinion of Parent or Stockholder, as the case may be, to carry out
the intent of this Agreement.
5. Consent and Waiver. Stockholder (not in his capacity as a director or
officer of the Company) hereby gives any consents or waivers that are reasonably
required for the consummation of the Merger under the terms of any agreements to
which Stockholder is a party or pursuant to any rights Stockholder may have.
6. Termination. This Agreement shall terminate and shall have no further
force or effect as of the earlier to occur of (i) such date and time as the
Merger shall become effective in accordance with the terms and provisions of the
Merger Agreement or (ii) such date and time as the Merger Agreement shall have
been terminated pursuant to Article VII thereof.
7. Miscellaneous.
7.1 Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, then the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
7.2 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.
7.3 Amendments and Modification. This Agreement may not be modified,
amended, altered or supplemented except upon the execution and delivery of a
written agreement executed by the parties hereto.
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7.4 Specific Performance; Injunctive Relief. The parties hereto
acknowledge that Parent will be irreparably harmed and that there will be no
adequate remedy at law for a violation of any of the covenants or agreements of
Stockholder set forth herein. Therefore, it is agreed that, in addition to any
other remedies that may be available to Parent upon any such violation, Parent
shall have the right to enforce such covenants and agreements by specific
performance, injunctive relief or by any other means available to Parent at law
or in equity.
7.5 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and sufficient if delivered in
person, by cable, telegram or telex, or sent by mail (registered or certified
mail, postage prepaid, return receipt requested) or overnight courier (prepaid)
to the respective parties as follows:
If to Parent: Platinum Software Corporation
195 Technology Drive
Irvine, CA 92718
Attn: Vice President, General Counsel
With a copy to: Wilson Sonsini Goodrich & Rosati, P.C.
650 Page Mill Road
Palo Alto, California 94304
Attn: Larry W. Sonsini, Esq.
If to the Stockholder: To the address for notice set forth on the
last page hereof.
With a copy to: Cooley Godward LLP
4365 Executive Drive
Suite 1100
San Diego, CA 92121
Attn: Frederick T. Muto, Esq.
or to such other address as any party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall only be
effective upon receipt.
7.6 Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the internal laws of the State of
Delaware (without regard to the principles of conflict of laws thereof).
7.7 Entire Agreement. This Agreement contains the entire
understanding of the parties in respect of the subject matter hereof, and
supersedes all prior negotiations and understandings between the parties with
respect to such subject matter.
7.8 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
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7.9 Effect of Headings. The section headings herein are for
convenience only and shall not affect the construction or interpretation of this
Agreement.
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IN WITNESS WHEREOF, the parties have caused this Voting Agreement to be
duly executed on the date and year first above written.
PARENT
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
STOCKHOLDER:
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
Stockholder's Address for Notice:
------------------------------------------
------------------------------------------
------------------------------------------
_______ Outstanding Shares of Common Stock
of the Company
_______ Outstanding Shares of Common Stock
of the Company subject to
outstanding stock options
***VOTING AGREEMENT***
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EXHIBIT A
IRREVOCABLE PROXY
The undersigned Stockholder of DataWorks Corporation, a Delaware
corporation (the "COMPANY"), hereby irrevocably appoints the directors on the
Board of Directors of Platinum Software Corporation, a Delaware corporation
("PARENT"), and each of them, 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 voting of the Shares and
the New Shares (each as defined in the Voting Agreement of even date between
Parent and the Stockholder (the "VOTING AGREEMENT")) on the matter described
below (and on no other matter), until such time as that certain Agreement and
Plan of Reorganization dated as of October 13, 1998 (the "MERGER AGREEMENT"),
among Parent, Zoo Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of Parent ("MERGER SUB"), and the Company, shall be terminated in
accordance with its terms or the Merger (as defined in the Merger Agreement)
becomes 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, is granted pursuant to the Voting Agreement and
is granted in consideration of Parent entering into the Merger Agreement. The
attorneys and proxies named above will be empowered at any time prior to the
earlier of termination of the Merger Agreement and the date on which the Merger
becomes effective 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 the Company's
stockholders, and in every written consent in lieu of such a meeting, or
otherwise, to vote the Shares in favor of approval of the Merger and the Merger
Agreement.
The attorneys and proxies named above may only exercise this proxy to vote
the Shares subject hereto at any time prior to the earlier of termination of the
Merger Agreement and the date on which the Merger becomes effective, at every
annual, special or adjourned meeting of the Stockholders of the Company and in
every written consent in lieu of such meeting, in favor of approval of the
Merger and the Merger Agreement. The undersigned Stockholder may vote the Shares
on all other matters.
<PAGE> 80
Any obligation of the undersigned hereunder shall be binding upon the
successors and assigns of the undersigned.
This proxy is irrevocable.
Dated: October 13, 1998
Signature of Stockholder:
-------------------------------
Print Name of Stockholder:
-------------------------------
***PROXY***
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<PAGE> 81
EXHIBIT A-2
PARENT VOTING AGREEMENT
This Voting Agreement ("AGREEMENT") is made and entered into as of
October 13, 1998, between DataWorks Corporation, a Delaware corporation
(the "COMPANY"), and the undersigned stockholder ("STOCKHOLDER") of Platinum
Software Corporation, a Delaware corporation ("PARENT").
RECITALS
A. Concurrently with the execution of this Agreement, Parent, the Company
and Zoo Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary
of Parent ("MERGER SUB"), are entering into an Agreement and Plan of
Reorganization (the "MERGER AGREEMENT") which provides for the merger (the
"MERGER") of Merger Sub with and into the Company. Pursuant to the Merger,
shares of capital stock of the Company will be converted into Common Stock of
Parent on the basis described in the Merger Agreement.
B. The Stockholder is the record holder of such number of outstanding
shares of Common Stock of Parent as is indicated on the final page of this
Agreement. In addition, the Stockholder holds options, warrants and other rights
to acquire such number of shares of capital stock of Parent as is indicated on
the final page of this Agreement.
C. As a material inducement to enter into the Merger Agreement, the
Company desires the Stockholder to agree, and the Stockholder is willing to
agree, to vote the Shares (as defined below) and other such shares of capital
stock of Parent over which Stockholder has voting power so as to facilitate
consummation of the Merger.
NOW, THEREFORE, intending to be legally bound, the parties agree as
follows:
1. Agreement to Vote Shares; Additional Purchases.
1.1 Agreement to Vote Shares. Until the termination of this
Agreement pursuant to Section 6 below, at every meeting of the stockholders of
Parent called with respect to any of the following, and at every
adjournment thereof, and on every action or approval by written consent of the
stockholders of Parent with respect to any of the following, Stockholder
shall cause the Shares and any New Shares (as defined below) to be voted in
favor of approval of the issuance of shares of Parent's Common Stock (the
"PARENT COMMON STOCK"), to the stockholders of the Company pursuant to the
Merger Agreement.
<PAGE> 82
1.2 Definitions. For purposes of this Agreement:
"Shares" shall mean all issued and outstanding shares of Common Stock and
Series C Preferred Stock of Parent owned of record or beneficially (over which
beneficially-owned shares the Stockholder exercises voting power) by the
Stockholder as of the record date for persons entitled (a) to receive notice of,
and to vote at the meeting of the stockholders of Parent called for the purpose
of voting on the matter referred to in Section 1.1, or (b) to take action by
written consent of the stockholders of Parent with respect to the matter
referred to in Section 1.1
"Subject Securities" shall mean: (i) all securities of Parent (including
all shares of Parent Capital Stock and all options, warrants and other rights to
acquire shares of Parent Capital Stock) beneficially owned by Stockholder as of
the date of this Agreement; and (ii) all additional securities of Parent
(including all additional shares of Parent Capital Stock and all additional
options, warrants and other rights to acquire shares of Parent Capital Stock) of
which Stockholder acquires ownership during the period from the date of this
Agreement through the termination of this Agreement pursuant to Section 6 below.
A person shall be deemed to have effected a "Transfer" of a security if
such person directly or indirectly: (i) sells, pledges, encumbers, grants an
option with respect to, transfers or disposes of such security or any interest
in such security; or (ii) enters into an agreement or commitment providing for
the sale of, pledge of, encumbrance of, grant of an option with respect to,
transfer of or disposition of such security or any interest therein.
1.3 Additional Purchases. Stockholder agrees that any shares of
capital stock of Parent that Stockholder purchases or with respect to which
Stockholder otherwise acquires beneficial ownership (over which
beneficially-owned shares the Stockholder exercises voting power) after the
execution of this Agreement and prior to the date of termination of this
Agreement ("New Shares") shall be subject to the terms and conditions of this
Agreement to the same extent as if they constituted Shares.
1.4 Transferee of Subject Securities to be Bound by this Agreement.
Stockholder agrees that, during the period from the date of this Agreement
through the termination of this Agreement pursuant to Section 6 below,
Stockholder shall not cause or permit any Transfer of any of the Subject
Securities to be effected unless such Transfer is in accordance with any
affiliate agreement between Stockholder and the Company contemplated by the
Merger Agreement to which such Stockholder is bound and each person to which any
of such Subject Securities, or any interest in any of such Subject Securities,
is or may be transferred shall have: (a) executed a counterpart of this
Agreement and the Proxy (defined below) (with such modifications as the Company
may reasonably request); and (b) agreed in writing to hold such Subject
Securities (or interest in such Subject Securities) subject to all of the terms
and provisions of this Agreement.
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<PAGE> 83
2. Irrevocable Proxy. Concurrently with the execution of this Agreement,
Stockholder agrees to deliver to Parent a proxy in the form attached hereto as
Exhibit A (the "PROXY"), which shall be irrevocable, with respect to the Shares.
3. Representations and Warranties of the Stockholder. Stockholder (i) is
the owner of the shares of capital stock of Parent, and the options, warrants
and other rights to acquire shares of capital stock of Parent, indicated on the
final page of this Agreement, which at the date hereof are free and clear of any
liens, claims, options, charges or other encumbrances; (ii) does not
beneficially own any securities of the Company other than the shares of capital
stock of Parent, and options, warrants and other rights to acquire shares of
capital stock of Parent, indicated on the final page of this Agreement; and
(iii) has full power and authority to make, enter into and carry out the terms
of this Agreement.
4. Additional Documents. Stockholder and the Company hereby covenant and
agree to execute and deliver any additional documents necessary or desirable, in
the reasonable opinion of the Company or Stockholder, as the case may be, to
carry out the intent of this Agreement.
5. Consent and Waiver. Stockholder (not in his capacity as a director or
officer of the Company) hereby gives any consents or waivers that are reasonably
required for the issuance of the Parent Common Stock under the terms of any
agreements to which Stockholder is a party or pursuant to any rights Stockholder
may have.
6. Termination. This Agreement shall terminate and shall have no further
force or effect as of the earlier to occur of (i) such date and time as the
Merger shall become effective in accordance with the terms and provisions of the
Merger Agreement or (ii) such date and time as the Merger Agreement shall have
been terminated pursuant to Article VII thereof.
7. Miscellaneous.
7.1 Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, then the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
7.2 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.
7.3 Amendments and Modification. This Agreement may not be modified,
amended, altered or supplemented except upon the execution and delivery of a
written agreement executed by the parties hereto.
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<PAGE> 84
7.4 Specific Performance; Injunctive Relief. The parties hereto
acknowledge that Parent will be irreparably harmed and that there will be no
adequate remedy at law for a violation of any of the covenants or agreements of
Stockholder set forth herein. Therefore, it is agreed that, in addition to any
other remedies that may be available to the Company upon any such violation, the
Company shall have the right to enforce such covenants and agreements by
specific performance, injunctive relief or by any other means available to the
Company at law or in equity.
7.5 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and sufficient if delivered in
person, by cable, telegram or telex, or sent by mail (registered or certified
mail, postage prepaid, return receipt requested) or overnight courier (prepaid)
to the respective parties as follows:
If to Parent DataWorks Corporation
5910 Pacific Center Boulevard
Suite 300
San Diego, CA 92121
Attn: General Counsel
With a copy to: Cooley Godward LLP
4365 Executive Drive
Suite 1100
San Diego, CA 92121
Attn: Frederick T. Muto, Esq.
If to the Stockholder: To the address for notice set forth on the
last page hereof.
With a copy to: Wilson Sonsini Goodrich & Rosati, P.C.
650 Page Mill Road
Palo Alto, California 94304
Attn: Larry W. Sonsini, Esq.
or to such other address as any party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall only be
effective upon receipt.
7.6 Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the internal laws of the State of
Delaware (without regard to the principles of conflict of laws thereof).
7.7 Entire Agreement. This Agreement contains the entire
understanding of the parties in respect of the subject matter hereof, and
supersedes all prior negotiations and understandings between the parties with
respect to such subject matter.
7.8 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
-4-
<PAGE> 85
7.9 Effect of Headings. The section headings herein are for
convenience only and shall not affect the construction or interpretation of this
Agreement.
-5-
<PAGE> 86
IN WITNESS WHEREOF, the parties have caused this Voting Agreement to be
duly executed on the date and year first above written.
COMPANY
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
STOCKHOLDER:
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
Stockholder's Address for Notice:
------------------------------------------
------------------------------------------
------------------------------------------
________ Outstanding Shares of Common
Stock of the Company
________ Outstanding Shares of Series C
Preferred Stock of the Company
________ Outstanding Shares of Common
Stock of the Company subject to
outstanding stock options
***VOTING AGREEMENT***
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<PAGE> 87
EXHIBIT A
IRREVOCABLE PROXY
The undersigned Stockholder of Platinum Software Corporation, a Delaware
corporation ("PARENT"), hereby irrevocably appoints the directors on the Board
of Directors of DataWorks Corporation, a Delaware corporation (the "COMPANY"),
and each of them, 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 voting of the Shares and
the New Shares (each as defined in the Voting Agreement of even date between the
Company and the Stockholder (the "VOTING AGREEMENT")) on the matter described
below (and on no other matter), until such time as that certain Agreement and
Plan of Reorganization dated as of October 13, 1998 (the "MERGER AGREEMENT"),
among Parent, Zoo Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of Parent ("MERGER SUB"), and the Company, shall be terminated in
accordance with its terms or the Merger (as defined in the Merger Agreement)
becomes 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, is granted pursuant to the Voting Agreement and
is granted in consideration of the Company entering into the Merger Agreement.
The attorneys and proxies named above will be empowered at any time prior to the
earlier of termination of the Merger Agreement and the date on which the Merger
becomes effective 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 Parent's
stockholders, and in every written consent in lieu of such a meeting, or
otherwise, to vote the Shares in favor of approval of the issuance of shares of
Parent Common Stock to the stockholders of the Company pursuant to the Merger
Agreement.
The attorneys and proxies named above may only exercise this proxy to vote
the Shares subject hereto at any time prior to the earlier of termination of the
Merger Agreement and the date on which the Merger becomes effective, at every
annual, special or adjourned meeting of the Stockholders of the Company and in
every written consent in lieu of such meeting, in favor of approval of the
issuance of shares of Parent Common Stock to the stockholders of the Company
pursuant to the Merger Agreement. The undersigned Stockholder may vote the
Shares on all other matters.
<PAGE> 88
Any obligation of the undersigned hereunder shall be binding upon the
successors and assigns of the undersigned.
This proxy is irrevocable.
Dated: October 13, 1998
Signature of Stockholder:
-------------------------------------
Print Name of Stockholder:
-------------------------------------
***PROXY***
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<PAGE> 89
EXHIBIT B
YEAR 2000 QUALIFICATION
I. "YEAR 2000 QUALIFICATION" means that the products and internal systems of
the Company have been reviewed to confirm that they store, process (including
sorting and performing mathematical operations), input, and output data
containing date information correctly regardless of whether the data contains
dates and times before, on, or after January 1, 2000. The products and internal
systems of the Company have been designed to ensure Year 2000 Qualification,
including date and time entry recognition, calculations that accommodate same
century and multi-century formulas and date values, leap year recognition and
calculations, and date data interface values that reflect the century. The
products and internal systems of the Company will manage and manipulate data
involving dates and times, including single century formulas and multi-century
formulas, and will not cause an abnormal ending scenario within the application
or generate incorrect values or invalid results involving such dates. The
products and internal systems of the Company which do not perform date
manipulation, and which do not alter any date information that flows through
them, are also considered Year 2000 Qualified.
II. SPECIFICALLY:
Dates before, on or after January 1, 2000 may be interpreted and stored using
either "FORMAT" or "CONVENTION" techniques. As used by Parent, "Year 2000
Qualification" means that the FORMAT technique is used. However, Qualification
by CONVENTION may be used in circumstances where compliance by FORMAT is
impractical, or where CONVENTION is required to meet specific external
interface requirements; in that case the convention used must be specifically
documented. "FORMAT" and "CONVENTION" have the following definitions:
FORMAT: All dates are stored, processed, input, and output in formats that
preserve century, decade, and year information.
CONVENTION: Dates are stored, input, or output in a format that preserves
only decade and year information, but are processed through a "sliding
window" calculation. For example, if the year is 00 to 70, add 2000, and if
the year is 71 to 99, add 1900. There is no industry standard for the
"cut-off" date used in such calculations, and therefore interfaces may not
work correctly between programs or systems using different conventions. Any
product or internal system of the Company achieving Qualification through
CONVENTION must clearly document the cut-off date and any other necessary
information relating to the bridging calculation used. This documentation
must be included in the product's entry in the Parent Year 2000
Qualification List.
III. LEAP YEAR
The year 2000 itself must be correctly processed as a leap year. In other
words, the two days
<PAGE> 90
following February 28, 2000 must properly be interpreted as Tuesday, February
29, 2000, and Wednesday, March 1, 2000.
IV. DISPLAY
Any display of a date, whether on screens or in reports, should use a
four-digit year (YYYY). However, if two-digit display of a date is commonly
accepted and does not cause confusion, the year field may be displayed as two
digits.
V. FIRMWARE AND HARDWARE
Any firmware, hardware, software, microde or networking component in a Year
2000 Qualified computer platform must process dates and data in accordance with
this Definition.
VI. SYSTEM INTEGRATION
Year 2000 Qualification extends only to the specific product configuration
tested, and does not include other software, firmware, or hardware products
which may be used in conjunction with the tested configuration. For a Company
product or internal system configuration consisting of multiple components to
be considered "Year 2000 Qualified," each constituent component, regardless of
vendor, must be "Year 2000 Qualified" in accordance with this Definition, and
the system as a whole must be tested for Year 2000 Qualification. "Constituent
components" include all software (including operating systems, programs,
packages, and utilities), firmware, hardware, networking components, and
peripherals provided as part of the configuration.
VII. CONTRACTS
All contracts with vendors for products to be used in the computer system or
platform MUST state that Year 2000 Qualification is a performance requirement.
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<PAGE> 91
EXHIBIT C
PARENT YEAR 2000 QUALIFICATION
I. "YEAR 2000 QUALIFICATION" means that the products and internal systems of
Parent have been reviewed to confirm that they store, process (including
sorting and performing mathematical operations), input, and output data
containing date information correctly regardless of whether the data contains
dates and times before, on, or after January 1, 2000. The products and internal
systems of Parent have been designed to ensure Year 2000 Qualification,
including date and time entry recognition, calculations that accommodate same
century and multi-century formulas and date values, leap year recognition and
calculations, and date data interface values that reflect the century. The
products and internal systems of Parent will manage and manipulate data
involving dates and times, including single century formulas and multi-century
formulas, and will not cause an abnormal ending scenario within the application
or generate incorrect values or invalid results involving such dates. The
products and internal systems of Parent which do not perform date manipulation,
and which do not alter any date information that flows through them, are also
considered Year 2000 Qualified.
II. SPECIFICALLY:
Dates before, on or after January 1, 2000 may be interpreted and stored using
either "FORMAT" or "CONVENTION" techniques. As used by the Company, "Year 2000
Qualification" means that the FORMAT technique is used. However, Qualification
by CONVENTION may be used in circumstances where compliance by FORMAT is
impractical, or where CONVENTION is required to meet specific external
interface requirements; in that case the convention used must be specifically
documented. "FORMAT" and "CONVENTION" have the following definitions:
FORMAT: All dates are stored, processed, input, and output in formats that
preserve century, decade and year information.
CONVENTION: Dates are stored, input, or output in a format that preserves
only decade and year information, but are processed through a "sliding
window" calculation. For example, if the year is 00 to 70, add 2000, and if
the year is 71 to 99, add 1900. There is no industry standard for the
"cut-off" date used in such calculations, and therefore interfaces may not
work correctly between programs or systems using different conventions. Any
product or internal system of the Company achieving Qualification through
CONVENTION must clearly document the cut-off date and any other necessary
information relating to the bridging calculation used. This documentation
must be included in the product's entry in the Parent Year 2000
Qualification List.
III. LEAP YEAR
The year 2000 itself must be correctly processed as a leap year. In other
words, the two days
<PAGE> 92
following February 28, 2000 must properly be interpreted as Tuesday, February
29, 2000, and Wednesday, March 1, 2000.
IV. DISPLAY
Any display of a date, whether on screens or in reports, should use a
four-digit year (YYYY). However, if two-digit display of a date is commonly
accepted and does not cause confusion, the year field may be displayed as two
digits.
V. FIRMWARE AND HARDWARE
Any firmware, hardware, software, microde or networking component in a Year
2000 Qualified computer platform must process dates and data in accordance with
this Definition.
VI. SYSTEM INTEGRATION
Year 2000 Qualification extends only to the specific product configuration
tested, and does not include other software, firmware, or hardware products
which may be used in conjunction with the tested configuration. For a Parent
product or internal system configuration consisting of multiple components to
be considered "Year 2000 Qualified," each constituent component, regardless of
vendor, must be "Year 2000 Qualified" in accordance with this Definition, and
the system as a whole must be tested for Year 2000 Qualification. "Constituent
components" include all software (including operating systems, programs,
packages, and utilities), firmware, hardware, networking components, and
peripherals provided as part of the configuration.
VII. CONTRACTS
All contracts with vendors for products to be used in the computer system or
platform MUST state that Year 2000 Qualification is a performance requirement.
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<PAGE> 93
EXHIBIT D-1
LIST OF COMPANY AFFILIATES
Nathan Bell
Stuart W. Clifton
Tony N. Dormit
Norman R. Farquhar
William P. Foley, II
Ronald S. Parker
Rick E. Russo
Roy Thiele-Sardina
Bradley J. Thies
<PAGE> 94
EXHIBIT D-2
COMPANY AFFILIATE AGREEMENT
THIS AFFILIATE AGREEMENT (this "AGREEMENT") is dated as of October 13,
1998, by and between Platinum Software Corporation, a Delaware corporation
("PARENT") DataWorks Corporation, a Delaware corporation ("COMPANY"), and the
undersigned ("AFFILIATE").
WHEREAS, Affiliate is an officer and/or director of, and may be an
affiliate of, the Company.
WHEREAS, Parent, Zoo Acquisition Corp., a Delaware corporation and a
wholly-owned subsidiary of Parent ("MERGER SUB"), and the Company have entered
into an Agreement and Plan of Reorganization dated as of even date herewith (the
"MERGER AGREEMENT"), providing for the merger of Merger Sub with and into the
Company (the "MERGER"). The Merger Agreement contemplates that, upon
consummation of the Merger, (i) the holders of the common stock of the Company
("COMPANY COMMON STOCK") will receive shares of common stock of Parent ("PARENT
COMMON STOCK") in exchange for their shares of Company Common Stock and (ii) the
Company will become a wholly-owned subsidiary of Parent. It is accordingly
contemplated that Affiliate will receive shares of Parent Common Stock in the
Merger.
WHEREAS, Affiliate understands that the Parent Common Stock being issued
in the Merger will be issued pursuant to a registration statement on Form S-4
and that Affiliate may be deemed to be an "affiliate" of the Company, as the
term "affiliate" is used (i) for purposes of paragraphs (c) and (d) of Rule 145
("RULE 145") of the General Rules and Regulations of the Securities and Exchange
Commission (the "SEC") under the Securities Act of 1933, as amended (the
"SECURITIES ACT"), and (ii) in the SEC's Accounting Series Releases 130 and 135,
and, as such, Affiliate may only transfer, sell or dispose of such Parent Common
Stock in accordance with this Affiliate Agreement and Rule 145.
WHEREAS, it is a condition to the consummation of the Merger pursuant to
the Merger Agreement that the independent accounting firms that audit the annual
financial statements of Parent and the Company will have delivered the written
concurrences with the conclusions of management of Parent and the Company to the
effect that the Merger will be accounted for as a pooling of interests under
Accounting Principles Board Opinion No. 16.
NOW, THEREFORE, in order to induce Parent to consummate the transactions
contemplated by the Merger Agreement, and for other valuable consideration (the
receipt and sufficiency of which are hereby acknowledged by Affiliate),
Affiliate hereby covenants and agrees as follows:
SECTION 1. REPRESENTATIONS AND WARRANTIES. Affiliate represents and
warrants to Parent as follows:
<PAGE> 95
(a) Affiliate is the holder and "beneficial owner" (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of the number
of shares of the Company Common Stock set forth under Affiliate's signature
below (the "COMPANY SHARES"), and Affiliate has good and valid title to the
Company Shares, free and clear of any liens, pledges, security interests,
adverse claims, equities, options, proxies, charges, encumbrances or
restrictions of any nature.
(b) Affiliate has carefully read this Agreement, and has discussed
with Affiliate's own independent counsel to the extent Affiliate felt necessary
the limitations imposed on Affiliate's ability to sell, transfer or otherwise
dispose of the shares of Parent Common Stock that Affiliate is to receive in the
Merger (the "PARENT SHARES"). Affiliate fully understands the limitations this
Agreement places upon Affiliate's ability to sell, transfer or otherwise dispose
of the Parent Shares.
(c) Affiliate understands that the representations, warranties and
covenants set forth herein will be relied upon by Parent, the Company, and their
respective affiliates, counsel and accounting firms for purposes of determining
Parent's eligibility to account for the Merger as a "pooling of interests," and
that substantial losses and damages may be incurred by these persons if
Affiliate's representations, warranties or covenants are breached.
SECTION 2. PROHIBITION AGAINST TRANSFER. In addition to the restrictions
set forth elsewhere herein, Affiliate agrees that Affiliate shall not effect any
sale, transfer or other disposition of the Parent Shares unless:
(a) such sale, transfer or other disposition is made in conformity
with the volume and other requirements of Rule 145 under the Securities Act, as
evidenced by a broker's letter and a representation letter executed by Affiliate
(reasonably satisfactory in form and content to Parent), each stating that such
requirements have been met;
(b) counsel reasonably satisfactory to Parent shall have advised
Parent in a written opinion letter (reasonably satisfactory in form and content
to Parent), upon which Parent may rely, that such sale, transfer or other
disposition will be exempt from registration under the Securities Act;
(c) such sale, transfer or other disposition is effected pursuant to
an effective registration statement under the Securities Act; or
(d) an authorized representative of the SEC shall have rendered
written advice to Affiliate to the effect that the SEC would take no action, or
that the staff of the SEC would not recommend that the SEC take action, with
respect to such proposed sale, transfer or other disposition, and a copy of such
written advice and all other related communications with the SEC shall have been
delivered to Parent.
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<PAGE> 96
SECTION 3. STOP TRANSFER INSTRUCTIONS; LEGEND. Affiliate acknowledges and
agrees that (a) stop transfer instructions will be given to Parent's transfer
agent with respect to the Parent Shares, and (b) each certificate representing
any of such shares of Parent Common Stock or any substitutions thereof shall
bear a legend (together with any other legend or legends required by applicable
state securities laws or otherwise), stating in substance:
THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT
OF 1933 APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT
BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR
HYPOTHECATED EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF SUCH RULE
AND IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT DATED AS OF OCTOBER
13, 1998, BETWEEN THE REGISTERED HOLDER HEREOF AND PLATINUM SOFTWARE
CORPORATION, A COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL
OFFICES OF PLATINUM SOFTWARE CORPORATION.
SECTION 4. COVENANTS RELATED TO POOLING OF INTERESTS. In accordance with
SEC Staff Accounting Bulletin No. 65 ("SAB 65"), during the period contemplated
by SAB 65, until the earlier of (i) Parent's public announcement of financial
results covering at least 30 days of combined operations of Parent and the
Company or (ii) the Merger Agreement is terminated in accordance with its terms,
Affiliate will not sell, exchange, transfer, pledge, distribute, or otherwise
dispose of or grant any option, establish any "short" or put-equivalent position
with respect to or enter into any similar transaction (through derivatives or
otherwise) intended or having the effect, directly or indirectly, to reduce its
risk relative to: (i) any shares of Company Common Stock, except pursuant to and
upon the consummation of the Merger; or (ii) any shares of Parent Common Stock
received by Affiliate in the Merger or any shares of Parent Common Stock
received by Affiliate upon exercise of options assumed by Parent in connection
with the Merger. Parent may, at its discretion, cause a restrictive legend
covering the restrictions referred to in this Section 4 to be placed on Parent
Common Stock certificates issued to Affiliate in the Merger and place a stock
transfer notice consistent with the restrictions referred to in this Section 4
with its transfer agent with respect to such certificates, provided such
restrictive legend shall be removed and/or notice shall be countermanded
promptly upon expiration of the necessity therefor at the request of Affiliate.
SECTION 5. PERMITTED TRANSFERS. Notwithstanding anything to the contrary
contained in this Agreement, Affiliate (i) may transfer Affiliate's pro rata
portion (of the total number of shares available under the "de minimis"
exception referred to in this clause (i) to all affiliates of Parent and
Company) of the "de minimis" number of shares of Company Common Stock and Parent
Common Stock available for sale in accordance with SEC Staff Accounting Bulletin
No. 76 (the "DE MINIMIS POOL") contingent upon confirmation and approval by
legal counsel for Company and independent auditors to the Company and Parent
that such transfer qualifies as within Affiliate's pro rata portion of the De
Minimis Pool and does not otherwise
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<PAGE> 97
adversely affect the Parent's ability to account for the Merger as a "pooling of
interests" (ii) may (with the written consent of Parent, not to be unreasonably
withheld): (A) transfer shares of Company Common Stock or Parent Common Stock to
the Company in payment of the exercise price of options to purchase Company
Common Stock; (B) transfer shares of Parent Common Stock in payment of the
exercise price of options to purchase Parent Common Stock; (C) transfer shares
of Company Common Stock or Parent Common Stock to any organization qualified
under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, so
long as such organization has traditionally been supported by contributions from
the general public (as opposed to being supported largely by a specific donor);
and (D) transfer shares of Company Common Stock or shares of Parent Common Stock
to a trust established for the benefit of Affiliate and/or for the benefit of
one or more members of Affiliate's family, or make a bona fide gift of shares of
Common Stock of the Company or shares of Parent Common Stock to one or more
members of Affiliate's family, provided that in the case of a transfer or gift
pursuant to this clause (C) or (D), a transferee of such shares agrees to be
bound by the limitations set forth in this Agreement.
SECTION 6. SPECIFIC PERFORMANCE. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement was not
performed in accordance with its specific terms or was otherwise breached.
Affiliate agrees that, in the event of any breach or threatened breach by
Affiliate of any covenant or obligation contained in this Agreement, each of
Parent and the Company shall be entitled (in addition to any other remedy that
may be available to it, including monetary damages) to seek and obtain (a) a
decree or order of specific performance to enforce the observance and
performance of such covenant or obligation, and (b) an injunction restraining
such breach or threatened breach.
SECTION 7. INDEPENDENCE OF OBLIGATIONS. The covenants and obligations of
Affiliate set forth in this Affiliate Agreement shall be construed as
independent of any other agreement or arrangement between Affiliate, on the one
hand, and the Company or Parent, on the other. The existence of any claim or
cause of action by Affiliate against the Company or Parent shall not constitute
a defense to the enforcement of any of such covenants or obligations against
Affiliate.
SECTION 8. NOTICES. Any notice or other communication required or
permitted to be delivered under this Agreement shall be in writing and shall be
deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or express delivery service or by facsimile
confirmation) to the address or facsimile telephone number set forth beneath the
name of such party below (or to such other address or facsimile telephone number
as such party shall have specified in a written notice given to the other
party):
IF TO PARENT: PLATINUM SOFTWARE CORPORATION
195 Technology Drive
Irvine, CA 92718
Attn: Vice President, General Counsel
Fax: (714) 450-4447
-4-
<PAGE> 98
WITH A COPY TO: WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
650 Page Mill Road
Palo Alto, CA 94304
Attn: Larry W. Sonsini, Esq.
Fax: (650) 493-6811
IF TO COMPANY: DATAWORKS CORPORATION
5910 Pacific Center Boulevard
Suite 300
San Diego, CA 92121
Attn: General Counsel
Fax: (619) 453-3555
WITH A COPY TO: COOLEY GODWARD LLP
4365 Executive Drive
Suite 1100
San Diego, CA 92121
Attn: Frederick T. Muto, Esq.
Fax: (619) 453-3555
IF TO AFFILIATE:
at the address or facsimile phone number set forth below Affiliate's
signature on the signature page hereof.
WITH A COPY TO: COOLEY GODWARD LLP
4365 Executive Drive
Suite 1100
San Diego, CA 92121
Attn: Frederick T. Muto, Esq.
Fax: (619) 453-3555
SECTION 9. SEVERABILITY. If any provision of this Agreement or any part of
any such provision is held under any circumstances to be invalid or
unenforceable in any jurisdiction, then (a) such provision or part thereof
shall, with respect to such circumstances and in such jurisdiction, be deemed
amended to conform to applicable laws so as to be valid and enforceable to the
fullest possible extent, (b) the invalidity or unenforceability of such
provision or part thereof under such circumstances and in such jurisdiction
shall not affect the validity or enforceability of such provision or part
thereof under any other circumstances or in any other jurisdiction, and (c) the
invalidity or unenforceability of such provision or part thereof shall not
affect the validity or enforceability of the remainder of such provision or the
validity or enforceability of any other provision of this Agreement. Each
provision of this Agreement is separable from every other provision of this
Agreement, and each part of each provision of this Agreement is separable from
every other part of such provision.
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<PAGE> 99
SECTION 10. GOVERNING LAW. This Agreement shall be construed in accordance
with, and governed in all respects by, the laws of the State of California
(without giving effect to principles of conflicts of laws).
SECTION 11. WAIVER. No failure on the part of Parent or the Company to
exercise any power, right, privilege or remedy under this Agreement, and no
delay on the part of Parent or the Company in exercising any power, right,
privilege or remedy under this Agreement, shall operate as a waiver of such
power, right, privilege or remedy; and no single or partial exercise of any such
power, right, privilege or remedy shall preclude any other or further exercise
thereof or of any other power, right, privilege or remedy. Neither Parent or the
Company shall be deemed to have waived any claim arising out of this Agreement,
or any power, right, privilege or remedy under this Agreement, unless the waiver
of such claim, power, right, privilege or remedy is expressly set forth in a
written instrument duly executed and delivered on behalf of the party deemed to
be charged; and any such waiver shall not be applicable or have any effect
except in the specific instance in which it is given.
SECTION 12. CAPTIONS. The captions contained in this Agreement are for
convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
SECTION 13. FURTHER ASSURANCES. Affiliate shall execute and/or cause to be
delivered to Parent or the Company such instruments and other documents and
shall take such other actions as Parent or the Company may reasonably request to
effectuate the intent and purposes of this Agreement.
SECTION 14. ENTIRE AGREEMENT. This Agreement, the Merger Agreement and any
Voting Agreement or Employment Agreement between Affiliate and Parent or
Irrevocable Proxy executed by Affiliate in favor of Parent constitute the entire
agreement between the parties with respect to the subject matter hereof and
thereof and supersede all prior agreements and understandings between the
parties with respect thereto.
SECTION 15. NON-EXCLUSIVITY. The rights and remedies of Parent and the
Company hereunder are not exclusive of or limited by any other rights or
remedies which Parent or the Company may have, whether at law, in equity, by
contract or otherwise, all of which shall be cumulative (and not alternative).
Nothing in this Agreement shall limit any of Affiliate's obligations, or the
rights or remedies of Parent or the Company, under any Voting Agreement
(including any Irrevocable Proxy contained therein) or Employment Agreement
between Parent and Affiliate; and nothing in any such Voting Agreement
(including any Irrevocable Proxy) or Employment Agreement shall limit any of
Affiliate's obligations, or any of the rights or remedies of Parent or the
Company, under this Agreement.
SECTION 16. AMENDMENTS. This Agreement may not be amended, modified,
altered, or supplemented other than by means of a written instrument duly
executed and delivered on behalf of Parent, the Company and Affiliate.
-6-
<PAGE> 100
SECTION 17. BINDING NATURE. This Agreement will be binding upon Affiliate
and Affiliate's representatives, executors, administrators, estate, heirs,
successors and assigns, and shall inure to the benefit of the Company, Parent
and their respective successors and assigns.
SECTION 18. ATTORNEYS' FEES AND EXPENSES. If any legal action or other
legal proceeding relating to the enforcement of any provision of this Agreement
is brought against Affiliate, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
SECTION 19. ASSIGNMENT. This Agreement and all obligations of Affiliate
hereunder are personal to Affiliate and may not be transferred or delegated by
Affiliate at any time. The Company or Parent may freely assign any or all of its
rights under this Affiliate Agreement, in whole or in part, to any other person
or entity without obtaining the consent or approval of Affiliate.
SECTION 20. SURVIVAL. Each of the representations, warranties, covenants
and obligations contained in this Agreement shall survive the consummation of
the Merger.
* * *
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<PAGE> 101
The undersigned have executed this Agreement as of the date first set forth
above.
PLATINUM SOFTWARE CORPORATION
By:
-------------------------------------
Title:
-------------------------------------
DATAWORKS CORPORATION
By:
-------------------------------------
Title:
-------------------------------------
AFFILIATE:
--------------------------------------------
Address:
---------------------------------
--------------------------------------------
--------------------------------------------
Facsimile:
---------------------------------
DATAWORKS CORPORATION
STOCK BENEFICIALLY OWNED BY AFFILIATE:
_______ shares of Common Stock
_______ shares of Common Stock issuable upon
of outstanding options
<PAGE> 102
EXHIBIT E-1
LIST OF PARENT AFFILIATES
L. George Klaus
William R. Pieser
Ken Lally
Arthur J. Marks
W. Douglas Hajjar
L. John Doerr
Donald R. Dixon
<PAGE> 103
EXHIBIT E-2
PARENT AFFILIATE AGREEMENT
THIS AFFILIATE AGREEMENT (this "AGREEMENT") is dated as of October 13,
1998, by and between Platinum Software Corporation, a Delaware corporation
("PARENT"), DataWorks Corporation, a Delaware corporation ("Company") and the
undersigned ("AFFILIATE").
WHEREAS, Affiliate is an officer and/or director of, and may be an
affiliate of, Parent.
WHEREAS, Parent, Zoo Acquisition Corp., a Delaware corporation and a
wholly-owned subsidiary of Parent ("MERGER SUB"), and Company have entered into
an Agreement and Plan of Reorganization dated as of even date herewith (the
"MERGER AGREEMENT"), providing for the merger of Merger Sub with and into the
Company (the "MERGER"). The Merger Agreement contemplates that, upon
consummation of the Merger, (i) the holders of the common stock of the Company
("COMPANY COMMON STOCK") will receive shares of common stock of Parent ("PARENT
COMMON STOCK") in exchange for their shares of Company Common Stock and (ii) the
Company will become a wholly-owned subsidiary of Parent.
WHEREAS, it is a condition to the consummation of the Merger pursuant to
the Merger Agreement that the independent accounting firms that audit the annual
financial statements of Parent and the Company will have delivered the written
concurrences with the conclusions of management of Parent and the Company to the
effect that the Merger will be accounted for as a pooling of interests under
Accounting Principles Board Opinion No. 16.
NOW, THEREFORE, intending to be legally bound, in order to induce the
Company and Parent to consummate the transactions contemplated by the Merger
Agreement, and for other valuable consideration, the receipt and sufficiently of
which are hereby acknowledged by Affiliate, Affiliate hereby covenants and
agrees as follows:
SECTION 1. REPRESENTATIONS AND WARRANTIES. Affiliate represents and
warrants to Parent as follows:
(a) Affiliate is the holder and "beneficial owner" (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of the number
of shares of the Parent Common Stock, Parent Series C Preferred Stock and
options to purchase Parent Common Stock set forth under Affiliate's signature
below (the "PARENT SHARES"), and Affiliate has good and valid title to the
Parent Shares, free and clear of any liens, pledges, security interests, adverse
claims, equities, options, proxies, charges, encumbrances or restrictions of any
nature.
(b) Affiliate has carefully read this Agreement, and has discussed
with Affiliate's own independent counsel to the extent Affiliate felt necessary
the limitations imposed on Affiliate's ability to sell, transfer or otherwise
dispose of the shares of Parent Common Stock or Parent Series C Preferred Stock.
Affiliate fully understands the limitations this Agreement places upon
Affiliate's ability to sell, transfer or otherwise dispose of the Parent Shares.
1
<PAGE> 104
(c) Affiliate understands that the representations, warranties and
covenants set forth herein will be relied upon by Parent, the Company, and their
respective affiliates, counsel and accounting firms for purposes of determining
Parent's eligibility to account for the Merger as a "pooling of interests," and
that substantial losses and damages may be incurred by these persons if
Affiliate's representations, warranties or covenants are breached.
SECTION 2. COVENANTS RELATED TO POOLING OF INTERESTS. In accordance with
SEC Staff Accounting Bulletin No. 65 ("SAB 65"), during the period contemplated
by SAB 65, until the earlier of (i) Parent's public announcement of financial
results covering at least 30 days of combined operations of Parent and the
Company or (ii) the Merger Agreement is terminated in accordance with its terms,
Affiliate will not sell, exchange, transfer, pledge, distribute or otherwise
dispose of or grant any option, establish any "short" or put-equivalent position
with respect to or enter into any similar transaction (through derivatives or
otherwise) intended or having the effect, directly or indirectly, to reduce its
risk relative to any Parent Common Stock or Parent Series C Preferred Stock.
Parent may, at its discretion, place a stock transfer notice consistent with the
restrictions referred to in this Section 2 with its transfer agent with respect
to such certificates, provided such notice shall be countermanded promptly upon
expiration of the necessity therefor at the request of Affiliate.
SECTION 3. PERMITTED TRANSFERS. Notwithstanding anything to the contrary
contained in this Agreement, Affiliate may (i) transfer Affiliate's pro rata
portion (of the total number of shares available under the "de minimis"
exception referred to in this clause (i) to all affiliates of Parent and
Company) of the "de minimis" amount of Company Common Stock and Parent Common
Stock available for sale in accordance with SEC Staff Accounting Bulletin No. 76
(the "DE MINIMIS POOL") contingent upon confirmation by legal counsel for Parent
and independent auditors for Parent and the Company as to whether such transfer
qualifies as within Affiliate's pro rata portion of the De Minimis Pool and (ii)
may (with the written consent of Parent, not to be unreasonably withheld): (A)
transfer shares of Parent Common Stock in payment of the exercise price of
options to purchase Parent Common Stock; (B) transfer shares of Parent Common
Stock to any organization qualified under Section 501(c)(3) of the Internal
Revenue Code of 1986, as amended, so long as such organization has traditionally
been supported by contributions from the general public (as opposed to being
supported largely by a specific donor); and (C) transfer shares of Parent Common
Stock to a trust established for the benefit of Affiliate and/or for the benefit
of one or more members of Affiliate's family, or make a bona fide gift of Parent
Common Stock to one or more members of Affiliate's family, provided that in the
case of a transfer or gift pursuant to this clause (B) or (C), a transferee of
such shares agrees to be bound by the limitations set forth in this Agreement.
SECTION 4. SPECIFIC PERFORMANCE. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement was not
performed in accordance with its specific terms or was otherwise breached.
Affiliate agrees that, in the event of any breach or threatened breach by
Affiliate of any covenant or obligation contained in this Agreement, each of
Parent and the Company shall be entitled (in addition to any other remedy that
may be available to it, including monetary damages) to seek and obtain (a) a
decree or order
2
<PAGE> 105
of specific performance to enforce the observance and performance of such
covenant or obligation, and (b) an injunction restraining such breach or
threatened breach.
SECTION 5. INDEPENDENCE OF OBLIGATIONS. The covenants and obligations of
Affiliate set forth in this Affiliate Agreement shall be construed as
independent of any other agreement or arrangement between Affiliate, on the one
hand, and Parent or the Company, on the other. The existence of any claim or
cause of action by Affiliate against Parent or the Company shall not constitute
a defense to the enforcement of any of such covenants or obligations against
Affiliate.
SECTION 6. NOTICES. Any notice or other communication required or
permitted to be delivered under this Agreement shall be in writing and shall be
deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or express delivery service or by facsimile
confirmation) to the address or facsimile telephone number set forth beneath the
name of such party below (or to such other address or facsimile telephone number
as such party shall have specified in a written notice given to the other
party):
IF TO PARENT: PLATINUM SOFTWARE CORPORATION
195 Technology Drive
Irvine, CA 92718
Attn: Vice President, General Counsel
Fax: (714) 450-4447
WITH A COPY TO: WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
650 Page Mill Road
Palo Alto, CA 94304
Attn: Larry W. Sonsini, Esq.
Fax: (650) 493-6811
IF TO COMPANY: DATAWORKS CORPORATION
5910 Pacific Center Boulevard
Suite 300
San Diego, CA 92121
Attn: General Counsel
Fax: (619) 453-3555
WITH A COPY TO: COOLEY GODWARD LLP
4365 Executive Drive
Suite 1100
San Diego, CA 92121
Attn: Frederick T. Muto, Esq.
Fax: (619) 453-3555
3
<PAGE> 106
IF TO AFFILIATE:
at the address or facsimile phone number set forth below Affiliate's
signature on the signature page hereof.
WITH A COPY TO: WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
650 Page Mill Road
Palo Alto, CA 94304
Attn: Larry W. Sonsini, Esq.
Fax: (650) 493-6811
SECTION 7. SEVERABILITY. If any provision of this Agreement or any part of
any such provision is held under any circumstances to be invalid or
unenforceable in any jurisdiction, then (a) such provision or part thereof
shall, with respect to such circumstances and in such jurisdiction, be deemed
amended to conform to applicable laws so as to be valid and enforceable to the
fullest possible extent, (b) the invalidity or unenforceability of such
provision or part thereof under such circumstances and in such jurisdiction
shall not affect the validity or enforceability of such provision or part
thereof under any other circumstances or in any other jurisdiction, and (c) the
invalidity or unenforceability of such provision or part thereof shall not
affect the validity or enforceability of the remainder of such provision or the
validity or enforceability of any other provision of this Agreement. Each
provision of this Agreement is separable from every other provision of this
Agreement, and each part of each provision of this Agreement is separable from
every other part of such provision.
SECTION 8. GOVERNING LAW. This Agreement shall be construed in accordance
with, and governed in all respects by, the laws of the State of California
(without giving effect to principles of conflicts of laws).
SECTION 9. WAIVER. No failure on the part of Parent or the Company to
exercise any power, right, privilege or remedy under this Agreement, and no
delay on the part of Parent or the Company in exercising any power, right,
privilege or remedy under this Agreement, shall operate as a waiver of such
power, right, privilege or remedy; and no single or partial exercise of any such
power, right, privilege or remedy shall preclude any other or further exercise
thereof or of any other power, right, privilege or remedy. Neither Parent nor
the Company shall be deemed to have waived any claim arising out of this
Agreement, or any power, right, privilege or remedy under this Agreement, unless
the waiver of such claim, power, right, privilege or remedy is expressly set
forth in a written instrument duly executed and delivered on behalf of the party
to be charged; and any such waiver shall not be applicable or have any effect
except in the specific instance in which it is given.
SECTION 10. CAPTIONS. The captions contained in this Agreement are for
convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
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<PAGE> 107
SECTION 11. FURTHER ASSURANCES. Affiliate shall execute and/or cause to be
delivered to Parent and the Company such instruments and other documents and
shall take such other actions as Parent or the Company may reasonably request to
effectuate the intent and purposes of this Agreement.
SECTION 12. ENTIRE AGREEMENT. This Agreement, the Merger Agreement and any
Voting Agreement between Affiliate and the Company constitute the entire
agreement between the parties with respect to the subject matter hereof and
thereof and supersede all prior agreements and understandings between the
parties with respect thereto.
SECTION 13. NON-EXCLUSIVITY. The rights and remedies of Parent and the
Company hereunder are not exclusive of or limited by any other rights or
remedies which Parent or the Company may have, whether at law, in equity, by
contract or otherwise, all of which shall be cumulative (and not alternative).
Nothing in this Agreement shall limit any of Affiliate's obligations, or the
rights or remedies of Parent or the Company under any Voting Agreement
(including any Irrevocable Proxy contained therein) between Company, Parent and
Affiliate and nothing in such Voting Agreement (including any Irrevocable Proxy)
shall limit any of Affiliate's obligations, or any of the rights or remedies of
Parent or the Company, under this Agreement.
SECTION 14. AMENDMENTS. This Agreement may not be amended, modified,
altered, or supplemented other than by means of a written instrument duly
executed and delivered on behalf of Parent, the Company and Affiliate.
SECTION 15. BINDING NATURE. This Agreement will be binding upon Affiliate
and Affiliate's representatives, executors, administrators, estate, heirs,
successors and assigns, and shall inure to the benefit of Parent, the Company
and their respective and its successors and assigns.
SECTION 16. ATTORNEYS' FEES AND EXPENSES. If any legal action or other
legal proceeding relating to the enforcement of any provision of this Agreement
is brought against Affiliate, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
SECTION 17. ASSIGNMENT. This Agreement and all obligations of Affiliate
hereunder are personal to Affiliate and may not be transferred or delegated by
Affiliate at any time. Parent or the Company may freely assign any or all of its
rights under this Affiliate Agreement in whole or in part, to any other person
or entity without obtaining the consent or approval of Affiliate.
SECTION 18. SURVIVAL. Each of the representations, warranties, covenants
and obligations contained in this Agreement shall survive the consummation of
the Merger.
* * *
5
<PAGE> 108
The undersigned have executed this Agreement as of the date first set forth
above.
PLATINUM SOFTWARE CORPORATION
By:
-------------------------------------
Title:
-------------------------------------
AFFILIATE:
--------------------------------------------
Address:
---------------------------------
--------------------------------------------
--------------------------------------------
Facsimile:
---------------------------------
PLATINUM SOFTWARE CORPORATION STOCK
BENEFICIALLY OWNED BY AFFILIATE AS OF
OCTOBER 13, 1998:
__________ shares of Common Stock
__________ shares of Series C Preferred
Stock
__________ shares of Common Stock issuable
upon exercise of outstanding
options
DATAWORKS CORPORATION
By:
-------------------------------------
Title:
-------------------------------------
AFFILIATE AGREEMENT SIGNATURE PAGE
